Powersys India Pvt Ltd

In the RESERVE BANK OF INDIA Foreign Exchange Department Secretariat Road Saifabad, Hyderabad -500 004 Present K R K Reddy Deputy General Manager Date: November 21, 2016 C.A. HYD 166 In the matter of M/s. Powersys India Private Limited 2-62/C/6, Road No. 2 Brundavan Hills Colony Near Rajiv Gruhakalpa Nizampet Hyderabad 500090. (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 October 04, 2016 received on October 06, 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 Paragraph 9 (1) (A) and Paragraph 9 (1) (B) of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India)

FED M/s. Powersys India Private Limited CA No. HYD 166 Regulations, 2000 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 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 24.02.2016 as a private limited company under Companies Act, 2013. The company is in the business of designing, developing, engineering, testing, manufacturing, erecting, installation, commissioning, importing, exporting, marketing, buying, selling, distributing, repairing and servicing of railway signaling systems/railway signaling software/railway electrification/railway track systems/power supplies and associated civil works etc. b) The applicant had received foreign inward remittances from Foreign Company towards advance for subscription to equity shares as indicated below:

Sl Name of Remitter Date of Date of Total Amount (`) No. Receipt Reporting 1 Powersys Limited 5,000 15.03.2016 19.08.2016 2 Powersys Limited 9,24,200 24.03.2016 20.07.2016 3 Powersys Limited 10,00,000 05.04.2016 19.08.2016 4 Powersys Limited 5,70,800 25.04.2016 19.08.2016 Total 25,00,000 The applicant reported receipt of remittances towards share subscription amounting to ` 25,00,000/- to the Regional Office of Reserve Bank of India with delay ranging from 2 months 25 days to 4 months 5 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.

FED M/s. Powersys India Private Limited CA No. HYD 166 c) The company allotted equity shares and filed Form FC-GPRs as indicated below: Sl Name of Investor Date of Number of Amount for Date of No allotment shares which shares reporting to of shares allotted allotted (`) RBI 1 Powersys Limited 28.03.2016 92,920 9,29,200 08.09.2016 2 Powersys Limited 29.04.2016 1,57,080 15,70,800 08.09.2016 Total 2,50,000 25,00,000

The applicant filed Form FC-GPRs for the allotment of shares amounting to ` 25,00,000/- as indicated above with a delay ranging from 3 months 11 days to 4 months 12 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.

3. a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/928/14.66.003/2016-17 dated November 10, 2016 for further submission in person and/or producing documents, if any, in support of the application.

b) The applicant vide e-mail dated November 17, 2016 has stated that they would not be able to attend the personal hearing and therefore, requested to issue Order as per regulation. In view of the foregoing, 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 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:

FED M/s. Powersys India Private Limited CA No. HYD 166 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 25,00,000/- and the duration of contravention ranges from 2 months 25 days to 4 months 5 days ₹ approximately.

b) 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 25,00,000/- and the duration of contravention ranges from 3 months 11 days to 4 months 12 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 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 22,990/- (Rupees Twenty Two Thousand Nine Hundred Ninety 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 22,990/- (Rupees Twenty Two Thousand Nine Hundred Ninety 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 favor 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

FED M/s. Powersys India Private Limited CA No. HYD 166 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 21st day of November 2016.

Sd/- (K R K Reddy) Deputy General Manager