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Dissertation Report On Corporate Social Responsibility in Emerging Markets
Dissertation Report On Corporate Social Responsibility in Emerging Markets
RESPONSIBILITY
(CSR)
IN EMERGING
MARKETS
(DISSERTATION REPORT SUBMITTED TOWARDS PARTIAL
FULFILLMENT OF POST GRADUATE DIPLOMA IN MANAGEMENT)
COLLEGE LOGO
ACADEMIC SESSION
2008-10
COLLEGE ADDRESS
CERTIFICATE FROM THE FACULTY
GUIDE
Page 2
ACKNOWLEDGEMENT
Behind every study there stands myriad of people whose help and
contribution make it successful.
I have been benefited from discussions and would also take the
opportunity to thank my friends whose support helped me a lot. A cordial
and encouraging environment made it very easier for me to complete the
dissertation.
Page 3
PREFACE
This dissertation tries to identify the after effects e-Choupal and how this
initiative has helped the company in its progress.CSR initiatives of some
companies have also been discussed.
Page 4
There may be some scope for improvement but serious efforts have been
put into to get the best results.
Table of Contents
1.1COMPANY PROFILE......................................................................................................2
LITERATURE REVIEW........................................................................................................8
3.1INTRODUCTION...........................................................................................................11
3.2E-Choupal........................................................................................................................11
Page 5
3.3The Traditional Model.....................................................................................................12
3.7BENEFITS OF E-CHOUPAL.........................................................................................16
3.9WEAKNESS OF E-CHOUPAL......................................................................................18
3.10 CHALLENGES.........................................................................................................19
5.2CADBURY.....................................................................................................................27
5.3CAVINKARE..................................................................................................................28
5.4 FEDEX:..........................................................................................................................29
5.5LG ELECTRONICS.......................................................................................................29
5.6 NOKIA...........................................................................................................................30
5.7PHILIPS INDIA..............................................................................................................31
5.8 SONY.............................................................................................................................31
5.10 DABUR........................................................................................................................33
REFRENCES..........................................................................................................................49
Page 7
CHAPTER: 1
ABOUT THE
COMPANY
Page 9
towards international competitiveness but by also consciously contributing
to enhancing the competitiveness of larger value chain of which it is a part.
ITC's production facilities and hotels have won numerous national and
international awards for quality, productivity, safety and environment
management systems. ITC was the first company in India to voluntarily
seek a corporate governance rating.
ITC employs over 26,000 people at more than 60 locations across India.
The Company continuously endeavors to enhance its wealth generating
capabilities in a globalizing environment to consistently reward more than
3, 39,000 shareholders, fulfill the aspirations of its stakeholders and meet
societal expectations. This over-arching vision of the company is
expressively captured in its corporate positioning statement:
Page 10
1.2 LIST OF PRODUCTS & BRANDS
Page 11
export requirements. Product Range includes Cartons (Folding &
Fluted), Flexibles (Reels & Pouches), Shoulder Box, HL's & CBO,
Printed Cork Tipping, Gay wraps. ITC PPB
Page 12
Page 13
CHAPTER: 2
RESEARCH
METHODOLO
GY
Page 14
2.1 DATA SOURCES
The data is purely secondary in nature and the knowledge has been
obtained only through various articles available on various websites.
There is no scope to collect primary data in any form as the topic is
theoretical in nature and does not include any kind of questionnaire to be
filled.
1. To study the efforts of Indian companies in this field and their impacts
on the company
2. To find out how corporate social responsibility is serving as a
determinant of corporate success
The research commences by searching for the articles related to the topic
CSR (Corporate Social Responsibility).Then having a detailed knowledge
of the same.
Then, studying the steps taken and efforts made in this field by various
Indian companies. Taking some examples of Indian companies and
explaining the efforts made by listing their contributions. After identifying
them, there is study of the results it had on the business and what positive
results came out.
Page 15
Then explaining by examples of various study that how it has lead to
increase in profits and is one the reason of corporate success. Also there is
special emphasis on an Indian company which can explain the topic better
and help to achieve the objectives.
