RIL, NTPC among firms spending more on corporate social responsibility

To encourage companies to spend money on social welfare activities, the government is considering the institution of an award to reward firms with good compliance record.

The Ministry of Corporate Affairs (MCA) has drawn up a list of top CSR spenders. “The social welfare work done by the big companies during the past four years will be evaluated. The idea is to encourage companies to spend,” said an official, adding that the appreciation award would be given on annual basis. The government is considering having mainly three categories for the award – highest spender, best project in various project categories and creation of assets of national importance. The CSR awards, which are likely to be announced in a month, would be given away by the Prime Minister or the finance minister, sources said.

The companies which spent over and above the prescribed 2% limit during FY16 included Reliance Industries, NTPC, Tata Steel, Maruti Suzuki, Tata Motors, TVS Motor, IBM, Wipro, Tech Mahindra, Ambuja Cement and L&T. Many firms spent the same amount as was earmarked for CSR. These included Zee Entertainment, ITC, Bajaj Auto, Bajaj Finance, Piramal Enterprises and JSW Energy. Top spenders among public sector companies were NTPC, Indian Oil, Oil India, HPCL, Coal India, Steel Authority of India and NHPC.

As many as 3,380 firms spent more than the prescribed limit during 2015-16, while 317 companies spent exactly the same amount as was earmarked for CSR during the same period, as per the government data. During 2016-17, 1,633 firms spent more than the prescribed CSR limit.

While some top companies like Reliance Industries, NTPC, ITC, Tata Steel, Wipro, Tech Mahindra, Bajaj Auto, TVS, Maruti Suzuki, M&M, Hindustan Lever and Zee have an outstanding record in spending their Corporate Social Responsibility (CSR) funds, there are scores of other companies which have been found wanting.

The government is said to be examining top 1,000 companies which have spent less than 2% of their profits on CSR activities starting with the fiscal year 2015-16. MCA has sent scrutiny letters to the erring companies. Based on the initial scrutiny, 272 preliminary notices have been sent to those firms which did not comply with the CSR law and also did not furnish reasons for not spending or under spending. More notices will be issued shortly, said sources. All the firms having 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 have to spend 2% of their profit on CSR every year, as per the provisions (section 135) of the Companies Act, 2013.

…& ANALYSIS

• The government is considering having mainly three categories for the award – highest spender, best project in various project categories and creation of assets of national importance.  
• As many as 3,380 firms spent more than the prescribed limit during 2015-16, while 317 companies spent exactly the same amount as was earmarked for CSR during the same period

Article Source: DNA