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Corporate social responsibility (CSR)

CORPORATE SOCIAL RESPONSIBILITY

PREFACE

AS MBA Degree requires equal attention practical as well as theoretical aspect of the business, various problems are to be dealt with in these courses, that is why research programs are there to give deep as well as through knowledge of the subjects.

I have attempted to live up these requisites while preparing this term paper. It is part of professional courses. With the help of term paper we can able to understand the deep knowledge about the specific topic assign to us.

It is hoped that this report meets the given expectations and various requirement of the respect topic.

Objective-

In this case I have studied about the various corporate social responsibilities of organization. For that I have taken the example of Indian Oil Corporation.

Corporate social responsibility

1.1 Introduction

Corporate social responsibility(CSR), also known as:

Corporate responsibility,

Corporate citizenship,

Responsible business,

sustainable responsible business (SRB), or

Corporate social performance

is defined ascorporateself-regulationintegrated into abusiness model. CSR would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its adherence to law, ethical standards, and internationalnorms.Organisation would embrace responsibility for the impact of their activities on the environment, consumers, employees, communities, stakeholders and all other members of thepublic .besides business wouldactivelypromote thepublic interestby encouraging community growth and development and voluntarily eliminating practices that harm the public interest regardless of legal view. Essentially CSR is the inclusion ofpublic interestinto corporatedecision-making..

*Benefits of CSR:

Business ethicsis one of the forms ofapplied ethicsthat analysis ethical principles and moral problems that can arise in a business environment.

In this changing business world pressure is applied on industry to improvebusiness ethicsthrough new public initiatives and laws (e.g. higher UK road tax for higher-emission vehicles).

Business ethics can be a normative or a descriptive discipline. As a corporate practice and a career specialization the field is primarily normative. In academic, descriptive approaches are also taken. The range and quantity of business ethical reflects the extent of social values of that particular organization.

Human resources

A CSR policy can be an aid torecruitmentandretentionparticularly within the competitivegraduatestudent market. Potential recruits often want to know about a firm's CSR policy during an interview. CSR can also increase the perception of a company among its staff, particularly when staff can become involved throughpayroll giving,fundraisingactivities or community volunteering.
CSR importance and its relevance today:
a) Increasing Affluence,
b) Changing social expectation
c) Globalization & free flow of information.
d) Motivations

Organizations are motivated to adopt CSR practices by several different ways.

e) Ethical consumerism

The increase in popularity ofethical consumerismover the last two decades can be associated to the rise of CSR. As global population increasing, so does the pressure on limited natural resources to meet rising consumer demand. Industrialization in many developing countries is booming as a result of technology and globalization.

CSR in India:

f) Social awareness and education

The role among corporate organization is changing now.Non-governmental organizationsare also taking an increasing role, leveraging the power of the media and the Internet to increase their scrutiny and collective activism around corporate behavior. Through education and dialogue, the development of community in holding businesses responsible for their actions is growing.
Education for all.

Community development.

g) Laws and regulation

Another aspect of CSR is the role of independent mediators particularly the government, in ensuring that corporations are prevented from harming the broader social good including people and the environment. Governments have set the agenda for social responsibility by the way of laws and regulation that will allow a business to conduct themselves responsibly.

Eg. Indian oil corporation.

1.2 Indian Oil Corporation:

Indian Oil and its subsidiaries account for a 47% share in the petroleum products market, 40% share in refining capacity and 67% downstream sector pipelines capacity in India. The Indian Oil Group of Companies owns & operates 10 of India's 19 refineries with a combined refining capacity of 60.2 million metric tons per year.On 30 June 2009 IndianOil completed 50 years of its existence and a series of events are being planned to celebrate itsGolden Jubilee Year

Indian Oil operates the largest and the widest network of fuel stations in the country, numbering about 17606 (15557 regular ROs & 2049 Kissan Sewa Kendra). It has also started Auto LPG Dispensing Stations (ALDS). It reaches Indane cooking gas to over 47.5 million households through a network of 4,990 Indian distributors. In addition, Indian Oil's Research & Development Center (R&D) at Faridabad supports, develops and provides the necessary technology solutions to the operating divisions of the corporation and its customers within the country and abroad. Also Indian Oil Technologies Limited - a wholly owned subsidiary, was set up in 2003, with a vision to market the technologies developed at IndianOil's Research and Development Center.

