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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Corporate Social Responsibility (CSR)

Meghdoot Foods Ltd has a net worth of Rs 520 crore at the end of the immediately preceding year, turnover of Rs 800 crore and a net profit of Rs 3 crore. Its average net profit of the last three years yields a CSR obligation of Rs 40 lakh. Which position is correct?

Section 135 applies because net worth is above Rs 500 crore, and any one threshold suffices. As the CSR amount of Rs 40 lakh does not exceed Rs 50 lakh, no committee is needed and the Board discharges the committee's functions.

  1. ASection 135 applies, but the Board itself discharges the CSR Committee functionsCorrect
  2. BSection 135 does not apply because net profit is below Rs 5 crore
  3. CSection 135 applies and a CSR Committee of three directors must be constituted
  4. DSection 135 does not apply because turnover is below Rs 1000 crore

Explanation

Net worth of Rs 500 crore or more satisfies section 135(1), so the section applies. Because the amount to be spent does not exceed Rs 50 lakh, section 135(9) makes the committee requirement inapplicable and the Board discharges its functions. Options citing profit or turnover wrongly demand all thresholds.

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