KMML net profit of KMML’s past 3 financial

KMML AND ITS CSR ACTIVITIES            KMML is one of the most profitableand reputable Public Sector Undertakings (PSUs) in the state of Kerala.According to KMML’S annual reports for the financial year 2015-16,  it generated an annual income of about 600Croresand a profit of nearly 28Crores. These figures have increased considerably from311 and 10.4Crores respectively in the financial year of 2007-08. As the incomegenerated by the company increased, the amount allocated to CSR activities alsoincreased. The enactment of the New Companies Act, 2013 was also a drivingfactor behind the company’s increased spending on CSR activities.

 Sec. 135 of the Acts states that a companyhaving a net worth of more than 500 Crore or a net profit of over 5Crore shouldconstitute a CSR committee andspend at least 2% of the average net profit of the immediately preceding threefinancial years on CSR activites.KMMLCSR Committee            TheCSR Committee was formed to recommend and formulate the companies CSRpolicy.The role and functions of the KMML CSR are as follows:·     Recommendto the Board of Directors the amount of expenditure to be incurred on CSRactivities·     Recommendthe Board, the modifications to CSR policy as and when required·     Monitorthe implementation of the CSR policy from time to timeKMML’sCSR Spending            Asper, annual reports of the financial year 2015-16, the average net profit of KMML’spast 3 financial years is estimated to 24.

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91Crore INR. So as per the Act, theprescribed amount of money KMML had to spent on CSR activities was 49,83,493INR. But the company was not able to fully utilize the allotted amount. Itcould only manage to spend 28,83,493 INR leaving a total of 21,60,992 INRunspent.Reasonsfor not spending the prescribed CSR expenditureThere was more than one reason for KMML to fail atspending the prescribed amount of money on CSR activities.

They were·        Duringthe financial year 2015-16, the company made a loss of 1.77 Crores after tax. ·        Thecompany’s products were also under stiff competition from several internationalplayers and the pricing was reduced.

·        Thedifference between the sum of liquid assets and incoming cash flows on one sideand outgoing cash flows, i.e. liquidity position of the company also was also amatter of concern and the availment of bank overdraft also increased.