Corporate Social Responsibility (CSR) Policy

1. Introduction: 

1.1. Corporate Social Responsibility (CSR) is a well-established concept in India, with numerous industrial entities having engaged in social development activities for years. However, the Companies Act, 2013 formalized CSR under Section 135, making it a mandatory requirement for certain companies. The Act introduced CSR as a "Comply-or-Explain" mandate, requiring qualifying companies to establish a CSR policy and disclose their CSR activities. 

1.2. Section 135 of the Companies Act, 2013 mandates certain companies to constitute a Corporate Social Responsibility (CSR) Committee to oversee and monitor CSR activities, ensuring they align with the company's objectives. The Companies (Corporate Social Responsibility Policy) Rules, 2014 ("CSR Rules") provide a detailed framework for implementing, monitoring, and reporting CSR activities. These activities must align with the areas specified in Schedule VII of the Companies Act, 2013, as amended from time to time. 

1.3. This Corporate Social Responsibility (CSR) Policy has been adopted by DYNATECH SYSTEMS PRIVATE LIMITED (hereinafter referred to as "the Company"), a private limited company, to define our commitment to sustainable development and our responsibility towards the communities, environment, and stakeholders we serve. The Company is dedicated to undertaking CSR activities in compliance with the provisions of Section 135 of the Companies Act, 2013 (hereinafter referred to as "the Act") and the Companies (Corporate Social Responsibility Policy) Rules, 2014 (hereinafter referred to as "the Rules"). This Policy reflects the Company’s philosophy of fulfilling its obligations as a responsible corporate entity and sets forth the guidelines and mechanisms for undertaking programs that contribute to the welfare and sustainable development of society at large. This Policy applies to all CSR initiatives and activities undertaken by the Company to promote the economic and social development of society. 

1.4. The Company recognizes its significant role in contributing to the well-being of society and is committed to promoting sustainable practices that align with our core values and long-term vision. Our CSR initiatives focus on areas such as education, healthcare, climate action, and societal betterment, while upholding principles of human rights, environmental sustainability, integrity, and accountability. 

2. Objective and Scope:

2.1. Objective of the CSR Policy: 

The primary objective of this CSR Policy is to guide DYNATECH SYSTEMS PRIVATE LIMITED in integrating CSR as a core focus area, ensuring its contribution to global environmental and social well-being. This policy aims to create a positive and sustainable impact through responsible initiatives that align with the Company’s values and long-term objectives. 

2.2. Scope of the CSR Policy: 

This policy governs CSR activities undertaken by the Company in India, in accordance with Schedule VII of the Companies Act, 2013, and any subsequent amendments. It defines the Company’s approach to CSR, which includes, but is not limited to, the following key focus areas:

2.2.1. Actively contributing to the social, environmental, and economic well-being of the communities in which the Company operates.

2.2.2. Supporting initiatives in the fields of education, healthcare, and nutrition, with a focus on improving access to these fundamental rights for disadvantaged groups.

2.2.3. Protecting the environment, mitigating climate change, and promoting the responsible use of natural resources.

2.2.4. Advocating for the protection of universal human rights and promoting gender equality, social inclusion, and community welfare.

2.2.5. Actively engaging employees and stakeholders in CSR initiatives to foster a culture of responsibility, community participation, and sustainable development. 

2.3. Coverage of CSR Activities: 

In accordance with Schedule VII of the Companies Act, 2013, CSR activities may be undertaken in the following areas:

2.3.1. Eradicating Hunger, Poverty, and Malnutrition: Programs aimed at reducing hunger, providing basic nutrition, and alleviating poverty through direct and indirect support.

2.3.2. Promoting Education: Initiatives that support educational advancement, especially for underprivileged children, women, and marginalized communities.

2.3.3. Promoting Gender Equality and Empowering Women: Programs aimed at improving gender equality, women’s education, and empowerment in various sectors of society.

2.3.4. Ensuring Environmental Sustainability: Projects related to environmental conservation, sustainable development, afforestation, renewable energy, water conservation, and addressing climate change.

2.3.5. Healthcare: Promoting health and well-being through medical aid, healthcare infrastructure, and awareness programs related to sanitation, clean drinking water, and other health issues.

2.3.6. Rural Development: Contributing to the development of rural areas by improving infrastructure, providing vocational training, and enhancing livelihood opportunities.

2.3.7. Slum Area Development: Working towards improving the quality of life in urban slums, providing basic amenities, and enhancing living conditions.

2.3.8. National Heritage, Art, and Culture: Supporting the preservation of cultural heritage, public libraries, and projects that promote traditional arts and crafts.

2.3.9. Contribution to the Prime Minister’s National Relief Fund (PMNRF) or any other similar fund set up by the Government of India.

