1. Paradeep Phosphates Limited (PPL) 2. Mangalore Chemicals & Fertilizers Limited (MCFL) 3. Zuari Maroc Phosphates Private Limited (ZMPPL)

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Page 1 of 14 COMPETITION COMMISSION OF INDIA Combination Registration No.C-2024/05/1149 30th July 2024 Notice under Section 6(2) of the Competition Act, 2002 filed by Paradeep Phosphates Limited, Mangalore Chemicals & Fertilizers Limited and Zuari Maroc Phosphates Private 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 17th May 2024, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) filed by Paradeep Phosphates Limited (PPL), Mangalore Chemicals & Fertilizers Limited (MCFL) and Zuari Maroc Phosphates Private Limited (ZMPPL) [PPL, MCFL and Combination Registration No. C-2024/06/1149 Page 2 of 14 ZMPPL are collectively referred to as the ‘Parties’. Further, PPL and MCFL are collectively referred to as the ‘Merging Parties’]. 2. The notice has been filed pursuant to the composite scheme of arrangement by and amongst PPL, MCFL and their respective shareholders and creditors; and the Merger Cooperation Agreement dated 7th February 2024 executed by and between PPL and MCFL. 3. The notice has been filed in relation to: (i) proposed amalgamation of MCFL with and into PPL, on a going concern basis (Proposed Merger); and (ii) proposed acquisition of upto 33.08% shareholding of MCFL by ZMPPL from ZACL, in accordance with and as an integral part of the Scheme (Proposed Acquisition) [together, Proposed Combination]. It is submitted that MCFL will be dissolved without winding-up as MCFL will amalgamate with and into PPL with ZMPPL holding upto 51% (on a fully diluted basis) shareholding in the resulting entity, i.e., PPL. 4. In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, certain information(s)/ clarification(s) were sought vide communication dated 03rd June 2024, and 03rd July 2024 and the responses to the same were received on 18th June 2024 and 8th July 2024, respectively. Further, voluntary submissions were received on 18th July 2024 and 24th July 2024. PPL 5. PPL is a public company incorporated under the Companies Act, 1956. It operates under the broader umbrella and control of the Adventz group of companies (Adventz group). ZMPPL currently holds the majority shareholding in PPL, i.e., 56.08%. The remaining shareholding of PPL is held by public shareholders. PPL does not have any subsidiaries. It has two manufacturing plants located in Odisha and Goa in India. Combination Registration No. C-2024/06/1149 Page 3 of 14 6. PPL is primarily engaged in the manufacture and sale of urea fertilizers, non-Urea/ complex fertilizers, namely, Di-ammonium Phosphate (DAP) and Nitrogen Phosphorus and Potassium (NPK) (multiple grades) fertilizers. PPL also sells a small amount of Muriate of Potash (MoP). Apart from these products, PPL also manufactures and sells small volumes of micronutrient mixtures like zypmite and HFSA (Hexafluoro Silicic Acid). Additionally, PPL produces phospho-gypsum (which is a by-product of the fertilizer manufacturing process) and is largely sold to cement manufacturers for use as raw material. 7. In addition to this, PPL also manufactures and sells small quantities of phosphoric acid, sulphuric acid and Ammonia in the open market. Phosphoric acid, sulphuric acid and Ammonia are intermediary inputs required for manufacturing of fertilizers and are used by PPL for captive consumption. However, if any excess quantity of such intermediary inputs is manufactured, they are sold as-is in the open market. MCFL 8. MCFL is a public company incorporated under the Companies Act, 1956. It operates under the broader umbrella and control of the Adventz group. The majority shareholding (i.e., 54.03%) in MCFL is held by ZACL1. The remaining shareholding is held by the Promoter Group (except ZACL) (6.60%) and Public Shareholders (39.37%). It has a manufacturing plant located in Panambur, Mangalore, Karnataka. 9. MCFL is inter alia engaged in the business of manufacture, purchase, import and sale of fertilizers in India. It is primarily engaged in the production and marketing of urea fertilizers, non-urea fertilizers, namely, DAP, NPK (multiple grades) and MoP in India. In addition, MCFL also manufactures and sells small quantities of sulphuric acid and ammonia in the open market. Sulphuric acid and Ammonia are intermediary inputs required for manufacturing fertilizers and are used by MCFL for captive consumption. 