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CHAPTER-1: INTRODUCTION

Corporate social responsibility refers to the initiatives that every company fulfils
towards a society and environment. Business under corporate social responsibility
conducts its business in an ethical manner, complying with national and international
norms and laws. Apart from legal compliance companies also involve themselves into
some social activity and do well for society. Corporate social responsibility helps
businesses to increase profits and stakeholders trust through maintaining positive
relationship with them and high legal standards. CSR also helps in creating positive
impact on environment and its stakeholders.

The concept of corporate social responsibility has grown over last few decades.
Earlier CSR was not considered that important but nowadays every company follows
it and considers it to be the key problem. Every organization not only thinks of
earning profits but also work towards welfare of the society as their key
responsibility. So CSR may be defined as when a company considers the
stakeholders, society and environment as its major responsibility.

As per the consumers, they strongly feel that businesses and organization should
engage themselves in CSR activities apart from achieving their set targets; this not
only helps in creating a positive image of an organization or goodwill of the firm but
will also help them in earning more profits through positive responses from
consumers. Most of the consumers are more inclined towards those businesses and
retailers those who do more of charity work and are actively participating in any of
the social work around them.

How companies go about CSR includes companies approach or initiatives towards


corporate social responsibility. One of the most used approach or initiative by
companies includes CORPORATE PHILANTHROPHY under which companies or
organizations provide aid or monetary donations to many communities like charity
homes, health organizations, education, social welfare, and etc. Other initiative
includes:
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 Volunteer activities by the employees of the organization towards the


community and non-profit organizations.
 For producing many products companies adopt ethical business practices that
do not harm the society.

There are few actions taken up by the companies as corporate social responsibility
actions which include the following:

 To keep environment safe and protected, companies go for activities like


management of water, management of waste, recycling of waste, reuse of
materials, more technology driven, less use of paper, etc.
 To help community and non-profit organizations, companies try to raise funds
for them, provide employees as volunteers for help, they employ local
workers, sponsor various local events, engage themselves in fair trade
practices, etc.
 To help customers usually adopt ethical marketing wherein they assume
customers to be the king of market, respect them, gives them more value and
try to generate value for their customers. They go for more fair practices and
do not manipulate customers by providing them any false hopes or any
misleading product.

Importance of corporate social responsibility to businesses:

 CSR helps in increasing employee engagement: every person wants to be


associated with an organization that not only keeps their employees as family
but are also inclined towards their customers and society and positive image in
market. Employees are more attracted to an organization which continuously
works for the betterment of the community.
 Corporate social responsibility helps in creating a good public image of the
organization: public image is of utmost importance for each and every
organization, positive public image helps in retaining and growing customers
whereas negative public image destroys everything. Positive public image can
be created by doing for the society, environment, stakeholders and
community.
 Corporate social responsibility increases media presence for the organization:
it is very important for organizations to be recognised for the good thing they
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are doing. If any organization is actively involved in CSR activities they


attract media and their presence is known to the world.
 Corporate social responsibility develops a positive and friendly working
environment for their employees.

Top 10 companies in INDIA in 2017 contributing maximum towards Corporate


Social Responsibility:

1. Tata Chemicals limited: BEACON is the CSR initiative taken up by Tata


Chemicals Limited where
 B stands for BLOSSOM Which promotes and helps in development of
handicrafts.
 E stands for ENHANCE which deals with poverty and helps in
enhancement of livelihood.
 A stands for ASPIRE which aims at developing skill of individual and
their education
 C stands for CONSERVE which is working towards sustainable
development of our environment and resources.
 N stands for NURTURE which deals which health aspect of
individuals and the working condition in an organization.
2. Tata steel limited: CSR initiatives taken up by Tata steel limited are in 10 key
areas which are towards education, livelihoods, electricity, health, sports,
disaster relief, rural development, environment, technological support.
3. Tata power company limited: As an active participant towards corporate social
responsibility Tata power company limited has undergone 5 programmes in 5
major areas:
 Samriddhi for improving livelihood
 Daksh for improving employment
 Vidya for girl child education
 Sanrachna to build country’s infrastructure and capital.
 Swatch Jal to promote health and sanitation
4. Shree cements limited: As part of CSR initiative Shree cements ltd. Have
become member of Cement Sustainability Initiative (CSI), Switzerland.
Company is actively involved in reduction of global carbon and moving
towards less carbon economy.
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5. Tata motors limited: As active member of society this organization is also


