Risk Management Policy

1. BACKGROUND

Dixon Technologies (India) Limited (erstwhile Dixon Technologies (India) Private Limited) is home grown design-focused and solutions company engaged in manufacturing products in the consumer durables, lighting and mobile phones markets in India. The Company’s diversified product portfolio includes –

(i) consumer electronics like LED TVs;
(ii) home appliances like washing machines;
(iii) lighting products like LED bulbs and tubelights, downlighters and CFL bulbs; and
(iv) mobile phones.

We also provide solutions in reverse logistics i.e. repair and refurbishment services of set top boxes, mobile phones and LED TV panels.

The business activities of the Company are such that they carry various internal and external risks which are inherent in all administrative functions.

‘Risk’ in literal terms can be defined as the effect of uncertainty on the objectives. Formal and systematic approaches to manage risks have evolved and they are now regarded as good management practice also called as Risk Management.

‘Risk Management’ is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of uncertain events or to maximize the realisation of opportunities. Risk management also provides a system for the setting of priorities when there are competing demands on limited resources.

Effective risk management requires:

  • A strategic focus,
  • Forward thinking and active approach
  • Balance between the cost of managing risk and the anticipated benefits, and
  • Contingency planning in the event that critical threats are realised.

In today’s challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are: Regulations, competition, Business risk, Technology obsolescence, Return on Investments, Business cycle, Increase in price and costs, Limited resources, Retention of talent, etc

2. LEGAL FRAMEWORK

Section 134(3) of the Companies Act, 2013 (‘the Act’) requires the Board of Directors of a company, as part of the Board’s Report, to give a statement indicating development and implementation of a risk management policy for the company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company.

Further, the provisions of Section 177(4)(vii) of the Companies Act, 2013 require that every Audit Committee shall act in accordance with the terms of reference specified in writing by the Board which shall inter alia include evaluation of risk management systems.

Additionally, SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015, across its different sections, invariably lays greater emphasis on Risk Management being one of the key functions of Board where responsibility is cast upon the Board to:-

  • review and guide Risk Policy
  • ensure that appropriate systems of control are in place, in particular, systems for risk management
  • ensure that, while rightly encouraging positive thinking, it does not result in over-optimism that either leads to significant risks not being recognized or exposes the company to excessive risk have ability to ‘step back’ to assist executive management by challenging the assumptions underlying risk appetite

3. PURPOSE AND SCOPE OF THE POLICY

Dixon Technologies (India) Limited understand that controlling risks through a formal program is necessary for the well-being of our organization.

To this end, the Board of Directors of the Company will form a Board Committee in due course to identify the risks impacting the Company’s business and formulate and administer policies/ strategies aimed at risk minimization and risk mitigation as part of risk management.

Further, an Internal Audit team has also been formed to identify and assess key risks and formulate strategies for mitigation of risks identified in consultation with the process owners.

The Key risks are broadly categorized into:-

Risk Category Description
Strategic Risks
  • Market Strategy
  • Political Environment
  • Organizational Growth- Market Penetration, Market Share, Loss of reputation
  • Globalization and Technological Obsolescence
  • Volatility in Commodity Market
  • Loss of Intellectual property and Trade secret
  • Uncertainty surrounding political leadership in Domestic and International markets
  • Economic condition of the market, Global recession and Environmental Issues
  • Competition
Operational Risks
  • Consistent Revenue Growth
  • Cost Optimization
  • Manpower retention
  • Disaster Management and Data Security
  • Inefficient working capital Management – High Inventory
  • Contractual Compliance
  • Quality Assurance
Compliance Risks
  • Ensure stricter adherence to laws / rules / regulations/ standards
  • Adherence of Company Policies and Procedures
Financial and Reporting Risks
  • Volatility in Currency, Funding & Credit Risk
  • Maintaining high standards of Corporate Governance and Public disclosures.

In adherence to the present regulatory framework described hereinabove, the Board of Directors of the Company or Committee which the Board may constitute to exercise the powers conferred herein for the purpose to:-

  • Ensure an organization’s relevant and perpetual Risk Management framework for identifying, assessing, responding to, monitoring or controlling and reporting risks.
  • Apply an organized, thorough approach to effectively anticipate and mitigate the probable or realistic risks that could endanger achievement of key objectives.
  • Ensure systemic risk evaluation, categorization, and prioritization thereof to assign relative importance to identified risks to determine where appropriate management attention is required.
  • Practice the highest level of control measures by installing mechanisms and tools, with involvement of all process-owners across the organization, to ensure that all applicable legal, regulatory, and business requirements are up-to-date and met.
  • Develop alternative/ recommended courses of action for critical risks and control the probability of occurrence of the risk, keeping ready contingency plans for selected risks where the consequences of the risks are determined to be high.
  • Review the activities, status, and results of the risk management process on a periodic and event-driven basis with appropriate levels of management and resolve issues i.e. gauging potential risk exposure and addressing the same with appropriate corrective action.
  • Obtaining, wherever required or desirable, the advice, opinion and assistance from outside legal, accounting, or other advisors, as necessary, to aid informed decision making.

4. APPLICABILITY

This Policy applies to all areas of the Company’s operations.

5. RESPONSIBILITY FOR RISK MANAGEMENT

Generally every employee of the Organisation is responsible for the effective management of risk including the identification of potential risks. Management is responsible for the development of risk mitigation plans and the implementation of risk reduction strategies. Risk management processes should be integrated with other planning processes and management activities.

6. COMPLIANCE AND CONTROL

All the Head of Departments (“HODs) under the guidance of the Executive Chairman/ Managing Director has the responsibility for over viewing management’s processes and results in identifying, assessing and monitoring risk associated with Company’s business operations and the implementation and maintenance of policies and control procedures to give adequate protection against key risk. In doing so, the HOD considers and assesses the appropriateness and effectiveness of management information and other systems of internal control, encompassing review of any external agency in this regard and action taken or proposed resulting from those reports.

7. REVIEW

This Policy shall be reviewed from time to time to ensure it meets the requirements of legislation and the needs of organization.

8. AMENDMENT

Any subsequent amendment/modification in the applicable laws in this regard shall automatically apply to this Policy.

Any change/amendments to this policy shall be approved by the Managing Director.