SKH Sheet Metals Components Private Limited. SKH Management Strategy Services India LLP. SKH M India Private Limited. Magna Automotive India Private Limited.

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Page 1 of 7 COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/02/1115 28th May 2024 Notice under Section 6(2) of the Competition Act, 2002 given by SKH Sheet Metals Components Private Limited, SKH Management Strategy Services India LLP, SKH M India Private Limited and Magna Automotive India Private Limited CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Order under Section 31(1) of the Competition Act, 2002 1. On 21st February 2024, the Competition Commission of India (Commission) received a Notice under Section 6(2) of the Competition Act, 2002 (Act) given by SKH Sheet Metals Components Private Limited (SKH SMC), SKH Management Strategy Services India LLP (SKH LLP), SKH M India Private Limited (SKH M India) and Magna Automotive India Private Limited (Magna India) [Hereinafter, SKH SMC, SKH LLP, SKH M India and Magna India are collectively referred to as Notifying Parties]. The Notice has been given inter alia pursuant to the execution of (i) Business Transfer Agreement, dated 7th November 2023, executed amongst Magna India, SKH LLP, and SKH SMC (BTA), and (ii) Shareholders Agreement, dated 7th November 2023, executed amongst SKH SMC, SKH LLP and Magna India (SHA). Combination Registration Number: C-2024/02/1115 Page 2 of 7 2. The Proposed Combination envisages the transfer of the chassis1 and body–in–white2 (BIW) business division of Magna India (operating under the name of ‘Cosma India’) [Target Business] to SKH M India. The steps to be consummated for bringing the Proposed Combination into effect, inter alia, are as under: (i) The Target Business will be acquired by SKH M India, as a going concern by way of a slump sale; and (ii) Magna India will be issued equity / equity-linked instruments representing 15% shareholding of SKH M India on a fully diluted basis. 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 (Combination Regulations), vide letters dated 6th March 2024, 5th April 2024 and 3rd May 2024, certain information and clarifications were sought from the Notifying Parties. The responses to these letters were submitted by the Notifying Parties on 2nd April 2024, 15th April 2024, and 7th May 2024, respectively. The Notifying Parties also submitted certain additional information on 22nd April 2024, by way of voluntary submission. 4. SKH SMC is engaged in the business of manufacturing fuel tanks, chassis, BIW parts and seat structures for passenger vehicles. It has four manufacturing facilities, one in Delhi NCR; two near Pune, Maharashtra; and one in Chennai, Tamil Nadu. SKH SMC belongs to the Krishna Group, which manufactures and supplies various automotive components to Original Equipment Manufacturers (OEMs) across the world. The auto components business of Krishna Group consists of the (a) interiors division and (b) metals division. 1 The chassis is like the foundation of a motor vehicle and is the frame on which the vehicle is built. 2 BIW is the body structure of the automobile that provides its internal shape and strength. This includes components such as bumpers, side sills, centre pillars, rear pillars, etc. Combination Registration Number: C-2024/02/1115 Page 3 of 7 5. The key product offerings of the metals division include BIW and chassis components, metal fuel tanks, exhaust systems, roof headliners, sheet metal tooling, and several other sheet metal components for passenger vehicles. 6. SKH LLP is engaged in the provision of management services for entities within Krishna Group. 7. SKH M India has been incorporated by SKH SMC and SKH LLP for the purpose of acquiring and operating the Target Business, and it does not undertake any business activities. 8. The Target Business is a wholly owned business division of Magna India, which in turn is owned and operated by Magna International Inc. The Target Business is present only in the manufacture and supply of chassis and BIW components for 4-wheel passenger vehicles (PVs), through two (2) plants based in Pune, Maharashtra, one (1) plant in Chennai, Tamil Nadu and one (1) plant in Sanand, Gujarat. 9. As the Target Business consists of the manufacture and supply of chassis and BIW components only for PVs, the overlaps between Krishna Group and Target Business, have been considered only for the PV segment. Krishna Group and the Target Business exhibit horizontal overlaps only in the segments of passenger cars [sub-segments of (i) compact passenger cars, and (ii) mid-size passenger cars] and Utility Vehicles (UVs). 10. Based on the overlapping chassis and BIW components manufactured and sold by Krishna Group3 and the Target Business, the overlaps exist for the segments/markets for the manufacture and supply of (i) chassis components for UVs, (ii) chassis components for compact and mid-sized passenger cars, (iii) BIW components for UVs, and (iv) BIW components for compact and mid-sized passenger cars. Further, it has 3 Krishna Group is engaged in the manufacture and sale of the overlapping chassis and BIW components, specifically through SKH SMC, SKH Metals Limited (SKH Metals), and SKH Y-Tec India Private Limited (SKH Y Tec). Combination Registration Number: C-2024/02/1115 Page 4 of 7 been submitted that Krishna Group and the Target Business do not supply the entire chassis system to any of the OEMs they cater to, and none of their customer OEMs source the entire assembled chassis system from Original Equipment Suppliers (OESs). 