Thank you, Anushka. Good evening, everyone.

Welcome to the Dixon Technologies Q1 FY '27 earnings call. Today, we have the management being represented by Mr.

Atul Lall, Vice Chairman and Managing Director, and Mr. Saurabh Gupta, Director and Group CFO.

At this point, I will hand over the floor to Mr. Lall for his initial remarks, post which we'll open up the floor for Q&A.

Thank you, and over to you, sir.

Thank you, Tanay. Good evening, everyone.

This is Atul Lall, and joining me today is our Director and Group CFO, Saurabh Gupta.

Good evening, everybody.

I would like to warmly welcome all our stakeholders to discuss our Q1 performance for 2026-27. Key highlights for the quarter are as below: Revenues for the quarter ended June 30th, 2026, was ₹15,557 crores.

EBITDA, excluding fair value gain on the stake held by Dixon in Aditya Infotech Limited, for the quarter was ₹472 crores. PAT after minority interest and excluding fair value gain on the stake held by Dixon in Aditya Infotech for the quarter is ₹218 crores.

During the quarter one, financial year 2026-27, the global and domestic electronics manufacturing landscape navigated a very complex macroeconomic environment, characterized by persistent inflationary pressure across commodities and supply chain. Sharp price spikes in core input components exerted temporary cost pressures across the broader hardware ecosystem.

However, Dixon's agile cost-plus contract structures and pass-through mechanisms enabled us to deliver a strong revenue growth even amid temporary volume friction. Operating margin for the quarter reflected temporary compression on account of expiry of Mobile PLI 1 in March '26, and from increased selling prices driven by elevated input cost and broader supply chain inflationary factors.

As increased input costs were passed through increase in selling prices, percentage margin look optically lower, mostly in mobile and IT hardware business. While the sunset of Mobile 1 incentives impacted short-term percentage profitability, Dixon's strategic pivot towards component backward integration, including display and camera modules, along with participation in Mobile PLI 2 and ECMS positions the company to drive absolute profit growth and restore operating margins from the next fiscal of 2027-28.

Washing machine and refrigerator business witnessed temporary margin pressures on account of volatility in polymer prices, other related input costs, and adverse foreign exchange movements. These impacts are expected to normalize with cost pass-through measures and operational efficiencies taking effect.

Operationally, our execution continues to be strong, with stable manufacturing efficiencies, disciplined cost management, and sustained customer demand across key businesses. We remain focused on driving absolute value creation through scale, productivity improvements, and deeper backward integration.

As we continue to expand our capabilities and benefit from the new growth opportunities, including strategic partnerships and increasing localization, we remain confident to deliver sustainable long-term value for all stakeholders. Our strategic focus on balance sheet optimization and capital efficiencies continued to yield strong results, driven by operational leverage, higher asset turns, and prudent capital allocation, with return on capital employed and return on equity at 34.1% and 23.4% respectively.

Enhanced working capital discipline resulted in an optimal working capital cycle of negative 5 days. We remain firmly committed to drive value-accretive expansion across all verticals while maintaining strict capital management discipline and preserving superior return metrics for our shareholders.

The timing of the announcement of the Mobile Phone Manufacturing Scheme is well aligned with the objective of ECMS policy. While ECMS is focused on building a robust domestic component ecosystem, the Mobile Phone Manufacturing Scheme is expected to create sustained demand for critical components by driving higher mobile production and greater value addition.

We expect the contours of the scheme to be announced in a couple of weeks, and remain excited about the opportunities in mobile and IT hardware business. Now, I'll share with you the business performance insights in each of the segments.

Mobile and other EMS business: Revenue for the quarter for mobile and other EMS business was ₹14,179 crores, with operating profit of ₹373 crores. During the quarter, mobile industry experienced a structured evolution from volume-led expansion to value-driven growth.

While total shipment volume saw a modest decline amid elevated global memory and component prices, the total industry market value expanded securely into the positive territory. Mobile volume performance was aligned with temporary demand contraction seen across the broader smartphone market by 10% to 12%.

However, our top line witnessed a strong revenue growth due to higher input cost realization. Our market position, customer engagements, and manufacturing capabilities remain intact, and we expect 20% to 25% quarter-on-quarter growth, as consumer demand strengthens, and we have a strong order book.

We received the PN3 approval for our JV with Vivo in July '26, and we are now working towards the consummation of the transaction. We expect the JV to commence operations and start reflecting in our revenues from Q3 of the current fiscal.

Construction of a 1 million square feet facility in Noida, with higher capacities for our anchor customer, is almost completed. We expect the operations to commence from Q3 of this fiscal.

We are expanding the capacities of camera modules in subsidiary, Q-Tech, which is an ECMS beneficiary, for the smartphones from 70 million annually to 180 to 190 million annually over next 15 to 18 months, largely catering to our captive smartphone volumes, in addition to deepening the level of manufacturing. Construction of our display facility is completed, and installation of machinery is going on for mobiles, IT hardware products, and automotive displays.

