Dixon Technologies Ltd. is inching closer to a Rs 30,000 crore revenue opportunity as the government is likely to approve its joint venture with global smartphone giant Vivo, NDTV Profit has learnt.
This comes after a meeting held on Saturday, where an inter-ministerial committee has backed the proposal and is expected to process the final approval once the regulatory processes for completed, sources said.
The approval of the Vivo JV could be significant for Dixon Technologies, potentially adding 20-22 million units of production on an annual basis. The management of Dixon Tech has indicated that the deal could represent a Rs 30,000 crore revenue opportunity, with the JV expected to make almost 67% of Vivo's total production.
Speaking to NDTV Profit at the end of May, Saurabh Gupta, Executive Director and Group CFO of Dixon Technologies, addressed the prolonged anticipation of the Vivo partnership while acknowledging that the final clearance is taking longer than what the company had hoped for. But he dismissed any structural roadblocks.
"We are deeply engaged with the government, all the related matters have been well settled and agreed upon, and my sense is it should come in soon," Gupta said.
"Our understanding with them is that under the JV that will be formed, almost 67% of their volume will be transferred to the JV," Gupta said. "On an annualised basis, we were looking at a volume of closer to 22 million units, with a much better selling price compared to our existing portfolio," he added, when asked about what the JV could mean to the company's prospects.
Shares of Dixon Tech are buzzing in trade on Tuesday in the wake of hype surrounding the Vivo JV approval, with the stock seeing a sharp uptick in late trade. The stock is trading at Rs 12,248, accounting for gains of almost 2.5%.
This comes against the backdrop of a sharp drawdown that the stock has had to witnessed in recent times. In the past 12 months, shares of Dixon Tech have fallen more than 14% while remaining largely flat on a year-to-date basis.
Dixon Tech has declined to comment on any development surrounding the JV approval.
ALSO READ: Dixon Tech Says Vivo Deal Delay 'Beyond Expectations', Sees Rs 30,000 Crore Revenue Boost
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