CHAPTER - 4

RESEARCH METHODOLOGY

4.1 Need of the Study

Corporate Social Responsibility (CSR) is an effective way of achieving and

maintaining sound business management. By practicing the social responsibility a

company can actually enhance its own economic value and brand image as well as

benefits the society. In addition, companies and other organisations are required to

have accountability towards stakeholders such as consumers, investors, employees,

local residents etc. while utilising the resources of society.

4.2 The Companies Act 2013 and the CSR Rules

The Section 135 of the Companies Act 2013 defines CSR and scope of applicability

of mandatory CSR clause. Some of the key provisions of the Act are:

• Applicable to all companies incorporated in India and having either of the

following in any financial year – Section 135(1)

o Net Worth of INR 500 Crores or more; or

o Turnover of INR 1000 Crores or more; or

o Net Profit of INR 5 Crores or more

• CSR is applicable from FY 2014-15. For the purpose of First CSR reporting

the Net Profit shall mean average of the annual net profit of the preceding

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 three financial years

• Companies need to spend 2% of the average net profits made by the company

during every block of three years

• Companies need to spend CSR money in project mode with pre-defined

indicators, budget, duration etc.

• The CSR projects should fall under the 10 broad areas outlined in the

Schedule VII of the Companies Act 2013. These are:

o Eradicating hunger, poverty and malnutrition, promoting preventive

health care and sanitation and making available safe drinking water;

o Promoting education, including special education and employment

enhancing vocation skills especially among children, women, elderly,

and the differently abled and livelihood enhancement projects;

o Promoting gender equality, empowering women, setting up homes

and hostels for women and orphans; setting up old age homes, day

care centers and such other facilities for senior citizens and measures

for reducing inequalities faced by socially and economically

backwards groups;

o Ensuring environmental sustainability, ecological balance, protection

of flora and fauna, animal welfare, agroforestry, conservation of

natural resources and maintaining quality of soil, air and water;

o Protection of national heritage, art and culture including restoration of

buildings and sites of historical importance and works of art; setting

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 up public libraries; promotion and development of traditional arts and

handicrafts;

o Measures for the benefit of armed forces veterans, war widows and

their dependents;

o Training to promote rural sports, nationally recognised sports,

Paralympic sports and Olympic sports;

o 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;

o Contributions or fund provided to technology incubators located

within academic institutions which are approved by the Central

Government;

o Rural development projects.

• CSR Projects cab be implemented by:

o Company itself

o Own foundation/trust

o NGOs/Trusts

o Section 8 companies

However, the implementing partner should have three years track record.

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Many companies are putting more emphasis on Corporate Social Responsibility‟s

Triple Bottom Line: People, Planet and Profit. These economic, social and

ecological values help to measure an organisation‟s success and impact on its

stakeholders. Business has a responsibility to give back to the community in which

they operate. In an increasingly competitive market place consumers are looking for

companies that not only produce a quality product or service, but also reflect their

own values. CSR is a vehicle through which companies give something back to the

society, but the challenge before the companies is to identify CSR priorities and the

areas of invention which are meaningful in the context of society development. So,

there is a need to study and understand the CSR practices being taken by different

corporate houses.

As we know that main motive of public sector undertaking is to generate

employment, earn profits and use this for social welfare. Nowadays, CSR has

become mandatory fro specified group of companies and there is a need to know

which sector companies (private sector and public sector) are doing better CSR

practices. This study will show sector wise comparison of CSR practices

between public and private sector companies.

The study will also highlight that do the Indian firms truly believe in CSR and its

ability to do social and financial good. Many companies and corporations have not

yet realised the importance of CSR practices. Therefore, there is a need to study

stakeholders‟ perception towards CSR.

Besides the responsibility towards the society the companies are responsible to work

in a manner so that they earn profit and increase their profitability. Companies have

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responsibility towards shareholders, investors, creditors. So, there is a need to study

what is the impact of CSR practices on profitability of the business.

To make an overall study that to what extent the companies in India are doing CSR

practices, there is a need to study CSR practices in different sectors of India.

4.3 Objectives of the Study

The objectives of a study provide a definite and proper track for any research

activity. To make the present study more scientific following objectives are

designed by the researcher:

1. To study the present status of CSR policy in India with respect to Company’s

Act 2013.