The response from various brands is very encouraging, and the trials will start from the beginning of Q3, and mass production to commence from end of Q3 and beginning of Q4 this fiscal. Telecom and networking products: This segment continues to deliver a robust growth driven by strong adoption of 5G, FWA, and broadband equipment.

With localized sub-components, scaled manufacturing lines, and a healthy order book, the telecom vertical remains on track to serve as a growth catalyst for the current and coming fiscal years. Production of complex microwave backhaul radios for large global brand has scaled up successfully, and we expect to also commence exports of these products too in the current fiscal year.

Our joint venture with Taiwanese ODM, Gemtek, for manufacturing of optical transceivers, small form-factor pluggable, and BOSA under our approved ECMS application will allow us to capture a share of growing demand in the telecom and data center segments. In line with our path to progress from a pure EMS provider towards solution-oriented engagements, we have commenced a joint design and manufacturing agreement with a marquee customer.

IT hardware products: The segment delivered a healthy performance for the quarter under review, and we are on track for multifold growth this year. Our IT hardware product manufacturing unit in Chennai is rapidly evolving into India's largest IT hardware manufacturing campus, where we currently manufacture notebooks, desktops, and AIOs, and have a healthy order book.

We have onboarded a high-end gaming notebook customer. Our new manufacturing facility adjacent to our current facility in Chennai, for our 60:40 joint venture with Inventec Corporation, one of the largest top five ODMs in IT space, is expected to get operational from Q4 of this fiscal.

We have also expanded our capacity in our Noida facility for our anchor customer, and we have started manufacturing tablets, in addition to laptops, for our existing customer. Moving strategically beyond traditional end-client computing, and we are actively discussing with our joint venture partner to tap into the high-growth enterprise server and data center hardware ecosystem, which allows us to address the surge in cloud and AI infrastructure demand, and will start manufacturing SSDs from Q3, and also exploring other critical components such as power supplies and mechanicals, which should enhance value addition and margins.

Driven by these strong structural catalysts, we possess immense confidence in the strong forward visibility in accelerating this vertical's trajectory, positioning it to become one of the most meaningful, strong growth pillars of Dixon's overall portfolio over the next few years. Home appliances: The revenue for the quarter was ₹382 crores, and operating profit of ₹32 crores.

The segment continues to deliver robust top-line growth, driven directly by our strategic investments in capacity, product portfolio expansion, and in-house backward integration in molding and tooling capabilities. This integrated manufacturing approach enables us to deliver structural cost efficiency to our customers, while unlocking significant operational leverage as we scale production across both semi-automatic and fully automatic product lines.

We have started manufacturing semi-automatic washing machine in the higher capacity categories of 16 and 18 kg, which is the first across the industry. Addition of our new manufacturing facility in Tirupati will expand our capacities from 0.6 million units per annum by another 0.3 million units per annum, including fully automatic front-loading washing machine line, which will be launched in Q3 of this fiscal.

We have started production of robotic vacuum cleaners with healthy order book, and are on track to start production of dishwashers and microwave ovens in Q3 of this fiscal. We remain confident that increasing premiumization and rising appliance penetration will continue to provide long-term growth opportunities in this segment.

Lighting: Joint venture with Signify continues to deliver robust revenue growth backed by strong growth in indoor lighting portfolio led by battens and downlighters. While the lighting industry remains competitive, we continue to strengthen our position by leveraging our scale, engineering and designing capabilities, and capitalize Signify's leadership position and long-standing relationships with other customers across consumer and professional lighting categories.

We have expanded our batten production capacity to an industry-leading 5 million units per month, fully supported by backward integrated process. Pursuing an active product mix improvement strategy, we have launched 1,000-plus SKUs premiumizing the indoor lighting portfolio in the last two quarters, and now we can cater to the entire portfolio in the indoor lights.

In the coming quarters, we are also focusing on expansion of range of outdoor lighting portfolio. We expect to start export deliveries to the largest retail chain in US and Germany in Q2 and Q3 of this fiscal.

Consumer electronics, LED TVs and refrigerators: Revenues for the quarter under review was ₹987 crores, with an operating profit of ₹58 crores. LED TVs: The industry demand remained soft for value and mid-range segments, impacted by sharp input cost inflation, majorly due to high memory prices on account of global supply tightness.

However, demand for larger screen, that is 55 inches and above, and premium QLED and OLED televisions remained relatively healthy. We have initiated mini-LED production, and will transition to an ODM model by Q2 of '27, alongside launch of soundbar TV sets, expanding our play in the premium home entertainment ecosystem.

IFPD and digital signage business was also impacted due to increase in memory prices in the quarter. Refrigerators: Q1 saw a huge uptick in commodity prices, prompting industry-wide older inventory liquidation, and slower fresh purchase, and demand was further impacted by less intense summer and unseasonal rains.

Despite these headwinds, we continue to see strong traction with healthy order book in direct cool and minibars. Our ODM-led portfolio is scaling well, enabling higher value realization and faster refresh cycles.

