Crux Biotech India 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 05, 2018 C.A. HYD 322 In the matter of M/s. Crux Biotech India Private Limited 8-3-222/C/1, A-26 Madhuranagar, Ameerpet Hyderabad – 500 038 (Applicant) In exercise of the powers conferred under Section 15 (1) of Foreign Exchange Management Act, 1999 and the Regulations/ Rules/ Notifications/ Orders made there under, I pass the following Order The applicant has filed the compounding application dated July 24, 2018 received on July 27, 2018 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; (ii) delay in submission of Form FC-GPR to Reserve Bank of India after issue of shares towards subscription to equity and (iii) delay in allotment of shares to the non-resident investor and delay in refund of excess share application money to the non-resident investor in terms of Paragraph

Compounding of contraventions under FEMA 1999 M/s Crux Biotech India Private Limited CA No. HYD 322 9(1)(A), Paragraph 9(1)(B) and Paragraph 8 respectively 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 (hereinafter referred to as Notification No. FEMA 20/2000-RB) as then applicable and also delay in submission of Form FC-GPR to Reserve Bank of India after issue of shares towards subscription to equity in terms of Regulation 13.1(2) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 notified vide Notification No. FEMA.20R/2017-RB dated November 07, 2017 (hereinafter referred to as Notification No. FEMA 20R/2017-RB). 2. The relevant facts of the case are as follows: a) The applicant is a resident company incorporated as Private Limited Company under the Companies Act, 1956 on 20.05.2010 (CIN: U24296TG2010PTC068519). The company is engaged in the business of manufacturing all kinds of products and Bio-Products relating to Ethanol, Extra Neutral Alcohol (ENA), Rectified Spirit, Pharma Grade Alcohol, Feeds and Feed Supplements. b) The applicant had received foreign inward remittances from single foreign investor towards advance for subscription to equity shares as indicated below.

Sl Name of the Remitter Total Amount Date of Date of No (INR) Receipt Reporting 1 Venkata Reddy 7912828 10-10-2012 10-11-2012 Vemireddy 2 Venkata Reddy 10699072 23-10-2012 10-11-2012 Vemireddy 3 Siva Kumar Munnangi 13640931 13-05-2013 28-06-2013 and Aruna Munnangi 4 Siva Kumar Munnangi 19819388 29-07-2013 17-09-2013

Compounding of contraventions under FEMA 1999 M/s Crux Biotech India Private Limited CA No. HYD 322 5 Venkata Reddy 9985901 18-11-2013 28-12-2013 Vemireddy 6 Siva Kumar Munnangi 19449228 17-02-2014 17-02-2014 and Aruna Munnangi 7 The Roy Family 7594015 25-02-2014 21-03-2014 Revocable Trust 8 Jagadeeshwar Reddy 7595250 25-02-2014 21-03-2014 and Jayasree Reddy 9 Venkata Reddy 11569769 21-03-2014 30-12-2017 Vemireddy 10 Venkata Reddy 10005716 15-04-2014 26-05-2014 Vemireddy 11 The Roy Family 2178026 21-05-2014 15-07-2014 Revocable Trust 12 Venkata Reddy 4981502 23-05-2014 15-07-2014 Vemireddy 13 Venkata Reddy 9000793 05-09-2014 06-09-2014 Vemireddy 14 The Roy Family 1764629 15-09-2014 18-09-2014 Revocable Trust 15 Siva Kumar Munnangi 10117447 07-10-2014 08-10-2014 and Aruna Munnangi 16 Vemireddy Investment 1846251 22-10-2014 25-10-2014 Company 17 Aruna Munnangi 6138937 16-03-2015 26-03-2015 18 Venkata Reddy 6039720 26-03-2015 04-05-2015 Vemireddy 19 Venkata Reddy 4061125 27-04-2015 24-07-2015 Vemireddy 20 The Roy Family 1613011 15-05-2015 24-07-2015 Revocable Trust 21 Venkata Reddy 2973695 18-05-2015 24-07-2015 Vemireddy 22 Venkata Reddy 12870356 12-04-2017 09-06-2017 Vemireddy 23 Lakshmi Reddy 9624000 24-04-2017 09-06-2017

Compounding of contraventions under FEMA 1999 M/s Crux Biotech India Private Limited CA No. HYD 322 R.Lakireddy 24 Venkata Reddy 16756377 07-07-2017 09-08-2017 Vemireddy 25 Venkata Reddy 17822946 05-10-2017 20-10-2017 Vemireddy 26 Lakshmi Reddy 54344750 18-12-2017 09-01-2018 R.Lakireddy 27 Venkata Reddy 16788557 01-01-2018 09-01-2018 Vemireddy Total 29,71,94,220

The applicant received the foreign inward remittances amounting to `29,71,94,220/- as indicated above out of which remittances amounting to `13,40,32,345/- were reported to Reserve Bank of India with delays ranging from 1 day to 3 years 8 months 10 days approximately beyond the prescribed period of 30 days. 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. c) The company allotted shares and filed form FC-GPRs as indicated below:

Sl Name of the Date of Number of Amount for Date of No investor allotment shares/CC which reporting of shares PS allotted shares allotted (INR) 1 Venkata Reddy 28-12-2012 1861190 18611900 06-04-2013 Vemireddy 2 Munnangi Siva 30-07-2013 3346030 33460300 17-09-2013 Kumar 3 Venkata Reddy 02-01-2014 998590 9985900 24-03-2014 Vemireddy

