Hello Kirstie,
The documentation for this is fairly good - http://manual.mahara.org/en/1.5/site_admin/groups.html#groups-csv-add
Unfortunately as far as I know assigning group category by csv was added in 1.6 - so upgrading might be required.
I had some issues using csv to create groups at my last job - problem was that the institution field in the groups table wasn't populated in the database, so it just gave an error when uploading (the fix was to update the table records to assign the group to an institution), but I haven't heard anyone else report the same problem so it might have been a one off bug - if not the tracker issue is https://bugs.launchpad.net/mahara/+bug/1133281
Regards, Gordon.
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