Allegro Speciality Chemicals Private Limited

In the RESERVE BANK OF INDIA Foreign Exchange Department Secretariat Road Saifabad, Hyderabad 500 004 Present Shri. Subrata Das Regional Director (Andhra Pradesh and Telangana) and Chief General Manager (Hyderabad) Date: November 15, 2019 C.A. HYD 454 In the matter of M/s. Allegro Speciality Chemicals Private Limited House No. 916-I, Road No. 46, Jubilee Hills Hyderabad - 500 033 (Applicant) In exercise of the powers conferred under sub-section (1) of Section 15 of Foreign Exchange Management Act, 1999 and the Regulations/ Rules/ Notifications/ Orders made thereunder, I pass the following Order The applicant has filed the compounding application dated September 11, 2019 received by us on September 11, 2019 for compounding of contraventions of the provisions of the Foreign Exchange Management Act, 1999 (FEMA) and the regulations issued thereunder. The contraventions sought to be compounded are (i) delay in reporting of receipt of foreign inward remittances towards subscription of equity, (ii) delay in submission of form FC-GPR to the Reserve Bank after issue of shares to a person resident outside India, (iii) delay in allotment of shares to the foreign investor beyond 180 days from the date of receipt of remittance, (iv) delay in filing the Annual Return in respect of the Foreign Liabilities and Assets (FLA Return), in terms

Compounding of contraventions under FEMA 1999 M/s Allegro Speciality Chemicals Private Limited CA No. HYD 454 of Paragraph 9(1)(A), Paragraph 9(1)(B), Paragraph 8, Paragraph 9(2) of Schedule 1 to Foreign Exchange Management (Transfer or Issue of Security by a person resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 03, 2000 (herein after referred to as Notification No. FEMA 20/2000-RB) as then applicable and Regulation 13.1(3) of Schedule 1 to Foreign Exchange Management (Transfer or Issue of Security by a person resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20(R)/2017-RB dated November 07, 2017 (hereinafter referred to as Notification No. FEMA 20(R)/2017-RB) as amended from time to time respectively.

2. The relevant facts of the case are as follows:

The applicant is a resident company incorporated as Private Limited Company under the Companies Act, 1956 on August 17, 2012 (CIN: U24232TG2012PTC082550). The company is engaged in the business of “Manufacture of medicinal substances used in the manufacture of pharmaceuticals: antibiotics, endocrine products, basic vitamins, opium derivatives, sulpha drugs, serums and plasmas, salicylic acid, its salts and esters, glycosides and vegetable alkaloids, chemically pure sugar etc.” a) The applicant had received inward remittances from the foreign investors as indicated below: S No Name of the remitter Amount (INR) Date of receipt Date of reporting 1 Ravipati Global Pte Ltd 22,52,951 09.05.2016 08.06.2016 2 6,67,437 21.07.2016 22.08.2016 3 9,99,779 27.07.2016 22.08.2016 4 9,95,218 01.08.2016 22.08.2016 Organo Synthesis Technologies 5 9,95,218 10.08.2016 07.09.2016 Ltd 6 9,98,807 23.08.2016 #30.07.2019 7 6,64,073 01.09.2016 22.09.2016 8 6,63,700 15.09.2016 #30.07.2019

Compounding of contraventions under FEMA 1999 M/s Allegro Speciality Chemicals Private Limited CA No. HYD 454 9 39,86,558 30.09.2016 02.11.2016 10 6,61,236 07.10.2016 02.11.2016 11 39,91,654 18.10.2016 02.11.2016 12 Ravipati Global Pte Ltd 53,33,200 25.10.2016 16.11.2016 13 26,64,100 25.10.2016 16.11.2016 14 6,30,985 08.08.2017 15 6,30,985 16 6,29,717 21.08.2017 17 Organo Synthesis Technologies 9,49,867 28.08.2017 #13.08.2019 18 Ltd 6,31,010 06.09.2017 19 6,29,021 13.09.2017 20 6,38,966 22.09.2017 21 6,40,930 16.10.2017 #18.07.2019 22 6,44,411 18.10.2017 23 6,43,616* 07.11.2017 24 1,90,154* 21.11.2017 Total 3,17,33,593 * Late Submission Fee was paid to regularize the contravention of Paragraph 13.1(1) of FEMA 20(R) dated November 7, 2017. # Delay calculated up to August 31, 2018, as the reporting of inward remittances has been discontinued w.e.f. September 01, 2018.

