Volume 3, Number 1, January March 2014 ISSN (P):2279-0918, (O):2279-0926

INDIAN INDUSTRIAL ORGANIZATIONS AND CORPORATE SOCIAL RESPONSIBILITY

REALITY OR MYTHS: A REVIEW STUDY

Pradhyuman Singh Lakhawat1 Poonam Vishwakarma2 Malay Tiwari3

ABSTRACT

In this study, we propose the Corporate Social Responsibility (CSR) activities perceived by the Indian Industrial organizations
and their impacts on Indian society. Specifically, we argue that the major types of the CSR activities and the importance of
such activities in Indian concern. This paper is also emphasizing with major affecting factors to actualization of CSR
activities. Previous literature is also used to suggest a route through which paper will become stronger (Latest knowledge,
Government policies etc.)

KEYWORDS

Corporate Social Responsibility, Indian Industrial Organization, Organizational Effectiveness etc.

PURPOSE OF STUDY

CSR is industrys response to growing public concern about the accountability and the social, economic, and environmental
impact of global corporations. This paper is providing information about currently perceived Corporate Social Responsibility
(CSR) related activities by the Indian Pharmaceutical Industry. In addition, what should be done.

IMPORTANCE OF STUDY

The benefits of an effective CSR approach to an organization can include: stronger performance and profitability, improved
relations with the investment community and access to capital, Enhanced employee relations and company culture, Risk
management and access to social opportunities, stronger relationships with communities and legal regulators.

RESEARCH METHODOLOGY

This is secondary data based study so all data was collected from Reviews of the applied literature based on CSR activities of
Indian industrial organizations.

OBJECTIVES OF STUDY

To find out the status of Corporate Social Responsibility perceived by Indian Industrial Organizations.
To find out the major benefits of the Corporate Social Responsibility activities for Indian social system.

INDIAN INDUSTRIES AND CSR

According to the new Companies Act, 2013, requires certain class of profitable entities to shell out at least three per cent of their
three-year annual average net profit towards Corporate Social Responsibility (CSR) activities. This would apply to the companies
with a turnover of Rs 1,000 crore and more or net worth of Rs 500 crore and more or net profit of Rs 5 crore and more. The new
rules, which would be applicable from 2014-15 fiscal, also require the companies to set up a CSR committee of their board
members, including at least one independent director.

According to the order of Honble Lok Sabha Indian pharmaceutical companies have to invest anywhere between Rs.300-325
crore in the coming years under Corporate Social Responsibility (CSR) scheme. Few pharmaceutical companies have already
implemented CSR activities and published their contribution towards social activities. As per the current reviews, nearly 79
pharmaceutical companies will have to spend two per cent of their average net profits on social activities, which come to around
Rs.325 crore.

The Minister of Steel, Shri Beni Prasad Verma has said that the public sector undertakings under the Ministry of Steel are
allocating and generally utilizing funds for taking up projects under the Corporate Social Responsibility (CSR) scheme issued by
the Department of Public Enterprises. The details of the funds allocated by the public sector undertakings under the Ministry of
Steel for CSR during the requisite period are as under:

1
Research Scholar, (UGC, NET-JRF), S.H.I.A.T.S., Uttar Pradesh, India, pradhyuman.sngh@gmail.com
2
Research Scholar, (UGC, NET-JRF), S.H.I.A.T.S., Uttar Pradesh, India, poonammbapm@gmail.com
3
Head of Department, Shambhunath Institute of Management, Uttar Pradesh, India, tiwarimalay@gmail.com

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Table-1: Name of the Central Public Sector Enterprise (CPSE)

(Rs. In Lakhs)
Name of the Central Public 2010-11 2011-12 2012-13 2013-14
Sector Enterprise (CPSE)
SAIL 9400 6400 4200 4000
RINL 1540 1200 750 750
NMDC 8156 8013 13321 12685
MOIL 542 628 950 1000
KIOCL 100 230 283 124
MSTC 100 150 355 260
FSNL 10 9 9 4
MECON 180.50 325 497 202
HSCL 25 0 0 0
BGC 216 38 17 85
Sources: GoI CSR Report 2013-14

In a written reply in the Lok Sabha, Shri Verma said, the projects implemented under the CSR relate to water supply arrangement,
construction of school buildings, supply of educational materials in schools, electricity facility, solar lighting system,
health/family welfare, irrigation facilities, sanitation, relief to victims of natural calamities, imparting vocational training etc.
Some of the projects have been completed and some are at various stages of completion. These projects are located in the States
of Chhattisgarh, Odisha, West Bengal, Jharkhand, Andhra Pradesh, Bihar etc. Under the scheme of CSR, funds are not allocated
state-wise. CSR funds / activities are controlled and managed by the respective Boards of the CPSEs. Sporadic complaints are
received about the CSR activities of the CPSEs. Such complaints as and when received are forwarded to the concerned authorities
for taking appropriate remedial measures, the Minister added.

CLASSIFICATION OF CSR ACTIVITIES

Environmental CSR: focuses on eco-issues such as climate change.

Community based CSR: businesses work with other organizations to improve the quality of life of the people in the
local community.
HR based CSR: projects that improve the wellbeing of the staff.
Philanthropy: businesses donate money to a good cause, usually through a charity partner.

IMPORTANCE OF CSR ACTIVITIES

In todays digital, fast speed world, each business, small or big, needs to have a CSR program in place. If CSR is not yet part of
your daily business practice, you must act fast. Or else youll lose the trust of the people who are important to your business.

