Spends ‘Nil’ against prescribed CSR budget of Rs2.94 Crore
New Delhi, 5 August 2020: The Bombay Dyeing and Manufacturing Company Limited has defaulted on its CSR obligation by not spending any amount on any CSR related activities in the year 2019-20. The company’s CSR Committee headed by Wadia Group successor Ness N. Wadia had an obligation to spend a total of Rs 2.94 Crore on CSR activities during the year.
The company reported an average net profit for last three financial years (2016-17, 2017-18 & 2018-19) at Rs 147.12 crore. Accordingly, as per the provisions of Section 135 of the Companies Act, 2013, the company was supposed to spend Rs 2.94 crore, calculated as 2% of the average net profit, on CSR activities.
However, the company did not undertake any CSR activities and did not spend any amount on its obligations Corporate Social Responsibility.
CSR Apathy: Missing Action at Bombay Dyeing
The company’s apathy towards the Corporate Social Responsibility (CSR) activities is evident from the fact that the CSR committee it formed to undertake its CSR commitments did not even meet once during the entire financial year.
This despite knowing the fact that the company had a CSR obligation to spent the prescribed amount as per the Companies Act 2013. The prescribed CSR budget is generally known to each company in the beginning of the financial year itself as the amount is based on the average net profit of the company over the last three years.
A Loose Approach and Questionable Intent
The company CSR policy states that "the CSR Policy of the Company has been formulated and adopted in terms of Section 135 of the Companies Act, 2013 and the Rules made thereunder. The Company undertakes CSR activities specified in Schedule VII to the Companies Act, 2013."
However, not only the action, but the intent of the company towards its CSR policy is also doubtful. The company also adopted a loose approach towards its CSR commitment.
IN THE YEAR 2018-19 ALSO, THE COMPANY HAD NOT SPENT ANY AMOUNT ON ITS CSR ACTIVITIES.
The CSR committee did not even meet once during the review period, still the "company decided not to spend any amount on CSR." The company said that it could not spend any amount on CSR activities during this financial year because of the Company’s businesses were affected adversely "due to the economic meltdown and the resultant downturn in Real Estate Industry."
This claim again contradicts with the financial statements of the company which stated that the company’s total Profit After Taxes stood at Rs 1229.98 Crore.
In the year 2018-19 also, the company had not spent any amount on its CSR activities. The company had cited a net loss in the three preceding years as the reason for not doing CSR activities in the year 2018-19.
Audacious CSR Claims
Despite falling flat on the CSR norms, the company’ CSR Committee made audacious claims that "the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and policy of the Company."
It also made a typed statement in its annual report 2019-20 saying that "the composition, powers, role and terms of reference ofthe Committee are in accordance with the requirements mandated under Section 135 of the Act."
But it was only towards the end of financial year that a resolution was passed by its CSR Committee on "contribution towards CSR activities during the financial year 2019-20.". According to the company documents, the meeting was held on March 20, 2020, just 10 days before the end of the financial year.
IN THE YEAR 2018-19 ALSO THE CSR COMMITTEE HAD MET ONLY ONCE AND THAT TOO IN THE 11TH MONTH OF THE FINANCIAL YEAR
In the year 2018-19 also the CSR Committee had met only once and that too in the 11th month of the financial year, indicating a low priority given to the CSR activities at the company.
The company’s CSR Committee is chaired by Mr. Ness N. Wadia who is also the Non-Executive, Non-Independent Director in the company.
The CSR Committee, according to the company policies, "reviews the existing CSR Policy from time to time and the activities to be undertaken by the Company towards CSR activities, recommends the project/programme to be undertaken, amount of expenditure to be incurred,roles and responsibilities of various stakeholders, etc.in respect of CSR activities and monitors for ensuring implementation of the projects/programmes undertaken or the end use of the amount spent by the Company towards CSR activities."
However, the policy document of the company and its commitment seems to be hollow and appear to be decorating its annual reports and CSR statements only.
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