The applicant reported receipt of remittances towards share subscription amounting to ₹ 3,17,33,593/- to the Regional Office of Reserve Bank of India out of which remittances amounting to ₹ 1,23,42,394/- were reported with delays ranging from 2 days to 1 year 11 months 9 days approximately as indicated above. Whereas in terms of Paragraph 9(1)(A) of Schedule 1 to Notification No. FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures in accordance with these Regulations should report to the Reserve Bank of India as per the prescribed

Compounding of contraventions under FEMA 1999 M/s Allegro Speciality Chemicals Private Limited CA No. HYD 454 procedure not later than 30 days from the date of receipt of the amount of consideration. b) The applicant had allotted equity shares and filed form FC-GPRs as indicated below: S Name of investor Date of No. of Amount for Date of No allotment Shares which shares reporting of shares allotted allotted (INR) 1 Organo Synthesis 27.01.2017 17,28,778 1,72,87,780 30.07.2019 Technologies Ltd 2 Ravipati Global 7,58,615 75,86,150 Pte Ltd 3 25.09.2017 4,74,055 47,40,550 13.08.2019 Organo Synthesis Technologies Ltd 4 05.12.2017 2,11,911 21,19,110* 18.07.2019

Total 3,17,33,590 * Late Submission Fee was paid to regularize the contravention of Paragraph 13.1(2) of FEMA 20(R) dated November 7, 2017. The applicant filed form FC-GPRs amounting to ₹ 3,17,33,590/- as indicated above out of which allotment of shares amounting to ₹ 2,96,14,480/- were reported with delays ranging from 1 year 9 months 19 days to 2 years 5 months 4 days approximately beyond the prescribed time period. Whereas in terms of Paragraph 9(1)(B) of Schedule 1 to Notification No. FEMA 20/2000-RB, an Indian company issuing shares in accordance with these Regulations has to submit to Reserve Bank a report in form FC-GPR along with documents prescribed therein within 30 days from the date of issue of shares to person resident outside India.

c) The applicant had received inward remittances & allotted equity shares as indicated below:

Compounding of contraventions under FEMA 1999 M/s Allegro Speciality Chemicals Private Limited CA No. HYD 454 Sl Name of Amount (INR) Date of Receipt Date of allotment No Remitter 6,67,437 21.07.2016 27.01.2017 9,99,779 27.07.2016 9,95,218 01.08.2016 9,95,218 10.08.2016 1 Organo Synthesis 9,98,807 23.08.2016 Technologies Ltd 6,64,073 01.09.2016 6,63,700 15.09.2016 39,86,558 30.09.2016 6,61,236 07.10.2016 39,91,654 18.10.2016 26,64,100 25.10.2016 22,52,951 09.05.2016 2 Ravipati Global 27.01.2017 Pte Ltd 53,33,200 25.10.2016 6,30,985 08.08.2017 Organo Synthesis 25.09.2017 6,30,985 08.08.2017 3 Technologies Ltd 6,29,717 21.08.2017 9,49,867 28.08.2017 6,31,010 06.09.2017 6,29,021 13.09.2017 6,38,966 22.09.2017 Organo Synthesis 6,40,930 16.10.2017 05.12.2017 4 Technologies Ltd 6,44,411 18.10.2017 6,43,616 07.11.2017

Compounding of contraventions under FEMA 1999 M/s Allegro Speciality Chemicals Private Limited CA No. HYD 454 1,90,154 21.11.2017 Total 3,17,33,593 The applicant had allotted equity shares amounting to ₹ 39, 20,167/- with delays ranging from 4 days to 2 months 22 days approximately beyond the prescribed time period. Whereas in terms of Paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB, an Indian company shall issue shares or convertible debentures in accordance with these Regulations as per the prescribed procedure not later than 180 days from the date of receipt of the amount of consideration. d) The applicant has delayed in filing FLA Return (Foreign Liabilities and Assets) as shown below. Here the period of contravention ranges from 5 months 24 days to 1 year 5 months 24 days approximately.

Sl Particulars Financial year Due date of Date of actual filing No filing 1 FLA Return 2016-17 15.07.2017 08.01.2019 2 FLA Return 2017-18 15.07.2018 08.01.2019 Whereas in terms of Paragraph 9(2) of Schedule I to Notification No. FEMA 20/2000- RB dated May 03, 2000 as then applicable and Regulation 13.1(3) of Schedule I to Notification No. FEMA 20(R)/2017-RB dated November 07, 2017 as amended from time to time, “All Indian companies which have received Foreign Direct Investment in the previous year(s) including the current year shall submit to the Reserve Bank of India, on or before the 15th day of July of each year, [a report titled ‘Annual Return on Foreign Liabilities and Assets’ (FLA) as specified by the Reserve Bank from time to time]. 3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/ 1055 /14.66.003/2018-19 dated November 05, 2019 for further submission in person and/or producing documents, if any, in support of the application.

