When the GDP Magazine was gathering data on CSR spend, we decided to compile the actual CSR Expenditure figures of 200 prominent companies vis-a-vis CSR expenditure prescribed under the Companies Act, 2013 for FY17. Interestingly, 57 of these prominent 200 companies underspent a whopping Rs. 1,146 crore during FY17. This clearly gives an idea of the reluctance of companies to spend on CSR. On the positive side, 85 out of these 200 companies have overspent on CSR, reports Bureau in the Governance Democracy & Politics (GDP), 2nd Annual Issue on CSR
- Southeastern Coalfields, REC, Central Coalfields, HUDCO, IRFC, BHEL are among the top PSU CSR defaulters
- Bharti Airtel, HZL, HCL Tech, TCS, Axis Bank, Lupin, Aurobindo Pharma, ICICI Bank, Petronet LNG are among the top private CSR defaulters
Though it is quite encouraging to see many companies spending decent amounts on CSR and this figure is increasing year after year and the number of companies is also swelling on year on year basis, many big shots of Indian corporate world seem to be reluctant towards CSR spending. These companies appear to be finding escape routes to somehow evade mandatory CSR funding requirment. Interestingly, the ’Hall of Shame’ includes who’s who of India Inc. club like Bharti Airtel, TCS, Axis Bank and also big Maharatna and Navratna like BHEL and REC.
When the GDP Magazine was gathering data on CSR spend, we decided to compile the actual CSR Expenditure figures of 200 prominent companies vis-a-vis CSR expenditure prescribed under the Companies Act, 2013 for FY17. It was a cumbersome exercise as we had to study the individual annual reports of companies in addition to the MCA data available but it was necessary to nail down the CSR culprits. Interestingly, 57 of these prominent 200 companies underspent a whopping Rs. 1,146 crore during FY17. This clearly gives an idea of the reluctance of companies to spend on CSR. On the positive side, 85 of these 200 companies have overspent on CSR.
Bharti Airtel Tops Defaulters’ List
In our data analysis, Bharti Airtel topped the CSR defaulters’ list as the company spent just Rs. 5.58 crore during FY17 against Rs. 207.9 crore it was required to spend as per the Companies Act, 2013, defaulting by a big margin of Rs 202.32 crore. When we checked the Annual Report of Bharti Airtel to know the reason for this shortfall, we saw that the report clearly showed the amount unspent as Rs. 203.32 crore, though it said that the “company contributed Rs 89.942 crore to Bharti Foundation for promotion of education of underprivileged children under Section 35AC of the Income Tax Act, 1961 and further contributed Rs. 2.03 crore to various charitable institutions during the financial year 2016-17”. But the company took the benefit of Section 35AC of IT Act on such expenditure, so it is not treated as CSR expenditure. Considering this, the unspent amount still remains Rs, 202.32 crore. This really calls for urgent action by the management of the company as well as the MCA to look into the matter as action of big corporate like Bharti Airtel surely would have cascading effect on the action of other companies in the matter of CSR, where already companies are showing reluctance to spend on this head.
HZL, HCL Tech, TCS, Axis Bank And Lupin Were Other Prominent Private Defaulters
Another interesting picture emerged in our analysis. There are many companies which, though figuring in the top spenders’ list, turn out to be prominent CSR spending defaulters. IT major and Tata group company TCS is one such company which was third largest CSR spender with Rs. 380 crore CSR spend but it underspent Rs. 66 crore as it is required to spend Rs. 446 crore as per Companies Act, 2013. In the same way, Hindustan Zinc was the second biggest defaulter among private companies as underspent Rs. 126 crore. HCL Tech, pharma major Lupin, Shriram Transport Finance, Aurobindo Pharma and Bharti Infratel also figure in the list of big defaulters.
Interestingly, all major private banks fumbled in terms of CSR spend and this clearly shows the bad state of banking sector. The rising NPAs seem to have taken a toll on generosity and charity intent of bank managements and they are postponing the CSR spend. Axis Bank was the biggest defaulter in the private banking space with Rs. 61 crore underspent. Indusind Bank, ICICI Bank, HDFC and Muthoot Finance were the other big defaulters in the financial space.
This article is part of 2nd Annual Issue of GDP Magazine on CSR. Governance Democracy& Politics (GDP) Magazine’s Special Issue on #CSR Takes A Deep Dive on the state of CSR Spending. It has a regressive database of 6000+ companies on CSR Spending.
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