We're also expanding our capacities for manufacturing two-door upright refrigerators, deep freezers, visi coolers, and side-by-side refrigerators, improving our value mix and building a broader appliance platform over the period. Despite the near-term softness, we remain positive on the medium to long-term growth prospects of the category, supported by low household penetration, premiumization, and increasing consumer demand.

Rexxam Dixon Electronics, our 40:60 AC PCB joint venture with Rexxam, continues its strong growth trajectory, characterized by excellent cash flow conversion and an industry-leading return on capital employed profile. Our new facility in Chennai will be operational starting August '26, with expanded capacity to meet demand of our anchor customer.

We are in active discussion to onboard couple of new customers for next year. Hearables and wearables, our 50:50 JV with Imagine Marketing, that is boAt, continues to deliver strong financial performance, supported by broad-based revenue growth, healthy cash flow generation, and lean balance sheet.

Building on this momentum, the JV is expanding into adjacent electronic categories, including dashcams, smartwatches, power banks, and mobile accessories. This diversification will improve capacity utilization and unlock operating leverage.

With that, I'll conclude my remarks, and both me and Saurabh are happy to take your questions. Thank you.

Hi. Good evening, Mr.

Lall and Saurabh.

Hi, Aditya.

Hi, sir. My first question is on the PLI 2 scheme.

How do you see that scheme benefiting us both in terms of additional incentives that may be available on backward integration, as well as on the export side? Is it more about boosting volumes, or is the advantage likely to be more around the margins?

Aditya, we feel that it's a very well-curated scheme. It's a combination of both the elements that you mentioned.

One is on boosting volumes, which we understand, because the domestic volumes are going to be kind of under pressure, the additional volumes will nudge the brand owners to bring in exports out of India. We at Dixon are already seeing a very significant traction from two of our anchor customers.

That is for building volumes. In this, the PLI guidelines are still awaited, but what we understand is going to be varying between 2.5% to 5%.

Now, that higher band of 5% is a very, very large element to support the export from India. The second is on more and more localization.

The figure that we understand is 1.5%, which is basically 0.3% for each component, which is display, camera modules, battery, mechanicals, and charger. Please also appreciate this 0.3% is on the export value of the set.

Which is very large support on the component side. These are the two important salient features which we feel would help the Indian manufacturing industry in mobile to get into the global markets with deepening of value addition.

The third, of course, is design element. We have to wait and watch for that, which is more focused on the local Indian brands.

The first two elements of the PLI are, I think, extremely encouraging.

Understood, sir. On the export side, is it mainly about these two anchor customers, which are our existing customers, or do you think that there could be a larger opportunity elsewhere as well, new customers getting added the way it kind of played out in the original PLI scheme?

We are all waiting for the exact guidelines to be rolled out. Then we'll be having a GTM strategy for going beyond our existing customer portfolio.

As of now, our two large relationships are extremely keen for looking at India and Dixon as the manufacturing base for servicing the global market.

Sure, sir. Sir, my second question is on working capital, wherein it appears that this quarter working capital has increased a bit.

From the cash flow statement, it appears that almost 800-odd crores may have gotten consumed in working capital. Just want to understand what has really transpired, and at the same time, we can also see that in the mobile phone business, capital employed has gone up.

Is it on account of this working capital deployment or HKC JV, if you can just elaborate on that? Thank you.

Our CapEx has been to the tune of 375 crores, but mainly there has been more working capital deployed for building certain inventories, strategic inventories, because there were supply chain challenges because of the memory price hike. We had to accumulate inventory across various verticals.

Also we had some extra cash, you see, lying at the end of March, which was a floating cash, which had to be paid off to the creditors.

Aditya—

It's a combination of these three things.

One is, of course, the inventory, Aditya, where strategic inventory, which was because the memory prices are also continuously increasing and it's on an increasing trend. Secondly, in some of the businesses, we have to back-to-back arrangement.

We got a lot of cash in end of March, which was subsequently paid beyond March. That is the reason.

This you will see that over a period it'll continue to get corrected from here onwards.

Aditya, please be rest assured it's a temporary

Temporary phenomenon.

temporary phenomenon, which is going to get corrected immediately.

Sure, sir. Helpful.

Thank you so much.

Yes, thank you very much for taking my question. Mr.

Lall, a couple of things. First thing, I was just trying to clarify this 20% to 25% growth in smartphone that you're talking about quarter-over-quarter.

You were just referring to this particular quarter, or are you talking about the year?

Sameet, this is Saurabh. We are talking about quarter two.

As of now, we are giving

short-term

visibility. Quarter two against quarter one, we are expecting a 20%, 25% kind of a growth, and that is the order visibility that we are seeing from our brands.

That's good. Can you just walk us through the seasonality of phone manufacturing?

Obviously, the festive season is a time when most of these phones get bought and sold. What should we expect beyond this 20% to 25% and for the rest of the year?

I guess the second part of my question is, is the guidance of 32 million phones still intact, and if you can walk us through kind of the drivers for that, while the rest of the world, or rest of the industry is declining, you're saying flat year-over-year, that's pretty commendable.

Here, Sameet, we are talking about the numbers without Vivo.

