Six major companies spent over Rs 300 crore in the first year of operation of new CSR rules
GN Bureau | August 20, 2015
The Corporate Social Responsibility (CSR) law has changed the way companies approach their activities as many old sectors do not fall under CSR categories. However, the good news is that the consumer goods companies’ share in CSR sector has risen by 57% in 2014-15.
The CSR rules, came into force on 1 April last year under the Companies Act 2013 and companies with a net worth of Rs.500 crore or more or revenue of at least Rs.1,000 crore or a net profit of Rs.5 crore in a given fiscal year should spend 2% of the profit of the last three years on CSR activities.
In the first year of implementation, six major companies ITC Ltd, Hindustan Unilever Ltd, Nestle India Ltd, Godrej Consumer Products Ltd, Dabur Ltd, Emami Ltd spent Rs.343.2 crore. Their initiatives focused mostly in health, nutrition, livelihoods and sanitation, according a report published in Mint daily.
Most noteworthy contribution is by ITC Ltd. The company has doubled its CSR spending to Rs.214 crore.
It spent on soil conservation (Rs.31.45 crore) and livelihood initiatives (Rs.28.53 crore) where it trains dairy farmers and help set up of modern milk collection networks.
However, Nestle missed meeting the 2% CSR spend and its CSR spending fall in 2014. According to its annual report, Nestle India had to spend Rs.30.7 crore in 2014, but it spent only Rs.8.5 crore. Its CSR spend fell by 64% from Rs.23.9 crore in 2013.
From Rs.8.5 crore, Nestle donated Rs.5 crore to the Swach Bharat Kosh set up by the Central Government for the promotion of sanitation and making available safe drinking water. It spent Rs.1.5 crore on raising nutritional awareness among government school children around its eight manufacturing units.
In its annual report it said: “The company has been implementing societal activities since many decades. As per the strict interpretation of the new CSR rules, some of these initiatives may not be eligible under the 2% CSR spend.” It also said it has ensured that the cumulative spend on societal activities is over 2%
The other multinational Hindustan Unilever Ltd spent Rs.82.3 crore in fiscal 2015. HUL’s CSR spend grew 40% over a year ago, and spent Rs.2.5 crore more than the 2% limit. HUL has various CSR initiatives from water conservation programmes to skill building initiatives, and some of its initiatives are also closely tied to its businesses be it the Lifebuoy hand washing programme which creates awareness about handwashing to prevent diseases, or giving micro-loans to the poor to be able to buy their water purifiers, Pureit, according to its annual report.
HUL’s highest spend was in fact towards its Project Shakti. It spent Rs.46.5 crore during the year to train rural men and women called Shaktimaan and Shakti ammas to sell the company’s products and in turn become entrepreneurs. For that, the company trains them in basic accounting, selling skills and relevant IT skills.
The highest increase in CSR spend among the six firms was seen in Godrej, as its spending rose four times to Rs.16 crore during the year. Their CSR activities include development of renewable energy and livelihood creation.
Dabur, which met its 2% target by spending Rs.14.7 crore, showed a 29% drop in CSR spend versus last year. Many companies’ CSR spends will fall because much of what they were doing as CSR earlier won’t be considered as CSR under the new guidelines. The activities carried out by the companies should be listed in Schedule VII of Section 135 of the act.
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