Corporate social responsibility of ratna status public sector undertakings in india

åDVµkVì gF¡Â¼ïVçk
SELP Journal of Social Science
Vol. VI, Issue. 25 ISSN : 0975-9999 (P), 2349-1655 (O)
July - September 2015
8
CORPORATE SOCIAL RESPONSIBILITY OF RATNA STATUS
PUBLIC SECTOR UNDERTAKINGS IN INDIA
Dr. C. Paramasivan, Ph.D.,
Assistant Professor
S. Savarimuthu
Assistant Professor
New Ideal College ofEducation, Tiruchirappalli – 9.
&
Ph.D. Research Scholar (P/T)
Department of Commerce, Periyar EVR College (Autonomous),
Tiruchirappalli – 23.
ABSTRACT
Corporate social responsibility is a concept whereby companies decide voluntarily to
contribute to a better society and a cleaner environment. Corporate social responsibility is
represented by the contributions undertaken by companies to society through its business
activities and its social investment. Corporate Social Responsibility is a social responsibility
of business that encompasses the economic, legal, ethical, and discretionary expectation that
society has of organizations at a given point in time (Michale, 2002). There are a number of
public sectors limited companies to know the importance of CSR scheme in business. One such
company, which works along a predetermined CSR Scheme, is Maharatna, Navaratna, CPSEs
in India. Central Public Sector Enterprises (CPSEs) have contributed a lot towards CSR. In
this paper, we attempt to highlight Corporate Social Responsibility of Ratna status undertakings
in India.
Key Words: Corporate Social Responsibility, Maharatna, Navaratna, CPSEs.
Introduction
Corporate Social Responsibility couldbe
described as a modern day manifestation of the
notion philanthropy that is to promote the welfare
of others, especially by donating money for good
causes (oxford dictionary, 1999: 1071).CSR can
be viewed as responsibility on the part of the
business and industrial organization to be
accountable to their stakeholders including
society. At the start of the 20th century, there were
numbered corporate acts ofcharity. Wealthypeople
provided wealth for charitable purpose in name of
philanthropy. Peter F. Drucker1963 compared the
relationship between a business organization and
society with the relationship between a ship and
sea. He has categorically mentioned that even the
most private-to-private enterprise is an origination
of society and serves the social function.
Available online @ www.selptrust.org
ISSN : 0975-9999 (P) 2349-1655 (O)
Research Impact Factor : 1.056
Vol. VI, Issue. 25

9
Review of literature
Rajasekhara Mouly Potluri. et.al
(2012) have made a study to discern the
perceptions of Indian financial institutions
towards corporate social responsibility and also
attempts to be acquainted with the opinions of
employees, customers and general public. The
Indian financial institutions expressed almost
hundred percent positive attitudes in
implementing Corporate Social Responsibility
towards all the stakeholders.
Shashank Shah and Sudhir Bhaskar
(2010) have used the case study of Bharat
Petroleum Corporation Ltd. to describe its
society and local community-related initiatives.
They studied that BPCL has gone beyond mere
charity and made attempts in association with
various Non Government organizations and Self
Help Groups to make the local communities self-
reliant, so that they can earn their own livelihood
and not be dependent on corporate organizations
for eternal help andsupport. Privateorganizations
and other PSUs have a lot to learn from the type
of corporate social responsibility activities
undertaken byBharat PetroleumCorporationLtd.
Supriti Mishra and Damodar Suar
(2010) have examined whether strategy towards
primary stakeholders and their salience influence
corporate social responsibility towards the
corresponding stakeholders. The salience of all
stakeholder groups enhanced the corresponding
corporate social responsibility. When salience
and strategy are considered, the salience of a
particular stakeholder group suppressed the
effect of strategy fully or partially on corporate
social responsibility.
Vikramjit Kaur (2012) has emphasized
that corporate social responsibility has become
the linchpin for development of any corporate
organizations. He tried to bring out corporate
social responsibility initiatives taken by various
organizations in India. The Indian corporate
sector is planning to introduce corporate social
responsibilityin the small and mediumenterprises
sector to increase its reach in remote areas and
to ensure the well being of the society in which
they activate their functions.
Swapna. P (2011) has enlightened the
aspects of social responsibility of the business
in light of labor welfare with special reference
to Singareni Collieries Company limited. The
linkages and the ethical considerations involved
in employee welfare have been addressed with
implications for labor welfare. The concept of
social responsibility in its narrow contours has
been equated with economic welfare.
Tridiv Hazarika (2012) has suggested
that Corporate Social Responsibility has become
an often used corporate jargon, which is still in
the process of evolution in terms of its dynamic
interpretation, eliciting disparate perspectives
from diverse target audience. Corporate Social
Responsibility continues to be more often
associated with community development
initiatives as reflected in the case of two oil and
gas public sector companies, where
sustainability, corporate governance, human
rights, Supply chain management etc., which are
key elements of corporate social responsibility
are dealt with independent of Corporate Social
Responsibility.
Objective
The primary objective is to study
Corporate Social Responsibility of Ratna status
undertakings in India
Methodology
This study is explorative in nature and
based on the secondary data. Sources of
secondary data were collected from reports,
records, journals, magazines, websites
documents of Maharatna and Navaratna CPSEs
in India. The collected secondary data were
analyzed based on the simple statistical as well
as percentage analysis.

