Thread by @tycoonmindset05

- Company is vertically integrated but now will provide more solutions.

- Capacity expansion of LED bulbs is executed
- #dixon to enter into outdoor lighting like street lights.

Mobile phones
- Delivered 2.5 million phones in the month of July
- Capacity to be increased to 700k phones per month.
- #lg phones order book seems to be healthy
- set top box order book can generate revenue of 1000 crores and will show it as a separate category

- Has entered into a contract with large global brand to produce Smartphones for there international demand.
- #dixon is in talks with one more large brand which can be a Game changer for the company.

PLI scheme: there is a budgetary allocation to be distributed among 5 foreign and 5 domestic companies. Base line turnover of 500 crore and then increase by 6%. There would be some upward threshold but it is not disclosed .

In panel side of business, order book remains strong

Tcl is coming with its own panel manufacturing but that would be for itself.

Dixon has cost advantage over other company

PLI scheme, assembling of cell phone: will it be easy to execute if approval is given?
- Groundwork has been done and are confident if approvals are given then #dixon would be able to set up plant in 4 moths and achieve threshold requirement

-Interest expenses on P&L is higher due to discounting charges
-Interest on discount was approximately 40 percent of interest expenses

-numbers for lager screen LED TVs, eg 50-55 inch, are increasing where margins are better.
-in lighting business there is operating leverage kicking in. -fixed cost in lighting business is under control.
-traction is there is lighting business.

- Automation in manufacturing of lighting business.
- Would improve production and margins by 1.5 to 2 percent.

Washing machine, volumes are struggling from last 2-3 quarters.
- In the month of July manufactured 80k machines
- Order book of 120k per month.
- Good Companies are moving to Dixon.
- Due to pandemic, demand had absolutely collapsed.

-Top criteria for PLI scheme: govt has asked for lot of data. Company believes it would be based on mobile assembling number of 2019.
-Capacity is ready for mobile assembling.

-Chances of PLI coming in other white goods.
- Govt. Is looking for set top boxes and lighting for next PLI scheme
- one approval is going to be in the range of 140 crore but if they get two PLIs then number would be higher.

-#dixon is generating enough cash but can take debt as well to fund the Capex but no final decision till now.
-Number of PLI approvals would affect the decision on Capex and debt funding plans.

PLI schemes and global brands
-Foxconn has very low margins.
- Large global brands partnership, margin profiles would be fairly better.
- dixon is more frugal and cost conscious compared to other global brand.
- cost structure in India is much more favorable.

-If Working capital requirement in the initial stage ramp up, new working capital would be deployed
-But once the business is stabilized no new working capital will be deployed.

-Domestic market production would be of sub $200 phone.
-Overall Roc would be significantly higher mainly in FY 22.
-Significant portion would be due to mobile category (due to PLI schemes)
- 60 percent of manufactured smartphone in PLI scheme would be exported.

-Indian mobile market is around150,000crore
-working capital increased due to only TV segment.
-Samsung and Xiaome export got delayed because clearance got delayed but will get back in the coming quarters

Set top boxes business:
- Customers are Reliance jio, dish TV, Citi cable.
- Due to Dish TV's low demand #dixon won't get affected

-Labor cost: structure of payment remains same.
-Contract of 5G equipment: currently for Jio it is manufacturing setup box and in that various kinds of set up box.
-No contract of 5G till now.
-Jio is going to be a strategic customer

-lighting business: Sales of 12.8 million bulbs in July. That is 80-85% of normal volumes. Will be back to normal sales by September.
-if company takes loan to fund the capex then interest cost will be of the same run rate as it was in the first quarter.