On the other hand, Mukesh Ambani-led corporate giant Reliance Industries Ltd (RIL) has exceeded the mandatory 2 per cent prescribed limit while spending the maximum amount (Rs 761 crore) among the Sensex companies that have so far disclosed their CSR spending figures for 2014-15 -- the first financial year for which the new law has been in force.
Others who have managed to meet the target include Azim Premji-led Wipro, tobacco-to-fashion conglomerate ITC, FMCG major Hindustan Unilever and auto giant Mahindra and Mahindra.
Infosys missed the limit by a small margin as on March 31, 2015, but said it managed to meet the target after spending the remainder amount of about Rs 3 crore in April. So far, half of the 30 Sensex firms have disclosed their CSR details for the latest financial year, but the actual CSR spending during 2014-15 for at least ten of them was below 2 <g data-gr-id="86">per cent</g> of their respective three-year-average net profit -- as required under the new Companies Act.
Together, all these 15 companies spent a little over Rs 2,100 crore on CSR during the fiscal. The government has also set up a six-member <g data-gr-id="64">high level</g> panel to suggest steps for improved monitoring of social welfare activities done by them under the companies law.
The companies whose actual CSR spending was less than 2 <g data-gr-id="82">per cent</g> during the year include HDFC Bank, ICICI Bank, Axis Bank, SBI, <g data-gr-id="87">Dr</g> Reddy’s, HDFC and Bajaj Auto. While giving reasons for their respective shortfalls, all of them have expressed their commitment to the CSR work. Among others, Vedanta said there was “no obligation for the company to spend on CSR as the average profit computed as per provisions of the Companies Act for last three years is negative”. Still, it had spent Rs 25.5 crore (1.3 per cent of its last fiscal profit after tax) in CSR projects and initiatives.
The new law applies to companies with a net worth of Rs 500 crore or more, or a turnover of Rs 1,000 crore or more or a net profit of Rs 5 crore or more in a financial year. They are also required to constitute a CSR committee with three or more directors, at least one of whom should be an independent director. If a company fails to spend full or part of the prescribed amount, it needs to explain the shortfall. Giving <g data-gr-id="88">update</g> of their compliance status on the new law, which came into force from April 1, 2014, five Sensex firms have so far disclosed CSR spending of 2 <g data-gr-id="94">per cent</g> or more.
RIL tops the list with total CSR spending of Rs 761 crore (2.85 per cent). The major areas for this expenditure included rural transformation, healthcare, education, environment, protection of national heritage, art and culture and disaster response, the company said in its annual CSR report.
Infosys said the prescribed amount required to be spent on CSR during the last fiscal was Rs 243 <g data-gr-id="62">crore,</g> while the total money actually spent during the year was Rs 239.54 core.
The ‘unspent’ amount of Rs 3.46 crore was “spent in April 2015 upon receiving pending documentation,” the company said. Wipro spent Rs 132.7 crore (2.06 per <g data-gr-id="81">cent),</g> while the total spending for ITC was Rs 214.06 crore (2.01 per cent). Mahindra and Mahindra spent Rs 83.24 crore (just above 2 per <g data-gr-id="80">cent),</g> while HUL spent Rs 82.35 crore (2.1 per cent).
HDFC said its prescribed CSR expenditure for the year was Rs 122.61 <g data-gr-id="77">crore,</g> while <g data-gr-id="76">total</g> amount spent during the fiscal was Rs 49.18 crore. The unspent amount, after considering the committed and disbursed amount, was Rs 73.43 crore. Explaining the gap, HDFC said it has set up a separate foundation with a dedicated team to focus on activities in the social and developmental sectors of India.
“As HDFC’s foreign shareholding exceeds 50 <g data-gr-id="93">per cent</g>, any amount contributed by it to the Foundation would need prior approval of the Ministry of Home Affairs under the Foreign Contribution Regulation Act, 2010 (FCRA). “The Foundation received the FCRA approval only in March 2014, hence it was unable to undertake any social initiatives prior to this period. Coincidentally, Section 135 of the Companies Act, 2013 which provides for CSR obligations on specified classes of companies also came into force during this time. <g data-gr-id="90">HDFC therefore</g> thought it appropriate to conduct a major part of its CSR activities through the Foundation, as the objectives of both were aligned,” it said.
The home loan major further said, “After receipt of the FCRA approval by the Foundation, an implementation plan was put in place to meet the development objectives of HDFC as well as the Foundation, which included the hiring of <g data-gr-id="70">full time</g> employees for the Foundation. In October 2014, the employees of the Foundation came on board.”
It added, “Initially time was taken to put in place processes, evaluate desired projects, their
execution timelines, travel to project locations and evaluate social investment options.
“Keeping in mind the long-term and sustainable development objectives of HDFC (as well as the Foundation), it is of paramount importance that any funds provided by HDFC be utilised prudently to ensure maximum social benefit and development.
“Considering all the factors stated above, the amount committed and disbursed towards CSR was Rs 49.18 crore in 2014-15. Now that the team is in place at the Foundation for <g data-gr-id="66">sometime</g>, HDFC intends to commit and deploy larger funds across social sectors in the coming financial year.”
HDFC Bank said its prescribed CSR spending amount for the year was 197.13 crore, but the total spending was Rs 118.55 crore, leaving an unspent amount of Rs 78.58 crore.
“We have spent 1.2 <g data-gr-id="68">per cent</g> of our Net Profit as part of our CSR in the reporting period. As a responsible bank, we have approached the mandatory requirements of CSR spend positively by <g data-gr-id="73">utilising</g> the reporting year to lay a foundation on which to build and scale future projects and partnerships.