Compounding of contraventions under FEMA 1999 M/s Crux Biotech India Private Limited CA No. HYD 322 4 Venkata Reddy 22-07-2014 2655698 26556980 06-01-2017 Vemireddy 5 Munnangi Siva 22-07-2014 1944923 19449230 06-01-2017 Kumar 6 The Roy Family 22-07-2014 977203 9772030 06-01-2017 Revocable Trust 7 Jagadeeshwar 22-07-2014 759525 7595250 06-01-2017 Reddy and Jayasree Reddy 8 Venkata Reddy 25-10-2014 900079 9000790 06-01-2017 Vemireddy 9 The Roy Family 25-10-2014 76462 764620 06-01-2017 Revocable Trust 10 Munnangi Siva 25-10-2014 1011744 10117440 06-01-2017 Kumar Reddy 11 Venkata Reddy 31-03-2015 783223 7832230 06-01-2017 Vemireddy 12 The Roy Family 31-03-2015 100002 1000020 06-01- 2017 Revocable Trust 13 Munnangi Siva 31-03-2015 613893 6138930 06-01-2017 Kumar Reddy 14 Venkata Reddy 23-12-2015 703482 7034820 06-01-2017 Vemireddy 15 The Roy Family 23-12-2015 161301 1613010 06-01-2017 Revocable Trust 16 Venkata Reddy 03-05-2017 858024 12870360 21-03-2018 Vemireddy 17 L a kshmi Reddy 03-05-2017 641600 9624000 21-03- 2018 R.Lakireddy 18 Venkata Reddy 04-09-2017 1117091 16756365 21-03-2018 Vemireddy 19 Venkata Reddy 30-10-2017 1188196 17822940 21-03-2018 Vemireddy

Compounding of contraventions under FEMA 1999 M/s Crux Biotech India Private Limited CA No. HYD 322 20 Venkata Reddy 20-01-2018 1119237 16788555 26-03-2018 Vemireddy 21 Lakshmi Reddy 20-01-2018 3622983 54344745 26-03-2018 R.Lakireddy Total 2,54,40,476 29,71,40,415

The applicant filed form FCGPRs for issue of shares amounting to `29,71,40,415/- as indicated above and the same were reported with delays ranging from 19 days to 2 years 4 months 16 days approximately beyond the stipulated period of 30 days. Whereas in terms of Paragraph 9(1)(B) of Schedule 1 to Notification no. FEMA 20/2000-RB dated May 03, 2000 and Regulation 13.1(2) of Notification no. FEMA 20R/2017-RB dated November 07, 2018, an Indian company issuing shares in accordance with these Regulations has to submit to Reserve Bank of India 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 applicant has delayed in allotment of shares amounting to ` 96,47,840/- to the foreign investors beyond the stipulated period of 180 days from the date of receipt of remittances. Period of contravention ranges from 17 days to 1 month 29 days approximately. Sl Name of the Total Date of Balance Date of No Remitter Amount Receipt amount for allotment (INR) which shares are allotted 1 The Roy Family 1764629 15-09-2014 1000009 31-03-2015 Revocable Trust 2 Venkata Reddy 4061125 27-04-2015 4061125 23-12-2015 Vemireddy 3 The Roy Family 1613011 15-05-2015 1613011 23-12-2015

Compounding of contraventions under FEMA 1999 M/s Crux Biotech India Private Limited CA No. HYD 322 Revocable Trust 4 Venkata Reddy 2973695 18-05-2015 2973695 23-12-2015 Vemireddy Total 1,04,12,460 96,47,840 e) The applicant has delayed in refund of excess share application money of ` 53,741/- to the foreign investor beyond the stipulated period of 180 days from the date of receipt of remittance. Period of contravention is 2 years 11 months 12 days approximately. Sl Name of the Total Date of Excess Date of No Remitter Amount Receipt share seeking (INR) application RBI money (INR) approval for refund 1 Venkata Reddy 6039720 26-03-2015 53741 03-09-2018 Vemireddy Total 60,39,720 53,741

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.

Compounding of contraventions under FEMA 1999 M/s Crux Biotech India Private Limited CA No. HYD 322

3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/799/14.66.003/2018-19 dated October 26, 2018 for further submission in person and/or producing documents, if any, in support of the application. (b) The applicant vide letter dated October 31, 2018 stated that they are foregoing appearing for the optional personal hearing and requested the disposal of the compounding application based on the documents submitted along with the 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 `13,40,32,345/- and the delay ranges from 1 day to 3 years 8 months 10 days approximately. (b) Paragraph 9(1)(B) of Schedule 1 to Notification No. 20/2000-RB and Regulation 13.1(2) of Notification No. 20R/2017-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 ` 29,71,40,415/- and the period of contravention ranges from 19 days to 2 years 4 months 16 days approximately. (c) Paragraph 8 of Schedule 1 to Notification No.20/2000-RB read with A.P (DIR Series) Circular No. 20 dated December 14, 2007 for delay in allotment of shares amounting to ` 96,47,840/- with a delay ranging from 17 days to 1 month 29 days approximately and delay in refund of share application money to the foreign investor and the contravention relates to an amount of ` 53,741/- with a delay of 2 years 11 months 12 days approximately.

Compounding of contraventions under FEMA 1999 M/s Crux Biotech India Private Limited CA No. HYD 322 5. It has been declared in the compounding application dated July 24, 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 July 24, 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. 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 and I consider that an amount of `11,36,898/- (Rupees Eleven Lakh Thirty Six Thousand Eight Hundred Ninety Eight 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 of Schedule 1 to Notification No. FEMA 20/2000-RB and Regulation 13.1(2) of Notification No. FEMA 20R/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 of `11,36,898/- (Rupees Eleven Lakh Thirty Six Thousand Eight Hundred Ninety Eight 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

Compounding of contraventions under FEMA 1999 M/s Crux Biotech India Private Limited CA No. HYD 322 to deposit the compounded amount within the above mentioned period, Rule10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 dated May 3, 2000 shall apply.

The application is disposed accordingly. Dated this 05th day of November 2018

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