Product

Indian Oil's products cover petrol, diesel, LPG, auto LPG, aviation turbine fuel, lubricants,naphtha,bitumen,paraffin,keroseneetc. Xtra Premium petrol, Xtra Mile diesel, Servo lubricants, Indane LPG, Autogas LPG, Indian Oil Aviation are some of its prominent brands.
Recently Indian Oil has also introduced a new business line of supplying LNG (Liquefied natural gas) by the cryogenic transportation. The branding called "LNG at Doorstep.

Refineries

§ Digboi Refinery in Upper Assam, is India's oldest refinery and was made in 1901.Modernisation of this refinery has been completed and the refinery now has an increased capacity of 0.65 MMTPA.

§ Guwahati Refinery, the 1st public sector refinery of the country was made with Romanian collaboration and was inaugurated by Late Pt.Jawaharlal Nehru on 1 January 1962.

§ Barauni Refinery in Bihar, was made in collaboration with Russia and Romania in 1964 with a capacity of 1 MMTPA. Its capacity is 6 MMTPA today.

§ Gujarat Refinery at Koyali in Gujarat in Western India, is IndianOil's largest refinery. The refinery was made in 1965. It also holds the first hydrocracking unit of the country. Its today capacity is 13.70 MMTPA.

§ Haldia Refineryis the only coastal refinery of the Corporation in the Purba Medinipur (East Midnapore) district. It was made in 1975 with a capacity of 2.5 MMTPA, which has been increased to 5.8 MMTPA today.

§ Mathura Refinerywas made in 1982 Located in between Delhi & Agra, with an capacity of 7.5 MMTPA.

§ Panipat Refineryis the seventh refinery having a capacity of 12MMTPA.

Loyalty programs

XTRAPOWER Fleet Card scheme is aimed at Large Fleet Operators. Currently it has 1 million customer base. XTRAREWARDS is a recently launched loyalty program for retail customers where customers can earn reward points on their purchases.

Controversies

Indian Oil Corporation earned concerns about the state of affairs in its marketing business whenShanmugam Manjunath, a marketing manager and an MBA from prestigiousIndian Institute of Management Lucknow was murdered in 2005 for sealing a corrupt petrol station in the state of Uttar Pradesh (U.P.).

The corporation'sMathura Refineryunit has also remainedconstantly in news because of the threat ofair pollutioncaused by it

2. Literature Review
Corporate Social Responsibility:

Indian Oil corporate social responsibility (CSR) has been the point of success right from inception in the year 1964. The Corporation's objectives in this key performance area are enshrined in its Mission statement: "…to help enrich the quality of life of the community & preserve ecological balance and heritage through a strong environment conscience."

IndianOil have defined a set of core values for society - Care, Innovation, Passion and Trust - to guide us in all we do. It takes pride in being able to claim all our countrymen as our customers. That's why coined the phrase, “IndianOil - India Inspired", in his corporate campaigns. Public corporations like IndianOil are essentially organs of society deploying significant public resources. ,Therefore, are aware of the need to work beyond financial considerations and put in that little extra to ensure that we are perceived not just as corporate behemoths that exist for profits, but as wholesome entities created for the good of the society and for improving the quality of life of the communities serve.

Indian Oil has been taking right action to realise its social responsibility objective thereby building value for its shareholders and customers. The Corporation respects human rights, values its employees & invests in innovative technologies and solutions for sustainable energy flow and economic growth. In the past four decades, Indian Oil has supported innumerable social and community initiatives in India. Touching the lives of millions of people positively by supporting environmental and health-care projects and social, cultural and educational programmes.

