Multiples Private Equity Fund III, SRF Transnational Holdings Limited, Balkrishna Industries Limited, Dharmayug Investments Limited, QRG Investments and Holdings Limited, Mr. Nishant k. Agarwal, and Ms. Mallika Srinivasan — Combination C-2022/03/911

Notice under Section 6(2) of the Competition Act, 2002 given by Multiples Private Equity Fund III, SRF Transnational Holdings Limited, Balkrishna Industries Limited, Dharmayug Investments Limited, QRG Investments and Holdings Limited, Mr. Nishant K. Agarwal and Ms. Mallika Srinivasan

CORAM:

Mr. Ashok Kumar Gupta Chairperson

Ms. Sangeeta Verma Member

Mr. Bhagwant Singh Bishnoi Member

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

1. On 1 March 2022, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act), given by Multiples Private Equity Fund III (Multiples Fund III), SRF Transnational Holdings Limited (SRF Transnational), Balkrishna Industries Limited (BIL), Dharmayug Investments Limited (DIL), QRG Investments and Holdings Limited (QRG), Mr. Nishant K. Agarwal, and Ms. Mallika Srinivasan. [SRF Transnational, BIL, DIL, QRG, Mr. Nishant K. Agarwal, and Ms. Mallika Srinivasan are collectively referred to as Financial Investors.] [Multiples Fund III and Financial Investors are collectively referred to as Acquirers.]

2. The Notice was given pursuant to the execution of the Shareholders’ Agreement (SHA) and Share Subscription Agreement (SSA) dated 18 January 2022 amongst Acquirers, BDR Pharmaceuticals International Private Limited (BDR/Target), and promoters of BDR, (Hereinafter, the Acquirers and the Target are collectively referred to as Parties).

3. The Proposed Combination contemplates acquisition of less than 10% of the equity share capital of BDR on a fully diluted basis through subscription of compulsorily convertible preference shares (CCPS) of BDR by Multiples Fund III and Financial Investors in the Target. Multiples Fund III will acquire less than 8% and Financial Investors will acquire approximately 2% of the equity share capital of the BDR on a fully diluted basis through subscription of CCPS of BDR, referred to as the Multiples Transaction and Financial Investors Transaction, respectively (the Multiples Transaction and the Financial Investors Transaction are collectively referred to as Proposed Combination). Multiples Fund III will have certain rights, including the right to nominate a director and observer on the board of directors of BDR subject to a qualifying threshold which is also linked to the shareholding of the Financial Investors.

4. The Commission, vide its communication dated 23 March 2022, 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), sought certain information(s)/clarification(s), inter alia, relating to the structure chart and products and services of the Parties; the response to the same was received on 29 March 2022.

ACQUIRERS

5. Multiples Fund III / Multiples Group: Multiples Fund III is a SEBI registered Category II AIF and is being managed by Multiples Alternate Asset Management Private Limited (MAAMPL). Apart from Multiples Fund III, MAAMPL is the investment manager of certain other Multiples Group funds.

6. SRF Transnational: SRF Transnational is a non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI). It is a wholly owned subsidiary of Kama Holdings Limited (KHL), which is the ultimate holding company and is listed on BSE Limited (BSE) wherein Mr. Arun Bharat Ram along with his family members (i.e., promoter group of KHL) collectively hold 75% shareholding, and the remaining 25% shareholding is held by public shareholders.

7. BIL: BIL does not belong to any group and is a holding company. Promoter and promoter group hold 58.29% in BIL, and the remaining shareholding of 41.71% is held by public shareholders. BIL and its affiliates are collectively referred to as BIL Group.

8. DIL: DIL is an NBFC registered with RBI. DIL is a wholly owned subsidiary of Bennett Coleman and Company Limited (BCCL). DIL, its parent, subsidiaries, and group companies along with their respective affiliates, are collectively referred to as Times Group.

9. QRG: QRG is an NBFC registered with RBI. Mr. Anil Rai Gupta, Mr. Surjit Kumar Gupta, and their family members collectively hold 100% shareholding in QRG which, in turn, has controlling/minority investment interests in various entities. Mr. Anil Rai Gupta, Mr. Surjit Kumar Gupta, along with their family members (i.e., the promoter group), and their affiliates are collectively referred to as QRG Group.

