Bengaluru: Corporate Social Responsibility is the new corporate buzz word and the Union Government has even enacted a law in this regard.
The bill, passed in August 2013, makes it mandatory for companies to spend two per cent of their profits on socially relevant activity. However a study by the Comptroller and Auditor General (CAG) revealed that most Central Public Sector Enterprises (CPSE) have failed in implementing it.
The findings stated that even profit-making companies listed among the Navratnas and Miniratnas are guilty of not complying with the law. And two of these CPSEs are in our backyard, Hindustan Aeronautics Limited (HAL) and Mangalore Refinery and Petrochemicals Ltd (MRPL). CAG assessed the CSR implementation by 76 CPSEs (seven Maharatna, 17 Navratna and 52 Miniratna Category-I) under the administrative control of 24 Ministries and departments for the period of one year ended March 31, 2016, and the findings do not show them in good light.
In its Report 6 of 2016, CAG states that test check of 65 CPSEs revealed that 21 out of 57 profit-making CPSEs, did not maintain information regarding actual expenditure from the prescribed amount of at least two per cent of the average net profits of the company made during the three immediately preceding financial years. The spending of nine CPSEs was below two per cent on CSR activities. Although the amount earmarked but unspent in a year can be carried forward for spending in the next financial year, many did not do so, and also did not bother to explain the reasons for not spending, although the law states that they are required to do so.
What is more, the companies are not monitoring the outcomes of the CSR. For instance, HAL had signed MoU with TERI for installation of solar panels in some schools and colleges. The monetary benefit generated through surplus power given back to Bangalore Electricity Supply Company Limited (BESCOM) was stated to be utilized by the beneficiaries for welfare activities. However there were no laid down procedures/guidelines for monitoring of the same by HAL/TERI.
As part of CSR, MRPL had sanctioned Rs 21.70 crore in 2012 towards construction of a wing in Lady Goschen hospital, Mangaluru. Since the profit after tax of MRPL for 2012-13 was negative, MRPL requested ONGC to chip in for the project and ONGC sanctioned Rs 12.78 crore.
Though the project started in March 2013 with initial investment of Rs 8.89 crore, there was no progress till July 2015. The project was resumed after a delay of 25 months. Till August 2016, only 64 per cent of the project is completed, CAG noted.
Despite being cash rich, (MRPL reported a net profit of Rs 1,942 crore for the fourth quarter of the financial year 2016-2017) and generating profits way beyond the government’s requirements for CSR activities, MRPL has lagged in its CSR contributions and so has HAL (which generated an all-time high turnover of Rs 16,524 crore in 2016)..