1 The shareholding pattern of ZACL (a company belonging to the Adventz group) is as follows: Promoter Group (65.28%) and Public Shareholders (34.72%). Combination Registration No. C-2024/06/1149 Page 4 of 14 However, if any excess quantity of such intermediary inputs is manufactured, they are sold as-is in the open market. ZMPPL 10. ZMPPL is a private company incorporated under the Companies Act, 1956. It is a 50:50 joint venture between ZACL and OCP S.A. (OCP). ZMPPL currently holds 56.08% equity stake in PPL. ZMPPL carries out trading of fertilizers. It has not made any sales of fertilizers till date, except for certain minuscule sales to PPL and MCFL in March, 2024. Adventz Group 11. The Adventz group is engaged in the agriculture business through ZACL, PPL and MCFL. It offers various services, such as, technical consultancy, project management for chemical, fertilizer and other infrastructure projects. Adventz Group (including Affiliates) is involved inter alia in the following businesses, i.e., (i) real estate services; (ii) engineering procurement and construction activities; (iii) ready-to- assemble furniture; (iv) business of strategic investments; and (v) agri-business. ZACL is the holding company for the agri-business. OCP 12. OCP is the holding company of the OCP group. It was founded in Morocco in 1920 as the Office Chérifien des Phosphates. The Office Chérifien des Phosphates became a joint stock company (société anonyme) in 2008 under the laws of the Kingdom of Morocco and was renamed OCP S.A. The Moroccan state holds 94.12% shareholding in OCP. The remaining shareholding of OCP is held by Infra Maroc Capital, Prev Invest SA, Société d'Aménagement et de Développement Vert, SOCINVEST and Banque Centrale Populaire S.A., a major Moroccan bank. Combination Registration No. C-2024/06/1149 Page 5 of 14 13. OCP is a global player specialized in the mining, refining, processing, manufacturing, commercialization, marketing and development of rock phosphate, phosphoric acid and fertilizers. In India, OCP primarily operates through its 50:50 joint venture with ZACL, i.e., ZMPPL. Further, OCP has 1 subsidiary in India, i.e., OCP Support Services Private Limited (OCP India). OCP India provides market research and analysis services to OCP and does not have any business operations in India. OCP supplies only four products to India, namely: (i) rock phosphate; (ii) phosphoric acid; (iii) DAP; and (iv) Mono-Ammonium Phosphate (MAP). It is stated that OCP has also supplied NPK to India in 2021 and 2022 and is expected to start the supply of Triple Super-Phosphate (TSP) to India in 2024. Identification of Overlaps A. Horizontal Overlap 14. The activities of the parties to the proposed combination overlap primarily in the fertilizer sector. The overlapping products/ services (i.e., products/ services which are identical/ similar in nature) offered by PPL, MCFL, ZMPPL and OCP in India are provided below: I. Overlaps arising from the Proposed Merger 15. At broad level, the Merging Parties exhibit horizontal overlaps in the following relevant product markets: (i) market for manufacture and/ or sale of Urea fertilizers; and (ii) market for manufacture and/ or sale of non-Urea fertilizers. Further, in non- Urea fertilizers, the Merging Parties’ activities exhibit horizontal overlaps at the narrow level in the following relevant product markets: (a) market for manufacture and/ or sale of DAP; (b) market for sale of MoP; and (c) market for manufacture and/ Combination Registration No. C-2024/06/1149 Page 6 of 14 or sale of NPK2. It is stated that for the purposes of the assessment, the relevant geographic market should be India. However, the overlap is also identified on a state- wise basis for all the states where the Merging Parties sell Urea and non-Urea fertilizers. 16. Accordingly, it is submitted that the relevant market for the evaluation of the horizontal overlaps in relation to the Proposed Merger may be considered as— i. Market for the manufacture and/ or sale of Urea in India (Urea Market) segmented on a state-wise basis as follows: a. Market for manufacture and/ or sale of Urea in Andhra Pradesh (Andhra Pradesh Urea Market); b. Market for manufacture and/ or sale of Urea in Karnataka (Karnataka Urea Market); c. Market for manufacture and/ or sale of Urea in Maharashtra (Maharashtra Urea Market); d. Market for manufacture and/ or sale of Urea in Telangana (Telangana Urea Market); ii. Market for manufacture and/ or sale of non-Urea fertilizers in India (Non- Urea Market), segmented on a state-wise basis as follows: a. Market for manufacture and/ or sale of non-Urea in Andhra Pradesh (Andhra Pradesh Non-Urea Market); b. Market for manufacture and/ or sale of non-Urea in Karnataka (Karnataka Non-Urea Market); 2 It is submitted that multiple grades of non-urea fertilizers are being manufactured by PPL and MCFL. However, no specific grade of NPK is dominant and most fertilizers are easily substitutable. On supply side, a manufacturing plant of NPK can manufacture different grades of NPK and can switch from manufacturing one grade of NPK to another