Jointly by (i) M/s Haldiram Snacks Private Limited (HSPL), New Delhi and (ii) M/s. Haldiram Foods International Private Limited (HFIPL), Mumbai — Combination C-2023/03/1006

Notice under Section 6(2) of the Competition Act, 2002 jointly filed by Haldiram Snacks Private Limited and Haldiram Foods International Private Limited

CORAM:

Ms. Sangeeta Verma Acting Chairperson

Mr. Bhagwant Singh Bishnoi Member

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

1. On 14.03.2023, 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 Haldiram Snacks Private Limited (HSPL) and Haldiram Foods International Private Limited (HFIPL). The notice has been filed pursuant to the Memorandum of Understanding (MOU) dated 28.02.2023, executed by and between HSPL, HFIPL, Haldiram Snacks Food Private Limited (HSFPL) and shareholders of HSPL HFIPL and HSFPL as set out in the MOU (Hereinafter, HSPL, HFIPL and HSFPL are collectively referred to as Parties).

2. The proposed combination comprises the following steps: (i) Step 1: A demerger of the respective FMCG businesses of HSPL and HFIPL (currently housed under HSPL and HFIPL and their various associates/subsidiaries) into a single company, i.e., HSFPL, by way of a court approved scheme; and (ii) Step 2: The acquisition of 56% and 44% shareholding in HSFPL by the existing shareholders of HSPL and HFIPL pursuant to the demerger (collectively, Proposed Combination).

Combination Registration No. C-2023/03/1006

3. In addition to the information provided in the notice, certain additional information was provided by the Parties vide submission dated 30.03.2023.

4. HSPL is headquartered in Delhi and its operations are primarily run by Mr. Manohar Agarwal and Mr. Madhu Sudan Agarwal (Delhi Family). It is the flagship ultimate holding company of the “Haldiram Delhi” group, comprising the FMCG business. HSPL is engaged in the manufacture and distribution of packaged food products in India, such as snacks, namkeen, sweets, ready to eat/pre-mix food, frozen food, biscuits, non-carbonated ready to drink beverages, pasta, etc.

5. HFIPL is headquartered in Nagpur and its operations are primarily run by Mr. Kamalkumar Shivkishan Agarwal (Nagpur Family). It is the flagship entity of the “Haldiram Nagpur” group, comprising the FMCG business. HFIPL is engaged in the manufacture and distribution of packaged foods products, such as snacks, namkeen, sweets, ready to eat/pre-mix food, biscuits, cookies, non-carbonated ready to drink beverages, pasta, dairy products, etc.

6. HSFPL is a newly incorporated entity that currently does not have any business activities or any physical presence in India. Post the completion of the Proposed Combination, HSFPL would house the FMCG businesses of HSPL and HFIPL and would continue to sell the products as part of the FMCG business under the “Haldiram” trade name.

7. It is stated in the notice that the FMCG business (i.e., the packaged foods business) would collectively comprise the FMCG business currently undertaken by HSPL and HFIPL, and their respective subsidiaries/affiliates. The FMCG business excludes:

(i) The quick-service restaurant business and the loose sweets business (QSR business) housed in certain entities of Delhi Family, viz., Haldiram Marketing Private Limited, Haldiram Manufacturing Company Private Limited, Haldiram

Combination Registration No. C-2023/03/1006

Products Private Limited and Haldiram Ethnic Foods Private Limited, as well as certain entities of the Nagpur Family, viz., Oam Industries (India) Private Limited, Harrshiv Healthy Foods and More Private Limited, Karria Food and Snacks Private Limited and Abhinandan Snacks Pvt. Ltd. The QSR business comprises restaurants that are engaged in the business of serving food for immediate consumption, such as freshly cooked meals, fast food and loose sweets. It is stated that the QSR business may also stock certain items from the packaged food business/FMCG business on display and these will be purchased on an arm‟s-length basis.

(ii) Various assets, i.e., surplus immovables, surplus cash & equivalents and shares/investments held in various group or other entities, as identified by both HSPL and HFIPL. The shares in the entities that house the FMCG business of the Parties will be transferred to the newly created joint venture, i.e., HSFPL.

8. In relation to the identification of overlaps, the Parties have submitted that the FMCG business of HSPL and HFIPL exhibit horizontal overlaps in the following segments, namely, (i) Overall packaged food in India, which can be further segmented into: (a) Snacks, (b) Sweets, (c) Biscuits, (d) Non-carbonated ready to drink beverages, (e) Ready to eat meals, and (f) Pasta and vermicelli. With respect to vertical relationships, it is stated that there is no vertical relationship between the FMCG business undertaken by HFIPL and HSPL.

