Indian conglomerate Reliance Industries Limited (RIL) is forming another joint venture to help support its end-to-end 5G stack development. This time, the efforts are centred around local telecom equipment manufacturing.
Reliance Strategic Business Ventures Limited (RSBVL), a wholly-owned subsidiary of RIL, has entered into an agreement with Sanmina Corporation to create a joint venture through investment in Sanmina’s existing Indian entity Sanmina SCI India Private Ltd SIPL.
RSBVL will hold a 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 up to Rs 1,670 crore ($222.67 million) in new shares in Sanmina’s existing Indian entity.
Sanmina, on the other hand, will contribute to its existing contract manufacturing business. The transaction is expected to close around September 2022.
As a result of the investment, the joint venture will be capitalized with over $200 million of cash to fund growth, according to an official statement.
“The day-to-day business will continue to be managed by Sanmina’s existing management team in Chennai,” the release added.
RIL’s satellite subsidiary recently announced a joint venture with Luxembourg’s SES to offer satellite-based services to deliver “affordable connectivity” and take on the likes of OneWeb, Starlink, and Tata-Nelco combine.
The joint venture will create an electronics manufacturing hub in India and prioritize high technology infrastructure hardware, especially for 5G, cloud infrastructure, and hyperscale data centres.
The joint venture will also focus on verticals like medical and healthcare systems, industrial and cleantech, and defence and aerospace.
RIL is also looking to support Sanmina’s current customer base through the manufacturing facility with the venture.
In addition to that, the joint venture will create a ‘Manufacturing Technology Center of Excellence’ that will serve as an incubation centre to support the product development and hardware start-up ecosystem in India and promote research and innovation of leading-edge technologies.
“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,” Akash Ambani, Director, Reliance Jio, said in the joint statement.
Akash Ambani is the eldest son of Mukesh Ambani, chairman and managing director of RIL.
“Through this partnership we plan to boost innovation and talent in India, meeting both Indian and global demand,” he added.
“This joint venture will service both domestic and export markets and represents a major milestone in the Indian governments “Make in India” initiative,” Jure Sola, Chairman and Chief Executive Officer of Sanmina said, adding that the collaboration will build “the premier integrated manufacturing solutions company in India.”
Revenues for SIPL were approximately $165 million for the fiscal year ended March 31, 2021.
Through this joint venture, Sanmina said that it 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 and potentially expand to new manufacturing sites in India over time based on business needs.