Suttatti Enterprises Ltd

PREFACE

Corporate Social Responsibility (CSR) is a vital element of Corporate Governance. It is a philosophy about the liaison between a business concern and the Society. CSR can be described as a strategy of an entity to assess and assume the impact of it’s activities on the environment and on social welfare, as a whole. It is a contribution towards the sustainable economic development of the society in which it operates. Every business concern depends wholly and solely on the society and ultimately, on the environment, for the resources, such as land, labour, material. This holds it ethically accountable towards the Society. CSR is not just restricted to donations and charity as it was considered, earlier. In today’s era, it is an effort made by a business concern to act beyond it’s legal obligations thereby integrating social, environmental and ethical concerns into company’s business processes. On the same line, Suttatti Enterprises Limited (“the Company”) believes in maintaining the quality of life of people and the surrounding, by adopting environmental friendly business practices. The Company will always support and encourage it’s personnel in promoting welfare activities, thereby achieving long-term success in harmony with societal benefits.

Scope:

This Policy is applicable to the activities undertaken, in consonance with Section 135 and Schedule VII of the Companies Act, 2013 and the rules framed thereunder, as amended from time to time, by the Company as a part of it’s CSR projects embarked on, during every financial year.

Vision Statement:

To achieve sustainable development and create value for the stakeholders: Two prime objectives that will drive the Company to realize its corporate responsibility vision.
To be a Responsible Corporate Citizen, deeply committed to socio – economic development of the society.

1. Objectives of the Policy:

The main purpose of the Policy is:

to act as a guiding instrument in order to execute and monitor CSR projects to be undertaken by the Company;
to seek increased commitment at all levels in the organization to operate in an economically, socially and environmentally sustainable manner, while recognizing interest of all its stakeholders;
to promote organizational integrity and ethical business practices through transparency in disclosure and reporting procedures and by leveraging on the technological advances;
to partner and collaborate with other public sector enterprises, government agencies, NGOs and such other organisation having credibility, reliability and integrity in implementing CSR & Sustainable projects
to explain as to how effectively the surplus of the Company will be utilized towards CSR activities and to specify the areas in which the Company intends to undertake its’ CSR projects;

2. Constitution of the CSR Committee:

In order to serve the purpose of this Policy, it is necessary to constitute “the Corporate Social Responsibility Committee” (“the CSR Committee”) of the Board of Directors of the Company in accordance with the provisions of the Companies Act, 2013 read together with the Companies (Corporate Social Responsibility) Rules, 2014, as amended from time to time.

3. Composition of the CSR Committee:

For the relevant financial year, the Board’s report shall specify the details regarding composition of the CSR Committee, which is as follows:

Chairman of the Committee: The Independent Director of the Company shall act as the Chairman of the CSR Committee.
Minimum number of Members of the CSR Committee: The CSR Committee shall consist of at least 3 (three) member directors of the Company, amongst whom, at least one director shall be an “Independent Director”.
Member Directors of the CSR Committee: The member directors of the CSR Committee of the Company are: Prakash S. Jagtap (Non-Executive Independent Director): Chairman, Bharat K. Jhamvar (Non-Executive Independent Director) and Vijay C. Suttatti (Managing Director)
Yogesh Kshemkalyani (Chief Financial Officer) and Manjiri Patil (Company Secretary)

4. Meetings of the CSR Committee:

During every financial year, the CSR Committee shall meet at least 2 times (twice) in order to take the review of the CSR activities undertaken, in process or to be undertaken.

5. Quorum of the meeting:

The quorum of the meeting shall be 1/3rd (one third) of total strength of member directors, present in person at the meeting, out of whom, at least one shall be an Independent Director.

