Raha Poly Products Ltd

In the RESERVE BANK OF INDIA Foreign Exchange Department Secretariat Road Saifabad, Hyderabad 500 004 Present Shri. Subrata Das Regional Director (Andhra Pradesh and Telangana) and Chief General Manager (Hyderabad) Date: February 07, 2019 C.A. HYD 340 In the matter of M/s. Raha Poly Products Limited Plot No. B-4, First Floor, Phase-1, IDA Opp. Bhujanga Theatre, Pipe Line Road, Shapur Nagar, Jeedimetla Hyderabad – 500 055 (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 15, 2018 received on the same date 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 (ii) delay in submission of Form FC- GPR to Reserve Bank of India after issue of shares towards subscription to equity and (iii) taking on record the transfer of shares from Resident to Non-Resident without obtaining certified form FC-TRS in terms of Paragraph 9(1)(A), Paragraph

Compounding of contraventions under FEMA 1999 M/s Raha Poly Products Limited CA No. HYD 340 9(1)(B) of Schedule 1 and Regulation 4 respectively of 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 (hereinafter referred to as Notification No. FEMA 20 /2000-RB) as then applicable. 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 28.02.1995 (CIN: U25209TG1995PLC019565). The company is engaged in the business of manufacturing bedding, quilts pillows, sleeping bags etc. b) The applicant had received foreign inward remittances from the foreign investors towards advance for subscription to equity shares as indicated below: Sl Name of the Total Amount Date of Date of No Remitter (INR) Receipt Reporting 1 S Anwar Ahsan 4650000 28.06.1995 2 Poly Products LLC 3752000 28.12.1996 * 3 Poly Products LLC 29913000 29.06.1999 4 Poly Products LLC 7200000 27.11.1999 5 Poly Products LLC 1505582 16.05.2001 18.10.2001 6 Poly Products LLC 995787 29.08.2001 18.10.2001 7 Poly Products LLC 268000 20.09.2001 18.10.2001 Industrial Projects & 8 Development Service 1803253 16.03.2004 29.04.2004 LLC Industrial Projects & 9 Development Service 2164395 16.03.2004 29.04.2004 LLC

Compounding of contraventions under FEMA 1999 M/s Raha Poly Products Limited CA No. HYD 340 Industrial Projects & 10 Development Service 2718664 26.05.2004 25.06.2004 LLC Industrial Projects & 11 Development Service 11795813 28.10.2004 16.11.2004 LLC Industrial Projects & 12 Development Service 10906859 01.11.2004 16.11.2004 LLC 13 Poly Products LLC 7999779 16.06.2009 12.02.2010 14 Poly Products LLC 6999779 16.06.2009 12.02.2010 15 Poly Products LLC 1999779 14.01.2012 20.07.2012 16 Poly Products LLC 1999900 21.02.2012 20.07.2012 17 Poly Products LLC 1512893 23.04.2012 20.06.2012 18 Poly Products LLC 879147 13.06.2012 06.08.2012 19 Poly Products LLC 819418 03.07.2012 06.08.2012 20 Poly Products LLC 3437266 30.07.2012 14.08.2012 21 Poly Products LLC 2010797.67 16.08.2012 11.09.2012 22 Poly Products LLC 4470464 06.09.2012 06.11.2012 23 Poly Products LLC 2479416 11.10.2012 07.11.2012 24 Poly Products LLC 2464763.19 29.11.2012 09.01.2013 25 Poly Products LLC 2425467.9 07.12.2012 09.01.2013 26 Poly Products LLC 3557313.76 16.01.2013 01.02.2013 27 Poly Products LLC 1287452.11 12.03.2013 03.04.2013 28 Poly Products LLC 3853244.48 14.05.2013 19.06.2013 29 Poly Products LLC 2339098 29.07.2013 30.08.2013 30 Poly Products LLC 4675253.22 10.10.2013 19.05.2015 31 Poly Products LLC 1911069.60 01.11.2013 19.05.2015

