COMPETITION COMMISSION OF INDIA

(Combination Registration No.C-2022/07/952)

Non-Confidential

30.08.2022

Notice under Section 6(2) of the Competition Act, 2002 jointly filed by Umang
Commercial Company Private Limited and Aditya Marketing and Manufacturing
Private Limited

CORAM:

Mr. Ashok Kumar Gupta

Chairperson

Ms. Sangeeta Verma

Member

Mr. Bhagwant Singh Bishnoi

Member

Order under Section 31(1) of the Competition Act, 2002

1. On 11.07.2022, the Competition Commission of India (Commission) received a notice

under sub-section (2) of Section 6 of the Competition Act, 2002 (Act), jointly filed by
Umang Commercial Company Private Limited (Umang/Acquirer) and Aditya
Marketing & Manufacturing Private Limited (AM/Target). [Hereinafter, Acquirer and
the Target are collectively referred to as the Parties].

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2. The notice has been filed pursuant to the Scheme of Amalgamation under Sections 230
and 232 of the Companies Act, 2013 (Scheme), sanctioned by the National Company
Law Tribunal, Kolkata bench, vide its order dated 28.06.2021.

3. The proposed combination was earlier notified on 10.12.2021 (Combination Registration

No. C-2021/12/888). During scrutiny of the notice, it was found that there were several
information gaps and deficiencies. Accordingly, a defect letter was issued under
Regulation 14 of the Competition Commission of India (Procedure in regard to the
transaction of business relating to combinations) Regulations, 2011
(Combination Regulations) on 28.12.2021, the response to which was received on
04.01.2022 and 24.01.2022. Upon perusal of the notice and the responses received, it
was observed that various deficiencies continued to persist. Thus, on account of the
information gaps, the Commission invalidated the notice in terms of Regulation 14 (2A)
of the Combination Regulations on 11.01.2022 and directed the parties file a fresh
notice.

Proposed Combination

4. The proposed combination involves merger of the Target into the Acquirer in
accordance with the Scheme. As a result of the merger and in terms of the Scheme, the
shares held by the Target in 15 entities1 will get vested in the Acquirer. Further, on
account of the aforesaid vesting of shares, the Acquirer Group, will acquire control over
a total of 5 entities which as on date are under the control of BKB Family (defined
below), namely, Padmavati Investment Private Limited (Padmavati), Pilani Investment
and Industries Corporation Limited (Pilani), Century Textile and Industries Limited
(Century Textile), Ganesh Tubes and Services Private Limited (Ganesh Tubes) and
Century Enka Limited (Century Enka). (Proposed Combination).

1
The shares held by Target in Pilani, Padmavati, Century Textile, Ganesh Tubes, HGI Industries Limited (HGI),
UltraTech Cement Limited (UltraTech), Kesoram Industries Limited (KIL), Birla Tyres Limited (Birla Tyre),
Kesoram Textile Mills Limited (KTML), Vidula Chemicals and Manufacturing Limited (Vidula), Jayshree Tea
& Industries Limited (Jayshree) , Bizari Veneer & Saw Mills Limited (Bizari Veneer) , Manav Investment and
Trading Company Limited (Manav), Essel Mining & Industries Limited (Essel Mining) and Mangalam Cement
Limited (MCL).

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5. In terms of Regulation 14 of Competition Commission of India (Procedure in regard to

the transaction of business relating to combinations) Regulations, 2011 (Combination
Regulations), the Commission, vide communication dated 03.08.2022, sought certain
information(s)/clarification(s), inter alia, relating to the activities of the Parties; a partial
response to the same was received on 10.08.2022. Further, the complete response was
received on 16.08.2022.

Description of Parties

6. Acquirer: The Acquirer is an investment company and belongs to the Aditya Birla
Group of companies. It holds shareholding in various entities on behalf of the Kumar
Mangalam Birla and/or his family (KMB Family). The Acquirer operates only in India.
It is registered with the Reserve Bank of India (RBI) as a Non-banking Financial
Company (NBFC).

7. Aditya Birla Group: It is stated in the notice that Aditya Birla Group is not a legal
entity and the group definition test prescribed under the Act is not applicable to it.
Aditya Birla group is an expression created and used after the larger Birla Family re-
organisation/arrangement, to represent companies and other entities, including joint
venture companies, in which KMB Family hold(s) directly or indirectly at least 20% of
the voting rights and are allowed to use Aditya Birla Logo; and includes entities which
have been traditionally controlled and/or managed by KMB Family, and/or combination
thereof. Aditya Birla Group is an Indian multinational conglomerate having businesses
in various industry sectors including textiles, garments, chemicals, cement, metals and
mining, apparels, life insurance, financial services, etc.

