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D & H India Limited
POLICY ON RELATED PARTY TRANSACTIONS


Pursuant to section 188 of the Companies Act, 2013 and Regulation 23 of the SEBI (LODR) Regulations, 2015


SCOPE AND PURPOSE


The Companies Act,2013 (Act) read with the Companies (Meetings of Board and its Powers) Rules,
2014 (Rules) introduced specific provisions relating to Related Party transactions and defined the term
related parties, (material) related party transactions, relatives and key management personnel. The Act
and the Rules have also laid down the financial limits and the approval process for such transactions.


Considering the requirements for approval of related party transactions as prescribed under the
Companies Act, 2013 (“Act”) read with the Rules framed there under and Regulation 23 of the SEBI
(LODR) Regulations, 2015 (“Regulation 23”). Company has formulated guidelines for identification of
related parties and the proper conduct and documentation of all related party transactions.


Also, Regulation 23(1) of the SEBI Listing Regulations requires the company to formulate a policy on
materiality of related party transactions and dealing with related party transactions.
In the light of the above, the Company has framed this Policy on Related Party Transactions (“Policy”).
This Policy has been adopted by the Board of Directors of the Company based on recommendations of
the Audit Committee. Going forward, such policy shall be reviewed by the Audit Committee and
recommend the changes to the board of directors at least once in every 3 (Three) years or as per the
discretion of the audit committee as per amendments made in the Companies Act, 2013 and Listing
Regulations and will updated accordingly.


DEFINITIONS


“Arm’s length Transactions” means a transaction between two or more Related Parties that is
conducted as if they are unrelated so that there is no conflict of interest.


“Audit Committee or Committee” means Committee of Board of Directors of the Company constituted
under provisions of Listing Regulations and Companies Act, 2013.


“Board” means the Board of Directors of D & H India Limited, as constituted from time to time.
“Company” means a company incorporated under the Companies Act, 2013 or under any previous
company law.


“Control” shall have the same meaning as defined in SEBI (SAST) Regulations, 2011


“Key Managerial Personnel” means key managerial personnel as defined under the Companies Act,
2013 and includes

  1. Managing Director, or Chief Executive Officer or manager and in their absence, a whole- time
    director;
  2. Company Secretary; and
  3. Chief Financial Officer


“Ordinary course of Business” means a transaction which is:-

  1. Carried out in the normal course of business envisaged in accordance with Memorandum of
    Association of the Company as amended from time to time;
  2. Historical practice with a pattern of frequency; or
  3. Common commercial practice; or
  4. Meets any other parameters/criteria as decided by Board/Audit Committee.


“Material Related Party Transaction” means a transaction with a Related Party shall be considered
material if the transaction / transactions to be entered into individually or taken together with previous
transactions during a financial year, exceeds ten percent of the annual consolidated turnover of the
company as per the last audited financial statements of the company.


“Policy” means Related Party Transaction Policy.


“Related Party” means Related Party as defined under Section 2 of the Companies Act, 2013, and
regulation 2(1)(zb) of the Listing Regulations and/ or under the applicable accounting standards, as
amended from time to time which has a wider scope for identification of Related Party.


“Related Party Transaction” shall have the same meaning as defined under Regulation 2(1)(zc) of the
Listing Regulations.


“Relative” means relative as defined under section 2(77) of the Companies Act, 2013, as amended from
time to time.


MATERIALITY THRESHOLDS


Regulation 23 of the SEBI Listing Regulations and section 188 of the Companies Act, 2013 read with
Rule 15 of the Companies (Meeting of Board and its Powers) Rules, 2014 as amended from time to time
requires a company to provide materiality thresholds for transactions beyond which approval of the
shareholders through resolution will be required and the all the related parties shall abstain from voting
on such resolutions whether the entity is a related party to the particular transaction or not.


The Company has fixed its materiality threshold limit as follows:

Nature of Transactions
Materiality as per Companies
Act, 2013 (A)
Materiality as per
SEBI LODR (B)
Sale, purchase or supply of any
goods or materials directly or
through appointment of agents
Exceeding 10% of Turnover or
Rs.100 Crores, whichever is
lower
All transactions with
one party exceeding
10% of the annual
consolidated turnover
Buying, selling or disposing of
property of any kind directly or
through appointment of agents
Exceeding 10% of Net worth or
Rs.100 Crores, whichever is
lower
Leasing of any kind of property Exceeding 10% of Net worth or
10% of Turnover or Rs.100
Crores, whichever is lower
Availing or rendering of any
services directly or through
appointment of agents
Exceeding 10% of Turnover or
Rs.50 Crores, whichever is lower
Appointment to any office or place
of profit in the company, its
subsidiary company or associate
company
Monthly remuneration exceeding
Rs.2,50,000
Remuneration for underwriting the
subscription of any securities in or
derivatives thereof
Exceeding 1% of net worth
Transfer of resources (e.g. loans
and advances, interest thereon,
guarantees)
 
Transaction involving payments
made to a related party with respect
to brand usage or royalty
  Transactions with one
party exceeding 2% of
the annual consolidated
turnover

 

 


Here, Net worth and turnover would be as per Audited accounts of preceding financial year and the
Company has defined Material RPTs basis the thresholds defined in the Companies Act 2013 and
Regulation 23 of the SEBI LODR Regulations.


IDENTIFICATION OF RELATED PARTY AND TRANSACTIONS
Each director and Key Managerial Personnel is responsible for providing notice to the Board or Audit
Committee of any potential Related Party Transaction involving him or her or his or her Relative,
including any additional information about the transaction that the Board/Audit Committee may
reasonably request. Board/Audit Committee will determine whether the transaction does, in fact,
constitute a Related Party Transaction requiring compliance with this policy.


