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Business News/ Companies / News/  A helping hand for sports infrastructure
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A helping hand for sports infrastructure

The inclusion of sports infrastructure construction and maintenance as part of CSR has been welcomed by both companies and consultants

Local youth take part in a martial arts coaching camp organized by Jindal Steel and Power Ltd in Barbil town, Odisha. Premium
Local youth take part in a martial arts coaching camp organized by Jindal Steel and Power Ltd in Barbil town, Odisha.

New Delhi: With the Rio Olympics just a month away, there is not much that can be done at this stage to help the athletes headed for Brazil. However, the All India Council for Sports (AICS) is using the buzz around the Games to give sports funding a shot in the arm by expanding the definition of sports promotion under Corporate Social Responsibility (CSR) Rules, 2014.

“We are hoping to help sportspersons for events beyond 2016, and to get quality sportspersons, we need to start working on them from today," said V.K. Malhotra, president, AICS.

So far, training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports were the only permissible activities as part of CSR. After much negotiation on 8 June, AICS, established in 2015 to serve as an advisory body for the ministry of youth affairs and sports, succeeded in getting the ministry of corporate affairs (MCA) to approve the construction, renovation, maintenance of stadiums, gymnasiums and rehabilitation centres as part of the permissible CSR activities.

As per the CSR Rules, which come under the purview of Section 135 of the Companies Act, 2013, firms with a net worth of 500 crore or a revenue of 1,000 crore or a net profit of 5 crore need to spend 2% of their average profit of the previous three years on social development activities such as sanitation, environment protection, rural development and others. These activities are defined in Schedule VII of the Rules.

The inclusion of infrastructure construction and maintenance as part of CSR has been welcomed by both companies and consultants. “The provisions as enshrined in the Act previously only allowed corporate houses to incur the cost of coaching and training as a part of CSR. It did not allow CSR spending in developing sports infrastructure, which could benefit a larger section of the aspiring sportspersons. The amendments would be helpful in nurturing a larger pool of budding sportspersons and would shift the focus from the selected few," said P.K. Joseph, director programmes at DLF Foundation, the philanthropic arm of real estate firm DLF Ltd.

The foundation spent 10 lakh on sports promotion in 2014-15. It partnered with the government under Special Olympics Bharat, a national federation working with differently abled persons competing in paralympics, to support 10 athletes who eventually came home with seven gold medals, six silvers and a bronze from the Special Olympics World Games in Los Angeles last year.

Adarsh Kataruka, director at SoulAce, a CSR consulting firm, believes CSR support for creating infrastructure in the sports sector is a great move because of the demand-supply gap.

“CSR funds supporting only training was restricting the scope of what the private sector can do in this field," said Kataruka.

Adil Sethi, operations manager, Anglian Medal Hunt Company, a company set up to nurture talent across sporting fields, believes that the quality of training that an athlete gets is directly proportional to the quality of infrastructure available and the support staff.

“Despite the fact that training and promotion of Olympic, paralympic and other nationally recognized sports were considered as a CSR activity, for the last two years a majority of corporates have not seen it as a viable thematic area to invest their funds in. With the introduction of a broader spectrum to invest in sports, it would inevitably become attractive," said Sethi.

Malhotra added: “Training is only one aspect of sports promotion and to truly achieve excellence and repute in sports, we need to include other factors like hosting national-level and international-level events."

Malhotra is in the process of reaching out to other government agencies, including the Sports Authority of India, to convene a meeting of all stakeholders such as heads of CSR divisions in large companies, sports promotion boards of large government-held companies and ministries in order to chalk out a road map about how such funds can be best channelled for creating excellence in sports, going beyond the Rio Olympics.

In a letter dated 15 June to finance and corporate affairs minister Arun Jaitley, Malhotra requested the minister to include “sponsoring national and international competitions for the holistic development of sports..."

But not all are in favour of this. “Sponsorship includes certain commercial aspects like revenue intake from sale of tickets, marketing or advertisements. And that is why such a step could lead to misutilization of CSR funds," Kataruka explained.

Jindal Steel and Power Ltd (JSPL) also expressed doubt over how hosting of events would qualify under CSR.

“As the rules stand today, sports provisions for communities living around plant locations of companies has to be the focus of CSR," said Miniya Chatterji, chief sustainability officer, JSPL.

The company has been supporting sports activities in and around its manufacturing plants through talent identification via village-level sports tournaments.

JSPL spent 12 crore of its total CSR spend of 83 crore in 2014-15 on promoting traditional sports such as kho kho, kabaddi, popular games such as cricket, volleyball and martial arts, and athletics.

Over the past two years, JSPL has supported 200 coaching camps, benefiting more than 3,000 youths, claims the company. These people are given sports accessories, nutritional supplement, rural gymnasiums through JSPL’s CSR funds and are helped to compete in district-level tournaments and then promoted for state and national-level tournaments.

According to Chatterji, sports promotion is important for the firm as “it helps engage communities, especially the youth, in productive and healthy activities".

Expressing concern over the narrowing definitions of CSR activities, as seen with this back and forth between the AICS and MCA, Sudhir Singh, partner at consulting firm PricewaterhouseCoopers (PwC) India said, “Sponsorship is a loose term. In the last two years, we have noticed repeated questioning of what qualifies as CSR. This is tightening the scope in the field and goes against the spirit of the law."

Private sector interventions need to be flexible and not restrictive, he said, adding that while sponsorship of an event such as the Indian Premier League cannot be considered CSR, similar sponsorship of sports in rural and remote areas could qualify. Companies need to be cautious when undertaking such initiatives, he added.

Echoing the view, Oil and Natural Gas Corp.’s chief CSR officer S.S.C. Parthiban said that the funds from CSR budgets of companies are spent at the discretion of the board and the CSR committee of the company and that independence is paramount.

“The statutory provisions empower the board and the CSR committees to decide about the CSR activities and all major CSR projects, including sports, are taken up with their approval," he said.

ONGC has done work under sports infrastructure development, promotion of rural sports in 13 states in areas of its operations. It has also extended support for many national events like the hockey league by providing money for equipment, coaching and infrastructure even prior to the CSR Rules coming into force as part of the firm’s sports promotion board, a must for all state-controlled companies.

ONGC was among the highest CSR spender in 2014-15 and of its total 215.16 crore CSR budget, it spent only 1.22 crore on sports. In FY15-16, its total CSR expenditure was 419.07 crore of which 3.63 crore was channelled towards supporting sports.

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Published: 23 Jun 2016, 07:50 PM IST
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