Hisense Group, China's largest television manufacturer, plans to acquire up to 26% in Epack Durable’s subsidiary, Epack Manufacturing Technologies, to enhance its manufacturing presence in India. Epack is establishing a facility in Sri City, Andhra Pradesh, to produce appliances under the Hisense brand. Ajay DD Singhania, managing director of Epack, noted that this partnership aims for significant growth and export potential. The collaboration could generate nearly $1 billion in revenue over five years, aligning with the trend of Chinese companies partnering with Indian firms.
Hisense Group, recognized as China’s largest television producer and a key player in the appliance sector, is preparing to acquire a stake of up to 26% in Epack Durable’s wholly owned subsidiary. This strategic move promises to enhance manufacturing capabilities in India.
Epack is in the process of establishing a significant manufacturing facility in Sri City, Andhra Pradesh, aimed at producing air conditioners, refrigerators, washing machines, and small domestic appliances under the Hisense brand. The facility will be developed by Epack Manufacturing Technologies, the new subsidiary where Hisense plans to invest.
"Hisense is in talks to buy up to 26% equity in Epack Manufacturing Technologies,” stated Ajay DD Singhania, managing director of Epack Durable. “They have big plans for India and want to even export. There will be a component vendor park too. We have applied for 80-100 acres for the land in Sri City, and total investment plans are still under finalisation,” he elaborated.
While Singhania refrained from disclosing Epack's valuation or the specifics of the proposed investment, the collaboration is poised to benefit both companies significantly.
Hisense joins a growing list of Chinese firms, including MG Motor, Vivo, and Haier, that are forging partnerships with Indian companies. This trend aligns with the Indian government’s encouragement for foreign entities to establish equity alliances to enhance their presence in the market.
The company intends to seek foreign direct investment (FDI) approval for the deal shortly, as required under current regulations for investments from neighboring countries like China.
Acquiring a stake in Epack is crucial for Hisense, allowing it to bring its advanced technologies and production expertise to India. The companies signed a contract manufacturing agreement in October, which Hisense seeks to strengthen through this investment.
Industry estimates suggest that the planned facility will require a total investment of between ₹800 crore and ₹1,000 crore, spread over various phases.
Epack, which achieved sales of ₹1,419 crore in FY24, is India’s second largest contract manufacturer of air conditioners, providing services for well-known brands such as Daikin, Voltas, Panasonic, Haier, and Blue Star. It is currently revamping one of its existing plants with a ₹250 crore investment to start AC production for Hisense, projected to become operational by mid-2024.
Singhania anticipates that the partnership with Hisense could generate additional revenue of nearly $1 billion over the next five years.
Currently, Hisense sells televisions in India through e-commerce platforms, with production handled by contract manufacturers like Dixon Technologies and Bhagwati Products, affiliated with Micromax. The company is also expanding into offline retail sales.
An industry insider indicated that Hisense plans to pursue a similar equity arrangement for television manufacturing, contingent upon obtaining FDI approval for the Epack investment. This trend of minority equity partnerships between Chinese and Indian firms is becoming a favored approach for foreign investments in India.
In a related development, Haier India applied last year to invest ₹1,000 crore in a new factory, a proposal still awaiting government clearance. To navigate the investment landscape, Haier is considering selling up to a 49% stake to an Indian partner to facilitate its manufacturing plans.
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