8. Target: The Target is an investment company and belongs to the B.K. Birla Group of
companies. It holds shareholding in various entities on behalf of late Mr. Basant Kumar
Birla and his family (BKB Family). The Target operates only in India. It is registered

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with the RBI as a NBFC. The B.K. Birla Group is a diversified group with presence in
various industry sectors including textiles, cement, nylon tyre cord fabric, tea, tyres, etc.

9. It is stated in the notice that the Acquirer group holds non-controlling shareholding in
various entities belonging to the BKB Family and whose shareholding is held by the
Target. Similarly, the Target, which is currently under the control of the BKB Family,
also holds non-controlling shareholding in entities which belong to the Acquirer group.
However, pursuant to a family understanding within the larger Birla family, the BKB
Family and KMB Family have been distinct family groups operating in various sectors
though independent companies. Further, the control of such companies has historically
been with the respective families regardless of the shareholding (if any) of either family
groups in each other‟s companies. This position has continued even after the demise of
Mr. Basant Kumar Birla.

Identification and Assessment of Horizontal Overlaps

10. It is submitted that the horizontal overlaps between the affiliates of Acquirer Group and
the affiliates of the Target, Padmavati, Pilani, Century Textile, Century Enka and
Ganesh Tubes are in following products/ services:
A. Horizontal Overlap I: Man Made Fibre (MMF) and Cotton and, at individual
product level, Viscose Filament Yarn (VFY)
B. Horizontal Overlap II: Sodium Sulphate
C. Horizontal Overlap III: Sulphuric Acid
D. Horizontal Overlap IV: Carbon Disulphide
E. Horizontal Overlap V: Grey Cement
F. Horizontal Overlap VI: Cotton Textile

11. The Commission decided to assess the Proposed Combination in relation to the relevant
market(s)/segment(s) as identified with regard to Horizontal Overlaps by the Parties in
the notice. The Commission, however, decided to leave the exact delineation of the

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relevant market as open, due to the reasons enumerated in the ensuing paragraphs of this
order.

A. Horizontal Overlap I: MMF and Cotton and, at individual product level, VFY

12. It is submitted that Grasim Industries Limited (GIL), an affiliate of KMB Family,
manufactures and sells Viscose Staple Fibre (VSF) and Viscose Filament Yarn (VFY)
and Kesoram Industries Limited (KIL), an affiliate of the Target, manufactures and sells
VFY; Century Textile, an affiliate of the Target, manufactures and sells Cotton Yarn,
Cotton Blended Yarn and Modal/Excel/Linen/Polyester Yarns; and Century Enka, an
affiliate of the Target, manufactures and sells Nylon Filament Yarn (NFY).

13. The Parties have identified the following relevant markets in relation to Horizontal
Overlap I: (i) „Market for manufacture and sale of MMF and cotton in India‟ at a broad
level (Relevant Market for MMF and Cotton); and (ii) „Market for manufacture and
sale of VFY in India‟ at a narrower level (Narrow Relevant Market for VFY)2. The
Commission decided to assess the Horizontal Overlap I in the identified relevant
markets; however the issue of the exact delineation of the relevant market is being left
open.

14. Based on the information provided, it is noted that the combined market share of the
parties in the Relevant Market for MMF and Cotton is in the range of [0-5] % in terms of
volume with a miniscule increment and in the Narrow Relevant Market for VFY is in the
range of [50-55]% with an increment of [10-15]% in terms of volume. Further, the
Parties have also submitted that there are no other domestic manufacturers except GIL
and KIL in the Narrow Relevant Market for VFY and that the rest of the competition is
only from imports by players such as Jilin Chemical Fiber Group Co., Ltd. (Jilin),
Xinxiang Bailu Investment Group Co., Ltd. (Bailu) and Yibin Grace Co., Ltd. (Yibin).
Given the high market shares of the Parties in the Narrow Relevant Market for VFY and
2
In relation to the Narrow Relevant Market for VFY, the Parties have submitted that they do not agree to a
narrow definition of the Narrow Relevant Market for VFY but have provided the market share on a without
prejudice basis and without conceding to a narrower definition of the relevant market.

