27 May, 2015
On February 19, 2015, CCI approved the proposed transaction between CSTT Co Holdings Pte. Limited (‘CSTT’); a Singapore incorporated holding company, wholly owned by RuYi), Reliance Industries Limited (‘RIL’) and Georgia Gullini Fashions Private Limited (‘GGFPL’), pursuant to an umbrella agreement dated December 9, 2014.
The proposed transaction involves the following steps: (a) acquisition by CSTT of 49 % shareholding in a textile company to be incorporated by RIL as its wholly owned subsidiary, which will house RIL’s textile business (‘NewCo’); (b) licensing of the ‘Georgia Gullini’ trademark by GGFPL to the NewCo; and (c) licensing of the ‘Vimal’ trademark by RIL to the NewCo.
RuYi, the parent company of CSTT, is a Chinese enterprise primarily engaged in the manufacture and supply of various textile products. RuYi operates in India at the wholesale level of the textile value chain and supplies fabric and readymade garments under the ‘Georgia Guillini’ brand, and is present in India through its three subsidiaries namely, GGFPL, Global Wool Alliance Private Limited, and LI Trading Private Limited.
RIL, a listed company incorporated under the Companies Act, 1956, is a diversified company which is engaged in, inter alia, the business of chemicals, synthetic textiles, fabrics, etc. The textile division of RIL sells its products (yarn, fabric for men’s suiting, trousers and shirting, men’s readymade garments including shirts, trousers, t-shirts, suits & jackets and accessories, industrial clothing including automobile upholstery and sarees) under its flagship brand ‘Vimal’.
CCI noted that the Indian textile industry, which comprises of organized sector, unorganized sector, weavers/artisans and farmers is fragmented and is characterized by a large number of players. Therefore, while RIL and RuYi have an overlap in men’s shirting, suiting & trouser fabric and in men’s readymade trouser segments of the textile industry, CCI was of the opinion that the transaction was unlikely to give rise to any AAEC in India, as the share of both RuYi and RIL was insignificant and numbers of other players are present. Further, the vertical relationship between RIL and RuYi was held to be insignificant and unlikely to give rise to any competition concerns. Accordingly, CCI approved the proposed transaction under Section 31(1) of the Competition Act.
For further information, please contact:
Zia Mody, AZB & Partners
zia.mody@azbpartners.com
Abhijit Joshi, AZB & Partners
abhijit.joshi@azbpartners.com
Shuva Mandal, AZB & Partners
shuva.mandal@azbpartners.com
Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com
Percy Billimoria, AZB & Partners
percy.billimoria@azbpartners.com
Aditya Bhat, AZB & Partners
aditya.bhat@azbpartners.com
