Indian fair trade watchdog, Competition Commission of India (CCI) has approved the proposal of Reliance Industries to sell 49 per cent stake in a newly-formed textile firm to Chinese company, Shandong Ruyi.
“The Commission is of the opinion that the proposed combination is not likely to have an adverse effect on competition in India and therefore approves the said proposal,” CCI said in a statement.
Under the proposed deal, CSTT Co Holdings, an investment arm of Ruyi will acquire 49 per cent stake in a textile company to be incorporated by Reliance as a wholly owned subsidiary.
Reliance will transfer its entire textile business to the subsidiary and will hold the remaining 51 per cent stake in the new company.
Ruyi which operates in India under the Georgia Gullini brand will also transfer this business to the joint venture, while RIL will transfer its flagship textile brand, Vimal.
Giving its opinion, the regulator said that RIL and Ruyi have an overlap in men’s shirting, suiting and trouser fabric and in the men’s readymade trouser segments of the textile industry.
“It is observed that in all these segments, the share of both Ruyi and RIL is insignificant and a good number of other players are present,” it added.
“As regards the vertical relationship between RIL and Ruyi, it is observed that the same is insignificant and unlikely to give rise to competition concerns,” CCI noted.