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the merger of only two existing domestic players in the said relevant market, the
Acquirer was required to provide certain clarification/ information(s) in relation to the
same.

B. Horizontal Overlap II, III and IV – Sodium Sulphate / Sulphuric Acid / Carbon
Disulphide

15. It is stated in the notice that GIL, an affiliate of KMB Family, and KIL, an affiliate of
the Target, are engaged in the manufacture and sale of both Sodium Sulphate and
Carbon Disulphide. Further, GIL, Hindalco Industries Limited (HIL) and Tanfac
Industries Limited (TIL) (affiliates of KMB Family) and KIL, an affiliate of the Target
are engaged in the manufacture and sale of Sulphuric Acid. It is stated that TIL has been
divested on 11.03.2022 to an unrelated third party and is no longer part of the KMB
Family/Aditya Birla group. To that extent, no overlap remains between KIL and TIL.

16. The Parties have submitted that the relevant market for these overlaps may be defined as
the “Market for the manufacture and sale of Sodium Sulphate in India” (Relevant
Market for Sodium Sulphate), “Market for the manufacture and sale of Sulphuric Acid
in India” (Relevant Market for Sulphuric Acid) and “Market for the manufacture and
sale of Carbon Disulphide in India” (Relevant Market for Carbon Disulphide).

17. Based on the submissions of the Parties, it is noted that the combined market share of the
Parties in the Relevant Market for Sodium Sulphate, Relevant Market for Sulphuric Acid
and Relevant Market for Carbon Disulphide in India is in the range of [25-30] %, [0-
5]% and [5-10]%, respectively, and there is miniscule increment in market share in
terms of value in each of these markets. Further, it is stated by the Parties that GIL and
KIL primarily manufacture Sulphuric Acid and Carbon Disulphide for captive
consumption and only the surplus quantity, post captive consumption is sold on an ex-
works basis. Moreover, there are other players such as Prakash Chemicals International
Private Limited, Atul Limited, Innova Corporate (India), and Nilkanth Organics Private
Limited, in the Relevant Market for Sodium Sulphate; Trident Limited, Sterlite Copper

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Limited, Paradeep Phosphates Limited, Gujarat State Fertilizer & Chemicals Limited,
Hindustan Zinc Limited, and Coromandel International Ltd. in the Relevant Market for
Sulphuric Acid; and Indo Baijin Chemical Private Limited, M.K. Intermediates, UPL
Limited, Hridaan Pharma Chem, and Alpha Chemika in the Relevant Market for Carbon
Disulphide.

C. Horizontal Overlap V- Grey Cement

18. It is stated in the notice that the activities of Ultratech, an affiliate of the KMB Family,
and KIL and MCL, affiliates of the Target, have horizontal overlap in the manufacture
and sale of different types of Grey Cement. Accordingly, the relevant product market
may be defined as “the Market for Manufacture and Sale of Grey Cement”. Further, it is
stated that, on one hand, UltraTech has cement manufacturing facilities in the States of:
(i) Andhra Pradesh; (ii) Bihar; (iii) Chhattisgarh; (iv) Gujarat; (v) Haryana; (vi)
Himachal Pradesh; (vii) Karnataka; (viii) Madhya Pradesh; (ix) Maharashtra; (x) Odisha;
(xi) Punjab; (xii) Rajasthan; (xiii) Tamil Nadu; (xiv) Western Uttar Pradesh; (xv)
Eastern Uttar Pradesh; (xvi) Uttarakhand; and (xvii) West Bengal. On the other hand,
MCL has cement manufacturing plants located in: (i) Western Uttar Pradesh; and (ii)
Rajasthan, and KIL has cement plants in: (i) Telangana; and (ii) Karnataka. Thus, while
MCL and UltraTech have overlaps (in terms of manufacturing facilities) in the States of:
(i) Rajasthan; and (ii) Western Uttar Pradesh; KIL and UltraTech have overlaps (in
terms of manufacturing facilities) in the state of Karnataka. The Parties have submitted
that in line with the past precedents of the Commission in relation to grey cement, the
relevant geographic market has been defined on the basis of the „Elzinga-Hogarty‟ Test
(EH Test).