2. To compare the CSR policy in public and private sector companies.

3. To study the corporate social responsibility spending of Indian companies.

4. To compare the corporate social responsibility spending of public sector

companies and private sector companies.

5. To compare the CSR thematic priorities and current CSR project Approach of

public and private sector companies.

6. To provide an understanding of the role played by corporate houses and

public sector undertakings and interaction amongst various stakeholders and

find out the challenges and recommend remedial measures.

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4.4 Research Methodology

4.4.1 Sample Size

For questionnaire purpose 75 public and 225 private companies have been

selected. 75 questionnaire were distributed, out of that 70 responses came

from public sector. The 225 questionnaire was given to private sector. Out of

that 212 respondents replied.

For the purpose of study 497 large scale organizations basically covering

public sector and private sector companies in India which belong to different

sectors. The list of companies is given below:

Table 4.1 - Sector-wise 497 Companies

Total No. of
Sectors
Companies

Aluminum 3

Auto and Allied (All Auto Types) 52

Banks (All) 38

Cement (Major-Mini and Building) 17

Chemicals, Petrochemicals and Pesticides 18

Computers (Hardware+ Software) 23

Construction & Contracting, Real Estate 15

Engineering and Heavy Engineering 5

Finance,-Housing, General and Leasing 31

Metal, Mineral & Mining 9

Oil Drilling and Exploration 7

Packaging 6

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Personal care 9

Pharmaceuticals 23

Power -Transmission and Equipment, Generation & Distribution 17

Refineries 4

Shipping, Transport & Logistic 3

Steel -(All Types) 17

Telecom-Equipment & Services 4

Textile (All Types) 22

Others 177

4.4.2 Sampling Units

For analyzing the Corporate social responsibility spending, a sample of 497

companies from 21 sectors is collected from the population. For questionnaire, 75

public sector has been choosen. However, 225 private sector companies is choosen

for primary data purpose.

Figure 4.1 : Sector wise Distribution on CSR

For comparing the corporate social responsibility spending as a percentage of Profit

after tax of Public sector companies & Private sector companies a sample of few

Public sector companies & few Private sector Companies is chosen.

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To study about the thematic priorities, CSR past & current project, and partners,

approximately 81 corporate foundation data also has been collected.

