Aar Shyam India Investment Company Limited

Related Party Transaction Policy (RPT Policy)

Introduction:

Aar Shyam India Investment Company Limited recognizes that Related Party Transactions (as defined below) can present potential or actual conflicts of interest and may raise questions about whether such transactions are consistent with the Company’s and its stakeholders best interests. This policy regarding the review and approval of Related Party Transactions (RPTs) has been adopted by the Company’s Board of Directors in order to set forth the procedures under which certain transactions must be reviewed and approved and/or ratified.

Definitions:

For the purposes of this policy, the following definitions apply:

“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.

“Related Party Transaction (RPT)” is a transfer of resources, services or obligations between a company and a related party, regardless of whether a price is charged including without limitation -

Sale / purchase of goods;

Availing or rendering of services;

Buying / selling / leasing of property;

Appointment of agent for purchase or sale of goods, materials, services or property;

Appointment to any office or place of profit in the company, its subsidiary company or associate company; and

Remuneration for underwriting the subscription of any securities or derivatives thereof of the company.

“Relatives of Directors / Key Managerial Persons”:

I. Members of same Hindu Undivided Family;
II. Spouse;
III. Father (“Father” includes step-father);
IV. Mother (“Mother” includes the step-mother);
V. Son (“Son” includes the step-son);
VI. Son’s wife;
VII. Daughter;
VIII. Daughter’s husband;
IX. Brother (“Brother” includes the step-brother); and
X. Sister (“Sister” includes the step-sister).

“Related Party”: means

a) a director or his relative; Any firm in which any such director or his relative is a partner;
b) Any private company of which any such director or manager is a director or member;

c) Any body corporate at a general meeting of which not less than 25% of the total voting power may be exercised or controlled by any such director, or by two or more such directors, together; anybody corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company;

d) A Public Company in which Director or Manager is a Director and holds along with his relatives, more than 2% of its paid-up share capital;

e) Any company which is holding, subsidiary or an associate company of such company; subsidiary of a holding company to which it is also a subsidiary.

f) A Director or Key Managerial Personnel of holding company or his relatives with reference to a company shall be deemed to be a related party; and

g) An entity which is Related Party under the applicable Accounting Standards.

Procedure:

1. Prior to entering into any potential Related Party Transaction, proposal for such transaction will be reported to Chief Financial Officer (CFO) of the Company. Any potential Related Party Transaction that is brought to his attention will be analyzed by him in consultation with Management and with outside consultants, if required, to determine whether the transaction or relationship does, in fact, constitute a Related Party Transaction, requiring compliance with this policy.

2. Once identified by CFO, all RPTs shall be reported promptly to the Audit Committee by the Chief Financial Officer or Company Secretary.

3. The Audit Committee shall be provided with the material facts of all new, existing or proposed RPTs. The Audit Committee will determine whether the proposed RPT is in the ordinary course of business and is proposed to be entered into at arm's length basis and if it fulfills both the criteria, the same will be approved by the Audit Committee subject to such other terms and conditions as may be determined by the Audit Committee in consultation with the management of the Company.

4. However, if the said RPT is one off in nature, then the Board of Directors will review the same. The notice and agenda for the board meeting considering any RPT shall disclose all material particulars of the proposed transactions in accordance with the applicable law/Rules and as set forth in the Disclosure section of this policy.

5. The board may approve the concerned RPT for the reasons to be recorded in writing. In assessing a Related Party Transaction, the Audit Committee / Board of Directors shall consider such factors as it deems appropriate, which include:

The materiality of the Related Party Transaction to Aar Shyam India Investment Company Limited i.e. transaction/s exceeding 10% of the annual consolidated turnover of the Company for previous financial year;

i. Whether the terms of the Related Party Transaction are at an arm's length and on the same basis as would apply if the transaction did not involve a Related Party;

ii. The extent of the Related Party’s interest in the Related Party Transaction;

iii. The impact of the Related Party Transaction on a non-employee director’s independence, if applicable.

Steps for Approval:

Related Party Transactions proposed to be entered in its ordinary course of business which are on arm’s length basis may be approved:

a. By Audit Committee provided the RPTs are in the ordinary course of business and on an arm's length basis. Or

b. By the vote of a majority of the Non-interested Members of the Committee (Disinterested quorum).

Related Party Transactions, which exceed the threshold limits referred under sub-section (1) of 188 of Companies Act, 2013 and Rules made thereunder and as per SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015will be undertaken after obtaining prior approval of shareholders by Special resolution at general meeting / postal ballot.

