R. A. Chem Pharma Limited

In the RESERVE BANK OF INDIA Foreign Exchange Department Secretariat Road Saifabad, Hyderabad 500 004 Present R. Subramanian Regional Director Date: January 31, 2017 C.A. HYD 167 In the matter of M/s. RA Chem Pharma Limited Plot No. 26 & 27 Technocrats Industrial Estate Balanagar Hyderabad 500 037. . (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 10, 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) neither the equity instruments were issued nor the money refunded to the foreign investor, a person resident outside India, within 180 days of the receipt of the inward remittance; (ii) delay in reporting receipt of foreign inward remittances; (iii) 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 FED M/s. RA Chem Pharma Ltd CA No. HYD 167 in Paragraph 8, 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 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 as a private limited company under the Companies Act, 1956 on 08.01.1996 under the name of M/s. Igor Dyespec Pvt Ltd. The company changed its name to M/s. Igor Pharmachem Pvt Ltd on 01.01.1999 subsequently changed on 21.11.2000 to M/s. Igor Pharmachem Ltd and again on 16.05.2005 to M/s. RA Chem Pharma Ltd. The company is engaged in the business of manufacturing of bulk drugs and formulation. b) The company reported receipt of remittances towards share application money amounting to ` 11,92,51,815/- received during the period 20.06.2003 to 30.12.2008 out of which ` 6,09,65,728/- was reported with a delay ranging from 2 years 10 months 9 days to 2 years 10 months 19 days approximately beyond the stipulated period of 30 days. The company has been earlier compounded for delay in reporting of inward remittances amounting to ` 5,82,86,087/- received from 20.06.2003 to 09.05.2007 in terms of CA No. 1651/2011 dated 24.08.2011 by CEFA, Central Office. They have now applied for compounding of the following foreign inward remittances as indicated below: Sl.

Name of Remitter Total Amount Date of Date of No. (`) Receipt Reporting 1 Ontario Inc 3,00,00,000 20.12.2008 09.12.2011 Orchem International 2 3,09,65,728 30.12.2008 09.12.2011 Trading BV Total 6,09,65,728 The applicant reported receipt of remittances towards share subscription amounting to ` 6,09,65,728/- to the Regional Office of Reserve Bank of India with delay ranging from FED M/s. RA Chem Pharma Ltd CA No. HYD 167 2 years 10 months 9 days to 2 years 10 months 19 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. c) The company has filed FC-GPRs for issue of shares amounting to ` 11,79,32,645/-during the period 31.03.2004 to 18.06.2009 and reported FC-GPRs for issue of shares amounting to ` 6,00,00,000/- beyond the stipulated period of 30 days with delay of 2 years 4 months 21 days approximately.

The company has been earlier compounded for delay in filing of FC-GPRs for issue of shares during the period 31.03.2004 to 30.04.2008 amounting to ` 5,79,32,645/- in terms of CA No.1651/2011 dated 24.08.2011 by CEFA, Central Office.

Date of Number of Amount for Sl Date of Name of Investor allotment of shares which shares No reporting shares allotted allotted (`) 1 Ontario Inc 3,00,000 3,00,00,000 18.06.2009 09.12.2011 Orchem 2 International 3,00,000 3,00,00,000 Trading BV Total 6,00,000 6,00,00,000

The applicant filed Form FC-GPRs for the allotment of shares amounting to ` 6,00,00,000/- as indicated above with a delay of 2 years 4 months 21 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. RA Chem Pharma Ltd CA No. HYD 167 d) The company has been earlier compounded for delay in refund of excess share application money of ` 3,53,442/- in terms of CA No.1651/2011 dated 24.08.2011 by CEFA, Central Office. They have again delayed in refund of excess share application money beyond the stipulated period of 180 days from the date of receipt of inward remittances with delay of 6 year 9 months 13 days approximately as detailed under: Sl Name of the investor Date of receipt Excess Share Date of application No. of funds application for refund Amount (`) Orchem International 1 30.12.2008 9,65,728 13.04.2016 Trading BV

Whereas in terms of Paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB, 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 November 13, 2007 in the official Gazette of the Govt. of India..

3 a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s e-mail dated 16.01.2017 for further submission in person and/or producing documents, if any, in support of the application. (b) The applicant appeared for personal hearing on 19.01.2017 during which Shri Sailesh Jhawar, Head-Finance and Shri Nagraj K.V, AGM- Finance, 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 FED M/s. RA Chem Pharma Ltd CA No. HYD 167 administrative reasons in initial time and was not willful 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 8 of Schedule 1 to Notification No. FEMA 20/2000-RB for delay in refund of excess share application money beyond the stipulated period of 180 days from the date of receipt of foreign inward remittances. The contravention relates to an amount of ` 9,65,278/- and the period of contravention is 6 years 9 months 13 days approximately. (b) 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 ` 6,09,65,728/-and the duration of contravention ranges from 2 years 10 months 9 days to 2 years 10 months 19 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 ` 600,00,000/- and the duration of contravention is 2 years 4 months 21 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 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. 7,33,297/- (Rupees Seven Lakhs Thirty Three Thousand Two Hundred Ninety Seven Only) will meet the ends of justice.

FED M/s. RA Chem Pharma Ltd CA No. HYD 167 6. Accordingly, I compound the admitted contraventions namely, the contraventions of Paragraph 8, 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. 7,33,297/- (Rupees Seven Lakhs Thirty Three Thousand Two Hundred Ninety Seven 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.

7. The application has been considered for compounding of the admitted contraventions without prejudice to any action that the Directorate of Enforcement may take based on their detailed investigations. The application is disposed accordingly. Dated this 31st day of January 2017

Sd/- (R. Subramanian) Regional Director