19. The Parties have identified three relevant geographic markets based on the EH Test and
LIFO – LOFI threshold assessments at 25% considering the Grey Cement production
and dispatch data. The relevant market when Rajasthan is considered as the base state
has been defined as “Market for manufacture and sale of Grey Cement in Rajasthan,
Western Uttar Pradesh and Haryana” (Rajasthan Relevant Market); when Western

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Uttar Pradesh is considered as the base state the relevant market has been defined as
“Market for manufacture and sale of Grey Cement in Western Uttar Pradesh, Rajasthan
and Haryana” (Western Uttar Pradesh Relevant Market); and when Karnataka is
considered as the base state the relevant market has been defined as “Market for
manufacture and sale of Grey Cement in Karnataka and Maharashtra” (Karnataka
Relevant Market). Further, the Parties have also provided details of sales in the market
for the manufacture and sale of Grey Cement segmented into trade and non-trade on a
statewise basis.

20. Based on the submissions of the parties, it is noted that the combined market share of the
parties on the basis of installed capacity is in the range of [35-40]% in Karnataka
Relevant Market with an incremental share of [5-10]%. Further, the combined market
share of the parties in both Western Uttar Pradesh Relevant Market and Rajasthan
Relevant Market is in the range of [30-35]% with an incremental share of [0-5]%. In
order to carry out competition assessment of the market realities, actual production and
sales figures of the parties as well as their competitors are required; however, in absence
of the same, the Acquirer was required to provide certain clarification/ information(s).

D. Horizontal Overlap VI - Cotton Textile

21. The Parties have submitted that both GIL, an affiliate of the KMB family, and Century
Textile, an affiliate of the Target, are engaged in the manufacture and sale of cotton
textile in India. Therefore, the relevant market may be defined as the: “Market for the
Manufacture and Sale of Cotton Textile in India” (Relevant Market for Cotton
Textile).

22. Based on the submissions of the parties, it is noted that both the combined market share
of GIL and Century Textile in the Relevant Market for Cotton Textile and the increment
in market share is miniscule. Further, there are other players present in the market such
as Raymond Limited, Vardhman Textiles Limited, Arvind Limited and K.P.R. Mill
Limited.

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Identification and Assessment of Vertical Relationship

23. With respect to vertical relationships between the products and services of the Parties, it
is submitted that the activities of the affiliates of KMB Family and the affiliates of the
Target, Padmavati, Pilani, Century Textile, Century Enka and Ganesh Tubes exhibit
certain vertical relationships.

24. The Commission decided to assess the Proposed Combination in relation to the relevant
market(s)/segment(s) as identified with regard to Vertical Relationship by the Parties in
the notice. The Commission, however, decided to leave the exact delineation of the
relevant market as open, due to the reasons enumerated in the ensuing paragraphs of this
order.

A. Vertical Relationship I –Rayon Grade Pulp manufactured by Century Textile used

by GIL for manufacture of VSF and VFY

25. It is stated in the notice that Century Textile‟s „pulp and paper‟ division is engaged inter
alia in the manufacture of Rayon Grade Pulp which is used by GIL as a raw material in
the manufacturing of VSF and VFY (which belong to the market for manufacture and
sale of MMF and Cotton). It is submitted that the relevant market may be defined at the
upstream level as the “Market for manufacture and sale of Rayon Grade Pulp in India”
(Relevant Market for Rayon Grade Pulp) and at the downstream level as “Market for
manufacture and sale of VSF in India” (Relevant Market for VSF) and “Market for
manufacture and sale VFY in India” (Relevant Market for VFY).

Assessment of Vertical Relationship–I:

26. Based on the submissions of the Parties, it is noted that in FY 2020-21 while the market
shares of GIL in the relevant markets at downstream level i.e. Relevant Market for VSF3

3
The Parties have provided the market share of GIL in the relevant market of VSF on a without prejudice basis
and without conceding to a narrower definition of the relevant market.

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and Relevant Market for VFY4 were in the range of ………..and [40-45]%, respectively,
the market share of Century Textile in the relevant market at the upstream level i.e.
Relevant Market for Rayon Grade Pulp was in the range of [0-5]% only. The Parties
have submitted that as Century Textile only supplies Rayon Grade Pulp to GIL and KIL
and does not compete in open market, the details of competitors are not available with
Century Textile. With respect to the downstream markets, the Parties have submitted
that GIL faces competition in the market for manufacture and sale of VSF from foreign
players such as Lenzing Group, Hebei Jigao, Asia Pacific Rayon and Tangshan Sanyou
Chemical Industry Company Limited and in the market for manufacture and sale of
VFY from Jilin Chemical Fiber Group Company Limited, Xinxiang Bailu Investment
Group Company Limited and Yibin Grace Company Limited. Further, the Parties have
submitted that GIL is not dependent on Century Textile to meet its requirement of rayon
grade pulp and even if GIL purchased Rayon Grade Pulp exclusively from Century
Textile, GIL will not be able to meet its production targets.