grade, if the need arises, without much additional cost or other disadvantages. Even from the perspective of the end consumer (i.e., farmers) the switching costs for NPK are almost zero, as the various grades of NPK are substitutable to each other and the customers are free to choose based on their soil and crop type. Combination Registration No. C-2024/06/1149 Page 7 of 14 c. Market for manufacture and/ or sale of non-Urea in Maharashtra (Maharashtra Non-Urea Market); d. Market for manufacture and/ or sale of non-Urea in Telangana (Telangana Non-Urea Market); iii. Market for manufacture and/ or sale of DAP in India (DAP Market), segmented on a state-wise basis as follows: a. Market for manufacture and/ or sale of DAP in Andhra Pradesh (Andhra Pradesh DAP Market) ; b. Market for manufacture and/ or sale of DAP in Karnataka (Karnataka DAP Market); c. Market for manufacture and/ or sale of DAP in Telangana (Telangana DAP Market); iv. Market for sale of MoP in India (MoP Market); v. Market for manufacture and/ or sale of NPK in India (NPK Market), segmented on a state-wise basis as follows: a. Market for manufacture and/ or sale of NPK in Andhra Pradesh (Andhra Pradesh NPK Market); b. Market for manufacture and/ or sale of NPK in Karnataka (Karnataka NPK Market); c. Market for manufacture and/ or sale of NPK in Maharashtra (Maharashtra NPK Market); d. Market for manufacture and/ or sale of NPK in Telangana (Telangana NPK Market). 17. In addition to above, PPL and MCFL also manufacture and sell small quantities of sulphuric acid and ammonia in the open market. Accordingly, the Parties have Combination Registration No. C-2024/06/1149 Page 8 of 14 provided the competition assessment for Merging Parties in the market for sale of sulphuric acid in India and market for sale of ammonia in India. II. Overlaps arising from the Proposed Acquisition 18. In relation to the horizontal overlaps arising from the Proposed Acquisition between OCP, on one hand, and PPL and MCFL, on the other hand, it is submitted that while OCP supplies MAP to India, neither PPL nor MCFL is engaged in the manufacture and/or sale of MAP in India. Correspondingly, it is stated with regard to MoP that while PPL and MCFL are involved in the market for sale of MoP, OCP does not manufacture and/ or sell MoP in India. Accordingly, there is no overlap between OCP on the one hand, and ZMPPL, PPL and MCFL on the other, in relation to MAP and MoP in India. In relation to Phosphoric Acid, it is submitted that PPL sells Phosphoric Acid in case of excess production; however, PPL has not sold any Phosphoric Acid in the open market for the past 5 Financial Years (FYs) and the entire quantity of Phosphoric Acid manufactured by PPL is captively consumed by it. With respect to NPK, the Parties have stated that OCP has limited sales of NPK in India. However, neither ZMPPL, PPL nor MCFL compete directly/ indirectly with OCP in the market for sale of NPK in India, as OCP’s supplies of NPK are on a B2B basis and the Parties do not compete with OCP in this market for sale of NPK. Similarly, neither ZMPPL, PPL nor MCFL compete directly/ indirectly with OCP in the market for sale of DAP in India. This is because, OCP’s supplies of DAP are on a B2B basis and the Parties do not compete with OCP in this market for sale of DAP. Nonetheless, the Parties have provided competition assessment for the following relevant markets of DAP and NPK for the purposes of assessment: (a) Market for sale of DAP in India; and (b) Market for sale of NPK in India. 19. Further, it is submitted that ZMPPL, PPL and MCFL sell limited quantities of Ammonia, Sulphuric Acid and Urea in India. Accordingly, the relevant markets may be delineated as: (a) Market for the sale of ammonia in India (Ammonia Market); (b) Combination Registration No. C-2024/06/1149 Page 9 of 14 Market for the sale of sulphuric acid in India (Sulphuric Acid Market); and (c) Urea Market. B. Vertical Relationships: I. Vertical Relationships arising from the Proposed Merger 20. It is submitted that there is a minor vertical relationship between PPL on one hand and MCFL on other hand, in the sale of sulphuric acid and ammonia by PPL to MCFL. It is mentioned that while sulphuric acid and ammonia is manufactured only for captive consumption by PPL, the excess sulphuric acid and ammonia produced is sold onwards to other fertilizer companies (including MCFL). However, there are no regular or formal supply arrangements regarding the sale of sulphuric acid between PPL and any other fertilizer company (including MCFL) and such sales are made on an ad-hoc and arms-length basis only when there is excess production or if there is some left-over stock. MCFL, on other hand, has not sold any quantity of sulphuric acid or ammonia to PPL in the last 5 FYs. II. Vertical Relationships arising from the Proposed Acquisition 21. It is submitted that ZMPPL and MCFL are not engaged in any activity relating to the production, supply, distribution, storage, sale and service or trade in products or provision of services which is at different stages or levels of the production chain, and/ or do not have any complementary activities, in India. However, PPL purchased miniscule quantity of sulphuric acid and ammonia sold by ZMPPL on an ad-hoc basis. 