Compounding of contraventions under FEMA 1999 M/s Allegro Speciality Chemicals Private Limited CA No. HYD 454 (b) The applicant vide e-mail dated November 06, 2019 stated that they are foregoing appearing for the personal hearing and requested that the compounding application may be disposed of on the basis of merits in terms of the facts and documents made therein along with the compounding application. The application for compounding is, therefore, being considered on the basis of the averments made in the application.

4. I have given my careful consideration to the documents on record. Accordingly, I hold that the applicant has contravened the following FEMA provisions issued in terms of:- (a) Paragraph 9(1)(A) of Schedule 1 to Notification No. FEMA 20/2000-RB for delay in reporting the receipt of consideration towards issue of shares amounting to ₹ 1,23,42,394/- and the period of contravention ranges from 2 days to 1 year 11 months 9 days approximately. (b) Paragraph 9(1)(B) of Schedule 1 to Notification No. FEMA 20/2000-RB for delay in submission of form FC-GPR to Reserve Bank of India after issue of shares to persons resident outside India and the contravention relates to an amount of ₹ 2,96,14,480/- and the period of contravention ranges from 1 year 9 months 19 days to 2 years 5 months 4 days approximately. (c) Paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB read with A.P (DIR Series) Circular No. 20 dated December 14, 2007 for delay in allotment of shares to the foreign investor and the period of contravention ranges from 4 days to 2 months 22 days approximately. (d) Paragraph 9(2) of Schedule I to Notification No. FEMA 20/2000-RB and Regulation 13.1(3) of Schedule I to Notification No. FEMA 20(R)/2017-RB for delay in filing of Annual Return on Foreign Liabilities and Assets to the Reserve Bank of India for two financial years viz, 2016-17 and 2017-18 with delays ranging from 5 months 24 days to 1 year 5 months 24 days approximately.

Compounding of contraventions under FEMA 1999 M/s Allegro Speciality Chemicals Private Limited CA No. HYD 454 5. It has been declared in the compounding application dated September 11, 2019, that the particulars given by the applicant in the application are true and correct to the best of their knowledge and belief. It has been declared in the declaration dated September 11, 2019 furnished with the compounding application that the applicant was not under any enquiry/investigation/adjudication by any agency as on the date of the application and has, in this regard, not informed of initiation of any such enquiry/investigation/adjudication proceedings against it thereafter. It has further been declared that the applicant has not filed any appeal under section 17 or section 19 of FEMA 1999. Accordingly, the above contraventions which are being compounded under this Order are subject to the veracity of the above declarations made by the applicant and this order is without prejudice to any other action which may be taken by any authority under the extant laws if the said declarations are subsequently discovered to be false and/or incorrect.

6. In terms of Section 13 of the FEMA, any person contravening any provision of the Act shall be liable to a penalty up to thrice the sum involved in such contravention upon adjudication. However, taking into account the relevant facts and circumstances of the case as stated in the foregoing paragraphs, I am persuaded to take a lenient view on the amount for which the contravention is to be compounded and I consider that an amount of ₹ 2,32,716/- (Rupees Two Lakh Thirty Two Thousand Seven Hundred Sixteen Only) will meet the ends of justice.

7. Accordingly, I compound the admitted contraventions, namely, the contraventions of Paragraph 9(1)(A), Paragraph 9(1)(B), Paragraph 8, Paragraph 9(2) of Schedule 1 to Notification No. FEMA 20/2000-RB and Regulation 13.1(3) of Schedule I to Notification No. FEMA 20(R)/2017-RB by the applicant on the facts discussed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 on payment of an amount ₹ 2,32,716/- (Rupees Two Lakh Thirty Two Thousand Seven Hundred Sixteen Only) which shall be deposited by the applicant with the Reserve

Compounding of contraventions under FEMA 1999 M/s Allegro Speciality Chemicals Private Limited CA No. HYD 454 Bank of India, Foreign Exchange Department, 1st Floor, Saifabad, Hyderabad - 500004 by a demand draft drawn in favour of the "Reserve Bank of India" and payable at Hyderabad within a period of 15 days from the date of this order. In case of failure to deposit the compounded amount within the above mentioned period, Rule 10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 dated May 3, 2000 shall apply.

The application is disposed of accordingly. Dated this 15th day of November 2019.

Sd/- (Subrata Das) Regional Director (Andhra Pradesh and Telangana) and Chief General Manager (Hyderabad)