10
Table: 1
History of CSR in India
Phases Period Year Nature of CSR
First Pre industrialization 1800 CSR activities were undertaken in the form of
philanthropy with religious belief
Second Pre industrialization 1800-1914 CSR activities were undertaken in the form of
donations with social welfare objectives
Third Industrialization 1950-1980 CSR activities were undertaken in the form of
responsible behaviour with progressive approach
Fourth Post industrialization 1980-until
today
CSR activities are being performed in various
forms by keeping in view multi stakeholders
benefit.
Source: www.IJBMRPublic Sector
However, in the post independence period, the
expansion of public sector was undertaken as
an integral part of the Industrial Policy 1956.The
government owned corporations are termed as
Public Sector Undertakings (PSUs) in India. In
a PSU majority (51% or more) of the paid up
share capital is held by central government or
by any state government or partly by the central
governments and partly by one or more state
governments.
Central Public Sector Enterprises (CPSE’s)
in India
The term public sector undertaking or
Enterprise refers to a Government Company.
Government Company is defined (under Section
2 (45) of the Companies Act, 2013) as any
company in which not less than 51% of the paid-
up share capital is held by the Central
Government, or by any State Government or
Governments, or partly by the Central
Government and partly by one or more State
Governments, and includes a company which is
a subsidiary company of so called Government
company.
The Board for Reconstruction of Public
Sector Enterprises (BRPSE) was constituted to
address problems relating to strengthening,
modernizing, reviving, and restructuring PSEs.
A company is referred to the BRPSE if it is
considered sick and has accumulated losses in
any financial year up to 50% or more of its
average net worth during the four years
immediately preceding such financial year /or a
company that is a sick company as per the
meaning of Sick Industrial Companies (Special
Provisions) Act, 1985.
Ratna Status
There are a few companies chosen to
be granted status of Maharatna, Navratna and
Miniratna. Maharatna PSUs are the biggest Public
Sector Undertakings (PSU)’s of India. As on 26
October 2014, there are 7 Maharatna, 17
Navratna Central Public Sector Enterprises
(CPSEs). They have contributed a lot towards
Corporate Social Responsibility because they
know the importance of Corporate Social
Responsibility scheme in business.
In 2009, the government established the
“Ratna” status. Accordingly, a few companies
have been chosen to be granted such status of
Maharatna, Navratna and Miniratna. There are
multiple factors and criteria for granting ‘Ratna’
status. However, major criteria of awarding
status are given in Table: 2.