Now,

our order book for Q2, to be precise, is somewhere around 9 to 9.2 million. By the first half, we would be close to around 16, 16.5 million.

Our last year numbers were around 32, 33 million. We feel we should be somewhere close to that number.

I think that way the team has done a fairly good job, because there is a very significant decline in the market. We still feel that we'll be holding on to our numbers of last year.

Right. My second question is, I guess, you're talking about Inventec and operational by the fourth quarter.

Then you also mentioned some data center server manufacturing, which should start in the third quarter. Can you give us just more details around both these two opportunities, which sound as if they are very good and they are very large, and be interested to know more?

For us, IT hardware vertical is an extremely important and high-growth opportunity. The campus in Chennai is already geared up for almost around 2 million units.

The product portfolio is now laptops, AIOs, and desktop. The north capacity, we've added a new product category of tablets along with laptops.

The new SSD line, which is the first initiative of backward integration, has already been installed. Top four out of five customers are there with us.

One new brand for gaming laptops has been added to the customer portfolio. What I was referring to in my opening remarks was that our joint venture with Inventec, which is one of the top four global ODMs in this space, the factory is getting ready, and this factory should become operational by end of Q3 or early Q4 of the current fiscal.

In this, we're going to be doing PCBAs, and also in this we are in discussions with our partner for starting the servers, the general servers and also the data center servers. That is with that.

Got it. Thank you very much.

Appreciate it.

Thank you.

Thanks for the opportunity. Sir, first question is, on this PLI 2.0, any assessment now with this PLI scheme out, and details to be sort of we also expect soon, what can be the export potential we can see from our anchor customers maybe in the next 1, 2 years?

The current volumes which you are talking about saying Q1 or Q2, what would be the export number in these which we are already doing?

Our current quarter export number was around 1,100 crores. We feel that in a couple of years, that can add almost 15 to 20 million to our numbers, additional quantity in a couple of years, which is an addition of almost 18,000 to 20,000 crores to the revenue.

That's what we look at with our two anchor partners.

Understood. Is there any potential to sort of look at more customers with Vivo also or anybody else also to try and sort of address this?

Second is, on this PLI 2.0 also, we understand there will be some requirement of localization level. Now we have already done a couple of them and we already also had planned for enclosures and batteries.

If you can get us some sense on where are we in terms of localization as of now and in the next couple of years with this ramping up the JVs, where do we stand?

There are two parts to PLI 2. One part is going to be linked to your production value, which we feel largely will come from the global markets.

The second, as I had shared in my response to Aditya's question, is linked to the localization, in which we understand the details are still awaited, and they're mentioning five components, out of which we have a play in two, camera modules and display. The other three components, see, the scheme has just been rolled out.

We have to sit together and apply our minds that what can be Dixon's play in that. Is there anything very tangible as of now from our side?

No, not yet. We'll definitely be sitting together that if we can have a play in that.

Understood, sir. Sir, last question on the feature phone side.

We had talked about a big order book and a strong ramp-up in volumes in the next couple of years. Can you highlight if there has been any change and are we on track for those type of volumes in this year and next year?

In feature phone, we are already the largest. Almost two-third of the production being done in India is done with Dixon.

We are with two of the largest brands in India, and what we had shared was that one of our anchor customers is shifting the export base to India. Please be rest assured that is on track.

It gets further solidified with the rolling out of PLI 2.

Understood, sir. Thanks a lot.

I'll come back in the queue.

Thank you.

Good afternoon, sir. Thank you for the opportunity.

Sir, first question, if you could help us with respect to the revenue for telecom and IT hardware separately, please.

Yeah. Revenue for telecom was around closer to 2,100-odd crores, and IT hardware is somewhere around 1,350-odd crores.

Would it be possible to know what is the YoY or QoQ growth, if you could help us with that as well, sir?

I wouldn't be having right now, but IT hardware there's a significant growth, because now the business is coming to the ramp stabilization and ramping up is happened, the volumes are increasing with the brand. IT hardware definitely there'll be a huge growth as compared to same period last year.

Telecom, we are, yeah, last year

Telecom is almost going to be flat as compared to last quarter.

Understood. Sir, if I missed out, I don't know, in terms of volume for the current quarter, is it somewhere around 7.5?

That's right. We did a 7.5 million volumes for smartphones.

Got it. Of this, how much would be exports, sir?

Export, I don't have the volume number in absolute number. It is closer to 1,100 crores.

In volume-wise, it should be out of this 7.5, I think so 0.6 million or somewhere.

Around between 0.6 to 0.7 million, yeah.

Got it. Sir, my next question was, in terms of the disadvantage, earlier we used to hear about the disadvantage India had versus China was somewhere around 10% to 12%.

You think where are we right now, and with the PLI, would we become absolutely cost competitive or it's more these China-plus-one which is helping in terms of the volumes as well on the export opportunity front?

You see, we feel now that the PLI 2 being rolled out for mobile is extremely, extremely well thought-out. A lot of number crunching is done, and now I think we can stand on our own feet.

