SAHAYI - CENTRE FOR COLLECTIVE LEARNING AND ACTION
Our Recent Research Study & Publication
MAJOR CSR FUNDING COMPANIES IN INDIA
Lead Author:
Dr. Antony Gregory
Co-authors:
Placid Gregory
Jose Gregory
Published : January 2024
Price Rs. 1200
OVERVIEW OF THE PUBLICATION
The book is the outcome of a research study by CSR Research and Knowledge
Resource Centre on the major CSR funding companies in India. Of the 150 major
companies covered by the study, only 100 companies have been included in the
book.
SEQUENTIAL LIST OF MAJOR CSR FUNDING COMPANIES COVERED
1.RELIANCE INDUSTRIES LIMITED | 51.BANDHAN BANK LIMITED . |
2.TATA CONSULTANCY SERVICES LIMITED | 52.CENTRAL COALFIELDS LIMITED |
3.HDFC BANK LIMITED | 53.SHREE CEMENT LIMITED |
4.OIL AND NATURAL GAS CORPORATION (ONGC) | 54.CANARA BANK |
5.INDIAN OIL CORPORATION LIMITED | 55.CIPLA LIMITED |
6.COAL INDIA LIMITED | 56.SJVN LIMITED |
7.INFOSYS LIMITED | 57.MUTHOOT FINANCE LIMITED |
8.ITC LIMITED | 58.NESTLE INDIA LIMITED |
9.NTPC LIMITED (NATIONAL THERMAL POWER CORPORATION LIMITED) | 59.ORACLE FINANCIAL SERVICES SOFTWARE LIMITED |
10.TATA STEEL LIMITED | 60.EICHER MOTORS LIMITED |
11.POWER GRID CORPORATION OF INDIA LIMITED | 61.HINDALCO INDUSTRIES LIMITED |
12.ICICI BANK LIMITED | 62.JINDAL STEEL AND POWER LIMITED. |
13.WIPRO LIMITED. | 63.PETRONET LNG LIMITED |
14.MAHANADI COALFIELDS LIMITED | 64.PUNJAB NATIONAL BANK |
15.NMDC LIMITED | 65.NATIONAL ALUMINIUM COMPANY |
16.BHARAT PETROLEUM CORPORATION LIMITED | 66.DR. REDDY’S LABORATORIES LIMITED |
17.HCL TECHNOLOGIES LIMITED | 67.DIVI’S LABORATORIES LIMITED |
18.HINDUSTAN ZINC LIMITED | 68.TITAN COMPANY LIMITED |
19.HINDUSTAN UNILEVER LIMITED | 69.UPL LIMITED |
20.REC LIMITED (RURAL ELECTRIFICATION CORPORATION) | 70.BOSCH LIMITED |
21.HINDUSTAN PETROLEUM CORPORATION LIMITED | 71.THE FEDERAL BANK LIMITED |
22.JSW STEEL LIMITED | 72.ACC LIMITED |
23.STATE BANK OF INDIA | 73.BRITANNIA INDUSTRIES LIMITED |
24.AXIS BANK LIMITED | 74.GLENMARK PHARMACEUTICALS LIMITED |
25.LARSEN & TOUBRO LIMITED | 75.LTIMINDTREE LIMITED |
26.GAIL (INDIA) LIMITED . | 76.CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED |
27.MARUTI SUZUKI INDIA LIMITED | 77.MRF LIMITED |
28.OIL INDIA LIMITED | 78.LUPIN LIMITED |
29.POWER FINANCE CORPORATION LIMITED | 79.DABUR INDIA LIMITED |
30.BAJAJ AUTO LIMITED | 80.GODREJ CONSUMER PRODUCTS LIMITED |
31.TECH MAHINDRA LIMITED | 81.PIDILITE INDUSTRIES LIMITED |
32.BAJAJ FINANCE LIMITED | 82.SIEMENS LIMITED |
33.ULTRATECH CEMENT LIMITED | 83.ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED |
34.MAHINDRA & MAHINDRA LIMITED | 84.ZEE ENTERTAINMENT ENTERPRISES LIMITED |
35.HERO MOTOCORP LIMITED . | 85.BHARAT ELECTRONICS LIMITED |
36.NHPC LIMITED | 86.HDFC ASSET MANAGEMENT COMPANY LIMITED |
37.HINDUSTAN AERONAUTICS LIMITED | 87.BAJAJ ALLIANZ GENERAL INSURANCE COMPANY LIMITED |
38.INDUSIND BANK LIMITED | 88.AVENUE SUPERMARTS LIMITED |
39.VEDANTA LIMITED | 89.TORRENT PHARMACEUTICALS LIMITED |
40.SOUTH EASTERN COALFIELDS LIMITED | 90.MANAPPURAM FINANCE LIMITED |
41.KOTAK MAHINDRA BANK LIMITED | 91.COLGATE PALMOLIVE LIMITED |
42.ASIAN PAINTS LIMITED | 92.SBI LIFE INSURANCE COMPANY LIMITED |
43.AMBUJA CEMENTS LIMITED | 93.BALKRISHNA INDUSTRIES LIMITED |
44.SHRIRAM TRANSPORT FINANCE COMPANY LIMITED | 94.PNB HOUSING FINANCE LIMITED |
45.ADANI PORTS AND SPECIAL ECONOMIC ZONE LIMITED | 95.EXIDE INDUSTRIES LIMITED |
46.INDUS TOWERS LIMITED | 96.MARICO LIMITED |
47.INDIABULLS HOUSING FINANCE LIMITED . | 97.HAVELLS INDIA LIMITED |
48.GRASIM INDUSTRIES LIMITED | 98.DCM SHRIRAM LIMITED |
49.NLC INDIA LIMITED (NEYVELI LIGNITE CORPORATION) | 99.HEG LIMITED |
50.AUROBINDO PHARMA LIMITED | 100.ALKEM LABORATORIES LIMITED |