11
Table: 2
Eligibility / Criteria for Granting ‘Ratna’ Status
S.
No
Companies
Awarding
Status
Eligibility / Criteria for Granting 'Ratna'
Status
Benefits for investment
1. Maharatna  3 years with an annual net profit of over
Rs. 5000 crore
 Average annual Net worth of Rs.15,000
crore for 3 years
 Average annual Turnover of Rs.25,000 crore
for 3 years
Up to Rs.1,000 crore - Rs.
5,000 crore, or free to
decide on investments up
to 15% of their net worth
in a project.
2. Navratna  A score of 60 (out of 100), based on six
parameters which include net profit, net
worth, total manpower cost, total cost of
production, cost of services, PBDIT (Profit
Before Depreciation, Interest and Taxes),
capital employed, etc.
 A company must first be a Miniratna and
have 4 independent directors on its board
before it can be made a Navratna.
 The Navaratna companies could invest up to
Rs 1,000 crore without explicit government
approval.
Up to Rs. 1,000 crore or
15% of their net worth on
a single project or 30% of
their net worth in the
whole year (not exceeding
Rs. 1,000 crores).
3. Miniratna
Category-I
 Have made profits continuously for the last
three years or earned a net profit of Rs. 30
crore or more in one of the three years.
Up to Rs. 500 crore or
equal to their net worth,
whichever is lower.
4. Miniratna
Category-II
 Have made profits for the last three years
continuously and should have a positive net
worth.
 The Categorization entitles the company
boards to do investments up to a limit
(depending on the status) without seeking
government permission.
Up to Rs. 300 crore or up
to 50% of their net worth,
whichever is lower.
Source: www. Maharatna PSUs list.com
As on 26 October 2014, there are 7
Maharatna, 17 Navratna and 54 Miniratnas -I
and 18 Miniratna -II Central Public Sector
Enterprises (CPSE’s) of India. Maharatna PSUs
are the biggest Public Sector Undertakings
(PSU)’s of India. Various PSUs have been
awarded additional financial autonomy. These
companies are public sector companies that have
comparative advantages, giving them greater
autonomy to compete in the global market to
support in their drive to become global giants.

12
Table: 3 Funds allotted by Maharatna for Corporate Social Responsibility (2011-12)
( In Crore)
(A) Maharatna
S.No Company Name PAT Fund allotted for CSR Percentage
1 Coal India Limited 14788 553.33 3.74
2 Indian Oil Corporation Limited 4226 95.60 2.26
3 NTPC Limited 9815 45.52 0.46
4 Oil & Natural Gas Corporation Ltd. 28144 378.48 1.35
5 Steel Authority of India Limited 3593 64.00 1.78
Source: Annual Reports of CPSEs for the FinancialYear 2011-12, Lok Sabha Unstarred Question No.2881
dated 14.3.2013 about CSR
Table No. 3 indicates the funds allotted
by Maharatna companies for Corporate Social
Responsibility for the year 2011-12. Profit after
Tax of Coal India Limited amounted to Rs. 14788
crore of which Rs. 553.33 crore was allotted to
CSR, which constitutes 3.74 percent of total
Profit after Tax. Profit after Tax of Indian Oil
Corporation Limited amounted to Rs. 4226 crore
of which Rs. 95.60 crore was allotted to CSR,
which constitutes 2.26 percent of total Profit
after Tax. Profit after Tax of NTPC Limited
amounted to Rs. 9815 crore of which Rs. 45.52
crore was allotted to CSR, which constitutes
Table: 4 Funds allotted by Navaratna for Corporate Social Responsibility (2001-12)
( In Crore)
0.46 percent of total Profit after Tax. Profit after
Tax of Oil & Natural Gas Corporation Limited
amounted to Rs.28144 crore of which Rs.
378.48 crore was allotted to CSR, which
constitutes 1.35 percent of total Profit after Tax.
Profit after Tax of Steel Authority of India
Limited amounted to Rs.3593 crore of which
Rs. 64.00 crore was allotted to CSR, which
constitutes 1.78 percent of total profit after tax.
On the whole, a maximum of percentage (3.74%)
of funds was allotted for CSR by Coal India
Limited and a minimum percentage (0.46%) of
funds was allotted for CSR by NTPC Limited
during the year 2011-12.
(B) Navaratna
S.No Company Name PAT Fund allotted for CSR Percentage
1 Bharat Electronics Limited 847 2.25 0.27
2 Bharat Heavy Electricals Limited 7087 30.05 0.42
3 Bharat Petroleum Corporation Ltd. 781 7.73 0.99
4 GAIL(India)Limited 4401 82.77 1.90
5 Hindustan Aeronautics Limited 2539 5.00 0.20
6 Hindustan Petroleum Corporation Ltd. 175 30.78 17.59
7 Mahanagar Telephone Nigam Ltd. 4104 Loss ---
8 National Aluminium Company Ltd. 850 34.22 4.03
9 NMDC Limited 7265 80.13 1.10
10 Neyveli Lignite Corporation Ltd. 1411 13.00 0.92
11 Oil India Limited 3469 50.00 1.44
12 Power Finance Corporation Limited 3059 13.24 0.43
13 Power Grid Corporation of India Ltd. 3303 13.48 0.41
14 Rashtriya Ispat Nigam Limited 751 12.00 1.60
15 Rural Electrification Corporation Ltd. 2839 12.85 0.45
16 Shipping Corporation of India Ltd. 428 5.67 1.33
Source: Annual Reports of CPSEs for the FinancialYear 2011-12, Lok Sabha Unstarred Question No. 2881