Page 16
LITERATURE REVIEW
0
3. R. Edward Freeman, S. Ramakrishna Velamuri, Brian Moriarty
in their study on “COMPANY STAKEHOLDER
RESPONSIBILITY-A new approach to CSR” have pointed out
the fact that if a company is enriching the lives of its stakeholders,
then asking the additional question of whether or not it is “socially
responsible” simply makes no sense-it is meaningless question. If
the company is doing everything to keep stakeholders happy, then
it deserves to be applauded and offered as an example for other
firms to emulate. If it is not doing it satisfactorily as particular
stakeholders think it ought, the n these stakeholders could perhaps
offer to help it do them better, rather than appeal to actions and
responsibilities that lie outside its day to day activities.
1
CHAPTER: 3
ITC E-
CHOUPAL
2
3.1 INTRODUCTION
3.2 E-Choupal
3
now e-Choupal has become the largest Internet based intervention in rural
India. e-Choupal aims to provide farmers ready access to crop specific
real-time information to improve the farmer’s decision making ability
thereby helping them to better align their farm output to the projected
demand in Indian market.
E-Choupal, the Web-based initiative of ITC’s IBD, offers the farmer all
information about products and services they need to enhance farm
productivity improve farm-gate price realization and cut transaction costs.
Farmers can access the latest local and global information on weather,
scientific farming practices and market prices at the village itself through
the web portal in Indian languages – Hindi, Marathi, Kannada and Telegu.
E-Choupal also facilitates the supply of high quality farm inputs as well as
purchases of produce at the farmer’s doorstep.
But with every intermediary the cost of produce increases to the processor
as intermediary adds his profit margin to the cost although the farmers get
the lowest price and margin in the whole chain.
4
The main attraction of e-Choupal is that it connects large and small
producer and users and eliminates the need of middlemen (who are
essential in traditional market).
The critical element of the e-Choupal system and the key to managing the
geographical and cultural breath of ITC’s network by recruiting a local
farmer is the sanchalak. Sanchalak create trust in society and all
infrastructure set up is made in his house. Sanchalak receives commission
5
for every transaction processed through the e-Choupal and also benefited
from increased social status that accompanies the position – a significant
advantage in rural Indian life. Sanchalak act as public officer in ITC
project. Sanchalak also aggregates farmers input as well as purchase
orders. Sanchalak undergoes training of basic computer usage, basic
business skills, quality inspection of crop product training etc. The
samyojak or cooperating commission agents also play important role. He
earn income by providing logistical services that substitute for the lack of
rural infrastructure by providing information and market signals on trading
transaction. Samyojak is involved in ongoing operation of e-Choupal
system, allowing them revenue streams through providing services such as
management of cash, bagging & labor at procurement hubs, handling of
mandi paperwork as licensed principals for the retail transaction of the e-
Choupal.
6
Labor khadi karai 50 Nil
8
e-Choupal delivers real-time information and customized knowledge to
farmer’s decision making ability, securing better quality & price. The e-
Choupal initiative also creates a direct marketing channel, eliminating
wasteful intermediation and multiple handling, thus reducing transaction
cost and making logistics efficient.
9
which can be employed into the farming, or pricing of the produce.
The increased participation in e-Choupal develops local leadership
quality in farmers. The farmers get attracted towards e-Choupal
due to increased profits, added services that he could get, saving in
time and the ability to use e-Choupal for many transactions.
e-Choupal at a glance
States covered 9 States [M.P., Haryana, Uttaranchal,
1. The transaction time at the ITC hub is also much faster than mandi.
10
2. ITC has given recognition to integral partner in the supply process
& not mere as agricultural producer and thus elevating the level of
respect of farmers. Similarly providing shaded seating area while
waiting for their paperwork shows ITC really care for farmers.
E-Choupal has been successful. It has reduced the cost of procurement and
the cost of transit and the material handling cost. Procurement transaction
costs are reduced from the industry standard of 8 percent (farmers incurs 3
percent and the processor incurs 5 percent) to 2 percent (with farmer
saving all his 3 percent, and the processor ITC – saving 3 percent).