Satisfied Employees

Employees want to feel proud of the organization they work for. An employee with a positive attitude towards the company is less
likely to look for a job elsewhere. It is also likely that you will receive more job applications because people want to work for
you. More choice means a better workforce. Because of the high positive impact of CSR on employee wellbeing and motivation,
the role of HR in managing CSR projects is significant.

Satisfied Customers

Research shows that a strong record of CSR improves customers attitude towards the company. If a customer likes the company,
he or she will buy more products or services and will be less willing to change to another brand.

Relevant Research

IBM study Attaining Sustainable Growth through Corporate Social Responsibility: The majority of business
executives believe that CSR activities are giving their firms competitive advantage, primarily due to favorable responses
from consumers.
Better Business Journey, UK Small Business Consortium: 88% of consumers said they were more likely to buy from a
company that supports and engages in activities to improve society.

Positive Image

CSR provides the opportunity to share positive stories online and through traditional media. Companies no longer have to waste
money on expensive advertising campaigns. Instead, they generate free publicity and benefit from worth of mouth marketing.

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Costs Reductions

Yes, you read this correctly. A CSR program does not have to cost money on the contrary. If conducted properly a company can
reduce costs through CSR. Companies reduce costs by:

More efficient staff hire and retention,

Implementing energy savings programs,
Managing potential risks and liabilities more effectively,
Less investment in traditional advertising.

More Business Opportunities

A CSR program requires an open, outside oriented approach. The business must be in a constant dialogue with customers,
suppliers and other parties that affect the organization. Because of continuous interaction with other parties, your business will be
the first to know about new business opportunities.

Long Term Future for Your Business

CSR is not something for the short term. It is all about achieving long-term results and business continuity. Large businesses refer
to shaping a more sustainable society (Vodafone 2010 report)

MAJOR AFFECTING FACTORS TO CSR ACTIVITIES

Too Many Rules and Regulations and All are Confusing

What gets measured is managed. Issues or goals without obvious metrics are much harder to tackle. Sustainability initiatives can
be particularly difficult to measure because they often affect people and society at a macro level, and their organizational
implications are unclear. Further, their impacts are not immediately obvious and they depend on who implements them and how.
Many suites of metrics and measurement systemssuch as the Global Reporting Initiative, ecological footprint, and life-cycle
assessmentcurrently exist to help managers measure their sustainability. The range of options often results in more problems
than solutions. What makes one metric or suite of metrics better than another does, and how can businesses judge which is most
appropriate for their needs? As one manager said: Its important to know which sustainability metrics are most meaningful and
integrate them with traditional business metrics. Managers recognize that different metrics serve different purposes: some are
most relevant to particular sectors, such as manufacturing, while others focus on specific issues, such as carbon.

Awareness in Customers about CSR Activities

Many decisions consumers makefrom what food to buy to how much energy to useinvolve sustainability-related tradeoffs.
We constantly trade off different types of impacts (social, environmental, or economic) at different levels (personal, communal, or
societal) over different times (now or later). In the words of one manager: Many people demand cleaner energy but refuse, for
example, to allow windmills in their community. How can we help consumers make informed tradeoffs when it comes to
sustainability? Understanding how consumers value sustainability in the context of other product attributes would help businesses
develop products that meet their needs. Further, there may be a role for business in educating consumers on issues and product
attributes, resulting in more informed purchasing decisions

Organizations are not familiar with Best Practices, which help in Increase the Satisfaction of Employees

Survey research shows employees would rather work for sustainable firmsand some would even forego higher earnings to do
so. Firms must better leverage this knowledge to attract and retain the best employees. To do this, sustainability managers want to
know which employee incentive plans are most valued, and so likely to be effective. One manager clearly identifies this need,
asking: What does the cumulative experience of business tell us about how best to incorporate sustainability performance targets
into employee incentives? These mechanisms should allow firms to leverage their sustainability initiatives and values, building
the right capacity internally and ensuring progress is made towards sustainability goals.

SUGGESTIONS FOR IMPROVEMENT THE CSR ACTIVITIES

After the fine study of available reviews on this particular topic, we found some recommendations, which may be or may not be
mentioned in available related material. These suggestions are as follows:

Popularity Creation

For better improvement in current situation, firstly we have to create popularity of CSR activities among the social system, which
includes both employees and customers. If these groups became aware then it will be easy to impose CSR policies on them.

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Appreciations

It is necessary to appreciate the organization, which are actively involved in the CRS activities accordingly the governmental
rules, and regulation. These appreciations may be percentage relaxation in taxes, honor, awards etc.

Getting Organized

The scope of CSR is ever expanding and therefore goalposts keep on changing regularly. Regulation in itself cannot cover every
aspect of CSR under its umbrella. We can overcome this challenge if we can get organized in the form of CSR focus groups. Our
organized groups can systematically counter the arguments that corporations are only responsible to their shareholders and not to
the society as a whole. We can actively work in the

RESULT AND CONCLUSION

After collection of many research reports, Case studies and Regular Industry updates study concluded as the value of
sustainability has been analyzed from every direction - revenues, profits, and share pricesand it is clear that, in some
circumstances, sustainability can pay off. However, sustainability is more than just about firm-level benefits. Businesses, business
schools, and society recognize that the current course of production and consumption cannot be sustained within our natural
resource limits.

Businesses develop the products and services consumed by individuals around the world. The vast resources extracted by business
for societys use have created waste streams that find their way into our land, air and water and compromise human health. New
businesses are being built on an understanding of the problems that have emerged through the 20th century.

Increasingly, old businesses are evolving to use fewer resources, intensify the resources they do use, and renew and reuse the
products they sell. New relationships are forming between businesses as firms realize synergies from interdependence; one firm
can profit from anothers waste, or several firms can benefit through flexible supply chain relationships built on common interest.

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