Talis Valves India Private Limited

In the RESERVE BANK OF INDIA Foreign Exchange Department Secretariat Road Saifabad, Hyderabad 500 004 Present N Sara Rajendra Kumar General Manager Date: June 19, 2018 C.A. HYD 296 In the matter of M/s. Talis Valves India Pvt Ltd The Platina, Block B, B-907 Near Radisson Hotel, Gachibowli Hyderabad – 500 032 (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 submitted the compounding application vide their letter dated March 13, 2018 received by us on March 15, 2018 for compounding of contraventions of the provision of the Foreign Exchange Management Act, 1999 (FEMA) and the regulations issued there under. The contraventions sought to be compounded are (i) delay in reporting of receipt of foreign inward remittances towards subscription of equity, (ii) delay in submission of Form FCGPR to the Reserve Bank after issue of shares to a person resident outside India and (iii) delay in refund of excess share application money in terms of Paragraph 9(1)(A), Paragraph 9(1)(B) and Paragraph 8 respectively of Schedule 1 to Foreign Exchange

Compounding of contraventions under FEMA 1999 M/s Talis Valves India Private Limited CA No. HYD 296 Management (Transfer or Issue of Security by a Person Resident Outside India) 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. 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, 2013 on October 18, 2016 (CIN: U74999TG2016FTC112501). The company is engaged in the business of manufacture of other pumps, compressors, taps and valves etc. b) The applicant had received foreign inward remittances from the following foreign investors as indicated below: Sl Amount Date of Date of Name of Remitter No (INR) Receipt Reporting Talis Management 1 3564495 16-11-2016 24-11-2016 Holding GmbH Erhard GmbH & Co. 2 35610 16-11-2016 24-11-2016 KG Talis Management 3 9068830 27-12-2016 11-04-2017 Holding GmbH Erhard GmbH & Co. 4 90587 13-03-2017 11-04-2017 KG Talis Management 5 5365508 30-05-2017 15-06-2017 Holding GmbH Erhard GmbH & Co. 6 54440 30-05-2017 15-06-2017 KG Total 1,81,79,470

The applicant reported receipt of remittances towards share subscription amounting to ₹ 1,81,79,470/- to the Regional Office of Reserve Bank of India, out of which remittance amounting to ₹ 90,68,830/- were reported with a delay of 2 months 13 days as indicated above. Whereas in terms of Paragraph 9(1)(A) of Schedule 1 to Compounding of contraventions under FEMA 1999 M/s Talis Valves India Private Limited CA No. HYD 296 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 equity shares and filed form FC-GPRs as indicated below:

Date of Number of Amount for Sl Name of Date of allotment shares/CC which shares No investor Reporting of shares PS allotted allotted (INR) Talis 09-12-2016 3564000 11-01-2017 1 Management 356400 Holding GmbH Erhard GmbH & 09-12-2016 3600 36000 11-01-2017 Co KG Talis 28-06-2017 534600 5346000 23-11-2017 2 Management Holding GmbH Erhard GmbH & 28-06-2017 5400 54000 23-11-2017 Co KG Total 90,00,000

The applicant filed form FCGPRs for the allotment of shares amounting to ₹ 90,00,000/- as indicated above, which were reported with a delay ranging from 3 days to 3 months 26 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.

Compounding of contraventions under FEMA 1999 M/s Talis Valves India Private Limited CA No. HYD 296 d. The company has refunded the excess share application money of ₹ 1,59,325/- & ₹ 197/- to the foreign investor beyond the stipulated period of 180 days from the date of receipt of remittance as indicated below:

Excess Date of Sl Total share Name of Date of seeking No Amount application Remitter receipt approval (INR) money from RBI (INR) Talis 1 Management 3564495 16-11-2016 495 28-12-2017 Holding GmbH Talis 2 Management 9068830 27-12-2016 158830 28-12-2017 Holding GmbH Erhard GmbH & 3 90587 13-03-2017 197 28-12-2017 Co. KG Talis 4 Management 5365508 30-05-2017 19508 Holding GmbH 13-03-2017 Erhard GmbH & 5 54440 30-05-2017 440 Co. KG Total 1,81,79,470

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. Here the amount of contravention is ₹ 1,59,522/- and the period of contravention ranges from 3 months 20 days to 7 months 17 days approximately.

Compounding of contraventions under FEMA 1999 M/s Talis Valves India Private Limited CA No. HYD 296

3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/2193/14.66.003/2017-18 dated June 13, 2018 for further submission in person and/or producing documents, if any, in support of the application. (b) The applicant appeared for personal hearing on June 18, 2018 during which Shri. Prasanth Kumar Suram, Assistant Manager (Finance) and Shri. Mahesh Chakka, Chartered Accountant, represented the applicant. The authorized representatives of the applicant 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 reasons. In view of the foregoing, the representative of 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.

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 ₹ 90,68,830/- with a delay of 2 months 13 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 ₹ 90,00,000/- and the delay ranges from 3 days to 3 months 26 days approximately.

Compounding of contraventions under FEMA 1999 M/s Talis Valves India Private Limited CA No. HYD 296 (c) Paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB for delay in refund of excess share application money to the foreign investor and the contravention relates to an amount of ₹ 1,59,522/- and the delay ranges from 3 months 20 days to 7 months 17 days approximately.

5. It has been declared in the compounding application submitted vide letter dated March 13, 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 March 13, 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. 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 ₹ 69,978/- (Rupees Sixty Nine Thousand Nine Hundred Seventy Eight 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) and Paragraph 8 of Schedule 1 to Notification No. FEMA-20/2000-RB by the applicant on the facts discussed above in Compounding of contraventions under FEMA 1999 M/s Talis Valves India Private Limited CA No. HYD 296 terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 on payment of an ₹ 69,978/- (Rupees Sixty Nine Thousand Nine Hundred Seventy Eight 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 19th day of June 2018

Sd/- (N Sara Rajendra Kumar) General Manager