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Sagar Chemicals Ltd spent Rs 60 lakh on a sanitation project and its assessor estimates a monetised social benefit of Rs 90 lakh. The assessor then compares the benefit with the cost to compute the Social Return on Investment (SROI). What is the ratio, and how should it be read?

The SROI is 1.5:1, meaning each rupee spent generated Rs 1.50 of monetised social value (90 divided by 60). SROI does not decide compliance with section 135(5), which depends on spending at least two per cent of the average net profit of the three preceding financial years.

  1. A0.67:1, benefits are less than cost
  2. B1.5:1, each rupee spent created Rs 1.50 of social valueCorrect
  3. C1.5:1, which means the company met its obligation under section 135(5)
  4. D0.5:1, benefits exceed cost by half

Explanation

SROI = 90/60 = 1.5, so each rupee invested created Rs 1.50 of social value. Option 0.67 inverts the ratio. Meeting the section 135(5) obligation depends on spending at least two per cent of average net profit of the three preceding years, not on SROI. The 0.5 figure is the net benefit per rupee, which is not the ratio.

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