1. Adani Foundation

2. Aditya Birla Centre for Community Initiatives and Rural Development

3. Alstom Foundation

4. AMM Foundation

5. Amway Foundation

6. Anandana (Coca-Cola India Foundation)

7. Avantha Foundation

8. Axis Bank Foundation

9. Kamalnayan Jamnalal Bajaj Foundation

10. Bharti Foundation

11. Biocon Foundation

12. Bosch India Foundation

13. Cannon India Foundation

14. Cognizant Foundation

15. CRISIL Foundation

16. Cummins Foundation

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17. Deepak Foundation

18. DLF Foundation

19. Dr. Reddy’s Foundation (DRF)

20. EdelGive Foundation

21. Essar Foundation

22. Fed Bank Hormis Memorial Foundation

23. Fortis Foundation

24. Glenmark Foundation

25. GMR Varalakshmi Foundation

26. Golden Jubilee Foundation

27. Gramothan Foundation

28. GVK Foundation

29. Havells India Foundation

30. HCL Technologies Foundation

31. Hinduja Foundation

32. H T Parekh Foundation

33. HUL Foundation

34. Hyundai Motor India Foundation

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35. ICICI Foundation

36. IDFC Foundation

37. Indiabulls Foundation

38. IndusInd Foundation

39. ING Vysya Foundation

40. IndianOil Foundation*

41. Jaipur Rugs Foundation

42. JM Financial Foundation

43. JSW Foundation

44. Jubilant Bhartia Foundation

45. Lanco Foundation

46. Lupin Foundation

47. Max India Foundation

48. Moser Baer Trust

49. Muthoot Group Foundation

50. Muthoot Pappachan Foundation

51. NALCO Foundation

52. NIIT Foundation

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53. NTPC Foundation

54. PepsiCo Foundation

55. PNB Farmers’ Welfare Trust

56. Ramky Foundation

57. Ranbaxy Science Foundation

58. Reliance Foundation

59. Rosy Blue Foundation

60. RPG Foundation

61. Schneider Electric India Foundation

62. Simbhaoli India Foundation

63. Sitaram Jindal Foundation

64. Soham Foundation

65. SRF Foundation

66. Steria India Foundation

67. Suzlon Foundation

68. Tata Chemicals Society for Rural Development

69. Tech Mahindra Foundation

70. Texas Instrument India Foundation

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71. Times Foundation

72. Transport Corporation of India Foundation

73. Thermax Social Initiative Foundation (TSIF)

74. Tribhuvandas Foundation

75. Union Bank Social Foundation

76. Vedanta Foundation

77. VLCC Foundation

78. Welspun Foundation for Health and Knowledge

79. Wockhardt Foundation

80. Yes Foundation

81. Zensar Foundation

Table 4.2 : List of Companies

• The performance analysis of the public and private Banks also has been

studied. The 19 Indian Banks (12 Public + 7 Private) are selected on the

following 3 parameters i.e. Market capitalisation, Availability of CSR project

information, Availability of financial information.

Sr. Sr.
Public Banks Private Banks
No. No.

1 State Bank of India 1 HDFC Bank

2 Bank of Baroda 2 ICICI Bank

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3 Punjab National Bank 3 Axis Bank

4 Bank of India 4 Kotak Mahindra Bank

5 IDBI Bank 5 IndusInd Bank

6 Union Bank 6 Yes Bank

7 Allahabad Bank 7 ING Vysya Bank

8 Andhra Bank

9 Central Bank of India

10 Corporation Bank

11 Indian Bank

12 UCO Bank

Table 4.3 : List of Banks

To know the exact status of CSR policy according to 2013 Act, Implementation

through CSR partners, and CSR committee, the collection of 21 pharmaceuticals

sector has been collected

1. Abbott India Ltd

2. Ajanta Pharma Ltd

3. Alembic Pharmaceuticals Ltd

4. Aurobindo Pharma Ltd

5. Biocon Ltd

6. Cadila Healthcare Ltd

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7. Cipla Ltd

8. Claris Lifesciences Ltd

9. Divis Laboratories Ltd

10. Dr Reddys Laboratories Ltd

11. Glaxosmithkline Pharma Ltd

12. Glenmark Pharmaceuticals Ltd

13. Ipca Laboratories Ltd

14. Lupin Ltd

15. Novartis India Ltd

16. Pfizer Ltd

17. Sanofi India Ltd

18. Shasun Pharmaceuticals Ltd

19. Sun Pharmaceuticals Industries Ltd

20. Torrent Pharmaceuticals Ltd

21. Unichem Laboratories Ltd.

4.4.3 Justification of Selection of Sample

The selection of the companies are based on huge market share in the country. The

criteria of selection is made on the following basis:

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• BSE and NSE listed companies are selected.

• Different CSR practices is being done by these agenies and some have been

awarded for CSR practices by FICCI, ASSOCHAM and Golden Peacock

Awards Committee etc.

• The bases of turnover is an important criteria to select these 500 companies.

4.4.4 Sources of Data

To accomplish the above stated objectives of the study primary and secondary data

are taken into consideration. The primary data has been collected through

questionnaires. Twenty four (24) questions in a structured questionnaire were

framed to collect the data regarding CSR policy and CSR Companies Act 2013.

Primary Data

a) The questionnaire framed for public and private companies, consisted of 24

questions evaluating various parameters based on the objectives of the study.

b) The questionnaire framed for public sector was given to 75 public sector

companies out of which 70 public companies responded to the questionnaire

where as others did not cooperate.

The same questionnaire was given to private sector companies. The total 225

questionnaire was distributed private companies. Out of 225, only 212

responded to the questionnaire, to evaluate the various parameter of

corporate social responsibility.

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Secondary Data

Secondary data are collected mainly from:

a) Annual reports of selected companies

b) Sustainability reports of companies

c) CSR Reports of companies

d) Official websites of companies

e) Reports of surveys by private institutions

f) NGO Box Study report on CSR

g) Blogs on CSR

4.4.5 Period of Study

The data will be examined for the last three financial years that is from 2011-12 to

2013-14.

4.4.6 Hypotheses

To make present study more practical, following hypotheses have been framed by

the researcher.

H 0 Indian companies are not following the CSR policy according to Companies Act

2013.

H 1 Indian companies are following the CSR policy according to Companies Act

2013.

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H 0 There is no significant difference in CSR policy of Public and Private.

