Through multiple queries, The Indian Express has received responses from some of the firms that were served show cause notices for allegedly not complying with the CSR norms under the Companies Act.
Between July 2016 and March this year, the Centre issued show cause notices to 1,018 companies for allegedly not complying with the Corporate Social Responsibility (CSR) norms under the Companies Act, 2013, in 2014-15. The Indian Express has learnt that these companies include a missionary wing of a church in Kerala, a hospital in West Bengal, and a number of top public and private firms across the country.
According to the information received under the Right to Information Act, 2005, 32 major companies have been sent the notices by the zonal offices of the Registrar of Companies (RoC). These include private firms such as DLF Investments, Adani Infrastructure and Developers, Vodafone India Services and Posco India; public sector companies such as National Internet Exchange of India, EdCIL (India) Ltd, Northern Coalfields Ltd, NHDC Ltd and Rajasthan Renewable Energy Corporation Ltd; and public companies including the Malabar Marthoma Syrian Christian Evangelistic Association, which is a missionary wing of a Kerala-based church, and Institute of Neurosciences, Kolkata.
On March 10, the then Minister of State for Corporate Affairs, Arjun Ram Meghwal, told the Lok Sabha: “Show cause notices have been issued to 1,018 companies for 2014-15 for violation of Section 135 read with Section 134(3)(o) of the Companies Act.” According to Section 135 of the Companies Act, 2013, any company that has 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, is eligible to follow the CSR norms stated in the law.
The Section 135 also states that an eligible company has to form a CSR committee consisting of minimum three directors and spend at least 2 per cent of its average net profits of preceding three financial years on CSR activities specified in Schedule VII of the law. Section 134(3)(o) of the law states that a board report, which has all details concerning the development and implementation of the CSR policy and initiatives, should be placed before the company at the annual general meeting. Schedule VII lists the activities such as promotion of education, eradicating extreme hunger and poverty, reducing child mortality and improving maternal health — on which the money allocated for CSR can be spent.
32 firms that were served notices
* DLF Assets Pvt Ltd, DLF Homes Rajapura Pvt Ltd and DLF Investments Pvt Ltd: These firms, part of the DLF group, have been served show cause notices by
RoC, Delhi. DLF spokesperson told The Indian Express: “DLF as a group is committed to CSR and we have a dedicated arm ‘DLF Foundation’ which executes most of our initiatives. The group has spent much higher amount on CSR activities than the envisaged 2 per cent of the net profit from 2014-15 to 2016-17. All our companies are fully compliant.”
* The Malabar Marthoma Syrian Christian Evangelistic Association: It is the missionary wing of Kerala-based Mar Thoma Church. According to its website, it is the “first and the oldest of the National Missionary Movement in India”. It is registered as a public company. ROC, Ernakulam, issued a show cause notice to this company on August 3, 2016. George Varghese, general secretary of the association, said: “Our clarification in this regard submitted to RoC, Cochin, (and) was accepted by him (RoC).”
* Adani Infrastructure and Developers Pvt Ltd: The company, part of Adani group, received the show cause notice from ROC, Ahmedabad. Adani group’s spokesperson said: “The company was not required to spend for CSR activities as per Section 135 of the Companies Act, 2013. Accordingly, we responded to the RoC notice. Our reply was satisfactorily accepted by RoC and the notice was dropped.”
* Dr Lal PathLabs Ltd: It runs a chain of diagnostic centers across the country. According to its website, it runs “190-plus clinical labs and 1,700-plus patient centers” across India. ROC, Delhi, served it the show cause notice. The company’s chief financial officer Dilip Bidani said: “Details of CSR are given in the Annual Reports of the company for each of the financial years 2014-15 and 2015-16.”
* EdCIL (India) Ltd: The government-run company was set up in 1981 and works under the Ministry of Human Resource and Development. It provides services in online testing and assessment services, digital education systems, advisory services, etc. Its executive director K L Sarkar said that there was a “shortfall of Rs 5.94 lakh in spending of CSR activities in FY15”. The company “carried forward” Rs 5.94 lakh and spent it on CSR activities in 2015-16.
