HOW TO BENEFIT FROM CSR LAW Section135 of

HOW TO BENEFIT FROM CSR LAW (Section-135 of the Companies Act 2013) Presentation by Prof. Ranjan Mohapatra Chairman VISION GROUP 1. VISION CONSULTING: a premier corporate consulting firm 2. VISION FOUNDATION : a globally recognized Non-Profit society 3. CSR VISION : India’s first monthly magazine on CSR & Sustainability) April, 2014

ABOUT MANADATORY CSR PROVISION of Companies Act 2013 11/2/2020 2

FEATURES OF SECTION 135 of the Companies Act 2013 ; which makes CSR spending mandatory under â APPLICABILITY : â Net worth of -Rs. 500 crore or more, or more â Turnover of Rs. 1000 crore or more , or more â Net profit of Rs. 5 crore or more during any financial year shall constitute a Corporate Social Responsibility Committee Of the Board � COMPOSITION of CSR COMMITTEE : â Minimum 3 Directors of which at least 1 shall be Independent Director â ROLE & RESPONSIBILITY of the Committee: â To formulate and recommend to Board, a CSR policy for undertaking permissible activities â To recommend the amount of expenditure to be incurred on CSR activities â To monitor the CSR Policy 11/2/2020 3

FEATURES OF SECTION 135 of the Companies Act 2013 ; which makes CSR spending is mandatory under - Contd â The Board of every company referred to above shall after taking into account the recommendations made by CSR Committee: â approve the CSR Policy for the company and disclose contents of such Policy in its report and also place it on the company’s website, and ensure that the activities as are included in CSR Policy of the company are u ndertaken by the company, and â ensure that the company spends, in every financial year, at least 2 % of the average net profits made by the Company in a block of three (company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for CSR activities) � If the Company fails to spend such amount, the Board shall, in its report specify the reas ons for not spending the amount. � • “Average net profit” shall be calculated in accordance with the provisions of section 198 of the 2013 Act. � • For the purposes of S 135, net profit before tax as per books of accounts and Shall not include profits earned by branches outside India. 11/2/2020 4

SCHEDULE VII – PERMITTED CSR ACTIVITIES Activities which may be included by companies in their CSR Policies 1. eradicating extreme hunger and poverty; 2. promotion of education; 3. promoting gender equality and empowering women; 4. reducing child mortality and improving maternal health; 5. combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases; 6. ensuring environmental sustainability ; 7. employment enhancing vocational skills; 8. social business projects; 9. Contribution to the Prime Minister’s Minister's National Relief Fund or any other fund set up by the Central Government or the State Gove rnments for socio‐economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, , other backward classes, , minorities and women; and 10. such other matters as may be prescribed. 11/2/2020 5

POSSIBLE OPTIONS FOR CORPORATE INDIA to deal with the CSR law LOSS vs PROFIT 11/2/2020 6

OPTIONS FOR COMPANIES FALLING UNDER SECTION 135 1. COMPLYING with the LAW , ANY HOW , spending as less as possible or spending on AD-HOC CHARITY ( EXPENDITURE APPROACH – where CSR expenditure , whatever little goes down the drain- LOSS) 2. BENEFITTING OUT OF THE LAW by integrating CSR in to business processes. ( INVESTMENT APPROACH, where CSR spending goes in to an investment leading to benefits / PROFIT for the company in short, medium and long run) GAP IN BENEFITS BETWEEN THE TWO APPROACHES IS HUGE , BUT SECOND APPROACH NEEDS INTEGRATED EXPERTISE 11/2/2020 7

UNIQUE STRENGTHS of VISION GROUP and Prof. Ranjan Mohapatra 11/2/2020 8

PROFILE of Prof. Ranjan Mohapatra : Founder Chairman , VISION GROUP 1. 2. 3. 4. 5. 6. A seasoned management & development professional and a system thinker with more than 30 years of corporate , academic and consulting experience A pioneer in INDIAN CSR DOMAIN ( drafted CSR Guidelines , promoted the CSR guidelines in colloaboration with Govt. of India, published and edited India’s first CSR & Sustainability magazine) Consulting experience includes and Corporate Sector in India ( Public & private ) & abroad and the Social sector in India Domains of expertise in corporate sector include, Corporate Strategy , BPR, Change Management , PMS , Management Audit , Marketing Audit and CSR etc Domains of expertise in social sector include , Employment Generation / Livelihood, Social Audit , need assessment, programme design and impact assessment. Leading clients include the world bank , UN agencies , most of the Ministries of Go. I

CREDENTIALS and EXPERTISE with VISION GROUP CSR CREDENTIALS- VISION GROUP : VISION FOUNDATION for Development Management : ( Role in CSR law / policy making ) - Drafted the CSR the first mandatory CSR guidelines for the Public Sector companies ( Dept. Of Public Enterprises, Go. I , 2010) - Drafted the CSR Guidelines for the Corporate Affairs Ministry , Govt. of India - Drafted the CSR approach paper for the World bank, India VISION CONSULTING ( VISION Corporate Management Consulting (p) Ltd ): ( Role in CSR law / policy promotion in collaboration with Govt. of India ) - Organised national workshop in collaboration with the Dept. Of Public Enterprises, Go. I to launch CSR Guidelines in 2010 and 2013 Conducts national CSR workshops to promote CSR among corporate India Conducts in-house workshops for companies for supporting CSR internalisation CSR VISION : ( Voice of CSR Movement of India ) - India’s first monthly magazine on CSR & Sustainability - Being published since May 2012 11/2/2020 10

COMPREHENSIVE CSR SERIVES OFFERED by VISION GROUP 11/2/2020 11

COMPREHENSIVE OFFERINGS of VISION GROUP is in a unique position to provide an integrated CSR solution for BENEFITTING OUT OF CSR LAW by converting CSR EXPENDITURE in to an INVESTMENT including the followings; S. N Integrated CSR Services offered Expertise Agency of VISION GROUP 1. CSR strategy and planning as per law for integrating CSR with business and organisation processes Strategy Consulting VISION CONSULTING 2. CSR Training for bring the top, middle management on board and employees CSR training VC / VISION FOUNDATION 3. CSR Planning for Activity Selection and NGO / implementing partner selection Development projects and NGO partners , Need assessment survey VISION FOUNDATION 4. IMPLEMENTATION & Monitoring Project MIS and KRA monitoring VF 5. Impact Assessment Programme evaluation VF 6. Promotion of CSR activities Media CSR VISION 7 Reporting to Ministry of Corporate Affairs ( 11/2/2020 Registrar of Companies ) Accounting and Auditing VC 12

UNIQUE BENEFITS to CSR IMPLEMENTING COMPANY 11/2/2020 13

SUMMARY BENEFITS TO CSR IMPLEMENTING COMPANY 1. Reduction in wastage of funds in ad-hoc CSR projects – disconnected strategically to business interest 2. Improving employee motivation and reduction of employee turnover 3. Improving CEO image and goodwill 4. Improving corporate image / goodwill and attracting talent /manpower 5. Reduces risk in business 6. Helps accessing capital 7. Improving Consumer Trust and increase in sales 8. Improves community relations 9. Improving Corporate Performance – Bottom line 11/2/2020 14

MILES TO GO --------ARE WE READY ? ? ? 11/2/2020 15