Indian Oil also target at developing techno-economically viable and environment-friendly products services for the benefit of millions of its consumers, while at the same time ensuring the highest standards of safety and environment protection in its operations.

1) Sharing Profits

Indian Oil has made a social responsibility programme to partner communities in health, family welfare, education, environment protection, providing potable water, sanitation & empowerment of women and other marginalised groups. Indian Oil has always be ahaed in times of national emergencies. Indian Oil People have time and again rallied to help victims of natural calamities, maintaining uninterrupted supply of petroleum products and contributing to relief and rehabilitation measures in cash and kind.

Indian Oil's community-focussed initiatives include allotment of petrol/diesel station dealerships and LPG distributorships to beneficiaries from among Scheduled Castes, Scheduled Tribes, physically handicapped, ex-servicemen, war widows, etc. The Corporation has also started kisan seva kendras as small-format retail outlets to reach quality products and services to people in the rural areas. Indian Oil has also set up the IndianOil Foundation (IOF) as a non-profit trust to protect, preserve and promote national heritage monuments. The Corporation also supports a variety of endeavours in arts, culture, music and dance, apart from organising programmes on its own under the banners of IndianOil Art Exhibition, IndianOil Sangeet Sabha and Indian Oil Kavi Sammelan.

As part of its environment-protection initiatives, Indian Oil has invested apprx Rs. 7,000 crore in state-of-the-art technologies at its refineries for production of green fuels meeting global standards. To further decrease dependence on precious petroleum products and secure the nation's energy security, the Corporation is now in the process of commercialising various options in alternative fuels such as ethanol-blended petrol, biodiesel, and Hydrogen and Hydrogen-CNG mixture.

With safety health & environment protection high on its corporate policy, Indian Oil is committed to run business with a strong environment conscience to ensure sustainable development, safe work places and enrichment of the quality of life of its employees, customers and the community. Indian Oil is also committed to the Global Compact scheme of the United Nations and endeavours to stick by the 10 principles of the project some of which are already part of the Corporation's Vision and Mission statements. It is the org. vision of Indian Oil people to move beyond business and touch every heart & fuel a billion dreams.

3. Research methodology:

Primary data-

Sampling-

I have visited the regional head office of Indian oil and talked with the regional employee and manager about the social responsibilities of Indian oil. I have also e-mailed my question to the employees of Indian oil .Based on the findings I have came to know about the various corporate responsibilities of Indian oil. Below are some questions which I have asked to them:

Questionnaires-

These are the some question which I have asked to the employee and management;

1) Is your company also working for the benefit of society?
Ans.-yes our company is trying its best to do for the welfare of society.
2) What are the steps taken for this?
Ans.- we have opened school for orphanage children, made mobile hospitals, self employment programme, give financial support, focused on women empowerment etc.
3) What are the regions?
Ans.- we are particularly focusing on the rural areas as there are lack of proper infrastructure
4) Which states are more prominent in your list?
Ans.-there is no particular states we are concerning but recently we have done more work in north east and in Jammu and Kashmir.
5) Is there is any special reason behind this?
Ans.- Not really, but as these states are lagging behind rest of the states.
6) Is your company doing anything for the environment?
Ans.-Yes off course, we have made Biofuels, CNG, and reduce the level of harmful gases from our product.

Secondary Data-

Indian oil guiding philosophies of a Good Corporate Citizen:

Exploration & production of hydrocarbons makes such an industry highly people centric. This is because unlike manufacturing industries, upstream oil companies cannot operate within Fixed and enclosed areas. Its activities are not focused on one central location alone but spread into interior areas also, where the employees have to negotiate with both the operational challenges and establishing a relationship of mutual trust and co-operation with the “apprehensive Local populace.”