Obviously, it's going to take time, but we are seeing a very positive traction from our existing anchor customers.

Got it. Would we have the similar margin what we have for the domestic market for this export or it could be even better, ex of incentives, sir?

It's going to be similar.

It'll be almost in the similar lines, yeah.

Understood. In terms of the components, if you could call out what has been the EBITDA contribution for the first quarter, would that be possible?

Component, as of now, display has not started. Q-Tech is closer to 500-odd crores.

I think so it'll take time for us to contribute meaningfully from this Q-Tech component thing. I think so we'll be able to give a better guidance in next couple of quarters.

Got it. I'll fall back in the queue for follow-ups, sir.

Thank you so much.

Thank you.

Hi, good evening. Thanks for taking up my questions.

I have a quick clarification on PLI 2.0. Can you help us understand when this new scheme will start contributing meaningfully to margins, and is it large enough to offset the decline from the tapering off of PLI 1.0?

On the localization requirement, do you see any margin benefit on captive consumption of some of these components like camera modules and display modules on the domestic sales that you have?

On the first part of your question, we feel that in a couple of quarters, the export volume should start coming in, and they'll keep building up. Because it requires new model allocation, capacity creation, testing, the jigs, fixtures, but we feel that in a couple of quarters it'll start acquiring a significant mass.

The second is, yes, in a calibrated way, more and more localization is going to take place, and definitely is going to be margin-accretive.

Got it, sir. Just on the revenue side, can you break down the mobile revenue growth into volumes and how much was contributed by volumes growth and average selling price?

It looks like the volumes were better than what we have guided for as of last quarter. Do you think that's a function of Dixon gaining wallet share or is it an overall better market performance or any of the OEMs that you work or gaining market share?

Definitely in Dixon, we have gained the market share because the volume degrowth is significantly higher. We have been kind of able to maintain our share.

In fact, maintain the volumes and increase the share. That's the way scenario is.

As we had mentioned, in Q2 we have a much better order book.

Thank you very much, sir.

Hi, good evening, Atul ji and Saurabh.

Hi, Rahul.

Sir, congratulations for I know the profits are down YoY, but I think in a challenging quarter you've done well, kudos to that. Sir, just some clarification and pardon me for my ignorance, but Mobile PLI 2, is it going to be only applicable for exports?

Because when I read whatever is available publicly, I don't see that it is actually specifically mentioned there. Whatever volumes we're doing right now, not in terms of backward integration, but the smartphone volumes we're doing right now and then Vivo also gets added, is any incentive Dixon going to earn on that?

Rahul, as of now we have whatever understanding we have, of course, the exact details need to come out, which will hopefully should come out in the next couple of weeks. This scheme should be effective from 1st of April '26.

FY '25-26 will become the base year of this PLI scheme, and as per our understanding is that anything incremental that you do becomes eligible for PLI, irrespective of exports.

Rahul, also to take further what Saurabh is just sharing, here it's going to be brand-wise.

Yeah. It's brand-wise sales of

Any brand X for which we are manufacturing, let's say it is at a certain base for '25-26. If the value of production goes beyond that '25-26 specifically for that brand, as per our understanding, it becomes eligible for the PLI.

The practical scenario is that the growth is not there. One feels, and the industry feels, that the growth is going to come from exports.

That's the rationale. Are you understanding what I'm trying to say?

Yes, very clear, sir. Even I was thinking the same, that fiscal '27, because the industry is going to go down domestically, the base year of '27 doesn't really make sense, right?

The fiscal '27 being the first year because nobody will get an incentive, right?

Again, Rahul, to your point, also the memory prices have gone up, the selling prices of the phones have also gone up. That will also potentially can help in higher revenues also.

The number crunching, Rahul, that we have done for our anchor investors, when the export comes in, we definitely become eligible.

Right, sir. Just a couple of smaller questions.

We saw some media reports talking about some Chinese approvals needed for the Vivo JV, if you could just clarify that. Secondly, just on the new businesses, you spoke about telecom, IT, and we've been talking about that for last three quarters, and that business has been ramping up pretty steadily, just in terms of over and upwards of mobile, right?

More so from a fiscal '29-30 perspective, I know it's a very long term and current situation is so volatile, but what are we excited about in Dixon in terms of new products for fiscal '29-30, which could actually scale up to ₹5,000-₹10,000 crores top line? Something on that bit could really help.

Thank you so much.

Responding, Rahul, to the first part of your question, as we shared in the opening remarks, that our Vivo JV is going to get fructified and transaction concluded within the next two months, and the numbers are going to get accounted for in our financials from Q3 fiscal. I hope that answers your question.

The second part is on the growth beyond mobile. First beyond mobile is the scaling up of our components business, that is both display and camera modules.

Then we feel that we are at an inflection point in our IT hardware business, which in the consumer side itself, we feel that we are going to be having a very large share of the Indian market for laptops, tablets, desktops, AIOs. Extension of that, our partnership with Inventec, in which we are going to be foraying into the more higher-end products like servers.