13
Table No. 4 indicates the funds allotted
by Navaratna companies for Corporate Social
Responsibility for the year 2011-12. Profit after
Tax of Bharat Electronics Limited amounted to
Rs. 847 crore of which Rs. 2.25 crore was
allotted to CSR, which constitutes 0.27 percent
of total Profit after Tax. Profit after Tax of Bharat
Heavy Electricals Limited amounted to Rs. 7087
crore of which Rs. 30.05 crore was allotted to
CSR, which constitutes 0.42 percent of total
Profit after Tax. Profit after Tax of Bharat
Petroleum Corporation Limited amounted to Rs.
781 crore of which Rs. 7.73 crore was allotted
to CSR, which constitutes 0.99 percent of total
Profit after Tax. Profit after Tax of
GAIL(India)Limited amounted to Rs. 4401 crore
after Tax. Profit after Tax of Hindustan
Aeronautics Limited amounted to Rs. 2539 crore
after Tax. Profit after Tax of Hindustan
Petroleum Corporation Limited amounted to Rs.
Profit after Tax. Profit after Tax of National
Aluminium Company Limited amounted to Rs.
Profit after Tax. Profit after Tax of NMDC
Limited amounted to Rs. 7265 crore of which
Profit after Tax of Neyveli Lignite Corporation
Limited amounted to Rs. 1411 crore of which
Profit after Tax of Oil India Limited amounted
to Rs. 3469 crore of which Rs. 50.00 crore was
allotted to CSR, which constitutes 1.44 percent
of total Profit after Tax. Profit after Tax of Power
Finance Corporation Limited amounted to Rs.
Profit after Tax. Profit after Tax of Power Grid
Corporation of India Limited amounted to Rs.
to CSR, which constitutes 0.41percent of total
Profit after Tax. Profit after Tax of Rashtriya
Ispat Nigam Limited amounted to Rs. 751 crore
after Tax. Profit after Tax of Rural Electrification
Corporation Limited amounted to Rs. 2839 crore
after Tax. Profit after Tax of Shipping
Corporation of India Limited amounted to Rs.
Profit after Tax.
On the whole, a maximumof percentage
(17.59 %) of funds was allotted for CSR by
Hindustan Petroleum Corporation Limited and a
minimum percentage (0.20 %) of funds was
allotted for CSR by Hindustan Aeronautics
Limited during the year 2011-12.
Table: 5 Funds utilized by Maharatna for Corporate Social Responsibility (2011-12)
( In Crore)
(A) Maharatna
S.No Company Name
Fund allotted
for CSR
Fund utilized
for CSR
Percentage
1 Coal India Limited 553.33 77.33 13.98
2 Indian Oil Corporation Limited 95.60 82.73 86.54
3 NTPC Limited 45.52 49.43 108.59
4 Oil & Natural Gas Corporation Ltd. 378.48 121.08 32.00
5 Steel Authority of India Limited 64.00 61.25 95.70
Source: Lok Sabha Unstarred Question No. 2881 dated 14.3.2013 about CSR

