On February 9, 2023, CCI approved National Investment and Infrastructure Fund’s (‘NIIF’) acquisition of 22-30% shareholding in the proposed merged entity of Hindustan Infralog Private Limited (‘HIPL’) (a subsidiary of DP World where NIIF holds 35% shareholding) and Hindustan Ports Private Limited (‘HPPL’) (‘Proposed Combination 2’).^[1]

Proposed Combination 2

Proposed Combination 2 consists of three steps:

i.     NIIF will subscribe up to 25% of share capital of HPPL;

ii.    Subsequently, HIPL will be merged into HPPL; and

iii.   Ultimately, NIIF will hold 22-30% shareholding in the proposed merged entity.

Parties to Proposed Combination 2

NIIF is a category II Alternative Investment Fund (‘AIF’) registered with the Securities and Exchange Board of India (‘SEBI’), acting through its investment manager, National Investment and Infrastructure Fund Limited (‘NIIFL’). NIIF primarily focuses on investing in core infrastructure sectors such as transportation, energy, and digital. NIIF is a financial investor and is not engaged in the day-to-day management of its affiliates. NIIF is held 49% by the Government of India., and it has National Investment and Infrastructure Fund Trustee Limited (‘NIIFTL’) as its trustee.

HIPL is a private company and a subsidiary of DP World. HIPL is directly engaged in providing various services like Freight Forwarding Services, Empty Container Handling (i.e., providing facilities to empty containers), and domestic rail operations. HIPL operates in India through various subsidiaries.

HPPL is a private company and a subsidiary of DP World. HPPL is engaged in the operation of container terminals of different terminals of the ports through its special purpose vehicles (‘SPVs’). It is also engaged in providing container freight station services and container rails (for export import cargo) and related services in India. HPPL operates in India through various subsidiaries.

Relevant Market and Overlaps along with Competitive Assessment

With respect to horizontal overlaps identified below, the CCI did not find any AAEC due to the Proposed Combination 2 in India:

i.     The market for Container Rail Operations (‘CRO’) in India (‘HM 1’). CCI notes that the combined market shares of the parties are insignificant in the range of 5-10%, along with presence of multiple players in the market such as Container Corporation of India Limited, Adani Logistics Limited, Pristine Logistics and Infraproject Limited, etc.

ii.    The market for Container Freight Station Services (‘CFS’) at Chennai Port (‘HM 2’). CCI noted that the combined market shares of the parties are insignificant in the range of 5-10%, along with the presence of multiple players in the market such as Ashte Logistics Pvt. Ltd., Balmer Lawrie Logistics & Co. Ltd., All Cargo Logistics Ltd., etc.

With respect to existing vertical relationships identified below, the CCI did not find any AAEC due to the Proposed Combination 2 in the vertically linked markets in India:

i.     The market for CRO in India at the upstream/downstream level, vertically linked with the market for Inland Container Depots (‘ICD’) in India, further sub-segmented into markets for ICD in NCR, Ahmedabad and Hyderabad respectively, at the upstream/downstream level. HIPL had miniscule market share in the market for ICD in NCR and Ahmedabad but had a high market share in the market for ICD in Hyderabad (in the range of 25-30%). The CCI however found no AAEC after considering the miniscule market share of HPPL in the market for CRO, and the presence of multiple players in these markets.

CCI also identified the following potential vertical relationships between the parties to the Proposed Combination 2:

i.     The market for CRO in India at the upstream/downstream level vertically linked with the market for Container Terminal Services (‘CTS’) in India (at broad level), further segmented into markets for CTS in West and South zones, respectively, at the upstream/downstream level.

ii.    The market for CTS in India (at broad level), further segmented into markets for CTS in the West and South zone respectively, vertically linked with the market for CFS at the Chennai Port and the market for CFS at the JN port, at the upstream/downstream level.

iii.   The market for CTS in India (at broad level), further segmented into markets for CTS in the West and South zone respectively, vertically linked with market for ICD in India, further segmented into market for ICD in NCR, Ahmedabad and Hyderabad respectively, at the upstream/downstream level.

CCI noted the high market shares of: (i) HPPL in the sub-segmented markets for CTS (ranging up till 30-35% in South Zone), and (ii) HIPL in the market for ICD in Hyderabad (range of 25-30%). However, CCI did not find any AAEC in the potential vertical markets given the low market share of HIPL in the market for CRO in India, CFS in the Chennai port, JN port and low market shares in the market for ICD in India, including ICD in Ahmedabad, along with the presence of multiple other players in the markets. With these observations, CCI approved Proposed Combination 2, holding that it would not have an AAEC in India.

^[1]  Combination Registration No. C-2022/10/976