Dixon Technologies aims to be one among the top five global EMS companies

In the next two years, Dixon plans to explore the export market. It also plans to increase its capacity to penetrate unexplored segments of the domestic market

By Srabani Sen

Friday, August 08, 2014: Over the last two decades, Dixon Technologies India Pvt Ltd has evolved into more than just an electronics manufacturing services (EMS) company. Headquartered in Noida, Dixon is the largest Indian EMS provider, focused on delivering high quality, cost effective solutions in the domestic consumer electronics, lighting, set top boxes (STBs) and home appliances space. It is one of the few Indian EMS players with full scale capabilities in product design, global procurement, turnkey manufacturing, logistics and reverse logistics and strong back-end support.

“We look at ourselves as a complete solutions provider, as we offer services that begin right from designing the product to assembling it. We even handle the logistics and reverse logistics, wherein we take care of after-sales service and the refurbishment of the products,” says Sunil Vachani, chairman and managing director, Dixon Technologies.

Established in 1993, Dixon has grown rapidly in the last two decades, and is recognised for its low cost manufacturing capabilities, proven design expertise and established customer base.

Maintaining a competitive edge

The manufacturing process at Dixon is vertically integrated—it has its own plastic injection moulding plant, sheet metal plant, and even manufactures its own wound components. It will soon start manufacturing some other components as well. “There is no Indian or multinational company in this space today that offers these kinds of packages or solutions to the customers,” says Sunil.

“Our vertical integration and scale of production make us one of the few low cost producers, allowing us to pass on the benefits of low cost production to our customers,” says Sunil. “This, coupled with our focus on processes, quality and continuous improvement in systems, helps us to maintain a competitive edge,” he adds.

The journey so far

With a meagre investment of just Rs 2.5 million, Sunil started Dixon in 1993. “Thanks to our customers and the great team that the company has, we crossed a turnover of Rs 10 billion last year—within a short span of 20 years,” says Sunil.

Recalling the initial hurdles faced, Sunil says, “The biggest challenge was to get funds, as back then, convincing the bankers about the viability of the business was a difficult task.” EMS was a relatively new concept in India in the nineties, and it was a risk that Sunil was undertaking. As expected, the company did not make a profit in the first year.

Talking about other challenges faced in the initial years, Sunil says, “Getting the right people was a major challenge. This is also an important aspect of a company’s success, as it is the people who will implement the right processes. But I was lucky to have Atul Lall as my partner and co-founder, who is currently the CEO and deputy managing director of the company. He has been a pillar of strength for the company, and is responsible for creating systems, processes and bringing the right people on board,” informs Sunil.

Two decades back, Dixon started its operations from a rented unit in Noida. Today, it has six manufacturing plants and a workforce of almost 4000 people. In 1993, the company started assembly operations for consumer electronics products such as CTVs and VCRs. Back then, two of its OEM customers were LG and Philips. Between 2000 and 2008, the company developed capabilities in PCB manufacturing and the final assembly for complex products. It began assembly operations for new products like DVDs, CFL bulbs and STBs. It also acquired new customers such as Kaon Media, Godrej, Videocon and Onida. Gradually, by 2010, it developed low cost original design manufacturing (ODM) solutions for products like CTVs, DVDs and CFL bulbs.

In 2010, Dixon entered new categories like LCD/LED TVs, energy meters and power inverters. During the same time, it also started manufacturing home appliances like washing machines and induction cooktops, apart from venturing into LED lighting. During this period, Dixon earned the trust and faith of OEMs like Panasonic, Toshiba and Landis Gyr.

“Since our inception, we have been driven by a clear vision, which helped us in carving a distinct space for Dixon at the forefront of the electronics manufacturing and contractual manufacturing industry in India. This clearly defined mission helped Dixon to acquire and retain its EMS clients in India and globally,” says Sunil.

Alliances and acquisitions

To offer the optimum cost advantage to its customers, Dixon promoted Bhurji India Pvt Ltd in 2008. It channelised its sheet metal and plastic injection moulding services through this firm, thereby making it a world class facility for sheet metal and engineering components in India.

Dixon had promoted My Box Technologies in 2009 along with Kharabanda family. While My Box designs and develops STBs, Dixon manufactures them at its facilities. “Dixon and My Box have been complementing each other, and have been instrumental in laying the foundation for a successful partnership with their expertise in manufacturing STBs for both the digital cable and satellite TV markets,” says Sunil.

Dixon Appliances Ltd was also established in 2009 with the aim to manufacture home appliances. This company is headed by Mr. Sahil Vachani. True to its commitment, the company today stands proud as one of India’s leading home appliance manufacturers with a customer base of leading brands like Godrej, Haier, Electrolux etc.

Strengths and achievements

Talking of the strengths of the company, Sunil says, “Maintaining customer relationships is our major strength. Our foremost focus is on building customer partnerships by providing products and services of the greatest value through innovation and excellence.”

This has been achieved by the firm attaining Six Sigma capabilities in all key processes. “We also give emphasis to strengthening supplier partnerships through good communication and recognition, all of which are our strengths. Conducting business with uncompromising integrity is another of Dixon’s strengths,” says Sunil.

Dixon is also driven by a passion to innovate and excel, and the constant desire to come up with something better each time.

In fact, the achievement that Dixon is most proud of is its ability to retain customers, all of whom have been with the company since it started. “Not a single customer who has been with us since the company’s inception two decades ago has left us,” says Sunil. He is also proud of the fact that the company has grown from 40 people to 4000. “We have a team which is very motivated, charged and willing to do something new every day,” adds Sunil.

