Maharashtra emerges as CSR hub

Bengaluru: Maharashtra emerged as the biggest beneficiary in the first year of mandated corporate social responsibility (CSR) under the Companies Act, 2013, with at least Rs.677.56 crore being spent by 53 of the 85 National Stock Exchange (NSE)-listed companies surveyed by NextGen, a CSR management firm.

The strong presence of manufacturing facilities across the state, in addition to much of corporate India having Mumbai as their headquarters, has resulted in more than 50% of the top 100 companies by market capitalisation on NSE deploying their CSR spends in Maharashtra in one way or the other.

Out of the 100 NSE companies, 85 released reports detailing their CSR spends by 14 September, the cut-off date for data collection. The remaining 15 companies have either not released their annual reports or follow a different financial year.

The island territories of Lakshadweep and Andaman and Nicobar had little or no exposure to CSR spends.

Data analysis by NextGen, based on the reports of companies, showed that CSR capital is concentrated in developed states with a strong manufacturing presence such as Maharashtra, Tamil Nadu, Gujarat, Andhra Pradesh, Rajasthan and Karnataka. These states are also among those with the highest gross state domestic product.

Another reason for these states being favoured by companies is because of the vast network of NGOs that work in them. “Maharashtra and Gujarat have the largest number of NGOs working at the grass-roots level. They already have a degree of professionalism, which makes companies flock to them,” pointed out Noshir Dadrawala, chief executive officer (CEO) of Mumbai-based Centre for Advancement of Philanthropy, a CSR consultancy.

While the increase in CSR budgets has resulted in some companies expanding the geographies they are present in, most choose to spend in areas where they have a business presence.

Car maker Tata Motors Ltd, for instance, primarily conducts its CSR initiatives of skill building at its manufacturing locations in Maharashtra, Jharkhand, Uttarakhand, Uttar Pradesh, Karnataka and Gujarat. It is now taking its efforts to Kerala, Tamil Nadu, West Bengal and Assam. Here, the firm will work with dealers to train school dropouts in automotive skills with assured placement. “To have sustained CSR across the country we are doing it along with dealerships. We can have an extended reach this way and will also be able to leverage multi-stakeholder partnerships,” said Vinod Kulkarni, deputy general manager, CSR, Tata Motors.

Pharma company Lupin Ltd, on the other hand, started out in states such as Rajasthan and Uttarakhand, where it did not have a presence in terms of manufacturing sites, and is now expanding to 11 manufacturing locations.

“Initially, in 1988, we chose areas that had weak human development indicators with respect to health, education and income,” said Sita Ram Gupta, executive director, Lupin Human Welfare and Research Foundation, through which the firm carries out its CSR activities.

As its CSR allocation grew from Rs.14.52 cr in 2013-14 to Rs.39.6 crore in 2014-15, Lupin began initiatives such as skill development and rural infrastructure development, and medical outreach initiatives such as tuberculosis detection to all of its 11 manufacturing locations in Maharashtra, Jammu and Kashmir, Andhra Pradesh, Goa and Gujarat.

But why carry out CSR in states as developed as Gujarat or Maharashtra where multiple companies are present?

CSR heads of companies feel there is plenty to be done even in developed states. “Even if five companies work in one district, very rarely do they cross paths given the magnitude of the problems,” said Anirban Ghosh, vice-president-sustainability, Mahindra & Mahindra Ltd. Mahindra is one of the five major auto companies that have a presence in Chakan, an auto hub in Pune.

Besides developed states, resource-rich locations such as Odisha and Chhattisgarh are also able to attract a fair number of companies—26 and 17, respectively—thanks to the overwhelming presence of metals and mining units.

“Unlike the services sector, which does not have a physical footprint, all extraction companies have a large physical footprint. It is our responsibility to mitigate the impact we have on the environment and communities in these geographies,” said Biren R. Bhuta, chief, CSR, Tata Steel Ltd.

All of these companies resettle and rehabilitate those displaced as part of their business, and organisations such as the Vedanta Group focus most of their CSR efforts on the geographies that they affect.

“Resettlement and rehabilitation requires us to ensure that every displaced individual/family or community in and around operations are provided for adequately. This includes building residential colonies, ensuring power, water supply and also creating employment opportunities. The company’s CSR programmes are designed to provide long-term positive impact for community development with a focus on education, health, livelihood and environment,” said Roma Balwani, president-sustainability and CSR, Vedanta Group.

Besides giving back to society, CSR is a business imperative, said Bhuta. Moreover, states that are rich in resources are also those that have a lot of poverty, so there is a lot of opportunity for these companies for doing CSR, he added. Tata Steel and Vedanta spent Rs.171 crore each in financial year 2015.

Most of the north-eastern states saw less than 10 companies contributing to each of them. The exception was Assam, which saw 17 companies carrying out CSR.

There is a business logic when a company chooses a state. The areas need to be a growth market for the company. “It is the truth of economics that the rich states grow richer,” said Ghosh.

Some states have been very active in wooing firms. Maharashtra and Karnataka asked corporates to contribute to areas such as drought relief and tourism. The Gujarat government even set up a dedicated department called Gujarat CSR Authority (GCSRA) in June, to help companies do CSR in the state.

“It is estimated that there are about 13,000 companies in the state. Of them only 2,000 have the capacity to do their own CSR. So we set up this department to help the rest,” said Prabodh Swain, senior project manager, GCSRA.

The state is also putting together a list of approved NGOs for companies to choose from, Swain added.

Maharashtra is also looking to set up a similar department, according to a Press Trust of India report on 24 August. Jharkhand too set up a CSR council in April this year and has asked companies to invest in skill development, sanitation, healthcare and education.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.