International Finance Corporation

Page 1 of 4 COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/02/1118 23rd April 2024 Notice under Section 6(2) of the Competition Act, 2002 given by the International Finance Corporation CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 31(1) of the Competition Act, 2002 1. On 27th February 2024, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act) given by the International Finance Corporation (IFC). The Notice has been given pursuant to the execution of the Subscription Agreement amongst Napino Auto and Electronics Limited (Napino), IFC and Sponsors1 on 29th December 2023 (SSA); and the Shareholder Agreement amongst Napino, IFC, Sponsors, Other Shareholder Parties2 on 29th December 2023 (SHA). 1 Consisting of Vipin Raheja, Vandana Raheja, Vani Raheja, Vaibhav Raheja and Vraheja Trading Private Limited 2 Consisting of Navin Raheja, Kunal Raheja Combination Registration Number: C-2024/02/1118 Page 2 of 4 2. IFC vide communications dated 11th March 2024 and 22nd March 2024 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) was required to remove defects from the Notice and furnish certain information relevant for the purpose of assessment of the proposed combination. IFC furnished its responses vide submissions dated 18th March 2024 and 3rd April 2024. 3. The Proposed Combination envisages subscription to an aggregate of 25,00,000 Compulsory Convertible Debentures (CCDs) of Napino by IFC. The conversion ratio is inter alia dependent on certain financial parameter. IFC’s exact shareholding in Napino, post the conversion of CCDs, will be known when the event triggering the conversion takes place. However, it is estimated that the CCDs subscribed to by IFC may amount to ~18-20% of Napino’s equity shareholding. 4. IFC, an international organization, was established in 1956 by an international treaty called the Articles of Agreement among its member countries, including India to further economic growth in its developing member countries by promoting private sector development. Membership in IFC is open only to member countries of International Bank for Reconstruction and Development (IBRD). IFC’s entire share capital is held by 186 member countries. IFC has investments across various sectors in India such as financial services, infrastructure, manufacturing, agribusiness and services. 5. Napino manufactures auto electrical and electronic products primarily for 2-wheeler and a small segment of 3-wheeler and 4-wheeler vehicles. In addition to auto electrical and electronic products, Napino is also engaged in certain ancillary businesses pertaining to internet of things (IoT), smart data devices, prototyping, hardware designing, digital solutions, etc. Napino through its affiliates also provides certain Electronic Manufacturing Services (EMS)/Original Design Manufacturing (ODM) services, data collection devices and data center network infrastructure and related implementation/managed services. 6. It has been submitted that there are no similar or identical or substitutable business activities undertaken by IFC or any of the IFC Portfolio Companies on the one hand Combination Registration Number: C-2024/02/1118 Page 3 of 4 and Napino and its affiliates on the other hand, considering all plausible alternative markets. 7. Mahindra Last Mile Mobility Limited (Mahindra Last Mile), an affiliate of IFC, is engaged in the manufacturing and sale of 3-wheel (3W) vehicles (of all fuel types and driver train systems) for all applications (cargo and passenger); 4-wheel (4W) small commercial vehicles, having a gross vehicle weight of less than 2 tons; and ancillary activities such as design, development and sale of electrical components. Napino (including its affiliates), on the other hand, is inter alia engaged in the business of manufacturing Engine Control Unit (ECU) and Battery Management System (BMS) for 3W. Further, Napino and an affiliate of IFC are contemplating a supply relationship for an auto component namely e-throttle. Therefore, the activities of IFC, through affiliate(s), and Napino exhibit vertical interfaces. The market share of Napino for ECU for 3W, for the period of FY 2022-23, is [0-5]%. It has been submitted that Napino Digital did not manufacture and/or supply BMS for 3W vehicles, during the period of FY 2022-23. Similar is the case for e-throttle. On the other hand, the market share of affiliate(s) of IFC for the period of FY 2022-23 for the overall segment of 3W, its sub- segments viz. electric 3W and 3W powered by internal combustion engine are [5-10]%, [5-10]% and [0-5]%, respectively. 8. The activities of NxtGen Datacenter and Cloud Technologies Private Limited (NxtGen), an affiliate of IFC, and VVDN Technologies Private Limited (VVDN), an affiliate of Napino, also exhibit vertical interface. NxtGen is engaged in the business of owning, setting up and operating data center facilities and providing colocation data center facilities such as physical space, racks for data servers, hardware, etc. VVDN is engaged in the business of network infrastructure (including turnkey service for setting up data centres at client-identified and owned locations) and related services for the implementation/management of data centres. It has further been submitted that VVDN is also engaged in the business of manufacturing data servers for OEM brands. The market shares of both VVDN and NxtGen for the period of FY 2022 – 23 for their respective segments are [0-5]%. Combination Registration Number: C-2024/02/1118 Page 4 of 4 9. 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. 10. The order may be revoked if, at any time, the information provided by IFC is found to be incorrect. 11. The information provided by IFC shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 12. The Secretary is directed to communicate this order to IFC.