Stakeholder Management

Case Study (Full Text)

Name of the company: AAA Power Plant of ABC Power Ltd
Author: Prof Sudhir Kumar Sinha, IRMA, Anand

ABC Power Limited (APL), a fully owned subsidiary of ABC Group, bought an acquired land of
approx. 600 Acre from the XYZ Group (XYZ) in 2006. The AAA Power Plant (APP) of APL is a
1,200 MW coal-based generation capacity plant, located at Chatra, Jharkhand. With the help
of the Govt of Jharkhand, XYZ Ltd completed the formalities of land acquisition processes
from five villages in Chatra in 1994-95. Although the land was legally acquired on paper, the
company, however, had not taken physical possession of the land from the farmers. So, the
farmers continued farming on the land despite having paid 100% compensation money for
the land from the company (XYZ). The company (XYZ) also did not have any problem with
the farmers who continued farming on the lands, which were sold to the company. Since the
proposed power plant of XYZ Ltd did not materialize for some unknown reasons, the land
was never physically possessed.

After 11 years, a business deal for the transfer of land was inked between the two
companies – XYZ Ltd and ABC Ltd - in 2006. Since XYZ Ltd could not set up its proposed plant
on the acquired land, with the approval from the State Govt., it transferred the entire deal
to APL Ltd. However, the farmers did not allow APL Ltd for taking physical possession of the
land. Instead, they initiated fierce agitation against the company and demanded more
compensation for the same land. The argument farmers put forward was based on the
market price of the day for the land. They put a new condition for the transaction now. They
said, “they were not satisfied with the land price given when the land was purchased by XYZ
in 1994. They transacted the land deal under duress from the then government.” Some of
the land losers denied vacating the land even if the enhanced land price was offered afresh
to them.

In response to the farmers’ fresh demands and agitation, the company management made
it clear that since it did not deal with them (farmers), the company was not going to engage
with them. “The deal of the land was legitimately done by the previous company;
compensations were paid accordingly by the company, which was accepted by the farmers.
Therefore, it was not legitimate to demand compensation again for the same deal,” the
company management said. The company denied them acknowledgment as an aggrieved
party or the legitimate sellers. The company then approached the administration for helping
it to take physical possession of the land. The adamant position taken by the two parties
resulted in a conflict between the company and communities, especially the land losers.

The land was fertile, and farmers were growing sugarcane on it and reaping good income.
Therefore, farmers wanted their land back. The Company was in a hurry as investors wanted
the project to be completed well within the given timeframe. The project was, however,
already delayed by 12 months. On the other hand, farmers had gone hostile when the
company representative tried to begin the process of physical possession of the land. Three
company officials were severely beaten up; fortunately, one of them who was brutally
injured could survive. The company, however, had approx. 12-15 acres of land in its physical
possession. It began its work from there. This piece of land was very critical for the company
as it sent out signals to the community about the determination of the company for the
project. Villagers tried many times to take back that land too in their possession but failed.
They had allegedly attacked the people (employees of contractors and the company)
working out there. The company, therefore, decided to deploy a professional private
security agency to protect its people and the land. Subsequently, armed security guards
were deployed. This was not liked by the villagers who complained to the local authorities
about their alleged atrocities. On the other hand, the company desperately needed all land
to be physically acquired for the progress of the work, which was stalled due to the conflict
for almost a year.

The situation on the ground was serious since no company official was allowed even to go to
the land/villages. The company's higher management had tried to exert pressure on the
district administration from the CM office. It also did not work as it was a public issue. The
Govt did not want it to become a political issue, which the media and the opposition would
have put the govt. on the back foot. However, there was one big respite for the company.
The public resistance/agitation did not get the attention of other political parties or social
activists.
Meanwhile, villagers had intensified their protests in the last few months. On all occasions,
women and children took the forefront when the company with police went to the land site
for taking possession. Women especially were very much against land acquisition. They
guarded the land all time. No one other than villagers was allowed to enter the villages. The
company for almost a year was trying hard to start the construction but was unable to do
so. The local administration also tried to negotiate with the farmers but failed. Almost all
engagement channels were closed. It was turning into losses to the company after each day
passing. Despite the company having good political rapport, the company could not get any
breakthrough.

