India Inc spent more on CSR in 2016, exceeds the threshold

As per a KPMG study, India's top tier companies' allocation of Rs 7,300 crore in fiscal 2016 to corporate social responsibility (CSR) initiatives exceeded regulatory requirements.

As per the rules, a company whose net worth is Rs 500 crore or more or a turnover in excess of Rs 1,000 crore or net profits of Rs 5 crore or more are required to mandatorily spend 2% of their profits on CSR programmes.

According to the study, actual spends on CSR activities by Nifty 100 companies were more than Rs 6,500 crore for financial year 2016 versus a little over Rs 5,000 crore a year ago.

Reportedly, 48 companies spent a combined Rs 4,252 crore in FY15. This is 1.6% of the standalone net profit earned by Nifty companies for the year. Two companies are yet to publish their annual reports.

"As per the Act's requirements and public disclosures of N100 companies' profits, they are required to spend Rs 7,233 crore against which companies committed Rs 7,355 crore (higher by Rs 122 crore) and have spent Rs 6,518 crore (90%),” the study noted.

The main areas that were covered ere that of health, sanitation and education while rural development attracted increasing spends in 2016, as per the study.

Allocations towards the Prime Minister's National Relief Fund, development of sports and protection of national heritage, art and culture remained low.

The study also highlighted that while spends have gone up, the number of projects funded by Indian corporates came down 33% from 1249 projects in financial year 2015 to 838 projects in financial year 2016.

"One can see a level of maturity emerging in the way in which companies are channelizing spends.

The focus seems to be on concentrating on bigger projects and not spreading themselves too thin,” Sathosh Jayaram, Head of Climate Change, Sustainability and CSR at KPMG told ET.

According to Rekha Sethi, independent director with Sun Pharma and CESC, the spends on CSR were a reflection of better compliance towards regulations. Companies have been focusing on spending especially in the area of sanitation and hygiene by allocating funds towards building toilets and indicating that companies are investing in areas that are priorities for the government, she said.