New Delhi, 9 August 2020: Retail major Shoppers Stop’s 50% CSR budget remained unspent during the financial year 2019-20. The company could not spend Rs 83 lakh of the total prescribed CSR budget of Rs 168 lakh during the year.
The company reported average net profit of Rs 84.14 crore over the last three financial years. Accordingly, the prescribed CSR budget, calculated as 2% of the average net profit of last three years, stood at Rs 1.68 crore.
"Pursuant to the provisions of Section 135 of the Act and Schedule VII thereto read with the Companies(Corporate Social Responsibility Policy) Rules, 2014,the prescribed CSR expenditure for the financial year 2019-20 amounts to Rs 1.68 crores. The CSR expenditure incurred by your Company amounts to Rs 0.85 crore," read the company’s annual report’s reference to the amount spent on CSR activities.
The company, however, hid its failure towards spending half of the overall CSR budget citing reasons that hardly stand scrutiny. Not only that, a concrete planning for spending the complete CSR budget during the year 2019-20 was also missing from the annual report filed by the company.
A lame excuse - COVID hampered CSR activity
A deeper analysis of the Shoppers Stop’s annual report revealed that the company kept half of its CSR budget to be spent in the last week of the financial year 2019-20. This raises doubts on company’s intent towards its CSR policies and objectives.
The reason for not spending the complete CSR budget was attributed to the Covid pandemic. The company said that its CSR activities were affected due to the lockdown clamped amid the Covid outbreak.
"The recycling of old clothes had to be suspended due to the pandemic Covid-19. During this time, the women were also immobile and could not make the sanitary napkins and the programme was stopped after the distribution of ready inventory to marginalised women in the villages," the annual report mentioned as the key reason for company’s inability to spend the remaining CSR budget.
However, the logic appears to be flawed as the lockdown happened only in last month of the financial year, that too towards the end of March.
It just seems that the company took the COVID crisis as the shield for not spending its prescribed CSR budget.
CSR budget outlay - Questionable Planning and Casual Approach
Though the company has a well-defined CSR policy document and a functional CSR committee also as mandated by Companies Act 2013, the ground reality reflects a casually working approach.
For example, the company claims that its CSR committee met 4 times in the years to plan and monitor its CSR activity.
"The CSR Committee confirms that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company," it said, adding, "the Corporate Social Responsibility Committee (CSRC) met 4 times, during the year under review i.e. on April 30, 2019, July 30, 2019,October 23, 2019 and January 31, 2020."
But even the basic budget outlay for the CSR activity failed to mention the plan for spending the prescribed CSR budget.
Further, the company boasted that it follows"a stringent governance process to review each of our CSR initiatives and assess their progress and impact on the community every quarter through our CSR Committee."
But it completely contrasts with the detailed CSR reporting where the budget outlay itself is for only half of the prescribed CSR budget. The financial record (taken from the annual report filed by the company) shows the CSR budget outlay for only half of the CSR budget. The CSR budget outlay is for Rs 85 lakh out of the total prescribed budget of Rs 1.68 crore.
*Source: Shoppers Stop Annual Report 2019-20
The annual CSR budget outlay of the company, as mentioned in its annual report, had no mention of 50 per cent of the prescribed CSR budget. Thus, not only the on-ground execution but the entire CSR planning of the company comes under the cloud.
With no justifiable reason for its unspent budget, the company just found an opportunity in the Covid crisis and named the pandemic in its annual report to cover its faltering CSR obligations.