The company then decided to undertake some community work to lure local people and
pacify their resistance. This, too, was declined in the core villages. The Company offered
some help in terms of healthcare in other villages but they were of no use. The Chairman
discussed the matter with the Group Head-CSR of the Company in Mumbai. He was asked to
intervene in it. The Chairman asked him to make an independent assessment of the
situation and find solutions that could achieve a breakthrough. The CSR Head visited Ranchi
first where the CEO of APP Ltd would sit with all his key officials. He first engaged with the
CEO and his team for a day in the Ranchi Office. He requested them to share with him all
small and big information related to the project and ongoing protests. The local
management shared the information with the Group Head – CSR, which was summarized as:

 Since it was an old issue, they blamed XYZ Ltd and felt that the earlier company
could have resolved it before handing it over to ABC Ltd.
 Villagers were termed greedy. According to them, villagers made it a matter of
dispute by taking advantage of conditions and using the arm-twist tactic.
 Villagers used women and children in the protests so that the administration
would not initiate any coercive action.
 The govt did not take proper action to give possession of the land.
 The CEO and his Corporate Affairs team were in constant touch with the
government and pursuing the matter with the CM’s office and other ministries.
 It was a law & order issue on the ground. The company’s local officials were
found to be shuttling between the govt offices, police station, and the corporate
headquarters.
  The company officials had not been able to identify the community leaders with
whom they could have initiated a dialogue. The local MLA was supporting the
agitation but also was sympathetic to the company. In fact, he wanted the plant
to come up there so that it would give employment to some local people of his
constituency. The CEO of APP had once spoken with the MLA but he did not
commit to helping the company by going against the protests.
 The security agency had submitted a confidential intelligence report to the
management, which said that no company official should ever try to go inside the
core villages. It was risky and not advisable. After the report, the company
management passed instructions for all employees to remain within the
protected area, and not to make any effort to visit villages or speak to any
person.

The Group Head-CSR asked the Business Head of the APP to share a stakeholder list of the
project and the engagement plan if there was any. The Business Head could not produce the
same. However, he immediately made a list of stakeholders, which included all but the
community and its representatives. CSR Head collected all information about the project,
did the social due diligence on the project, and then did the initial analysis of them. He then
prepared a roadmap for fixing the problems and shared it with the Chairman and the top
management.

Note:

Part A of the Case Study ends here. We will discuss this in class and tell you what actions the
CSR Head undertook which helped the company crack the deadlock.

Discussion points:

Q.: What was/were the actual problem(s)?

Q.: What was that the company missed in its approach to finding solutions?

Q.: If you were the Group Head-CSR, what would have been your plan to find solutions to
the problem? In your opinion, what actions the CSR Head should take?

Part-2
Since the stakeholder list was prepared only after the interventions made by the CSR Head,
it included mainly the CM, ministers, the Collector, the Superintendent of Police, Police Sub-
Inspector, contractors, MLA, MP, and a sarpanch.

CSR Head decided to visit the project site and camped there for three days. He met with the
local security head and the one-man team of CSR. He also discussed the issue with other
company officials who were deployed at the site. The next day he decided to visit one of the
most problematic villages. The idea of visiting the village was opposed by the security in
charge of the site. He cited potential risks and threats to life. But, the CSR head overruled it
by using his authority and went to a village with the CSR executive the next day morning.
However, two more people came along. As was anticipated, he was surrounded by over 100
villagers who were violent and wanted to manhandle him. However, the CSR Head was cool
and used his past industry experiences of dealing with such a situation in pacifying the
crowd. The crowd was led by 3 persons who only were speaking on behalf of the
community. The CSR Head wanted a dialogue with them and therefore urged them to sit
down. There appeared a person from the crowd; he scolded the crowd and said them to
listen to the CSR Head. And then, everyone followed him. The discussion went on for more
than three hours. It was those three people who would speak. The CSR Head used his calm
and gave the patient hearing. Out of the three leading persons, one was found to be a
teacher of a school. On further grilling, it was found that the teacher was not losing his land.
But he was the one who instigated the villagers against the land acquisition. The CSR Head
asked him, “why was he speaking when he was not the land loser?” He presented himself as
a well-wisher of villagers. Being a teacher, he took the role of guiding them on the issue.
However, from his conversations, it emerged that it was his concern for getting his school
displaced. He feared losing his job and becoming unemployed if the school got displaced by
the land acquisition. The CSR Head told him that the school was getting displaced to a new
location. He assured him that the company was committed to constructing a school building.
He promised the school teacher to start the construction work within a week if the villagers
could show land for it. Although the teacher did not believe him, he was found mellowed
down. The teacher said he would trust him only after the action began. Then, the CSR head
asked villagers about their other concerns. Villagers gave a laundry list. However, expecting
a fresh compensation was more an expectation than a demand, which could emerge as a
piece of knowledge only after this meeting. The CSR head invited their representatives to
come to the site office the next day for the continuation of the discussion to find win-win
solutions. He said that he was going to speak to them on behalf of the company, to which
villagers agreed. Since the CSR Head was coming from the headquarters, they wanted to
test him. The CSR Head invited the opponents of the sarpanches to the meeting. This was
the first-ever meeting being formally held at the company’s site office. The discussion took
place. The CSR Head made things clear in the beginning that compensation was not on the
agenda as it needed a business decision which he would be able to talk about only after
discussing the same with the management at the headquarters. However, he said this
matter would be communicated to the Chairman. Villagers were convinced. They also
shared the following concerns:

1. Education of children - Displacement of the School

2. Loss of livelihood in absence of land because the compensation amount was by then
consumed or spent fully.
3. Unemployed youths – employment for educated youths and giving priority to village
men in the construction jobs under contractors. Villagers complained that
contractors had brought workers from outside.

But surprisingly there was nothing said by women who were leading the protests from the
front. Women were still not convinced to give away land even after the company could have
addressed the general grievances. No one also on their (women) behalf did say anything.

CSR Head went on implementing his plan of action as per the roadmap he had developed.
Some of the key actions he initiated were:

1. He met with the Collector and discussed the issues. Although the collector was very
friendly and offered all possible help, the Head-CSR did not discuss the solutions as
he did not want to reach conclusions just after initial engagement with villagers.
2. He collected information about the NGOs working in the area. In fact, he asked
villagers if they would know of some good NGOs which were working on women and
livelihood issues. Villagers recommended the name of an NGO, which was working
with the women of impacted villages and also working on agriculture and livelihood
solutions. The same name was endorsed by the Collector later.
 3. The CSR Head immediately established contacts and engaged with the head
functionary of the NGO. He was a follower of Binoba Bhave and worked on his
principles. The Head-CSR discussed the matter and the purpose of his meeting with
him very transparently. He explained the matter, which the chief functionary was
aware of it. The Head-CSR then sought the assistance of his NGO for the following:
- to know the real issues of women, “why were they agitating against the
proposed project?”
- to assist the Company’s CSR Team in knowing the communities’ needs
- to help the company in the implementation of some needs-based social projects
4. The NGO functionaries were aware of the issue and informed the HEAD -CSR that
women had discussed their problems with them. Their main concern was “open
defecation” for which they used farmland since villagers did not have toilets at
home.

The association with the NGO helped the Head-CSR know the areas’ social issues and
challenges. He would know who the main people were in the community with whom he had
to engage with. Among many actions he had initiated, some of the following helped the
Company build trust, which eventually helped the company finish the deadlock and take
possession of the land.

1. The work of construction of the school was started within one week of his discussion
with the villagers.
2. The CSR Head engaged with the local Sarpanch and offered him unconditional
support for the implementation of development projects. Simultaneously, he
engaged with the Sarpanch’s opponents and managed them by taking them in
confidence.
3. With the help of the NGO and the Collector (who gave some funds), toilets were
constructed in villages.
4. Along with toilets, water also was made available.
5. The contractors were instructed to engage 70% of workers from the villages.
 6. Special training for skill building was arranged in the government-run polytechnic
cum industrial training institute – the arrangement was made for the first batch of 70
youths.
7. For educated youths, including girls, a computer education program was initiated
with the help of a local institution.
8. Mobile Medical Vans started visiting impacted villages
9. The NGO shared information with the CSR Head about the district having a
significant number of persons with disabilities who needed surgical interventions
and also assistance in terms of making aids and equipment available. Subsequently,
with the help of the Collector and Dist. Medical Officer, an identification cum fitment
camp was organized, and thereafter the help was extended accordingly. The Local
MLA was invited to this program as the Chief Guest.
10. With the help of the NGO, some income-generating programs involving women were
initiated.

The strategy and plan of the CSR Head worked well and the company finally succeeded in
taking possession of the land. It all happened silently and smoothly without making a big
noise. Power plants are running successfully since then, and APP is the profit-making
business unit of RPL.

Instructions for the classroom discussion:

Please discuss the case and analyze the following:

1. What was/were the problem(s) – issues or people?

2. Who are the key stakeholders? Map them according to their criticality, importance,
and interest.
3. Was it CSR that provided the solutions or was it something else?
4. Is CSR a management tool that can find business solutions? Please give your
arguments to substantiate your views.
5. What did the CSR Head do that the others in the management failed to do – your key
learning from this case?