Dixon Technology surged 3.5 per cent after announcement of JV with Vivo for manufacturing smartphones in India
New Delhi, July 10
Shares of Dixon Technologies Ltd surged 3.5 per cent in intraday opening trade on Friday, after the company announced the execution of definitive agreements with Vivo Mobile India Pvt Ltd to establish a joint venture for manufacturing smartphones and other electronic devices in India. At the time of reporting the company share was trading at 13,840 up 2.69 per cent.
The company informed stock exchanges on Thursday, that it has signed a joint venture agreement (JVA) and a shareholders' agreement with VMI to incorporate a joint venture company (JV Co.), subject to completion of customary conditions precedent. It also said VMI has received the Government of India's approval under Press Note 3 for incorporation of the joint venture and subscription of shares by VMI.
Under the arrangement, Dixon will hold a 51 per cent stake in the JV, while VMI will own the remaining 49 per cent. The company clarified that "neither the Company nor VMI will have any stake in each other."
According to the exchange filing, the joint venture "shall be incorporated to carry on the business as original equipment manufacturer (OEM) of electronic devices including smartphones." The company added that the JV "will undertake part of VMI's OEM orders of smartphones in India, and can also engage in OEM business of various electronic products of other brands."
The initial paid-up share capital of the joint venture will be Rs 5 crore, to be contributed by Dixon and VMI in the ratio of 51:49. At the closing of the transaction, the JV will purchase certain manufacturing assets and enter into a manufacturing and packaging agreement with VMI to execute part of the smartphone OEM orders.
Explaining the rationale behind the partnership, Dixon said, "This association will bolster the Company's manufacturing excellence and superior execution abilities. This partnership will further strengthen the Company's foothold in the android smartphone ecosystem in India in line with Dixon's strategic goals."
The transaction remains subject to completion of conditions precedent and receipt of applicable statutory and regulatory approvals, where required.
— ANI
Reader Comments
Finally some positive economic news! With the government's PLI scheme pushing local manufacturing, this JV could create thousands of jobs in electronics. Hope they also invest in R&D and not just assembly work.
Smart strategic move by Dixon. They already have strong ties with Samsung and Xiaomi, now adding Vivo to their portfolio. This diversification reduces risk and strengthens their position as India's EMS leader. 📈
Good for the stock, but I hope this isn't just a way for Chinese companies to bypass regulations. Press Note 3 approval is there, but we need to ensure real technology transfer happens. Made in India should mean Indian innovation too!
Interesting development from a global perspective. India is clearly positioning itself as an alternative manufacturing hub to China. The 51:49 ownership structure is becoming the new norm for foreign investments in sensitive sectors.
As a consumer, I hope this means more affordable smartphones made in India. But the real test will be in quality control - Indian manufacturing needs to match global standards consistently. Let's see if Dixon can deliver!
The devil is in the details - Rs 5 crore initial capital seems quite small for a smartphone venture. Hope this is just the starting point and
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