This is a serious research publication on Corporate Social Responsibility (CSR) implementation in India. The book is the outcome of a study of the major CSR funding companies in India. At the same time, it serves as a handbook. It is a handbook for corporate CSR executives, NGO functionaries, local self-government institutions, civil society organisations, district administrations and other government departments and beneficiary organisations such as healthcare institutions, government schools, other educational institutions, etc. The first part of the book deals with CSR implementation in the country. The topics include the statutory provisions on CSR implementation, the extent of CSR compliance by companies and the state-wise and sector-wise spending of CSR funds. The second part deals with the major CSR funding companies in India. The book analyses the CSR activities of 100 companies. The chapter on each company includes a detailed corporate profile with five-year data on the financial performance, discussion on the major CSR programmes of the company, the focus areas for CSR interventions, five-year data on the prescribed CSR budget of the company and the actual CSR spending. The chapter provide detailed lists of CSR programmes implemented by the company, sometimes partial lists, in the past two years or more, specifying the location, the development sector and the amount spent on each project. The companies analysed are the top 100 CSR funding companies in India. A few companies with significant CSR spending have not been included, mainly on account of paucity of information in the public domain. The companies are presented in a top-down sequential order that reflects their average CSR spending during the six-year period from financial year (FY) 2018 to FY 2023. The sequential list of Secondary data available on the public domain have been used to prepare the corporate profile as well as to track the CSR activities of the companies.
MANDATORY CSR IN INDIA
A silent revolution is sweeping across the hinterland of India, a revolution ushered in by Corporate Social Responsibility. Neighborhood development and social welfare interventions have become legitimate corporate concerns at board meetings, and CSR strategy has been integrated into corporate strategy by several major companies in India. The introduction of Section 135 of the Companies Act of 2013 marked a pioneering step in India, introducing mandatory CSR among large companies. Only two other countries in the world have introduced mandatory CSR, besides India; Indonesia and Mauritius. In Indonesia, the extent of CSR compliance is yet to achieve significant momentum, reportedly on account of soft compliance regulations. The efficacy of the mandatory CSR introduced in Mauritius remains to be fully established, perhaps on account of paucity of evaluation studies. Over the years, the CSR landscape in India has been transformed, shifting its focus from mere compliance to striving for a more profound societal impact. This has been so, more among the major companies. Only a few hundred companies have annual CSR budgets above Rs. 10 crores, and the average annual CSR budget per company is around Rs. 1 crore. However, mandatory CSR has turned out to be a legally viable and socially feasible proposition in India. The unique Indian experiment turns out to be a global corporate experience and a major development experiment, and mandatory CSR has proved to be a viable proposition for the global economy. With increasing focus on environment and social development, several countries are likely to join the CSR bandwagon.