With a century old legacy Indian oil, a premier national oil company has evolved as a “people's company” by being actively involved in the overall development of the people residing in And around the company's operational areas, especially in Assam and Arunachal Pradesh. But unlike other companies the greatest challenge for Indian oil is that it has to operate in a region best known as a sign of ethnic strife and countless groups of separatist and subversive outfits; a region plagued senseless violence, corruption, lack of infrastructure and

Political volatility.

Changing Times: The turbulent 80's The early years of 1980's was one of the most challenging for Indian oil since it got caught in the Assam agitation. Indian oil was used as a tool by the people to voice their grievances against the Central Government. The agitation movement also gave birth to the All Assam Students Union -One of the most prominent and pressure group of the region. The AASU also used Indian oil - which Was perceived as a property of the local people - to fight the long drawn agitation. These Developments had a far reaching impact on the Company's CSR policies and strategies. TheseSocio-political undercurrents created a demand driven CSR strategy. It is this twin objective of business and social commitment that has prompted Indian oil to embark upon massive programmes of educational, medical and infrastructural development

Endeavors; an attempt to invest technology with a human face. There is a need to strike a balance between the overall objectives of achieving corporate excellence vis-à-vis

The corporate responsibility towards the community. The Company earmarks a minimum of .75% of its net profit for CSR initiatives.

While on the other hand all efforts are directed at enhancing productivity and financial prudence is dependent to a large extent on the ability to overcome a number of logistic and Infrastructural difficulties. And most abundantly, the greater challenge of negotiating the external Environment by generating favourable public opinion towards the company. This is only possible by winning the trust and faith of the local people through tangible community Welfare endeavours.

Today, in the states of Assam and Arunachal Pradesh alone the company caters to the developmental needs of more then 1400 villages, connecting them to the mainland and providing realistic opportunities to strive for a fulfilling future.

Indian oil conducts a Social Survey

Indian oil conducted a social survey through Dibrugarh University in the year 1983 (in its operational Areas in the North-East) to evolve a CSR Strategy. Based on the recommendation of the survey, the Company introduced a scheme entitled Social Welfare Programme (SWP) in 1984 and later on another scheme called Areas Development Scheme (ADS) in 1996.

Social Welfare Programme (SWP):

This programme shows Indian oil commitment of-

1) protecting the environment,

2) upliftment of education

3) Health & socio-economic Development a topmost priority.

4) All-round development of education,

5) rural infrastructure,

6) primary health care,

7) environment protection,

8) promotion of sports/sportsperson (especially rural sports),

9) assistance to youth and women organizations in carrying out community

development activities are some of the key areas covered under SWP.

Area Development Scheme (ADS)

Area Development Scheme was introduced in 1996 with the aim of supporting the various socio-cultural activities in the operational areas. The Scheme covers the construction of roads, setting up of educational institutions and primary health centres in the North East Region and other operational areas of the company.

Indian oil conducts a Social Audit (2008) of its CSR activity The Community Audit which was one of the first of its kind to be conducted in Indian oil has provided significant insights to Indian oil management for preparing a comprehensive policy on the Company's Corporate Social Responsibility. The following are some of the key findings of the audit:

Community responses to initiatives:

• Mobile hospital program ranks as one of the most ‘useful' Indian oil initiatives.

• Self Help Group (SHG) schemes of Indian oil and SIRD (State Institute of Rural Development) the current ‘favourite'

• Schools, colleges or cultural centers attracts high community involvement

Peoples' perceptions about Indian oil

• Without Indian oil there would have been no development work

• Indian oil contributes largely to the prosperity of the region

• Historically,Indian oil yielded to public agitations and ‘bandhs' as a price to ensure uninterrupted production from its oil/gas fields

• “Agitations pay, and ‘bandhs' pay splendidly”- key lesson drawn by prospective beneficiaries of Indian oil as means to achieving their objectives.