22. Further, there is an existing supply arrangement between OCP and both MCFL and PPL. Regarding this existing supply arrangement, it is stated that: (i) PPL has purchased certain quantities of rock phosphate, phosphoric acid and DAP from OCP; and (ii) MCFL has purchased certain quantities of phosphoric acid from OCP. Further, Combination Registration No. C-2024/06/1149 Page 10 of 14 NPK besides being manufactured by PPL and MCFL could also be imported from OCP for onwards sale, in order to meet the domestic requirements by Indian farmers. 23. Based on above, the following relevant markets have been delineated for the evaluation of the above vertical relationships: PPL to MCFL i. Sulphuric Acid Market at the upstream level; and ‘market for manufacture and/ or sale of fertilizers in India’ (Fertilizers Market) at the downstream level (Vertical Relationship 1) ii. Ammonia Market at the upstream level; and Fertilizers Market at the downstream level (Vertical Relationship 2) ZMPPL to PPL and MCFL iii. Sulphuric Acid Market at the upstream level; and Fertilizers Market at the downstream level (Vertical Relationship 3) iv. Ammonia Market at the upstream level; and Fertilizers Market at the downstream level (Vertical Relationship 4). OCP to PPL and/or MCFL v. ‘Market for manufacture and/or sale of Phosphoric Acid in India’ (Phosphoric Acid Market) at the upstream level; and ‘Market for manufacture and sale of phosphatic fertilisers in India’ (Phosphatic Fertilizers Market) at the downstream level (Vertical Relationship 5). vi. ‘Market for manufacture and/or sale of Rock Phosphate in India’ (Rock Phosphate Market) at the upstream level; and Phosphatic Fertilizers Market at the downstream level (Vertical Relationship 6). vii. ‘Market for supply of DAP to India’ (DAP Market) at the upstream level; and ‘Market for sale of DAP in India’ (DAP Sale Market) at the downstream level (Vertical Relationship 7). viii. ‘Market for supply of NPK to India’ at the upstream level; and ‘Market for sale of NPK in India’ at the downstream level (Vertical Relationship 8). Combination Registration No. C-2024/06/1149 Page 11 of 14 24. The Commission decides to leave precise delineation of the relevant market open, as it was observed that because of the reasons stated below, the Proposed Combination is not likely to result in appreciable adverse effect on competition irrespective of the manner in which the relevant market is delineated. 25. It is noted from the submissions of the Parties that currently both MCFL and PPL operate under the broader umbrella and control of Adventz Group. While MCFL is a subsidiary of ZACL, PPL is a subsidiary of ZMPPL (a joint venture of ZACL with OCP). Pursuant to the Proposed Combination, there would be an addition of MCFL’s business to ZMPPL, which will continue to operate as joint venture of ZACL (belonging to Adventz group) and OCP (belonging to OCP group). 26. Based on the submissions of the Parties, it is noted with respect to horizontal overlaps arising from the Proposed Merger that the combined market shares of the Merging Parties in Urea, MoP, Ammonia and Sulphuric Acid Markets are in the range of [0-5] % only. In the Non-Urea, DAP and NPK Markets, the combined market shares are in the range of [5-10] %; however, the incremental market shares in these markets are in the range of [0-5] % only. Further, there are other players present in these markets such as Indian Farmers Fertiliser Cooperative Limited (IFFCO), Krishak Bharati Cooperative Limited (KRIBHCO), National Fertilizers Limited (NFL), Chambal Fertilizers and Chemicals Limited (CFCL), Indian Potash Limited (IPL) Coromandel International Limited (CIL) Gujarat State Fertilizers and Chemicals Limited (GSFCL), Mosaic India Private Limited (MIPL), Indorama India Private Ltd (IIPL), Fertilisers and Chemicals Travancore Limited (FACT), Smartchem Technologies Limited (SMARTCHEM), Hindustan Urvarak & Rasayan Limited (HURL) and Hindustan Zinc Limited (HZL). 