© 2012 Harsco Corporation. All rights reserved. HARSCO GIP Corporate Social Responsibility (Financial Year ) Hyderabad I India

WHY CORPORATE SOCIAL RESPONSIBILITY ?  Business uses scarce resources of society  Business often adversely affects environment  Government alone cannot tackle problems of inclusive growth  Business should supplement Government’s efforts in addressing social challenges we face today.  Business cannot succeed in a society which fails.

Applicability of CSR as per NEW COMPANIES ACT, 2013 Applicability Every company having  Net worth of INR 500 crore or more, or  Turnover of INR 1000 crore or more or  Net profit of INR 5 crore or more ; during any financial year in the preceding 3 financial years It includes Private Companies as well Note: Net profit before tax as per books of accounts and shall not include profits arising from branches outside India.

Formation of CSR Committee If CSR applies then the Company shall constitute CSR Committee of the Board and the Committee would comprise of three or more directors, out of which at least one director shall be an independent director Note:  CSR Rules have dispensed with the requirement of appointing an Independent director on the CSR Committee of the Board of an unlisted company as well as a private company.  In case where a private company has only two directors on the Board, the CSR Committee can be constituted with these two directors

Functions of CSR Committee The CSR committee shall formulate and recommend to the Board, a CSR Policy. The policy shall indicate the activities to be undertaken by the company as specified in Schedule VII; The CSR Committee shall recommend the amount of expenditure to be incurred on the activities referred in CSR Policy The CSR Policy of the company shall be monitored by CSR committee from time to time.

Responsibilities of the Board To approve the CSR Policy after considering recommendations of CSR Committee. To disclose CSR policy and initiatives in Board’s report and Company’s website. To ensure that activities reflected in CSR policy are actually undertaken by company. To ensure that the company spends, in every financial year, at least two per cent of the average net profits

Minimum Expenditure to be incurred on CSR 2 percent of the Average Net Profit during the three immediately preceding financial years. Note: For Financial Year Calculation: Average Net Profit of FY , & needed to be considered.

Implementation of CSR The company can implement its CSR activities through the following methods: Directly on its own Through its own non-profit foundation set- up so as to facilitate this initiative Through independently registered non-profit Organizations that have a record of at least three years in similar such related activities Collaborating or pooling their resources with other companies

Contribution to corpus of a trust/ society/ company Whether Contributions to corpus of a trust/ society/ company with charitable objects, etc. will qualify as CSR expenditure ? Yes: Subject to below conditions Such entities are created exclusively for undertaking CSR activities The corpus is created exclusively for a purpose directly relatable to a subject covered in schedule VII of the Act. Note: Only CSR activities undertaken in India will be taken into consideration Activities meant exclusively for employees and their families will not qualify

Activities covered under CSR  Eradicating hunger, poverty and malnutrition, promoting preventive health care and 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, daycare centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward,  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;

 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 art and handicrafts,  Measures for the benefit of armed forces veterans, war widows and their dependents;  Training to promote rural sports, nationally recognised sports, paraolympic 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 Castes, 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, 10) Rural development projects,  Slum Area Development

Other types of Expenditures that qualify for CSR Expenditure 1. Salaries paid to regular CSR staff and volunteers (in proportion to time spent on CSR activities) can be factored into CSR project cost as part of CSR expenditure. 2. Expenditure incurred by the foreign holding company for CSR activities in India will qualify as CSR Expenditure of the Indian subsidiary if: the CSR expenditure is routed through the Indian subsidiary the Indian subsidiary is covered under CSR provisions of the Act. 3. Contribution to corpus of a trust/ society/ company with charitable objects, etc. will qualify as CSR expenditure if either of the following is fulfilled: Such entities are created exclusively for undertaking CSR activities The corpus is created exclusively for a purpose directly relatable to a subject covered in schedule VII of the Act.

Format of Annual CSR Report A brief outline of the company's CSR policy, including overview of activities proposed to be undertaken The composition of the CSR Committee Average net profit of the company for the last three financial years Prescribed CSR Expenditure made by the company Details of CSR monies spent during the financial year, including the total amount to be spent for the financial year and the amount unspent (if any) In case the company has failed to spend 2% of the average net profit of the last three financial years, the company needs to provide the reasons for not spending the amount A responsibility statement of the CSR Committee that the implementation and monitoring of the company policy is in compliance with the CSR objectives

Consequences for non-Compliance of CSR  Company is not subject to liability for failing to spend on CSR.  But the Company and its officers are subject to liability for not explaining such a failure in the annual report of the board of directors.  In addition, a company and its directors are liable even if they fail to report on CSR activities that actually were conducted.  Failure to explain is punishable by a fine on the company of not less than 50,000 rupees and up to 25 lakh rupees  Further, officers who in default on the reporting provision could be subject to up to three years in prison and/or fines of not less than 50,000 rupees and as high as 5 lakh rupees

Thank you B. Sanjay Kumar Reddy Harsco GIP