Mumbai: In a disappointing start to the much-touted CSR regime, a vast majority of the country's top blue-chip companies have failed to spend the minimum 2 per cent of profits on social responsibility activities in the first year by missing the target by one-third on an average.
Collectively, the 30 Sensex companies are estimated to have spent about Rs 3,500 crore on CSR initiatives during the 2014-15 fiscal, when they were required to spend nearly Rs 5,000 crore on such activities under the new Companies Act. Together, they are estimated to have clocked a three-year-average net profit of Rs 2.5 lakh crore, of which they were required to spend 2 per cent on Corporate Social Responsibility (CSR).
Making the scorecard even worse, just seven of them could meet this two per cent threshold in time. These firms include Mukesh Ambani-led Reliance Industries, ITC, Mahindra and Mahindra, Wipro, Hindustan Unilever, Tata Steel and Coal India, while Infosys also managed to meet the target although after a delay by a few days for a small amount of Rs 3 crore. Interestingly, quite a few companies have also tried to defend their failure to meet the threshold with reasons like 'money already having been earmarked' and 'delays in getting requisite approvals for spending the prescribed amounts'.
Quite a few public sector companies have also failed to meet the target. The companies whose actual CSR spending was less than 2 per cent during the year included HDFC Bank, ICICI Bank, Axis Bank, SBI, Dr Reddy's, HDFC, Bajaj Auto, Bharti Airtel, Hero Motocorp, Hindalco, Larsen and Toubro, TCS, Lupin, Cipla, Maruti Suzuki, GAIL, NTPC, BHEL and ONGC. All of them have expressed commitment to the CSR work. Corporate giant Reliance Industries Ltd (RIL) spent the the maximum amount (Rs 761 crore) among the Sensex companies on CSR during 2014-15 - the first financial year for which the new law has been in force. RIL is followed by ONGC in terms of absolute amount at Rs 495 crore, although it could spend only 1.5 per cent of its three-year-average net profit.
There is no penalty as such for missing this threshold, but the company needs to explain the reasons for its failure to spend at least 2 per cent on CSR. The government has set up a six-member panel to suggest steps for improved monitoring of social welfare activities done under the Companies Act. At least two companies, Vedanta Ltd and Tata Motors, did not have any obligation to meet the CSR threshold as they did not meet the requirement due to losses. The exact figures for Sun Pharma could not be ascertained.
