Reliance and Sanmina create manufacturing joint venture in India
Mumbai, March 3, 2022
Integrated manufacturing solutions company Sanmina Corporation and Reliance Strategic Business Ventures Limited (RSBVL), a wholly-owned subsidiary of the Mukesh Ambani-led Reliance Industries Limited (RIL), today said they have entered into an agreement to create a joint venture through an investment in the former's existing Indian entity, Sanmina SCI India Private Ltd (SIPL).
RSBVL will hold 50.1% equity stake in the joint venture entity with Sanmina owning the remaining 49.9%, a press release from the two companies said.
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," the release said.
The release said the partnership would 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, in line with the Prime Minister's 'Make in India' vision. The joint venture 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," the release said.
In addition to supporting Sanmina’s current customer base, the joint venture will create a state-of-the-art Manufacturing Technology Centre of Excellence that will serve as an incubation centre to support the product development and hardware start-up ecosystem in India, as well as promote research and innovation of leading-edge technologies, it said.
Revenues for SIPL were approximately Rs 12.3 billion (or approximately US$165 million) for the fiscal year ended March 31, 2021.
Through the joint venture, Sanmina, which has its headquarters in San Jose, California in the United States, expects to significantly grow the scale of the business over time and expand its Indian manufacturing footprint to serve the local and global demand for hi-tech equipment across industries, the release said.
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, it said.
“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 government's '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. Through this partnership we plan to boost innovation and talent in India, meeting both Indian and global demand.”
Completion of the transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close no later than September 2022, the release said.
Sanmina Corporation is a leading integrated manufacturing solutions provider serving the fastest growing segments of the global Electronics Manufacturing Services (EMS) market. Recognized as a technology leader, Sanmina provides end-to-end manufacturing solutions, delivering superior quality and support to Original Equipment Manufacturers (OEMs) primarily in the communications networks, cloud solutions, industrial, defense, medical and automotive markets.
Sanmina has facilities strategically located in key regions throughout the world.
Reliance is India’s largest private sector company, with a consolidated turnover of INR 539,238 crore ($73.8 billion), cash profit of INR 79,828 crore ($10.9 billion), and net profit of INR 53,739 crore ($7.4 billion) for the year ended March 31, 2021. Reliance’s activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and digital services.