What is the function of PhLi in this reaction?
I was wrong, this is not a Wittig reaction. Just posting the answer to let anybody who comes in hunt for this in the near future.

On googling for about an hour, I discovered that this is indeed a preparation of phosphonium ylide which is the witting reagent.

On adding $ \ce{Ph_3P} $ to 1,2-dichloroethane , $\ce{PhLi}$ acts as an catalyst and eliminates $\ce{HCl}$ from both the carbons resulting in a phosphonium di ylide.