Indian oil CSR activities based on the Social Audit report:

• Mobile hospital Services to be extended to newer areas and the frequency to be increased

• Indian oil-SIRD (Project Rupantar) project given top priority

• More proactive dialogue with the target beneficiaries for need identification and prioritization

• Sharing of information with the people on matters like CSR budget allocation/resource mobilization/operational constraints etc

Project Rupantar

The twin problems of growing unemployment and poverty have posed a serious threat to Indian oil long term business goals. This is because Indian oil is one of the only industries in this part of the country, which is catering to the socio-economic needs of the residents of its operational areas.

More and more unemployed youths look at Indian oil as the only possible source of direct recruitment. With over 1400 villages under its extended operational areas, it is becoming increasingly difficult.

The project (worth USD 3 Million) aims to create self employment avenues and promote entrepreneurship in the region and generate sustainable sources of livelihood.

Project Objective

Successful agro-based industries would result in direct and indirect employment for many more peoples It could become one of the flagship social welfare projects of Indian oil. The scheme strives to address the issues related to demonstration of new technology, organic farming, efficient water management, etc. in order to adopt compact/cluster based approach. It covers post harvest management, processing and value addition, including that of medicinal and aromatic plants.

In order to help the large number of unemployed youth and strengthen the rural economy, the focus is on development of agro-based industries like:

a) bamboo cultivation

b) floriculture,

c) fishery,

d) sericulture,

e) organic farming etc.

Focus on Women

Indian oil focus on women for:

a) better nutrition,

b) health care and

c) education for their children.

d) Working with SIRD, Indian oil has organized village women into Self-Help Groups

For employing and training

Local technicians, generation of self-employment avenues.

Self Help Group.

This is in accordance with government of India's emphasis on creating self-employment in rural areas through schemes Like as Swarnajayanti Gram Swarojgar Yojana (SGSY). The objective of this scheme is to provide Self-employment avenues through innovative approaches involving different strategies. Indian oil has launched new project as “Rupantar” (an Assamese word meaning Transformation) - which will provide the rural poor and the unemployed an opportunity to become self-employed.

• Financial assistance to socio-cultural/sports/youth organizations /mahila samities (women organizations)

The Company has supported the youth and women organizations in a big way. The support is in terms of financial assistance by which they can Carry out their developmental activities.

•Indian oil Mobile hospital services

The mobile hospital services of Indian oil have always been one of the most significant step for welfare of society. Today, the team of doctors and paramedical staff of Indian oil hospital do the basic medical needs of the villages in and around Indian oil operational areas

Indian oil has also given financial contribution to Assam Medical College and Guwahati Medical College - the two premier Government hospitals in the state of Assam and Dibrugarh University, Assam.

• Indian oil is replacing the telecommunication system of 1157 Km crude oil trunk pipeline which supplies crude oil to the four refineries in India's north eastern region with optical fibre cable.

• KD Malaviya Chair in Dibrugarh University, Assam Indian oil set up a chair in the memory of late KD Malviya, Ex. Petroleum Minister, Government Of India in late sixties in the Dibrugarh University, Assam. That's one of Indian oil social gestures of promoting research works in geoscientific fields relevant to exploration & exploitation of

Hydrocarbon for India's self-sufficiency. for this Indian oil contributes an amount of Rs.1 Million (USD .02 Million) under its Social Welfare Programme towards the chair. Indian oil India Rural Development Society (OIRDS)

a) Agriculture Development Programme

Indian oil has provided assistance & technical guidance to farmers in nearby villages of Indian oil operational areas for agricultural development. Farming equipment, hybrid seeds, fertilizers etc. are distributed to farmers of the region.

b) Handicraft Training & Production Centre (HTP

Indian oil Handicraft Training and Production Centre, located at Duliajan imparts training to women on Handicraft, Weaving, Embroidery and Tailoring on monthly stipendiary for a 9 months period.

• General Nursing Midwifery (GNM) training in Indian oil Hospital, Duliajan The nursing school in Indian oil Hospital Duliajan conducts 3 years General Nursing Midwifery (GNM) training courses which is recognized by the Directorate of Medical Education, Government of Assam.

