Unspent CSR Funds: A Case Study of Jindal Stainless for FY 2024-25

In a broader context, India’s CSR spend reached INR 25,000 crore in FY 2022-23, but unspent portions underscore the need for better project management.

This report delves into the unspent CSR scenario of Jindal Stainless Limited (JSL) for FY 2024-25, analyzing its compliance, reasons for unspent amounts, and the broader implications.

Corporate Social Responsibility (CSR) in India

Corporate Social Responsibility (CSR) has evolved from a voluntary philanthropic activity to a mandatory obligation for qualifying companies in India, as enshrined in Section 135 of the Companies Act, 2013. This provision requires companies with a net worth of INR 500 crore or more, turnover of INR 1,000 crore or more, or net profit of INR 5 crore or more in any financial year to spend at least 2% of their average net profits from the preceding three financial years on CSR activities. These activities must align with Schedule VII of the Act, which includes areas such as education, healthcare, environmental sustainability, rural development, and promotion of sports. The intent is to ensure that businesses contribute to societal development, bridging gaps in public welfare and fostering sustainable growth.

A key aspect of CSR compliance is the treatment of unspent funds. If a company fails to spend the full obligated amount in a given year, it must provide reasons in its annual report. For unspent amounts related to “ongoing projects”—defined as multi-year initiatives (up to three years excluding the year of approval)—the funds must be transferred to a dedicated Unspent CSR Account within 30 days of the financial year’s end. These can then be utilized over the project duration. For non-ongoing unspent amounts, transfer to specified funds like the Prime Minister’s National Relief Fund or other Schedule VII funds is required within six months. This framework aims to prevent hoarding of CSR funds while allowing flexibility for impactful, long-term projects.

In recent years, unspent CSR has been a topic of scrutiny. According to data from the Ministry of Corporate Affairs, in FY 2022-23, Indian companies had unspent CSR amounting to over INR 2,000 crore, often attributed to delays in project execution, identification of suitable initiatives, or bureaucratic hurdles. However, unspent funds for ongoing projects are viewed positively if they lead to substantial community benefits, such as infrastructure development in underserved areas.

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Overview of Jindal Stainless Limited and Its CSR Framework

Jindal Stainless Limited (JSL) is India’s largest stainless steel manufacturer, with integrated facilities in Hisar (Haryana) and Jajpur (Odisha). Part of the OP Jindal Group, JSL produces a wide range of stainless steel products used in industries like automotive, railways, and construction. The company has a strong emphasis on sustainability and community engagement, aligning its CSR efforts with national priorities such as health, education, and rural development. JSL’s CSR policy, as outlined in its Directors’ Report, focuses on holistic community upliftment through partnerships with entities like the Jindal Stainless Foundation, OP Jindal Charitable Trust, and Jindal Stainless Charitable Trust.

The CSR Committee, responsible for overseeing these activities, comprises key directors including Ratan Jindal (Chairman and Managing Director), Abhyuday Jindal (Managing Director), Jagmohan Sood (Wholetime Director & COO), Dr. Aarti Gupta (Independent Director), and Mrs. Arti Luniya (Independent Director). During FY 2024-25, the committee held two meetings, with full attendance from most members.

JSL’s CSR initiatives are implemented in regions surrounding its plants, particularly in Haryana and Odisha, impacting areas like healthcare, education, women empowerment, and environmental sustainability. In FY 2023-24, the company reached over 68,700 beneficiaries through its programs. To ensure accountability, JSL engages independent agencies for impact assessments of projects exceeding INR 1 crore in average annual spend over the previous three years, as mandated by Rule 8(3) of the CSR Rules.

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CSR Financials for FY 2024-25: Spending and Unspent Analysis

For FY 2024-25, JSL’s average net profit under Section 135(5) was INR 3,192.58 crore, resulting in a 2% CSR obligation of INR 63.85 crore. After accounting for a set-off of INR 0.25 crore from previous excesses and nil surplus from prior CSR activities, the total obligation stood at INR 63.60 crore.

The company spent INR 9.95 crore during the year, broken down as follows:

• INR 7.59 crore on CSR projects (both ongoing and other than ongoing).
• INR 2.36 crore on administrative overheads.
• Impact assessment fees were paid post-March 31, 2025, and thus not included in the FY spend.

