How Sunil Vachani Turned Dixon Technologies Into a $2.8 Billion Empire

While Dixon Technologies founder Sunil Vachani, 52, struggled in his early days, his company’s shares surged 879% since a 2017 IPO through Monday’s close. Sales and profits have boomed with domestic demand for smartphones, along with India’s ambitious plans to develop its own local industry.

Almost 30 years ago, Vachani borrowed $35,000 so he could start making 14-inch TV 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. Dixon boasts a market value of more than $2.8 billion and the capacity to produce about 50 million smartphones this year. It’s an early indicator of India’s opportunities -- and challenges -- in building a sophisticated manufacturing sector, a top priority for Prime Minister Narendra Modi.

The founder and his siblings are now in the league of India’s billionaire families. Vachani, who controls a one-third stake worth about $939 million, just bought one of the more extravagant homes in the country -- a $20 million mansion in New Delhi’s tony Lutyens neighborhood.

The Indian electronics maker's shares have soared since its IPO

India has been plagued for decades with rickety infrastructure, heavy taxes and crushing bureaucracy. The Modi administration has tried to change the dynamic through a range of policies and incentives, with the goal of creating jobs and economic growth. Along with hefty tariffs on products like imported smartphones, the country kicked off a cash incentive program last October to encourage local producers.

That has helped spark the construction of new factories from homegrown device makers like Dixon and global contract manufacturers such as Foxconn Technology Group and Wistron Corp. The effort has taken on new urgency with the rising tensions between the U.S. and China, and the coronavirus pandemic, which disrupted supply and underscored the risks of concentrating production in one place for phonemakers like Apple Inc.

India still lags well behind China, making about 330 million smartphones annually compared with 1.5 billion in its larger Asian neighbor, according to the Indian Cellular Association. Yet 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 units after the government’s incentive program began, with more planned next year.

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 color televisions and video recorders -- and operated a string of video game parlors on the side. The Vachanis are Sindhis, a small community in India with a reputation for business acumen.

After studying business in London, Sunil opted to go his own way in 1993 rather than join the family business, a decision that quickly led to difficulty. He ran out of working capital and found banks wouldn’t lend to him without collateral. He finally landed bank financing backed by an export contract.

So desperate for business was he early on that he agreed to make his 14-inch color televisions for $1.50 in profit apiece. He later made Sega game consoles, Philips video recorders and push-button mobile phones for Bharti Airtel Ltd., the country’s leading mobile operator. Dixon’s fortunes began to improve in the 2000s, when a regional political party gave the company a contract to manufacture 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.

Phones are becoming a substantial growth market. The number of smartphone users in India is projected to rise from 468 million in 2017 to 859 million in 2022. For Dixon, mobile could account for 44% of revenues in the next fiscal year, compared with 12% last year.

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