SRINAGAR: A government audit has flagged substantial shortfalls in Corporate Social Responsibility (CSR) spending by Jammu and Kashmir’s public sector enterprises, with only Rs 3.05 crore spent against Rs 27.42 crore allocated by three enterprises during 2022-23, leaving Rs 24.37 crore unspent.
The findings are contained in Chapter V of the Composite Audit Report (Civil and PSEs) for the period ended March 2023, which examined compliance with the CSR provisions of the Companies Act, 2013 by Union Territory Public Sector Enterprises (UTPSEs).
According to the report, nine of the 33 active UTPSEs in 2022-23 met the statutory criteria requiring them to undertake CSR activities. Of these nine, only three — Jammu and Kashmir Bank Limited, Jammu and Kashmir State Power Development Corporation Limited (JKSPDCL) and Chenab Valley Power Projects Private Limited (CVPPPL) — actually undertook CSR activities during the year.
The audit found that seven of the nine eligible UTPSEs were required to incur CSR expenditure amounting to Rs 12.64 crore based on the statutory requirement of spending at least two per cent of the average net profit of the preceding three financial years. The remaining two, Kashmir Power Distribution Corporation Limited and Jammu Power Distribution Company Limited, were not required to spend on CSR as they had incurred losses during the three preceding financial years.
However, among the three enterprises that undertook CSR activities, the total allocation stood at Rs 27.42 crore, including Rs 16.34 crore carried forward from previous years, while actual expenditure was only Rs 3.05 crore.
Jammu and Kashmir Bank Limited utilised its allocated CSR funds in full during 2022-23. JKSPDCL, however, spent only Rs 1.57 crore against an allocation of Rs 25.80 crore, resulting in a shortfall of Rs 24.23 crore, or 94 per cent. CVPPPL spent ₹0.30 crore against Rs 0.44 crore allocated, leaving a shortfall of Rs 0.14 crore, or 32 per cent.
The audit also found delays in transferring unspent CSR funds by JKSPDCL. Of the Rs 24.23 crore unspent amount, Rs 7.60 crore relating to 2020-21, Rs 8.54 crore relating to 2021-22 and Rs 8.09 crore relating to 2022-23 were transferred to the Swachh Bharat Kosh, a fund specified under Schedule VII of the Companies Act.
The transfers for 2020-21 and 2021-22 were made in October 2024, while the amount relating to 2022-23 was transferred in June 2025. The audit recorded delays of three years, two years, and one year and nine months respectively.
The report also highlighted weaknesses in the institutional framework for CSR compliance. Under Section 135 of the Companies Act, companies meeting specified thresholds of net worth, turnover or net profit are required to constitute a CSR Committee.
Of the nine eligible UTPSEs, only four had constituted CSR committees during 2022-23. These were Jammu and Kashmir Bank Limited, CVPPPL, JKSPDCL and Jammu and Kashmir Police Housing Corporation Limited.
Of the four, Jammu and Kashmir Bank complied with the requirement for at least one independent director on its CSR Committee. CVPPPL and JKSPDCL were not required to appoint an independent director, while Jammu and Kashmir Police Housing Corporation Limited did not comply with the requirement.
The audit further found that only four of the nine eligible UTPSEs had framed CSR policies on the recommendation of their CSR committees. The five without a CSR policy were Jammu and Kashmir Cable Car Corporation Limited, Jammu and Kashmir Forest Development Corporation Limited, Jammu and Kashmir Medical Supplies Corporation Limited, Kashmir Power Distribution Corporation Limited and Jammu Power Distribution Company Limited.
Another concern was the concentration of CSR expenditure towards the end of the financial year. Of the Rs 3.05 crore spent by the three UTPSEs in 2022-23, Rs 2.73 crore, or 89 per cent, was incurred during the fourth quarter.
The audit noted that CSR expenditure should, as a best practice, be spread across the financial year rather than being concentrated towards its close.
On monitoring, the report said all four UTPSEs that had framed CSR policies had incorporated monitoring mechanisms in their policies. However, the requirement for impact assessment through an independent agency was not applicable to any of the UTPSEs during 2022-23 because their average CSR obligation over the preceding three financial years was below Rs 10 crore.
The audit also examined statutory reporting and disclosure requirements. Among the three UTPSEs covered in this assessment — CVPPPL, JKSPDCL and Jammu and Kashmir Bank — two, Jammu and Kashmir Bank and CVPPPL, complied with the relevant disclosure provisions.
The report said CSR provisions under Section 135 of the Companies Act and Schedule VII apply to UTPSEs. The legal framework requires qualifying companies to spend at least two per cent of their average net profit over the three immediately preceding financial years on eligible CSR activities.
The audit concluded that although nine UTPSEs met the criteria for undertaking CSR activities, only four had framed CSR policies, while only three actually incurred CSR expenditure during 2022-23.
It recommended that all UTPSEs meeting the statutory criteria should constitute CSR committees and frame CSR policies in accordance with the Companies Act and CSR Rules. It also recommended that enterprises required to undertake CSR activities ensure that the requisite allocations are made.
