EXTRANCHECK: POST-SHIPMENT VERIFICATION: ARJUN TECHNOLOGIES

UNCLAS NEW DELHI 002967

SIPDIS

USDOC FOR 532/OEA/M. NICKSON-D/L.RITTER
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: ARJUN TECHNOLOGIES
INDIA LIMITED, CHENNAI, INDIA

REF: USDOC 02448


1. Unauthorized disclosure of the information provided below is
prohibited by Section 12(c) of the Export Administration Act.


2. On November 4, 2008, Export Control Officer (ECO) Paul Cushman
and FSN Shailendra Srivastava conducted a Post-Shipment Verification
(PSV) at Arjun Technologies India Limited (ATIL) in Chennai.


3. BIS requested a PSV at ATIL, located at Thandalam Group,
Irungattukottai, Sriperumpudur in Chennai. ATIL was listed as the
ultimate consignee and SMD Pumps and Engineering India Limited
(SMDP) as the intermediate consignee for three magnetic drive
centrifugal pumps (model KC22V) manufactured by Finish Thompson Inc
(FTI) of Erie, Pennsylvania. Export License: D361586. ECCN: 2B350.



4. ECO and FSN Srivastava met with Mr. S. Soundararajan, General
Manager - Projects & Engineering and Mr. M.S. Muralikrishnan, Deputy
General Manager - Manufacturing, in the ATIL conference room.


5. ATIL representatives were familiar with BIS regulations.
However, this was the first visit by BIS officials to their
facility. Soundararajan clarified that ATIL did not actually take
delivery of the pumps in question. He explained that ATIL issued a
purchase order to SMDP for the pumps in June 2006 but later
cancelled the order when it was discovered that three identical
pumps purchased from SMDP in November 2005 did not perform as
expected. He provided copies of various documents supporting this
sequence of events.


6. Soundararajan went on to explain that SMDP originally procured
the pumps from FTI for Andhra Pradesh Paper Mills Limited (APPM),a
paper manufacturer based in Hyderabad. They were to be used for
transferring sulfuric acid from storage tanks to a chemical plant
where it would be converted into chlorine dioxide, a bleaching
agent. APPM returned the pumps to SMDP when they encountered
leakage problems. SMDP later resold the pumps to ATIL.


7. After the meeting, the BIS team was given a tour of the ATIL
facility where the ECO recorded the pumps' model number as
KC22VCVNO6010 and their serial numbers as 49711G05, 49712G05 and
49713G05. The pumps are stored in a locking conex box.
Soundararajan stated that ATIL engineers are currently attempting to
find an alternate use for the pumps.


8. ATIL, headquartered in Chennai, is a project engineering firm
which services the paper manufacturing and recycling industries.
ATIL employs approximately 120 personnel. A roving private security
force is on duty at the facility 24/365.


9. Recommendation: At the time of this visit, Arjun Technologies
India Limited appeared to be a suitable recipient of`controlled
technology. The items on check could not be physically verified
because the order was cancelled. However, ATIL officials
volunteered the fact that they were in possession of three identical
pumps obtained previously without a license and they permitted
inspection of those pumps.
WHITE