EVOLUTION OF CSR IN INDIA & INTRODUCTION OF MANDATORY CSR
Evolution of CSR in India
The concept of Corporate Social Responsibility is not new to India. The Indian economy had a pre-eminent position in the world for several millennia (until the Colonial period), primarily on the strength of a business institution called ‘Shreni’ (popularly conceived as trade guilds). As an economic institution, it was conceptually much stronger than the joint stock companies of today, since its productive strength was rooted in the larger society. Shreni was very powerful and prosperous and had a strong social component that contributed immensely to the welfare of society, including building social infrastructure and protecting people during famine. Even the rulers received support of the Shreni and in Arthashastra, Chanakya discusses the strategy for effectively utilising Shreni by the rulers. In Modern India, the concept of CSR has evolved in a phased Manner. In the first phase charity and philanthropy were the main drivers of CSR. In the second phase, during the independence movement, Mahatma Gandhi introduced the concept of "trusteeship," which stressed that the industry leaders had to manage their wealth so as to benefit the common man. Gandhiji emphasised that Indian companies were supposed to be the "temples of modern India." The third phase of CSR in India emerged during the post- independence socialist era in the Indian economy. The period from the 1960s to the 1980s in particular, was marked by the emergence of the "mixed economy," with widespread nationalizations, for example, of mines and banks, emergence of Public Sector Undertakings (PSUs) and laws relating labour and environmental standards. This was an "era of command and control." The major business houses in the country as well as several small and upcoming firms continued their social development interventions, establishing their foundations and trusts. Companies began to establish specialised CSR teams for formulating policies, strategies and goals for their CSR programmes and implementing these programmes. The introduction of Section 135 in the companies Act, 2013, changed the situation drastically and revolutionized the CSR situation in the country.
Mandatory provisions pertaining to Corporate Social Responsibility (CSR) were introduced in the Companies Act 2013. The 21st Report of the Parliamentary Standing Committee on Finance (2011), was one of the prime movers for bringing the CSR provisions within the statute. While considering the Companies Bill, 2009, the Parliamentary Standing Committee on Finance in 2011 suggested the incorporation of a mandatory provision of 2% of profit for CSR in the new Companies Act. When the Minister of Corporate Affairs, Murli Deora, indicated the introduction of the two percent mandate, most of India Inc. was immediately up in arms. The Confederation of Indian Industry revolted, "The law should not specify any amount to be spent on CSR activities. It should be left to the decision of the board”. Initially, the government seemed to yield to the corporate pressure, but eventually mandatory CSR found its way into the Companies Act, 2013. Section 135 of the Companies Act, 2013 contains the provision related to CSR; Schedule VII of the Act enumerates the activities that can be undertaken under CSR; and Companies (Corporate Social Responsibility Policy) Rules, 2014 prescribe the manner in which the companies have to comply with the CSR provisions of the Act. Section 135, Schedule VII, and the Companies (Corporate Social Responsibility Policy) Rules, 2014 were notified on 27 February, 2014, and came into force from 1 April, 2014.