2.3.10. Animal Welfare: The Company may undertake or support Animal Health and Welfare Programs, including organizing health camps, providing medical aid, and promoting veterinary care; Animal Rescue and Shelter Support, such as establishing or partnering with shelters, Gaushalas, and Panjarapoles; initiatives for the Self-Sustainability of Gaushalas and Panjarapoles; and Awareness and Capacity Building programs aimed at fostering humane treatment of animals, ethical farming, and sustainable ecosystems. 

The Company may also engage in other activities as prescribed under Schedule VII of the Companies Act, 2013, and any future amendments thereto. The scope of such activities may be expanded to comply with the requirements of the Act as amended from time to time.

3. Definitions:

3.1. Act: means and refers to the Companies Act, 2013 as amended from time to time.

3.2. Committee: means the Corporate Social Responsibility (CSR) Committee constituted by the Board of Directors of the Company and referred to in section 135 of the Act. 

4. Governance and Oversight:

4.1. Constitution of CSR Committee: 

In accordance with Section 135 of the Companies Act, 2013 (the "Act"), the Board of Directors of DYNATECH SYSTEMS PRIVATE LIMITED shall constitute a Corporate Social Responsibility (CSR) Committee to oversee the Company’s CSR activities. The CSR Committee will be composed of members appointed by the Board, with a minimum of two Directors. To ensure the effective implementation of CSR initiatives and the achievement of the policy’s objectives, as required under the Act, the Company has established the "Corporate Social Responsibility Committee" (the "CSR Committee"). 

The composition of the CSR Committee is as follows: 

4.1.1. Chairman of the CSR Committee: The Managing Director/Executive Director of the Company shall serve as the Chairman of the CSR Committee.

4.1.2. Number of Member Directors: The CSR Committee shall consist of at least two Directors, including the Chairman. 

The current composition of the CSR Committee is detailed in Annexure - 1. The composition of the CSR Committee may change if the Managing Director/Executive Director or any Director serving as Chairman or member of the Committee retires, resigns, or is removed from/by the Board. In such cases, the Board of Directors will appoint a new member to fill the vacancy from among the remaining Directors. 

For each financial year, the Company’s Board Report will include a section disclosing the composition of the CSR Committee for that particular year.

4.2. Role and Responsibilities of the Committee: 

In accordance with Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the key responsibilities of the CSR Committee are as follows: 

4.2.1. To formulate the CSR Policy or propose amendments to the existing CSR Policy and recommend the same to the Board for consideration and approval. 

4.2.2. To be responsible for the identification, selection, approval, planning, execution, supervision, coordination, and monitoring of various CSR programs, projects, initiatives, and activities undertaken by the Company. 

4.2.3. To recommend the CSR activities and the amount to be spent on such activities/projects to the Board for approval for the relevant financial year. 4.2

4.2.4. To formulate broad guidelines for the selection and execution of CSR initiatives and projects. 

4.2.5. To Oversee the implementation and progress of CSR activities, from time to time including implementation CSR project collaborations with group companies, NGOs, or other organizations, if any.

4.2.6. To recommend terms of contract with respect to the execution of CSR Projects/programs Directly or Indirectly through any other implementation agency, identify and recommend for acceptance any deviations/changes in CSR activities/project/programs planned or implemented and make appropriate interact with the Governmental and Non - Governmental Bodies as and when required in relation to implementation of CSR activities/projects under this Policy.

4.2.7. To ensure the receipt of Utilization Certificates along with a Statement of Expenditure, duly certified by an eligible professional (including a Chartered Accountant of repute), from the organizations/institutions to whom CSR funds have been allocated or by whom CSR funds have been spent.

4.2.8. To recommend the CSR budget and approve CSR expenditure. 

4.2.9. To formulate requisite strategies and institution of a transparent monitoring mechanism for implementation of the projects/programmes/activities undertaken or proposed to be undertaken by the company.

4.2.10. To recommend necessary disclosures in the Annual Report, stating that the implementation and monitoring of the CSR policy are in compliance with the CSR objectives and Policy of the Company.

4.2.11. To review the performance of the Company in the area of CSR, evaluate its effectiveness, and prioritize future activities.

4.2.12. To ensure that the CSR Policy is aligned with the Company’s broader sustainability objectives.

4.2.13. To submit an annual report to the Board regarding CSR activities and progress during the year, in accordance with the provisions of the Companies Act, 2013 and CSR Rules.

4.2.14. To review and update the CSR Policy, as necessary, to ensure its continued relevance and compliance with applicable laws and regulations.

4.2.15. To monitor the work of internal teams responsible for implementing CSR initiatives, ensuring the successful execution of the CSR programs. 

