Many companies like Tata Consultancy Services Ltd and HDFC Bank Ltd fell short of the 2% target in fiscal 2015
When it came to meeting the stipulated expenditure on corporate social responsibility (CSR), smaller companies did better than large companies, shows a Crisil Foundation report.
Crisil Foundation, the non-profit arm of rating agency Crisil Ltd, analysed 3,855 BSE listed companies and found that 1,024 of them qualified to spend on CSR.
Of the lot, however, only 50% met the 2% bar. The companies cumulatively spent about Rs.6,800 crore, or 1.35% of their profit.
The CSR rules of 2014 mandate that companies with a net worth of Rs.500 crore or revenue of Rs.1,000 crore or net profit of Rs.5 crore spend 2% of their average profit in the last three years on social development-related activities.
Of the 1,024 companies surveyed, 425 were firms with a turnover of Rs.100 crore to Rs.500 crore. And 53% of them spent 2% or more of their net profit on CSR.
There were 518 mid-size companies (Rs.500 crore to Rs.10,000 crore) and 50% of them met the 2% spending requirement.
But only 31% of the 81 large companies, which had a turnover of over Rs.10, 000 crore, met or exceeded the recommended limit.
Many companies like Tata Consultancy Services Ltd and HDFC Bank Ltd fell short of the 2% target in fiscal 2015.
“Compliance towards CSR in fiscal 2015 seems to be inversely proportional to the size of the company; those with high turnover were short of the 2% mandatory spending,” said Ramraj Pai, president, Crisil Foundation.
A probable reason for large companies missing the 2% target could be the sheer challenge of their spending mandate. “They need considerable time and effort to conceptualise and design processes to maximise outcomes,” said Pai.
While they may have missed the target, a big chunk of the total CSR spend for FY15 still came from the clutch of large companies. Of the Rs.6,838 crore spent, 70% came from large companies.
CSR consultants said there wasn’t any increase in CSR fund flow from small and mid-size companies during the year.
“Most small and medium enterprises are family run and they would have been carrying out CSR even before the law came in, through their family foundations. We have not seen any significant increase in CSR money from the sector,” said the reprensative of a CSR management firm.
If the other 50% of companies meet the 2% norm, another Rs.3,200 crore could have been made available, said the report.
Also, there were 200 companies that didn’t spend anything (or were in advanced stages of planning their CSR agenda) and Crisil estimates these firms could have spent another Rs.2,000 crore, which would have taken the cumulative spending to Rs.12,000 crore for fiscal 2015.
This article was taken from here.