involved in many programmes which includes following:
 Kaushalya which is a skill development programme
 Amrutdhra which is related to preservation of water and clean drinking
water
 Aarogya which is a programme relating to health
 Vasundhara which is a environment related programme, helps in
developing a healthy environment to live in.
6. Ultra tech cement limited: ultra the cement limited is also a voluntary member
with Cement Sustainability Initiative (CSI) and also they play a very important
role in preserving the environment as one of the largest cement producing
company in India. And environment can be preserved by following ways in
which company is actively committed and involved which includes: waste
management, afforestation, preservation of water, etc.
7. Mahindra and Mahindra limited: As part of CSR activity Mahindra and
Mahindra limited is undertaking programmes like
 A project named NANHI KALI that provides scholarship to
underprivileged girls for their education.
 Provide scholarships and grants to various students who lack financial
support so that they get required education.
 Another project which company took up is HRAYALI wherein to
increase greenery company is involved in more of plantation of trees.
 Through a programme named ESOPs, Company is getting into CSR
projects in field of education, health, etc.
8. ACC limited: ACC limited to promote education has opened many schools to
impart education and develop more skills in students. Also ACC is promoting
women empowerment through self-help groups. Along with these company is
also concerned about health of people for it organize many health camps.
9. Ambuja cements limited: Ambuja cement has its own foundation named
“Ambuja Cement Foundation” who wants that our society our community
should realize their full potential and work towards their betterment as well as
the society. This foundation covers almost 22 locations across India and works
in areas like health, water management, education, etc.
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10. ITC limited: initiatives taken up by ITC limited are that they were actively
involved in providing shelter to the disadvantage people of our society. Other
initiative of ITC includes working towards women empowerment and they
have successfully created 1183 self-help group as part of women
empowerment. ITC limited has opened 2334 learning classes as part of
providing education to primary school students. ITC has taken E-Choupal
initiative as well.

Corporate social responsibility not only significantly impact organizations operations


but also its financial performance. There is a great impact of CSR activities on every
company’s financial performance. So this research is conducted to study the impact of
CSR activities on financial performance of companies listed in national stock
exchange in India. India is amongst the developing nation of economy therefore
through CSR each and every company contributes towards Indian economy
development. Societies in developing countries face a lot of problems but CSR helps
in reducing such problems.

The research work conducted describes how Indian companies are impacted through
CSR activities and what impact whether positive or negative is created by CSR
activities.

1.1PURPOSE OF THE STUDY:

The main purpose of the study is to find out what role CSR plays in making a
business more profitable and how important it is for each and every organization to
contribute some amount as donation to society and environment. There are various
organizations that have taken some or the other initiative taken up by many
companies which were part of study. Also to find out what relationship exists between
CSR and financial performance of the companies taken up for study?

1.2 OBJECTIVES OF THE STUDY:

 To study the relationship between CSR and net profits of companies


 To study the relationship between CSR and totals Assets of firm
 To study the relationship between CSR and EPS of firm
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CHAPTER-2: LITERATURE REVIEW

Corporate social responsibility provides base for every organization to understand


their responsibilities that they need to fulfil towards society. Several studies have been
conducted in order to study the impact corporate social responsibility creates on
firm’s financial performance. Various authors have done research. “Impact of
corporate social responsibility on firms financial responsibility” ( Munaza Kanwal,
Farida Khanam, Shagufta Nasreen, and Shahid Hameed belonging to Department of
management sciences Islamia University Bahawalpur, Pakistan nov. - Dec. 2013)
revolves around explaining the relationship between CSR and financial performance
of 15 companies of Pakistan that were listed in Karachi stock exchange. For analysis
correlation was used to study the relationship between them. CSR activities are kind
of investment and not any expense or cost. Apart from earning profit it is a prior
responsibility of every organization to think about society and its welfare. For study
data for 5 years of these companies were examined. Correlations were calculated and
it was found that there was a positive relationship between CSR and net profits of
these 15 companies. When CSR was compared with the totals Assets of these firms it
was found that there is also a positive relationship between them. It was observed that
Pakistani companies actively take part towards fulfilment of their responsibility
towards society. It was also observed that firms spending more and more towards
CSR have a positive financial performance. “Impact of Corporate Social
Responsibility on Financial Performance: Evidence from Listed Banks in Nigeria” (
Joseph UGOCHUKWU MADUGBA and Michah C. OKAFOR belonging to Michael
Okpara University of Agriculture Umudike, Nigeria). The author felt a need for CSR
activities as economy was recovering from the financial crisis so CSR help the
financial institutions to recover from these crises. It was also observed that banks in
Nigeria were solely profit making and their commitment towards society was very
limited. Research was conducted on listed banks of Nigeria in order to study the
impact of CSR on these banks earning per share (EPS), dividend per share (DPS) and
return on capital employed (ROCE). The study was conducted for a period of 5 years
from 2010 to 2014. It was observed that EPS has a negative relationship with CSR
activities, where ROCE has a positive relationship with CSR and DPS is not affected
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by CSR. So it was concluded that banks in Nigeria does not actively involved in CSR
because it does not increase their profitability and thus financial performance remains
unaffected. “Impact of CSR on financial performance of Ghee and fertilizers industry
situated in Southern Punjab, Pakistan” ( Prof. Dr. Abdul Ghafoor Awan and Sobia
Saeed; both of them were part of Institute of Southern Punjab, Multan-Pakistan).
There are fundamentally four types of CSR, 1. Market oriented 2. Society oriented
3.workforce oriented and 4. Environment oriented. Each and every firm need to focus
on any of the above mentioned CSR in order to maintain their reputation. Main
purpose of this study was to check that how many firms falling under this category
actually follow CSR and how many of them do not do so and also to study their
impact. Both primary and secondary data are collected for 5 years (2009-13). It was
observed that only 15% of the firms involve themselves in all four areas of CSR
whereas 85% of the firms involve in any of the CSR activities. It was also seen that
environment oriented CSR was most preferred. It was observed that ghee and
fertilizer industry fully involve them in CSR and there is a positive relationship
between revenues, return on capital and CSR. Sukanya Chetty, Rebekah Naidoo, and
Yudhvir Seetharam from University of the Witwatersrand - School of Economic and
Business Sciences, South Africa focused on studying the impact of CSR on financial
performance of various firms in South Africa. Investors use JSE SRI Index to find out
socially responsible companies and this index was launched in year 2004. Impact of
CSR on MNC’s financial performance in Bangladesh (Naheem Mahtab)was observed.
CSR is of utmost importance in all the areas of operations but a firm cannot
implement it everywhere so it is the responsibility of every employee and
management to look after CSR. One need to frame CSR strategies and align that with
the firm’s objectives. In Bangladesh, CSR was a new concept and every company
need to adopt that. To study the impact of CSR, 5 MNC’s of Bangladesh listed in
DSE were taken and secondary of all those MNC’s were collected. Correlation and
regression analysis was conducted and it was observed that a positive relationship
exists between CSR and all the variables. In India it was mandatory to contribute at
least 2% of their profits towards CSR activities and India is the first country that made
it mandatory for companies to contribute towards CSR (Akshmi Das, Amalendu
Bhunia, july 2016). Various studies conducted in India and abroad were discussed;
valuable suggestions and conclusion given by various researchers were monitored and
discussed. Studies showed that a positive relationship exists between CSR and
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financial performance. Effect of Corporate Social Responsibility was also observed


