India Inc's CSR spending up 22% in FY16 at Rs 8,300 cr: Study

Larger companies spent significantly, with more than half of them adhering to 2% mandate

CRISIL Foundation's analysis of India Inc's CSR activity last fiscal shows overall spending increased 22 per cent, with bulk of the money going into education, skills development, healthcare and sanitation initiatives.

The total money spent rose by Rs 2,500 crore to Rs 8,300 crore in fiscal 2016 compared with Rs 6,800 crore in fiscal 2015. Another Rs 1,835 crore needed to be spent for the average to achieve the mandated 2 per cent. Of this, as much as Rs 5,300 crore - or Rs 1,175 crore more than fiscal 2015 -- were spent on CSR activities linked to the above mentioned areas.

The Companies Act, 2013, encourages corporates to spend at least 2 per cent of their average net profit of the past three years on CSR activities.

In fiscal 2016, the second year of the CSR mandate, 1,505 companies, or 30 per cent of the 4,887 listed on the BSE, met the criteria for mandatory spending. Of these, 77 per cent, or 1,158 companies, reported on their CSR activity, compared with 1,024 companies, or 75 per cent of the 1,300 eligible in fiscal 2015.

These 1,158 companies also spent a lot more money compared with fiscal 2015, which led to a 29 basis points improvement in average spending to 1.64 per cent compared with 1.35 per cent in fiscal 2015, moving closer to the 2 per cent mandate.

The spending profile of larger companies improved significantly, with more than half of them adhering to the 2 per cent mandate versus roughly a third last year.

Both public and private sector companies improved their CSR spending, with an increased proportion complying with the 2 per cent stipulation. However, public sector undertakings made distinct progress, with 65 per cent PSUs spending 2 per cent or more of their profits towards CSR compared with 56 per cent for private firms.

In fiscal 2016, more than half of the companies spent 2 per cent or more, except those from telecoms and IT. Commodities and diversified industries stood out, with 60.2 per cent and 59.2 per cent, respectively, of companies in the sector spending 2 per cent or more. Telecoms performed poorly with nearly half of the companies spending less than 1 per cent.

More than half the companies in all states spent 2 per cent or more. The top 10 states make up 95.8 per cent of the total CSR spend, with Maharashtra contributing 40.5 per cent, followed by NCT of Delhi with 24.7 per cent.

"A standout feature last fiscal was about focus shifting to CSR outcomes. This is indeed the way to go, as underlined by the 'Effective Altruism' movement worldwide where, instead of doing what feels right, find the best causes to work on by using empirical evidence and analysis," Ashu Suyash, managing director and CEO, CRISIL.

 

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