The much hyped Corporate Social Responsibility (wp) mandate came out with highly depressing results in its first financial year with only 7 of the 30 Sensex companies complying with the new rule. Most top notch companies failed to spend the mandated 2% profits on social responsibility in time.
The 30 companies listed on Sensex were mandated to spend a total of about Rs 5,000 crore on social activities under the new Companies Act. But an estimated amount of Rs 3,500 crore has only been spent. Most companies missed on their targets by one third on an average of their 2% mandatory requirements.
India became the first country to have mandated wp last year but it looks like the companies have not taken the new rule quite seriously. Collectively, these 30 companies are estimated to have booked a three year net profit of Rs 2.5lakh crore, of which 2% was supposed to be spent on wp initiatives.
In the first year of mandating wp, the 7 companies making it to the success list are Mukesh Ambani’s Reliance Industries Ltd (RIL), ITC, Mahindra and Mahindra, Wipro, Hindustan Unilever, Tata Steel and Coal India. Infosys managed to meet the target after a delay of few days for a meager amount of Rs 3 crore.
Many public sector companies too failed in meeting their wp targets including banking giant SBI, GAIL and ONGC. Some of the companies that failed in spending 2% of their profits are HDFC Bank, Axis Bank, Dr Reddy’s, Bajaj Auto, Bharti Airtel, Hero Motocorp, Larsen and Toubro and others.
The highest spender on wp initiatives was RIL with an amount of Rs 761 crore among the Sensex companies during 2014-15 – the first financial year of the new Companies Act. Companies will not be penalized for missing their wp targets, but they would be required to explain the reasons for its failure to spend at least 2% profit on wp. The government has set up a six-member panel to suggest steps for improved monitoring of social welfare activities done under the Companies Act.
Courtesy: Zee News