No director who is interested / Related Party shall participate in the evaluation or approval of any Related Party Transaction for which he or she is interested / a Related Party and shall not be present in the Board Room where the matter is discussed.

In case of wholly owned subsidiary, the special resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between wholly owned subsidiary and holding company.

The RPTs which fulfill materiality (exceeding 10% of annual consolidated turnover) would require shareholders prior approval.

Pre-approved Transactions:

The following types of transactions will be deemed to be pre-approved by omnibus approval by the Audit Committee, subject to the following;

Criteria for granting omnibus approval be laid down for transactions which are repetitive in nature;
Committee shall satisfy itself about the need for such omnibus approval and it should be in the interest of the company;

Such omnibus approval shall specify (i) the name/s of the related party, nature of transaction, period of transaction, maximum amount of transaction that can be entered into, (ii) 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 Transaction cannot be foreseen and aforesaid details are not available, Audit Committee may grant omnibus approval for such transactions subject to their value not exceeding Rs.1 crore per transaction.

Committee shall review on quarterly basis details of RPTs which were granted omnibus approval

The said approval is valid for one year only and shall require fresh approval after the expiry of one year.

The following type of RPTs would require shareholders' approval if exceeds the given threshold limits:

i. Sale, purchase or supply of any goods or materials directly or through appointment of agents exceeding 10% of the turnover of the Company or Rs. 100 Crore or such other prescribed ceiling from time to time, whichever is lower as mentioned in clause (a) and clause (e) respectively of sub-section (1) of section 188 of Companies Act 2013.

ii. Selling or otherwise disposing of, or buying, property of any kind directly or through appointment of agents exceeding 10% of net worth or Rs. 100 Crore or such other prescribed ceiling from time to time, whichever is lower as mentioned in clause (b) and clause (e) respectively of sub-section (1) of section 188, Companies Act 2013.

iii. Leasing of property of any kind exceeding 10% of the net worth or exceeding 10% of turnover or Rs. 100 Crore or such other prescribed ceiling from time to time, whichever is lower as mentioned in clause (c) of sub-section (1) of section 188, Companies Act 2013.

iv. Availing or rendering of any services directly or through appointment of agents exceeding 10% of the turnover or Rs. 50 Crore or such other prescribed ceiling from time to time, whichever is lower as mentioned in clause (d) and clause (e) of sub-section (1) of section 188, Companies Act 2013.

v. Appointment to any office or place of profit in the company, its subsidiary company or associate company at a monthly remuneration exceeding 2.5 lakh rupees as mentioned in clause

(f) of sub-section (1) of section 188 ,Companies Act 2013 or

vi. Remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding 1% of the net worth (Amount) as mentioned in clause (g) of sub-section

(1) of section 188, Companies Act 2013.

Note: The threshold amounts referred above are on the basis of Turnover or Net Worth on the basis of the Audited Financial Statements for the previous financial year.

Disclosure:

The agenda of the meeting of Audit Committee and/or Board of Directors at which the resolution is proposed to be moved shall disclose:

i. The name of the related party and nature of relationship;

ii. The nature, duration of the contract and particulars of the contract or arrangement;

iii. The material terms of the contract or arrangement including the value, if any;

iv. Any advance paid or received for the contract or arrangement, if any;

v. The manner of determining the pricing and other commercial terms both included as part of contract and not considered as part of the contract;

vi. Whether all factors relevant to the contract have been considered, if not, the details of factors not considered with the rationale for not considering those factors; and

vii. Any other information relevant or important for the Board to take a decision on the proposed transaction.

The explanatory statement to be annexed to the notice of a general meeting convened pursuant to section 101 of Companies Act , 2013 shall contain the following particulars namely:-

i. Name of the related party;
ii. Name of the director or key managerial personnel who is related, if any;
iii. Nature of relationship;
iv. Nature, material terms, monetary value and particulars of the contract or arrangement;

v. Any other information relevant or important for the members to take a decision on the proposed resolution.

Details of all Material transactions with related parties will have to be disclosed quarterly along with the compliance report on corporate governance.

Every contract and arrangement with Related Party entered into, irrespective of whether it is exempted from ratification or not, pursuant to the section 188 of Companies Act, 2013 shall be referred in the Board’s Report to the shareholders along with the justification for entering into such contracts or arrangements.

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