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STATUS OF CSR AMONG PSUS IN INDIA

1

Status of Corporate Social Responsibility among

PSUs in India

(A study of the CSR scenario of Oil and Power sector PSUs)

Authors:

Anil Dhaneshwar1 and Pooja Pandey

2

December 31, 2015

1 IICA & CBI/CCI certified CSR trainer & adviser

2 MA Development student at Azim Premji University, Bangalore.


2

TABLE OF CONTENT

TABLE OF CONTENT ........................................................................................................... 2

ABSTRACT .............................................................................................................................. 4

I. INTRODUCTION .............................................................................................................. 6

II. RESEARCH OBJECTIVE .................................................................................................. 8

III. RESEARCH METHODOLOGY ....................................................................................... 9

IV. DOMAIN OF RESEARCH............................................................................................. 10

V. SECTORAL ANALYSIS .................................................................................................. 11

OIL SECTOR ........................................................................................................................... 8

I. CSR: BROAD OVERVIEW .............................................................................................. 8

II. MONITORING MECHANISM ......................................................................................... 12

III. OBSERVATIONS & ANALYSIS ................................................................................... 13

A. Focus Areas ........................................................................................................... 13

B. Budget Allocation .................................................................................................. 13

C. Implementation ...................................................................................................... 14

D. Geographical Variation .......................................................................................... 14

E. Role of Government .............................................................................................. 15

F. Media Focus and Recognition ............................................................................... 15

G. Overall Performance .............................................................................................. 16

H. Remarks ................................................................................................................. 16

POWER SECTOR ................................................................................................................. 17

I. BROAD OVERVIEW ...................................................................................................... 17

II. OBSERVATIONS & ANALYSIS ...................................................................................... 23

A. Focus Areas ........................................................................................................... 23

B. Budget Allocation .................................................................................................. 23

C. Implementation ...................................................................................................... 24

D. Geographical variation .......................................................................................... 24

E. Role Of Government ............................................................................................. 24

F. Media Focus and Recognition ............................................................................... 25

G. Overall Performance .............................................................................................. 25

H. Remarks ................................................................................................................. 25

SHORTCOMINGS ................................................................................................................ 27


3

RECOMMENDATIONS ....................................................................................................... 31

CONCLUSION ...................................................................................................................... 34

REFERENCES ....................................................................................................................... 36


4

ABSTRACT

Today’s time is swarming with the lively discussions about the role of Corporate Social

Responsibility (CSR) and its vision to confluence the corporate and social space. However,

the ambiguity and non-clarity of CSR both as a concept and a practice is widely

acknowledged by all. CSR in Indian context becomes a more serious discussion after the

introduction of Section 135 of the Companies Act, 2013. Interestingly, irrespective of this

recent regulation, the practice of CSR is particularly not very new to the Indian Public Sector

Undertakings (PSUs) as they have been practicing CSR both morally and statutorily under

the Guidelines on Corporate Governance for Central Public Sector Enterprises, 2010 (issued

by the Department of Public Enterprises). Thus, PSUs clearly have an added experience and

advantage over other private companies in terms of CSR compliance.

This paper, with a narrowed down focus, tries to analyze the status of Indian Public Sector

Undertakings (PSUs) in the Oil and Power sector and derive meaningful trends and

observations concerning the established CSR mechanism of some of the selected companies

of this particular sector. It is an attempt to collate the initiatives under the mandatory rules of

CSR and try to gauge if the efforts are heading in the right direction. It gives us a glimpse

into the CSR policies of Indian Public Sector Undertakings and tries to draw significant

inferences out of these findings. This paper does not justify the right and wrong ways to

approach the concept of CSR for there is no objective conclusion to its acceptability and

applicability.

Our findings in the research show that even though Indian PSUs have improved greatly in

their CSR dealing as compared to previous years, there is still a long way to go. The CSR

practices of these PSUs are generally un-researched which makes their efforts redundant .The

focus is lop sided concentrating over a particular thematic area and geographical location.


5

The initiative lacks in the dynamic collaboration of efforts and fails to take into account

multiple stakeholders and beneficiaries. Additionally, the CSR initiatives of these PSUs are

still greatly under Government influence which reduces the transparency and credibility of

the process. The study also throws light on the role of external agencies in assisting the

corporate with the planning and implementation of the CSR activities. We need to draw a line

of demarcation of such aid and stress more on capacity building rather than complete

dependence. Case of TISS-CSR Hub Initiative has been cited in the study to raising similar

questions. We believe that there is some problem with the very understanding of the

definition of CSR and the lack of motivation and direction among the PSUs needs to be

addressed on a priority basis. We have narrated in the reports the drawbacks of the CSR

practices of the PSUs and have attempted to offer viable and meaningful suggestions to the

problem. Our effort is not to look down upon the efforts of the PSUs towards the community

but to critically evaluate their course of action in order to make their efforts more thriving and

accommodating.


