International Journal of Management (IJM), ISSN 0976 International Journal of Management (IJM), 6502(Print), ISSN 0976 6510(Online) Volume

me 1, Number 2, July - Aug (2010), IAEME ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 1, Number 2, July - Aug (2010), pp. 129-140 IAEME IAEME, http://www.iaeme.com/ijm.html

IJM

CSR IN A PUBLIC SECTOR UNDERTAKING IN INDIA A CASE STUDY

P.Babu Rao Director (Personnel) Neyveli Lignite Corporation Limited, India V.Balakrishnan Professor Former Director Anna University of Technology Coimbatore, India

ABSTRACT:
Neyveli Lignite Corporation Limited a Central Public Sector operating in the backward region of Tamilnadu, has been aggressively pursuing Corporate Social Responsibility since its inception in 1956. What impact its social development initiatives had made on sustainable development in this region was not evidently ascertained for long. The study on Social Sector Activities of Neyveli Lignite Corporation compiled, collated data on NLCs spending on social infrastructure development in the project area and its spending on promotion of education and health in this region. The study also measured the Human Development Index for this region as an outcome of sustained CSR initiatives taken by this company for over 50 years. Assessment of life expectancy, adult literacy and per capita GDP for this region indicated a higher Human Development Index (HDI) of 0.81 which is higher compared to 0.531 achieved for the state. This finding conclusively portrait the significant contributions made by Neyveli Lignite Corporation towards Human development in this backward region through aggressive CSR strategies.

INTRODUCTION
The concept of social responsibility of Business popularly termed Corporate Social Responsibility is by no means a recent phenomenon but many observers agree that the globalization has spurred its growth and prominence. Aaronson argues, Europe has taken the lead in shaping global CSR debates1.The term CSR includes environmental, social , and human-rights based impacts and initiatives of companies, Ward and Fox 129

International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 1, Number 2, July - Aug (2010), IAEME

elucidate 2, and many countries in both industrialized and the third world take the concept and practices seriously, explains Hopkins3. The definition of CSR, therefore, is still being debated and there is no consensus among academicians or practitioners, Mohan observes
4

. Ward and Fox 5argue, whatever the language used, the basic idea is to understand

business as part of society not somehow separate from it.

NEED FOR THE STUDY

Neyveli Lignite Corporation which sprang to life in the year 1956 as Central Government owned Public Sector Undertaking, in the backward region of the then South Arcot District, embarking on mining and power generation activities in a remote place called Neyveli 200 Kms South east off Chennai, the capital of Tamilnadu State, has come a long way. From modest beginning to attaining growth of mammoth proportion, in a span of more than 50 years, Neyveli Lignite Corporation has consistently contributed to the development of the local region while making big strides in its core business activities. As a model Central public sector employer and responsible corporate citizen, Neyveli Lignite Corporation has developed resources and infrastructure namely a 369 bed secondary level hospital, Health Centres, Schools, sports infrastructure, School for the rehabilitation of mentally challenged for supporting social causes of health, education, rehabilitation and community development. With the help of theses infrastructures, NLC has undertaken projects on community health, reproductive health, family welfare, Prevention of transmission of HIV/AIDS from mother to child during ante-natal period, promotion of literacy, sports and overall community development activities. Neyveli Lignite Corporation, which is committed to initiation and implementation of Corporate Social Responsibility with its mission articulating the concept of social responsibility business behavior in a progressive way, has created an increasing impact on the surrounding villages. Against the above background, this article attempts to bring out compendious account of NLCs involvement in social development initiatives and measure the social impact of such initiatives on sustainable development of the area in which it operates.

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STUDY METHOD
Comprehensive data on the social sector activities of NLC was collected from the various departments like CSR division, Hospital Care Delivery System and Education studying secondary sources like records, reports and registers maintained by the respective CSR areas and financial data by referring the Annual Report of the Hospital and Township administration for social overheads. The information/data sought for pertained to NLCs spending on social sector, community development projects, utilization of medical care service by rural population in the last 5 years, enrolment of rural children in NLC run schools and the overall impact of such development initiatives on the quality of life of the local population. Secondary data available in the Annual report of the company was also accessed to make analysis of NLCs commitment towards social development initiatives.