6. Role of the CSR Committee:

In this regard, the CSR Committee of the Board will perform the following duties. It shall:

formulate the Policy for the Company and recommend the same to the Board, which shall indicate the activities to be undertaken by the Company as specified in Annexure B of the Policy;
recommend the CSR activities to be undertaken and the amount of expenditure to be incurred on such activities on annual basis;
monitor the execution of the Policy of the Company, at regular intervals;
determine the CSR activities in consonance with Schedule VII (Annexure B) of the Companies Act, 2013;
institute a transparent monitoring mechanism for implementation of the CSR projects undertaken or intended to be undertaken by the Company, in accordance with the Policy and for this purpose, to constitute an Operational Committee;
prepare a Responsibility Statement stating that the implementation and monitoring of the Policy is in compliance with the CSR Objectives and Policy of the Company;
Enter into dialogue with various Government or Non-Government bodies, so far as implementation of CSR Projects or activities is concerned;
ensure that duly certified Statement of Accounts of the trusts, societies to whom the CSR Activities are allocated on behalf of the Company are obtained and reviewed, on regular basis;
prioritize the activities to be undertaken as CSR projects;
perform any other role, as it may deem necessary, with the prior approval of the Board of Directors of the Company

7. CSR Operational Committee:

In order to assist the CSR Committee, an Operational Committee shall be constituted with the approval of the CSR Committee of the Board. It shall consist of:

The General Manager, Purchases
the Company Secretary,
HR personnel,
The Internal Auditor

to enable it to discharge its duties/responsibilities expeditiously, smoothly and efficiently. In this process,

The Operational Committee will conduct a survey, on the basis of which, projects under CSR will be identified and evaluated. For this purpose, various Non-governmental Organisations will be visited in person.
After identification of such projects, it will prepare strategy to select the projects, keeping in view, the financial viability of the programme, budget allocation, implementation guidelines /schedules, feedback, impact assessment and the time frame.
The Operational Committee will scrutinize all such projects and schemes as received from organisations, associations, so visited and will put up the same before the Board with its comments/recommendations.
Whenever it may deem necessary, the said Committee will participate in dialogue with the Non-Government Organisations/Agencies, for further details.
It will also carry out any other task as may be assigned by the Board level CSR Committee.

The Operational Committee will regularly submit reports regarding the progress in the implementation of CSR activities to the Board Level CSR Committee.

8. Board’s Role:

The Board of Directors of the Company has a crucial role to play so far as operation of the Policy is concerned. For this purpose, it shall act in co-ordination with the CSR Committee. It shall:

constitute the CSR Committee of the Board;
approve the Policy of the Company, after taking into account the recommendations made by the CSR Committee;
ensure that activities to be undertaken by the Company under this Policy are in harmony with the activities included in Annexure B;
ensure that the CSR activities are implemented in the manner prescribed under this Policy;
ensure that at least two percent of the average net profit of the previous three financial years is spent under CSR during every financial year (calculated as per Section 198 of the Companies Act, 2013);
disclose the contents of the Policy in it’s report for every financial year

9. Guidelines for functioning of the CSR Activities:

The following are the operating provisions of the Policy:

CSR activities shall be undertaken with preference to the local area and areas in which the Company operates.
The Company may decide to undertake its CSR activities through a Registered Trust or a Registered Society or a company established by the company under Section 8;
If such trust, society or company is other than the one, established by the Company, it shall have an established track record of at least three years in undertaking similar CSR programs or projects;
The Company shall specify the projects or progams to be undertaken through the specified entities, the modalities of utilization of funds on such projects and the monitoring and reporting mechanism, in the Annual Report (Annexure C).
The Company may also collaborate or pool the resources with other companies for undertaking CSR activities in such a manner, that the CSR Committees of respective companies are in a position to report independently on such projects or programs.
The CSR activities carried out by the Company, as either new or ongoing projects, shall exclude those activities which are undertaken in pursuance of its normal course of business;
The CSR projects or activities which exclusively benefit the employees of the Company and their families, shall not form a part of the Company’s CSR activities.
The Company may build CSR capacities of it’s own personnel as well as those of it’s Implementing agencies through institutions with established track records of at least three financial years. However, such expenditure, including expenditure on administrative overheads, shall not exceed 5% (five percent) of total CSR expenditure of the Company in any financial year.
Contribution of any amount made to any political party, directly or indirectly, shall not be considered as CSR activity.
If the Company fails to spend the desired amount for CSR activities, in any particular financial year, the Board shall specify reasons for not spending the same, in it’s report for that particular year.
Further, in case of Company’s failure to disclose the reasons for not spending the amount in the Board’s report, it may attract penal consequences.
The Policy shall be displayed on the Company’s website, in the manner prescribed in the Annexure C of the Policy.

