Under the agreement, Dixon Electroconnect Pvt Ltd, currently a wholly owned subsidiary of Dixon Technologies, will be converted into a joint venture, with Dixon holding a 60% stake and Gemtek the remaining 40%.
The agreement was signed on October 7, following a binding term sheet entered into by the two companies on June 9.
The JV will manufacture Optical Transceiver-SFP (Small Form-Factor Pluggable), BOSA (Bidirectional Optical Subassembly) and other telecom products as mutually agreed by the partners.
The transaction will be carried out through the subscription of fresh equity shares of Dixon Electroconnect by Dixon and Gemtek. The number of shares to be subscribed by each partner will be determined based on valuation reports and in compliance with applicable laws.
Dixon will have the right to nominate three directors to the JV’s board, while Gemtek will nominate two. Dixon will also have the right to nominate the chairman.
The transaction is expected to be completed by February 3, 2027, subject to customary conditions.
Dixon said the JV will help it enter the data centre, telecom and optical-connectivity ecosystem by combining its manufacturing capabilities with Gemtek’s expertise in high-speed optical modules, telecom infrastructure and networking technologies.
The company expects the venture to tap demand from artificial intelligence, cloud and edge computing, hyperscale data centres, high-speed networking and next-generation optical communication.
Dixon Electroconnect had not commenced operations as of March 31, 2026, and therefore had nil turnover. Its authorised and paid-up share capital stood at ₹1 lakh as of the date of the disclosure.
Dixon and Gemtek will not acquire stakes in each other under the proposed transaction, and the two companies are not related parties as of date.
Dixon expects margins to improve
Separately, Dixon Technologies expects its margins to improve over the next couple of years as it expands into higher-value component manufacturing and grows its appliances and lighting businesses.
The company also plans to maintain an annual capex run-rate of around ₹800-1,000 crore as it expands its mobile and component manufacturing capacities.
“The margin profile of the Indian EMS industry in the space of mobiles is comparable to our global peers,” Atul Lall, vice chairman and managing director of Dixon Technologies, said.
Lall said Dixon’s component business, along with higher-margin original design manufacturing (ODM) operations in appliances and lighting, is expected to improve the company’s blended margin profile.
Dixon Technologies shares closed at ₹12,945 on October 7, down 0.54% from the previous close.
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