OBJECTIVES
To evaluate NLCs spending on social sector which cover areas like provision of Housing, lighting, water supply, health, education, development of sports, recreational facilities like library, wellness centres, clubs, parks, gardens, roads, water supply, public health measures, public sanitation, roads, transport that have huge bearing on the quality of life of employees and their dependants and other general population. To analyse NLCs overall spending on Community Development activities as percentage of net profit in the last 5 years from 2004-05 to 2008-09. To assess utilization of medical services by rural population in the last 5 years from 2004-05 to 2008-09. To compute the Human Development Index( HDI) for this region as a measure of impact which NLC created on the overall social development of this region

Hypothesis
H0 : Human Development Index for Neyveli and the surrounding rural area is not in the high HDI category H1: Human Development Index for Neyveli and the surrounding rural area is in the high HDI category

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Statistical Analysis
Spending as percentage of net profit was calculated to verify if spending on social development, community development, health initiatives and education was on sustained basis over the last 5 years. A five year analysis of Percentage of pass achieved by rural students who appeared for the 10th and 12th Standard public examinations was analysed to examine the success rate of NLC run schools in promoting higher secondary level education in this rural area. Impact of NLCs spending on community development, health and education was measured in terms of Human Development Index for Neyveli to infer if Neyveli was better off compared to the State of Tamilnadu.

RESULTS AND DISCUSSION Commitment to development of services in the Social Sector

Mining data available in the Township Administration on various facilities developed and maintained by Neyveli Lignite Corporation that contribute to improved standard of living of around 3.0 population residing in and around the well developed Township reveal the following: Table 1 Social development infrastructure facilities available in the Township Facilities Facilities Facilities 1 Residential 21,029 11 College 1 21 General Hospital quarters 2 Shops 1530 12 Library 4 22 Peripheral Dispensaries 3 Sub-Stations 3 13 Reading 6 23 Community Halls Rooms 4 Fuse-off call 16 14 Auditorium 3 24 Vegetable Market 5 Water supply 9 15 Theatres 3 25 Guest Houses 6 Public Health 13 16 Stadium 1 26 Lodges Centres 7 Roads 450 17 Swimming 1 27 Temples Kms. pool 8 Bore wells 28 18 Clubs 3 28 Mosques 9 Overhead Tanks 15 19 Parks 3 29 Churches 10 Schools 40 20 Golf Course 1 30 Burial/Cremation ground

1 5 9 3 3 3 59 6 21 1

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Analyzing the above data it could be inferred that Neyveli Lignite Corporation which had created 30 development infrastructure in the Township and sustain the facilities through maintenance had contributed significantly for improving the quality of life of people residing in this region through provision of holistic environment that meet out Housing, health, educational, recreational, social and spiritual needs of employee community and other general public. The study further revealed the provision of subsidized housing, water and electricity, public health, sanitation, drainage, lighting, gardens, lawns, recreational facilities, solid waste management system and free medical care services which the residing population in this Township enjoy, could lead to enhancement of their quality of life to a great extent. The following data dwelt on NLCs spending on development of a model Township with all amenities and infrastructure facilities that promote human development in this Neyveli and surrounding villages. Table 2 NLCs spending on Social Development (Rs.in Crore) Spending on Township social sector Year Library Transport maintenance as % of Net profit 2004-05 36.98 0.51 7.84 6.26 2005-06 38.20 0.55 8.72 11.57 2006-07 42.19 0.62 9.57 15.12 2007-08 49.44 0.80 11.21 9.89 2008-09 84.53 0.98 12.52 20.15 Average 12.59 The above analysis revealed that NLC had spent an average of 13 % of its net Medical Net profit care expenditure Rs. In Cr. Rs. In Cr. 30.78 1215.00 33.86 702.35 33.36 566.75 47.52 1101.57 67.37 821.09 profit on maintenance of Township which is spread over 50 sq.kilometer with 30 residential blocks that house 21,029 residential quarters provided to around 19,000 NLC regular employees and another around CISF personnel, which was significant finding. The Township is home for around 3.0 population which include contract workmen and general public who consist of businessmen, Bank/Insurance personnel and other Government personnel who render commercial services to NLC project. It could be concluded that the standard of living of employee population, their families, contract

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workmen and their families and the surrounding population who have access to quality housing, sanitation, public hygiene, drinking water, electricity , road, medical care, education, sports facilities, wellness centres, recreation, pollution free environment ensured by green belt which serve as pollution sink would be higher plane as impacted by sustainable social development initiatives of Neyveli Lignite Corporation.

