RELATED PARTY TRANSACTIONS POLICY

1. PREFACE

1.1 Section 188 of the Companies Act 2013 (the Act) and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) provide that a listed Company shall formulate a policy on materiality of related party transactions and also on dealing with Related Party Transactions (RPT).

1.2 Company understands the importance of stakeholder’s confidence and trust in the Company. In order to preserve it with transparency and to ensure that there is no conflict of interest causing any apprehension in the minds of its stakeholders, the Board of Directors of the Company, acting upon the recommendations of its Audit Committee (“the Committee”), has proposed to adopt a policy and procedures with respect to Related Party Transactions (Related Party Policy) of the Company.

1.3 The Related Party Transaction Policy will be placed on the Company’s website at www.sakthisugars.com

2. PRIMARY OBJECTIVE

The primary objective of the policy is not only to be in the best interests of its stakeholders but also in due compliance with the requirements of the Act, Listing regulations and other applicable laws of the country. Further, as per Regulation 23 of the Listing Regulations, a policy needs to be formulated to deal with Related Party Transactions including formulating a policy on materiality of Related Party Transaction. This policy lays down the mechanism to deal with Related Party Transactions.

 

3. DEFINITIONS

For the purpose of this policy:

3.1 “Act” means the Companies Act 2013.

3.2 “Arm’s length transaction” means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest.

3.3. “Material Related Party Transactions” means RPT that fulfil the conditions specified in Explanation to Regulation 23(1) or in Regulation 23(1A) of the Listing Regulations as modified from time to time.

3.4. “Material Modification” means modification to an approved RPT resulting in one or more of the following ways:

a) Modification of the price or value of the contract/ arrangement or rate of interest (in case of a loan) by 10% or more;

b) Modification of remuneration of related parties who is part of Promoter or Promoter group by more than 20%;

c) Extending or reducing the contract period by 3 (three) months or more;

d) Extending or reducing the credit period (in case of commercial transactions) by more than 3 months or repayment period (in the case of financial transactions) by more than 6 (six) months;

e) Providing additional concession/ rebate of 10% or more; and

f) Any other aspect which may be considered “material” to the Audit Committee considering the nature of transaction

3.5 “Related Party” means a related party as defined in Section 2(76) of the Act or in Regulation 2(1)(zb) of the Listing Regulations.

3.6. “Related Party Transaction” or “RPT” means   transactions as given under clause (a) to (g) of Section 188(1) of the Companies Act 2013 and also as defined in Regulation 2(1)(zc) of the Listing Regulations. These include sale, purchase or supply of any goods or materials, selling or otherwise disposing of, or buying, property of any kind, leasing of property of any kind, availing or rendering of any services, appointment of any agent for purchase or sale of goods, materials, services or property, such related party's appointment to any office or place of profit in the company, its subsidiary company or associate company, and underwriting the subscription of any securities or derivatives thereof, of the company, and transfer of resources, services or obligations, regardless of whether a price is charged or not, other than specifically exempted.

 

4. APPROVAL OF RPT BY AUDIT COMMITTEE

4.1. All RPTs, except the RPTs mentioned in Para 4.2 below shall require prior approval of Audit Committee of the Company irrespective of its materiality. The Audit Committee shall also approve any subsequent modification of RPTs. Any material modification would require prior approval.

4.2. Remuneration and sitting fees paid by the Company or its subsidiary to its Director, Key Managerial Personnel or Senior Management, except who is part of Promoter or Promoter group, shall not require approval of the Audit Committee provided that the same is not material in terms of the provisions of Regulation 23(1) of the Listing Regulations.

4.3 The Members of the Audit Committee, who are Independent Directors, may ratify related party transactions within three months from the date of the transaction or in the immediate next meeting of the Audit Committee, whichever is earlier, subject to the following conditions:

(i) the value of the ratified transaction(s) with a related party, whether entered into individually or taken together, during a financial year shall not exceed rupees one crore;

(ii) the transaction is not material in terms of the provisions of Regulation 23(1) of the Listing Regulations;

(iii) rationale for inability to seek prior approval for the transaction shall be placed before the Audit Committee at the time of seeking ratification;

(iv) the details of ratification shall be disclosed to the Stock Exchanges along with disclosures of related party transactions in terms of the provisions of Regulation 23(9) of the Listing Regulations;