11. As per the information submitted, the Commission noted that the automotive industry has emerged largely in the form of clusters, with OEMs being the centres of growth. There are four major automotive clusters for PVs in India, namely (i) North India (Delhi – Gurgaon – Faridabad), (ii) Gujarat (Sanand – Hansalpur – Vithalpur), (iii) Maharashtra (Mumbai – Pune – Nashik - Aurangabad), and South India (Chennai – Bengaluru - Hosur). 12. Krishna Group’s facilities in the North India cluster and the Gujarat cluster include facilities located inside the vendor park of OEMs namely Maruti Suzuki India Limited (MSIL) and Suzuki Motors Gujarat (SMG), respectively. MSIL and SMG have leased premises to Krishna Group’s entities (i.e., SKH Metals and SKH Y Tec) for establishing their manufacturing facilities within their vendor parks and these facilities supply the overlapping chassis and BIW components to MSIL and SMG. In addition to Krishna Group, OESs such as Jay Bharat Maruti, Bellsonica Auto Components and Caparo Maruti, have also established such facilities in these vendor parks. 13. According to information submitted, for chassis / BIW components, geographical proximity to OEMs appears to be a significant commercial factor for both OEMs and OESs, as otherwise there would be transport costs. The Notifying Parties have furnished the quantity of each overlapping chassis/BIW component, supplied by each facility of the Krishna Group and Target Business to the facilities of the OEMs. 14. The Commission assessed the Proposed Combination considering the overlapping segments and decided to leave the exact delineation of relevant market open as the Proposed Combination, for the reasons detailed in the ensuing paragraphs, is not likely to cause appreciable adverse effect on competition (AAEC) in any of the plausible alternative relevant markets that could be delineated. Combination Registration Number: C-2024/02/1115 Page 5 of 7 15. It is observed that the combined shares of Krishna Group and the Target Business in the overall segments for manufacture and sale of (i) chassis components for UVs and (ii) chassis components for compact and mid-sized passenger cars, are in the range of [30-35]% and [20-25]%, respectively, with insignificant incremental market shares. On the other hand, the combined shares in the overall markets for manufacture and sale of (i) BIW components for UVs (ii) BIW components for compact and mid-sized passenger cars are in the range of [0-5]% and [10-15]%, respectively. 16. Further, even after excluding sales within vendor parks, the combined market shares are in the range of [25-30]% and [5-10]% for the manufacture and sale of chassis components for UVs and compact and mid-sized passenger cars, respectively. On the other hand, the combined market shares of Krishna Group and the Target Business in the segments for manufacture and sale of BIW components for UVs and compact and mid-sized passenger cars, are insignificant, being in the range of [0-5]% and [0-5]%, respectively. 17. In terms of the individual overlapping components, the market shares of Krishna Group and Target Business are not such to cause competition concern either due to low combined market share or insignificant incremental market share. 18. Being a bidding market, where procurements are made by OEMs on the basis of bidding amongst the OESs empanelled by the OEMs, which prefer the lowest cost bidder. It is observed from the information provided that Krishna Group and the Target Business face competition from a multitude of competitors which are empanelled by OEMs. Based on the bidding data provided by the Notifying Parties, the Commission observed that for a significant number of Request for Proposals (RFPs), they do not appear to be close competitors and there are other bidders (OESs) for those RFPs. 19. Apart from the above, the Commission also noted that in the method for procurement of the overlapping chassis and BIW components, OEMs do not have to rely upon small Combination Registration Number: C-2024/02/1115 Page 6 of 7 number of OESs to supply as the OEMs empanel multiple OESs at a single point of time. Moreover, OEMs do not award the business for all the chassis and/or BIW components of a particular vehicle to a single OES, to ensure diversification and prevent supplier disruptions. 20. With regards to the vertical overlaps/linkages, the Commission observed that Krishna Group, through Krishna Maruti Limited (KML), is engaged in the manufacture and supply of tools/moulds4 for chassis and BIW components in India (upstream segment), which are an input for the chassis and BIW components manufactured and supplied by the Target Business (downstream segment). 21. As per the information submitted, the market share of KML in the upstream segment is in the range of [0-5%]. Further, KML supplied moulds to the Target Business in FY 2018-19 and FY 2019-20, which constituted [0-5%] and [0-25%], respectively, of the total revenue generated by KML from the sale of tools. The insignificant market share of KML in the upstream segment makes it unlikely for KML to have the ability or incentive to cause foreclosure in the downstream segment for the manufacture of chassis and BIW components. 22. Considering the material on record, including the details provided in the Notice and the assessment of the Proposed 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 AAEC in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act. 23. The order may be revoked if, at any time, the information provided by the Notifying Parties is found to be incorrect. 4 Tools/moulds are an integral part of the stamping process and are the primary elements that shape the components into their desired shape. Combination Registration Number: C-2024/02/1115 Page 7 of 7 24. The information provided by the Notifying Parties shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 25. The Secretary is directed to communicate to the Notifying Parties accordingly.