This left an unspent amount of INR 53.65 crore, which was transferred to the Unspent CSR Account on April 11, 2025. Notably, this entire unspent sum was allocated to an ongoing project: the establishment of a hospital and school in Jajpur, Odisha, executed through the Jindal Stainless Foundation.

The approved CSR projects for FY 2024-25, as detailed in company disclosures, span multiple categories under Schedule VII:

• Healthcare Promotion (Item i): INR 1.28 crore for initiatives like clubfoot disability elimination, preventive healthcare, and wellness workshops.
• Education Promotion (Item ii): INR 0.67 crore for strengthening deaf schools, vocational training, and educational support for underprivileged communities.
• Sports Promotion (Item vii): INR 1.01 crore.
• Environmental Sustainability (Item iv): INR 2.34 crore for cleanliness drives, ecological balance, and animal welfare.
• Rural Development (Item x): INR 1.02 crore.
• Emergencies and Relief (Item xii): INR 0.27 crore.
• Protection of National Heritage (Item v): INR 1.00 crore.
• Administrative Overheads: INR 2.36 crore.
• School and Hospital Project (Items i & ii): INR 53.65 crore (unspent, ongoing).

These allocations reflect JSL’s strategic focus on long-term infrastructure, with the bulk reserved for the Jajpur project. No excess spending occurred, and there was no surplus from previous years available for set-off.

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Details of the Ongoing Project: Hospital and School in Jajpur, Odisha

The unspent INR 53.65 crore is earmarked for setting up a hospital and school in Jajpur, Odisha, where JSL operates a major manufacturing facility. This initiative qualifies as an ongoing project under CSR rules, allowing the transfer to a dedicated account for phased execution over multiple years.

Historical context reveals JSL’s long-standing commitment to healthcare in Jajpur. In 2016, the Jindal Institute of Medical Sciences (JIMS) proposed a 100-bed hospital in the region, starting with basic facilities and expanding to include trauma centers and super-specialties. While updates on its exact status in 2025 are limited, JIMS operates a 580-bed multi-specialty hospital in Hisar, Haryana, suggesting potential replication or expansion in Odisha. The Jajpur hospital could address local healthcare gaps, especially in rural areas lacking advanced facilities.

The school component aligns with JSL’s education focus, which includes non-formal education centers, vocational training, and infrastructure development in Jajpur. Initiatives like the Jindal Institute of Industrial Training in Jajpur provide skill development, empowering youth and women. This project could integrate with existing efforts, such as stainless steel fabrication training at local polytechnics.

By allocating a significant portion to this infrastructure, JSL aims for enduring impact, potentially benefiting thousands in Odisha’s industrial belt. However, the lack of detailed timelines in public disclosures highlights a common challenge in tracking ongoing CSR projects.

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Impact Assessment and Previous Years’ Unspent

JSL appointed KPMG Assurance and Consulting Services LLP to assess CSR projects from FY 2023-24. The executive summary and full report are accessible on the company’s website, emphasizing positive outcomes in areas like museum restoration and community outreach. Such assessments ensure transparency and effectiveness.

Regarding previous unspent: In FY 2023-24, INR 29.41 crore was transferred to the Unspent CSR Account, fully spent in FY 2024-25. No amounts remained unspent or were transferred to Schedule VII funds, indicating efficient utilization.

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Reasons for Unspent and Compliance

JSL did not fail to meet the 2% target per se; the unspent is justified under ongoing project provisions. Reasons include the capital-intensive nature of the hospital and school setup, requiring phased funding for planning, approvals, and construction. No capital assets were created in FY 2024-25, confirming the project’s early stage. This complies with Section 135(5), as noted in the report: “Not Applicable, please refer point no. 6.”

Implications and Conclusion

Unspent CSR at JSL exemplifies how companies balance immediate spending with strategic, high-impact investments. While critics argue unspent funds delay benefits, ongoing projects like Jajpur’s hospital and school promise sustainable development, aligning with SDGs on health (SDG 3) and education (SDG 4). In a broader context, India’s CSR spend reached INR 25,000 crore in FY 2022-23, but unspent portions underscore the need for better project management.

JSL’s approach demonstrates commitment, with over 90,000 beneficiaries impacted in FY 2024-25. As the company progresses the Jajpur project, it could set a benchmark for industrial CSR in Odisha. Stakeholders should monitor execution to ensure timely realization of these vital community assets.

(India CSR)