10. CSR Corpus and Calculation of CSR Expenditure:

a. Corpus/Budget for CSR projects/program:

Any Surplus arising out of CSR activities undertaken by the Company shall be re-invested into CSR initiatives and this corpus shall always be higher than the threshold of 2% figure.

CSR Corpus to comprise of the following:
2% of average net profits of the Company for the preceding three financial years;
Any surplus arising out of CSR activities
other operational items

In no case, the surplus arising out of the projects or progams undertaken under CSR shall form a part of the business profits of the Company.

b. CSR Expenditure:

It shall include all expenses incurred while undertaking projects or programmes relating to CSR activities as approved by the Board, including contribution to corpus, on the recommendation of the CSR Committee. However, it does not include any expenditure on anitem, not in conformity with activities which fall within the purview of the Schedule VII (Annexure B) of the Act. Following expenses will amount to CSR expenditure:

Salaries paid by the Company to it’s CSR staff as well as to volunteers (in proportion to company’s time/hours spent specifically on CSR) can be factored into “CSR project cost”.
Contribution to Corpus of a Trust/ society/ Section 8 companies, etc. will qualify as CSR expenditure as long as:
a. the Trust/ society/ section 8 companies etc., is created exclusively for undertaking CSR activities; or
b. where the corpus is created exclusively for the purpose directly relatable to a subject covered in Annexure B of the Policy

Following expense will not amount to CSR expenditure:

One-off events such as marathons/ awards/ charitable contribution/ advertisement sponsorships of TV programmes etc.
Expenses incurred by the Company for the fulfillment of any Act/ Statute of regulations (such as Labour Laws, Land Acquisition Act etc.)

c. Calculation of amount available as CSR Expenditure:

The threshold of 2% of average of net profits of three preceding financial year shall be calculated, by considering the amount of profit before tax as base figure.

11. Approval of Project Proposal:

The CSR proposals received by the Company from various NGOs, institutions, and recommended by the Operational Committee, shall be discussed by the CSR Committee. After obtaining the approval of the Board of Directors, the said proposals will be accepted and implemented:

11. Tax Implications:

The tax treatment of CSR expenditure shall be in accordance with the provisions of the Income-tax Act, 1961, as notified by the Central Board of Direct Taxes [‘CBDT’]. However, till date, nothing has been clearly specified in the notified CSR Rules about the tax treatment, to be given to CSR expenditure.

Identification of areas for CSR projects/programs in India, Modalities for execution of CSR projects/programs to be undertaken, Implementation Schedules:

Sr.No.	Key thrust Areas	Activities/Programmes/Projects
1	Health and Sanitation	--
2	Education	--
3	Welfare of Women and Children	--
4	Environment	--

Modalities for execution of CSR Projects:As mentioned above, the Company may implement its CSR activities through:

its employees, it’s CSR Operational Committee, formed for that purpose or/and;
trusts, Societies, or Section 8 companies operating in India, whether set up by the Company itself or not or/and;
collaborating or pooling resources with other companies/organizations to undertake CSR activities;
selection of any organization engaged in carrying out social activities and to support the same for undertaking CSR activities as prescribed

ImplementationIn this process, the investment shall be made project-based and for every project, to be undertaken by the Company under CSR, a specific time frame shall be finalized. The progress report of the CSR projects shall be shared by the CSR Operational Committee, on quarterly basis with the CSR Committee and then, by the CSR Committee to the Board, on a half yearly basis.

14. Monitoring mechanism/process of CSR Projects or Programs:

The progress report of the CSR projects shall be shared by the CSR Operational Committee, on quarterly basis with the CSR Committee and then, by the CSR Committee to the Board, on a half yearly basis.

