The annual reports of many of the leading listed entities for the accounting year ended March 2025 make for interesting reading from one specific perspective.
It was during this period that the 2024 general elections and the elections to the legislature of a few key Indian states took place.
India Inc, predominantly the promoter-driven companies, has, over the years, shed its reticence to overtly fund the political parties.
The earlier general election held in 2019 also revealed many corporates making such donations. The key change that marks a watershed in the period since is the order of the Supreme Court in February 2024, putting an end to the anonymous political donations through the electoral bonds.
This column had carried articles on that subject and, hence, any further deliberation on this is eschewed. It is also not of any continuing relevance.
With the striking down of the Electoral Bond Scheme, 2018, the routes available for political donation are either making a direct donation to a political party, or making the donation to an approved electoral trust, which in turn would make over the funds to a political party.
Even earlier, damaging the transparency in political donation inflicted by the introduction of the anonymous bonds, the Companies Act, 2013, which was enacted prior to the change of the government at the Centre, removed the requirement for the disclosure of the name of the party to which the donation is made that existed under Section 293A of the 1956 Act.
Therefore, under the present Section 182, companies making donations need not specify the beneficiary. The only requirement is to disclose the sum of the political donations made.
The present article makes a collage of the different ways in which the annual reports disclosed this fact. Needless to say, the companies were picked up at random and not exhaustive by any means.
To reiterate, the removal of the statutory disclosure has completely lowered the threshold for this purpose. In view of this, nothing contained in this article should be viewed as a comment of non-compliance if the examples of the companies that restricted themselves to the barest disclosure mandated are highlighted.
To the extent seen from the annual reports that reported political donations, the nature of the disclosure made is categorised as under-
- Disclosure of the name of the political party, where a direct donation is made;
- Disclosure of the name of the political party, even where the donation is made through an electoral trust;
- Disclosure of the name of the electoral trust alone;
- No disclosure of the name of even the electoral trust;
- Disclosure of the fact of the contribution even in the directors’ report;
- Cases where the company has a laid down policy that prohibits making any donation; and
- The queer ones
A conspectus of what is stated above is presented pictorially. The branches are punctuated with the names of some companies as an example of that particular type of disclosure in the annual report.
If the picture resembles the spread of the traditional ‘Onam Sadhya’ on a plantain leaf, it is entirely coincidental!
What follows is merely a display of the dreary details of the disclosures made in the various financial statements which were looked into to prepare the above classification.
The readers who hurriedly scroll these articles on their handhelds can actually move their attention elsewhere!
Those curious to know the nuances can go further. The reason to fill more space with the details below is to present the exact wordings in the notes in each of the cases and also to highlight certain eccentricities, if that usage is not frowned upon, that one notices in some of these disclosures.
The first is the variations in the disclosure even within a clutch of entities belonging to a particular business group. In this regard, the companies belonging to the Tata and the Mahindra groups are used as examples.
There is no law that companies belonging to the same business group should all have a set way of thinking and disclose the details in their annual reports. Yet, someone old-fashioned may think this to be a point to ponder!
The second highlights the differences in the disclosure by companies that are audited by the same audit firm. Here again, who said that the different partners, especially in large firms, should all speak to each other and standardise their way of presentation? More technically, the accounting notes are the domain of the management concerned, and the mere fact that the same audit firm audited the different companies may not warrant any form of standardisation.
The third is the same audit partner appending the seal to the different financial reports with different disclosures. Again, the thirst for variety may not bypass even an unromantic auditor!
Finally, a few curious cases, whether or not the readers perceive anything special in those!
A good place to start with can be the second biggest donor in value among all the companies that this column has happened to scrutinise.
The Progressive Electoral Trust is a captive vehicle for the Tata group to channelise its donations. Once the trust files its accounts and the annual report to the election commission of India (ECI), possibly before 31st October, the experts who analyse the evils of corporate political donations will unfold more details. This column has no expertise in that space!
The biggest software company in the country that actually carried out the exercise of electoral role digitisation as part of its professional service offering and itself, a subsidiary of Tata Sons, follows with its own disclosure standards!
Readers may figure out what distinguishes the subsidiary from its mother in the disclosure!
Its other sibling follows the same path!
When a chemicals company makes the donation, its way of saying it adds a few more catalysts! Don’t mind the partner signing it being a partner in another case!
Chemicals is followed by power and motor and being different is their key trait.
The real value addition in accounting, not in mere disclosure, is actually held in the steely hands of the group!
Just to break from the above monotony that emphasises a vague camouflage of a trust that means nothing to any reader of the reports, in the next—a different steel company, where the donation is made directly, but given the secrecy allowed in the law—the name is not mentioned!
The impression one gathers is that more than one party benefited. Only later revelations will show whether multiple parties were actually donated money.
There are two cases that may delight any investor looking for transparency!
The second one goes a step further to share the name of the party even when the money has gone through the conduit of a trust.
A large donor that is casual about the nomenclature of the trust contributed to-
It is no General Electoral Trust- the right name is Aditya Birla General Electoral Trust!
Why is Vedanta always targeted for less than acceptable disclosures? It actually wears all it does on its sleeve. May also be a way of saying not to mess with it!
The examples of companies which have a stated policy to not donate for political purposes make for an interesting side note-
The article has been arbitrarily terminated here, as the other examples and the additional content would make it an unwieldy one. It has to be refined and put out as part-2, of course, depending on whether the readers….
(Ranganathan V is a CA and CS. He has over 44 years of experience in the corporate sector and in consultancy. For 17 years, he worked as Director and Partner in Ernst & Young LLP and three years as a senior advisor post-retirement, handling the task of building the Chennai and Hyderabad practice of E&Y in tax and regulatory space. Currently, he serves as an independent director on the board of four companies.)
