Upstart Dixon surges 824% as CEO bets on phone-making
Almost three decades ago, Sunil Vachani borrowed $35,000 so he could start making 14-inch television sets in a rented shed outside New Delhi. It was an unconventional choice given India, though renowned for software and services, had long lagged behind in manufacturing.
Today, Vachani's startup has grown into a sprawling electronics empire. His Dixon Technologies boasts a market value of more than $2.5 billion and the capacity to produce about 50 million smartphones this year. It's an early indicator of the country's opportunities in building a sophisticated manufacturing sector, a top priority for PM Narendra Modi.
While Vachani, 52, struggled in his early days, his company's shares have surged 824 per cent since a 2017 initial public offering. Sales and profits have boomed with domestic demand for smartphones, along with India's ambitious plans to develop its own local industry.
"This is only a start," Vachani said in a telephone interview. "We are
bringing about a mindset change that global manufacturing can happen in India."
The founder and his siblings are now in the league of India's billionaire families. Vachani controls a one-third stake worth about $900 million.
Dixon is an example of how quickly India is changing: It has ramped up production capacity from about 2 million smartphones a month last year to about 4 million after a government incentive programme began.
"India is well qualified to be the world's alternative to the China supply chain," said P.N. Sudarshan, partner at Deloitte India. "Once component makers move, vibrant manufacturing clusters will form."
India lags behind China, making about 330 million smartphones annually compared with 1.5 billion in China, data from the Indian Cellular Association shows.
Vachani comes from an entrepreneurial family. His father and siblings started a business that produced electronics and appliances under the Weston brand. They made the country's first colour televisions and video recorders—and operated a string of video game parlours on the side.
After studying business in London, Sunil opted to go his own way in 1993. He started making colour TVs and later added Sega game consoles, Philips video recorders and push-button mobile phones for Bharti Airtel to the portfolio. Dixon's fortunes began to improve in the 2000s, when a regional political party gave the company a contract to make televisions for free distribution.
Dixon now makes televisions for Xiaomi Corp, washing machines for LG Electronics Inc and lighting products for Philips. It began producing mobile phones in 2016 for brands like Panasonic Corp and Samsung Electronics Co.