Arjas Steel Pvt Ltd (formerlly Gerdau Steels India Pvt. ltd)

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: April 25, 2019 C.A. HYD 392 In the matter of M/s. Arjas Steel Pvt Ltd (Formerly known as Gerdau Steel India Pvt Ltd) Jambulapadu Village, Tadipatri Mandal Ananthpur District, Andhra Pradesh- 515 411 (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 December 20, 2018 received on January 1, 2019 for compounding of contraventions of the provisions of the Foreign Exchange Management Act, 1999 (the FEMA) and the regulations issued thereunder. The contraventions sought to be compounded are (i) delay in reporting receipt of foreign inward remittances and (ii) delay in submission of Form FC-GPR to Reserve Bank of India after issue of shares towards subscription to equity (iii) delay in refund of share application money to the foreign investor beyond 180 days from the date receipt of foreign inward remittance in terms of Paragraph

Compounding of contraventions under FEMA 1999 M/s. Arjas Steel Private Limited CA No. HYD 392 9(1)(A), Paragraph 9(1)(B) and Paragraph 8 respectively of Schedule 1 to Foreign Exchange Management Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated May 03, 2000, as then applicable and amended from time to time (hereinafter referred to as Notification No. FEMA 20/2000-RB). 2. The relevant facts of the case are as follows: a) The applicant is a resident company incorporated as M/s SKJ Steel Plant Limited Company under the Companies Act, 1956 on 16.03.1993 (CIN: U27109AP1993PTC015499). The company is engaged in the business of manufacturing pig iron and spiegeleisen pigs, blocks or other primary forms, steel in ingots or other primary forms, other semi-finished products of steel, hot rolled and cold rolled products of steel. The name of the company has been changed to M/s Arjas Steel Pvt Ltd with effect from 21.12.2018. b) The applicant had received foreign inward remittances from the foreign investors as indicated below: Sl Name of Remitter Amount (INR) Date of Date of No Receipt Reporting 1 79,11,75,000.00 12.12.2007 16.06.2008 2 210,20,83,128.00 02.05.2008 22.05.2008 3 24,94,26,447.00 20.02.2009 11.03.2009 4 28,60,20,000.00 28.05.2009 26.06.2009 5 65,62,83,189.00 27.01.2010 26.06.2010 Gerdau Holdings Europa 6 30,82,84,704.00 29.04.2010 19.07.2010 (formerly known as 7 22,44,99,569.00 29.12.2010 14.01.2011 Corporacion Sidenor) 8 5,46,77,929.00 26.03.2011 02.05.2011 9 45,54,62,434.00 21.04.2011 02.05.2011 10 22,60,95,155.00 30.06.2011 04.07.2011 11 15,82,95,251.00 01.08.2011 08.08.2011 12 16,64,95,005.00 30.08.2011 06.09.2011

Compounding of contraventions under FEMA 1999 M/s. Arjas Steel Private Limited CA No. HYD 392 13 26,25,95,076.00 21.09.2011 27.09.2011 14 118,34,50,487.00 29.09.2011 05.10.2011 15 49,61,56,087.00 01.02.2012 22.02.2012 16 49,59,71,106.00 09.03.2012 26.03.2012 17 153,64,03,238.00 28.03.2012 10.04.2012 Gerdau Holdings Europa 18 315,65,86,529.00 21.05.2012 28.05.2012 (formerly known as 19 183,60,93,622.26 04.09.2012 28.09.2012 Corporacion Sidenor) 20 260,09,51,646.41 20.12.2012 18.01.2013 21 76,09,21,698.24 15.01.2013 22.01.2013 22 440,90,95,228.80 28.02.2014 07.03.2014 23 150,77,88,055.98 03.09.2014 07.10.2014 24 147,07,18,080.00 25.11.2014 17.12.2014 Total 2539,55,28,665.69 The applicant reported receipt of remittances towards share subscription amounting to ₹ 2539,55,28,665.69 to the Regional Office of Reserve Bank of India out of which remittances amounting to ₹ 331,82,08,877.98 were reported with delays ranging from 3 days to 5 months 4 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 procedure not later than 30 days from the date of receipt of the amount of consideration.