4.2.16. To approve the attendance of Company executives at CSR Committee meetings, as necessary.

The CSR Committee shall place its report before the Board of Directors at the end of each financial year, in accordance with the provisions of the Companies Act, 2013 and the CSR Rules.

4.3. Meetings of the Committee: 

For smooth functioning of the Committee, the CSR Committee shall meet at least twice a year. The meetings will be scheduled as agreed upon by the members, with the quorum being one-third of the total strength or two members, whichever is higher. Members may attend meetings in person or via video/audio conferencing.

4.4. Role of the Board of Directors: 

The Board of Directors shall perform the following duties with regard to the CSR Policy of the Company and its related activities: 

4.4.1. To approve the "Corporate Social Responsibility Policy" or any amendments thereto, after considering the recommendations made by the CSR Committee.

4.4.2. To disclose the contents of the Company's CSR Policy in the Board Report and ensure the policy is displayed on the Company's website.                                

4.4.3. To ensure that the activities included in the CSR Policy are undertaken by the Company.                                                                                                                                   

4.4.4. To ensure that the Company spends at least 2% of the average net profits of the Company made during the three immediately preceding financial years, in every financial year, in accordance with the provisions of Section 135 of the Companies Act, 2013.                                                                                                                            

4.4.5. To ensure that preference is given to the local area and the areas surrounding the Company's operations for spending the amount allocated for CSR activities.

4.4.6. To ensure that the activities included in the Company's CSR Policy are aligned with the provisions of Schedule VII of the Companies Act, 2013, and the rules framed thereunder.

4.4.7. To ensure that funds disbursed for CSR activities/programs (whether directly or indirectly) are utilized for the intended purposes and in the manner approved by the Board.                                                                                                                                                                                                                                    

4.4.8. To ensure adherence to and enforcement of contractual obligations by the implementation agency with respect to CSR projects. Based on the recommendations of the CSR Committee, approve any deviations or changes in the projects that are planned or under implementation through the implementation agency.

5. Budget and Allocation of Funds: 

As per the provisions of Section 135 of the Companies Act, 2013, companies meeting the criteria specified therein shall allocate a portion of their annual net profits (calculated in accordance with Section 198) for CSR activities. These activities must fall under the categories specified in Schedule VII of the Act.

5.1. CSR Expenditure:

5.1.1. The Company shall allocate a portion of its annual net profits (calculated in accordance with Section 198 of the Companies Act, 2013) towards CSR activities as specified in Schedule VII of the Act. For the purposes of CSR expenditure, "net profit" refers to the profit as defined under Rule 2(f) of the Companies (Corporate Social Responsibility Policy) Rules, 2014.

5.1.2. CSR expenditure shall include all costs, including contributions to the corpus, or expenditures on projects or programs relating to CSR activities approved by the Board of Directors on the recommendation of the CSR Committee. However, CSR expenditure shall not include any costs for activities that are not in alignment with the activities specified in Schedule VII of the Companies Act, 2013.

5.2. Failure to Spend CSR Funds:

5.2.1. In the event the Company fails to spend the required amount on CSR activities in a particular financial year, the CSR Committee shall submit a report to the Board of Directors, specifying the reasons for the shortfall in expenditure. The Board of Directors shall disclose the reasons for not spending the prescribed amount in the Company’s Annual Report for that financial year, in compliance with the applicable provisions of the Companies Act, 2013.

5.2.2 Any surplus arising from CSR projects, programs, or activities shall not form part of the Company’s business profits. The surplus shall be dealt with in accordance with the applicable provisions of the CSR regulations under the Companies Act, 2013.

6. Rules Governing CSR Policy:

6.1. CSR activities will not comprise the Company’s normal business activities and will not benefit employees or their families.

6.2. CSR projects should not directly benefit the employees or their families but can encourage employee participation.

6.3. Only CSR projects in India are eligible for CSR expenditure.

6.4. Any surplus arising from CSR activities shall not be considered part of the Company’s business profits.

6.5. Contributions to political parties shall not be considered CSR activities. The Company may build CSR capacities, including administrative costs, up to 5% of the total CSR expenditure for the year.

6.6. The tax treatment of CSR spend will be in accordance with the Income Tax Act, 1961, and amendments by the Central Board of Direct Taxes (CBDT).

6.7. Treatment of Surplus from CSR Activities: 

Surplus arising from CSR activities shall be:

6.7.1. Ploughed back into the same project. or

6.7.2. Transferred to the Unspent CSR Account and used as per the CSR policy and the annual action plan. Or

6.7.3. Transferred to a Fund specified under Schedule VII within six months after the financial year-end. Or

6.7.4. Give Treatment of Surplus from CSR Activities in accordance with applicable provisions of the act. 

7. CSR Initiatives, Implementation, Monitoring and Reporting Framework:

7.1. Initiatives:

Pursuant to Schedule VII of the Companies Act, 2013 (the "Act") and the CSR Rules, the Company shall undertake CSR activities as outlined in its Annual CSR Plan, which will be recommended by the CSR Committee at the beginning of each financial year. The CSR Committee is authorized to approve any modifications to the existing Annual CSR Plan or propose new CSR programs during the financial year under review.

