Last Updated:
Under the agreed shareholding structure, Dixon Technologies will own a 51% stake in the joint venture, while Vivo Mobile India will hold the remaining 49%.
Dixon said the partnership is in line with its strategy to strengthen its presence in the country’s Android smartphone manufacturing ecosystem and enhance its contract manufacturing business.
Shares of Dixon Technologies will remain in focus on Friday as the company has received government approval to form a joint venture with Vivo Mobile India for manufacturing smartphones and other electronic devices in India, marking a key development under the country’s foreign investment rules for neighbouring nations.
The approval, granted on July 8 under the Press Note 3 framework, allows the Chinese smartphone maker to participate in the proposed manufacturing venture after obtaining the Centre’s clearance. Press Note 3 requires prior government approval for investments originating from countries that share a land border with India, including China.
In a regulatory filing on Thursday, Dixon said it has entered into a joint venture agreement and shareholders’ agreement with Vivo Mobile India to incorporate a new company that will operate as an original equipment manufacturer (OEM). The transaction is subject to the fulfilment of customary conditions before completion.
Under the agreed shareholding structure, Dixon Technologies will own a 51% stake in the joint venture, while Vivo Mobile India will hold the remaining 49%. The partners will initially infuse a paid-up share capital of Rs 5 crore in proportion to their ownership, and neither company will hold equity in the other.
Venture to Manufacture Vivo Smartphones
The proposed entity will undertake a part of Vivo’s smartphone manufacturing operations in India. Besides executing Vivo’s production orders, the venture will also be eligible to manufacture smartphones and other electronic products for third-party brands, expanding its contract manufacturing capabilities.
Once operational, the joint venture will acquire certain manufacturing assets and enter into manufacturing as well as packaging agreements with Vivo to execute a portion of the smartphone brand’s OEM business in India.
Partnership First Announced in 2024
Dixon and Vivo had first disclosed their plans to collaborate in December 2024 through a non-binding term sheet. With the signing of definitive agreements and the receipt of government approval, the companies can now move towards operationalising the venture after completing the remaining procedural requirements.
The transaction is expected to be completed within one year from the signing of the joint venture agreement, or on any other date mutually agreed upon by both companies. After incorporation, the new company will function as a subsidiary of Dixon Technologies under the Companies Act, 2013.
Governance Structure
Although Dixon will hold the majority stake, the joint venture will have equal representation on its board, with each partner nominating two directors. The shareholders’ agreement also lays down provisions relating to governance, reserved matters, transfer of shares, pre-emptive rights and dispute resolution.
Dixon Eyes Stronger Position in Smartphone Manufacturing
Dixon said the partnership is in line with its strategy to strengthen its presence in India’s Android smartphone manufacturing ecosystem and enhance its contract manufacturing business.
The company stated that the collaboration is expected to reinforce its manufacturing capabilities and execution strength while expanding its footprint in the country’s fast-growing smartphone production market.
About the Author
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, w…Read More
Read More
Source link
[ad_3]