B. Vertical Relationship II / Potential Vertical Relationship I-A/ Potential Vertical

Relationship I-B (Chemicals produced by GIL/HIL/ TIL used by Century Textile/
KIL/ Century Enka for various purposes)

27. It is stated in the notice that GIL is inter alia engaged in the business of production of
various chemicals such as caustic soda, sodium sulphate, sulphuric acid, phosphoric
acid, chlorine, etc. These chemicals can be used by Century Textile, KIL and Century
Enka for various purposes. Century Textile is engaged in the production of textiles,
cotton yarn and cotton blended yarn and pulp, amongst other businesses. KIL is
engaged in the manufacture of VFY, and Transparent Paper. Century Enka is engaged in
the manufacture of NFY and Nylon Tyre Cord Fabric, among other businesses. All these
activities require chemicals for processing.

4
The Parties have provided the market share of GIL in the relevant market of VFY on a without prejudice basis
and without conceding to a narrower definition of the relevant market.

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28. It is submitted that in FY 2020-21, GIL supplied Caustic Soda and Sodium Sulphate to
Century Textile which was used in the manufacturing processes of textile and pulp by
Century Textile. Further, GIL supplied Caustic Soda and Chlorine to KIL in FY 2020-
21. While Caustic Soda was used by KIL in the manufacturing process of VFY, Chlorine
was used by it in the manufacturing process of VFY and Transparent Paper.
Accordingly, there exists a vertical relationship between GIL and Century Textile and
between GIL and KIL.

29. Separately, GIL also produces Caustic Acid and Phosphoric Acid. Century Enka uses
Caustic Soda in the manufacturing process of NFY and Nylon Tyre Cord Fabric; and
Phosphoric Acid as an additive in the recovery process during the manufacturing of
NFY and Nylon Tyre Cord Fabric. However, the parties have submitted that Century
Enka has not procured Caustic Acid or Phosphoric Acid from GIL. Accordingly, this
overlap is stated to be purely potential. Additionally, GIL also produces Sulphuric Acid
and Carbon Disulphide. Sulphuric Acid is also produced by HIL and TIL. The Parties
have submitted that KIL uses captively produced Carbon Disulphide and Sulphuric Acid
in the manufacturing process of Transparent Paper and does not procure Carbon
Disulphide or Sulphuric Acid from third parties.

30. The Parties have submitted that at the broad level the upstream market of overall
chemicals may be defined as “Market for manufacture and sale of chemicals in India ”
(Relevant Market for Overall Chemicals). At the narrow level, the upstream relevant
markets can be defined as “Market for manufacture and sale of Caustic Soda in India”
(Relevant Market for Caustic Soda), “Market for manufacture and sale of Sodium
Sulphate in India” (Relevant Market for Sodium Sulphate), “Market for manufacture
and sale of Phosphoric Acid in India” (Relevant Market for Phosphoric Acid) and
“Market for manufacture and sale of Chlorine in India” (Relevant Market for
Chlorine) (collectively, Upstream Relevant Markets). Further, the relevant
downstream markets may be defined as “Market for production of Textiles in India”
(Relevant Market for Textiles), “Market for the production of cotton yarn and cotton
blended yarn in India” (Relevant Market for Cotton Yarn and Cotton Blended

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Yarn), “Market for production of Pulp in India” (Relevant Market for Pulp), Relevant
Market for VFY and “Market for manufacture and sale of Transparent Paper in India”
((Relevant Market for Transparent Paper) (collectively, Downstream Relevant
Markets). (Vertical Relationship II).

31. As stated earlier, Century Enka is engaged in manufacture and sale of NFY and Nylon
Tyre Cord Fabric which requires caustic soda and phosphoric acid for processing. Since,
GIL has not supplied any chemicals to Century Enka, there exists a potential vertical
relationship (Potential Vertical Relationship I-A). The relevant markets for this
potential vertical relationship may be defined at the upstream level as Relevant Market
for Caustic Soda and Relevant Market for Phosphoric Acid and at the downstream level
as “Market for manufacture and sale of NFY in India” (Relevant Market for NFY) and
“Market for manufacture and sale of Nylon Tyre Cord Fabric in India” (Relevant
Market for Nylon Tyre Cord Fabric).