The total cost incurred on the initiatives so far has been Rs.50 million
(Rs.35 million as capital cost towards computers and other hardware at the
kiosks as well as central servers and Rs.15 million revenue expenditure
incurred towards portal development, people overhead etc.). But ITC has
gain benefit Rs. 20 million, which is the equivalent of full investment on
40 percent of the Choupals (Kiosks). In terms of future revenue, the
outflow is 52.1 million in 2001-02 which reduces to 3.90 million in 2005-
2006 and for 2006-07 is estimated as 2.70 million. Where as inflow in
2001-02 is 15.3 million where as 65.0 million in 2005-2006 and estimated
as 85.0 million in 2006-2007. The internal rate of return (IRR) on the
project works out to be 21.55 percent.
In the mandi system, there was a mark up of 7-8 percent on the price of
soybean from the farm gate to the factory gate of this mark-up 2.5 percent
was born by the farmer while 5 percent was borne by ITC with e-Choupal,
ITC cost are down to 2.5 percent. In absolute terms, both the farmers and
ITC save about $ 6 per metric ton.
11
Although e-choupal helps eliminate the middleman and therefore allows
farmers to get a better price for what they grow, it does nothing to solve
the more fundamental problem of the inherent inefficiencies created by so
many tiny farms.
3.10 CHALLENGES
There are several issues which the company has addressed. Firstly, it is not
just tweaking around but a greater efficiency in the supply chain. One of
the problems in redesigning supply chains is how to use different tools,
thus making the various players still own the chain. Here, the farmer and
the team are involved in painting the big picture, so there is enthusiasm
and a feeling of ownership.
Further, how do you avoid a channel conflict by finding space for the
middle-men? Upton also points out that the 'roll out, fix it, scale up' model
is a new approach to strategic management. The philosophy here is that
the terrain has so many uncertainties that gaps will exist. So, unlike in the
past, where focus was on well-laid strategic plans, here you give
experimentation-based strategies more weightage.
13
The e-Choupal project covers over 35,000 villages in Madhya Pradesh,
Uttar Pradesh, Maharashtra, Karnataka, Andhra Pradesh, Rajasthan,
Haryana and Uttaranchal providing millions of farmers with critical
information on farming. The Choupal services are being delivered by over
6,000 Sanchalaks and over 17,000 Upa Sanchalaks to these remotest areas.
2. Multiple Benefits
Farmers can look at weather forecasts, order fertilizer and herbicide, and
consult an agronomist by e-mail when their crops turn yellow. At some e-
Choupals they can even buy life insurance, apply for loans and also check
their children’s exam results.
While much has been written about the social benefits of ITC’s e-Choupal,
the matter of the fact is that the project was conceptualized with a pure
business focus to create farmer communities in villages to facilitate
sourcing of high-quality farm produce for the company’s fast growing
agribusiness.
3. Better Payment
The project was built using .NET. The first implementation of a Soya
Choupal took eight months but later extensions like the Aqua Choupal for
aquamarine farmers took between six and eight weeks.
14
The portfolio of commodities sourced has been vastly expanded to include
maize, barley, sorghum, and pulses, and the sourcing cycle is extended
almost around the year. In the commodities market, these two factors are
helping ITC create a definite competitive advantage.
In healthcare services, a pilot project has been launched along with leading
corporate healthcare service providers, to extend reliable and quality
healthcare services to the remotest villages. Several health camps
conducted during the pilots are encouraging and the project is in the midst
of scaling up to other locations.
15
CHAPTER: 4
OTHER CSR
INITIATIVES
OF ITC
Conserving Energy
As part of ITC’s concern for global warming, the Company began efforts
to become a carbon-positive corporation.
ITC has effectively leveraged its need for wood fiber to provide
significant livelihood opportunities to economically backward wasteland
owners.
The Company has undertaken extensive tree plantation, at all its Units, and
major afforestation and watershed development programmes across the
17
country. So far some 35 million saplings have been planted over 16,000
hectares, generating employment for about 160,000 people.
Apart from the obvious benefits of increasing the forest cover this effort
also directly contributes to moisture conservation, groundwater recharge
and a significant reduction in topsoil loss due to wind and water erosion.
Conserving Water
Enhancing Eco-Efficiency
18
The ITC Environment Health and Safety Policy and Codes of Practice
require all Units to take EHS issues into consideration in identifying and
using resources. The Company continually strives to:
Nearly 44% of solid waste from ITC’s paper business is currently recycled
while solid waste production has reduced by 12%.
