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Reliance, Sanmina creates joint venture for electronics manufacturing in India

Source : The Hindu Business Line

Reliance, Sanmina create joint venture for electronics manufacturing in India
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Reliance Industries has formed a new joint venture with California -based logistics and manufacturing solutions company Sanmina Corporation to create a electronic manufacturing hub in India.

Reliance Strategic Business Ventures Limited (RSBVL), a wholly-owned subsidiary of RIL, will invest in Sanmina’s existing Indian entity – Sanmina SCI India Private Ltd (SIPL)- which runs a manufacturing unit in Chennai. Globally, Sanmina was founded in 1980 and it had revenues of $6.76 billion for the fiscal year 2021.  The company has global footprint of manufacturing operations in 20 countries on 6 continents. The Sanmina Chennai facility provides complete design and manufacturing solutions for leading telecommunications, medical, storage & computing, avionics, industrial and multimedia companies.

RSBVL will hold a 50.1 per cent equity stake in the joint venture entity, primarily through an investment of up to ₹1,670 crore in new shares in Sanmina’s existing Indian entity. Sanmina will own the remaining 49.9 per cent. As a result of the investment, the joint venture will be capitalised with over $200 million of cash to fund growth, the companies said in a statement.

“It will prioritise high technology infrastructure hardware, for growth markets, and across industries such as communications networking (5G, cloud infrastructure, hyperscale datacenters), medical and healthcare systems, industrial and cleantech, and defense and aerospace,” the statement said.

State-of-the-art centre

In addition to supporting Sanmina’s current customer base, the joint venture will also 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.

The day-to-day business will continue to be managed by Sanmina’s existing management team in Chennai. Revenues for SIPL were approximately ₹1,230 crore 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,” it said.

All the manufacturing will initially be done 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.

Tapping market opportunities

“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 serve both domestic and export markets and represents a major milestone in the Indian government’s “Make in India” initiative,” said Sola.

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.” Through this partnership we plan to boost innovation and talent in India, meeting both Indian and global demand,” Ambani said.

The completion of the transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close no later than September 2022.

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