Introduction of Mandatory CSR in India
Companies Act,2013
In India, the concept of CSR is governed by Section 135 of the Companies Act, 2013. The CSR provisions within the Act are applicable to companies with an annual turnover of Rs.1,000 crore and more, or a net worth of Rs. 500 crore and more, or a net profit of Rs. five crore and more. The rules applicable from the fiscal year 2014-15 onwards, require companies to set-up a CSR committee consisting of their board members, including at least one independent director. Board of directors of the company must ensure that the company spends at least two percent of its average net profits made during the three immediately preceding financial years, in every financial year, as per its CSR policy. Earlier, companies were required to comply or give reasons for Non-compliance and then get away with it. But, as per the amendment (2019) of Section 135 of the Companies Act, 2013, getting away became impossible. Amendment of the section incorporated a provision, according to which if a company is unable to spend the target amount kept for CSR activities, then it is required to transfer the amount to a fund which is prescribed under schedule VII, for example, Prime Minister’s National Relief Fund. Within 30 days after the date of closure of the financial year, the unspent amount has to be transferred to the particular fund. If any company contravenes with the provisions of Section 135, it is required to pay a fine. Further, officers responsible shall be liable for imprisonment of up to 3 years. The penal provision of the Act bounded all the corporate entities fulfilling CSR criteria to perform Corporate Social Responsibility (CSR) and define the penalties and imprisonment for the violation of the CSR norms. A subsequent amendment revoked the penal clause and converted the offence into a civil offence rather than a criminal offence and removed the provision for imprisonment.
CSR LIABLE COMPANIES IN INDIA
CSR Liable Companies in India
The active companies in India in 2023 was estimated as 13 lakhs. Of these only 16,548 companies were CSR eligible companies, hardly 1.6 % of the total companies operating in the country. The CSR eligible companies increased to 18,623 in FY 2022. CSR Liable Companies It was observed by the Parliamentary Standing Committee on Finance that annual statutory disclosures on CSR required to be made by the companies under the Act would be a sufficient check on noncompliance. It is a decade since Corporate Social Responsibility (CSR) was introduced as a mandatory requirement for the corporate sector in India. However, the number of companies that meet the criteria for mandatory CSR spending has remained very small. Further, not all companies that are liable for CSR come forward to comply with their CSR obligations.
TOTAL CSR CONTRIBUTION IN INDIA
The total CSR spending in the country increased from Rs. 10,066 crores in FY 2015 to Rs. 25,933 crores in FY 2022.The contribution of private sector companies increased from 72% of the total CSR spending in FY 2015 to 79% in FY 2022. The contribution of public sector companies declined from 28% in FY 2015 to 21% in FY 2022.
CSR COMPLIANCE IN INDIA
Companies with zero CSR spending declined from 54.58 % of the CSR liable companies in FY 2015 to 21.10 % in FY 2022. Companies fully complying with CSR norms increased to 54.9% of the total in FY 2021 and to 62.5% in FY 2022. Among the 37.5% of the companies that do not comply with the CSR regulations, 21% have made zero CSR spending during FY 2022. The remaining (16.5%) companies spent less than their obligatory CSR budget.
CSR - GDP Ratio
The CSR spending in the country increased from Rs. 10,066 crores in FY 2015 to Rs. 25,933 crores in FY 2021-22. However, the total CSR spending is apparently too small at present to make any significant social development impact. The actual CSR spending was 0.08% of GDP in FY 2014-15 and it increased to 0.11% in FY 2021-22.
CORPORATE SOCIAL RESPONSIBILITY (CSR): LEGAL FRAMEWORK
CSR in India
The Corporate Social Responsibility concept in India is governed by Section 135 of the Companies Act, 2013, Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. The Act and rules specify the criteria for assessing the CSR eligibility of a company and the regulations for implementation and reporting of the company’s CSR policies and programmes.
FOCUS AREAS / THRUST AREAS FOR CSR PROGRAMMES
Schedule VII of the Companies Act, 2013 specifies the following activities for CSR interventions: (i) Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation and safe drinking water. (ii) promoting education, including special education and employment enhancing vocation skills. (iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups. (iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water. (v) protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts. (vi) measures for the benefit of armed forces veterans, war widows and their dependents, ncluding Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows. (vii) training to promote rural sports, nationally recognised sports, Paralympic sports and Olympic sports. (viii) contribution to the prime minister’s national relief fund or any other fund set up by the central govt. for socio- economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women. (ix) (a) Contribution to incubators or research and development projects in the field of science, technology, engineering and medicine, funded by the Central Government or State Government or Public Sector Undertaking or any agency of the Central Government or State Government; and (b) Contributions to public funded Universities; Indian Institute of Technology (IITs); National Laboratories and autonomous bodies established under Department of Atomic Energy (DAE); Department of Biotechnology (DBT); etc. (x) Rural development projects. (xi) Slum area development. (xii) Disaster management, including relief, rehabilitation and reconstruction activities. CSR Funds Being Utilized for Government Schemes The objective of CSR provisions is to involve the corporates as partners in the social development process. Use of corporate innovations and management skills in the delivery of ‘public goods’ is at the core of CSR implementation by the companies.
