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COMPETITION COMMISSION OF INDIA
Combination Registration No. C-2024/02/1112
16^th^ April 2024
Notice under Section 6(2) of the Competition Act, 2002 jointly given by Protos Engineering Company Private Limited and Paharpur Cooling Towers Limited
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
Combination Registration No. C-2024/02/1112
As a result of the Proposed Combination, Seller 1 and Seller 2 will cease to be shareholders of Target.
In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, vide letter dated 29^th^ February 2024, certain information and clarifications were sought from the Acquirers. The Acquirers submitted the response to the same vide communication dated 13^th^ March 2024, after seeking an extension of time. Since the response was not complete, another letter dated 19^th^ March 2024 was issued and the response to the same was furnished vide communication dated 26^th^ March 2024. The Acquirers also furnished certain information voluntarily vide communication dated 9^th^ April 2024.
Protos, a private company incorporated in India, is directly and indirectly owned and controlled by the Kapadia family. Certain Kapadia family members and Harshadray Private Limited constitute the Protos Group. Protos is engaged in the following activities:
Combination Registration No. C-2024/02/1112
One of the affiliates of Protos Group namely, TUV India Private Limited (‘TUV India’) is engaged in providing services, inter alia, relating to industrial inspection, industrial certification, food testing to consumer companies, oil & gas testing to transport companies and electric & electronic testing.
Paharpur, a public limited company incorporated in India, is directly and indirectly, owned and controlled by the members of the Swarup family. Paharpur Group is comprised of the Swarup family and their relevant entities. Paharpur is engaged in the manufacture and sale of industrial cooling systems (‘ICS’) and the generation of power (through wind) in India.
Two affiliates of Paharpur Group are KSB Limited and KSB MIL Controls Limited (‘MIL Controls’). KSB Limited is engaged in the manufacture and sale of industrial valves, industrial pumps, and pump control units. MIL Controls is engaged in the manufacture and sale of industrial valves and accessories.
Target, a private company incorporated in India, is jointly controlled by Seller 1, Protos Group, Paharpur Group, and group of Mr. Arvind Parikh. Target is engaged, inter alia, in:
Combination Registration No. C-2024/02/1112
where process heat is generated such as power, refineries, cement, chemical & fertilizer, sugar, oil & gas, mining, etc. for cooling purposes. They are essential to the production process as they prevent equipment and products from overheating by transferring the thermal energy (heat) generated, from one medium to another.
As submitted in the Notice, ICS may be segmented based on the cooling technique into dry industrial cooling systems (‘DCS’), wet industrial cooling systems (‘WCS’), and hybrid industrial cooling systems (‘Hybrid ICS’). DCS makes use of air for cooling and is used when the availability of water resources are limited. WCS makes use of water for cooling and is used for large industries which require extensive cooling and have sufficient availability of water. Hybrid ICS combines both cooling technologies (wet and dry cooling) to achieve optimal cooling efficiencies. ICS and its above-mentioned segments may be segmented into the Engineering, Procurement, and Construction (‘EPC’) Model and Non-EPC (Standard) Model based on the supply model. Under the EPC Model, the ICS manufacturer engages in designing and engineering of cooling equipment or procurement of the same; and undertaking civil construction to erect the ICS at the customer location/plant. These are typically undertaken for large projects such as setting up a power plant or captive power plant while setting up another plant, oil refinery, etc. On the other hand, under the Non-EPC Model, the ICS manufacturer supplies standard products to its customers, which are typically used for small projects generating less heat such as kilns in a cement plant or centralised cooling systems installed at an airport, commercial buildings, data centres, hospitals, hotels, etc.
Paharpur is engaged in the manufacture and sale of ICS including WCS and DCS under both supply models, excluding non-EPC DCS products. Further, it is present only in the sale of non-EPC Hybrid ICS, which are procured by it from overseas manufacturers and supplied to the customer in India.
With regard to the EPC activities of the Target, it is submitted that EPC firms deliver a complete package of resources from designing the plant to supply, construction, and commissioning of the complete plant. EPC projects can be undertaken for multiple
Combination Registration No. C-2024/02/1112
industries. However, an EPC contractor providing services to a particular sector requires significant capabilities i.e., the necessary engineering, technology, technical know-how, expertise, and machinery. For every sector, an EPC contractor requires separate know-how and technology as the machinery/equipment/technology used is sector-specific. It is submitted that Target is engaged in the provision of EPC services to the sugar, mining, cement, and power industries only as it does not have the capabilities to cater to other sectors.