10. Mr. Nishant K. Agarwal: Mr. Nishant K. Agarwal does not belong to any group and is an individual investor.

11. Ms. Mallika Srinivasan: Ms. Mallika Srinivasan does not belong to any group and is an individual investor.

TARGET

12. BDR: BDR is a holding company and does not belong to any group. It is controlled/owned by the promoters, namely, Mrs. Sharmishta Shah, Mrs. Binita Shah, Mr. Dharmesh Shah, Mr. Dheer Shah, and Mr. Raheel Shah. BDR has shareholding in various affiliates in India as well as outside India. In India, the affiliates of BDR are: a) Cibeles Pharmaceuticals Private Limited (Cibeles), b) Magnum Chemi- Gran Private Limited (Magnum), c) BDR Lifesciences Private Limited (BDR LSPL), d) Virdev Intermediates Private Limited (Virdev), and e) Lyka BDR International Limited (Lyka BDR), and outside India, the affiliates of BDR are: a) BDR International FZE (BDR FZE), b) BDMED Trading FZCO, and c) Alfacare. [BDR along with its affiliates are referred to as the BDR Group.]

13. BDR Group is engaged in the following segments within the pharmaceutical sector:

(i) Manufacture and sale of active pharmaceutical ingredients (APIs): APIs are the primary inputs in the manufacture of formulations. The World Health Organisation (WHO) defines an API as “a substance used in a finished pharmaceutical product, intended to furnish pharmacological activity or to otherwise have direct effect in the diagnosis, cure, mitigation, treatment or prevention of disease, or to have direct effect in restoring, correcting or modifying physiological functions in human beings” (ii) Manufacture and sale of formulations (including pellets1): WHO defines a formulation or finished pharmaceutical product as “a finished dosage form of a 1 Pellets are formulations in the form of spherical units. They are small, free-flowing, spherical units made using a group of fine powders or granules of drugs through pelletisation. They are used for controlled and delayed release of active ingredients in the gastrointestinal tract at prearranged rates.

pharmaceutical product, which has undergone all stages of manufacture, including packaging in its final container and labelling”.

(iii) Contract development and manufacturing services (CDM Services): Contract manufacturing is a form of outsourcing where a pharmaceutical manufacturer enters a formal agreement with another manufacturing firm for manufacturing/development of its parts, products, or components.

14. Based on the submissions of the Acquirers, it is observed by the Commission that Acquirers (including their affiliates) are not engaged in any activity that could be considered overlapping with the businesses of any of the entities belonging to BDR Group. Therefore, there are no horizontal overlaps between the activities of Parties in India. With respect to vertical overlaps, it is submitted that there are no vertical links/ relationships between the Acquirers (including their affiliates) and BDR Group in India.

15. With regard to complementary overlaps, the Commission observed that there is a complementary relationship between the Acquirers (through their affiliates) and BDR Group in India. QRG Group through its affiliates: (a) Marengo Asia Healthcare Private Limited (Marengo)2 operates two super/multi-speciality hospitals in Faridabad and Ahmedabad; and (b) Aartas Care Private Limited (Aartas) is engaged in the provision of retail sale of pharmaceuticals in India Retail Pharmaceutical Market. BDR Group is engaged in the manufacture and sale of pharmaceutical products in India Pharmaceutical Market. The market share of BDR Group in the Pharmaceutical Market is less than 1 per cent, and the market share of QRG Group in the Retail Pharmaceutical Market is also insignificant, i.e., less than 1 per cent. Accordingly, neither BDR Group nor QRG Group has the ability or the incentive to foreclose competition in either of the markets. Additionally, Retail Pharmaceutical Market is a highly fragmented market, with presence of organised chains such as Apollo Pharmacy, Guardian, Lifecare, LifeKen, etc., as well as small players. Considering that there are no competition concerns due to the Proposed Combination, irrespective of how the market is defined, the Commission decided to keep the definition of the relevant product market open.

16. Considering the material on record, including the details provided in the Notice and the assessment of the Proposed Combination based on 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. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

2 Marengo runs two hospitals i.e., CIMS Hospital Private Limited (Ahmedabad, Gujarat) (CIMS Hospital) and QRG Medicare Limited (Faridabad, Haryana) (QRG Hospital).

17. This order may be revoked if, at any time, the information provided by the Acquirers is found to be incorrect.

18. The information provided by the Acquirers shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

19. The Secretary is directed to communicate to the Acquirers accordingly.