VZCZCXYZ0000
RR RUEHWEB

DE RUEHNE #0302/01 0491209
ZNR UUUUU ZZH
R 181209Z FEB 09
FM AMEMBASSY NEW DELHI
TO RUCPDOC/USDOC WASHDC
RUEAHLC/HQ ICE IAO WASHINGTON DC
INFO RUEHC/SECSTATE WASHDC 5426

UNCLAS NEW DELHI 000302 
 
SIPDIS 
 
USDOC FOR 532/OEA/HINES/GAINES 
USDOC FOR 3131/USFCS/OIO/ANESA/KREISSL 
USDOC FOR 4530/MAC/ANESA/OSA 
ICE HQ FOR STRATEGIC INVESTIGATIONS 
STATE FOR EB/ESP 
 
E.O. 12958: N/A 
TAGS: BEXP ETRD ETTC IN
SUBJECT: EXTRANCHECK: POST-SHIPMENT VERIFICATION: SMD PUMP & 
ENGINEERING INDIA PRIVATE LIMITED, CHENNAI, INDIA 
 
¶1. Unauthorized disclosure of the information provided below is 
prohibited by Section 12(c) of the Export Administration Act. 
 
¶2. On January 28, 2009, Export Control Officer (ECO) Paul Cushman 
and FSN Shailendra Srivastava conducted six Post-Shipment 
Verifications (PSV) at SMD Pump & Engineering India Private Limited 
(SMD) in Chennai.  These PSVs had been requested by the Bureau of 
Industry & Security and corresponded to exportations made under 
licenses: D342534, D349823, D354565, and D361591 (ECCN: 2B350) and 
two exportations made under the "No License Required" (NLR) 
exception.  In all, SMD was listed as the ultimate consignee for 
twenty-three centrifugal pumps and six drum pumps manufactured by 
Finish Thompson Inc. (FTI) of Erie, Pennsylvania. 
 
¶3. ECO and FSN Srivastava met with J.S. Desai, Managing Director and 
Mr. K.R. Lakshmanan, Marketing Head, in the SMD conference room. 
 
¶4. SMD representatives were familiar with BIS regulations.  However, 
this was the first visit by BIS officials to their facility.  During 
this meeting, Lakshmanan was only able to provide certain documents 
relating to the NLR transactions.  Lakshmanan could not provide any 
documentation relating to any of the licensed importations. 
Lakshmanan stated that FTI has never advised SMD of any license 
conditions.  ECO then provided him with copies of the license 
conditions.  He reviewed them and stated that SMD had complied with 
these conditions and would continue to do so. 
 
¶5. Lakshmanan stated that SMD imports FTI industrial products on 
behalf of their customers in India.  When SMD receives a purchase 
order, it then places the identical order with FTI.  SMD does not 
maintain inventory.  SMD does not install or maintain the products 
it sells. 
 
¶6. On February 18, 2009, ECO received a set of documents from SMD 
which included SMD Purchase Orders, FTI Invoices, Air Waybills, and 
receipts for duties paid to the Indian Customs Authority. 
 
¶7. In 2004, SMD imported eight centrifugal pumps and six drum pumps 
using the NLR exception.  In 2007, SMD imported another six 
centrifugal pumps using the NLR exception.  Lakshmanan presented the 
associated FTI Invoices and SMD Invoices demonstrating the products' 
NLR status and their ultimate disposition. 
 
¶8. In 2005, three FTI KC22 VCVNO centrifugal pumps were imported on 
behalf of ITC Bhadrachalam Limited under license D342534.  He 
explained that the order was placed by Aker Kvaerner, an engineering 
division of Aker Solutions of Mumbai, a consulting firm for ITC.  He 
could not show the transfer papers but asserted that the entire lot 
was sent to Aker Kvaerner.  On February 18, 2009, Lakshmanan 
forwarded the ITC End-Use Statement. 
 
¶9. In March 2006, two FTI KC22 VCVNO centrifugal pumps were imported 
on behalf of Haden International Group India Limited under license 
D349823.  On February 18, 2009, Lakshmanan forwarded copies of the 
Haden Purchase Order, Haden End-Use Statement, and the SMD 
Invoice-cum-Delivery Challan to support this transfer. 
 
¶10. In May 2006, three FTI KC22 PVDF centrifugal pumps were imported 
on behalf of Parker Engineering India Limited under license D354565. 
 Lakshmanan stated that the entire consignment was sold to Parker. 
On February 18, 2009, He provided copies of the Parker Purchase 
Order, Parker End-Use Statement and the SMD Invoice-cum-Delivery 
Challan to support this transfer. 
 
¶11. In December 2006, one FTI UC1518 centrifugal pump was imported 
on behalf of SRF Limited under license D361591.  On February 18, 
2009, Lakshmanan forwarded copies of the SRF Purchase Order, SRF 
End-Use Statement, and the SMD Invoice-cum-Delivery Challan to 
support this transfer. 
 
¶12. After the meeting, the BIS team was taken to the SMD store room 
where ECO physically verified three centrifugal pumps.  Lakshaman 
explained that these pumps were procured from FTI under the export 
license number 361586.  The customer, Arjun Technologies Inc., had 
cancelled the order.  SMD is currently looking for another customer 
to buy the pumps.  ECO advised Lakshmanan that in order to sell the 
pumps to another end-user, he will first have to apply for and 
receive a modification to the original license.  Lakshmanan 
acknowledged that he understood his responsibility.  The serial 
numbers of these pumps are 57448K06, model KC22VCVNO6010, and 
46743L04, model KC22PCVB6090.  The serial number of the third pump 
could not be recorded.  This is because the shroud, on which the 
serial number is affixed, was missing. 
 
¶13. Established in 1958, SMD Pump & Engineering India Private 
 
Limited is a company specializing in supplying sophisticated pumps 
and related equipment to engineering consultancies that support the 
paper and pulp industries.  SMD became an overseas distributor for 
Finish Thompson Inc. in 1994.  SMD has 12 employees.  SMD does not 
have after-hours security. 
 
¶14. Recommendation: Based upon a review of the documents and 
information provided, SMD Pump & Engineering India Private Limited 
does not appear to be a thoroughly reliable recipient of controlled 
technologies.  ECO has concerns about SMD's sloppy record keeping 
practices and the lack of organization and security at their 
facility.  Furthermore, because a physical inspection of only three 
items could be performed, these Post-Shipment Verifications remains 
inconclusive.  ECO recommends additional PSVs be performed at this 
facility in the future. 
MULFORD