Shielding thermal conductive material die-cutting industry: This company plans an IPO in India and is the largest electronic manufacturing services (EMS) manufacturer in India

According to relevant reports, Foxconn Technology Group's Bharat FIH is the largest electronic manufacturing services (EMS) manufacturer in China and also the largest mobile phone manufacturer of market leader Xiaomi. The company has submitted documents to the Securities and Exchange Commission of India, intending to raise approximately INR 50 billion through an IPO.

Moneycotrol has reviewed a copy of Bharat FIHs DRHP, which is 100% owned by the initiators. According to the document, the net proceeds from the IPO will be used to fund capital expenditures for upgrading and expanding the existing campus.

Fuzhikang Group (02038. HK) has announced its proposal to spin off its Indian subsidiary BharatFIH Limited (BFIH) and list it independently on the two major stock exchanges in India (Mumbai Stock Exchange and Indian Stock Exchange). The proposed spin off (if carried out) is expected to be completed in 2022. BFIH ， Ranked as the largest electronic manufacturing service provider in India by EMS market revenue share.

The company has submitted an application to the Stock Exchange for the proposed spin off in accordance with the 15th application guideline, and the Stock Exchange has confirmed that the company can continue with the proposed spin off.

On December 21, 2021, BFIH has submitted an informal prospectus draft to the Securities and Exchange Commission of India, the Mumbai Stock Exchange, and the Indian Stock Exchange regarding the proposed initial public offering of its equity shares, and will apply for principle approval for the listing of its equity shares on the Mumbai Stock Exchange and the Indian Stock Exchange.

It is expected that the proposed spin off will involve offering subscription for new equity shares to be issued by BFIH through an initial public offering, as well as offering existing equity shares by the company (through its subsidiary WonderStarsPte. Ltd.), totaling no more than 25% of BFIH's expanded issued share capital (including exercising any over allotment rights) immediately following the completion of the proposed spin off.

BFIH is currently an indirect wholly-owned subsidiary of the company. After the proposed spin off is completed, the company's shareholding in BFIH is expected to be reduced to no less than 75%, BFIH will continue to be a subsidiary of the company, and the company will continue to be included in the overall financial performance of BFIH Group.

In addition, the company currently plans to use the net proceeds from the proposed spin off of existing equity shares to pay special cash dividends to shareholders, provide financing for its operating capital needs, maintain a healthy capital structure and sufficient cash to meet its ongoing operational needs, mitigate unforeseen market risks, and allocate the company's capital commitments and other investments to achieve future business growth and development when opportunities arise.

The board of directors of the company believes that the proposed spin off would benefit both the company and BFIH commercially, for reasons including:

• Releasing the Value of BFIH Group: The proposed spin off will release the value of BFIH Group to shareholders, as it can more effectively identify and establish the fair value of BFIH Group's business, thereby reflecting the relevant business value. It is expected that this value will significantly increase the value of the group, ultimately driving up the value of our company and bringing benefits to all shareholders.

• Independent nature and fundraising platform: It is suggested that the spin off will help BFIH Group establish its independent listed group nature, with an independent fundraising platform that can directly and independently enter the equity and debt capital markets to finance existing operations and future expansion, thereby improving its capital structure. The proposed spin off will also help BFIH Group further consolidate its capabilities, reputation, and credibility, enabling it to make more adequate preparations for negotiating, creating, and developing more customers and businesses for BFIH Group.

• Business Transparency: The proposed spin off can further enhance the operational, financial, and governance transparency of BFIH Group and the remaining groups, allowing equity investors to evaluate and assess the operational and financial performance and potential of the two groups as independent enterprise groups. It can also allow financial institutions, rating agencies, and investors to evaluate their respective creditworthiness and actual intrinsic value.

• Business focus and clarity: It is recommended to split the BFIH Group and the remaining groups to more directly align their management responsibilities and accountability with their respective operational and financial performance, so that both can benefit from more effective decision-making procedures under independent management and corporate governance structures, as well as responsible financial and performance measurement methods.

• Our company has obtained significant income: We expect to obtain significant income from the sale of existing equity shares through the proposed spin off, and currently plan to use some of the income to pay special cash dividends to shareholders (To directly benefit them from the proposed split) ） , and as operating capital and general corporate use for the remaining group.

• Continuous benefits: As BFIH will continue to be a subsidiary of the company after the proposed spin off, shareholders will be able to share in the growth and development of the BFIH Group through the majority stake held by the company in BFIH.

The announcement shows that, BFIH is the largest EMS supplier in India based on its EMS market revenue share, operating in three parks in southern India. BFIH Group provides EMS to original equipment manufacturers (OEMs) of mobile phones, machinery, electric vehicles, televisions, ear worn devices, telecommunications and network products, and information technology hardware. In addition to EMS services, which mainly include manufacturing services, BFIH is establishing its ability to provide comprehensive, vertically integrated "one-stop solutions" for OEMs (i.e. its branded customers), including a range of original design manufacturing (ODM) services (including product design and development, component manufacturing and procurement, logistics, and after-sales services). The services provided by BFIH aim to enable customers to reduce manufacturing costs, improve supply chain management, minimize obsolete inventory and product delivery time, and accelerate their time to market, mass production, and capital requirements.