* Fortis Hospotel Ltd: The company, a subsidiary of Fortis Healthcare, runs a chain of healthcare facilities in India, Dubai, Mauritius and Sri Lanka. Fortis Heathcare’s spokesperson said: “The company (Fortis Hospotel) duly responded to the Registrar of Companies in November 2016 advising that average net profit (before tax) for the last three financials years of the company was negative. Hence, it was not required to spend on CSR activities during FY15.”
* Indian Broadcasting Foundation (IBF): It was established in 1999. According to the Ministry of Information and Broadcasting, it is India’s “premium apex organisation of television broadcasters” and “enjoys a unique position as the accredited spokesman of the broadcasting industry”. Puneet Goenka, president, IBF, said: “IBF is fully compliant with the provisions of the Companies Act, 2013, on CSR. At IBF, we have internal CSR committee and policy. We have already made CSR contributions towards 2014-15, 2015-16 and 2016-17 to the Prime Ministers’ (National) Relief Fund.” Goenka is also the managing director and chief executive officer of Zee Entertainment Enterprises.
* Bhaskar Industries Pvt Ltd and D B Power Ltd: Both the companies are part of the Dainik Bhaskar Group. P K Pandey, head (investor relations), D B Corp, said: “Yes, the mentioned companies did receive notice and our complete and requisite response have been submitted, timely, to concerned authorities. We have taken sufficient and adequate steps to fulfill our statutory responsibility, on same account”. D B Corp is the leading company of the group.
* Jindal Stainless Steelway Ltd: This company is domestic service arm of Jindal Stainless Ltd. The company said: “We received a notice about non-compliance only for the year FY15… There was no CSR obligation for the subject year as average net profit of the preceding three years was negative (- Rs 5.8 crore)… There was probably an oversight at RoC office regarding the same (show cause notice) and necessary disclosures thereof.”
* Welspun Mercantile Ltd: This company belongs to the Welspun group, which operates in textile and energy sector. The group’s spokesperson said: “Non-spending of the amount of CSR is not a non-compliance of the Companies Act, 2013, in which case the only statutory obligation is to give reason for non-spending in the Director’s Report, which was made by the company… The amount of contribution for 2014-15 was accumulated, as mentioned in the Directors’ Report, and the same along with the amount of contribution to be spent in FY16 aggregating to Rs 84,802 was spent in March 2016. Thus, there was no obligation of CSR which was not discharged by the company.”
* Bajaj Auto Holdings Ltd: It belongs to the Bajaj Group. Vallari Gupte, company secretary, Bajaj Holdings and Investment Ltd, said: “As already clarified to the RoC vide our letter dated 12 July 2016, the company (Bajaj Auto Holdings) did not fall in the ambit of Section 135 of the Companies Act, 2013, during the year 2014-15, since it did not get covered under any of the three prescribed thresholds under the section and hence there was no requirement for the company to spend any amount under CSR for that year.”
The companies that did not respond to the queries are: Amarchand Towers Property Holdings Ltd, Cambridge University Press India Pvt Ltd, Eicher Goodearth Pvt Ltd, Firefox Bikes Pvt Ltd (part of Hero Cycles group), Haier Appliances (India) Pvt Ltd, National Internet Exchange of India, National Scheduled Castes Finance and Development Corporation, PHD Chamber of Commerce and Industry, Bansal Classes Pvt Ltd, Bikaji Foods International Ltd, Rajasthan Renewable Energy Corporation Ltd, Vodafone India Services Pvt Ltd, Institute of Neurosciences, Kolkata, Northern Coalfields Ltd, NHDC Ltd, Posco India Pvt Ltd, BPL Ltd and Havmor Ice Cream Ltd.
Article Source: The Indian Express