Four out of 10 BSE-listed firms are shying away from CSR spending
Four out of ten companies listed on the Bombay Stock Exchange failed to spend the prescribed amount for corporate social responsibility (CSR) in 2015-16 with the total unspent amount totalling to ₹1,200 crore.Updated: Oct 17, 2016 11:12 IST
Four out of ten companies listed on the Bombay Stock Exchange failed to spend the prescribed amount for corporate social responsibility (CSR) in 2015-16 with the total unspent amount totalling to ₹1,200 crore.
The Companies Act 2013 makes it mandatory for every company with a net worth of more than ₹500 crore (or a net profit of at least ₹5 crore or a turnover of at least ₹1,000 crore) to spend 2% of their average net profit of last three years on CSR activities.
An analysis of annual reports on corporate social responsibility (CSR) activities filed by respective companies for 2015-16 reveals ONGC, Bharti Airtel, HCL Technologies, HDFC and HDFC Bank as some of the major names that fell short of the target.
Out of the 969 BSE-listed companies, 395 had filed their annual reports on CSR as on Friday.
ONGC spent ₹173 crore lower on CSR activities in 2015-16 than the ₹594-crore prescribed under the Companies Act. ONGC was still the third highest in overall CSR expenditure despite falling short of the target by 30%.
Bharti Airtel fell short by ₹136 crore, which is 72% of the prescribed amount. HCL Technologies could only spent ₹10.5 crore with 91% of the expected amount remaining unspent.
While the companies did not respond to queries sent by HT, they have fleshed out explanations in their annual reports.
For instance, ONGC and HCL Technologies cited long gestation periods of projects as a reason for not being able to spend the prescribed amount. “Major flagship CSR projects have project duration of more than one year with milestone-based payment spread in different fiscals,” ONGC said in its report.
On its part Bharti Airtel said: “Being in the initial years of implementation, the company is persistently exploring new opportunities to increase its CSR expenditure.”
HDFC, in its annual report, highlighted restrictions in contribution to organisations under the Foreign Contribution Regulation Act, 2010 (FCRA 2010) and the difficulty to find organisations that are aligned to the social objectives of the company.
“Most of the companies with large sums of CSR budget, were in the first couple of years of the law in 2014-15 and 2015-16, trying to figure out right initiatives. Pilot initiatives were undertaken and fine-tuned. From this financial year we expect 95% of the top 500 listed firms to spend their entire CSR budget,” Adarsh Kataruka, director of SoulAce, a CSR advisory firm.
On the other hand, there are companies that have spent more. NTPC spent ₹490 crore or 40% more than what was prescribed. Likewise, Reliance Industries, the highest CSR spender in 2015-16, disbursed ₹651 crore, 17% higher than required.
GAIL, Tata Steel and Larsen &Toubro also spent more than required by law.