Compounding of contraventions under FEMA 1999 M/s Raha Poly Products Limited CA No. HYD 340 32 Poly Products LLC 1494841 18.11.2013 11.12.2013 33 Poly Products LLC 3518393 28.11.2013 31.12.2013 34 Poly Products LLC 2179985.14 13.01.2014 01.02.2014 35 Poly Products LLC 3620789.20 06.02.2014 22.03.2014 36 Poly Products LLC 1600784.90 09.04.2014 22.05.2014 37 Poly Products LLC 1616311 24.06.2014 15.07.2014 38 Poly Products LLC 1904733 21.08.2014 09.09.2014 39 Poly Products LLC 1100000 29.12.2014 03.05.2016 40 Poly Products LLC 1700000 03.02.2015 31.07.2015 41 Poly Products LLC 1700000 10.02.2015 31.07.2015 42 Poly Products LLC 4817514.40 16.04.2015 19.05.2015 43 Poly Products LLC 5590517 17.04.2015 19.05.2015 44 Poly Products LLC 4164869 27.04.2015 08.06.2015 45 Poly Products LLC 2796219 30.04.2015 08.06.2015 46 Poly Products LLC 3014678 02.06.2015 15.06.2015 47 Poly Products LLC 2502440 24.06.2015 30.07.2015 48 Poly Products LLC 597935.72 05.08.2015 24.08.2015 49 Poly Products LLC 4041303.56 14.06.2016 18.07.2016 50 Poly Products LLC 1688612 30.06.2016 29.07.2016 51 Poly Products LLC 1196928 22.08.2016 19.09.2016 52 Poly Products LLC 851672.56 09.09.2016 06.10.2016 53 Poly Products LLC 1328803 29.09.2016 28.10.2016 54 Poly Products LLC 1500208 27.10.2016 25.11.2016 55 Poly Products LLC 778049 29.12.2016 07.01.2017 Total ₹ 19,01,01,240.41 *The remittances were received during the FERA regime and therefore cannot be compounded. The applicant received the foreign inward remittances amounting to ₹ 19,01,01,240.41 as indicated above out of which remittances amounting to Compounding of contraventions under FEMA 1999 M/s Raha Poly Products Limited CA No. HYD 340 ₹ 8,79,71,902.45 were reported to Reserve Bank of India with delays ranging from 2 days to 1 year 6 months 10 days approximately beyond the prescribed period of 30 days. 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 allotted the following shares in total and filed form FC-GPRs as indicated below:

Amount for Date of Number of which Sl Name of the Date of allotment of shares/CCPs shares No investor reporting shares allotted allotted (INR) 1 Anwar Ahsan 28.06.1995 465000 4650000 2 Poly Products LLC 28.12.1996 375200 3752000 ** 3 Poly Products LLC 29.06.1999 2991300 29913000 4 Poly Products LLC 27.11.1999 720000 7200000 5 Poly Products LLC 30.09.2002 276927 2769270 15.10.2018 Industrial Projects 6 & Development 23.02.2005 2938848 29388480 15.10.2018 Service LLC 7 Poly Products LLC 02.08.2009 1500000 15000000 17.08.2015 8 Poly Products LLC 13.04.2012 399967 3999670 14.08.2013 9 Poly Products LLC 20.06.2012 239204 2392040 14.08.2013 10 Poly Products LLC 31.08.2012 626744 6267440 24.09.2013 11 Poly Products LLC 04.11.2012 694988 6949880 14.08.2013 12 Poly Products LLC 23.01.2013 489023 4890230 14.03.2014

Compounding of contraventions under FEMA 1999 M/s Raha Poly Products Limited CA No. HYD 340 13 Poly Products LLC 14.03.2013 484476 4844760 14.03.2014 14 Poly Products LLC 11.07.2013 385324 3853240 14.03.2014 15 Poly Products LLC 02.09.2013 233909 2339090 12.05.2015 16 Poly Products LLC 05.12.2013 658632 6586320 25.05.2015 17 Poly Products LLC 15.01.2014 501323 5013230 16.08.2014 18 Poly Products LLC 06.03.2014 580077 5800770 16.08.2014 19 Poly Products LLC 05.06.2014 160078 1600780 28.04.2015 20 Poly Products LLC 20.08.2014 161631 1616310 28.04.2015 21 Poly Products LLC 21.09.2014 190473 1904730 28.04.2015 22 Poly Products LLC 11.06.2015 2038379 20383790 20.08.2015 23 Poly Products LLC 10.08.2015 310037 3100370 28.12.2015 24 Poly Products LLC 25.02.2015 450000 4500000 13.03.2017 25 Poly Products LLC 04.07.2016 404130 4041300 13.03.2017 26 Poly Products LLC 10.09.2016 85167 851670 11.03.2017 27 Poly Products LLC 04.07.2016 168861 1688610 13.03.2017 28 Poly Products LLC 10.09.2016 119693 1196930 11.03.2017 29 Poly Products LLC 29.09.2016 132880 1328800 11.03.2017 30 Poly Products LLC 27.10.2016 150021 1500210 11.03.2017 31 Poly Products LLC 19.01.2017 77804 778040 11.03.2017 Total 19010096 ₹ 190100960

