135.

Corporate Social Responsibility

(1) Every company having net worth of rupees five hundred crore or more, or
turnover of rupees one thousand crore or more or a net profit of rupees five crore or more
during any financial year shall constitute a Corporate Social Responsibility Committee of the
Board consisting of three or more directors, out of which at least one director shall be an
independent director.
(2) The Board's report under sub-section (3) of section 134 shall disclose the
composition of the Corporate Social Responsibility Committee.
(3) The Corporate Social Responsibility Committee shall,—
(a) formulate and recommend to the Board, a Corporate Social Responsibility
Policy which shall indicate the activities to be undertaken by the company as
specified in Schedule VII;
(b) recommend the amount of expenditure to be incurred on the activities referred
to in clause (a); and
(c) monitor the Corporate Social Responsibility Policy of the company from time
to time.
(4) The Board of every company referred to in sub-section (1) shall,—
(a) after taking into account the recommendations made by the Corporate Social
Responsibility Committee, approve the Corporate Social Responsibility Policy for the
company and disclose contents of such Policy in its report and also place it on the
company's website, if any, in such manner as may be prescribed; and
(b) ensure that the activities as are included in Corporate Social Responsibility
Policy of the company are undertaken by the company.
(5) The Board of every company referred to in sub-section (1), shall ensure that the
company spends, in every financial year, at least two per cent. of the average net profits of
the company made during the three immediately preceding financial years, in pursuance of
its Corporate Social Responsibility Policy:
Provided that the company shall give preference to the local area and areas around it
where it operates, for spending the amount earmarked for Corporate Social Responsibility
activities:
Provided further that if the company fails to spend such amount, the Board shall, in its
report made under clause (o) of sub-section (3) of section 134, specify the reasons for not
spending the amount.
Explanation.—For the purposes of this section “average net profit” shall be calculated
in accordance with the provisions of section 198.

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 fulfil 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 fulfil 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 operates.

To formulate and monitor the CSR policy of a company, a CSR Committee of the Board needs to be constituted. Section 135 of the 2013 Act requires
the CSR Committee to consist of at least three directors, including an independent director. However, CSR Rules exempts unlisted public companies
and private companies that are not required to appoint an independent director from having an independent director as a part of their CSR
Committee and stipulates that the Committee for a private company and a foreign company need have a minimum of only 2 members.

A company can undertake its CSR activities through a registered trust or society, a company established by its holding, subsidiary or associate
company or otherwise, provided that the company has specified the activities to be undertaken, the modalities for utilization of funds as well as the
reporting and monitoring mechanism. If the entity through which the CSR activities are being undertaken is not established by the company or its
holding, subsidiary or associate company, such entity would need to have an established track record of three years undertaking similar activities.

Companies can also collaborate with each other for jointly undertaking CSR activities, provided that each of the companies are able individually
report on such projects.

A company can build CSR capabilities of its personnel or implementation agencies through institutions with established track records of at least
three years, provided that the expenditure for such activities does not exceed 5% of the total CSR expenditure of the company in a single financial
year.

The CSR Rules specify that a company which does not satisfy the specified criteria for a consecutive period of three financial years is not required to
comply with the CSR obligations, implying that a company not satisfying any of the specified criteria in a subsequent financial year would still need
to undertake CSR activities unless it ceases to satisfy the specified criteria for a continuous period of three years. This could increase the burden on
small companies which do not continue to make significant profits.

The report of the Board of Directors attached to the financial statements of the Company would also need to include an annual report on the CSR
activities of the company in the format prescribed in the CSR Rules setting out inter alia a brief outline of the CSR policy, the composition of the CSR
Committee, the average net profit for the last three financial years and the prescribed CSR expenditure. If the company has been unable to spend
the minimum required on its CSR initiatives, the reasons for not doing so are to be specified in the Board Report.

1. Reliance Industries Ltd

Project Details: DA Scholarships, Community Development, Reliance University, Initiatives Digitisation of education initiative, Education –
Partnerships, Education- at manufacturing locations.
Implementation By: Reliance Foundation

Amount spent: INR 215 Cr

Location: Across India

For Reliance, education and skill development are the cornerstones of a progressive society and it has continuously provided quality education.

Reliance seeks to provide quality education, training and skill enhancement to improve the quality of living and livelihood. The Company focuses on
promoting primary and secondary education, enabling higher education through scholarships, promoting higher education through setting up and
supporting universities and skill development through vocational training.

a. Dhirubhai Ambani Scholarship Programme

The Dhirubhai Ambani Scholarship (DAS) Programme aims to fulfil late Shri Dhirubhai Ambani’s vision of providing opportunities to the youth and
empowering them towards becoming future leaders.

b. Reliance Dhirubhai Ambani Protsaham Scheme

Reliance Dhirubhai Ambani Protsaham Scheme supports financially poor and meritorious students (Class X pass-outs).

c. Education For Specially-Abled Children

Reliance has set up an Early Intervention and Rehabilitation Centre in Thallarevu, Andhra Pradesh to facilitate and enhance the development process
of children with speech and hearing impairment.

Estimated Impact: 687 meritorious students were given scholarships to pursue higher studies (over 12,000 since inception). Quality education was
provided to 85,000 students through six ‘Education for All’ NGOs (70,000 students and 13 Reliance Foundation Schools (15,000 students). Student
from marginalised communities got access to better education and skill development. 687 meritorious students were given scholarships to pursue
higher studies (over 12,000 since inception).

Mahindra & Mahindra

Key CSR Areas: Focus on the girl child, youth and farmers through programmes in the domains of education, public health and
environment. Mahindra Pride Schools provide livelihood training to youth from socially and economically disadvantaged communities
and have trained over 13,000 youth in Pune, Chennai, Patna, Chandigarh and Srinagar. M&M sponsors the Lifeline Express trains that
take medical treatment to far flung communities. Then there's Project Hariyali, which has planted 7.9 ..