Hitachi Buys Majority Stake in Hi-Rel Electronics

October 09, 2011 by Jeff Shepard

Hitachi, Ltd. and Hi-Rel Electronics Pvt. Ltd. announced closing of a transaction under which Hitachi has made a majority equity investment in Hi-Rel, in a move to strengthen Hitachi’s and Hi-Rel’s power electronics business in India. Hi-Rel will subsequently be renamed Hitachi Hi-Rel Power Electronics Pvt. Ltd. in October 2011.

Hitachi and Hi-Rel have also decided to construct a new manufacturing facility for medium-voltage inverters before the end of 2012 in the Sanand-II Gujarat Industrial Development Corporation (GIDC) Estate near Ahmedabad in Gujarat, in order to expand the product lineup and strengthen the local production system. These moves should drive expansion in the power electronics business in India, from which it is aimed to generate revenues of around 8 billion Indian Rupees (14 billion yen) in the fiscal year ending March 31, 2016.

At present in India, there are many large-scale plants such as power plants, steel works and petrochemical plants being planned as the India’s economy grows, and large-scale investments in renewable energy are also planned to realize a low-carbon society. These developments are expected to lead to expansion in the markets for products such as medium-voltage inverter systems, uninterrupted power supplies (UPS) and power conditioners for solar and wind power generation. These products are required to ensure stable operations of large-scale factories, and conserve energy. The two companies have cooperated in expanding sales for medium-voltage inverter drive systems in India since July 2009, and in June 2011, Hitachi and Hi-Rel began discussing a business alliance, including the possibility of an equity investment by Hitachi in Hi-Rel, in light of expectations for expanding demand in the country’s power electronics market. These discussions led to today’s agreement.

Hitachi is focusing on accelerating the global development of the Social Innovation Business, which is made up of social infrastructure supported by highly reliable and highly efficient information and telecommunications technology. Hitachi has identified India as a fifth key management area for further business expansion in India.

Hi-Rel, meanwhile, manufactures industrial-UPS and power electronics products, including low-voltage inverter drive systems, and has an extensive nationwide network of sales and service bases.

The company will combine Hitachi’s power control technologies, supported by wealth of experience and expertise in systems integration for large-scale plants, with Hi-Rel’s local technological and production capabilities as well as its sales and service network. The addition of a new manufacturing facility should enable the new company to further meet the growing and sophisticated power electronics requirements in India.