Natems Sugar Pvt. Ltd.

In the RESERVE BANK OF INDIA Foreign Exchange Department Secretariat Road Saifabad, Hyderabad 500 004 Present Ramanath Dash Regional Director Date: September 30, 2016 C.A. HYD 147 In the matter of M/s.Natems Sugar Private Limited 14-79, Sriram Nagar Colony Pattancheru Medak Telangana 502319 (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 21, 2016 for compounding of contravention of the provisions of the Foreign Exchange Management Act, 1999 (the FEMA) and the regulations issued there under. 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 the Reserve Bank after issue of shares towards subscription to equity to a person resident outside India in terms of in Paragraph 9 (1) (A) and Paragraph 9 (1) (B) of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 of Schedule 1 to Foreign Exchange Management (Transfer or Issue of Security by a FED M/s. Natems Sugar Pvt. Ltd. CA No. HYD 147

Person Resident Outside India) Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated 3rd May 2000 and as 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 on 03.03.2014 as a private limited company under the Companies Act, 2013 as M/s. Natems Sugar Ltd and subsequently changed to M/s. Natems Sugar Pvt. Ltd with effect from 22.05.2015. The company is engaged in the business to manufacture of sugar and its byproducts. b) The applicant had received foreign inward remittances from overseas investors towards advance for subscription to equity shares as indicated below:

Sl. Name of Remitter Total Amount Date of Date of reporting No. (`) Receipt to AD

1 Armstrong Energy Ltd 99,53,754.02 09.05.2014 13.10.2014

2 Armstrong Energy Ltd 1,68,92,700 04.08.2014 22.08.2014

Armstrong Energy Small Self- 3 4,77,50,000 24.04.2015 03.06.2015 Administered Scheme (The Trust) Total 7,45,96,454.02

The applicant reported receipt of remittances towards share subscription amounting to ` 7,45,96,454.02 to the Regional Office of Reserve Bank of India and remittances amounting to ` 5,77,03,754.02 was reported with delay ranging from 10 days to 4 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

FED M/s. Natems Sugar Pvt. Ltd. CA No. HYD 147 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 equity shares and filed Form FC-GPRs as indicated below:

Sl. Name of Date of Number of Amount for Date of No Investor allotment shares which shares reporting to AD of shares allotted allotted (`)

Armstrong 1 Energy Ltd 03.07.14 9,95,375 99,53,750 09.01.15 Armstrong 2 Energy Ltd 01.10.14 16,89,270 1,68,92,700 09.01.15 Armstrong Energy Small Self- Administered Scheme (The 3 Trust) 09.06.15 4,77,500 4,77,50,000 13.07.15

Total 31,62,145 7,45,96,450

The applicant filed Form FC-GPRs for the allotment of shares amounting to ` 7,45,96,450/- as indicated above with a delay ranging from 4 day to 5 months 7 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 FC- GPR along with documents prescribed therein within 30 days from the date of issue of shares to person resident outside India.

FED M/s. Natems Sugar Pvt. Ltd. CA No. HYD 147

3 a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/591/14.66.003/2016-17 dated September 16, 2016 for further submission in person and/or producing documents, if any, in support of the application. (b) The applicant appeared for personal hearing on September 28, 2016 during which Ms. Surbhi Agrawal, Company Secretary of the company represented the applicant. The applicant admitted the contraventions for which the compounding has been sought. During the personal hearing it was submitted that the delay was due to administrative reasons in initial time and was not wilful or with a malafide intention. In view of the foregoing, 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 and submission made by the applicant during the personal hearing. 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 due to delay in reporting of receipt of foreign inward remittances towards subscription to equity shares as detailed above. The contraventions relate to an amount of Rs. 5,77,03,754.02 and the duration of contravention ranges from 10 days to 4 months 4 days approximately. (c) Paragraph 9 (1) (B) of Schedule 1 to Notification No. 20/2000-RB due to delay in submission of Form FC-GPR to Reserve Bank after issue of shares to persons resident outside India and the contravention relates to an amount of Rs. 7,45,96,450/- and the duration of contravention ranges from 4 days to 5 months 7 days approximately.

5. In terms of Section 13 of the FEMA, any person contravening any provision of the Act shall be liable to a penalty upto thrice the sum involved in such contravention upon adjudication. However, taking into account the relevant facts and circumstances of the FED M/s. Natems Sugar Pvt. Ltd. CA No. HYD 147 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 Rs.46,940/-(Rupees Forty Six Thousand Nine Hundred and Forty Only) will meet the ends of justice.

6. Accordingly, I compound the admitted contraventions namely, the contraventions of Paragraph 9 (1) (A) and Paragraph 9 (1) (B) of Schedule 1 to Notification No. 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 Rs.46,940/- (Rupees Forty Six Thousand Nine Hundred and Forty 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, Rule10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 dated May 3, 2000 shall apply.

The application is disposed accordingly.

Dated this thirtieth day of September 2016

Sd/- (Ramanath Dash) Regional Director