on financial performance of various commercial banks in Kenya (kipruto Daniel,
D63/60179/2013). Some of the banks took profit after taxes to find out the impact of
CSR on financial performance because they consider that CSR is tax exempt. The
amount spend by companies towards the social activities was considered to be
investment in CSR activities. And this is how CSR is measured. Data from 2009-2013
was taken; descriptive analysis as well as multiple regression were part of analysis. 44
commercial banks of Kenya were studied out which only 8 banks data was complete.
It was found that contribution towards CSR activities significantly affects the
financial performance of banks in Kenya. In London study was conducted to find out
how customer awareness is related to CSR and value of firm. Firms with high
customer awareness tend to have positive relation between firm value and CSR
activities (Henri Servaes, Ane Tamayo; London business school, july 2012). A
question arise that how to measure impact of corporate social responsibility on
business performance? (Dd. Dipl.-Vw. Malte Kaufmann) the researcher believed in
using the new trend d measuring CSR and its impact. A shift from short term analysis
focuses on indicators like revenue, market share and shareholder value towards using
indicators like customer satisfaction, employee and other stakeholders that help in
long term success of the business; using a EFQM criteria. Results of research were
presented at the Berlin International Economics Congress, 2012. As people have
growing interest towards clothing industry so an analysis was done for clothing
industry (Bodil Sandén, Markus Fellesson). This study was done to find out that how
corporate social responsibility can influence company performance as well as
customer perception. Food sector in Pakistan was taken a segment of study and
relationship of CSR and companies falling under food sector were observed (Iqra Ali
Murtaza, Naeem Akhtar, Aqsa ijaz and Ayesha Sadiqa, 2014). Companies spend good
amount on CSR activities under food sector as there comes out to be a positive
relationship between financial performance and corporate social responsibility.
Whereas test like correlation, ANOVAs and t test were conducted. It was also
concluded that companies should involve more and more CSR as it helps in overall
improvement of financial performance of the companies.CSR is considered to be an
independent variable whereas financial performance of companies is considered to be
a dependent variable and this relationship was observed in pharmaceutical sector of
Peshawar, Pakistan (Gul Aga, Shahzad Khan, Danish Wasim and Adnan Shah, June
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2012). Various pharmaceutical companies were taken up for study and managers of
these companies were questioned and it was seen that there exists a strong correlation
between the variables. There are various initiatives taken up by many companies
towards the society and environment, so study was conducted to observe the various
researches already done to study the relationship between CSR done by organizations
and the financial performances of the organizations (Ravi Sankar.R, December 2014).
Study disclosed therein showed that some researchers reported positive impact of
CSR while others found negative impact, some of them also found that no relationship
exist between them. In India earlier organizations use to focus more on making profits
rather than thinking about society or its environment but now focus has shifted and
they have become more society oriented (Harpreet Singh Bedi, Punjab). In India, out
of 37 companies 26 companies spent fewer amounts than recommended on CSR
activity. There exists a positive relationship between CSR and financial performances
of the companies. Another area of study was Indonesia where companies listed in
Indonesia stock exchange were taken for study. 24 Companies relating to mining and
basic chemical industries were observed and impact of CSR were studied on that
industry (Novrianty Kamatra and Ely Kartikaningdyah, January 2015). CSR does not
impact on ROE and EPS of these companies whereas ROA and NPM are significantly
impacted by CSR. When it comes to aviation industry, a strong need is arising to
create an environmental agenda and take required initiatives to reduce the impact of
activities on the environment (Eleni Rapti and Francesca Medda, 2008). Various
airports in UK, Europe, and china were considered for study. It was observed that
CSR activities help in generating revenues in case of Manchester and European
airports. A study was conducted to observe the effect of CSR on firm’s profitability in
Nigeria (Babalola, Yisau Abiodun, 2012). Secondary data of firms in Nigeria was
collected and it was observed that firms invest less than 10% of their profit towards
corporate social responsibility. After study it was observed that CSR significantly
impacts the firm’s financial performance in Nigeria so it was recommended that the
firms in Nigeria should adopt more social activities and do more of social work for
the welfare of the firms. Banks in India were compared on the basis of their sector.
Two banks of private sector whereas two banks of public sector were taken for the
study (Rajnish Yadav and Dr. F.B. Singh, 2016). Net worth of all four banks were
taken as financial measure to study the impact of CSR on performance of banks.
ANOVA table was used for the analysis and it was found that in all the four banks
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there was a positive relationship between net worth of the banks and the financial
performance of the banks. Another area of study was MTN Ghana limited (Alex
Anlesinya, Joseph Ahinsah, Fatimatu Bawa, Eunice W. Appoh and Zakari Bukari,
January-March 2014). 35 respondents were considered for the study and regression
and multiple regression were the techniques of analysis and at various levels impact
were studied. It was revealed that there comes out to be a positive relationship
between CSR and the financial performance of Ghana LTD. It was also seen that
company is very obedient in following all the laws and regulations relating to its
operations so it was required that company should put in more for employee
enhancement and customers for long term perspective. With the increase in CSR
activities by the organizations its impact has also increased over a period of time.
Major implementations have been made in case of developing nations and especially
in west areas and one the areas discussed over here is Nigeria. Financial performance
of 40 audited companies were taken for study using financial instrument like return on
Assets and return on equity(Olayinka Marte Uadiale and Temitope Olamide Fagbemi,
2012). There seems to exist a positive relationship.
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CHAPTER-3: RESEARCH METHODOLOGY