14
Table No. 5 indicates the funds utilized
Responsibility for the year 2011-12. Coal India
Limited allotted funds for CSR amounting to Rs.
555.33 crore of which Rs. 77.33 crore was
utilized. It shows only 13.98 percent of funds
was utilized. Indian Oil Corporation Limited
allotted funds for CSR amouning to Rs. 95.60
crore of which Rs. 82.73 crore was utilized. It
shows only 86.54 percent of funds was utilized.
NTPC Limited allotted funds for CSR amounting
to Rs. 45.52 crore of which Rs. 49.43 crore
was utilized. It shows only 108.59 percent of
funds was utilized. Oil & Natural Gas Corporation
378.48 crore of which Rs. 121.08crore was
was utilized. Steel Authority of India Limited
allotted funds for CSR amounting to Rs. 64.00
On the whole, NTPC Limited utilized a
maximum of 108.59 percent of funds, which
includes the previous years, funds also a
minimum of 13.98 percent of funds was utilized
by Coal India Limited during the year 2011-12.
Table-6 Funds utilized by Navaratna for Corporate Social Responsibility (2011-12)
( In Crore)
(B) Navaratna
S.
No
Company Name
Fund allotted
for CSR
Fund utilized
for CSR
Percentage
1 Bharat Electronics Limited 2.25 2.36 104.89
2 Bharat Heavy Electricals Limited 30.05 4.87 16.21
3 Bharat Petroleum Corporation Ltd. 7.73 7.76 100.39
4 GAIL(India)Limited 82.77 54.43 65.76
5 Hindustan Aeronautics Limited 5.00 5.81 116.20
6 Hindustan Petroleum Corporation Ltd. 30.78 26.54 86.23
7 Mahanagar Telephone Nigam Ltd. Loss --- ---
8 National Aluminium Company Ltd. 34.22 34.22 100.00
9 NMDC Limited 80.13 86.72 108.22
10 Neyveli Lignite Corporation Ltd. 13.00 16.14 124.15
11 Oil India Limited 50.00 50.19 100.38
12 Power Finance Corporation Limited 13.24 13.27 100.23
13 Power Grid Corporation of India Ltd. 13.48 24.93 184.94
14 Rashtriya Ispat Nigam Limited 12.00 10.62 85.50
15 Rural Electrification Corporation Ltd. 12.85 12.99 101.09
16 Shipping Corporation of India Ltd. 5.67 5.84 103.00
Source: Lok Sabha Unstarred Question No. 2881
Table No. 6 indicates the funds utilized
Responsibility for the year 2011-12. Bharat
Electronics Limited allotted funds for CSR
amounting to Rs. 2.25 crore of which Rs. 2.36
crore was utilized. It shows only 104.89 percent
of funds was utilized. Bharat Heavy Electricals
30.05 crore of which Rs. 4.87 crore was utilized.
It shows only 16.21 percent of funds was
utilized. Bharat Petroleum Corporation Limited
GAIL (India) Limited allotted funds for CSR

15
amounting to Rs. 82.77 crore of which Rs.
54.43 crore was utilized. It shows only 65.76
percent of funds was utilized. Hindustan
Aeronautics Limited allotted funds for CSR
amounting to Rs. 5.00 crore of which Rs. 5.81
crore was utilized. It shows only 116.20 percent
of funds was utilized. Hindustan Petroleum
Corporation Limited allotted funds for CSR
amounting to Rs. 30.78 crore of which Rs.
percent of funds was utilized. National
Aluminium Company Limited allotted funds for
CSR amounting to Rs. 34.22 crore of which Rs.
percent of funds was utilized. NMDC Limited
Neyveli Lignite Corporation Limited allotted
funds for CSR amounting to Rs. 13.00 crore of
which Rs. 16.14 crore was utilized. It shows
only 124.15 percent of funds was utilized. Oil
India Limited allotted funds for CSR amounting
to Rs. 50.00 crore of which Rs. 50.19 crore
was utilized. It shows only 100.38 percent of
funds was utilized. Power Finance Corporation
was utilized. Power Grid Corporation of India
was utilized. Rashtriya Ispat Nigam Limited
Rural Electrification Corporation Limitedallotted
which Rs. 12.99 crore was utilized. It shows
only 101.09 percent of funds was utilized.
Shipping Corporation of India Limited allotted
which Rs. 5.84 crore was utilized. It shows only
103.00 percent of funds was utilized.
On the whole, Power Grid Corporation
of India Limited utilized a maximum of 184.94
percent of funds, which includes the previous
year’s funds also a minimum (16.21%) of
Bharat Heavy Electricals Limited during the year
2011-12.
Conclusion
India needs more contribution to uplift
the socio-economic infrastructural development
though various supporting agencies like
government corporate and nongovernmental
sectors. In the view of the CSR, corporate
sectors particularly CPSES are committed to
provide something back to the society in the
form of assistance, awareness and affiliations.
CPSES are categorized into Maharatna,
Navaratna and Miniratna accordingto its financial
performance, and based on that, CSR targets
have been fixed. If these undertakings really
sanctioned the CSR amount and utilized it in a
proper manner, it will help empower the region
concerned or part of the country. CPSES as
well as other corporate sectors which will comes
under the preview of CSR as per the companies
Act 2013, originallywant to contribute something
to the society. All kinds of Socio- economic
developments are possible without any financial
support from the government. More policy
formulation and sanction are not enough to fulfill
the content CSR. Therefore there is a need of
monitoring mechanism with the association of
local government and reputed NGO’s.
Reference:
Anil Prasand Bandela and Sampath Kumar (2013).
Corporate Social Responsibilitie Aperspective,
Mohit publication, pp 1-170.
Harish Kumar(2011). Corporatesocial responsibility,
a waffle or way of life, AITBS Publishers, pp
1to179.
Micheal Mc Comb (2002). Profit to be found in
companies that care, south china morning post,
April 14, p.5.