Dixon has diversified its product portfolio to a great extent. Explains Sunil, “Diversification is important for a company to grow faster. Products are very cyclical, and have ups and downs. So if you just depend on one product, there are very high chances of failing as an organisation. I am very satisfied with the fact that we now are a multi-product, multi-location business, which hopefully, will hold the company in good stead in the days to come,” adds Sunil.

Another achievement of Dixon’s that Sunil likes to share is its capability to design STBs, which many considered an impossible task in India. “I remember, when we were trying to design STBs five years back, some of my Korean OEMs said that I was wasting money and time on it, because many companies had tried to design an STB but failed. But we believed that Indian designers, along with hardware and software engineers, had the capability to design these boxes, and finally we did. So that is definitely a way forward. We cannot just take designs from China, reverse engineer them and sell them in India,” says Sunil.

Areas for improvement

Sunil feels that despite operating for two decades, the company is still learning and trying to improve on certain areas that need attention. Design is one aspect the company needs to strengthen further, so that it can be capable of developing products at frequent intervals since the industry is changing very fast.

Another area in which the company feels it can improve further is with regard to processes. “In this aspect, a company needs to evolve every day because in every activity we do, there is always the scope to do things better,” says Sunil.

Sunil also feels that the company needs to improve its infrastructure. “Although we have seven facilities, there is definitely scope for more automation. Today, if you go to China, you can see how robots work in factories—many processes and activities are automated. So, obviously our infrastructure needs to become world class in the years to come,” he says.

Sectors catered to

Dixon is present in four different segments—consumer electronics, lighting, STBs and home appliances—besides the general EMS category that covers many other products. In consumer electronics, its main focus is on televisions, LED TVs, DVD players and home theatre systems. In lighting, Dixon is the largest player in CFL bulbs and circuits, claims the company. It is also in the LED lighting and LED driver circuits space. In home appliances, it claims to be the largest manufacturer of washing machines. And it is India’s first company to have started manufacturing STBs based on its own designs.

State-of-the-art infrastructure

Dixon has six facilities—three in Uttarakhand and three in Noida, Uttar Pradesh, spread over 92,903 sq m. “We have 11 SMT lines, and the largest capacity for auto insertion. We also have infrastructure for manual insertion and plastic injection moulding, right from 80 tonne machines to 1600 tonne machines. We have sheet metal infrastructure right up to 160 tonnes and have our own moulds for washing machines,” says Sunil.

Dixon has the capacity to manufacture 1.5 million LED televisions per year, about 60 million circuits per year (which is being increased to 80 million circuits), and 40,000 washing machines per month (which is about half a million per year). It also has the capacity to manufacture almost 2 million STBs per year.

Dixon will soon establish one more unit in Noida, next to its existing plant, as it feels the need to do more backward integration and increase its infrastructure for reverse logistics. “We need this unit in order to increase the production capacity of our existing plant in Noida,” says Sunil.

Sustainability strategies

Sunil believes that a company has to build strong sustainable and competitive strategies to survive in this industry. Some such strategies include creating a scale by producing Six Sigma quality, having processes that are difficult to emulate, and offering the lowest cost to customers. “A combination of these sustainable strategies gives us a competitive advantage,” says Sunil.

Dixon’s vision is executed not only by the management but is shared by everybody working in the company. “Once people believe in that vision and once they see that I am sincere about what I want to accomplish, a lot of things fall into place. And as the MD and chairman of the company, my key task is to convince my people about the vision of the company. In fact, my vision is never expressed in terms of numbers, because if I tell my people that my vision is to grow at a rate that is unrealistic, they will not believe in me. Also by defining your vision in numbers you tend to limit the potential for growth. Instead, my vision is to become the most respected company in the field of electronics manufacturing services. And that can happen by becoming the company that delivers the best quality in the industry—our processes are the best in the industry, our cost structure is the lowest and we are exceeding our customers’ expectations in every parameter. So we are making our vision come true each day,” says Sunil.

The second most important strategy of the company is to innovate every day. Sunil believes that a company will die if it stops innovating and becomes stagnant. “In our industry, we cannot survive or be in the competitive race if we do not innovate—whether it is with products, processes or systems,” he says.

Another strategy that the company follows is to train people to meet the challenges an EMS company faces. “We have our in-house training facility and a soft skills training company that coaches anyone joining the company over a period of 30-45 days. We train them on theory, component insertion, and also give on-the-job training,” says Sunil.

The company follows a focused and structured review process, ensuring a well-documented feedback process for all customer complaints that come up. The review system operates at all levels, starting from the workers’ level on a daily basis, to the managerial level on a weekly basis, and the board and senior management level on a monthly basis.

Future plans

Dixon’s focus areas are lighting, STBs, home appliances and LED televisions. While all these markets are growing, the penetration of these products is still very low. So Sunil feels that, in the near future, the company will have to increase its capacity.

Dixon is the largest Indian EMS company. Sunil would like to turn it into one of the top five global EMS companies, competing with the global giants with its focus on innovation, quality and execution. “I know it’s a very grand vision, but only if we dream of it will we be able to achieve it,” he says.

In the next two years, Dixon also plans to explore the export market. “I know it is a different ball game, as the international market is very different from the domestic market, and customer expectations in terms of quality and cost will also be very different from what we have been experiencing in India. But as a team we have to gear up to face the challenge,” concludes Sunil.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine