Genesis Colors Ltd.

In the RESERVE BANK OF INDIA Foreign Exchange Department 6, Sansad Marg New Delhi-110001 Present V.G. Sekar Chief General Manager Date: June 10, 2019 CA No. NDL 374/2019 In the matter of Genesis Colors Limited 301 to 303, 3rd Floor, Good Earth Business Bay, Sector 58, Golf Course Extension Gurugram, Haryana-122102 (Applicant) In exercise of the powers under Section 15(1) of Foreign Exchange Management Act, 1999 and the Regulations/ Rules/ Notifications/ Orders made thereunder, I pass the following Order. ORDER The applicant has filed the compounding application dated January 10, 2019 (received at Reserve Bank of India, New Delhi on January 14, 2019) for compounding of contraventions of the provisions of the Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA) and the regulations issued thereunder. The contraventions sought to be compounded are those of (i) delay in reporting foreign inward remittance received for issue of shares, and (ii) delay in filing Form FC-GPR after issue of shares, in terms of paragraphs 9(1)(A) and 9(1)(B) 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 3, 2000 (hereinafter referred to as FEMA 20/2000-RB), as amended from time to time.

Genesis Colors Limited CA No. NDL 374/2019

2. The relevant facts of the case are as follows: (a) The applicant company, incorporated on November 23, 1998, is engaged in the business of wholesale of other clothing items n.e.c. (b) The applicant had reported the remittances received from its foreign investors viz. Shri Deepak Mohan Narula, U.S.A, M/s Sequoia Capital India Growth Investment Holdings I, LLC, Mauritius and M/s HEP Mauritius Limited, Mauritius, on three occasions with delay ranging from 2 days to 1 month and 19 days beyond the prescribed period, as detailed below, in contravention of paragraph 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, as then applicable. Sl. No. Date of receipt Amount (₹) Date of Reporting 1 27.02.2006 1,97,64,000.00 18.05.2006 2 09.06.2008 19,63,64,000.00 11.07.2008 3 04.06.2013 5,64,73,494.00 08.07.2013 Total 27,26,01,494.00

Whereas, in terms of paragraph 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures or warrants in accordance with these Regulations shall submit through AD bank to the Regional Office concerned of the Reserve Bank under whose jurisdiction the Registered office of the company operates, not later than 30 days from the date of receipt of the amount of consideration received by Indian company for issue of shares or convertible debentures or warrants, a report in Advance Reporting Form as specified by Reserve Bank from time to time along with documents prescribed therein. (c) The applicant had reported the allotment of shares to its foreign investors viz. Shri Deepak Mohan Narula, U.S.A and M/s Sequoia Capital India Growth Investment I, Mauritius, on two occasions with delays of 5 months & 15 days and 1 year, 1 month & 3 days beyond the prescribed period, as detailed below, in contravention of paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, as then applicable. Sl. No. Date of allotment Amount (₹) Date of Reporting 1 01.04.2006 1,97,63,700.00 16.10.2006 2 16.03.2017 7,00,00,006.72 18.05.2018 Total 8,97,63,706.72

Whereas, in terms of paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures or warrants in accordance

Genesis Colors Limited CA No. NDL 374/2019 with these Regulations shall submit through AD bank to the Regional Office concerned of the Reserve Bank under whose jurisdiction the Registered office of the company operates, not later than 30 days from the date of issue of shares or convertible debentures or warrants, a report in Form FC-GPR as specified by the Reserve Bank from time to time together with documents prescribed therein. (d) Thus, there are contraventions of paragraphs 9(1)(A) and 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, as then applicable.

3. The applicant was given an opportunity for personal hearing for further submission in person and/ or by producing documents, if any, in support of the application. Shri Deep Singh, Company Secretary, appeared for personal hearing on June 10, 2019 on behalf of the applicant. The representative of the applicant admitted the contraventions committed by the applicant for which compounding has been sought. During the personal hearing, he submitted that contraventions were without any malafide or wilful intention but were mainly due to delay in receipt of FIRC and other related documents and non-availability of specialised professional in the company. He requested for a lenient view in the matter. The application for compounding is, therefore, being considered on the basis of averments made in the application as well as other documents and submissions made during the personal hearing.

4. I have given my careful consideration to the documents on record and submissions made by the applicant during the personal hearing. Accordingly, I hold that the applicant has contravened the following FEMA provisions: (a) Paragraph 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, on account of delay in reporting foreign inward remittances received towards subscription of shares as detailed in paragraph 2(b) above. The contraventions relate to an amount of ₹27,26,01,494/- (Rupees Twenty Seven Crore Twenty Six Lakh One Thousand Four Hundred and Ninety Four only) and the period of delay ranges from 2 days to 1 month and 19 days. (b) Paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, on account of delay in filing Form FC-GPR after issue of shares as detailed in paragraph 2(c) above. The contraventions relate to an amount of ₹8,97,63,706.72 (Rupees Eight Crore Ninety Seven Lakh Sixty Three Thousand Seven Hundred Six and Paise Seventy Two only) and the periods of delay are 5 months & 15 days and 1 year, 1 month & 3 days.

Genesis Colors Limited CA No. NDL 374/2019

5. It has been declared in the compounding application dated January 10, 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 also been declared in the declaration 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. 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 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. After considering the submissions made by the applicant and the entire facts and circumstances of the case I am persuaded to compound the contraventions, in line with the Guidance Note on Computation Matrix prescribed as part of Master Direction – Compounding of Contraventions, framed in accordance with the Foreign Exchange (Compounding Proceedings) Rules 2000. Accordingly, it stands to reason that payment of an amount of ₹1,24,000/- (Rupees One Lakh Twenty Four Thousand only) will meet the ends of justice in the circumstances of this case.

7. Accordingly, I compound the admitted contraventions of paragraphs 9(1)(A) and 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, as then applicable, by the applicant based on the facts detailed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000, on payment of an amount of ₹1,24,000/- (Rupees One Lakh Twenty Four Thousand only) which shall be deposited by the applicant with the Reserve Bank of India, Foreign Exchange Department, 6, Sansad Marg, New Delhi-110001 by a demand draft drawn in favour of the “Reserve Bank of India” and payable at New Delhi 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

Genesis Colors Limited CA No. NDL 374/2019 shall apply.

The application is disposed accordingly.

Dated this the 10th day of June 2019.

Sd/- (V.G. Sekar) Chief General Manager