Then the backward integration play there of SSD modules. We see a significant potential, a very significant potential into the IT hardware business.

It's going to be almost a replication, of course, the opportunity pool is not as large, it's going to be a replication of our mobile domain. We are extremely excited about our telecom venture, in which we are expanding our product portfolio.

I shared in the opening remarks that we've got into already the manufacturing of products like microwave radios, which is beyond the CP products, and also our JV with Gemtek, Taiwan, for getting into the optical transducers, that is the SFPs for the end-use both in the telecom network as well as the data centers. Then there is an expansion of our home appliances portfolio, wherein we are going to be launching very shortly in our washing machine divisions the new product category of front-loading washing machines.

Dixon is the first ODM in the country which is going to be launching this particular product. Further, we are starting manufacturing for our anchor customer microwave ovens and dishwashers in a couple of months.

We are going to be rolling out the ODM solutions for dishwashers in next 6 to 8 months. In our refrigerator category, we are expanding our capacity from 1.5-odd million to almost 3 millions.

We are going to be starting manufacturing side-by-side refrigerators in a couple of months. The new product categories of frost-free 240 and 280 liters, deep freezers, and visi coolers is going to be launched by Q4 of the current fiscal, expanding the capacity from 1.5 to 3.2-odd million, which is going to be the largest capacity of refrigerator at a single site.

Now, these are all exciting opportunities for us. Also in our lighting vertical, wherein we have a deep relationship now in our lighting vertical with Signify, we're looking at export opportunities.

We have launched almost 1,000 SKUs on the luminaire side in the last six months. We have got significant breakthroughs in export markets.

We will be starting exporting lighting products to the largest retail chains globally in the next quarter, the largest retail chain in Europe in the next quarter. We would be launching the professional range of streetlights, floodlights, industrial lights in next 6 to 8 months.

These are all growth opportunities for Dixon. We are extremely confident that there is no lack, the runway for growth is extremely good.

Perfect, sir. Thank you so much and best wishes for the year to come.

Thank you.

Thank you.

Thank you.

Yeah. Namaste, Atul ji, and hello, Saurabh.

Namaskar.

Namaskar.

Namaskar. I really had a question not for this year or next year, but little down the line, maybe three years and more, is to how the picture as I visualize is emerging, and I wanted to get your thoughts on that, whether I'm understanding it right or it requires modification.

If I retrace a little bit of journey of EMS in India and Dixon in particular, I think the phase one of yesterday, for whatever number of years, was characterized by limited categories, basically designs of the brands, while role of Indian firms was restricted largely to manufacturing to the print, and the value add was low, and scale also was emergent one and had not really fully established. I think in last two, three years and today, we have certainly established scale, for example in the mobile phone very clearly, exports also have emerged from the Apple ecosystem in a significant way, and we have improved our value add, we have improved our some component of design-led manufacturing.

As I visualize, some of these advantages probably will remain for a limited period of time, unless India itself makes significant change in the thrust of the ecosystem, because as I see the future of the EMS manufacturing, it will mean scale, it will mean own designs, it will mean technology and using AI-led shop in manufacturing floors, advance material, advance engineering, and our own proprietary knowledge. Time to build those competence will take years, and if these are not fully in evidence in some time, our current advantages probably, I'm afraid, may dwindle over a period of time.

I wanted to get your thoughts on this.

Bharat bhai, you have touched my heart. The question and the narrative that you've just shared is absolutely apt.

In Dixon, we have to, and we have started initiating, that we have to focus more on technology, we have to focus on AI-led manufacturing, we have to acquire the skill set for IP acquisition and much deeper sciences. Now, what we're trying to do, Dixon's growth, if you are seeing strategically, is being pursued through partnerships.

Many of these partners, whether it's Inventec or Gemtek, Taiwan for optical transducers, or Longcheer for mobile designing, they're all masters in their own domains. The whole objective and what we're trying to pursue is that in Dixon we need to acquire talent and build a capability of acquiring that knowledge and implement it on our shop floors, in our R&D centers.

In our own way, we have initiated that. Just to share with you, we have now launched a Center of Excellence in BITS Pilani, which from August is going to be rolling out an M.Tech program specifically in these areas of display, optics, artificial intelligence, robotics, humanoids, tools and dies, precision engineering.

The courses have been curated, the faculty has been selected, all by us. There's a governing council which I lead along with the Vice Chancellor of BITS Pilani.

The same thing is going to be replicated, and that's for product designing, at BITS Pilani, Hyderabad campus. For the larger initiative on the scientific side, the same M.Tech program is being launched at Plaksha University, Chandigarh, Mohali.

The whole idea is, deepen the partnership with possibly the best globally, bring in foreign talent or nurture Indian talent to acquire that skill set. Now, it's going to take time, but that is the building block one is trying to put together.

Delighted to know about the COE at BITS Pilani and what you describe about physical AI initiatives. Atul ji, what about advanced material capability, specialty chemistry capability, advanced engineering strength which are design-led?

What are the steps in that direction?