6

I. INTRODUCTION

Corporate Social Responsibility, the much hyped but the less understood concept is the

new buzz word in the corporate and social arena. There have been numerous attempts to

understand the nuances of this fairly complex and confounding theory. Different parties have

interpreted it differently but the consent remains intact on the fact that CSR is a contemporary

phenomenon and has emerged out from the voluntary and generous benevolence of the ones

with money and resources which they further direct towards the needs of the society. CSR is

backed by the unanimously accepted need of establishing a sustainable environment towards

the well-being of one and all.

Dissecting the term, we find an essence of both ethical and practical imperative to it.

(Yemokhya Fakay, 2015) This is where the contradiction arises. CSR as a philosophy is

fundamentally different from the way it is practiced. As a philosophy CSR is more suitably

referred as Corporate Shared Value (CSV) (Chaturvedi, 2013) which is much broader than

the concept of sustainability and environment and assimilates corporate and communities as a

single entity and works in the same tandem of visions. Profit making has always been the

most integral part of a business operation; CSR on the other hand is beyond natural and

statutory obligation of the company. (Bibhu Prasad, 2012) .Thus, CSR has always remained

extrinsic to the conventional business models and principles. Eventually, an attempt has been

made to penetrate the facet of CSR into the mainstream business by the introduction of

Section 135 in the revised Companies Act; 2013.It has furthered our quest and posed a very

crucial scrutiny of testing the synchronization of the corporate operations into the provisions

of the Act.

This paper, with a narrowed down focus, tries to analyze the status of Indian Public

Sector Undertakings (PSUs) in the Oil and Power sector and derive meaningful trends and


7

observations regarding the prevalent CSR mechanism of the concerned sector. This paper

will at no point try to justify the right and wrong ways to approach the concept of CSR for

there is no objective conclusion to its acceptability and applicability. It is an attempt to collate

and find out the initiatives under the mandatory rules of CSR and try to gauge if the efforts

are heading in the right direction. It gives us a glimpse into the policies of Indian Public

Sector Undertakings and will anticipate drawing some logical inferences out of these

findings.

This paper is more absorbed towards oil and power sector and attempts to collate a

comprehensive and analytical picture of the prevalent condition of CSR in this segment. It

throws a light on the recent CSR initiatives of the respective companies and ties to map its

relevance, impact, applicability, effectiveness, drawbacks and social responses. The report

also makes an attempt to offer brief scrutiny of the problem and offer recommendations in its

own humble capacity. The purpose of this paper is to draw attention of the concerned parties

towards the relatively under-researched and under-explored zone of CSR functioning in

Indian PSUs.


8

II. RESEARCH OBJECTIVE

Before starting our analysis, it is very important to clarify why only Public sector units of

oil and Power sector have been taken for our research. As mentioned earlier, PSUs have a

very prominent role in CSR as they are the father figures of the economy and their actions

pave a direction for the conduct of rest of the units. The main reasons for taking his sector as

our matter of study is as follows:

Even before the introduction of Schedule 135 of the Companies Act, 2013,

Directives on Corporate Governance for Public Sector Enterprises, 2010 was

issued by DPE. This gives us a good base for comparison and elaborate study.

Secondly, government in all ways and forms owe a great moral responsibility toward the

betterment of the society it works for. In this report, we would state the importance of a

government initiative to lay the foundation for further road of CSR.

Thirdly, power and oil sectors, owing to its gigantic operation size and coverage results into

pollution to a great extent. Their operations lead to displacement of livelihoods of many

and it creates adverse impact on the environment. Hence they are indebted greatly to the

community which they can repay in the form of CSR spending.

The objective of the paper is to individually scrutinize the guidelines of the CSR policies of

Public Sector industries. An attempt has been made to find out intra sector similarities and

dissimilarities. It aims to render the following points:

a. This paper attempts to provide the readers with a comprehensive analysis of the CSR

policies and its tangible impact on the society and hence try to draw a larger

picturesque of CSR condition in India.

b. It tries to draw and assimilate possible suggestions and observations which could be

used by various interest groups for multiple purposes.