H 1 There is significant difference in CSR policy of Public and Private.

H 0 There is no significant difference in the corporate social responsibility spending

as a percentage of profit after tax of the Indian companies.

H 1 There is significant difference in the corporate social responsibility spending as a

percentage of profit after tax of the Indian companies.

H 0 There is no significant difference in the corporate social responsibility spending

as a percentage of profit after tax of the public and private companies.

H 1 There is no significant difference in the corporate social responsibility spending

as a percentage of profit after tax of the public and private companies.

H 0 There is no significant difference in the corporate social responsibility thematic

priorities and CSR approach of public and private companies

H 1 There is significant difference in the corporate social responsibility thematic

priorities and CSR approach of public and private companies

H 0 Successful companies don’t values social responsibility and sustainable

development.

H 1 Successful companies values social responsibility and sustainable development.

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4.4.7 Tools for Study

Statistical Tools

Statistical tools will be used by the researcher at the time of research on the

availability of data and as per the requirement of study. Some of these are mean,

percentage, t-test, z-test etc.

1. Simple average and percentage will be used to evaluate the CSR items.

2. Ranking will be given to the companies on the basis of CSR practices.

Statistical Tools

σ
σx =
n

x.
µH0
ZCal =
σx

Where

σx = Std error of the mean

σ = Simplest deviation

x = Sample of the mean

µH0 = Hypothesized value of the mean

n = Sample size

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 X1 − X2
Z =
1 1
Sp +_
n1 n2

X1 − X2
t =
1 1
Sp +_
n1 n2

Sp =
( n 1 − 1) s12 + ( n 1 − 1) s22
n1 + n2 − 2

Where

Sp = Estimated standard error of the difference between sample

means

X1 = Mean of sample 1

n1 = Size of sample 1

s1 = Std deviation of sample 1

X2 = Mean of sample 2

N2 = Size of sample 2

s2 = Std deviation of sample 2

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4.5 Limitations of the Study

The study is based on the secondary data collected from the CSR report NGO Box

Foundation.

4.6 Preparation of Checklist

Checklist will be prepared to check CSR practices of selected companies on the basis of

different parameters of GRI Report & other related reports.

4.7 Presentation Tools

Graphs, Charts, Tables will be used to represent the trend of CSR practices, CSR initiatives

in selected companies and for doing comparative analysis and profitability analysis among

public and private sector companies.

4.8 Objective wise Research Methodology

Table 4.4 : Objective wise Research Methodology

Objective Population Sample Research Statistical

Design Tools Used
1. To study the Public and 81 for Descriptive Check list,
present status of Private descriptive Survey and Table,
CSR policy in Companies survey 75 questionnaire percentage
India with respect public sector analysis.
to Company’s Act and 225
2013.
private sector
for
questionnaire
2. To compare the Public and 81 companies Descriptive Percentage
CSR policy in Private for descriptive Survey and analysis, chart
public and private Companies survey & 75 questionnaire and t-Test.
sector companies. public sector
& 225 private
sector
companies for
questionnaire.

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3. To study the Public and For Descriptive z-Test
corporate social Private descriptive Survey and percentage
responsibility Companies survey 497 questionnaire analysis
spending of Indian companies is
companies selected. 75
public and 225
private sector
companies is
selected.
4. To compare the Public and For Descriptive z-TEST and
corporate social private descriptive Survey and percentage
responsibility companies survey questionnaire analysis
spending of public purpose 497
sector companies companies is
and private sector
selected. 75
companies
public and 225
private sector
companies is
selected.
5. To compare the Public and The total 21 Descriptive Graphs, t-Test
CSR thematic private companies is Survey and and percentage
priorities and companies selected for questionnaire analysis
current CSR descriptive
project Approach survey. 75
of public and
public and 225
private sector
companies private sector
companies is
selected.
6. To provide an Public and Total 497 Descriptive Graph and
understanding of private companies is Survey and Percentage
the role played by companies selected for questionnaire analysis.
corporate houses descriptive
and public sector survey and
undertakings and
data is
interaction
amongst various collected
stakeholders and through
find out the secondary
challenges and sources. 75
recommend public and 225
remedial measures. private sector
companies is
selected.

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4.9 Data Sources and Type

The study is conducted based on the primary and secondary sources of data collected

through questionnaire, journals, articles & annual reports.

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