According to Frost & Sullivan, the global market for Electronics Manufacturing Services (EMS) and Original Design Manufacturer (ODM) is projected to reach a size of 958 billion USD by 2026. Dixon, being a leading EMS player in India, key destination for China plus one strategy for global brands, is well positioned to tap into this huge market and create global impact. However, there are certain challenges the organization must nimbly circumvent or overcome to effectively address the humongous opportunity. These challenges are primarily around ensuring we maintain exemplary quality even at 10X the scale we operate today, retaining and attracting talent in today’s highly competitive job market, reducing reliance on geography specific supplier base, and improving capital efficiency of the business further.
Stating on behalf of the organization’s entire leadership team, we are cognizant of all the above-mentioned challenges and committed to dealing with them. Since incorporation, we have been able to achieve one of the highest levels of customer retention in the industry. The key reason behind this is the quality of products and services we offer. To maintain the same level of quality standards we have been heavily investing in automation, process management, and digitalization software systems. My dual role as the CFO and IT Head has given me a unique opportunity to evaluate the long-term ROI of such investments across all functions and departments within the firm.
Our organization is built at the back of our workforce. Over the last few years, the Indian market has become a hot bed for a lot of international and domestic investments and hence in today’s landscape, building, retaining, and sustaining human capital is a critical to achieving competitive advantage. Realizing this need, we have developed a multi-pronged strategy to make sure that our employees across levels stay motivated towards the company’s vision. Incentivizing superlative performance with attractive ESOPs, organizing trainings and workshops for employees for their competence development, forging tie-ups with Industrial Training Institutes (ITI) in the country for on-field apprenticeships, promoting an open culture with feedback gathering processes are some of the key drivers of our long-term strategy.
The outbreak and expansion of the pandemic caused several difficulties for us as we were reliant on supply of raw materials from international suppliers. While our production rates declined briefly, we were swiftly able to get back to optimized production levels by onboarding more suppliers for the same component locally. To fuel the next phase of expansion, we are building a roadmap for backward integration with some large component manufacturers in India through setting up Joint Venture entities, acquisitions, investment in complementary startups etc. We are confident that we will be able to create a resilient ecosystem of suppliers cutting across local and international boundaries.
Dixon has increased its production capacity exponentially in the past few years and currently we have 17 manufacturing units in the country. However, to fuel the next phase of expansion, we will need to incur significant CapEx. To stay competitive and continuously generate return for our shareholders, our strategy is to keep a healthy yet flexible infusion of capital from public and private investors as well as plow back some of the company profits in a prudent manner.
We are confident that our cost optimization initiatives, systems-oriented workflows, inclusive organizational culture, and proven working capital management will help us drive revenue growth, profitability and make the balance sheet even stronger in coming future.