According to Pranav Haldea, MD of PRIME Database Group, while the increase in profits did increase the amount required to be spent, these companies had already been spending more than what was required
The number of companies which spent on CSR went up to 1271 (98% of the 1296 companies) in 2022-23 from 1191 (98%) in 2021-22.
Spending on Corporate Social Responsibility (CSR) by companies listed on the NSE main board increased by 5% to Rs 15,524 crore in financial year 2022-23 (FY23) against Rs 14,816 crore in FY22, according to primeinfobase.com. This came on the back of a 13% rise in the average net profit (of the preceding 3 years) of these companies, 2% of which needs to be spent on CSR activities as per regulatory requirements.
CSR activities can include things like donating to charity, volunteering in the community, reducing their environmental impact, or supporting social causes like education or healthcare. It’s all about businesses recognising their role in making the world a better place and taking action to make positive changes
According to Pranav Haldea, Managing Director, PRIME Database Group, while the increase in profits did increase the amount required to be spent, these companies as a whole had already been spending more than what was required to be spent in the previous 3 years (from 2019-20 till 2021-22). Thus, the increase in the amount spent in 2022-23 was not as significant.
The CSR law, which came into force in April 2014, mandates companies, subject to the provisions of the Act, to invest 2% of their net profit in CSR projects. Companies with a net worth of Rs 500 crore and above or revenue of Rs 1,000 crore and above or net profit of Rs 5 crore and above have to spend 2% of the average net profits of the last three years.
According to Haldea, it is also time that the government considers revising these thresholds upwards given the passage of time and “ease of doing business”. The average 3-year net profit of companies listed on the NSE has almost doubled from Rs 4.18 lakh crore in 2014-15, the first year of this regulation, to Rs 8.14 lakh crore in 2022-23.
Accordingly, the thresholds may now be revised upwards to keep the relatively smaller companies out of the purview of this regulation, which was the original intent as well.
According to primeinfobase.com, 1,893 companies were listed on the NSE main board as of March 31, 2023. Of these 1,893 companies, annual reports for 2022-23 have been released by 1,854 companies. Of these 1,854 companies, 1,830 had details relating to CSR given in the annual reports, while no such details were available for the balance 24. Finally, of the 1,830 companies, 1,296 were obligated to spend on CSR, up from 1,214 companies in 2021-22.
The number of companies which spent on CSR went up to 1271 (98% of the 1296 companies) in 2022-23 from 1191 (98%) in 2021-22. The balance of 25 firms, despite being mandated, did not spend anything. The top 10 companies in terms of CSR spend in FY 2022-23 include HDFC Bank (Rs 820.89 crore), TCS (Rs 783 crore), Reliance Industries (Rs 744 crore), Tata Steel (Rs 480.62 crore), ONGC (Rs 475.89 crore), ICICI Bank (Rs 462.66 crore), Infosys (Rs 391.51 crore), ITC (Rs 365.50 crore), Power Grid (Rs 321.66 crore) and NTPC (Rs 315.32 crore). These companies together spent 33% of the total spend on CSR in FY23.
The data further highlighted that there were 48 companies, which despite reporting an average loss in the past three years, spent on CSR. Some of the companies on the list include Tata Motors, IDFC First Bank, MRPL, CPCL, BHEL, Jaiprakash Ventures, Aditya Birla Fashion & Retail, MSP Steel & Power, Star Health & Allied Insurance and Patel Engineering.
PSU spending on CSR activities saw a fall of 17% from the previous year. As many as 56 PSUs spent Rs 3,136 crore in 2022-23, down from Rs 3,766 crore spent by 59 PSUs in 2021-22.
The top states which received maximum CSR spend include Maharashtra (Rs 355.78 crore), Rajasthan (Rs 344.19 crore), Gujarat (Rs 193.39 crore), Tamil Nadu (Rs 185.68 crore), Chhattisgarh (Rs 167.83 crore), Uttar Pradesh (Rs 156.82 crore), Haryana (Rs 154.10 crore), Telangana (Rs 147.63 crore), Odisha (Rs 140.08 crore) and Karnataka (Rs 123.91 crore).
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