Reliance Industries Ltd. (RIL), on Tuesday, announced that it had entered into a definitive agreement with a wholly-owned subsidiary of China’s Shandong Ruyi Science and Technology Group (Ruyi) to transfer its founding textile business into a newly incorporated joint venture (JV) company.
RIL said that it would receive cash consideration from the deal. It will own 51 per cent in the proposed joint venture, while Ruyi will own the balance. The proposed transaction is subject to requisite approvals.
In the 1970s, Reliance entered into the textile business in a small way, and since then, it has grown to be a Fortune Global 500 company through backward vertical integration. The textile business of RIL operates under the brand Vimal, which was popularised by the ‘Only Vimal’ campaign. This business has a prominent presence in the domestic worsted and synthetic suiting fabric segments. Ruyi, China’s leading textile company with revenues of $3 billion, has a global presence with a portfolio of world-renowned brands. It operates in India under the Georgia Gullini brand in the worsted suiting segment. This business operation would be realigned with the joint venture.
“Our joint venture will help Reliance reposition its textile business on a high growth path. Our partner’s deep commitment and global reach in textile business will enable this joint venture to harness the growth potential of the Indian market and emerge as a global textile player,” said RIL Executive Director Nikhil Meswani.
“We see our joint venture with Reliance as a significant event for the group. To enter the Indian market with Reliance, we truly believe in the bright future of this joint venture business,” said Shandong Ruyi group Chairman Qiu Yafu.
The joint venture will build on RIL’s textile business and distribution network as well as Ruyi’s technology and global reach.
The new venture will introduce some of Ruyi’s global brands later.
