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CS Professional · CSR and Social Governance · Corporate Social Responsibility

Meridian Textiles Ltd, an Indian company, had net worth of Rs 300 crore, turnover of Rs 700 crore and net profit of Rs 6 crore in the immediately preceding financial year. A director argues that CSR provisions do not apply because net worth and turnover are below the limits. What is the correct position?

CSR applies because section 135(1) uses alternative thresholds: net worth of Rs 500 crore, turnover of Rs 1,000 crore, or net profit of Rs 5 crore in the immediately preceding financial year. Meridian's net profit of Rs 6 crore satisfies one threshold, so the company is covered.

  1. ACSR applies only if all three thresholds are met
  2. BCSR applies only if net worth and turnover are both met
  3. CCSR provisions do not apply because net profit alone cannot trigger them
  4. DCSR applies, because meeting any one of the three thresholds is enoughCorrect

Explanation

Section 135(1) applies to a company having net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more in the immediately preceding financial year. The thresholds are alternative. Net profit of Rs 6 crore exceeds Rs 5 crore, so the section applies.

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