MMD Heavy Machinery (India) Pvt Ltd

In the matter of M/s MMD Heavy Machinery (India) Private Limited 5600 Central Expressway, Sector 24, Sricity, Satyavedu Mandal, Chittoor, Andhra Pradesh-517588 (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 November 29, 2018 received on December 10, 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 and (ii) delay in submission of Form FC-GPR to Reserve Bank of India after issue of shares towards subscription to Compounding of contraventions under FEMA 1999 M/s MMD Heavy Machinery(India) Private Limited CA No. HYD 368 equity of Schedule 1 to Foreign Exchange Management 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 as amended.

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 25/07/2012, with CIN: U29253AP2012PTC106326. The company is engaged in manufacture of parts and accessories for machinery/equipment used by Construction and Mining Industries. b) The applicant had received foreign inward remittances for subscription to equity shares as indicated below: Name of remitter Date of Date of S.No Amount (INR) Receipt reporting MMD GPHC Limited 1 10,00,00,000 01/10/2012 10/11/2012 2 MMD GPHC Limited 8,13,90,000 27/05/2013 16/05/2013 3 MMD GPHC Limited 9,71,50,000 12/11/2013 06/11/2013 MMD GPHC Limited 30/07/2014 29/08/2014 4 15,00,30,000 5 MMD GPHC Limited 4,71,10,000 28/04/2015 27/05/2015 6 MMD GPHC Limited 9,60,00,000 03/06/2015 18/06/2015 MMD GPHC Limited 26/11/2015 04/04/2019 7 9,81,50,000 8 MMD GPHC Limited 8,35,80,000 27/10/2017 07/03/2018 Total 75,34,10,000 The applicant reported receipt of remittances towards share subscription amounting to ₹ 75,34,10,000/- to the Regional Office of Reserve Bank of India out of which remittances amounting to ₹ 28,17,30,000/- were reported with delays ranging from 10 days to 3 years 3 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 Compounding of contraventions under FEMA 1999 M/s MMD Heavy Machinery(India) Private Limited CA No. HYD 368 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. Name of Amount for investor Date of No. of which Date of S.No allotment of Shares shares reporting to shares allotted allotted RBI (INR) MMD GPHC 9998 99980 Limited 1 01/10/2012 15/05/2013 MMD Asia 1 10 Pacific Ltd MMD GPHC 2 20/03/2013 999000 99900000 09/04/2013 Limited MMD GPHC 26/06/2013 3 14/06/2013 813900 81390000 Limited MMD GPHC 21/01/2014 4 24/12/2013 971500 97150000 Limited MMD GPHC 26/09/2014 5 1500300 150030000 27/10/2014 Limited MMD GPHC 30/09/2015 6 471100 47110000 03/03/2016 Limited MMD GPHC 01/12/2015 7 960000 96000000 09/03/2016 Limited MMD GPHC 06/05/2016 8 981500 98150000 07/06/2016 Limited 9 MMD GPHC 22/03/2018 835800 83580000 11/06/2018

Compounding of contraventions under FEMA 1999 M/s MMD Heavy Machinery(India) Private Limited CA No. HYD 368 Limited Total 7543099 753409990 The applicant filed form FCGPRs for the allotment of shares amounting to ₹75,34,09,990/- as indicated above out of which FCGPRs for ₹39,13,89,990/- were reported with delays ranging from 2 days to 6 months 14 days approximately beyond the prescribed limit. 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. 3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/2176/14.66.003/2018-19 dated April 12, 2019 for further submission in person and/or producing documents, if any, in support of the application. (b) The Authorized representative of the company Shri N. Sandeep Kumar, Chartered Accountant appeared for the personal hearing.

He admitted the contraventions for which the compounding has been sought. During the personal hearing, it was submitted that the delay was not wilful or with a malafide intention but was on account of administrative lapses. In view of the above, the applicant requested to take a lenient view in disposal of the application. The application for compounding is, therefore, being considered on the basis of the averments made in the application as well the submissions made in this context by the applicant during the personal hearing. 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 MMD Heavy Machinery(India) Private Limited CA No. HYD 368 ₹ 28,17,30,000/- and the delay ranges 10 days to 3 years 3 months 9 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 ₹ 39,13,89,990/- and the period of contravention ranges from 2 days to 6 months 14 days approximately.

5. It has been declared in the compounding application dated November 29, 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 November 20, 2018 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 and I consider that an amount of ₹ 2,57,080/- (Rupees Two Lakhs Fifty Seven Thousand and Eighty Only) will meet the ends of justice. 7. Accordingly, I compound the admitted contraventions, namely, the contraventions of Paragraph 9(1)(A) and Paragraph 9(1)(B) of Schedule 1 to FEMA.20/2000-RB by Compounding of contraventions under FEMA 1999 M/s MMD Heavy Machinery(India) Private Limited CA No. HYD 368 the applicant on the facts discussed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 on payment of an amount of ₹2,57,080/- (Rupees Two Lakhs Fifty Seven Thousand and Eighty 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 22nd day of April 2019

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