Natarajan Chandrasekaran Tata Consultancy Services, India’s largest information technology service and consulting company, has been unable to comply with the corporate social responsibility law in all the five years of the regulation’s existence. The company’s CSR spends in each of the years during 2014-15 to 2018-19 have been less than the prescribed amount mandated under the law. TCS in its annual reports stated multi-year projects as the reason for the unspent money.YEARPrescribed Spends (RS CR)TCS Actual Spends (RS CR) 2018-195424342017-184974002016-174463802015-163602942014-15285218Source: TCS Annual reports, nseinfobase.com
Companies with certain criteria, are mandated to spend two per cent of their average profits every financial year, made during three immediately preceding financial years, in corporate social responsibility work. The CSR regulation is defined under Section 135 of the Companies Act, 2013. The law is applicable for firms with networth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more or a net profit of Rs 5 crore or more. India is the first country to make CSR mandatory.
“During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, standards etc. mentioned above. The Company has spent an amount of Rs 434 crore against the amount of Rs 542 crore to be spent during the year towards Corporate Social Responsibility,” — TCS 2018-19 Annual Report.
“Company spends amount on projects keeping in mind sustainability, impact on the desired recipients, and efficacy of implementing agencies. Considering the multi-year projects, total amount to be spent and the extent of due diligence to be performed, the Company is focusing on select projects to ensure maximum impact to society. The Company also spends actively in various communities and on social initiatives in the countries it operates in. These expenditures, while in the nature of CSR spend, do not qualify under Section 135 of the Companies Act 2013. The total CSR spend of the Company for FY 2019 including both the nature of expenses is Rs 527 crore,” —TCS 2018-19 Annual Report.
“During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, standards etc. mentioned above. However, the Company has spent an amount of Rs 380 crore against the amount of Rs 446 crore to be spent during the year towards Corporate Social Responsibility,” — TCS 2016-17 Annual Report.
“During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards etc. mentioned above. However, the Company has spent an amount of Rs 294 crores against the amount of Rs 360 crores to be spent during the year towards Corporate Social Responsibility,” — TCS 2015-16 Annual Report.
TCS Chairman N Chandrasekaran was a member of the High-Level Committee on corporate social responsibility which was constituted last year to review the framework for CSR regulation. It was headed by corporate affairs secretary Injeti Srinivas.
Chandrasekaran is also the Chairman of the CSR committee at the TCS. All liable firms under the law are mandated to constitute a board level committee on CSR.
TCS did not comment on the ETCFO’s detailed questionnaire seeking the company’s comments on its CSR spends being lower than the prescribed, and if it received any notice or not from the concerned authorities on the same.
The CSR compliance hit a four-year record low in the financial year 2017-18, the High-Level Committee Report of 2018, quoted above, showed. The total CSR spends with respect to the prescribed amount for the total number of companies liable for the regulation was 57 per cent in 2017-18. This total number of CSR spends as a percentage of prescribed amount for the total number of companies liable for the regulation was 72 per cent in 2016-17, 85 per cent in 2015-16, and 59 per cent in 2014-15. The sample size of the companies in the report was some 10,000 plus. The data wasn’t available for the financial year 2018-19.
The non-compliance hit a record low even as the total number of companies liable for the CSR regulation reached an all-time high. A total of 21,337 companies were liable for the CSR regulation during the year 2017-18, the same High-Level Committee Report mentioned above showed. This number was 19,532 in 2016-17, 18,290 in 2015-16 and 16,548 in 2014-15.
The CSR spends though showed a mixed trend. The expenses were Rs 13,326 crore in 2017-18, down from over Rs 14,000 crore in preceding two years of 2016-17, and 2015-16. The CSR contribution was lowest in 2014-15 at Rs 10,065 crore, when the regulation had just come.
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