COMMITMENT TO COMMUNITY DEVELOPMENT INITIATIVES

Neyveli Lignite Corporation has institutionalized community development initiatives by which this CPSU contributes to sustainable development of the surrounding villages in the areas of health, education, irrigation, drinking water and other infrastructure needs required for development like access roads. Based on data collected from CSR department in NLC Limited, the CPSUs spending as percentage of net profit was worked out to analyze the contributions made towards community development for achieving sustainability in peripheral villages. The four major areas of infrastructure development taken up for study included education, health, irrigation, roads and drinking water. The following explains NLCs spending on peripheral development in terms of building infrastructure for achieving sustainable development between 2004-05 and 2008-09. Period Table 3 NLCs spending on community development initiatives School Health Irrigation Road Drinking Net Spending as Infra. Infra. Infra. Infra. water Infra profit % of Net Dev Dev. Dev. Dev. Dev. In Cr. profit 1.20 0.25 0.66 0.80 0.78 3.69 0.25 0.25 0.55 0.25 0.25 1.55 0.24 0.13 0.18 0.16 0.71 2.19 1.52 0.76 1.51 0.93 6.91 1.03 0.70 0.44 0.95 0.49 3.61 1215.00 702.35 566.75 1101.57 821.09 4406.76 0.38 0.42 0.45 0.33 0.32 0.38

200405 200506 200607 200708 200809 Total

NLC on an average had spent 0.38 percent of its income towards development of key infrastructure like school building, laboratories, libraries, Primary health centres, Reproductive and child health centres, irrigation canals, check dams, desilting of tanks 134

International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 1, Number 2, July - Aug (2010), IAEME

roads, bore wells, and overhead tanks for improving accessibility to safe drinking water which were considered catalyst for determining growth sustainability in the surrounding villages. NLC in the last 5 years had helped peripheral villages achieve sustainability in education through augmentation of facilities like libraries, laboratories, computer labs, Toilet and drinking water facilities in schools located in the local area where it operates. Development of such facilities aided in upgrading the existing schools so that rural children could gain access to education up to high school level in their own environment. Health Infrastructure provided by NLC in the peripheral villages included renovation of Primary Health Centres by which NLC had complemented the efforts of State Government in meeting Millennium Development Goal of Health for All in the rural areas. NLC had developed adequate irrigation infrastructure like canal for continuous irrigation of 23,000 hectares of land for sustaining perennial crops in this region. The impact of sustained irrigation could be seen in raising of 3 major crops per annum on continuous basis as against 1 or 2 two crops which farmers in other areas could hope to raise in the absence of continuous irrigation. Analysed in this perspective, it could be concluded that NLC had contributed to improving percapita GDP agriculture product leading to sustainable livelihood in this region. Building access roads which NLC focused on priority basis had facilitated access of the surrounding rural population to Neyveli- the centre of development in this region and facilities available in it like Hospital, Schools, sports facilities, libraries, rehabilitation and other recreational facilities. The improved accessibility to the NLC Township enable the surrounding rural population to engage in street vending through sale of milk, fish, poultry, meat, vegetables, petty business, small trades like motor mechanic, cycle repair and merchandise in local agriculture produce like cashew nuts, jack fruits that improve their livelihood sustenance to a significant level.

