CSR Policy

Introduction

Corporate Social Responsibility (CSR) and Sustainability is a Company’s commitment to its stakeholders to conduct business in an economically, socially and environmentally sustainable manner that is transparent and ethical.

Stakeholders include employees, investors, shareholders, customers, business partners, clients, civilians, government and non-government organizations, local communities, environment and society at large. Thus, the companies are expected to conduct themselves in a socially, economically and environmentally responsible manner at all times for the cause of the national and international interest.

In order to regulate the CSR obligations of companies, the Companies Act, 2013 and Rules thereunder provide for mandatory obligations to be complied by specified Companies. The Act requires framing of a Policy by the Company, which should be recommended by its CSR Committee and approved by Board of Directors.

Accordingly, after considering the present Policy document prepared, finalized and recommended by the CSR Committee of the Board, the Board of Directors of the company have approved the CSR Policy Document at its Board Meeting held for implementation.

Objectives

To comply with the provisions of Companies Act, 2013 and Rules framed thereunder, as amended from time to time (hereinafter referred to as the Act & Rules thereunder).

Scope

The scope of CSR Policy of the company will cover all stakeholders, which will also include socio-economic, environmental and health and social work activities for the society at large dwelling in the areas surrounding to or nearby the plants and offices of the company. The focus will be on community relief/benefits/welfare.

The CSR activities as are provided in the Schedule VII appended to the Companies Act, 2013 and amended by MCA and guidelines issued by DPE, NITI Ayog or other Government Authorities from time to time as under:

  • Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water.
  • Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.
  • Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.
  • Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga.
  • Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts.
  • Measures for the benefit of armed forces veterans, war widows and their dependents.
  • Training to promote rural sports, nationally recognised sports, Paralympic sports and Olympic sports.
  • Contribution to the Prime Minister's National Relief fund or any other fund set up by the central Govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women.
  • Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research and Development Organisation (DRDO), Department of Science and Technology (DST), Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).
  • Rural development projects.
  • Slum area development.

Initiatives

The CSR strategy will have fourfold initiatives as under:

  • Company may act as Promoter: In the first instance, the company will take up CSR activities on its own but within over-all budgeted funds as per provisions of the Act. However, such instances would be few, and shall mandatorily comply with all CSR guidelines and rules under the Act.
  • Company may act as a Partner: Company will be building up partnership with the Voluntary Bodies, Autonomous Bodies, Statutory Agencies, State and Central Government Agencies/PSUs, to take up Corporate Strategic Responsibility Projects on a sustainable basis. These partnering bodies shall be compliant of being registered under the Income Tax Act, 1961 for carrying out such not for profit activities, and should have also filed their Form CSR-1 with the Ministry of Corporate Affairs.
  • Company may act as Facilitator: Company may make contributions to various Socially Beneficial Projects in and around its factories and offices as well as in any part of India, in compliance with the provisions of the Act.
  • Company may act as a Consultant: Company may extend assistance in terms of technical expertise, managerial expertise, etc. to the welfare and developmental projects by other organizations registered under relevant laws to carry them out.

Analysis of Companies (CSR Policy) Rules, 2014

As per Rule 2(c) of Companies (Corporate Social Responsibility Policy) Rule, 2014 "Corporate Social Responsibility (CSR)"means and includes but is not limited to: (i) Projects or programs relating to activities, areas or subject specified in Schedule VII to the Act; or (ii) Projects or programs relating to activities undertaken by the Board of Directors of a Company (Board) in pursuance of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such policy will include activities, areas or subjects specified in Schedule VII of the Act as amended from time to time.

CSR Policy: Rule 2(e) of Companies (Corporate Social Responsibility Policy) Rules, 2014, states that "CSR Policy" relates to the activities to be undertaken by the company in areas or subjects specified in Schedule VII to the Act and the expenditure thereon, excluding activities undertaken in pursuance of normal course of business of a company. The CSR Committee constituted under section 135(1), shall prepare the CSR Policy of the company which shall include the following; (a) a list of CSR projects or programs which a company plans to undertake areas or subjects specified in Schedule VII of the Act, specifying modalities of execution of such project or programs and implementation schedules of the same; and (b) monitoring process of such projects or programs.

However, the CSR activities do not include the activities undertaken in pursuance of normal course of business of a company. Further, that the Board of Directors shall ensure that activities included by a company in its Corporate Social Responsibility Policy as amended from time to time are related to the activities, areas or subjects as specified in Schedule VII, as may be amended by Statutory provisions or Government directions, of the Act.

Important Provisions of the CSR Policy Rules

Under the Companies Act, Section 135 deals with the provisions of the CSR which has been mandated to certain categories and the provisions are as follows:

  • Section 135 (1) states that every company shall constitute a CSR committee if:
    • the net worth of such company exceeds Rs. 500 crores or more; or
    • having its turnover of Rs.1000 crore; or
    • a net profit of Rs. 5 crores in any financial year.
    Company shall a form a CSR committee of the Board consisting of 3 or more directors of the Board having at least one independent director.
  • Such Committee shall formulate the policy for CSR with respect to Schedule VII of the Act and suggest CSR expenditure to the Board under Section 135(3).
  • The Board of every company will review the CSR policy recommended by the committee and will approve the CSR policy of the company. The company is required to disclose the above policy on the company’s website too. The committee will ensure that company is following the approved policy in a proper manner.
  • The BOD of every company shall ensure that company spends at least two percent of the average Net Profit of the company during the last three financial years for executing the CSR policy. The company should give preference to the surrounding area for the social development.
  • If it is unable to incur specified amounts on CSR, the BOD shall specify the appropriate justification in its report under Section 134 (3) and the calculation of the Net Profit of past three stated above should be with respect to Section 198 of the Act.
  • The latest amendment of the Act in 2020 provides that if a company is found at default of not following the provisions under Section 135(5) then it shall be liable to pay twice the amount incurred in the activities of Schedule VII or the unspent CSR expenditure or the amount of Rs. 1 crore whichever is less. And the officer in default shall pay one- tenth amount spent for schedule VII or for unspent CSR or amount of Rs. 2 Lakhs whichever is less.

Budget Allocation

So far the net worth of the company remains Rs. 500 crores or more or Turnover remains not less than Rs. 1000 Crores or a Net Profit remains not less than Rs. 5 crores, the company shall earmark at least 2% of the Average Net Profit of the company made during the three immediately preceding Financial years towards CSR activities in compliance of the Provisions of the Companies Act, 2013.

The average net profit shall be calculated as per the provisions of the Section 198 of the Companies Act, 2013.