4.4. Only those Members of the Audit Committee who are Independent Directors shall approve RPTs.

4.5 The Audit Committee shall consider the following before approving a RPT:

a. Type, material terms and particulars of the proposed transaction;

b. Name of the related party and its relationship with the listed entity or its subsidiary, including nature of its concern or interest (financial or otherwise);

c. Tenure of the proposed transaction (particular tenure shall be specified);

d. Value of the proposed transaction;

e. The percentage of the listed entity’s annual consolidated turnover, for the immediately preceding financial year, that is represented by the value of the proposed transaction (and for a RPT involving a subsidiary, such percentage calculated on the basis of the subsidiary’s annual turnover on a standalone basis shall be additionally provided);

f. If the transaction relates to any loans, inter-corporate deposits, advances or investments made or given by the listed entity or its subsidiary:

i) details of the source of funds in connection with the proposed transaction;

where any financial indebtedness is incurred to make or give loans, intercorporate deposits, advances or investments,

• nature of indebtedness;
• cost of funds; and
• tenure;

iii) applicable terms, including covenants, tenure, interest rate and repayment schedule, whether secured or unsecured; if secured, the nature of security; and

iv) the purpose for which the funds will be utilized by the ultimate beneficiary of such funds pursuant to the RPT.

g. Justification as to why the RPT is in the interest of the listed entity;

h. A copy of the valuation or other external party report, if any such report has been relied upon;

i. Percentage of the counter-party’s annual consolidated turnover that is represented by the value of the proposed RPT on a voluntary basis;

j. Any other information that may be relevant.

The Audit Committee may grant omnibus approval for RPTs proposed to be entered into by the Company, subject to the following conditions:

• Transactions are repetitive in nature or at regular intervals
• Transactions are in arms length basis and are in the ordinary course of business.
• Transactions are in the best interest of the Company.
• Details of related parties, nature of transactions, period of transaction and the maximum amount of transactions are to be specified.
• The indicative base price/current contracted price and the formula for variation in price, if any, and the manner of determining the price.
• The aggregate transaction value per annum is not more than Rs.100 lakhs in cases where the need for the related party transactions cannot be foreseen and the above details are not available.
• The omnibus approval period is not more than one year.
• Details of RPTs are to be reviewed on quarterly basis.

5. APPROVAL OF RPT BY BOARD

The Board will approve all RPTs which are not at arm’s length and / or which are not in the ordinary course of business and/or RPTs that are not approved by the Audit Committee, but are within the threshold limits specified in Rule 15(3) of the Companies (Meetings of Board and its Powers) Rules 2014.

6. APPROVAL OF RPTS BY BOARD AND MEMBERS

All Material Related Party Transactions, Material Modifications thereto, all Related Party Transactions which are not at arm’s length falling within the scope of Section 188 (1) of the Companies Act 2013 and the values of which are in excess of the limits specified in Rule 15(3) and subsequent Modifications thereto would require prior approval of the shareholders, based on recommendation of the Board, through a resolution. No related party who is a party to the transaction shall vote to approve the relevant transaction.

No related party shall vote to approve Material RPT or Material Modifications thereto, irrespective of whether the related party is a party to the particular transaction or not, at the general meeting or postal ballot conducted for the purpose.

7. DISCLOSURE BY INTERESTED DIRECTORS / KMPS

7.1 Every   Director and Key Managerial Personnel of the Company shall disclose his concern or interest in any company or companies or bodies corporate (including shareholding interest), firms or other association of individuals, by giving a notice in writing in the prescribed form.

7.2 Every director and Key Managerial Personnel of the Company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement being discussed at the meeting of the Board, such director shall disclose his concern or interest at the meeting of the Board in which such contract or arrangement is discussed and shall not participate in such meeting.

 

8.OTHER DISCLOSURES

Appropriate disclosures as required under the Act and the Listing Regulations will be made in the Annual Return, Board’s Report and information to the Stock Exchanges and to publish the same in the Company’s website.

 

9. REVIEW OF THE POLICY

The Related Party Policy and the threshold limits will be reviewed by the Board as and when necessary, not being less than once in every three years and also in tune with significant changes in the regulatory requirements.