16
Oxford dictionary (concise), (1999: 1071)10th
edn,
Oxford: Oxford Universitypress.
Rajasekhara MoulyPotluri, Rizwana Ansari, Saqib
Rasool Khan and Siva Kumar Challa. 2012.
Corporate Social Responsibility: An Outlook of
Indian Financial Institutions, British Journal of
Economics, Management & Trade, Vol. 2(4), pp
296-308.
Shashank Shah and Sudhir Bhaskar. A. 2010.
Corporate Social Responsibility in an Indian
Public Sector Organization: A Case Study of
Bharat Petroleum Corporation Ltd, Journal of
Human Values, Vol.16, Issue 2, pp 143-156.
Supriti Mishra and Damodar Suar. 2010. Do
stakeholder Management strategyand salience
influence Corporate Social Responsibility in
Indian companies? Social Responsibility
Journal, Vol. 6, No. 2, pp 306-327.
Swapna.P. 2011. Social Responsibility towards
Labor Welfare in Singareni Collieries Company
Limited, VSRDInternational Journal ofBusiness
& Management Research,Vol. 1(5), pp290-298.
Tridiv Hazarika. 2012. Corporate Social
Responsibility (CSR) – A Popular Corporate
Jargon with Multiple Interpretation and
Perspectives: A study of the approaches to
Corporate Social Responsibility by Oil India
Limited and Indian Oil Corporation Limited,
IJCAESSpecial Issueon Basic,Applied &Social
Sciences, Vol. 2, pp 319-321.
Vikramjit Kaur.2012. CorporateSocial Responsibility
(CSR): Overview of Indian Corporate,
International Journal of Management and Social
Science Research, Vol. 1, No. 3, pp 48-54.
www.Annual reports ofCPSEs for the financial year
2011-12.in
www.Corporate social responsibility.com
www.Maharatna PSUs list.com
www.SRRF India CSR Main Analytical Report
August 2013.in
SELP PUBLICATION
SELP Trust established the publication division in the
name of SELP Publication devoted to education and
research with the ISBN and published 20 educational
books and propose to publish 50 books in a calendar year
2015. So, if you have a proposal or manuscript (Including
edited volume) in your area of specialization, please
contact or write to us. we are happy to publish your books
with ISBN.

Corporate social responsibility of ratna status public sector undertakings in india

Recommended

Recommended

More Related Content

What's hot

What's hot (17)

Similar to Corporate social responsibility of ratna status public sector undertakings in india

Similar to Corporate social responsibility of ratna status public sector undertakings in india (20)

More from RAVICHANDIRANG

More from RAVICHANDIRANG (20)

Recently uploaded

Recently uploaded (20)

Corporate social responsibility of ratna status public sector undertakings in india