Reliance forays into electronic manufacturing business via JV with Sanmina Corporation

resr 5paisa Research Team 11th December 2022 - 02:37 pm
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Post this investment, the JV will be capitalized with over USD 200 million of cash to fund growth.

Reliance Industries Limited (RIL) announced today that Reliance Strategic Business Ventures Limited (RSBVL), a wholly-owned subsidiary of RIL, has inked an agreement with Sanmina Corporation for setting up a manufacturing joint venture in India.

Sanmina Corporation is an American electronics manufacturing services provider based in the US. The JV will be created through investment in Sanmina’s existing Indian entity (Sanmina SCI India Private Ltd, “SIPL”).

In this collaboration, Reliance will bring in its expertise and leadership in the Indian business ecosystem to leverage Sanmina’s 4 decades of experience in advanced manufacturing.

Why this JV?

Aligned with Prime Minister Modi's “Make in India” vision, this JV aims to create a world-class electronic manufacturing hub in the country. It aims to cater to the rising demand for high technology infrastructure hardware in India as well as addresses export opportunities.

It shall prioritize manufacturing high technology infrastructure hardware, for growth markets. Apart from this, it will also cater to the demand across industries such as communications networking (5G, cloud infrastructure, hyperscale datacenters), medical and healthcare systems, industrial and cleantech, and defence and aerospace.

Apart from this, a state-of-the-art ‘Manufacturing Technology Center of Excellence’ shall be established to serve as an incubation centre to aid the product development and hardware start-up ecosystem in India, as well as promote research and innovation of leading-edge technologies.

The JV structure

In this JV, RSBVL will hold a 50.1% equity stake, whereas the remaining 49.9% shall be by Sanmina. To secure its 50.1% equity stake, RSBVL shall make an investment of up to Rs 1,670 crore in new shares in Sanmina’s existing Indian entity, while Sanmina will contribute its existing contract manufacturing business. 

Post this investment, the JV will be capitalized with over USD 200 million of cash to fund growth. 

At 12.56 pm, the share price of Reliance Industries Limited (RIL) was trading at Rs 2380, down by 0.77% from the previous day’s closing price of Rs 2398.40 on BSE. 

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