It is an example of joint venture.
When two or more firms join together for a common purpose and mutual benefit, it is known as a joint venture. The two organisations maybe private, government owned or a foreign company.
In broader sense, a joint venture is the pooling of resources and expertise by two or more businesses, to achieve a particular goal. e.g., Maruti Suzuki.
(i) Joint venture is a partnership between two firms.
(ii) It is a temporary business activity.
(iii) In joint venture profits and losses are shared in agreed proportion. If there is no agreement then in case profits and losses are shared equally.
(iv) The joint venture agreement will be automatically terminated after completing the venture.
(v) At the end, all the assets are liquidated and liabilities are paid off.