Bring GST rates on television to 18% from 28%: Atul B Lall

Certain brands have performed well despite the slowdown. In fact, there is a brand to brand difference in sales performance, says Atul B Lall, Managing Director, Dixon Technologies (India) Ltd, which manufactures washing machine, television and LED lighting among others. During an interview with Swati Khandelwal, Lall said the demand will go up during the upcoming festive season.

What are your expectations from the festive occasion?

There was a slight slowdown, but some brands have performed well. There is a brand to brand difference in sales performance. The finance minister has announced a package and I feel that further such announcements will be made in the future. The announcement has come in the form of release of liquidity, bringing down the interest rates and support to the NBFC sector. I believe the demand will go up in the coming festive season and there will be a price correction.

What is your demand from the government on consumption slowdown?

Availability of liquidity will encourage financing for consumer durables, and these things will lead to an uptick in demand. We have certain products that come under the essential segment like television above 32-inches where GST of 28% is levied. I would like to request to bring it down to 18%. Import duty on open cell, which is an essential input for television, should be brought down to zero from 5% because import from Vietnam and Asean countries is hurting the 'Make in India' programme. So, certain issues such as rationalisation of GST and rate reduction, liquidity infusion and import duty correction will revive the industry, bring buoyancy and encourage demand.

Dixon Technologies' profits increased by 85% in the first quarter. Do you think that the company will repeat the results in the future quarters?

Yes, our growth has been good in the first quarter. Dixon is an outsourcing company and we design durable products and lighting products for other brands. Ebitda growth stands above 90%. As far as the margin is concerned then many things have an impact on it. I feel that the domains where margins have expanded like lighting, and we have achieved operating leverage in the domain. It is at a very big scale as we are engaged in manufacturing 35-40% LED indoor lighting of India. The scale has increased in even other products, but the operating leverage has not kicked in yet in those areas. I feel that it will happen in next one-two quarters and you will be able to see good margin improvement in Dixon's performance.

Which segment will give you the maximum growth in the next five years?

On comparing India's consumption story with China, we find that China's demand is five times more than India's demand because of the low penetration level in India. So, I feel the growth story in India across all these verticals will be bullish. Several products like lighting and washing machine – for which a plant is being developed near Chennai airport – will be globally comparative and we will be able to generate demand from the international market. So, all these fields are high-growth areas and I am sure that Dixon's growth story will remain good.

Do you have any plans to expand your capacity?

Yes, we have a capacity of about 1 million semi-automatic washing machines, and it is completely utilised. We will set up a new plant in the next six months. The plant with a capacity of six lakh/annum will come up in Noida. So, the current situation where we are not able to execute orders will come into control. Apart from this, we will also set up a top-loading fully automatic plant in Tirupati, which will become functional in the first or second quarter of the next fiscal. So, our total combined capacity will increase to 2-2.2 million by next year, which is more than 30% of the total requirement of the country.

Zee Media Newsroom