Let's say this front-loading design of the front-loading washing machine, I'll come to the other part, but I'm just keen to share. The front-loading washer is an extremely complex SKU.

We've brought in the R&D head of a large global conglomerate from Korea to head our R&D, and our team under the mentorship of this Korean senior person has developed the solution. What's happening is that in this process, and this product is being launched within 10 months, the complete team is just absorbing the knowledge which is at a global level.

Now, what one is trying to do at BITS Pilani is not purely only manufacturing technology. That's the reason I said that what you mentioned earlier is exactly what my focus is, that all this has to be acquired with deep sciences.

Let's say when we are talking about display, I'm talking about materials. I'm talking about chemistry.

When I'm talking about tools and dies, I'm talking about deep metals, again chemistry. That's what we are trying to do.

If Dixon has to reach somewhere, those extremely strong building blocks, of course along with the financial metrics, has to be built in.

Delighted to know that. One last tweak on that.

Sorry, this is beyond the financial metrics, this is something something [laughter]

Of course. One last tweak on that.

I suppose the initiatives and thoughts are in areas much more than devices, personal devices, and appliances and all of that into precision engineering and precision manufacturing, because that's where greater value add and superior margins would lie. Of course, it will also call for significant investment in the interim period, and that has to be accepted without any doubt.

Over the period of time, the future, I think, would remain and would get enhanced with that. On the other areas in precision manufacturing, some thoughts at your end?

Please be rest assured, sir, we are aggressively working in that direction. Specifically in the area of precision engineering.

Sorry, I'm not able to share more details. Hopefully, things fructify, we'll come back to you shortly.

It's specifically in the area of precision engineering.

What you have highlighted is already we are working on. Maybe give us some more time, sir.

We will come back to our shareholders what exactly we're talking about.

Deeply appreciated.

I didn't share it in my opening remarks because it's not fair, but since you have raised this question and mentioned this extremely important point, just be rest assured that we are very deeply working in this domain.

Thank you, Atul ji, and I strongly, ardently believe if this journey has to be attained at a scale by some company in India, I think Dixon is going to be at the forefront of it, and therefore, the concern and belief that why this journey needs to be carved out. Thank you so much and all the best.

Thank you.

That is our dream.

Thank you, sir.

Hi, sir. Thanks for taking my question.

I have one question regarding server global market. We have big players like Foxconn, etc., who have almost more than 40% of their overall revenue coming from data center driven server, and it has built up especially over just post-COVID.

Over the next 3 to 4 years, how's the journey for Dixon likely to be with respect to servers? What are the positives that can pan out?

What are the challenges now which we face with respect to server manufacturing?

Undoubtedly, opportunity is immense, and as we're referring to both servers, general servers and data servers, that's what we shared in response to the earlier question. We will be leveraging our deep relationship with our joint venture partner Inventec, who's the largest global players.

In the Chennai campus, this factory is being built up. We will be creating our footprint for server manufacturing.

Got it, sir. Yeah.

Thanks.

Yeah. Hi, sir.

Thanks for the opportunity. Sir, just wanted to clarify one thing in terms of mobile.

You're calling out that first half you'll be doing about 16-odd million, second half also that means about 16 million. Last year was about 12 million.

Ex of Vivo, you will still see a strong growth in second half, despite memory issues kind of been there. Just wanted to reconfirm on that, sir.

Abhishek, the kind of order book and outlook at present we have, we feel so. However, you know that how the market is going to pan out, one has to wait and watch and see.

Last year we did around 32-odd million. First half, we're confident because the immediate order book for the next two months is there.

July has come to an end. We will be closing at almost 16, 16.5 million.

Okay. That's going to be largely out of the market share gains in domestic, or will it be export-led?

Any thoughts on that?

Largely, Abhishek, we have taken market share because, as the market will contract this year. As per the various reports, it will contract by a decent number, double-digit number.

Within that, if we are able to maintain our market share of do the similar volumes as what we did last year, I think so definitely it clearly shows that we have gained market share from other EMS competitors.

Got that. Sir, the other thing is on margins.

Since optically the margins look lower on a rising input cost, from here on, quarter-on-quarter, the margin profile should stabilize to improve, and exit should be better because of components coming in. If you can just help us through that bridge.

Abhishek, the component play would largely play out next year. Of course, Q-Tech will start contributing, it's contributing, but that's a small contribution as compared to the display, which will start coming from Q4, and then it'll take time to ramp up and stabilize.

We feel that the memory issue, the prices of memory, will continue to go up or at least not come down. The margin, there will always be margin pressure in this business.

We are not expecting a margin improvement from here onwards. Of course, in our

in our

In the current year. in the current year, but definitely next year the margin should start to improve.

Got that. Sir.

Thank you so much for clarifying, and wish you all the best. Thank you.

Yeah. Hi, sir.

Good evening. Thank you for the opportunity.

Sir, my first question is just a clarification on the incentives again. Based on our current understanding, will Vivo volumes would be eligible for these incentives, since FY '26 it's not in our base?

Will it incrementally be eligible or you think it's based on the production of the brand, will not come under this scheme?

