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Kaveri Pharma Ltd had a net profit of Rs 6 crore in the immediately preceding financial year, though its net worth and turnover were below the section 135 thresholds. Its Board treats CSR as optional because 'turnover is below Rs 1,000 crore'. Under section 135(1) as worded, what is the position?

CSR provisions apply. Section 135(1) is triggered if any one of net worth of Rs 500 crore, turnover of Rs 1,000 crore or net profit of Rs 5 crore is met in the immediately preceding financial year, so net profit of Rs 6 crore is enough.

  1. ACSR provisions apply, since net profit of Rs 5 crore or more alone triggers the requirementCorrect
  2. BCSR provisions do not apply, because all three thresholds must be met together
  3. CCSR provisions apply only if the company is also listed
  4. DCSR provisions apply only if net worth is Rs 500 crore or more

Explanation

Section 135(1) uses 'or' among net worth of Rs 500 crore, turnover of Rs 1,000 crore and net profit of Rs 5 crore. Meeting any one in the immediately preceding financial year attracts the section. Net profit of Rs 6 crore therefore triggers it, so the Board's reliance on turnover is wrong.

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