Dixon Technologies (India) Ltd

Dear Shareholders,

It is an honour for me to present to you the Integrated Annual Report of Dixon Technologies (India) Limited for the financial year 2023-24. Before I explain our performance for the year allow me to share with you the macro landscape in which we operate.

During the year, the global geopolitical scenario continued to be uncertain with persistent conflicts in Europe and the Middle East, fuelling inflation and disrupting supply chains. Although coordinated actions by Central Banks worldwide have helped curb inflationary pressures globally, downside risks persist.

Amid the global turmoil, India continues to be one of the fastest growing major economies of the world, with an emphasis on infrastructure creation, incentivising indigenous manufacturing and encouraging local employment generation. Robust growth across multiple sectors is driving socio-economic prosperity, which is inclusive and sustainable.

We, at Dixon Technologies, are seizing this opportune period to scale up our production capabilities, contributing to the nation's vision of building ‘Atmanirbhar Bharat'. While we regard indigenous manufacturing as an important aspect, we put equal emphasis on ‘Design in India' to ensure our products can fulfil the exacting global standards and create long-term stakeholder value.

Eyeing the global opportunity in the EMS space

At present,the potential growth of the electronics market is expected to reach USD 3 trillion by 2047, including exports worth approximately USD 100 Billion presents a significant opportunity, especially with the government's focus on scaling exports in this sector.

With strong growth potential, the domestic electronics sector continues to expand rapidly and is poised to become an integral part of India's manufacturing footprint.

At Dixon, we are geared to capitalise on this opportunity by bridging this massive gap in India's export potential and realisation. For the years ahead, our objective is ambitious yet attainable—we aim to be among the top five global EMS players within the next decade.

Over the years, we have followed a fairly straightforward approach which entailed entering a category, creating scale and bolstering our backward integration capabilities to offer cost- competitive offerings for improved customer stickiness. I believe that this agility in seeding and scaling up new segments will support our ambition in the years to come. Further, we have internalised a culture of frugality, which has not only contributed to record revenue growth but have also enabled us to consistently deliver a high return of capital employed (RoCE)—reaffirming our fiscal prudence and a persistent focus on stakeholder value creation.

Focused on ‘Make in India'

The Electronics industry in India is now positioned at an inflexion point with the country planning an H 440 billion boost to become an electronics powerhouse. With India gradually strengthening its value proposition as an alternate manufacturing hub on the global stage, while gradually reducing its electronics imports and scaling domestic manufacturing, a paradigm shift in the growth of indigenous EMS players, like us is anticipated. Enhanced government impetus for ‘Make in India' products and recent policy boosters for electronics and component manufacturing in India to support assembly, also augurs well for our growth.

At Dixon, we are at the right place and at the right time having delivered competitively priced products for both exports and domestic markets. Besides, we have received approvals for the production-linked incentive schemes, which has enabled us to increase localised production of components. This backward integration has strengthened our domestic supply chain, thereby aligning with the country's emphasis on ‘Make in India' initiatives.

Additionally, we are expanding our manufacturing footprint across India with a renewed focus on innovation and sustainability. Our new state-of-the-art refrigerator plant in Greater Noida has resulted in considerably streamlined operations. We have also inaugurated a washing machine plant in Dehradun, with annual production capacity of 2.4 million units and the facility is expected to generate employment opportunities for more than 1,000 people.

Fostering partnerships and collaborations

We aspire to be the preferred manufacturing and solution partner for renowned brands. In the mobile phones division, we have collaborated with industry behemoths. We are also expanding our IT hardware business with a steady order book. Our wholly-owned subsidiary, Padget Electronics is now the beneficiary in IT PLI 2 under the hybrid category. It will enable us to manufacture laptops and notebooks for Lenovo in addition to our existing partnership with Acer. Beyond our core products, we are currently working in categories such as wearables and hearables through a joint venture with boAt and through our partnership with the Bharti Group in the telecom space.

