India Inc's spending on CSR hit the fast lane in FY24
Corporate social responsibility (CSR) spending of NSE-listed companies saw the highest year-on-year jump in four years at 15.7% in fiscal 2024 on the back of strong profit growth, according to a study that analysed the numbers from 1,394 companies.CSR spends at these companies rose to Rs 17,967 crore in 2023-24, as they saw a 18% rise in average net profit (of the preceding three years), according to data shared exclusively with ET by primeinfobase.com. The spending rose 4.8% to Rs 15524 crore in FY23 and was flattish in the previous two fiscal years.
The top 10 companies in terms of CSR spending — led by HDFC Bank (Rs 954.31 crore), Reliance Industries (Rs 900 crore) and Tata Consultancy Services (Rs 827 crore) – accounted for 34% of the total amount.
Others in the top 10 were Oil & Natural Gas Corp (Rs 634.57 crore), Tata Steel (Rs 580.02 crore), ICICI Bank (Rs 518.87 crore), Indian Oil Corp (Rs 457.71 crore), Infosys (Rs 455.67 crore), ITC (Rs 404.05 crore) and Power Grid Corporation of India (Rs 330.48 crore).
Spending by public sector units rose 19% over the previous year — 66 PSUs spent Rs 3,717 crore in FY24, up from Rs 3,136 crore spent by 56 PSUs in FY23.The CSR law, which came into force in April 2014, mandates that companies with at least a net worth of Rs 500 crore, revenue of Rs 1,000 crore or net profit of Rs 5 crore during the preceding financial year must spend 2% of the average net profit of the previous three years on CSR projects.According to primeinfobase.com, the three-year rolling average net profit of these 1,394 companies was Rs 9.62 lakh crore, up from Rs 8.14 lakh crore in FY23.As per CSR requirements, the amount required to be spent by them was Rs 18,309 crore (Rs 15,713 crore in FY23), against which they spent slightly lower at Rs 17,967 crore (Rs 15,524 crore in 2022-23).'The shortfall can be explained by the increase in amount which remained unspent, which was transferred by companies to the Unspent CSR Account (Rs 2,329 crore) for use in future years,' said Prime Database Group managing director Pranav Haldea.
As in previous years, education (Rs 1,104 crore) received the biggest chunk of companies' CSR spends, followed by hunger, poverty and healthcare (Rs 720 crore), based on data of 544 companies among the 1,394 that voluntarily made this disclosure. While the uptick in spending is a function of profits going up over the years, companies have also become more structured and thoughtful in the way they are spending on CSR, said Amit Tandon, managing director of proxy-advisory firm Institutional Investor Advisory Service India (IIAS). 'They are aligning these spends to their strategy and corporate purpose, and have shifted from projects to themes; for example: education in Raipur district. In addition, they are now measuring the impact.'
Haldea said it is also now time for the government to consider revising these thresholds upwards, given the passage of time and ease of doing business. 'The average three-year net profit of companies listed on the NSE has more than doubled from Rs 4.18 lakh crore in 2014-15, the first year of this regulation, to Rs 9.62 lakh crore in 2023-24. Accordingly, the thresholds may now be revised upwards to keep the relatively smaller companies out of the purview of this regulation, which was the original intent as well,' he said.According to primeinfobase.com, 2,013 companies were listed on NSE main board as on March 31, 2024. Of these, 1944 had details relating to CSR given in the annual reports, of which, 1394 were obligated to spend on CSR, up from 1,297 companies in 2022-23. This analysis is based on these 1,394 companies.CSR spends by NSE-listed cos over the last five years 2023-24 2022-23 2021-22 2020-21 2019-20 No of cos 1394 1297 1214 1153 1122 Avg net profit of last 3 years (Rs crore) 9,61,963 8,13,678 7,20,343 6,81,324 6,79,601 Actual amt spent (Rs crore) 17,967 15524 14816 14780 14751 Yoy increase in spends 15.7% 4.8% 0.2% 0.2% 25.2% Note: Includes administrative expenses and impact assessment cost.Bigger gainer; biggest loser(Factoring in data of 440 companies for which project details were available for both FY24 and FY23)
Environmental sustainability (54%) saw the max increase in CSR spends Slum development (-72%) saw the sharpest drop
Source: primeinfobase.com
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