Research problem:

To study the impact that corporate social responsibility creates on the financial
performance of companies listed in National stock exchange descriptive research is
used.

Sources of data:

Secondary data is used for the study and not the primary data. Secondary data is the
data which is also published or used by others as well. Secondary data is collected to
reach every aspect of the study and find valuable conclusions.

Secondary data is collected through the following ways:

 Annual and sustainability reports of the 15 companies taken for the study
 Research papers on CSR
 Published documents and reports taken from ministry of corporate affairs
website
 Journals published in context of CSR
 Various online portals
 Data secured from NDTV profit and Economic times

Various statistical tools used for analysis of data are:

 Descriptive analysis inclusive of pie charts and bar graphs


 Inferential analysis inclusive of correlation
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CHAPTER-4: DATA ANALYSIS

To study the impact that CSR has on financial performance of company has
been studied through following data:

Data for 14 companies listed in national stock exchange from year 2013-2017(5
year data) has been to study the objective.

NET PROFITS:

NET PROFITS (IN CRORES)


S. NO. COMPANY 2017 2016 2015 2014 2013
1 Reliance 31425 27417 22719 21984 21003
2 TCS 23653 23075 19256.96 18474.92 12786.34
3 IOC 19106.4 11242.23 5273.03 7019.09 5005.17
4 ONGC 17899.98 16003.65 17732.95 22094.81 20925.7
5 HDFC Bank 14549.64 12296.21 10215.92 8478.38 6726.28
6 Coal India 14500.53 16343.53 13383.39 15008.54 9794.32
7 Infosys 13818 12693 12164 10194 9116
8 Vedanta 11068.7 -11906.23 1927.2 1076.09 120.77
9 SBI 10484.1 9950.65 13101.57 10891.17 14104.98
10 ITC 10200.9 9844.71 9607.73 8785.21 7418.39
11 ICICI Bank 9801.09 9726.29 11175.35 9810.48 8325.47
12 NTPC 9385.26 10242.91 10290.86 10974.74 12619.39
13 Hind Zinc 8316 8175 8178 6904.62 6899.48
14 Wipro 8161.7 8099 8193.1 7387.4 5650.2
Table 4.1: Net Profits
Source: Company’s annual reports, Economic Times
13

EARNING PER SHARE:

EPS (IN CRORES)


S.NO. COMPANY 2017 2016 2015 2014 2013
1 Reliance 96.65 84.61 70.21 68.02 65.05
2 TCS 120.07 117.13 98.32 94.18 65.23
3 IOC 40.31 47.44 21.72 28.91 20.61
4 ONGC 13.95 18.71 20.73 25.83 24.46
5 HDFC Bank 56.78 48.64 40.76 35.34 28.27
6 Coal India 23.36 25.87 21.19 23.76 15.51
7 Infosys 0 0 105.92 177.52 158.75
8 Vedanta 37.33 -40.16 6.5 3.63 1.39
9 SBI 13.15 12.82 17.55 145.88 206.2
10 ITC 8.4 12.23 11.99 11.05 9.39
11 ICICI Bank 16.83 16.73 19.28 85.04 72.22
12 NTPC 11.38 12.42 12.48 13.31 15.3
13 Hind Zinc 19.68 19.35 19.35 16.34 16.33
14 Wipro 33.57 32.78 33.18 29.95 22.94
Table 4.2: EPS
Source: Company’s annual Reports, Economic Times

TOTAL ASSETS:

TOTAL ASSETS (IN CRORES)