19
CHAPTER: 5
SOME OTHER
CSR
INITIATIVES
BY OTHER
COMPANIES
GLOBALLY
20
5.1 AARTI DRUGS LTD.
5.2 CADBURY
21
Close to its factory at Malanpur near Gwalior, the company is working on
a project targeting women's empowerment and female infanticide. The
initiative known as the ' Gurikha Project' was launched in line with
Cadbury India's philosophy to serve communities around its factory
locations in partnership with NGOs on a planned and sustainable basis.
The projects key focus is on various aspects of women's inequality, female
infanticide and rights of the girl child.
5.3 CAVINKARE
22
servants, and people from all walks of life contribute to the cause by
witnessing the awards and also contributing in the manner they
desire towards the just cause.
5.4 FEDEX:
FedEx, which has set itself the objective of being the express carrier of
choice, believes that to achieve this end it has to be first seen as an
employer and a neighbor of choice. And while it has been voted among the
best workplaces in the country, it is keen to prove that it is a conscientious
corporate as well.
23
A good example of such an engagement is FedEx's tie up with CRY in the
field of education, which not only aims at providing basic education to
underprivileged children, but also at supporting their overall development.
It has donated Rs 15 lakh towards four CRY-supported projects that is
expected to impact the lives of 15,000 children.
5.5 LG ELECTRONICS
5.6 NOKIA
Nokia with its mission to 'connect people' is the world leader in mobile
communications. The company is deeply concerned about ethical business
practices and believes that personal and organizational integrity is
essential to long term relationships- whether with customers, employees or
stakeholders. The organization is committed to development initiatives
and is supporting numerous projects in partnership with several
community and charitable organizations worldwide. The focus of its
community initiatives are centered on education, corporate giving and
disaster relief.
25
the people around them. Villages in rural India desperately need
preventive health, education and knowledge-based care. To meet these
needs, Philips is stepping out as part of its Corporate Social Responsibility,
to bring healthcare to those in rural India who need it most.
In association with the Trust for Reaching the Unreached (TRU), Philips
introduces Arogya Kiran - a project designed to provide quality healthcare
to people in rural India.
5.8 SONY
In July 2006, Sony signed an agreement with the World Wide Fund for
Nature (WWF) global environmental NGO, to join its "Climate Savers
Programme". Under the program, Sony has agreed to partner with the
WWF to reduce greenhouse gas emissions at Sony's sites around the
world, reduce carbon dioxide emissions from product use by lowering the
annual energy consumption of major Sony products and cooperate with
the WWF to raise consumer awareness of global warming prevention.
26
saving laws, representing the industry's highest energy-saving
performance.
5.9 TUPPERWARE
In India, money from the proceeds of each sale of Tiwi Munch goes
towards this noble cause.
SUNDESH
Dabur Nepal Pvt. Ltd. is a joint venture company established in the year
1989 when probably very few investors had their roots in Ayurveda.
Dabur Nepal has started the project on medicinal plants in Nepal to
provide the modern technology for cultivation of the required
medicinal herbs of Himalayas to the farmers. The only eco-friendly
project of CSR nature in Nepal, this initiative is fully integrated with the
company’s business vision.
28
A state-of-the-art Greenhouse facility has been set up at Banepa,
which has the capability to produce 5-6 million saplings of medicinal
plants per annum. All the required climatic parameters for uniform growth
of saplings of the medicinal plants like temperature, humidity etc. are
controlled by automatic computer systems. Besides helping preserve
natural resources, this initiative has also gone a long way in generating
employment and income for local people and improving the socio-
economic conditions of local populace in the Himalayan Kingdom.