The CSR initiatives undertaken by the Company will be based on the Annual CSR Plan, which will be presented to the Board after approval by the CSR Committee. The Annual CSR Plan, presented to the Board, will include:

1. Project proposals, objectives, and timelines.

2. Target beneficiaries and their key needs.

3. Project goals and milestones.

4. Alignment with Schedule VII.

5. Estimated budget and funding allocation.

6. Monitoring and reporting mechanisms.

7. Progress reporting and frequency of reports.

8. Risk management strategies.

9. Any other information as may be required by the CSR Committee.

7.2. Implementation: 

7.2.1. To ensure that CSR funds are effectively spent, and projects are completed within the planned timelines, the Board may engage in CSR activities either directly or indirectly. This may be done through a registered trust, registered society, or a company established by the Company or its holding, subsidiary, or associate company under Section 8 of the Act (referred to as "Implementing Agencies"). However, if these entities are not established by the Company or its subsidiaries, they must have a proven track record of at least three years in executing similar projects and programs as per the provisions of the Act. The Company must specify the projects or programs to be undertaken, the utilization modalities of funds, and a monitoring and reporting mechanism. 

The Company may also collaborate with other companies for CSR initiatives, ensuring that each CSR Committee can report separately on the progress of projects or programs in compliance with the CSR Rules, 2014.  

Further, the Company may use expert agencies, consultancies, or other entities for baseline surveys, project design guidance, and impact assessments. If required by law, the Company will undertake impact assessments for CSR projects.

7.2.2. The CSR Committee will report on the status of projects, monitor fund usage, and review implementation periodically. It will also provide an annual action plan to the Board, aligning with the CSR Policy and CSR regulations.

7.3. Monitoring: 

An internal working and monitoring team will be formed to oversee the effective implementation and monitoring of CSR projects. The team will provide regular progress reports to the CSR Committee, at least every six months.

7.4. CSR Reporting and Disclosure:

As per the CSR Rules, the CSR Policy's contents will be included in the Directors’ Report and displayed on the Company’s website, if any. The Company will adhere to all regulatory reporting requirements, detailing the CSR activities undertaken and the allocated budget.

8. Policy Review and Future Amendment:

8.1. The CSR Policy will be reviewed periodically to ensure its alignment with the Company’s objectives and evolving legal frameworks.

8.2. Any provisions of the CSR Policy may be amended by the Board of Directors based on the CSR Committee’s recommendations, in line with the Companies Act, 2013 and relevant rules.

8.3. The Company reserves the right to modify, cancel, add, or amend any provisions of the CSR Policy. 

9. Compliance:

9.1. The Company will ensure full compliance with Section 135 of the Companies Act, 2013, and the CSR Rules, including adherence to guidelines issued by the Ministry of Corporate Affairs (MCA) and any other relevant authority. 

9.2. The Company ensures full compliance with the provisions of Section 135 of the Companies Act, 2013, and the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR activities will be undertaken in accordance with the guidelines and regulations issued by the Ministry of Corporate Affairs (MCA) and any other relevant government authority. 

10. General: 

Words and expressions used but not defined in this Policy shall have the same meaning assigned to them in the Companies Act, 2013, the CSR Rules made thereunder or in any amendment thereto. This CSR Policy shall also be subject to such clarifications and FAQs as may be issued by Ministry of Corporate Affairs from time to time. 

In case of any doubt with regard to any provision in the Policy and also in respect of matters not covered herein, a reference will be made to CSR Committee and the interpretation & decision of the CSR Committee shall be final.

The CSR Policy would be subject to revision/amendment in accordance with the guidelines as may be issued by the Government, from time to time. The Board may subject to the applicable laws amend any provision(s) or substitute any of the provision(s) with the new provision(s) or replace this policy entirely with a new policy.

In case of any subsequent changes in the provisions of the Act which makes any of the provisions in this Policy inconsistent with the Act, then the provisions of the Act would prevail over the Policy and the provisions in the Policy would be modified in due course to make it consistent with the Act. 

The aforesaid CSR Policy has been recommended by CSR Committee and approved by the Board of Directors of the Company. 

11. Policy Approval:

The CSR Policy was approved by the Board of Directors on 05/10/2024 based on the recommendations of the CSR Committee.

12. Effective Date:

This CSR Policy is effective from 05/10/2024 and has been approved by the Board of Directors of DYNATECH SYSTEMS PRIVATE LIMITED.