32. Further, it is stated that KIL produces Transparent Paper and captively uses Sulphuric
Acid and Carbon Disulphide produced by it for manufacturing transparent paper.
However, it is noted that Sulphuric Acid is also manufactured by GIL, HIL and TIL, and
Carbon Disulphide is also manufactured by GIL as well which may be used for the
production of Transparent paper. Therefore, there may exist a potential vertical
relationship in this regard also (Potential Vertical Relationship I-B). The relevant
markets for this potential vertical relationship may be defined at the upstream level as
Relevant Market for Sulphuric Acid, Relevant Market for Carbon Disulphide and at the
downstream level as “Market for the manufacture and sale of Transparent paper”
(Relevant Market for Transparent Paper).

33. In relation to Vertical Relationship II, it is noted from the submissions of the Parties,
that the market share of GIL in the Relevant Market for Overall Chemicals is not
available; however, the Parties have provided market shares of GIL in FY 2020-21 in the
upstream Relevant Markets for Caustic Soda, Sodium Sulphate, Phosphoric Acid and
Chlorine, which are in the range of [15-20]%, [25-30]%, [20-25]% and [30-35]% in

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terms of volume, respectively. Further, the market share of Century Textile in each of
the Downstream Relevant Markets is in the range of [0-5%] in terms of value and
volume respectively. The market share of KIL in each of Downstream Relevant Markets
for VFY and Transparent Paper is in the range of [10-15]% and [0-5%] in terms of value
and volume respectively. Further, it is noted that each of the Upstream Relevant
Markets are characterized by the presence of other players such as Gujarat Alkali and
Chemicals Limited, DCM Shriram Limited and Meghmani Finechem Limited in the
Relevant Market for Caustic Soda; Prakash Chemicals International Private Limited,
Atul Limited, Innova Corporate (India), Nilkanth Organics Private Limited in the
Relevant Market for Sodium Sulphate; Gujarat Alkali and Chemicals Limited, Nirma
Limited in the Relevant Market for Phosphoric Acid; and Gujrat Alkali and Chemicals
Limited, DCM Shriram Consolidated Limited and Tata Chemicals Limited in the
Relevant Market for Chlorine. Also, each of the Downstream Relevant Markets have
presence of other players, such as, Raymond Limited, Vardhman Textiles Limited,
Arvind Limited, K.P.R. Mill Limited., among others in the Relevant Market for Textile;
ITC Limited, Tamilnadu Newsprint and Papers Ltd, JK Paper Ltd, among others in the
Relevant Market for Pulp; and Jilin Chemical Fiber Group Company Limited, Xinxiang
Bailu Investment Group Company Limited and Yibin Grace Company Limited in the
Relevant market for VFY. Moreover, with respect to the inter se relationship amongst
them, the Parties have submitted that the revenue generated by GIL from sale of
chemicals to Century Textile and KIL is miniscule in comparison to the total sale of
chemicals in each of the Upstream Relevant Markets; therefore, even if GIL chose to sell
chemicals exclusively to Century Textile or KIL, its inventory of chemicals will remain
unsold. Given the high market shares of the Parties in the Relevant Market for VFY at
the downstream level and the merger of only two existing domestic players in the said
relevant market, the Acquirer was required to provide certain clarification/
information(s) in relation to the same.

34. Based on the submissions of the Parties regarding Potential Vertical Relationship I-A, it
is noted that the market shares of GIL in the Relevant Market for Caustic Soda and
Phosphoric Acid at the upstream level are in the range of [15-20]% and [20-25]% in

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terms of volume and the market share of Century Enka in the Relevant Market for Nylon
Tyre Cord Fabric at the downstream level is in the range of [25-30]% in terms of
volume; however, the Parties have submitted that market share in the Relevant Market
for NFY is not available. Nonetheless, it is noted from the submissions of the Parties that
there are other players in both the upstream and the downstream relevant markets and
that Century Enka‟s requirement of the Caustic Soda and Phosphoric Acid is
insignificant when compared to GIL‟s production. Accordingly, it appears that Potential
Vertical Relationship I-A is not likely to raise any competition foreclosure concerns.

