Protos Engineering  Company Private Limited Paharpur Cooling Towers Limited

Page 1 of 7 COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/02/1112 16th 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 1. On 16th February 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 Protos Engineering Company Private Limited (‘Protos’) and Paharpur Cooling Towers Limited (‘Paharpur’) [Hereinafter, Protos and Paharpur are collectively referred to as the ‘Acquirers’]. The Notice was filed pursuant to the execution of the Share Purchase Agreement dated 22nd January 2024 between Thyssenkrupp Technologies Beteiligungen GmbH (‘Seller 1’) and Acquirers (‘SPA 1’), and the Share Purchase Agreement dated 19th January 2024 between Mr. Jayprakash Jagannath Girme (‘Seller 2’) and Acquirers (‘SPA 2’). Combination Registration No. C-2024/02/1112 Page 2 of 7 2. The Proposed Combination envisages the additional acquisition, on a fully diluted basis, of: a) 10.088% and 0.112% of total paid-up share capital of Thyssenkrupp Industries India Private Limited (‘Target’) by Protos from Seller 1 and Seller 2, respectively. b) 44.639% and 0.446% of total paid-up share capital of the Target by Paharpur from Seller 1 and Seller 2, respectively. As a result of the Proposed Combination, Seller 1 and Seller 2 will cease to be shareholders of Target. 3. 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 29th February 2024, certain information and clarifications were sought from the Acquirers. The Acquirers submitted the response to the same vide communication dated 13th March 2024, after seeking an extension of time. Since the response was not complete, another letter dated 19th March 2024 was issued and the response to the same was furnished vide communication dated 26th March 2024. The Acquirers also furnished certain information voluntarily vide communication dated 9th April 2024. 4. 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: a) acts as an agent of companies that manufacture: (i) equipment, machinery, and raw materials in the steel, power, sugar, cement, fertilizer, oil and gas, plastic, solar water purification, and petrochemicals sectors, etc. and (ii) industrial products such as densolen tapes, die casting machine, etc. b) acts as a sole selling agent for Target with respect to the latter’s sugar equipment/plant. c) provides after-sales services in relation to the erection and commission of pneumatic tube systems, die casting machines, and densolen tapes. Combination Registration No. C-2024/02/1112 Page 3 of 7 5. 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. 6. 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. 7. 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. 8. 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: a) providing engineering; engineering and procurement; and engineering, procurement, and construction services to execute turnkey projects from conceptualization to finalisation relating to sugar, mining, cement, and power sectors. It also provides after-sales services. b) manufacture and sale of various industrial products to customers in India and globally i.e., centrifugal machines, mineral and aggregating crushing systems, and vertical shaft impactors. c) providing operation and maintenance/asset management services for plants. 9. It is submitted by the Acquirers that ICS is the process cooling system to remove excess heat from any medium, using heat exchange with water or air to bring down the temperature of that medium towards ambient levels. They are required in industries Combination Registration No. C-2024/02/1112 Page 4 of 7 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. 10. 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. 11. 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. 12. 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 Page 5 of 7 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.