CSR Reporting, Legal and Fiscal Due Diligence by NGOs

Noshir Dadrawala provided an enlightening account of what NGOs can expect by way of CSR funds as well as the eligibility criteria and reporting requirements that are mandated by law


Noshir Dadrawala, CEO of Centre for Philanthropy, addressed Moneylife Foundation on the legal provisions regarding CSR funding. However, he told NGOs to be pragmatic. He went on to explain in detail the provisions of the Companies Act, 2013, and the numerous clarifications notified which had not only expanded the scope of the funding, but also allowed the provisions of the Act to be interpreted in the broadest possible manner.


He said that CSR funds will not be available in the form of donations. NGOs can only seek funds for specific projects and their utilisation would need to be certified by an auditor.


Mr Dadrawala also explained the sort of expenses that could be included under project expenses and those which would be classified as administrative costs and disallowed.

Mr Dadrawala expects CSR rules to keep evolving and said that the first year of their implementation was the best time for companies to experiment with the rules and their interpretation.


Mr Dadrawala was addressing a packed audience at Moneylife Foundation on the provisions of CSR under the Companies Act, 2013, and legal compliances required. The audience comprised largely NGOs and their representatives. He took questions from a very engaged audience all through the session and was more than forthcoming in his replies. The pros and cons of registering an NGO or not-for-profit entity as a trust, society or a Section 8 entity (earlier Section 25) were also discussed.


NRI Investors sue ICICI Ventures for $103 million in damages

Investors claim that investments made by ICICI Ventures in real estate projects caused huge losses, for which the investors are seeking damages


69 NRI investors, who had invested in ICICI Ventures' India Dynamic Fund III, have sued 'ICICI and associated companies' to the Mauritius Supreme Court. The suit is regarding losses suffered as a result of investments in real estate.


“A plaint with summons was lodged before the Supreme Court of Mauritius by a group of NRI and foreign investors against (DIF III), International Financial Services Ltd (IFS), ICICI Venture Funds Management Company Ltd (ICICI Venture), ICICI Bank and the Western India Trustee And Executor Co Ltd,” the legal firm handling the case, Banymandhup Boolell Chambers said.


These 69 investors are part of a larger group of 500 investors in the fund. The investors allege that the fund, promoted by ICICI Ventures and ICICI Bank, did not invest in world class projects as promised, but instead invested in projects that flopped miserably.


Calling the allegations baseless and pointing out that only 69 out of 500 investors are party to the suit, an ICICI spokesperson said, “It is common knowledge that globally PE as an asset class does not guarantee returns given the equity risks involved. Also, projects in real estate have a long gestation period and hence the returns accrue over a period of time.”


However, pointing to the fact that of the 13 projects invested in, 5 projects (2 in Mumbai and 3 in Hyderabad) took up 60% of the corpus, the investors said that this went against ICICI's original promise of diversifying the investments. The investors also alleged that as per the fund's March 2014 report, only one project in Pune had been exited, while the rest were in various stages of construction, with a Chennai project yet to begin.


The petitioners said that, “Thus, it is a classic case of total neglect of due diligence, research of suitability taking into account of exit term, outrageous underestimation of cost and completion, alleged negligence and overt manipulation of the finances for escalating costs and serious blunders in judgment of selection of projects.”


In its defence, ICICI through its spokesperson added, “ICICI Ventures has extended the fund’s life by three years to optimise the realizations from the portfolio. ICICI Ventures also simultaneously offered investors a cash exit option in line with global best practices.”


The investors are claiming a sum of USD 103,699,976, which is the capital investment made by the investors in DIF III and the moral damages.


Nifty, Sensex in no mans land – Tuesday closing report

Nifty is drifting sideways with low volumes


Yesterday we had mentioned that the benchmark may move sideways. Weak trading on the bourses up to around 1.40pm was followed by a surge which continued up to around 2.45 pm when the indices hit their intra-day high. After this the indices gave up some of the gains but closed near the intra-day highs.

Sensex opened at 26,789 while Nifty opened at 8,002. The indices hit a low at 26,764 and 7,995 and managed staying above yesterday’s low. Sensex hit a high at 26,907 and closed at 26,881 (up 128 points or 0.48%), while Nifty hit a high at 8,038 and closed at 8,028 (up 36 points or 0.45%). NSE recorded a volume of 65.20 crore shares. India VIX fell 1.42% to close at 13.3225.

Manappuram Finance (9.98%) was among the top three gainers in the A group. It hit its 52-week high today. PMC Fincorp (10.15%) was the top loser today, it gave up some gains today after hitting its 52-week high on Monday.

Sun Pharma (4.31%) was the top gainer in the Sensex 30 pack. Sun Pharma is in the process of acquiring Ranbaxy, it gained after Ranbaxy's consolidated numbers showed improved performance over the year ago period.

Today again Hindustan Unilever (0.83%) was at the losing end among the Sensex 30 stocks. Its board declared an interim dividend of Rs 6 per equity share of face value of Re 1 each for the FY14-15.

US indices closed flat on Monday. Yesterday's data indicated uneven economic growth in the US. Contracts to purchase previously owned homes rose less than forecast in September, showing housing will take time to gain momentum. Another release showed growth in services activity slowed this month, while the Dallas Fed's gauge of regional manufacturing fell.

Asian indices showed mixed performance. Shanghai Composite (2.07%) was the top gainer while Jakarta Composite (0.46%) was the top loser.        

Data from China's statistics bureau showed profit as China's industrial companies grew 0.4% last month, compared with a 0.6% drop in August.

European indices were trading in the green. US Futures too were trading higher.


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