27. The Parties have also identified relevant markets on a state-wise basis for the overlapping states i.e., the states where both Merging Parties sell Urea and/ or non- Combination Registration No. C-2024/06/1149 Page 12 of 14 Urea fertilizers. In this regard, it is noted that, except Karnataka, the combined market shares of the Merging Parties in Urea, Non-Urea, DAP and NPK Markets in the other overlapping states range between [0-5] % to [15-20] % and the incremental market shares are in the range of [0-5] % only. In Karnataka, the combined market shares in Urea, Non-Urea, DAP and NPK Markets are in the range of [20-25] % and incremental market shares in Urea, Non-Urea, and NPK Markets are in the range of [5-10] % and in DAP Market in the range of [10-15] %. The Parties have submitted that the market shares are slightly higher in Karnataka as Karnataka is the home market for MCFL. Accordingly, the sales of MCFL in Karnataka are relatively more as compared to other states. Apart from this, the Urea, Non-Urea, DAP and NPK markets in Karnataka are characterised by presence other players such as IFFCO, KRIBHCO, IPL, CIL, FACT, Ramagundam Fertilizers and Chemicals Limited (RFCL), Rashtriya Chemicals and Fertilizers Limited (RCFL), Southern Petrochemicals Industries Corporation Limited (SPIC), Madras Fertilizers Limited and Greenstar Fertilizers Limited (GFL), that exert competitive constraints on the Merging Parties. 28. In relation to the horizontal overlaps arising from the Proposed Acquisition between OCP (a joint venture partner in ZMPPL), on one hand, and ZMPPL, PPL and MCFL, on other hand, it is noted from the submissions of the Parties that though OCP supplied NPK to India in 2021 and 2022 with combined market shares being in the range of [10-15] % and [15-20] % in the market for sale of NPK in India, its supplies of NPK to India were nil in FY 2022-23. With respect to DAP supplied by OCP to India, it is noted that the market share of OCP on the basis of imports in India is in the range of [25-30] % and on the basis of sales of DAP in India is in the range of [10-15] % in FY 2022-23 in the market for sale of DAP in India. Pursuant to the Proposed Combination, there would only be an incremental addition of MCFL’s market shares which are in the range of [0-5] % only for the past 5FYs in both the market for sale of NPK as well as DAP in India. Further, the Parties have submitted that since OCP is a supplier of NPK, DAP, etc., to Indian fertilizer manufacturers and only makes B2B sales and not B2C sales in India, its sales for all products as well as that of other players who supply Combination Registration No. C-2024/06/1149 Page 13 of 14 directly B2B to Indian players are reflected in the sales made by Indian players. Hence, attributing any market shares to them would amount to double-counting. Furthermore, it is noted that there are other global players exerting competition constraints on OCP at the level of import as well as in the final supply to consumers. 29. Regarding horizontal overlaps in the Ammonia, Sulphuric Acid and Urea Markets arising from the Proposed Acquisition, it is noted that ZMPPL has not sold any quantity of Ammonia, Sulphuric Acid or Urea from FY 2018-19 to FY 2022-23. Only in March 2024, ZMPPL sold a limited quantity of Urea to MCFL which constituted less than 1% of the total market size of Urea Market. Further, the competitors of ZMPPL, PPL and MCFL in the market for the sale of Ammonia and Sulphuric Acid include companies like IFFCO, CFCL, GSFCL, etc. Thus, it appears that the Proposed Combination is not likely to change the competition dynamics in the markets in India. 30. With respect to Vertical Relationships arising from the Proposed Merger and Proposed Acquisition, it is noted that in Vertical Relationships 1 to 4, as mentioned above, the market shares in the upstream and downstream markets are in the range of [0-5]% only; in Vertical Relationships 5 to 7, as mentioned above, the market shares in the upstream markets are in the range of [10-15] % and in the range of [5-10] % in the downstream markets and, in Vertical Relationship 8, as mentioned above, it is noted that the market share in the upstream market is nil and the market share in the downstream market is in the range of [5-10] %. Further, there are other players present in each of the upstream and downstream markets. Thus, it appears that the Proposed Combination is not likely to raise any competition foreclosure concerns. 31. Considering the material on record, including details provided in the notice given under sub-section (2) of Section 6 of the Act and assessment of the combination based on the factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have appreciable adverse Combination Registration No. C-2024/06/1149 Page 14 of 14 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. 32. This order may stand revoked if, at any time, the information provided by the Acquirers is found to be incorrect. 33. The information provided by the Acquirers shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 34. The Secretary is directed to communicate to the Acquirers accordingly.