As we shared with you, that the threshold is on the basis of the brand-wise production. If the concerned brand production is going beyond the threshold, as per our understanding, although the final print and the guidelines still have to be rolled out, it will be on the incremental production over the threshold brand production of last year.

Got it, sir. Sir, secondly on the retention for these incentives, based on our understanding at least, in the PLI 1.0, we saw a lower retention with Dixon, primarily to gain more market share and to get more brands.

Now with a decent volume size, do we believe that for this round of incentives, our retentions could be much higher versus what we had seen in PLI 1.0 or any discussions that we had with the customers regarding the retention rate?

That's slightly difficult responding to that question, Niranjan. We'll take it as it comes.

Sure, sir. Sir, and if I can just squeeze one more.

Sir, on the Q-Tech, before the acquisition, Q-Tech used to make closer to 6% to 8% EBITDA margin, and now we've seen since last 3, 4 quarters since the acquisition, the margin seems to be subdued. Since it has not added to any margin uptick in our mobile and EMS business.

May I know the reason for this, and since when can we start expecting a margin uptick from Q-Tech back to the levels that it used to make before the acquisition?

Nirransh, the statement is not right. It is adding to our margins, but not to the same potential as what we had thought.

It is taking some time for us to deepen the level of manufacturing, put more capacities. Also, some of the FX has also played a spoilsport in this business for some time.

Now those things hopefully are all behind us. Gradually and slowly as the capacities are building, more deepening of manufacturing happens, volumes of course they are a large player in the Android ecosystem, the margin profile will continue to go up.

It's not

Please be rest assured that quarter-on-quarter the margin profile would improve. It was a temporary aberration primarily because of some currency implications, which has now largely been corrected.

Surely, sir. That's very helpful.

Thank you and all the best.

Yes, thank you. I have actually a couple of follow-ups.

Mr. Lall, you mentioned something about the PLI being effective April 1st.

Are you saying that it's going to be retroactive to April 1st of this year? My second question is, in the last earnings call, you talked about, Iskra, the opportunity in industrial EMS.

Can you tell us can you give us an update on what's happening over there? Those are two questions, then I have a follow-up.

Responding to the first part of your question, as per our understanding, it's going to be applicable from 1st April '26. Responding to the second part of questions, please be rest assured, as I had shared with Mr.

Bharat Shah also, that we are aggressively pursuing some opportunities in this space.

Got it. Just one follow-up.

It just seems like between PLI and ISM 2.0, the reduced duties on certain imports, the government seems to be getting behind the electronics industry. Is that anything else that we can expect or am I getting too greedy here?

No, I think the policy framework for electronics industry has been one of the most supportive, and we really want to thank the government. Also, one policy framework intervention which is extremely positive for us is the duty reduction on the inputs for display for automotive.

That's an extremely important sector for us. The first line being installed in our display plant is for automotive and IT products, and with the duty reduction, the arbitrage significantly goes up.

That's a very major positive for us.

Got it. Thank you very much.

Thank you.

Thank you.

This is Achal Lohade. Thank you for the follow-up opportunity, sir.

Just harping on the previous question with respect to telecom and IT hardware, if you could call out you had earlier indicated certain revenue numbers for FY '27-28, if you could talk about that, are they on track or is there any upside to those revenue figures?

You're talking about telecom revenues?

Telecom and IT hardware, both, sir, yeah.

Telecom revenues, please appreciate we have grown from 700 to 3,600 to 5,000, and we feel, as I'd mentioned earlier, we're going to be somewhere between 6,700 to 7,000 crores in this fiscal, and there's going to be a decent growth next year. That's where we are.

In the case of IT hardware, the order book is extremely strong. Please appreciate the first quarter IT hardware numbers are approximately 1,300-odd crores, which we did in the whole year last year.

That's the kind of growth, and it's going to be just keep on ramping up. Please be rest assured.

If you could talk a little bit on the margin profile for these two segments, sir?

Margins on telecom side in this quarter was almost 5.1% of operating margin.

How about IT hardware?

IT hardware is slightly

lower. It'll be lower.

It's slightly lower, similar to what we make on mobile. Telecom is slightly higher than what we make on mobile segment.

Got it. There was one media article about the MOU signed in Madhya Pradesh with respect to telecom.

If you could elaborate or clarify on the same, sir?

The Government of India and Madhya Pradesh government have formed an SPV to set up a telecom manufacturing zone in Gwalior. It is an extremely attractive scheme, wherein land and building is at ₹1 per square meter for a 30-year lease.

There is a capital subsidy of almost 50%. There is an employment allowance for workers of almost ₹5,000 per worker.

There is a power tariff subsidy of ₹2 per unit. There is a skilling subsidy for ₹13,000 per worker up to 4,000 workers.

It is right next to the expressway, is just 5 minutes from Gwalior airport, is just 5, 7 minutes from Gwalior station, is 20 km from ICD Malanpur. We are going to be establishing our footprint there.

Thank you very much, everyone. Really appreciate your participating in this call.

Thanks very much.

Thank you very much. Thank you.