Ramping up tech infrastructure and data analytics

Technology continues to evolve and elevate business performance and quality of life for millions of people. Our objective now is to integrate advanced technology across all aspects of our businesses. Our tech vision actively engages with the dynamic technology landscape to enhance our products,processes and customer experiences. Dixon has undertaken 38+ digital/ technology projects. Through major initiative Industry 4.0 >> Robust &

Digital MES/MOM solution enablement, including and expanding cloud technology, insights and analytics, cybersecurity measures and ongoing Gen-AI experiments, we are now unlocking new possibilities. We have also established technology partnerships with global technology leaders, such as Dassault, Google, Blue Yonder, SIEMENS, Qlik, Nutanix and others.

We believe, Artificial Intelligence (AI) can fundamentally transform life and business as we know it. In business, this may require us to completely reinvent how we approach our work. As we look towards the future, digital transformation and Industry 4.0 are likely to remain critical enablers of our growth. In keeping with this, we are also integrating advanced technologies across our operations and positioning Dixon to lead in this new era of manufacturing.

Sustaining our growth momentum

To support our upward trajectory, we are judiciously investing in deeper backward integration, both organically and inorganically. Our low capital model and basic level technology offerings present low barriers to entry amid high competition, substantially raising the execution burden and need for product diversification and backward integration. We are also gradually increasing local value addition and growing our ODM share across key business verticals which should lead to better backward

integration and further improve margins from here on.

Moreover, expanding our manufacturing footprint with new mega factories in Noida and Chennai, coupled with our entry into high-value EMS sectors like automotive and aerospace are set to further strengthen our market position. Our future prospects remain promising, with numerous opportunities to innovate, excel and unlock value that benefits our customers, investors and other stakeholders.

Upskilling our people

We recognise that skill development is essential for scaling our operations and sustaining an edge in an ever-evolving industry. Our team, therefore, remains committed to regularly engage in training and development programmes that align with the requirements of a future-focused working environment.

We have also established centres of excellence to provide in-house training to our workforce and address evolving requirements. Besides, we remain focused on nurturing a diverse and inclusive workplace. Reiterating this commitment, our Tirupati factory now has a workforce comprising 65% women.

Considering the importance of learning and development, Dixon has established a learning roadmap, wherein the focus is on developing technical, functional, managerial capabilities, leadership and innovation skills of employees of your Company. We periodically conducts ‘DIXON STAR SUPERVISOR (DSS)' workshops for enhancing the supervisory skills of our team members. As part of employee engagement, we organise various health camps/workshops, festivals, monthly award distributions, workshops on minimising water wastages, Environmental clean-ups workshops and indoor sports activities.

Growing with a multi-stakeholder approach

We believe that to generate long-term value, we need to widen our vision and care for all our stakeholders, comprising our customers, suppliers and business partners, employees, investors, communities and above all, the planet and society. Our future growth trajectory will depend on our multi-stakeholder model and embed sustainability across the value chain.

Sustainability at Dixon extends beyond environmental stewardship to encompass responsible business growth as it is pivotal for earning the trust of our stakeholders. To this end, we are taking various measures such as amplification of rain water harvesting, establishments of Sewage Treatment Plants (STPs), non-usage of plastic bottles and reduction of carbon emissions by enhanced installation of solar panels in our facilities.

Recently, our wholly-owned subsidiary, Dixon Electro Manufacturing Private Limited has commissioned its operations at Greater Noida having a solar capacity of 1,980 KWP that is equivalent to 67,980 matured trees absorbing CO2 for 40 years and 1,37,100 barrels of oil consumed. We shall also be conducting Supply chain assessment and Climate risk assessment in the coming years to enhance our ESG performance.

We engage in community development projects to uplift communities and bring holistic change in society. During the year under review, we have contributed towards Healthcare, Education and Skill Training, Women's Empowerment and Welfare of Senior Citizens, among others.

At Dixon, we have a strong governance framework that supervises our business initiatives, emphasising on diversity and inclusiveness in our workforce and ESG practices every step of the way. Our core values underpin all our initiatives and encourage us to craft sustainable pathways to progress with a multi-stakeholder approach to growth. Empowered with future-fit capabilities and anchored to our core values, we are well positioned to deliver value to all stakeholders in a transforming India.

I am confident that our enduring customer relationships, integrated manufacturing facilities, a diversified client base, robust R&D capabilities, technical expertise, experienced leadership team and strong corporate governance will continue to serve as our competitive advantages going forward.

Thank you for your continued trust and support in our journey so far.