COMMITMENT TO HEALTH INITIATIVES FOR IMPROVING QUALITY OF LIFE OF SURROUNDING RURAL POPULATION
NLCs spending on provision of health care for the rural population as sourced from secondary data available from the company run hospital reveal that it had treated

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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online) Volume 1, Number 2, July - Aug (2010), IAEME

more than a lakh of rural patients in its 369 bed facility. Analysis of data on utilization by rural population of health care services provided by NLC explain the major role played by the company in providing medical care to the rural population: The following table analyses the utilization of medical care service by rural population in NLC GH in lakhs and percentage share in total medical expenditure for the period from 2004-05 to 2008-09. Table 4 NLCs spending on community health initiatives and medical care to rural population Utilization of medical service Amount spent on rural Spending as % Year Income in Cr. population in Cr. of net profit by rural patients ( in lakhs) 2004-05 1.30 0.24 1215.00 0.02 2005-06 1.19 0.28 702.35 0.03 2006-07 1.37 0.37 566.75 0.06 2007-08 1.38 0.43 1101.57 0.04 2008-09 1.42 0.51 821.09 0.06 Average 1.33 0.37 0.04 Analysing the above data it could be concluded that NLC had spent an average of 0.04 % of its total income towards providing medical care to the surrounding rural population in the service areas of emergency, Out-patient, Maternity and Family welfare.

COMMITMENT

TO

EDUCATIONAL

INITIATIVES

FOR

PROMOTION OF LITERACY IN THIS REGION

Education is one of the major areas of social CSR which Neyveli Lignite Corporation spearheads to promote literacy in this backward region. NLC since its inception had developed a network of 13 Schools- 3 Higher Secondary Schools, 2 High Schools, 5 Middle schools and 3 Elementary Schools to realize the mission of providing quality education in this region. The rural children have uninhibited access to schools run by NLC at all levels of primary, high school and secondary education. With private schools meeting the educational requirements of children of employees, NLC run schools in the last two decades predominantly serve rural children. Quality education in the best of learning environment supported by quality labs, library, computer and sports facilities, which rural children enjoy free of cost had contributed to sustainable development of the surrounding rural areas.

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Analysis of enrolment of rural children in NLC run schools and the amount spent by NLC as percentage of its net profit on development of school facilities which rural children predominantly make use of support the above hypothesis. Table 5 NLCs spending on education (Rs.in Crore) Annual Annual spending Income Spending as Year Enrolment spending on on sports and in Cr. % of GDP education culture 2004-05 10500 3.41 0.91 1215.00 0.35 2005-06 10352 3.39 0.75 702.35 0.58 2006-07 10111 3.64 0.83 566.75 0.78 2007-08 10090 3.15 0.88 1101.57 0.36 2008-09 8774 5.40 0.11 821.09 0.67 Average 0.37 0.54 The above analysis revealed that Neyveli Lignite Corporation in the last 5 years had spent an average of 0.54 percent of its net profit on provision of education, sports and culture which rural children predominantly utilize. The percentage of pass which NLC run schools had registered for Higher Secondary and High level education in the last 5 years further strengthened the hypothesis that the mean schooling year for this backward region to be upward of 12 years. Table 6 Percentage of pass for 10th and 12th standard rural children studying in NLC run schools 12th Standard 10th Standard No.of No.of No.of No.of Year students students % of pass students students % of pass appeared passed appeared passed 2005-06 1154 788 67 1446 1067 74 2006-07 1252 885 67 1408 982 70 2007-08 1244 845 68 1365 998 74 2008-09 1164 882 72 1501 1110 74 2009-10 1141 919 77 1421 1082 76 Analysing the above data it could be concluded that Neyveli Lignite Corporation had made significant improvements in terms of churning out no.of students who had successfully passed both 12th and 10th standard public examinations in the last 5 years. By achieving an improved performance in education from 67 percent pass registered during 2005-06 to 77 percent during 2009-10 in the case of 12th standard and 74 percent during 2005-06 to 76 percent achieved during 2009-10 in the case of 10th standard public 137

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examination, NLC run schools which predominantly serve the surrounding rural population had contributed to promotion of higher secondary level school education among the rural population and in turn impacted their quality of life.

