Home CATEGORIES Business Ethics & Philanthropy CSR news: Company fined Rs 1 crore by RoC Mumbai for not...
The Registrar of Companies (RoC), Mumbai region has reportedly imposed a whopping amount of Rs 1 crore as penalty on RHI Magnesita India Ltd, a leading supplier of high-grade refractory products for allegedly failing to utilise its Corporate Social Responsibility or CSR funds.
According to a news report, the RoC has penalised the company for violations and non-compliance on unspent CSR funds. Apart from a penalty of Rs 1 crore on the company RHI Magnesita India Ltd, penalties of Rs 2 lakh each have been allegedly imposed on CEO & Managing Director Parmod Sagar and a few other senior members of the management, for violations of provisions under section 135 of the Companies Act.
The Companies Act, 2013
The Companies Act, 2013 provides for CSR under section 135. Thus, it is mandatory for profit-making companies covered under section 135 to comply with the CSR provisions in India. Companies are required to spend a minimum of 2% of their net profit over the three preceding financial years as CSR.
According to the Central Government’s amendments of the rules governing corporate social responsibility and unspent CSR funds in September 2022, amounts remaining unspent in a particular FY relating to an ongoing project as well as any unutilised surplus arising from the CSR activities are required to be deposited by the company in a bank account called the ‘Unspent Corporate Social Responsibility Account’.
Failure to transfer unspent amount
The report further states that the company RHI Magnesita India Ltd was expected to transfer its unspent CSR funds – of Rs 1,35,40,799 – until March 2021, to any of the prescribed funds listed by the government, within six months. But RHI Magnesita had allegedly deposited only Rs 32 lakhs by the due date. Also, the company had reportedly failed to transfer the unspent CSR amount of Rs 1,03,40,799 to the prescribed funds by September 2021.
Company Secretary Sanjeev Kumar, the authorised representative of RHI Magnesita India Ltd in meeting with the Mumbai RoC has reportedly offered an explanation that the delay in spending the CSR funds was due absence of employees affected by Covid-19 pandemic.
What is RHI Magnesita India Ltd.
RHI Magnesita India Ltd. is born out of integration of three Indian subsidiaries of RHI Magnesita Group – RHI Clasil, RHI India and Orient Refractories Ltd. RHI Magnesita India is a leading supplier of high-grade refractory products, systems and solutions in a wide range of industries, including steel, cement, non-ferrous metals and glass. Headquartered in Gurugram, the company has plants in Rajasthan’s Alwar, Visakhapatnam in Andhra Pradesh and Cuttack in Odisha.