9. The Parties have submitted that the relevant markets in relation to the horizontal overlaps in the FMCG business of HSPL and HFIPL can be delineated at the broad level as „market for packaged foods in India‟, which can be segmented into (i) „market for snacks in India‟ (Snacks Market), (ii) „market for sweets in India‟ (Sweets Market), (iii) „market for biscuits in India‟ (Biscuits Market), (iv) „market for ready to eat meals in India‟ (Ready to Eat Meals Market), (v) „market for non-carbonated ready to drink beverages‟ in India (i.e., non-carbonated and non-alcoholic beverages) (Non-Carbonated Ready to Drink Beverages Market) and (vi) „market for pasta in Combination Registration No. C-2023/03/1006

India‟ (Pasta Market). Additionally, the Snacks Market can be further segmented at a narrower level into (a) „market for salted snacks in India‟ (Salted Snacks Segment) and „market for non-salted snacks in India‟ (Non-Salted Snacks Segment), and the Sweets Market can be further segmented at a narrower level into (a) „market for milk-based sweets in India‟ (Milk Based Sweets Segment); (b) „market for dry fruit sweets in India‟ (Dry Fruit Sweets Segment); and (c) „market for other sweets in India‟ (Other Sweets Segment).

10. The Commission decided to assess the Proposed Combination in the segments identified by the Parties. However, the exact delineation of the relevant market is left open, as the material available on record does not suggest that the Proposed Combination is likely to cause any competition concern in India.

11. Based on the submissions of the Parties, it is noted that the combined market share of HFIPL and HSPL for FY 2021-22 in the market for packaged food in India is in the range of [0-5]%, in terms of value, both in the overall and the organised segment. Further, there are other players present in the market for packaged foods in India such as Anand Milk Union Limited (Amul), Parle Products Private Limited, Britannia Industries, Mother Dairy and ITC Limited.

12. It is further noted from the submissions of the Parties that the combined market share of HFIPL and HSPL for FY 2021-22 in the Snacks Market as well as the narrower Salted Snacks Segment is in the range of [5-10]% and [10-15]%, in terms of value, in the overall and the organised segment, respectively. Further, in the narrower Non- Salted Snacks Segment, the combined market share of HSPL and HFIPL for FY 2021- 22 in terms of value, in both the overall and the organised segment is not significant. Furthermore, the Snacks Market has the presence of multinational companies like Bikaji, Bikanervala, Pepsi and ITC; mid-sized companies like Shree Krishna Sweets, Adyar Anand Bhavan, Hindustan Sweets and Sproutlife; as well as unorganised players in the form of local shops engaged in the manufacture and distribution of local snacks across the country. Similarly, the Salted Snacks Segment is characterised by the Combination Registration No. C-2023/03/1006 presence of players such as Balaji, Pepsico and Prataap Snacks, and the Non-Salted Snacks Segment has the presence of organised players such as Lion Dates Impex Pvt. Ltd, FieldFresh (Del Monte Juice) and Sproutlife (YogaBar).

13. In relation to the Sweets Market, it is noted from the submissions of the Parties that the combined market share of HSPL and HFIPL for FY 2021-22 in the Sweets Market as well as the narrower Milk Sweets Segment and the Other Sweets Segment is in the range of [5-10]%, in terms of value, in organised segment and is not significant in the overall segment. Further, in the narrower Dry Fruit Sweets Segment, the combined market share of HSPL and HFIPL for FY 2021-22 is also not significant, in both the overall and the organised segment. In addition, the Sweets Market is characterised by the presence of other players such as Amul, Prabhuji, Bikanervala and Bikaji, regional brands such as Nathus, Aggarwal Sweets, Bengal Sweets, Brijwasi and Shree Krishna Sweets, as well as several standalone mithai shops across the country. Similarly, the Milk Based Sweets Segment is characterised by the presence of other players in the organised segment such as Adyar Anand Bhavan, KC Das, Amul, Bikaji and Mother Dairy. Likewise, the Dry Fruit Sweets Segment as well as Other Sweets Segment are characterised by the presence of other organised players such as Bikano, Prabhuji and Bikaji, among others.

14. Further, with respect to the Biscuits Market, Ready to Eat Meals Market, Ready to Drink Beverages Market and Pasta Market, it is noted from the submissions of the Parties that the combined market share of HSPL and HFIPL for FY 2021-22 in these markets is not significant, in both the overall and the organised segment. Further, each of these markets is characterised by the presence of other players, which would continue to pose competition constraints on the Parties even after the Proposed Combination. For instance, the Biscuits Market has other players like Parle, Britannia, ITC, McVitie‟s and UNIBIC; the Ready to Eat Meals Market has players like MTR, ITC, Gits and Tata Q.; the Non-Carbonated Ready to Drink Beverages Market has players like Amul, Pepsico, ITC, Dabur and Hector Beverages; and the Pasta Market has players ranging from multinational companies like Nestle, Del Monte, Bambino

Combination Registration No. C-2023/03/1006 and ITC to mid-sized companies like Slurrp farms, Gustora Foods and Pink Harvest Farms.

15. Considering the material on record, including details provided in the notice given under Section 6(2) of the Act and assessment of the 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 in any of the relevant market(s), and therefore, the Commission approves the same under Section 31(1) of the Act.

16. This order may stand revoked if, at any time, the information provided by the Parties is found to be incorrect.

17. It is made clear that nothing contained in this order shall be deemed to be confidential as the same has been used for the purposes of the Act in terms of the provisions contained in Section 57 of the Act.

18. The Secretary is directed to communicate to the Parties accordingly.