India's largest private sector company, Reliance Industries Limited (RIL) and China's giant player, Shandong Ruyi Science and Technology Group Co. Ltd. (Ruyi) have joined hands to expand the textile business.
As per the deal, Reliance Industries will convert its existing textile business into a joint venture. Reliance will own the majority of 51% stakes and divest the remaining 49% stakes to the Chinese firm. It will receive cash consideration for the same.
The new venture is expected to build Reliance's existing textile business and create a wide distribution network in India and Ruyi's state of the art technology and its global reach. It plans to introduce some of the popular global brands of Ruyi. The joint Venture will also benefit from the existing strong brands Reliance's Vimal and Ruyi's Georgia Gullini.
Reliance's existing textile business
Textile is the business with which Reliance's foundation was laid. Dhirubhai Ambani started off with textiles. From textile, Reliance Industries have come a long way to manufacture polyester, petrochemicals, refining crude products and producing oil and gas.
The textile brand name, Vimal is named after Dhirubhai's brother Ramniklal Ambani's son. The brand with its tagline, 'Only Vimal' became a household name since 1970s. It has a prominent presence in the Indian textile market especially in the worstedand synthetic suiting fabric segments. Bollywood stars and cricketers endorsed the brand.
In the recent years, the textile business has seen a decline because of innumerable competitors that came up. With the assistance of Ruyi and its experience in the textiles market, Reliance aims to take the brand further.
The Chinese firm, Ruyi
Ruyi is a $3-billion textile company with a global presence in regions like America, Europe, Japan, Australia, New Zealand and China. It consists of popular brands 'Taylor & Lodge', 'Harris Tweed', 'Royal Ruyi China', 'Nogara Italy' and 'Indios Italy'. In India, Ruyi operates in the worsted suiting segment of the market under the brand name, 'Georgia Gullini.'
What the companies say about the Joint Venture
Both the companies have high expectations from the joint venture. They aim to extend their brands in the global market.
Nikhil R. Meswani, Executive Director of Reliance Industries Ltd., said, "Our joint venture with Ruyi Group will help Reliance reposition its textile business on a high growth path.Our partner, Ruyi is deeply committed and has a wide global reach in the textile business. This will enable the joint venture to harness the growth potential of the Indian market and emerge as a global textile player."
Qiu Yafu, Chairman of Shandong Ruyi Group, said, "China and India are strengthening their economic ties. With closer economic relations between the two 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."