According to Indian Institute of Corporate Affairs, a minimum of 8,000 listed Indian companies ( out of the 13.5 lakh odd registered companies) will be required to undertake CSR projects in order to comply with the provisions of the Companies Act, 2013 with many companies undertaking these initiatives for the first time. Further, some estimates indicate that CSR commitments from companies can amount to as much as 22,000 crore INR from FY 2014-15. Going ahead, even by conservative GDP growth estimates, the number of companies likely to come under the ambit of this mandate is likely to grow exponentially.

The CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore INR and more, or a net worth of 500 crore INR and more, or a net profit of five crore INR and more, with a mandate to spend 2% of average net profits over previous 3 years. This has to be driven by a Board CSR committee of at least 3 members, with 1 being an Independent Director. Curr...
According to Indian Institute of Corporate Affairs, a minimum of 8,000 listed Indian companies ( out of the 13.5 lakh odd registered companies) will be required to undertake CSR projects in order to comply with the provisions of the Companies Act, 2013 with many companies undertaking these initiatives for the first time. Further, some estimates indicate that CSR commitments from companies can amount to as much as 22,000 crore INR from FY 2014-15. Going ahead, even by conservative GDP growth estimates, the number of companies likely to come under the ambit of this mandate is likely to grow exponentially.

The CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore INR and more, or a net worth of 500 crore INR and more, or a net profit of five crore INR and more, with a mandate to spend 2% of average net profits over previous 3 years. This has to be driven by a Board CSR committee of at least 3 members, with 1 being an Independent Director. Currently only a handful of companies are meeting this 2% targets, with exceptions like Tata Steel,HPCL,JSW Steel being exceptions. Also in terms of sectors towards which investment is flowing, education/skill development and healthcare garner the lion’s share (almost 35%) with rest of the sectors having a huge gap.

Arising from the above scenario, the pain points and hence opportunity, as we identify are multi fold:

• When mandated to spend 2% of net profit and driven by Board level, the need to integrate CSR strategy with business strategy will be paramount and it will be imperative to measure ROI/ SROI on this spend due to pressure from shareholders.

• Secondly, given the unorganized, fragmented nature of the market ( implementation partners/NGO’s numbering 3.3 million), the corporate sector would find it difficult to systematically channelize such large investments without compromising on quality and compliance issues

• Transparency and governance in CSR investments is a major pain point, due to which the Indian Government is the first globally, to mandate such a “comply or explain” for the corporate sector.

• There is lop sided investment in certain sectors while other sectors have quality gaps, due to a nonexistent marketplace of matching “givers” with “ recipients”, on criteria of geography, sectors, projects handled, capabilities, professionalism and measurement of outcomes.

• NGO’s do not have a simple, cost effective method of showcasing their strengths and capabilit
More information