Dixon Technologies expects revenue boost due to restriction in PC import

Dixon Technologies’ Chief Financial Officer, Saurabh Gupta said that the company’s annual turnover from its IT hardware segment which includes laptops and personal computers may increase to the range of Rs 3,000–4,000 crore over the next two years.

His remarks come after the Union government imposed import restrictions on laptops, tablets, all-in-one PCs, ultra-small-form factor computers and servers, with effect from Oct. 31. To boost manufacturing in India and cut imports from China, the government is imposing restrictions.  

"It will go a long way in boosting the local production and eventually making India a global manufacturing hub in this particular category as well," Gupta told a news source in an interview. "India is also a large market and a significant portion of it is getting serviced through imports. So, it is a big substitution play as well."

In the first quarter of fiscal 2024, the hardware segment of Dixon contributed less than 5% to its top-line. The electronic manufacturing firm will be a large beneficiary of the segment, said Gupta. He also said that it is expected that the market will grow from the current $9-billion to $13-14 billion in the next few years.   

Gupta said the company was in talks with large global players for future orders. Currently, Dixon manufactures IT hardware mainly for Acer and expects volume to grow from their anchor customer.

In the next 12-15 months, the company focuses to reach an aggregate facility space of 4.5 million square feet. Gupta further said that from the IT hardware perspective, the company is also aiming to add capacities in the northern and southern parts of India in the next 5-6 months.    

The company would work out its volume and infrastructure numbers in the next four months in order to gain earnings visibility for the segment, he said.

The CFO expects revenue inflow from prospective customers by the fourth quarter and "meaningful revenues" from the category in the next fiscal.

Dixon is currently a beneficiary of the production-linked incentive scheme for large-scale electronics production, Gupta said. The firm is also looking at spending capital expenditure on backward integration in its IT hardware and mobile phone verticals.

Currently, 50% of the lighting segment and 60% of the washing machine segment have value additions made in India. On the mobile phone front, the level is only 20%, but it can potentially go up to 30–32% with an increase in scale and capacities, according to Gupta.

The company's dependency on imports gets diluted every year and in the next two–three years, Dixon will have a well-built component ecosystem in India, he said.