INDIA Law and Practice Contributed by: Anshuman Sakle, Anisha Chand, Pranjal Prateek and Soham Banerjee, Khaitan & Co
turnover of the acquirer (or acquirer group) and the target. In cases of merger/amalgamation, consideration of the numbers for the merging/amalgamating entities is required. The group level thresholds are calculated after considering the numbers for the group to which the merged/amalgamated entity will belong after the transaction. Each test is based either on Indian figures alone, or on global figures with a minimum Indian component. Deal Value Threshold A transaction will exceed the deal value threshold (DVT) if the overall “transaction value” exceeds INR20 billion (approximately USD209.14 million) and the tar - get has “substantial business operations in India”. 2.6 Calculations of Jurisdictional Thresholds For financial thresholds , the calculations are as fol - lows. • Asset value – The value of assets is determined by considering the book value of the assets in the audited books of account, in the financial year immediately preceding the financial year in which the date of the proposed combination falls, as reduced by any depreciation. The value of assets must also include: (a) the brand value; (b) the value of goodwill; and (c) the value of copyright, patent, permitted use, collective mark, registered proprietor, regis - tered trade mark, registered user, homonymous geographical indication, geographical indica - tions, design or layout-design or similar com - mercial rights, if any. • Turnover – Indian turnover means the audited revenue which subject to certain considerations is adjusted for: (a) intra-group sales; (b) indirect taxes; (c) trade discounts; and (d) all amounts generated through assets or busi - ness from customers outside India. The following calculations apply for DVT .
• Transaction value – The transaction value is deter - mined after including every valuable consideration, whether direct or indirect, immediate or deferred, cash or otherwise. • Substantial business operations in India – Whether a target has substantial business operations in India is determined by comparing its Indian metrics with its global metrics. For digital services targets, the metrics are the number of users, revenue or gross merchandise value (GMV); for all other tar - gets, the metrics are either revenue or GMV. 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds For the entity-level test, parties are required to con - sider consolidated assets or turnover. In certain indus - tries and for certain entity types, assessed on a case- by-case basis, the consolidated figures must also be aggregated with the assets or turnover of controlled entities. For the group-level test, the consolidated figures of the group must be aggregated with those of all con - trolled entities. Financial figures are assessed as at the close of the preceding financial year. Where the facts warrant, financial statements may be carved out to capture the numbers attributable to the specific transaction perimeter. 2.8 Foreign-to-Foreign Transactions A global transaction will require a CCI approval if any one of the notification thresholds is crossed. The notification thresholds are designed to capture only transactions with an Indian nexus. As such, each financial threshold carries a minimum Indian asset or turnover component, and the DVT is subject to the substantial business operations in India test. A target with no direct or indirect Indian presence will therefore rarely trigger a filing requirement. There is no separate impact-based test. Once the thresholds are met, the filing requirement is triggered regardless of the transaction’s effect on the Indian market.
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