29
CHAPTER: 6
ITC’s
PERFORMANC
E SINCE
INCEPTION OF
e-CHOUPAL
30
31
ITC’s PERFORMANCE SINCE INCEPTION OF e-
CHOUPAL
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 200
gross
income 8069.37 8827.11 9982.46 11194.47 12039.92 13585.39 16510.51 19636.53 21966.84 236
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 20
PBT 1228.95 1600.3 1780.26 2056.19 2319.06 2673.07 3269.19 3926.7 4571.77 48
33
3.PROFIT AFTER TAX OF ITC: 2000-09(Rs in crores)
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008
PAT 792.44 1006.26 1189.72 1371.35 1592.85 2191.4 2235.35 2699.97 3120.1
34
4.DIVIDEND PER SHARE (ACTUAL) OF ITC : 2000-09
(Rs in crores)
YEAR 2000 2001 2002 2003 2004 2005 2006 2007 2008 20
35
figure of 3.1 in 2005.so the graph shows a falling and rising trend
from 2005-07.
YEAR 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
DPS
(ADJUSTED) 0.75 1 1.36 1.51 2.02 3.15 4.05 4.75 5.37 5.69
year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Sales 2475.45 2516.44 3155.90 3712.00 4109.85 4846.89 6463.15 8207.88 9543.59 10529.60
37
Interpretation- The graph of SALES OF ITC 2000-09 clearly depicts that
the sales trend is also increasing from 2000-09.But in the year 2000-01 the
trend is nearly constant as the rise is very small because of small increase
in sales figure .The increase in sales figure from 2000-01 is only of 40.99
crores.
38
CHAPTER: 7
REASONS FOR
THE SUCCESS
OR HIGH
PROFITS OF
ITC
39
1. COMPETITIVE NATURE
They have been three years into the Indian foods market and ITC Foods
are challenging for heavyweights like PepsiCo, HLL and Britannia in three
different segments simultaneously. The launch of Bingo snacks was ITC
Foods’ fifth line of foods business after staples, biscuits, ready-to-eat and
confectionery businesses.
Their food business plan is backed by a robust supply chain and effective
distribution to ensure consistency in supply and quality. And their
communication and brand cut through the advertising clutter and define
clearly the values associated with the product. Celebrity advertising with
Sunfeast biscuits, for instance, helped quick recall in a segment where it
competed with old established brands. Success in foods requires a keen
understanding of the supply chain for farm produce. A robust distribution
network across India is also a big plus.
3. CONSISTENCY IN QUALITY
40
The challenge in the FOOD market is to offer consistency in quality.
That’s where Aashirvaad scores over competitors who could not offer that
quality consistency.
ITC holds close to 70 per cent of the domestic market for cigarettes with
the segment’s contribution to the top line averaging 65 per cent and profits
85 per cent for the four years ended March 2009. With strong pricing
power to pass on excise duty hikes, operating margins have averaged a
healthy 25 per cent, much higher than rivals such as Godfrey Philips.
ITC may remain the market leader in the cigarette business, growing in
high single-digits in terms of volumes. ITC’s ‘mindshare’ among
consumers, is going to be hard to dent by rivals such as Philip Morris and
Godfrey Philips. The business is likely to remain the major cash cow,
continuing to fund efforts to diversify into other businesses.
5. IN HOUSE PRODUCTION
In-house production of cartons filters and paper, coupled with efficient raw
tobacco procurement, have made ITC a highly integrated player. In house
production helps them to save time and cost. There is no delay and
dependability that can hamper the smooth supply of materials.
6. DIVERSIFIED PORTFOLIO
41
To diversify its revenues and profits, ITC has charted several forays into
consumer products such as garments, confectionery, consumer staples,
bakery products, snacks and stationery products.
In the FMCG business, ITC has over the past couple of years moved from
segments such as matches, snacks and consumer staples ITC does enjoy a
competitive edge in bakery products or consumer staples by virtue of its
well established agri-product supply chain such as atta into the more
highly competed soaps and personal products.
7. CONRIBUTION OF E-CHOUPAL
That’s where we had immense support from ITC’s e-Choupal that ensured
consistency in wheat quality.
42
INTERPRETATION
AND
RECOMMENDATIO
NS
43
INTERPRETATION
With time many other companies have started taking interest in this kind
cause.
44
RECOMMENDATIONS
LIMITATIONS
45
Limitations
1. CSR initiatives practiced by companies were easily available but
the results of these initiatives are hard to find out.
46
REFRENCES
4. www.e-choupal.com
47
5. www.karmayog.org
6. www.itcportal.com
7. www.businessline.com
RURAL TRANSFORMATION
48