*The allotment of shares was made during FERA regime and therefore cannot be compounded. The applicant filed form FCGPRs for issue of shares amounting to ₹ 19,01,00,960/- as indicated above out of which shares amounting to ₹ 14,45,85,960/- were reported with delays ranging from 21 days to 15 years 11 months 15 days approximately beyond the stipulated period of 30 days. Whereas in terms of Paragraph 9(1)(B) of Schedule 1 to Notification no.

Compounding of contraventions under FEMA 1999 M/s Raha Poly Products Limited CA No. HYD 340 FEMA 20/2000-RB, an Indian company issuing shares in accordance with these Regulations has to submit to Reserve Bank of India 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. d) The applicant has taken the transfer of 486200 equity shares held by Mr. Azhar Ahsan, Resident Indian to the foreign investor, M/s. Poly Products LLC and transfer of 500000 equity shares held by Mr. Saif H Nensey, Resident Indian to the foreign investor, M/s. Industrial Projects & Development Service LLC on record in their books on 15.09.2009 without obtaining certified form FC-TRS from AD Bank. Details of the transaction are shown below: Date of Sl Number of Amount Date of taking Date of filing transfer of No shares (INR) on record form FC-TRS shares 1 15.09.2009 486200 4862000 15.09.2009 15.10.2018 2 15.09.2009 500000 5000000 15.09.2009 15.10.2018 Total 986200 98,62,000 Whereas in terms of Regulation 4 of Notification No. FEMA 20/2000-RB, an Indian entity shall not issue any security to a person resident outside India or shall not record in its books any transfer of security from or to such person, provided that the Reserve Bank may, on an application made to it and for sufficient reasons, permit an entity to issue any security to a person resident outside India or to record in its books transfer of security from or to such person, subject to such conditions as may be considered necessary. Here the amount of contravention is ₹ 98,62,000/- and the period of contravention is 9 years 1 month approximately. 3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/1586/14.66.003/2018-19 dated February 01, 2019 for further submission in person and/or producing documents, if any, in support of the application.

Compounding of contraventions under FEMA 1999 M/s Raha Poly Products Limited CA No. HYD 340 (b) The applicant vide their letter dated February 04, 2019 stated that they are foregoing appearing for the optional personal hearing and requested the disposal of the compounding application based on the documents submitted along with the application. 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. 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 ₹ 8,79,71,902.45 and the delay ranges from 2 days to 1 year 6 months 10 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 ₹ 14,45,85,960/- and the delay ranges from 21 days to 15 years 11 months 15 days approximately.

(c) Regulation 4 of Notification No.20/2000-RB for taking on record transfer of shares from Resident to Non-resident company without obtaining certified form FC- TRS and the contravention relates to an amount of ₹ 98,62,000/- and the period of contravention is 9 years 1 month approximately. 5. It has been declared in the compounding application dated October 15, 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 October 15, 2018 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. Accordingly, the above contraventions which are being compounded in this Order are subject to the Compounding of contraventions under FEMA 1999 M/s Raha Poly Products Limited CA No. HYD 340 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 ₹ 13,07,260/- (Rupees Thirteen Lakh Seven Thousand Two Hundred Sixty Only) will meet the ends of justice. 7. Accordingly, I compound the admitted contraventions, namely, the contraventions of Paragraph 9(1)(A), Paragraph 9(1)(B) of Schedule 1 and Regulation 4 of 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 ₹ 13,07,260/- (Rupees Thirteen Lakh Seven Thousand Two Hundred Sixty 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 accordingly. Dated this 7th day of February 2019

Sd/- (Subrata Das)

Compounding of contraventions under FEMA 1999 M/s Raha Poly Products Limited CA No. HYD 340 Regional Director (Andhra Pradesh and Telangana) and Chief General Manager (Hyderabad)