Slide 1

THE DEAL

Business

Mankind

CORPORATE SOCIAL RESPONSIBILITY
Mahavir International Delhi
6550, Main Qutab Road, Nabi Karim, Near Hanuman Mandir, New Delhi - 110 055 [INDIA]
(T) +91 - 11 -2351 0770, 2352 6502 | (M) +91 9910435554
(E) [email protected], [email protected]


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Corporate Social Responsibility

This is what it is
‘Corporate Social Responsibility is the continuing commitment by business to
behave ethically and contribute to economic development while improving the
quality of life of the workforce and their families as well as of the local community
and society at large’.
– World Business Council For Sustainable Development

Interpretation
(Expectation that business should)

Behave Ethically

Contribute to
Economic
Development

Improve the
quality of life of
its workforce and
their families

CSR- Business owes this to the society

Play active part
in the
improvement of
the society


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Corporate Social Responsibility

Need of the Hour
Developed countries like Sweden, Norway, Netherland, Denmark,
France has already espouse such practices.

Australia,

India on the path to be a developed nation should also adopt itself with
the same.


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Existing

1) Profit Maximization
2) Maximizing shareholders
wealth
3) Reinvesting in the
Business
Desired
1) Profit Optimization
2) Optimizing shareholders wealth
3) Reinvesting for growth of
Business
4)


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Corporate Social Responsibility

CSR-Talk of the Town
Mandatory under Law

Globalization

Factors

Increased Expectations of stakeholders
Awareness of the limits of Government
legislative

Awareness of Social and Environmental care
Sudden rise of CSR


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Corporate Social Responsibility

CSR – Everything that needs to be known
Benefits
• Winning new businesses
•Enhanced relationship with Stakeholders
•Attracting, Retaining & Maintaining strong
workforce
•Image Building
•Access to funding opportunities
•Increased customer retention

CSR initiatives may comprise
•Employee Focused Initiative
•Market Focused
•Product Focused
•Environmentally Focused
•Society Focused

Myths
•Too complicated and Technical
•Too expensive
•Mostly a market gimmick
•Separate corporate initiative
•Whatever being done is enough
•Being preventive is enough
•CSR is like charity
•Just a Piece of Legislation

Opportunity
• Develop people’s confidence in your
company
• Strong point of differentiation from
competitors
• Gain foothold in the industry
• Recognition and support from customers

There’s much more to it than we knew !


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Companies Bill -2013
Section
135 of the
2013 Act
Net profit
of Rs 5
Crore or
more

Turnover of Rs
1000 Crore or
more
OR

Net worth
of Rs 500
Crore or
more
OR

Shall constitute a CSR Committee
Through the mandatory provision expected
3000 companies would be covered & Rs.12000 Crore induced through CSR expenditure
activities


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Corporate Social Responsibility

Responsibility of the Board
Ensure that the activities are undertaken by the
company
Approve the CSR Policy & disclose contents in its report
& also place it on the company’s website
Ensure that company spends, in every financial year, at
least 2% of the average net profits made over 3
preceding years

“Average net profit” shall be calculated in accordance with the provisions of section 198
of the 2013 Act and for deciding the eligibility for CSR expenditure profit of overseas
branches and the dividend received from other companies in India will be excluded from
net profit criteria.
If the Company fails to spend such amount, the Board shall, in its report specify the
reasons for not spending the amount


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Schedule VII (Activities Covered)
1

• Eradicating hunger and poverty

2.

• Promoting education

3.

• Promoting gender equality and empowering women

4.

• Reducing child mortality and improving maternal health

5.

• Combating HIV ,malaria and other diseases

6.

• Ensuring environmental sustainability

7.

• Employment enhancing vocational skills

8.

• Social business projects

9.
10.

• Contribution to the Prime Minister's National Relief Fund or other funds set up by the
CG or the SG for socio-economic development
• Company shall give preference to the local area and areas around it where it operates

11.

• Livelihood enhancement projects

12.

• Steps for benefit armed forces veterans


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(Activities Not Covered)
Funds given to
political parties
directly or
indirectly


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Failing to spend on CSR under the 2
Percent Formula, a company and its
officers are subject to liability for not
explaining such a failure in the report
of the board of directors.

Failure to explain is punishable by a
fine on the company of not less than
50,000 rupees (about U.S. $900) and
up to 25 lakh rupees (about U.S.
$46,000).

Further, officers who default on the
reporting provision could be subject to
up to three years in prison and/or
fines of not less than 50,000 rupees
(about U.S. $900) and as high as
5 lakh rupees (about U.S. $9,200).


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Flaws in Laws
If the 2 percent allocation is not made in a given fiscal year, the CSR
committee has to submit an explanation to avoid being penalized

• An enforcement mechanism or penalties for non-compliance

• There is no discussion of what explanations would be legally valid,
opening up much room for corruption and extortion.

• There is no validation for the CSR spend to be genuine

CSR in India is dominated by the philanthropic approach rather than a collaborative approach


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Now a Million dollar
Question How to spent
money?


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Direct
involvement in
CSR project

Collaboration with
NGO/Registered
trust/Society

If Project cost is higher, then one or more companies
can join hand.


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Experience and exposure
Requisite infrastructure and resources
Suitable Manpower
Work Culture
Dedication (Main Stream)


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Health Care Facilities


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Experience and exposure
Requisite infrastructure and resources
Suitable Manpower
Work Culture
Dedication (Main Stream)
 Trust & Credibility
 Transparency
 Proven Track Record
 Highly Professional Think Tank having passion to serve
 Moto : ” Serve All Love All ”
 Service with Smile

 Approach to Deliver


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By Anil Kr. Jain
Vice Chairman
(E) [email protected]
Mahavir International Delhi