CSR PROJECTS: MODES OF IMPLEMENTATION
Based on rule 4 of the Companies (CSR Policy) Rules, 2014 a company may undertake CSR activities through following three modes of implementation: (i) Implementation by the company itself. (ii) Implementation through eligible implementing agencies as prescribed under sub-rule (1) of rule 4. (iii) Implementation in collaboration with one or more companies as prescribed under sub-rule (4) of rule 4. Implementing Agency for undertaking CSR activities: eligibility Rule 4(1) of the Companies (CSR Policy) Rules, 2014 provides the eligible entities which can act as an implementing agency for undertaking CSR activities. These are: (i) Entity established by the company itself or along with any other company – a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961. (ii) Entity established by the Central Government or State Government – a company established under section 8 of the Act, or a registered trust or a registered society. (iii) Statutory bodies – any entity established under an Act of Parliament or a State legislature. (iv) Other bodies – a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities. CSR: Project Implementation Procedures Ongoing Projects Ongoing project has been defined under rule 2(1)(i) of the Companies (CSR Policy) Rules, 2014 as: (i) a multi-year project, stretching over more than one financial year; (ii) having a timeline not exceeding three years, excluding the year of commencement; (iii) includes such project that was initially not approved as a multiyear project but whose duration has been extended beyond one year by the Board based on reasonable justification. The Board has the power to abandon or modify an ongoing project, partially or wholly, under exceptional circumstances, during the prescribed project period, based on the recommendation of its CSR Committee, and by providing reasonable justification to that effect. Unspent CSR Amount If a company spends less than the amount required to be spent under their CSR obligation for the year, the Board shall specify the reasons for not spending in the Board’s report and shall deal with the unspent amount in the following manner: If the unspent amount pertains to ‘ongoing projects, transfer such unspent amount to a separate bank account of the company to be called as ‘Unspent CSR Account’, within 30 days from the end of the financial year. If the unspent amount pertains to ‘other than ongoing projects,’ the unspent amount to any fund included in Schedule VII of the Act, within 6 months from the end of the financial year. A company needs to open a separate ’Unspent CSR Account’ for each financial year but not for each ongoing project. Penal Provisions for Noncompliance Noncompliance with the provisions regarding transfer of unspent amount is a civil wrong and shall attract the following penalties: for the company, twice the unspent amount required to be transferred to any fund included in Schedule VII of the Act or Unspent CSR Account, as the case may be, or one crore rupees, whichever is less; for every officer in default, 1/10th of the unspent amount required to be transferred to any fund included in Schedule VII of the Act or Unspent CSR Account, or two lakh rupees, whichever is less. CSR Reporting & Disclosure As per rule 8(1) of the Companies (CSR Policy) Rules, 2014, the Board’s Report pertaining to any financial year, for a CSR-eligible company, shall include an annual report on CSR containing particulars specified in Annexure I or Annexure II of the said rules, as applicable.
IMPACT ASSESSMENT
The purpose of impact assessment is to assess the social impact of a particular CSR project. The objective is to encourage companies to take decisions before deploying CSR amounts and assess the impact of their CSR spending. This serves as feedback for companies to plan and allocate resources better. Rule 8(3) of the Companies (CSR Policy) Rules, 2014 mandates following class of companies to conduct impact assessment: (i) companies with minimum average CSR obligation of Rs.10 crore or more in the immediately preceding 3 financial years; and (ii) companies that have CSR projects with outlays of minimum Rs. 1 crore and which have been completed not less than 1 year before undertaking impact assessment. Impact assessment reports shall be placed before the Board and shall be annexed to the report on CSR. Creating web-link to access the complete impact assessment reports and providing executive summary of the impact assessment reports in the annual report on CSR, shall be considered as sufficient compliance.