On September 29, 2020, CCI approved the demerger of the textiles business of GHCL Ltd. (‘GHCL’) into its wholly owned subsidiary, GHCL Textiles (‘GHCL Textiles’).^[1]

GHCL, a listed company, is, inter alia, engaged in: (i) ‘chemical business’ which involves manufacture and sale of inorganic chemicals, sodium bicarbonate, industrial salt and consumer products; and (ii) ‘textile business’ which is an integrated setup that supports activities from spinning yarn to weaving, dyeing, printing, and processing until shaping and export of finished products.

GHCL Textiles, a public limited company incorporated in India, is a wholly owned subsidiary of GHCL with no business activity.

The transaction involved an internal restructuring as a result of which shareholders of GHCL would receive shares in GHCL Textiles on the basis of swap ratio of 1:1. Accordingly, the shareholding pattern of GHCL would be mirrored in GHCL Textiles.

The Parties submitted that the proposed combination did not squarely fall within ambit of the intra-group exemption under sub-rule 8 of Schedule 1 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011.

CCI approved the combination, given that the transaction would not result in any change in competition dynamics in the market.

^[1] Combination Registration No. C-2020/08/766