The Company strongly prefers to receive such notice of any potential Related Party Transaction well in
advance so that the Audit Committee/Board has adequate time to obtain and review information about
the proposed transaction.


PROCEDURE FOR APPROVAL OF RELATED PARTY TRANSACTIONS


Approval by Audit Committee:


I) All related party transactions require prior approval of the Audit Committee. However, the Company
may obtain omnibus approval from the Audit Committee for such transactions, subject to compliances
with the following conditions:
a. The Audit Committee shall, after obtaining approval of the Board of Directors, specify the criteria
for granting the omnibus approval in line with the Policy and such approval which shall include the
following namely:

  1. Maximum value of the transaction, in aggregate, which can be allowed under the omnibus
    route in a year;
  2. The maximum value per transaction which can be allowed;
  3. extent and manner of disclosures to be made to the audit committee at the time of seeking
    omnibus approval
  4. review, at such intervals as the Audit Committee may deem fit, related party transaction
    entered into by the company pursuant to each omnibus approval made;
  5. transactions which cannot be subject to the omnibus approval by the Audit Committee


b. The Audit Committee shall consider the following factors while specifying the criteria for making
omnibus approval, namely:-

  1. repetitiveness of the transactions (in past or in future);
  2. justification for the need of omnibus approval


c. The Audit Committee shall satisfy itself regarding the need for such omnibus approval for
transactions of repetitive nature and that such approval is in the interest of the company;


d. The omnibus approval shall provide details of (i) the name/s of the related party, nature of
transaction, period of transaction, maximum aggregated value of the particular type of transaction
that can be entered into, (ii) basis of arriving at the indicative base price / current contracted price
and the formula for variation in the price if any and (iii) such other conditions as the Audit
Committee may deem fit.


Provided that where the need for related party transactions cannot be foreseen and aforesaid details
are not available, Audit Committee may grant omnibus approval for such transactions subject to
their value not exceeding rupees 1 crore per transaction

.
e. The Audit Committee shall review, at least on a quarterly basis, the aggregated value and other
details of related party transactions transacted into by the company pursuant to the omnibus
approval given;


f. Such omnibus approval shall be valid for a period not exceeding one financial year and shall require
fresh approval after expiry of such financial year.


g. Omnibus approval shall not be made for transactions in respect of selling or disposing of the
undertaking of the company.


h. Any other conditions as the Audit Committee may deem fit


i. The maximum value per transaction which can be approved under omnibus route will be the same
as per the materiality threshold as defined in the Policy.


j. The Audit Committee shall review, at least on a quarterly basis, the details of related party
transactions entered by the company pursuant to each omnibus approval given


k. Transaction of following nature will not be subject to the omnibus approval of the Audit
Committee:

  1. Transactions which are not at arm’s length or not in the ordinary course of business
  2. Transactions which are not repetitive in nature
  3. Transactions exceeding materiality thresholds as laid down in Clause 5 of the Policy
  4. Transactions in respect of selling or disposing of the undertaking of the company
  5. Financial Transactions eg. Loan to related parties, Inter Corporate Deposits, subscriptions to
    bond, debenture or preference shares issued by the related parties, corporate guarantee
    given/received from related parties
  6. Any other transaction the Audit Committee may deem not fit for omnibus approval
  7. Approval by members in General Meeting/through Postal Ballot:
    a) All the transactions with related parties exceeding the materiality thresholds, laid down in
    Materiality Threshold Limit as specified in the Policy, are placed before the shareholders for
    approval.
    b) For this purpose, all entities falling under the definition of related parties shall abstain from
    voting irrespective of whether the entity is a party to the particular transaction or not. However,
    this condition shall not apply in respect of a resolution plan approved u/s 31 of the Insolvency
    and Bankruptcy Code, subject to the event being disclosed to the recognized stock exchanges
    within one day of the resolution plan being approved.
    c) All kinds of transactions specified under Section 188 of the Act which
    • are not at Arm’s Length or not in the ordinary course of business; and
    • exceed the thresholds laid down in Companies (Meetings of Board and its Powers) Rules,
    2014 are placed before the shareholders for its approval.
    d) However, the requirement of shareholders’ approval shall not be applicable for transactions
    entered into between the company and its wholly owned subsidiary whose accounts are
    consolidated with the company and placed before the shareholders at the general meeting for
    approval.
    e) At the time of taking the approval of members, the company is required to disclose certain items
    in the Explanatory statement u/s 101 of the Companies Act, 2013 and shall contain all the
    particulars as specified in Rule 15 of the Companies (Meeting of Board and Its Powers) Rules,
    2014, as amended from time to time.

DISCLOSURES


The Company shall disclose the following:-

  1. In the Board’s report, transactions prescribed in Section 188(1) as specified in Form AOC-2;
  2. In Corporate Governance Report which is required to be submitted to the Stock exchange on
    Quarterly Basis;
  3. The company shall disclose the policy on dealing with Related Party Transactions on its website
    and a web link thereto shall be provided in the Annual Report;
  4. In the Annual Report as prescribed in Schedule V of the SEBI (LODR) Regulations, 2015;
  5. The Company shall keep and maintain a register, maintained physically or electronically, as may
    be decided by the Board of Directors, giving separately the particulars of all contracts or
    arrangements to which this policy applies and such register is placed/taken note of before the
    meeting of the Board of directors.


REVIEW OF THE POLICY


The adequacy of this Policy shall be reviewed and reassessed by the Committee and recommend the
changes to the board of directors at least once in every 3 (Three) years and updated accordingly due to
any regulatory amendments or otherwiseand shall be binding on the concerned Directors. KMPs and
Senior Management Persons in the manner described as above.


The Policy is approved by the board of Directors at their meeting held on 14th August, 2018 and came
into force w.e.f. 14.08.2018