RIL, Sanmina Corp ink pact to create manufacturing JV

Reliance Strategic Business Ventures (RSBVL), a wholly-owned subsidiary of Reliance Industries (RIL), announced a joint venture with Sanmina Corporation (Sanmina) for electronic manufacturing in India.

Sanmina is a leading integrated manufacturing solutions company. It provides end-to-end manufacturing solutions and support to Original Equipment Manufacturers (OEMs) primarily in the communications networks, cloud solutions, industrial, defense, medical and automotive markets.

Sanmina and RSBVL have entered into an agreement to create a joint venture through an investment in Sanmina's existing Indian entity (Sanmina SCI India, "SIPL").

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 Rs 1,670 crore in new shares in Sanmina's existing Indian entity, while Sanmina will contribute its existing contract manufacturing business. As a result of the investment, the joint venture will be capitalized with over $200 million of cash to fund growth.

Revenues for SIPL were approximately Rs 1230 crore (or approximately $165 million) for the fiscal year ended 31 March 2021.

This partnership will leverage Sanmina's 40 years of advanced manufacturing experience and Reliance's expertise and leadership in the Indian business ecosystem. The day-to-day business will continue to be managed by Sanmina's existing management team in Chennai, which will be seamless from an employee and customer perspective.

The joint venture will create a world-class electronic manufacturing hub in India and it will prioritize 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.

In addition to supporting Sanmina's current customer base, 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.

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.

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

RIL is India's largest private sector company. Its activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and digital services.

On a consolidated basis, RIL reported a 37.9% jump in net profit to Rs 20,539 crore on a 57% rise in net sales to Rs 185,027 crore in Q3 FY22 over Q3 FY21.

Shares of RIL were up 0.36% at Rs 2407 on the BSE.

Powered by Capital Market - Live News