Saregama India Limited, one of India's oldest and most iconic music labels, has received a significant relief from the Appellate Tribunal under SAFEMA (Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976). The final order passed on 24th April 2025 and received by the company on 29th April 2025 brings closure to a long-standing compliance matter under the Foreign Exchange Management Act (FEMA), 1999.

Background of the Case

The matter dates back to delays in filing Annual Performance Reports (APRs) for Saregama’s wholly owned subsidiary in Mauritius for the financial years ending March 2007 to March 2010. The non-submission of these mandatory reports resulted in the imposition of a penalty of ₹10 lakh by the adjudicating authority on 16th January 2019.

Saregama India filed an appeal against the order, citing involuntary reasons for the delay. These included:

• A fire incident at one of the offices,

• Relocation of operations, and

• Staff attrition, which disrupted the reporting and compliance process.

SAFEMA's Final Verdict: Penalty Slashed by 80%

The Appellate Tribunal thoroughly examined the appeal and the justifications provided by the company. Taking into account the unintentional nature of the delay and the circumstantial challenges faced, the tribunal reduced the penalty from ₹10,00,000 to ₹2,00,000.

This decision is significant as it reflects the Tribunal’s balanced approach—upholding compliance requirements while recognising practical operational challenges.

Financial and Operational Impact on Saregama India

According to the company's regulatory filing, there will be no additional financial burden, since the penalty will be adjusted against the pre-deposit already made by Saregama during the pendency of the appeal.

This implies:

• No cash outflow for the company following the order.

• No operational disruptions or further implications.

• The company is in the process of initiating steps to claim a refund of the excess amount pre-deposited.

Regulatory Compliance Clarified

The issue revolved around non-compliance of FEMA rules, specifically for the non-submission of APRs related to foreign investments. According to FEMA regulations, Indian companies with overseas subsidiaries are mandated to submit Annual Performance Reports (APRs) on their overseas investments.

Saregama’s lapse was administrative in nature and not an intentional evasion or misuse of foreign exchange.

The Tribunal’s acknowledgement of the company’s explanation validates that there was no malafide intent, and the delay was a result of unfortunate circumstances, not negligence.

Period of Applicability

The final order is applicable for the financial years:

• FY 2006–07 (ending 31st March 2007),

• FY 2007–08 (ending 31st March 2008),

• FY 2008–09 (ending 31st March 2009),

• FY 2009–10 (ending 31st March 2010).

Saregama’s Response and Further Action

Post receiving the Tribunal's final order, Saregama India has confirmed that it will take necessary steps to recover the excess deposit paid. The company's proactive communication to the exchanges reflects its commitment to transparency and compliance.

With the matter now concluded, this decision eliminates a regulatory overhang that could have affected stakeholder confidence. The company can now focus on its business growth and content innovation in the music and media space without legacy compliance issues looming over.

Importance of Regulatory Compliance in Overseas Operations

This case highlights the criticality of timely regulatory compliance, especially when dealing with foreign subsidiaries. FEMA compliance ensures:

• Transparency in foreign investments,

• Monitoring of fund flows outside India,

• Accurate tracking of overseas assets and liabilities by Indian entities.

While the penalty was reduced, this incident serves as a reminder for all listed companies to:

• Maintain robust compliance systems,

• Ensure timely reporting, even in cases of operational disruptions,

• Have disaster recovery plans in place to handle unexpected contingencies such as fire or attrition.

Conclusion

The Appellate Tribunal under SAFEMA has offered substantial relief to Saregama India, allowing it to put behind a historical compliance issue. By acknowledging the company’s explanation and recognising genuine hardship, the Tribunal has set a precedent for fair adjudication in regulatory matters.

With no further financial impact and a clear regulatory path ahead, Saregama India remains well-positioned to continue its journey as a leading player in the Indian entertainment and content industry.

This case is a prime example of how companies must balance business continuity with regulatory compliance, and how transparent communication and timely appeals can help in securing fair outcomes from regulatory authorities.

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