Date of Date of Number of Amount for which Sl Name of reporting allotment shares shares allotted No investor to AD or of shares allotted (INR) RBI

Compounding of contraventions under FEMA 1999 M/s. Arjas Steel Private Limited CA No. HYD 392 1 02.04.2008 1,53,13,506 79,11,75,000.00 24.04.2008 2 27.05.2008 4,06,86,494 210,20,75,000.00 15.06.2010 3 30.03.2009 4827297 24,94,26,436.00 28.07.2009 4 23.11.2009 2,86,02,000 28,60,20,000.00 02.02.2010 5 16.04.2010 6,56,28,318 65,62,83,180.00 26.06.2010 6 26.06.2010 3,08,28,470 30,82,84,700.00 19.07.2010 7 11.02.2011 2,24,49,956 22,44,99,560.00 11.03.2011 8 13.06.2011 5,10,14,036 51,01,40,360.00 11.07.2011 Gerdau 9 23.12.2011 2,26,09,515 22,60,95,150.00 05.01.2012 Holdings Europa 10 24.01.2012 1,58,29,525 15,82,95,250.00 01.02.2012 (formerly 11 23.02.2012 1,66,49,500 16,64,95,000.00 19.03.2012 known as Corporacion 12 15.03.2012 2,62,59,507 26,25,95,070.00 04.04.2012 Sidenor) 13 24.03.2012 16,79,60,657 167,96,06,570.00 24.04.2012 14 05.05.2012 4,95,97,110 49,59,71,100.00 06.06.2012 15 24.05.2012 15,36,40,323 153,64,03,230.00 06.06.2012 16 19.07.2012 31,56,58,652 315,65,86,520.00 06.08.2012 17 25.10.2012 18,36,09,362 183,60,93,620.00 21.11.2012 18 17.01.2013 7,60,92,169 76,09,21,690.00 13.02.2013 19 15.02.2013 26,00,95,164 260,09,51,640.00 08.03.2013 20 03.06.2014 44,09,09,520 440,90,95,200.00 04.07.2014

Compounding of contraventions under FEMA 1999 M/s. Arjas Steel Private Limited CA No. HYD 392 Gerdau 21 28.10.2014 15,07,78,805 150,77,88,050.00 27.11.2014 Holdings Europa (formerly 22 10.03.2015 14,70,71,808 147,07,18,080.00 30.03.2015 known as Corporacion Sidenor) Total 228,61,11,694 2539,55,20,406.00 c) The company allotted equity shares and filed form FC-GPRs as indicated below:

The applicant filed form FCGPRs for the of shares amounting to ₹ 2539,55,20,406.00 as indicated above out of which shares allotted for ₹ 987,84,77,486.00 were reported with delays ranging from 1 day to 1 year 11 months 20 days approximately. 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 FCGPR along with documents prescribed therein within 30 days from the date of issue of shares to person resident outside India. d) The company has refunded the share application money to the foreign investor as indicated below: Sl Name of Total Amount Date of Excess Date of No Remitter (INR) Receipt share RBI’s application Approval money for refund 1 Gerdau 210,20,83,128.00 02.05.2008 8128.00 30.11.2012 Holdings Europa (formerly

Compounding of contraventions under FEMA 1999 M/s. Arjas Steel Private Limited CA No. HYD 392 known as Corporacion Sidenor) Total 8128.00 The applicant has refunded the un-allotted share application money of ₹ 8,128.00 with delay of 4 years 1 month 1 day approximately. Whereas in terms of 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, if the shares are not issued within 180 days from the date of receipt of the inward remittance, the amount of consideration so received shall be refunded to the person concerned, provided the Reserve Bank may on an application made to it and for sufficient reasons permit to refund the amount of consideration received towards issue of security, if such amount is outstanding beyond a period of 180 days from the date of receipt. The amendment in Paragraph 8 of Schedule 1 to Notification No. FEMA 20/20000-RB was introduced by issue of Foreign Exchange Management (Transfer or Issue of Security by a Person outside India) (Third Amendment Regulation, 2007 notified, vide Notification No. FEMA 170/2007-RB dated 13th November, 2007 in the official Gazette of the Govt. of India.

3. The applicant vide mail dated April 23, 2019 stated that they are foregoing appearing for the personal hearing and requested that the compounding application may be disposed off on the basis of merits in terms of the facts/submission 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 Compounding of contraventions under FEMA 1999 M/s. Arjas Steel Private Limited CA No. HYD 392 ₹ 331,82,08,877.98 and the delay ranges from 3 days to 5 months 4 days approximately. (b) Paragraph 9(1)(B) of Schedule 1 to Notification No. 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 ₹ 987,84,77,486.00 and the period of contravention ranges from 1 day to 1 year 11 months 20 days approximately.

(c) Paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB for delay in refund of share application money ₹ 8128.00 and the delay is 4 year 1 month 1 day approximately. 5. It has been declared in the compounding application dated December 20, 2018 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 December 20, 2018 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 in 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

Compounding of contraventions under FEMA 1999 M/s. Arjas Steel Private Limited CA No. HYD 392 and I consider that an amount of ₹ 6,42,325/- (Rupees Six Lakh Forty Two Thousand Three Hundred Twenty Five 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) and Paragraph 8 respectively of Schedule 1 to FEMA.20/2000-RB by the applicant on the facts discussed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 on payment of an amount of ₹ 6,42,325/- (Rupees Six Lakh Forty Two Thousand Three Hundred Twenty Five Only) which shall be deposited by the applicant with the Reserve 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 25th day of April 2019

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