A PROJECT ON EVALUATION OF CORPORATE SOCIAL

RESPONSIBILITY ACTIVITIES CONDUCTED IN INFOSYS

,HYDERBAD

CORPORATE SOCIAL RESPONSIBILTY

1.1 INTRODUCTION OF THE STUDY

Corporate social responsibility is the commitment of businesses to contribute
to sustainable economic development by working with employees, their
families, the local community and society at large to improve their lives in ways
that are good for business and for development.
CSR is not charity
CSR is the process by which an organization thinks about and evolves its
relationships with stakeholders for the common good, and demonstrates its
commitment in this regard by adoption of appropriate business processes and
strategies. Thus CSR is not charity or mere donations.
CSR is a way of conducting business, by which corporate entities visibly
contribute to the social good. Socially responsible companies do not limit
themselves to using resources to engage in activities that increases only their
profits. They use CSR to integrate economic, environmental and social
objectives with the companys operations and growth.
Constitution of CSR Committee
Every company including its holding or subsidiary, and a foreign company
defined under Section 2(42) having its branch office or project office in India,
which fulfils the criteria specified in Section 135(1) shall constitute CSR
committee. This means if a holding company satisfies the criteria, Section 135
shall be applied to its subsidiary even if it does not satisfy the eligibility
criteria. Similarly, if the subsidiary company satisfies the criteria, Section 135
shall be applied to its holding company even if it does not satisfy the eligibility

criteria. This Rule enlarges scope of Section 135. The provision applies to both
public company and private company.

Eligibility criteria
A company satisfies the eligibility test if any of following three criteria is
satisfied:
(i) Net worth Rs. 500 cr. or
(ii) Turnover Rs. 1000 cr.
(iii) Net profit Rs. 5 cr.
A foreign company shall compute net worth, turnover or net profit in
accordance with the Balance Sheet and Profit and Loss Account in accordance
with provisions of Section 381(1) and Section 198. Other companies shall
compute net worth, turnover or net profit in accordance with the Balance Sheet
and Profit and Loss Account in accordance with provisions of Section 129(1)
and Section 198. There is no need to make any change to the financial
statement and net profit computed in accordance with previous Companies Act.
Composition of CSR committee
A company shall constitute a CSR committee consisting of 3 or more directors
out of which at least one director shall be an independent director.
(i) An unlisted public company or a private company falling at the ambit of
Section 135(1) which is not required to appoint an independent director
pursuant to section 149(4) shall have its CSR Committee without such director.
(ii) A private company having only two directors on its Board shall constitute its
CSR Committee with two such directors.

With respect to a foreign company covered under these rules, the CSR
Committee shall comprise of at least two persons of which one person shall be
as specified under Section 380(1)(d) and another person shall be nominated by
the foreign company.[Section 380(1)(d): Every foreign company shall, within 30
days of the establishment of its place of business in India, deliver to the
Registrar for registration the name and address or the names and addresses of
none or more persons resident in India authorized to accept on behalf of the
company service of process and any notices or other documents required to be
served on the company.]
1.2.

IMPORTANCE OF CSR

Current times dont allow for companies to simply be in business for the sake of
making a profit anymore. While consumers may rely on corporations for goods
and services, the level of competition allows customers to make decisions based
on several factors, including (maybe surprisingly) how much good a corporation
is also doing outside of the workplace. Many individuals today are basing their
corporate loyalties on how companies are positively impacting their community

A Better Public Image

A corporations public image is at the mercy of its social responsibility
programs and how aware consumers are of them (remember, this is the biggest
obstacle education and awareness). According to a study by Cone
Communications, 9 out of 10 consumers would refrain from doing business
with a corporation if there existed no corporate social responsibility plan.
For example, if a company is heavily involved in the practice of donating funds
or goods to local nonprofit organizations and schools, this increases the
likelihood that a consumer will use their product. Additionally, if a corporation

takes

great

care

to

ensure

the

materials

used

in

its

products

are

environmentally safe and the process is sustainable, this goes a long way in the
eye of the public. Remember, consumers feel good shopping at institutions that
help the community. Clean up your public image (and broadcast it to the
world!)

Better and More Media Coverage

Going along with how the public sees your corporation, the amount of positive
media coverage a corporation receives is extremely important for business. It
doesnt matter how much your company is doing to save the environment if
nobody knows about it. As they say, its okay to toot your own horn every once
in a while. Make sure youre forming relationships with local media outlets so
theyll be more likely to cover the stories you offer them.
How much good a company can do in the local communities, or even beyond
that, is corporate social responsibility. And the better the benefits, the better
the media coverage.
On the other hand, however, if a corporation participates in production or
activities that bring upon negative community impacts, the media will also pick
this up (and unfortunately, bad news spreads quicker than good news). Media
visibility is only so useful in that it sheds a positive light to your organization.

Fosters a Positive Workplace Environment

This section is short and simple because its just common sense employees
like working for a company that has a good public image and is constantly in
the media for positive reasons. Happy employees almost always equal positive
output.

AN

OVERVIEW OF

CSR RULES

UNDER

COMPANIES ACT, 2013

The Ministry of Corporate Affairs has notified Section 135 and Schedule VII of
the Companies Act 2013 as well as the provisions of the Companies (Corporate
Social Responsibility Policy) Rules, 2014 to come into effect from April 1, 2014.
With effect from April 1, 2014, every company, private limited or public limited,
which either has a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or
net profit of Rs 5 crore, needs to spend at least 2% of its average net profit for
the

immediately

preceding

three

financial

years

on

corporate

social

responsibility activities. The CSR activities should not be undertaken in the

normal course of business and must be with respect to any of the activities
mentioned in Schedule VII of the 2013 Act. Contribution to any political party
is not considered to be a CSR activity and only activities in India would be
considered for computing CSR expenditure.
The net worth, turnover and net profits are to be computed in terms of Section
198 of the 2013 Act as per the profit and loss statement prepared by the
company in terms of Section 381 (1) (a) and Section 198 of the 2013 Act. While
these provisions have not yet been notified, is has been clarified that if net
profits are computed under the Companies Act, 1956 they needn't be
recomputed under the 2013 Act. Profits from any overseas branch of the
company, including those branches that are operated as a separate company
would not be included in the computation of net profits of a company. Besides,
dividends received from other companies in India which need to comply with
the CSR obligations would not be included in the computation of net profits of
a company.
The CSR Rules appear to widen the ambit for compliance obligations to include
the holding and subsidiary companies as well as foreign companies whose

branches or project offices in India fulfill the specified criteria. There is a need
for clarity with respect to the compliance obligations of a company as well as its
holding and subsidiary companies.
The activities that can be undertaken by a company to fulfill its CSR
obligations include eradicating hunger, poverty and malnutrition, promoting
preventive healthcare, promoting education and promoting gender equality,
setting up homes for women, orphans and the senior citizens, measures for
reducing inequalities faced by socially and economically backward groups,
ensuring environmental sustainability and ecological balance, animal welfare,
protection of national heritage and art and culture, measures for the benefit of
armed forces veterans, war widows and their dependents, training to promote
rural, nationally recognized, Paralympic or Olympic sports, contribution to the
prime minister's national relief fund or any other fund set up by the Central
Government for socio economic development and relief and welfare of SC, ST,
OBCs, minorities and women, contributions or funds provided to technology
incubators located within academic institutions approved by the Central
Government and rural development projects.
However, in determining CSR activities to be undertaken, preference would
need to be given to local areas and the areas around where the company ope