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Business Ethics & Philanthropy Most companies from Tamil Nadu, Haryana and West Bengal spend actively on...
Most companies from Tamil Nadu, Haryana and West Bengal spend actively on CSR
About 62% companies based in Tamil Nadu and Haryana proved to be socially responsible by spending atleast 2% of their profits on corporate social responsibility (CSR).
A report published by CRISIL Foundation reveals that most companies in West Bengal spent above 1.5% of their CSR funds in 2015, the first year of implementation of the CSR mandate.
The report stated that Maharashtra- one of the most industrial states had 48% companies that spent 2% and above funds on CSR; whereas TN and Haryana topped the list with 62% firms spending funds as mandated.
Companies in West Bengal, Uttar Pradesh and Gujarat also did fairly well with 57% companies from the first two states and 56% companies from Gujarat spending 2% and above profits on CSR.
| Spending profile (% of profit) of companies | ||||
| States | 2% and above | 1.5% and above | Less than 1.5% | Less than 1% |
| West Bengal | 57% | 68% | 32% | 21% |
| Gujarat | 56% | 67% | 34% | 26% |
| Uttar Pradesh | 57% | 67% | 32% | 24% |
| Tamil Nadu | 62% | 66% | 34% | 34% |
| Haryana | 62% | 65% | 35% | 19% |
| Maharashtra | 48% | 65% | 34% | 27% |
| Telangana | 51% | 60% | 39% | 28% |
| Karnataka | 51% | 59% | 41% | 29% |
| Rajasthan | 46% | 58% | 42% | 28% |
| NCT of Delhi | 43% | 57% | 43% | 29% |
| Rest of India | 38% | 49% | 50% | 35% |
CRISIL Foundation studied 1300 companies listed on BSE that were under the radar of the New Companies Act 2013. Out of these around 1,000 (approximately 75%) companies reported their CSR spend for the fiscal year 2015.
Cumulatively these companies spent over Rs 6,800 crore tantamount to 1.35% of their profit. The amount would have been higher by Rs 3,200 crore had these companies spent their 2% profit share. About 200 companies did not report about their CSR activities or were in advance stages of implementing their CSR activities.
According to CRISIL, if these companies had spent their shares too, another Rs 2000 crore could have been added to the CSR spent funds taking the total to Rs 12,000 crore As per the data provided by the CRISIL Foundation, smaller companies were more active in CSR spending as compared to the bigger corporate firms.
About 53% companies with annual sales turnover of Rs 100-500 crore spent CSR funds to the tune of 2% and above and only 31% companies with annual sales turnover of more than Rs 10,000 crore spent CSR funds worth more than 2% funds.
| Spending profile (% of profit) | % of companies (segmented on annual sales turnover | ||
| Rs 100-500 cr | Rs 500-10,000 cr | More than Rs 10,000 cr | |
| 2% or more | 53% | 50% | 31% |
| 1.5% or more | 62% | 59% | 47% |
| Less than 1.5% | 38% | 41% | 53% |
| Less than 1% | 26% | 29% | 36% |
“For the bigger companies, the challenge is the large size of their spending mandate so they need considerable time and effort to conceptualise and design processes to maximise outcomes,” the report read.
Most of the CSR funds were spend in concentrated sectors – Education and skill training, Healthcare and sanitation, Rural development projects and Environment conservation.
A combination of these four sectors resulted in 82% funds usage. Another factor the report showed is the seriousness of public sector companies in CSR spending. While 52% private sector firms spent over 2% of their profits in CSR, only 43% public sector units did it. As per the new rules regarding CSR in the Companies Act, 2013, all corporate firms having a net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more or a net profit of Rs 5 crore or more during any financial year are required to spend at least 2% of three preceding years’ average net profit.
The results are not great but are a good start towards imbibing social responsibility among all the corporate firms and partnering with them for a better India.
The fact that many companies not only from highly industrial states like Gujarat, Maharashtra and Tamil Nadu but also from West Bengal and Uttar Pradesh performed well and spent more than the national average is a motivational step for the rest of the country. With these positive results, we hope the second year of mandate implementation takes a good and high leap into development and prosperity.