• Family Welfare Society,Indian oil Hospital, Duliajan Under this, families of Indian oil employees specially the Women are provided education on the importance of good health and help in treatment in all family welfare cases. Indian oil gives Rs 1 cr to cancer institute

GUWAHATI, - Indian oil as a part of its golden jubilee year corporate social responsibility initiatives, handed over a cheque of Rs 1 crore to B Barooah Cancer Institute. The money would be used by the hospital for introducing a well-equipped ICU for postoperative support and treatment of neutropenic patients following chemotherapy and radiology.
IndianOil Academic Scholarships

Indian Oil Corporation Limited awards 450 Scholarships for meritorious students all over India, under the IndianOil Scholarships Scheme for each academic year. As a part of the scheme, special encouragement is being given to girl students, physically challenged students, and students from J & K as well as the Northeast States.

3. Data analysis &interpretation:

From the given above data I have analysed that Indian Oil has always supported the economically and socially challenged sections of the society. Almost all socially challenged sections are covered under the roof as a social objectives scheme. The following table explains how:

Percentage of RO dealerships/LPG distributorships reserved under various social objectives categories:

Categories

% reserved

Scheduled Caste/Scheduled Tribes

25

Defence Personnel

8

Freedom Fighters

2

Outstanding Sports Persons

2

Paramilitary/Police/Government Personnel

8

Physically Handicapped

5

Open Category

50

As a special initiative for empowerment of women, 33% of the dealerships/distributorships in each category are reserved for women. Widows and unmarried women above 40 years of age without earning parents are given preference.

Financial assistance is provided to SC/ST categories of dealers and distributors under the corpus fund scheme. Under this scheme, IndianOil makes the dealership/distributorships ready for operation at its own cost. Thereafter, adequate working capital loan for a full operation cycle of operation is provided recoverable in 100 instalments. This facility is also extended selectively to widows and unmarried women above 40 years of age without earning parents. For those Northeast States that have a pre-dominant population of Scheduled Tribes, the per centage reserved for ST category is as follows:

Budget Allocation of CSR:

a) National Calamities: 35%

b) Donations: 5%

c) Community Development: 30%

d) Indian Oil Scholarships: 20%

e) Other activities: 10%

4. Conclusion

It can be concluded that accountability on Corporate Social Responsibility (CSR) should be increased. In order to attain the social objectives, there is a need for framing a CSR Policy in every company for prioritization of activities for social spending & allocation of separate funds for this purpose.

Besides to have an impact of the CSR spending and utilization of allocated budget, there must be a system of periodical monitoring and reporting to the Board of Directors. Indian firms are most transparent in respect of governance, policies and code of conduct. They also provide more information than most companies on issues relating to community impact & development. Disclosure on environmental issues is also relatively high.

Companies should tie up with other firms & even their competitors to raise the impact of corporate social responsibility (CSR) programs. Opportunities for collaboration include working with other org. to make supply chains more sustainable or with the government to improve policies.

5. Suggestion:

I would suggest that CSR should be increased. Organization should do more things in favors of society. Some step which can be be implied are-

a) There should be education for all. No gender differentiation
b) Community development
c) Free flow of information.
d) Specific laws should be made.
e) Environment should be taken care.

6. Bibliography:

International Business Report (2008).Corporate Social Responsibility: a necessity not a choice, Grant Thornton.

http://www.iocl.com/Aboutus/corporatesocialresponsibility.aspx

http://www.business-standard.com/india/news/govt-wants-industry-to-trade-in-csr/376805/

. Hundred Years of Oil by S N Visvanath

. Corporate Social Responsibility - by Shankar Venkateswaran

Social Responsibilities of Business - by Dr. Dulal Bhattacharya

www.karmayog.org/csr500companies/csr500companies_8239.htm

http://business.rediff.com/slide-show/2009/oct/29/slide-show-1-corporate-social-responsibility-india-ranks-4th.htm

http://www.assamtribune.com/scripts/details.asp?id=jul0309/at05http://www.iocl.com/Aboutus/Scholarships.aspx


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