15. Disclosure/Reporting of the CSR Policy:

The Board’s Report pertaining to the relevant financial year commencing on 1st day of April, 2014 shall include the Annual Report on CSR containing particulars specified in Annexure C of this Policy.

16. Amendment in Policy:

Any changes and modifications in this Policy to be made in consonance with the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014, as amended from time to time, shall be at the discretion of the CSR Committee, after obtaining the prior approval from the Board of Directors of the Company, regarding the same.

ANNEXURE A

Section 135 of the Companies Act, 2013: Corporate Social Responsibility

Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.
The Board’s report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.
The Corporate Social Responsibility Committee shall,—
a. formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII;
b. recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and
c. monitor the Corporate Social Responsibility Policy of the company from time to time
The Board of every company referred to in sub-section (1) shall,—
a. after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company’s website, if any, in such manner as may be prescribed; and
b. ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company
The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:,

Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:

Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount. Explanation — For the purposes of this section “average net profit” shall be calculated in accordance with the provisions of section 198.

ANNEXURE B

SCHEDULE VII

Activities which may be included by companies in their Corporate Social Responsibility Policies:

eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation, including contribution to the “Swach Bharat Kosh” set up by the Central government for the promotion of sanitation and making available safe drinking water:
promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;
promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining quality of soil, air and water, including contribution to the clean Ganga Fund set up by the Central Government for rejuvenation of river Ganga;
protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts:
measures for the benefit of armed forces veterans, war widows and their dependents;
training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports;
contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Caste, the Scheduled Tribes, other backward classes, minorities and women;
contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government
rural development projects
slum area development

ANNEXURE C

FORMAT FOR THE ANNUAL REPORT ON CSR ACTIVITIES TO BE INCLUDED IN THE BOARD’S REPORT:

1. A brief outline of the company’s CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programmes:
2. The Composition of the CSR Committee:
3. Average net profit of the company for last three financial years:
4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above):
5. Details of CSR spent during the financial year

Total amount to be spent for the financial year:
Amount unspent, if any:
Manner in which the amount spent during the financial year is detailed below:

*Give details of implementing agency:

6. In case, the Company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the Company shall provide the reasons for not spending the amount in its Board report.A responsibility statement of the CSR Committee that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the company.

ANNEXURE D

DEFINITIONS

1. Any financial year implies ‘any of the three preceding financial years’.
2. Corporate Social Responsibility (CSR) means and includes but is not limited to:
a. Projects or programmes relating to activities specified in Schedule VII to the Act or;
b. Projects or programmes relating to activities undertaken by the board of directors of a
Company (Board) in pursuance of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such policy will cover subjects enumerated in Schedule VII of the Act.
3. CSR Committee means the Corporate Social Responsibility Committee of the Board referred to in Section 135 of the Act.
4. CSR Expenditure shall include all expenditure including contribution to corpus, tbe projects or programs relating to CSR activities approved by the Board on the recommendation of it’s CSR Committee, but does not include any expenditure on alt item not in conformity or not in line with activities which fall within the purview of Schedule VII of the Act.
5. CSR Policy relates to the activities to be undertaken by the company as specified in Schedule VII to the Act and the expenditure thereon, excluding activities undertaken in pursuance of normal course of business of a company:
6. Net profit means the net profit of a company as per its financial statement prepared in accordance with the applicable provisions of the Act, but shall not include the following, namely :-

a. any profit arising from any overseas branch or branches of the company’ whether operated as a separate company or otherwise; and
b. any dividend received from other companies in India, which are covered under and complying with the provisions of section 135 of the Act:

Provided that net profit in respect of a financial year for which the relevant financial statements were prepared in accordance with the provisions of the Companies Act, 1956, (1 of 1956) shall not be required to be re-calculated in accordance with the provisions of the Act: Provided further that in case of a foreign company covered under these rules, net profit means the net profit of such company as per profit and loss account prepared in terms of clause (a) of sub-section (1) of section 381 read with section 198 of the Act.
7. Registered Trust would include Trusts registered under Income Tax Act 1956, for those States where registration of Trust is not mandatory.