Reliance Industries’ subsidiary RSBVL and US-based Sanmina Corporation have completed the deal to set up an electronics manufacturing joint venture at a total enterprise valuation of about ₹3,300 crore.
Reliance Strategic Business Ventures Limited (RSBVL) will hold 50.1 per cent equity stake in the joint venture while Sanmina will have 49.9 per cent shareholding.
RSBVL will achieve this ownership primarily through an investment of up to ₹1,670 crore in new shares in Sanmina’s existing Indian entity. With the investment, the entity will become a joint venture and will be capitalised with over USD 200 million of cash to fund growth.
“Sanmina Corporation, a leading integrated manufacturing solutions company and Reliance Strategic Business Ventures Limited (RSBVL), a wholly-owned subsidiary of Reliance Industries Limited (RIL), India’s largest private sector company, today announced they have completed the previously announced joint venture transaction,” a joint statement by the two companies said on Tuesday.
RSBVL had a revenue of ₹1,478.1 crore (USD 194.9 million) and a net profit of ₹179.8 crore for the year ended March 2022. It had a total investment of ₹10,857.7 crore at the end of March 2022, the statement said.
The joint venture 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 management team in Chennai.
“The joint venture will create a world-class electronic manufacturing hub in India. The joint venture will prioritise high technology infrastructure hardware, for growth markets, and across industries such as communications networking (5G, cloud infrastructure, hyperscale datacentres), medical and healthcare systems, industrial and cleantech, and defence and aerospace,” the statement said.
In addition to supporting Sanmina’s current customer base, the joint venture will create a ‘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.
All the manufacturing will 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, the statement said.