Energy sector emerges as the highest spender

GN Bureau | September 28, 2015


#Energy sector   #NTPC Ltd   #finance minister  


Energy companies spent the highest on corporate social responsibility (CSR) initiatives. The energy sector was followed by financial services and IT when it came to firms that committed to CSR.

With oil and gas companies being among the largest corporations in India by revenue and profit, they emerged as the highest spenders. They spent Rs.1,945 crore in 2014-15, or 38%. The telecom sector spent only Rs.51 crore, while it was expected to spend Rs.194 crore.

However, the consumer goods companies were, however, the only companies that exceeded the mandatory spending limit of 2% of annual profits.

Reliance Industries Ltd spent Rs.761 crore, the most by an Indian company, followed by state-run Oil and Natural Gas Corp. Ltd at Rs.495.2 crore and power producer NTPC Ltd at Rs.205 crore.

These companies focus areas are hunger, poverty, preventive health care, sanitation and safe drinking water. These activities consumed Rs.913 crore. Of that RIL’s spending on healthcare accounted for Rs.608 crore. For the rest, much of it would went toward Swachh Bharat Abhiyaan as most state-run firms were directed to spend on toilets by the ministry of public enterprises.

The sector also linked its CSR spending to business, allocating Rs.412 crore for environmental sustainability initiatives. This includes initiatives such as building rain-water harvesting structures, improving quality of soil, tree plantation among others.

The energy sector, however, did not spend the entire 2% of their combined net profits. It met only up to 89% of what they were supposed to spend. The financial services sector, even though it was the sector that spent the second highest on CSR with Rs.736.9 crore, fulfilled only 54% of what it was supposed to spend.

Financial services companies have spent the most on rural development, where they are mostly carrying out financial inclusion. While government banks are mandated to achieve financial inclusion by opening bank accounts in under-banked areas under the Jan Dhan Yojana, private banks have been asked to participate but not mandated to so.

The technology sector fared better than energy and financial services industries when it came to meeting the 2% spend. They spent Rs.656 crore, which is 91% of what they had to.

The sector focused on education and skill building initiatives, as nearly half the money was spent in this area.

TCS’s employees developed software in nine Indian languages for adult literacy programmes giving them free of cost to organizations such as Lucknow District Jail, HELP NGO in Hiriyur Karnataka and Tata Power Delhi Distribution Ltd, reaching out to as many as 231,178 adults.

“Being the initial year, the company was in the process of evaluating the focus areas and locations of intervention for CSR activities to cater to the pressing needs of society and deliver optimal impact,” said Bharti Airtel in its annual report.

It is not a violation of the law when a firm does not meet 2% spending target, but it is a violation if it does not report its spending and does not disclose why it failed to meet the target.

Consultants and the finance minister have speculated that FY 15 would see about Rs.14,000 crore in CSR spends; now it seems unlikely that the first year will see such a large amount.

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