Dixon invests ~600 crore to build new facility under PLI scheme

Electronic manufacturing services (EMS) player Dixon Technologies is investing over ~600 crore to build new capacity in mobile devices, laptops and tablets, telecom equipment, and LED components to cater to the domestic and global market in the next year.

Dixon is positioning itself as the country’s largest homegrown ‘global champion’ for electronics manufacturing, one of the key goals of the government’s Production-linked Incentive (PLI) scheme which Dixon is leveraging for its growth. The scheme offers qualified companies incentives of 4-6 per cent for four years on their sales in the hope of transforming India into a global hub for manufacturing.

Dixon wants to leverage the scheme in its areas of expertise. CEO Sunil Vachani, the man behind the new push, said the company aims to become among the top 10 EMS players in the world.

“We are already investing in building new capacity which is more than the investment commitments required under the PLI. We also hope to have revenue sales which are more than what we have to get in order to qualify for the incentive,” he said.

The company has earned revenues of ~4,400 crore and is in the bottom 20 of the global pecking order of EMS players.

In mobile devices, where it is already eligible for the PLI scheme, it is putting in ~200 crore and has set up manufacturing capacity to make 25 million phones a year. In fact, the phones have started rolling off the production line.

The fact that Dixon, like most other players, failed to reach the first year targets of production revenue because of the supply chain disruptions caused by the pandemic has not deterred it. (It has to achieve these targets to become eligible for the incentive). The firm has just acquired land in Noida to set up a large electronics complex where work is on to add capacity to make another 40 million per annum of mobile phones a year.

Vachani said this additional capacity will be ready in 12 months and confirmed that it has tied up with Nokia, Motorola and Gionee as an OEM supplier for both the domestic as well as the global market. Its aim is to export 60 per cent of the phones eventually.

In IT hardware, Dixon will start in the first phase with sub~100 crore of investment, making laptops and tablets followed by monitors, mostly both for domestic and global brands. Vachani said talks are also on with leading PC makers across the world. He expects a deal soon, once Dixon becomes eligible under the scheme.

The firm is also planning to manufacture motherboards for PCS inhouse — this is a localisation requirement under the PLI policy in the first year. Vachani does not rule out making laptops with its own designs and brand in the future.

On the incentive for LED bulbs, Dixon plans to manufacture the entire range of components such as mechanical parts, plastics, and mounts, which constitute over 45 per cent of the cost of LED bulbs.

Dixon has earned revenues of ~4,400 crore and is in the bottom 20 of the global pecking order of EMS players