 "China's Hisense eyes 26% stake in Epack's manufacturing facility in India")
Hisense Group, the largest television producer in China and a leading manufacturer of appliances, is looking to acquire up to a 26 per cent stake in Epack Durable’s fully owned subsidiary, according to a report by The Economic Times.
Epack is establishing a large production facility in Sri City, Andhra Pradesh, to manufacture air conditioners, refrigerators, washing machines, and small appliances under the Hisense brand. The facility will be operated by a newly formed subsidiary, Epack Manufacturing Technologies, where Hisense plans to acquire a stake.
The report quoted Ajay DD Singhania, managing director of Epack Durable, as saying that the company is in discussions with Hisense to acquire up to 26 per cent equity, and they have substantial plans for India, including export initiatives. A component vendor park is also part of the plan, and the company is seeking 80-100 acres of land in Sri City, he said.
Revenue boost of $1 billion
The news report quoted Singhania as saying that Epack expects nearly $1 billion in additional revenue over the next five years from the Hisense partnership.
Hisense joins other Chinese companies, such as MG Motor, Vivo, and Haier, which are either partnering with or have already partnered with Indian firms. This is in response to the Indian government’s encouragement for Chinese companies to form equity alliances with local businesses to expand their presence in the country.
The Chinese company intends to seek approval for foreign direct investment (FDI) for the transaction, the report said.
Under Press Note 3 rules from 2020, investments from neighbouring countries like China require clearance from multiple departments of the Indian government. This policy was implemented after tensions escalated between India and China following a border clash in June 2020.
Also Read
Hisense to acquire stake in Epack
Acquiring a stake is crucial for Hisense, as it plans to bring its proprietary technologies, designs, molds, and production capacity from China to its Indian manufacturing project. The companies signed a contract manufacturing agreement in October, and Hisense aims to further deepen its collaboration through this stake acquisition, the report mentioned.
The manufacturing plant, as envisioned by Hisense, will require an investment of Rs 800-Rs 1,000 crore in stages, according to industry estimates.
Epack, which posted Rs 1,419 crore in sales for FY24, is India’s second-largest contract manufacturer of air conditioners, serving brands like Daikin, Voltas, Panasonic, Haier, and Blue Star, with Amber Enterprises holding the top spot. Epack is currently upgrading one of its existing plants with a Rs 250 crore investment to begin AC production for Hisense, which is expected to be operational by June-July, the report said.
Hisense targets retail expansion
Currently, Hisense sells televisions in India via e-commerce platforms. These are produced by contract manufacturers such as Dixon Technologies and Bhagwati Products, part of Micromax. The company has also partnered with Amber Enterprises for AC production and is expanding into offline retail.
Additionally, Chinese electronics company Haier applied last year for Indian government approval to invest Rs 1,000 crore in a new factory, but the proposal is still awaiting clearance. Haier India is now exploring the option of selling up to 49 per cent of its stake to an Indian partner to facilitate the approval process for its manufacturing investments.