18 months on, Dixon gets govt nod for JV with China's Vivo

By Shouvik Das

shouvik.das@livemint.com

New Delhi: Eighteen months after it was first announced, Dixon Technologies' joint venture with China's Vivo Mobiles has finally got government nod, removing a key hurdle for a partnership expected to drive the company's next phase of smartphone manufacturing growth.

In an exchange filing late on Thursday, the Noida-headquartered electronics manufacturer said Vivo Mobiles India (VMI) got the government's approval through an 8 July letter from the department of promotion of industry and internal trade (DPIIT) "for incorporation of the JV Co and subscription of shares of JV Co by VMI.”

On 15 December 2024, Dixon had first announced a joint venture agreement with Vivo to assemble the latter’s smartphones in India.

The venture, in which Dixon will hold 51%, will also see Dixon operate as an original equipment manufacturer, which means that the latter may, in the long run, create its own smartphone brand—or assemble smartphones for other clients in its factories in India.

The joint venture, however, did not take off as the Chinese firm had to seek an approval as per norms that require firms from any nation sharing a land border with India to seek clearance from the government before investing in the venture.

The regulation had been put in place when India’s relations with China had soured in 2020, around their Galwan Valley clash. With relations thawing over the past six months, New Delhi eased some of the strictures on 31 March, paving the way for investments from China-based entities.

For Dixon, the pending deal coincided with declining smartphone sales in India. On 31 January, Dixon reported a 29% year-on-year decline in quarterly operating revenue, as there was no imminent clarity on the Vivo joint venture deal and on declining domestic smartphone sales.

On 12 May, Saurabh Gupta, whole-time director and group chief financial officer of Dixon, told Mint in an interview that the company was in “advanced stage talks” with the government for clearance of the joint venture that could “expand Dixon’s smartphone production volume by 60%”.

Gupta also said that while the company expected a 15-17% revenue growth in FY27, approval and setting up of the joint venture with Vivo “could accelerate revenue growth to as much as 45% year-on-year.”

Analysts at brokerage firms also sounded bullish on Dixon, after months of sustained decline in its share prices.

On 5 July, a note to investors by analysts Deepak Krishnan and Naman Jain at Kotak Institutional Equities said: “Dixon is expected to deliver a strong 43% quarter-on-quarter revenue growth, driven by robust traction in the mobile and consumer electronics segments, while margin impact from the absence of Mobile PLI benefits is likely to be largely offset by a favorable product mix.”

Though the announcement came late Thursday, share prices of Dixon were up 4.4%. Its share price is, however, still 25% below the December 2024 levels, when the joint venture was announced.