HUMAN DEVELOPMENT INDEX OF NEYVELI COMPARED TO THAT OF THE STATE

NLCs spending which averaged around 16 percent of its net profit during the period from 2004-05 to 2008-09 on development of social infrastructure which include maintenance of well developed Township with all necessary facilities like Hospital, Schools, recreational facilities, provision of housing, civic amenities like water, electricity supply, gardens, lawns, clubs, sports facilities which include swimming pool, gyms, libraries, theaters, places of worship, in addition to competitive pay, perks and incentives to both regular and contract workers, provided a significant leading that its social CSR initiatives would have impacted the Human Development index for this backward region. In order to test this Hypothesis the following parameters were analysed and compared with that of the state of Tamilnadu: Table 7 Human Development Index for Neyveli Sl.No Index Neyveli Tamilnadu 1 Life Expectancy at birth 71.55 68.45 2 Infant Mortality 5.79 44 3 Birth rate 8.1 18.5 4 Death rate 3.68 7.7 3 Adult Literacy ( mean schooling 12 years 8.4 years) 4 Combined gross enrolment 90 % 70 % 5 Per capita GDP in current prices 3,79,668.00 2097.99 Social Infrastructure 1 Sanitation 100% 40% 2 Drainage 100% 35 % 3 Safe drinking water 100% 40 % 4 Over crowding 3943/Sq.km 478/sq.km 5 Access to health care services 100 % 60 % 6 Provision of education 0.28 High school/ 0.02 High school /sq.km (Cuddalore) sq.km area

HUMAN DEVELOPMENT INDEX FOR NEYVELI

Life Expectancy at Birth: 25 years (Minimum) 85 years (Maximum) Life Expectancy at Birth for Neyveli is 75 years

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Life expectancy index = 75 25 / 85-25 = 0.833 Adult literacy rate: 0 percent and 100 percent Adult Literacy rate for Neyveli is 90 % Adult Literacy Index = 90 0 / 100-0 = 0.90 Combined gross enrolment ratio= 0 percent and 100 percent Combined gross enrolment ratio for Neyveli is 100 % Combined gross enrolment index= 100-0/100-0 = 1.00 Educational attainment for Neyveli = [ 2( 0.90) + 1(1.00) ]/3= 0.93 Real GDP percapita ( PPP$) = $ 100 and $ 40,000 GDP per capita for Neyveli is 5333 $ GDP per capita ( PPP$) for Neyveli is Log ( 6793) log ( 100) / log ( 40000) log ( 100) = 0.70 Human Development Index for Neyveli is 0.833 + 0.90 + 0.70 = 0.81 Neyvelis HDI of 0.81 when compared to the state HDI of 0.531 and the countrys HDI of 0.472 is bracketed in high HDI category.

CONCLUSION
Neyveli Lignite Corporation, which embedded in its vision the Corporate Social Responsibility objectives, had contributed significantly to the Human development of this region by spending 13 % of its net profit on development of social infrastructure like housing, health, medical care, drinking water, electricity, education, sanitation, public hygiene, roads, recreation , sports and worship centers that promote religious harmony. The company had also spent 0.04 % and 0.54 % of its net profit for provision of medical care and education respectively to the surrounding rural population. The higher HDI of 0.81 achieved by NLC for this region compared to 0.531 of Tamilnadu reveal the companys consistent efforts towards achieving the goal of sustainable development by fully realizing its CSR vision and mission.

REFERENCES
1. Aaronson, S.A. (2002) How the Europeans Got a Head Start on Politics to Promote Global Corporate Social Responsibility, PP.356-367, International Journal Corporate Sustainability. Corporate Environmental Strategy,

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9(4).Elsevier

Science

Inc.Ruth

Hillary,

Editor-in-Chief,

Scott

Wilson

Kirkpatrick & Co Ltd., London UK. 2. Ward, H and T.Fox (2002) Moving the Corporate Citizenship Agenda to South, London: IIED. 3. Hopkins, M (2003) The Planetary Bargain: Corporate Social Responsibility comes of age, London: Macmillan Press. 4. Mohan .A (2001) Corporate Citizenship: Perspectives from India, Journal of Corporate Citizenship, Sheffield: Greenleaf Publishing. 5. Ward, H and T.Fox (2002) Moving the Corporate Citizenship Agenda to South, London: IIED.

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