How Dixon Technologies is reaping the benefits of some smart decisions made by its founder Sunil Vachani

And Vachani’s journey has been nothing short of remarkable. From a single rented factory in Noida, only 30-odd employees, one modest product for one customer—assembling CRT TV sets for Goldstar (now LG Electronics)—Dixon Technologies has come a long way. Today, it is a leader across multiple sectors, servicing leading global and Indian brands, and proudly stands among the top players in the global EMS arena. Dixon today has 23 factories spread across Uttar Pradesh, Punjab, Uttarakhand and Andhra Pradesh, and employs close to 25,000 professionals. And, from a few lakh rupees as turnover in the first year, it has surged to Rs 12,192 crore in FY23. Now Vachani expects it to grow to Rs 18,000 crore by end-FY24.

Incidentally, none of the company’s customers has left since their first association with Dixon over its three decade-long journey. What has impressed industry watchers is the kind of growth that Dixon has registered over the past five years. From Rs 2,984 crore in FY19, its sales have grown at a CAGR of 42.2% till FY23, defying the economic slowdown that the pandemic had wrought. During the first nine months of FY24, Dixon’s top line has surged by another 49%, from Rs 9,125 crore in April-December FY23 to Rs 13,033 crore in the current fiscal.

How did Dixon pull this off? Experts say the reason could also be geopolitical. Global electronics players are increasingly looking for an alternative to China. Hence, Indian EMS firms have grown in importance. In the post-pandemic era, with the China +1 strategy on the rise, Dixon has benefitted from its unique positioning, securing major global players operating in India as clients. Dixon has also benefitted from the government’s policy moves, where it is looking to scale up local manufacturing in order to establish the country as a major electronics exports hub. A key intervention in this regard is the production-linked incentive (PLI) scheme and it has helped in import substitution by bringing down the extent of imports in key sectors like mobile handsets, thereby helping Dixon’s growth. The company is a major beneficiary of the multi-sectoral scheme across sectors.

But not all factors are external. As Vachani says, the seeds for the present success were sown around a decade ago. “The decisions that we took 10 years ago are now giving us great results. We decided to de-risk the business model and diversify across multiple categories,” he tells Business Today. Since then, the company has diversified into nine key categories: televisions, mobile handsets, LED lighting, telecom equipment, security & surveillance systems, washing machines, wearable items like smartwatches, refrigerators, and IT hardware. In fact, Dixon was one of the few Indian companies that got approval under the first PLI scheme for manufacturing of mobile handsets in October 2020. Earlier it used to manufacture some 70,000-80,000 handsets a year; the capacity has now jumped to 70 million units a year. To put it in perspective, Dixon’s handset manufacturing capacity is about 27% of India’s market size of 260 million handsets a year. As a result, while a decade ago it used to get 95% of its sales from one category—LED TVs—today the share has come down to 20% as other categories like mobile handsets have grown substantially.

Industry watchers believe Dixon’s growth story has only started. According to Hitesh Taunk, Senior Research Analyst at ICICI Securities, the Indian EMS industry is likely to grow at a CAGR of 32% to Rs 4.5 lakh crore by FY26, where Dixon currently has a market share of 3-4%, leaving ample “opportunity to expand and grow”. Taunk points out that Dixon’s future revenue growth hinges on several key strategies: expanding its customer base, maximising wallet share in the mobile segment, and diversifying into new segments. Sectors like electronics, IT products, telecom products, LED lights, and components for refrigerators and ACs—many of which Dixon is already active in—would drive the future revenue growth of the company.

After guiding Dixon for three decades, Vachani now wants to place the company among the global elite in the EMS space. “Business is akin to yoga. Once you discover your focus and balance, everything aligns,” he reflects, revealing his guiding philosophy. In fact, it is this unwavering focus and commitment towards his work and customers that has kept him away from the temptation of launching a consumer brand, a path many EMS players tend to pursue. But Vachani is not like the rest. As he says, competing with his own customers is a red line he would never cross.

Most importantly, Vachani, having set his eyes firmly on the global stage, is sure of one thing: his late father would have been very proud. 

@arndutt