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The Competition Commission of India approves the combination involving the merger of Diliigent Power into DB Power, share buyback by Decore Power, share purchase, and rights issue subscription by Writers and Publishers. The transaction includes the merger, share buyback, and share acquisition steps. The Commission concludes that the proposed combination does not create an appreciable adverse effect on competition in India. The order remains subject to revocation if the provided information is incorrect.
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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/09/1188
29th October 2024
Notice under Section 6(2) of the Competition Act, 2002 jointly given by Diliigent Power Private Limited, DB Power Limited, Decore Thermal Power Private Limited, and Writers and Publishers Private Limited
CORAM:
Ms. Ravneet Kaur Chairperson
Mr. Anil Agrawal Member
Ms. Sweta Kakkad Member
Order under Section 31(1) of the Competition Act, 2002
On 25th September 2024, the Competition Commission of India (Commission) received a notice (Notice), under sub-section (2) of Section 6 of the Competition Act, 2002 (Act), jointly given by Diliigent Power Private Limited (Diliigent Power), DB Power Limited (DB Power), Decore Thermal Power Private Limited (Decore Power), and Writers and Publishers Private Limited (Writers and Publishers). The Notice has been given pursuant to the execution of the Transaction Framework and Cooperation Agreement amongst Diliigent Power, DB Power, Decore Power, DB Power (Madhya Pradesh) Limited (DB Power Madhya Pradesh), Willowbay Investment Limited (WIL), AIRRO (Mauritius) Holdings IX (AIRRO Mauritius), AIRRO II Singapore 1 Pte. Ltd. (AIRRO Singapore), and the Promoters¹ on 9th August 2024 (Framework Agreement); the Buyback and Share Purchase Agreement amongst Decore Power, AIRRO Mauritius, AIRRO Singapore, WIL, and the Promoters on 9th August 2024 (Buyback Agreement); the Shareholders' Agreement amongst the DB Power, WIL, AIRRO Mauritius, AIRRO Singapore, and the Promoters on 9th August 2024 (DB Power SHA); and the Shareholders' Agreement amongst Decore Power, AIRRO Mauritius, AIRRO Singapore, DB Power Madhya Pradesh, and the Promoters on 9th August 2024 (Decore Power SHA); and the Scheme of Amalgamation amongst Diliigent Power, DB Power, and their respective shareholders and creditors (Scheme). Diliigent Power, DB Power, Decore Power, and Writers and Publishers are hereinafter collectively referred to as the Parties.
The notifying parties, vide communications dated 3rd October 2024 issued under Regulation 14 of the Competition Commission of India (Combinations) Regulations, 2024 (Combination Regulations), were required to remove defects from the Notice and furnish certain information relevant for the purpose of assessment of the combination. The notifying parties made their submissions vide response dated 10th October 2024.
The Proposed Combination envisages:
¹ Writers and Publishers, Mr. Girish Agarwal, Mr. Sudhir Agarwal, Mr. Pawan Agarwal, Mrs. Jyoti Agarwal, Mrs. Namita Agarwal, and Mrs. Nitika Agarwal
capital of Diliigent Power on a fully diluted basis. Upon completion of the Merger, Promoters will collectively hold ~98.36% of the share capital of the merged entity on a fully diluted basis. The other shareholders will collectively hold ~1.64% of the share capital of the merged entity on a fully diluted basis.
Prior to the Buyback, the Promoters and the other shareholders respectively hold ~54.46% and ~45.54% of the share capital of Decore Power on a fully diluted basis. Upon completion of the steps of the Proposed Combination related to Decore Power, one of the shareholders will cease to be a shareholder of Decore Power, the collective shareholding of the Promoters will increase to ~75% of the share capital of Decore Power on a fully diluted basis, and shareholding of other shareholders will reduce to ~25% of the share capital of Decore Power on a fully diluted basis.
Diliigent Power is the parent company of DB Power. DB Power has set up a 1200 MW coal-based power plant in the state of Chhattisgarh. Power generated from this project is being sold under the combination of long term and short-term power purchase agreements predominantly to State-owned distribution companies and a small untied capacity sold through power exchange and bilateral trades.
Decore Power is holding company of its subsidiary viz., DB Power Madhya Pradesh. DB Power Madhya Pradesh presently only holds certain land at Singrauli District, Madhya Pradesh.
Writers and Publishers is inter-alia engaged in the business of trading of fabrics/textiles, printing and publishing, renting/leasing, acquiring, and selling of immovable properties in India.
It has been submitted that the (i) Parties; and (ii) the Promoters and Parties do not produce/provide any similar or identical or substitutable products or services either directly or indirectly. There are two Promoter Portfolio entities viz., DB Malls (DB Malls) and Ishan Mall LLP (Ishan Malls), that could be said to be engaged in activities which are at different stages or levels of the production chain with respect to the activities undertaken by DB Power. Both DB Malls and Ishan Malls are primarily involved in renting/leasing services and operating and maintenance of malls. As a part of their service offerings, as a mall operator, they are inter alia responsible for providing utilities, including electricity, to their tenants (i.e., the lessee of the shop premises), exclusively within the mall premises and do so in accordance with the process set up for distribution of electricity within 'shopping malls'. Madhya Kshetra Vidyut Vitran Company Limited supplies power to both DB Malls and Ishan Malls. The mall is provided with electricity through one high-voltage electricity line by power distribution company, which thereafter splits into multiple low-voltage electricity lines to supply electricity to the tenants by the mall operators. The shopping malls in Madhya Pradesh are permitted to supply electricity to their tenants after its procurement through open access. As per the Madhya Pradesh Electricity Regulatory Commission (Terms and Conditions for Intra State Open Access in Madhya Pradesh) Regulations, 2021, the minimum load requirement for open access power purchase is set at one megawatt (MW). Further, open-access purchases are allowed to the extent of 80% of the demand load. DB Mall usually has a demand load of more than one MW, which meets the minimum load requirement for open-access power purchase. However, Ishaan Malls typically has a demand load of less than one MW.
Since the power requirement of DB Mall is more than the eligibility criteria for availing open access, DB Malls and DB Power exhibit a vertical interface to this extent. It is observed that the installed capacity of DB Power is 1200 MW and the usual demand load of DB Mall in Bhopal is less than 1% of the installed capacity of DB Power. Therefore, foreclosure concerns are not likely to arise.
Considering the material on record, including the details provided in the Notice 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 appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.
This order may be revoked if, at any time, the information provided by the notifying parties is found to be incorrect.
The information provided by the notifying parties shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.
The Secretary is directed to communicate this order to the notifying parties.
