Reliance to invest ₹1,670 cr in Sanmina’s India unit for JV

Industry:    3 months ago

Integrated manufacturing solutions provider Sanmina Corporation and Reliance Strategic Business Ventures Limited (RSBVL), a wholly-owned subsidiary of Reliance Industries Limited (RIL), have entered into a joint venture to create an electronic manufacturing hub in India.

The joint venture will be focused on high technology infrastructure hardware, for growth markets, and across industries such as communications networking including 5G, cloud infrastructure, hyperscale datacenters, besides medical and healthcare systems, industrial and cleantech, and defense and aerospace.

The joint venture has been created through an investment in Sanmina’s existing Indian entity Sanmina SCI India Private Ltd, or SIPL, and the day-to-day business will continue to be managed by Sanmina’s existing management team in Chennai.

RSBVL will hold 50.1% equity stake in the joint venture entity with Sanmina owning the remaining 49.9%. RSBVL will achieve this ownership primarily through an investment of upto ₹1,670 crore in new shares in Sanmina’s existing Indian entity, while Sanmina will contribute its existing contract manufacturing business, the companies said in a statement.

As a result of the investment, the joint venture will be capitalized with over $200 million of cash to fund growth.

“The joint venture will create a world-class electronic manufacturing hub in India, in line with the Hon’ble Prime Minister’s “Make in India” vision,” the companies said in a joint statement Thursday.

The joint venture will create a state-of-the-art ‘Manufacturing Technology Center of Excellence’ that will serve as an incubation center to support the product development and hardware start-up ecosystem in India, as well as promote research and innovation of leading-edge technologies.

Revenues for SIPL were approximately ₹12.3 billion for the fiscal year ended March 31, 2021. Through this joint venture, Sanmina expects to significantly grow the scale of this business over time and expand its Indian manufacturing footprint to serve the local and global demand for hi-tech equipment across industries.

All the manufacturing will initially take place at Sanmina’s 100-acre campus in Chennai, with the ability for site expansion to support future growth opportunities as well as to potentially expand to new manufacturing sites in India over time based on business needs.

“We are excited to partner with Reliance to build the premier integrated manufacturing solutions company in India,” stated Jure Sola, Chairman and Chief Executive Officer of Sanmina. “This joint venture will service both domestic and export markets and represents a major milestone in the Indian governments “Make in India” initiative.”

Akash Ambani, director, Reliance Jio, said, “We are delighted to work with Sanmina to access the significant market opportunity for high-tech manufacturing in India. For both growth and security, it is essential for India to be more self-reliant in electronics manufacturing in telecom, IT, data centers, cloud, 5G, new energy and other industries as we chart our path in the new digital economy.”

The transaction is expected to close by September 2022.