S. NO. COMPANY 2017 2016 2015 2014 2013
1 Reliance 546746 481674 397785 367583 318511
2 TCS 87538 75117 62761.83 57330.61 42685.81
3 IOC 259213.3 230626.8 227224.2 256709.2 231351
4 ONGC 247249.5 220105.8 208079.9 199288.4 178126.7
5 HDFC Bank 863840.2 740796.1 590503.1 491599.5 400331.9
6 Coal India 18885.4 21378.76 23501.45 25041.59 34037.12
7 Infosys 79539 72327 61380 52170 42650
14

8 Vedanta 164225.5 180931.4 78534.4 83489.68 18435.31


9 SBI 2705966 2357618 2048080 1792748 1566211
10 ITC 54215.95 50031.28 44195.66 39229.39 34017.43
11 ICICI Bank 771791.5 720695.1 646129.3 549641.6 536794.7
12 NTPC 236577.5 215138.3 204014 186269 170820.1
13 Hind Zinc 49047 50697 48992 41676.67 35465.41
14 Wipro 62921.7 58499.5 53242.6 45588.2 40591.5
Table 4.3: Total Assets
Source: Company’s Annual Reports, NDTV Profit, Economic Times

CSR CONTRIBUTION:

CSR contribution (IN CRORES)


S. NO. COMPANY 2017 2016 2015 2014 2013
1 Reliance 659 652 761 712 351
2 TCS 379.7 294 219 93.6 71.6
3 IOC 214 156.68 113.79 140.38 100.1
4 ONGC 526 421 495.23 341.25 261.57
5 HDFC Bank 305 120.72 118.55 110.21 100.89
6 Coal India 128.05 73.3 24.7 95 150
7 Infosys 289 202.3 239.54 203.38 182.32
8 Vedanta 108 0 25.5 15.06 1.5
9 SBI 109.82 143.92 115.8 148.93 127
10 ITC 276 247.5 214.06 106.63 82.34
11 ICICI Bank 182 172 174.33 192.27 96.57
12 NTPC 280 491.8 205.18 208.52 239.76
13 Hind Zinc 64.03 63.3 59.28 55.23 55.19
14 Wipro 186 159.8 132.7 103.42 67.8
Table 4.4: CSR Contribution
Sources: mca.gov.in, Company’s Annual Reports and sustainability reports
15

4.1 Correlation of total companies year wise between CSR & Net profits,
CSR & EPS and CSR & Total Assets.

1. CORRELATION BETWEEN NET PROFITS AND CSR

CORRELATION IN CORRELATION IN CASE OF NET


CASE OF NET PROFITS PROFITS
2017 0.797269 0.9
0.8
2016 0.650185
0.7
2015 0.765332 0.6
0.5
2014 0.706219
0.4
2013 0.855118 0.3
Table 4.5 0.2
0.1
0
2017 2016 2015 2014 2013

Figure 4.1

INTERPRETATION:

On comparing year 2013 and 2014 it is very clear that there is a positive degree of
correlation between the contribution made by the companies towards CSR activities
and the profit generated during the year but there is a decline correlation for the year
2014 from 0.85 to 0.71.

On comparing 2014 and 2015 it is seen that amount of contribution made by


companies in 2015 increased due to which correlation has also increased from 0.71 to
0.76. But in 2016 again there is a decline in correlation from 0.76 to 0.65 but still
there exists a strong and positive relation between CSR and net profits.

On comparing 2016 and 2017, there is sharp rise in correlation from 0.65 to 0.79.
Since 2014 there is rise in correlation up to 2017 and there is strong positive
correlation between CSR and net profits of the companies.
16

2. CORRELATION BETWEEN EARNING PER SHARE AND CSR

CORRELATION IN CASE OF EPS


CORRELATION IN
0.6
CASE OF EPS
0.5
2017 0.490822 0.490821971
0.4 0.447716326
2016 0.447716
0.376736076
2015 0.376736 0.3

2014 0.179818 0.2


2013 0.173591 0.179818264 0.173591421
0.1
Table 4.6
0
2017 2016 2015 2014 2013

Figure 4.2

INTERPRETATION:

From the above table and graph it is observed that in 2013 and 2014 there is a weak
correlation between earning per share and CSR contribution of the companies. So in
this case CSR and EPS are not related with each other.

In 2015 the correlation is 0.37 which is a weak correlation but when comparing with
year 2013 and 2014 there is a rise in correlation from 0.17 to 0.38.

In 2016 and 2017 correlation is moderate which signify that there is relationship
between CSR and EPS of the firm but not that strong relationship exists. But when
compared to other years correlation has increased.
17

3. CORRELATION BETWEEN CSR AND TOTAL ASSETS

CORRELATION IN
CASE OF TOTAL CORRELATION IN CASE OF TOTAL
ASSETS ASSETS
0.15
2017 -0.13569
0.1
2016 -0.05962
0.05
2015 -0.02052
0
2014 0.102473
2017 2016 2015 2014 2013
2013 0.089726 -0.05

Table 4.7 -0.1

-0.15

Figure 4.3

INTERPRETATION:

From the above diagram it is clear that CSR and total Assets of the companies are not
at all correlated. In 2013 correlation was 0.09 which is very weak correlation but in
2014 correlation increased to 0.1 which also very weak. This shows that there is no
relationship between contribution towards CSR and the total Assets of the companies.