35. Based on the submissions of the Parties regarding Potential Vertical Relationship I-B, it
is noted that the market shares of GIL, HIL and TIL in the Relevant Market for
Sulphuric Acid and Carbon Disulphide at the upstream level are in the range of [0-5]%
and [5-10]%, in terms of value, respectively, and the market share of KIL in the
Relevant Market for Transparent Paper at the downstream level is in the range of [0-
5]%, in terms of value. Further, there are other players present in both the upstream and
the downstream relevant markets. Accordingly, it appears that Potential Vertical
Relationship I-B is not likely to raise any competition foreclosure concerns.

C. Vertical Relationship III/ Potential Vertical Relationship II (VSF/ VFY

manufactured by GIL used by Century Textile in manufacture of Textile)

36. It is submitted that GIL is engaged in the manufacture and sale of VSF which belongs to
the Relevant Market for MMF and Cotton, which is used by Century Textile in the
manufactures of textiles. The Parties have submitted that relevant market at the upstream
level may be defined as Relevant Market for MMF and Cotton or narrowly as Relevant
Market for VSF and the relevant market at the downstream level may be defined as the
Relevant Market for Textiles. (Vertical Relationship III)

37. Further, it is submitted that GIL manufactures VFY which is used in the manufacture of
Textile and Century Textile is engaged in the manufacture and sale of Textile. Thus,
there may exist a potential vertical relationship between GIL in the Relevant Market for

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VFY at the upstream level and Century Textile in the Relevant Market for Textiles at the
downstream level. (Potential Vertical Relationship II)

38. Based on the submissions of the Parties, it is noted that the market share of GIL in the
Relevant Market of VSF is in the range of ……….in terms of volume and the market
share of Century Textile in the Relevant Market of Textiles is miniscule. Further, there
are players such as Raymond Limited, Vardhman Textiles Limited, Arvind Limited,
K.P.R. Mill Limited among others in the Relevant Market for Textiles at the downstream
level.

39. With respect to the Potential Vertical Relationship II, it noted from the submissions of
the Parties that Century Textile has not procured VFY from any party in the past for the
manufacture of Textile. Therefore, this overlap is purely notional.

D. Vertical Relationship IV (Textiles manufactured by Century Textile used in the

manufacture of apparels by ABFRL)

40. It is submitted that Century Textile manufactures textile/unfinished cloth which can be
used for the manufacture of apparels by ABFRL. The Parties have submitted that the
relevant market at the upstream level may be defined as Relevant Market for Textiles
and at the downstream level as “Market for manufacture and sale of Apparels in India”
(Relevant Market for Apparels).

41. Based on the submissions of the parties, it is noted that the market share of the Parties is
in the range of [0-5]%, in terms of value and/ or volume in relevant markets at both the
upstream and the downstream level. Further, the Relevant Market for Textiles at the
upstream level is characterized by the presence of other players such as Raymond
Limited, Vardhman Textiles Limited, Arvind Limited and K.P.R. Mill Limited and the
Relevant Market for Apparels at the downstream level has presence of other players
such as Arvind Limited, Page Industries, Trent Limited and Raymond Limited.

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 Combination Registration No. C-2022/07/952

E. Vertical Relationship V (Carbon black additives manufactured by Birla Carbon

used in manufacture of tyres by Birla Tyres)

42. It is stated in the notice that Birla Carbon India Private Limited (Birla Carbon), an
affiliate of KMB Family, is engaged inter alia in the manufacture of „carbon black
additives‟. Carbon black additives are used in a diverse group of materials to enhance
their physical, electrical and optical properties. When carbon black additives are used in
tyres and other rubber products, it is primarily used as a filler. Further, Birla Tyre, an
affiliate of the Target, is engaged in the manufacture of tyres for various types of
automobiles. It is submitted that the Birla Tyre plant for manufacture of tyres has not
been operational since the past 8 months. Further, at the time of filing of the notice, Birla
Tyre is undergoing Corporate Insolvency Resolution Process under the provisions of the
Insolvency and Bankruptcy Code.

43. The Parties have submitted that Birla Tyre can utilise the carbon black additives
manufactured by Birla Carbon in the manufacture of tyres. The Parties have submitted
that for the purposes of assessment of this vertical relationship the relevant market at the
upstream level may be defined as “Market for manufacture and sale of carbon black
additives in India” (Relevant Market for Carbon Black Additives) and at the
downstream level may be defined as “Market for manufacture and sale of tyres in India”
(Relevant Market for Tyres).

