CSR MandateIndia

“Era of Command and Control"

PRESENTATION FLOW

CSR- EVOLUTION AND UNDERSTANDING

CSR MANDATE

CSR FRAMEWORK

CSR- EVOLUTION AND UNDERSTANDING

Integrated CSR into a sustainable business

strategy

Industrialization had an influential effect on CSR

First PhaseTill 1850s

Second Phase1900s to 1980s

Third PhasePresent

Culture, religion, family values and tradition

“Era of Command and Control"

CSR is a way of conducting business, by which corporate entities visibly contribute to the social good.

CSR EVOLUTION IN INDIA

CSR - UNDERSTANDING

CSR AS VALUE CREATION

CSR AS PHILANTROPY

Innovation, Sustainable business models

Compliance with legislations

Contribute with money and knowledge

Fundamental strategic and operational impact

Medium to High Operational Cost

Little Strategic or Operational Effect

CSR AS RISK

MANAGEMENT

Three Different Understanding of CSR

CSR MANDATE

Clause 135 of the Companies Bill (the “CSR Clause”) requires a qualifying

corporation to spend on CSR at least 2 percent of its average net profits made in the preceding three financial years..

Bill is applicable to any company with...

A net worth of rupees

500 crore (about U.S. $90 million)

or more

A turnover of rupees

1000 crore (about U.S. $180 million)

or more

A net profit of rupees

5 crore (about U.S. $900,000) or more in any fiscal year

CSR MANDATE – COMPANY BILL 2013

WHAT ACCOUNTS AS CSR?

Eradicating Hunger

Promotion of Education

Gender Equality and Empowering Women

Reducing child mortality and improving maternal health

Combating human immunodeficiency virus,

other diseases

Ensuring Environmental Sustainability

Employment Enhancing Vocational Skills

Social Business Projects

Contribution to the Prime Ministers National Relief Fund

Such other Matters as may be prescribed

CSR MANDATE – POSITIVE IMPACT

Business can contribute to equitable and sustainable

economic development..

ONE-THIRD of the population is illiterate

TWO-THIRD lack access to proper sanitation

400 MILLION PEOPLE

still live on less than US$2 a day.

CSR MANDATE – NEGATIVE IMPACT

Indian companies still equate CSR with

CORPORATE PHILANTHROPY

Companies may treat it as a

“CHECK THE BOX” exercise rather than looking at ways to doing social and

environmental good.

Companies will comply by

CHANNELING FUNDS to community

organizations.

Effort to meet the spending obligations, companies may

not do the right

WHERE INDIAN COMPANY STANDS?

Company Revenue Avg PAT Actual Spent - CSR

2% of PAT

Indian Oil 442,459 7,783 83 156

Reliance Industries 368,571 21,138 288 423

Tata Steel 135,978 3,895 146 78

TCS 48,894 8,935 51 179

Grasim Industries 27,899 3,395 16 68

Cairn India 11,861 5,108 NA 102

HDFC Bank 27,606 4,108 NA 82

Oil India 17,215 2,988 50 60

Infosys 33,734 7,128 26 143

Source: Forbes India magazine of 22 March, 2013

Comparative Analysis on how much Indian firms are spending on CSR currently.

INDIA’S TOP 100 COMPANIES 2% of PAT – 5611 Crores

Actual Spent – 1765 Crores

CSR FRAMEWORK

EffectiveCSR

FRAMEWORK – CSR

Aligned with

Business Objectives

Sustainable

Compliance with

Company Bill Act

Result Oriented Scalable

Brand Visibility Social Capital Partnerships & Relationships

Business Opportunities Nation Building

PROCEDURE TO COMPANY

“CSR Committee”

Create ““Corporate Social

Responsibility Policy”

Develop

“CSR Initiatives to be Reported”

Report “Two percent of net

profit”

Allocate

*The two percent CSR spending needs to be computed as two percent of the average net profits made by the company during every block of three years.

Aswathaman Vijayanaswath9882@yahoo.in