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CS Professional · CSR and Social Governance · Guidelines on CSR

Kaveri Pharma Ltd, a private company, has for the immediately preceding financial year a net worth of Rs 300 crore, turnover of Rs 600 crore and net profit of Rs 6 crore. Its board asks whether the statutory CSR regime that began on 1 April 2014 applies. What is the correct position?

CSR applies to Kaveri Pharma. The thresholds of net worth Rs 500 crore, turnover Rs 1000 crore or net profit Rs 5 crore are alternative, and its net profit of Rs 6 crore satisfies one of them. Failing the other two does not matter, and private companies are not exempt.

  1. AIt applies, because meeting any one of the net worth, turnover or net profit thresholds is enoughCorrect
  2. BIt does not apply, because the net worth is below Rs 500 crore
  3. CIt applies only if all three thresholds are met
  4. DIt does not apply, because private companies are exempt from CSR

Explanation

The thresholds are net worth of Rs 500 crore or more, turnover of Rs 1000 crore or more, or net profit of Rs 5 crore or more, and meeting any one is enough. Net profit of Rs 6 crore exceeds Rs 5 crore, so CSR applies. Private companies are not exempt, and the conditions are alternative, not cumulative.

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