44. Based on the submissions of the parties, it is noted that the market share of Birla Carbon
in the Relevant Market for Carbon Black Additives at the upstream level is in the range
of [30-35]% and the market share of Birla Tyre in the Relevant Market for Tyres at the
downstream level is miniscule both in terms of value and/ or volume. Further, the
Relevant Market for Carbon Black Additives at the upstream level is characterized by
the presence of other players such as PCBL Limited, Himadri Speciality Chemicals
Limited, Continental Carbon India Limited, Balkrishna Industries Limited and Epsilon
Carbon Private Limited and the Relevant Market for Tyres at the downstream level has

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 Combination Registration No. C-2022/07/952

presence of other players such as Apollo Tyres Limited, MRF Limited, CEAT Tyres and
JK Tyre & Industries Limited.

F. Vertical Relationship VI (Redmud and Phospho-gypsum produced by HIL used in

manufacture of grey cement by MCL)

45. The Parties have submitted that HIL produces (i) phospho-gypsum, and (ii) red-mud.
Both these products are waste by-products and of insignificant commercial value.
Further, it is submitted that MCL procures redmud from HIL for manufacture of grey
cement. Redmud is primarily generated as process waste by HIL as a result of its
alumina manufacturing process. Cement manufacturing companies typically obtain this
redmud for free and at times, by paying a nominal cost.

46. MCL also procures phospho-gypsum from HIL for the manufacture of grey cement. HIL
generates phospho-gypsum as an involuntary by-product waste during the manufacture
of phosphoric acid and provides the same to cement manufacturing companies such as
MCL. The relevant market at the upstream level may be defined as “market for
manufacture and sale of redmud” and at the downstream level may be defined as “the
market for manufacture and sale of grey cement”.

47. Based on the submissions of the parties, it is noted that HIL is required to dispose of the
redmud generated due to limitation of space and the fact that it cannot be stored for a
long duration. Further, phospho-gypsum also cannot be stored for a long duration since,
it is highly toxic. Accordingly, HIL disposes off these products to cement manufacturing
companies such as MCL. In relation to inter se relationship, the Parties have submitted
that MCL procured an insignificant amount for a miniscule cost from HIL in FY 2020-
21, however, given that phospho-gypsum is a waste product, its commercial data is not
available.

Modifications Offered by the Acquirer

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 Combination Registration No. C-2022/07/952

48. With respect to the possible competition concerns raised during the review of the
Proposed Combination by the Commission, inter alia, in relation to: (1) Market for
manufacture and sale of VFY in India and (2) Market for manufacture and sale of Grey
Cement in Rajasthan Relevant Market, Western Uttar Pradesh Relevant Market and
Karnataka Relevant Market, the Parties have submitted that post the Proposed
Combination, GIL, UltraTech, KIL and MCL will continue to function as independent
entities as the control of the respective companies will remain vested with distinct
groups. Further, the Acquirer group will de facto not acquire any special rights or
material influence over KIL or MCL and both the entities will remain under the control
of the BKB Family only (despite the shareholding of the Acquirer group being higher
than the BKB Family in these entities, post the Proposed Combination).

49. In this regard, the Acquirer also made a submission dated 30.08.2022, in terms of
Regulation 19(2) of the Combination Regulations through which it offered certain
modifications. The modifications offered by the Acquirer are enclosed at Annexure A.

Observations of the Commission and decision

50. The Commission notes that the modification proposed by the Acquirer is adequate to
address the competition concerns that may otherwise result from the Proposed
Combination.

51. Considering the material on record including the details provided in the Notice under
Section 6(2) of the Act and the assessment of the Proposed Combination based on the
factors stated in Section 20(4) of the Act, the Commission is of the opinion that the
Proposed Combination is not likely to have any appreciable adverse effect on
competition in India. Therefore, the Commission approves the Proposed Combination
under Section 31(1) of the Act subject to carrying out of modifications under Regulation
19(2) of Combination Regulations.

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 Combination Registration No. C-2022/07/952

52. The order may be revoked if, at any time, the information provided by the Acquirer is
found to be incorrect.

53. The information provided by the Acquirer shall be treated as confidential in terms of and
subject to the provisions of Section 57 of the Act.

54. The Secretary is directed to communicate to the Acquirer accordingly.

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Annexure - A