In 2015 there is a drop in correlation from 0.1 to -0.02. Here it is observed that
correlation is negative.

In 2016 and 2017 there was a sharp fall in correlation from -0.02 to -0.13. this shows
that EPS and CSR of companies are negatively correlated and there is a negative
correlation between them.
18

4.2 Correlation of 14 companies between CSR & Net Profits, CSR &
EPS and CSR & Total Assets.

 RELIANCE INDUSTRIES LIMITED

RELAINCE INDUSTRIES LIMITED


NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.285950773 0.285086722 0.446418549
Table 4.8

CORRELATION WITH CSR


RELIANCE INDUSTRIES LIMITED
0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
NET PROFITS EPS TOTAL ASSETS

Figure 4.4

INTERPRETATION:

Reliance Industries Limited has a very weak correlation of Net Profits and EPS with
CSR. But there exists a positive correlation between them. Net Profits and EPS have a
correlation of 28% each. As such no relationship exists between CSR & Net Profits
and CSR & EPS. But there exists a moderate and positive correlation in case of Total
Assets of 44%. So there is some sort of relationship between them.
19

 TCS LIMITED

TCS LIMITED
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.897244778 0.895788874 0.962793575
Table 4.9

CORRELATION WITH CSR


TCS LIMITED
0.98

0.96

0.94

0.92

0.9

0.88

0.86
NET PROFITS EPS TOTAL ASSETS

Figure 4.5

INTERPREATATION:

From the above diagram it is observed that total Assets are highly correlated with
CSR contribution. Correlation is 0.96 which is very strong correlation. Net profits and
CSR are also strongly correlated with 0.9. EPS and CSR of TCS limited are also
positively correlated with correlation of 0.89. So it can be seen that all the 3 variables
are positively related with CSR contribution.
20

 INIDAN OIL CORPORATION LIMITED

IOC LIMITED
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.978937434 0.765737838 0.695793392
Table 4.10

CORRELATION WITH CSR


IOC LIMITED
1.2

0.8

0.6

0.4

0.2

0
NET PROFITS EPS TOTAL ASSETS

Figure 4.6

INTERPRETATION:

From above bar graph it is seen that Net profits are highly correlated with CSR.
Among total Assets and EPS net profits has the highest correlation of 97%. Whereas
EPS is also positively correlated but not that strong. And Assets are moderately
correlated with CSR. All three have a strong relationship with contribution towards
CSR.
21

 OIL AND NATURAL GAS LIMITED

ONGC LIMITED
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR -0.702811321 -0.827774492 0.87171667
Table 4.11

CORRELATION WITH CSR


ONGC LIMITED
1
0.8
0.6
0.4
0.2
0
-0.2 NET PROFITS EPS TOTAL ASSETS
-0.4
-0.6
-0.8
-1

Figure 4.7

INTERPRETATION:

From above bar graph it is observed that only total Assets are positively correlated
with CSR. Total Assets of ONGC Limited have a strong correlation with CSR of
87%. But when we talk about ONGC’S net profits and EPS they both are negatively
correlated with CSR. There exists no relationship between EPS & CSR and Net
profits & CSR of ONGC Limited. EPS has strong negative correlation of 82%
whereas Net profits has a negative correlation of 0.7.
22

 HDFC BANK

HDFC BANK
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.797755234 0.798258066 0.791332924
Table 4.12

CORRELATION WITH CSR


HDFC BANK
0.8
0.798
0.796
0.794
0.792
0.79
0.788
0.786
NET PROFITS EPS TOTAL ASSETS

Figure 4.8

INTERPRETATION:

HDFC Bank has a strong positive relation in case of all three variables i.e. Net profits,
EPS and total Assets with CSR. EPS has highest correlation of 0.8 which is highly
strong correlation. Net profits have a strong positive correlation of 79%, whereas total
Assets has a correlation of 0.7. EPS, Net profits and total Assets of HDFC bank has a
strong relationship with CSR.
23

 COAL INDIA LIMITED

COAL INDIA
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR -0.46035065 -0.439047958 0.423133468
Table 4.13

CORRELATION WITH CSR


COAL INDIA
0.5
0.4
0.3
0.2
0.1
0
-0.1 NET PROFITS EPS TOTAL ASSETS
-0.2
-0.3
-0.4
-0.5
-0.6

Figure 4.9

INTERPRETATION:

Coal India Limited has a positive correlation between Total Assets and CSR. But
there is moderate correlation of 0.42 between CSR and Total Assets of Coal India
Limited. There exists some relationship between CSR contribution and total Assets of
Coal India Limited. But net profits and EPS are negatively correlated with CSR. They
are moderately negatively correlated with correlation 46% and 43% respectively.
24

 INFOSYS LIMITED

INFOSYS
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.813648817 -0.582022419 0.763784895
Table 4.14

CORRELATION WITH CSR


INFOSYS
1
0.8
0.6
0.4
0.2
0
NET PROFITS EPS TOTAL ASSETS
-0.2
-0.4
-0.6
-0.8

Figure 4.10

INTERPRETATION:

For Infosys it is seen that Net profits and Total Assets are positively correlated
whereas EPS is negatively correlated. Net profits have a strong positive correlation of
81% with CSR whereas Total Assets have a strong correlation of 76% with CSR. This
shows that there exists a positive and strong relationship of CSR with Net profits and
Total Assets. But if EPS is seen it has moderate negative correlation with CSR of
58%. There exists no correlation between EPS and CSR.
25

 VEDANTA LIMITED

VEDANTA
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.812109216 0.806612918 0.437205861
Table 4.15

CORRELATION WITH CSR


VEDANTA
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
NET PROFITS EPS TOTAL ASSETS

Figure 4.11

INTERPRETATION:

From the above bar graph it is observed that Net profits, EPS and total Assets of
Vedanta Limited are positively correlated with CSR. Both Net profits and EPS of
Vedanta have strong correlation of 81% with CSR contribution. This shows that there
exists a positive and strong relationship between CSR & Net profits and CSR & EPS
of Vedanta Limited. When it comes to Total Assets it is seen that it has a moderate
positive correlation with CSR. Up to 43% it is correlated with CSR which implies that
to some extent they are related.
26

 STATE BANK OF INDIA

SBI
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR -0.343666121 0.348307824 -0.393947373
Table 4.16

CORRELATION WITH CSR


STATE BANK OF INDIA
0.4
0.3
0.2
0.1
0
-0.1 NET PROFITS EPS TOTAL ASSETS
-0.2
-0.3
-0.4
-0.5

Figure 4.12

INTERPRETATION:

State Bank of India is the only company which has Total Assets negatively correlated
with CSR. Also Net Profits of SBI are negatively correlated with CSR. Net profits are
moderately negatively correlated with 34% and Total Assets with 40%. There exists
negative relationship between CSR & Net Profits and CSR & Total Assets of State
Bank of India. Whereas if EPS is seen it has positive correlation with CSR. It is
moderately correlated with 35%.
27

 ITC LIMITED

ITC
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.937555387 0.053996173 0.97031284
Table 4.17

CORRELATION WITH CSR


ITC
1.2

0.8

0.6

0.4

0.2

0
NET PROFITS EPS TOTAL ASSETS

Figure 4.13

INTERPRETATION:

There exists a very strong correlation of Net profits and Total Assets with CSR of ITC
Limited. Total Assets has a correlation of 97% and Net Profits has a correlation of
93%. This shows that there exists a very strong relationship between CSR & Net
Profits and CSR & Total Assets of ITC Limited. Whereas in case of EPS it is totally
opposite, there exists positive but a very weak correlation between EPS and CSR of
ITC Limited. This shows that no relationship exists between them.
28

 ICICI BANK

ICICI BANK
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.735103613 -0.331775309 0.475487549
Table 4.18

CORRELATION WITH CSR


ICICI BANK
0.8

0.6

0.4

0.2

0
NET PROFITS EPS TOTAL ASSETS
-0.2

-0.4

Figure 4.14

INTERPRETATION:

In case of ICICI Bank there exists a strong correlation between Net Profits and CSR
of ICICI Bank. Positive correlation of 75% exists between them. Total Assets is
moderately positively correlated with 48%. It is observed that a positive relation
between exists between CSR & Net profits and CSR & Total Assets of ICICI bank.
But if EPS is observed than it is negatively correlated with CSR. It has a negative
correlation of 33% which shows a negative relationship.
29

 NTPC LIMITED

NTPC
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR -0.282028348 -0.282542882 0.411019841
Table 4.19

CORRELATION WITH CSR


NTPC
0.5
0.4
0.3
0.2
0.1
0
NET PROFITS EPS TOTAL ASSETS
-0.1
-0.2
-0.3
-0.4

Figure 4.15

INTERPRETATION:

Like many other companies NTPC also has a negative correlation of Net profits and
EPS with CSR. There exists a very weak negative correlation between the Net profits
& CSR and EPS & CSR of 28% each. There is no significant relation between these
two variables with CSR. It is observed that NTPC has a moderate but positive
correlation with CSR of 41%. There exists some sort of relationship CSR and Total
Assets of NTPC Limited.
30

 HINDUSTAN ZINC LIMITED

HIND ZINC
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.92170272 0.922192686 0.864003482
Table 4.20

CORRELATION WITH CSR


HIND ZINC
0.93
0.92
0.91
0.9
0.89
0.88
0.87
0.86
0.85
0.84
0.83
NET PROFITS EPS TOTAL ASSETS

Figure 4.16

INTERPRETATION:

Hindustan Zinc Limited has the positive correlation of its Net profits, EPS and Total
Assets with CSR. Both Net Profits and EPS have a very strong positive correlation
with CSR of 92%. This shows that Net Profits and EPS of Hindustan Zinc Limited
have very strong and significant relationship with CSR. Total assets of Hindustan
Zinc Limited have a strong correlation with CSR of 86% which depicts a strong
relationship between them.
31

 WIPRO LIMITED

WIPRO
NET PROFITS EPS TOTAL ASSETS
CORR WITH CSR 0.868186602 0.886204197 0.995739382
Table 4.21

CORRELATION WITH CSR


WIPRO
1.05

0.95

0.9

0.85

0.8
NET PROFITS EPS TOTAL ASSETS

Figure 4.17

INTERPRETATION:

There exists a perfect correlation between the Total Assets and CSR of Wipro
Limited. Correlation of Total Assets to CSR is equal to 1 which shows that not only
positive relationship exits but a perfect relationship exists between them. Whereas net
profits and EPS of Wipro Limited have a very strong correlation with CSR of 87%
and 89% respectively.
32

CHAPTER-5 : FINDINGS

 Table 1.1, 1.2, 1.3 and 1.4 shows the Net profits, EPS, Total Assets and CSR
contribution of 14 companies from the year 2013 to 2017, Which shows the
increase and decrease in the above mentioned variables.
 It was found that there exists a very strong correlation between the net profits
of the mentioned 14 companies and the CSR. This shows that there is strong
positive relationship that exists between net profits and CSR. Although in
2013 correlation was maximum, companies had decline in profits due which
CSR also declined but in 2017 correlation was as high as 79%. Slowly
correlation increased.
 While first measure was net profit EPS stood the second measure to study the
objective. But in case of EPS it was found that in initial years like 2013 and
2014 very weak correlation existed between EPS & CSR so no relation could
be defined. But there exists moderate positive correlation in current scenario.
Graph shows that currently companies have a positive correlation of 50%
which signifies that some relationship exists between CSR and EPS of the
firms.
 Third measure which was used to study the relationship was the Total Assets
of the firms. It was observed that in 2013 and 2014 there was very minute
correlation between them but currently they are nowhere related. There is
negative correlation between CSR and Total Assets of the companies. This
shows that if one is increasing other is decreasing so there is no relationship
between them when all the companies are seen.
 Correlation was also seen in case of individual companies whether it is
positive or negative in all the three measures. Correlation for an individual
company was calculated between CSR & Net profits, CSR & EPS and CSR &
Total Assets.
 In case of correlation between Net Profits and Corporate Social responsibility
it was observed that Indian oil corporation limited has the highest correlation
of 0.98 followed by ITC limited with 93% and Hindustan zinc limited with
92%, which shows there is a strong positive relationship between CSR and
33

Net Profits. Reliance industries limited has a very weak correlation. While
ONGC limited has very strong negative correlation of 79%. Which means no
relationship exists between Net profits and CSR of such companies.
 In case of correlation between Earning per Share and corporate social
responsibility of companies it was observed that Hindustan Zinc Limited has
highest correlation of 92% followed by Tata Consultancy services limited with
89% and Wipro 88%. From this it can be concluded that a strong positive
relationship between EPS and CSR of these companies. Following with trend
Reliance Industries Limited here also has the lowest correlation and very weak
correlation in case of EPS. When it comes to strong negative correlation
ONGC Limited tops the list again with negative correlation of 83% followed
by Infosys with 58% which shows that no relationship exists between EPS &
CSR of these companies.
 In case of correlation between Total Assets and Corporate social responsibility
of companies it was observed that Wipro has the highest correlation of 1
which means CSR and Total assets of Wipro have perfect relationship
between them. Wipro is followed by ITC which has a positive and strong
correlation of 97% followed by Tata Consultancy services limited with 96%.
This shows that Total assets of these companies have strong and significant
relationship with CSR. NTPC Limited and Coal India Limited have weak
correlation of 42% which shows that very little relationship exists in CSR and
total assets of these companies. It was a strong observation that State Bank of
India is the only company which has a weak negative correlation of 39%
which shows that total assets and CSR of state bank of India are nowhere
related and also they move apart from each other.
34

CHAPTER-6: CONCLUSION

Corporate social responsibility refers to the duty, initiative that an organization fulfils
or does for their employees, society, and environment. It justify the way the company
shall conduct its business and carry out its operations and activity. Earlier corporate
social responsibility was not accepted by each and every organization but its
importance grew over decades. Now company do corporate social responsibility as
their obligation to do it.

Objective of the study was to find whether any relationship exists between the
corporate social responsibility and financial performance of the companies or not. It
was found that there exists a positive relationship between the corporate social
responsibility & net profits and corporate social responsibility & earning per share of
the companies. But total assets have no significant relationship with corporate social
responsibility. There is a positive impact of corporate social responsibility with net
profits and earning per share.

It was observed that Indian firms invest more and more towards corporate social
responsibility not as an obligation but with a zeal to improve the society. They invest
more and more towards education of girl child, focus more on health of our society,
working towards women empowerment through SHGs and much more. Corporate
social responsibility helps in retaining employees and also help in building new
employees. So therefore spending more and more towards corporate social
responsibility will help in overall development of an organization.

RECOMMENDATIONS

 Many organizations in our country contribute towards corporate social


responsibility as an investment to get more and more financial benefits out of
it while they should do it for benefit of society and environment.
 It is very important that corporate social responsibility should have a positive
relationship and positive impact on the financial performance of the company
as it helps in building good image in front of the investors as well as the
customers.
35

 At times companies invest towards corporate social responsibility but they do


not disclose the contribution towards CSR neither to the investors nor to the
public which might not follow the rule of full disclosure. This is an unhealthy
practice which should not be followed, so companies should disclose the
amount of CSR.
 Contribution towards Corporate social responsibility helps in protecting
companies from lawsuits, complaints and various objections by the society,
competitors or any customers.

LIMITATIONS

 The authenticity of the data collected from the secondary sources cannot be
100% verified.
36

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