The Economic Times: December, 2014
Mumbai: Reliance Industries, which begun life as a textile company, has decided to hive off its oldest business into a joint venture with China's Shandong Ruyi Science and Technology Group Co, the Indian conglomerate said on Tuesday. The group diversified from trading to manufacturing textiles, largely polyester yarn, in the 1960s. Reliance Textiles was incorporated in 1966 and it is this company which later became Reliance Industries Ltd (RIL) in 1985.
RIL is currently India's third largest private sector company by market capitalisation and the largest by far in revenues. RIL will hold a 51% stake in the new joint venture thus formed while the Chinese partner will hold the balance. The company sells products — primarily fabric for suits — under the 'Vimal' brand.
"Our joint venture with Ruyi Group 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 JV to harness the growth potential of the Indian market and emerge as a global textile player," said Nikhil R Meswani, executive director, RIL. The proposed transaction is subject to obtaining requisite approvals. A RIL spokesman told ET that the two companies are yet to decide on the financial consideration.
The JV will leverage RIL's existing textile business and distribution network in India and Ruyi's state-ofthe-art technology and its global reach. It will expand the geography for the brand 'Vimal' besides introducing brands owned by Ruyi in India. RIL has a presence in Indian textile market, especially in the worsted and synthetic suiting fabric segments, while the $3 billion-Ruyi, a leading textile company in China, has a presence in America, Europe, Japan, Australia, New Zealand and China.Ruyi owns brands like 'Taylor & Lodge', 'Harris Tweed', 'Royal Ruyi China', 'Nogara Italy' and 'Indios Italy', among others. In India, Ruyi sells the 'Georgia Gullini' brand in the worsted suiting segment of the market. "This business operation and activities would get realigned to strengthen the JV," the press release said.
"With closer economic relations between China and India and Shandong Ruyi Group's expanding global presence in the textile sector, 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 Qiu Yafu, chairman, Shandong Ruyi Group.
India has been among the top three textile and apparel exporting nations in the world for the last three years. The CII-BCG report on 'Make in India' states that India is expected to grow as an exporter of textile and apparels but also that much of the potential is yet to be tapped.