Integrated manufacturing solutions company Sanmina Corporation and Reliance Strategic Business Ventures Limited (RSBVL) have agreed to create a joint venture. RSBVL is a wholly owned subsidiary of Reliance Industries Limited (RIL), India’s largest private sector company. As such, the joint venture will be through an investment in Sanmina’s existing Indian entity, Sanmina SCI India Private Ltd, (SIPL).
RSBVL will invest up to Rs1,670 crore (around US$220 million) in new shares in Sanmina’s existing Indian entity. Meanwhile, Sanmina will contribute its existing contract manufacturing business. As a result, the joint venture investment will have a capital of over US$200 million of cash to fund growth.
Consequently, the partnership will leverage Sanmina’s 40 years of advanced manufacturing experience and Reliance’s expertise and leadership in the Indian business ecosystem. Sanmina’s management team in Chennai, India will continue to manage the day-to-day business.
Accordingly, the joint venture will create a world-class electronic manufacturing hub in India, which is in line with the “Make in India” vision of the Indian government. In addition, the joint venture will prioritize high technology infrastructure hardware for growth markets.
Furthermore, it will encompass 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. Moreover, it will also promote research and innovation of leading-edge technologies.
RSBVL will hold 50.1 percent equity stake in the joint venture entity with Sanmina owning the remaining 49.9 percent.
Revenues for SIPL were approximately Rs12.3 billion (approximately US$165 million) for the fiscal year ended March 31, 2021. Hence, Sanmina expects this joint venture to significantly grow the scale of this business over time. In addition, it will also 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. In addition, it carries potential to 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 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.