Reliance Industries to sell 49% stake in ‘Vimal’ to Chinese company

MUMBAI: The business in which Reliance Group founder Dhirubhai Ambani cut his teeth will now have a co-promoter. The Mukesh Ambani-led Reliance Industries (RIL) has decided to sell a 49% stake in the textiles business — the group's very first foray under the founder — to Chinese textile firm Shandong Ruyi Science and Technology Group (Ruyi) for an undisclosed sum. RIL will hive off its textiles business into a new joint venture, in which it will have a 51% stake and the rest will be held by the $3-billion Ruyi Group.

RIL's existing textile business, started by RIL founder Dhirubhai Ambani about five decades ago, operates under the brand 'Vimal' and has a prominent presence in the Indian textile market in the worsted and synthetic suiting fabric segments. The textile business is located at Naroda near Ahmedabad and was set up in 1966. But it now contributes $300-350 million, or less than 1%, to the overall $65-billion annual revenues of RIL. In 2012, RIL had appointed bankers to sell its textile business but the sale was called off due to a tepid market and lack of buyers.

"Our joint venture with Ruyi Group will help Reliance reposition its textile business on a high-growth path," said Nikhil R Meswani, executive director, RIL.

Ruyi, a leading textile company in China, has a global presence, including in America, Europe, Japan, Australia, New Zealand and China. It has a portfolio of world-renowned brands such as 'Taylor & Lodge', 'Harris Tweed', 'Royal Ruyi China', 'Nogara Italy' and 'Indios Italy'. Ruyi also operates in India under the 'Georgia Gullini' brand in the worsted suiting segment of the market. This business operation and its other activities would get realigned to strengthen the JV.

Investment adviser S P Tulsian believes that the deal size would not be significant, given that none of the textile companies in that space is valued at over $100 million.