9

III. RESEARCH METHODOLOGY

The following is an Explorative Research paper which broadly talks about the status and

impact of CSR policies of PSUs in the Indian business context. The research has been divided

into broad 2 sectors namely: Oil Sector PSUs and Power sector PSUs.

The data used in this paper are Secondary in nature and has been collected from multiple

sources ranging from the official website of the PSUs , newspaper articles, academic research

papers, independent study reports, media coverage and other relevant and reliable web

sources.

The paper has enlisted the exhaustive areas of the CSR operations of the PSUs followed

by a further analysis of the methodologies and policies. Finally, a wide-ranging analysis of

the companies on several benchmarks has been done in order to facilitate a more clear

understanding of the subject.


10

IV. DOMAIN OF RESEARCH

The subject of matter in the Oil Sector primarily includes oil and gas exploration,

development and production and marketing companies. Our study involves the companies

involved in the production of crude oil and petroleum.

The Power sector includes the below mentioned companies involved in power generation and

power distribution.

OIL SECTOR POWER SECTOR

Bharat Petroleum Corporation Ltd. National Thermal Power Corporation Ltd.

Gujarat State Petroleum Corporation National Hydroelectric Power Corporation

Hindustan Petroleum Corporation Ltd. Power Finance Corporation Ltd.

Indian Oil Corporation Power Grid Corporation of India

Oil India Ltd. Rural Electrification Corporation Ltd.

Oil and Natural Gas Corporation

Gas Authority of India Ltd.


11

V. SECTORAL ANALYSIS

The application of CSR study fits differently for public sector PSUs for they have been

carrying these initiatives in various forms since decades. Something which was seen from a

philanthropic angle has now taken the shape of a dedicated stakeholder centric approach. As

pointed out in a CSR research report by KPMG-ASSOCHAM, trends in CSR (especially for

PSUs) have clearly changed. The present focus is on building partnership and empowerment.

The companies are aligning the visions and missions of their CSR initiatives to their core

values. Stress is being given to get more expertise on board to execute the policies and have

substantial tie ups with bodies that are closer to the society (E.g. Government, NGOs, and

Employees etc). All this has clearly re-defined their approach towards CSR. (KPMG,

Corporate Social Responsibility -TOWARDS SUSTAINABLE FUTURE, 2008).Hence,

there is no second thought on the fact that CSR efforts have become a more serious

endeavour from what it previously was. But the question is, is that enough?


8

OIL SECTOR

VI. CSR: BROAD OVERVIEW

The below mentioned table is a result of an extensive study of the secondary data available on the CSR initiatives and efforts of the Oil PSUs.

The figures and data primarily take account of the financial year 2014-15:

Company Thematic Focus Projects CSR Committee Areas Of

Operation

Budget

(in Rs. crores) Present Status

Allotted

Spent

BPCL

Education, Water

Management Skill

development,

Health & hygiene,

Community

Development

Akshar(Education), Boond(Water

Management),Disha (Skill Development),

Aasha ki Kiran (Health & Hygiene),

Unnati(Community Development)

External Director

Director(HR)

Director

(Finance)

Maharashtra,

Kochi,

Sagar(MP),

Kolar &

Tumkur(Karnat

aka),

Bharatpur(R),

Lucknow(UP),

Khurda,(Odhis

a)

76 33.95

Reports delay in

the implementation

of some of the CSR

projects

Project BOOND is

the flagship

program with

promising results.

(tkarsh Majmudar,

2015)

GSPC

As specified in

Schedule 7 of the

Companies

Act,2013.

Additionaly, funds

to be spent on

Swacch Bharat

Abhiyaan and

Project Prakriti

CSR committee,

Board Of

Directors and

Managing

committee with

divided authority

and

responsibility.

Gandhinagar

and

neighbouring

areas

14.96 Rs.28,

80,900

Gujarat

Government is

planning to

increase its

contribution to

CSR to around

Rs.900 crores.

GSPC would be a


9

related projects part of it.

HPCL

Child Care

Education Health

Care Skill

development Sports

Environment and

Community

development

Unnati (Computer training programmes)

Nanhi Kali(Education of girl child)

Muskan(Protection of street children)

Suraksha(Avoid HIV cases amongst

truck drivers)

Swavalamban(Vocational training)

Navjyot(Imroving health index and

welfare)

Rasoi Ghar(Distribution of LPG in rural

areas)

CSR Committee

CSR Council

CSR Mgmt.

Committee CSR

Working

committee

Widely spread

across

Maharashtra,

UP, MP,

Rajasthan,,

Andhra

Pradesh, Tamil

Nadu, Odisha,

and more

34.03 34.03

Continues to mark

its media presence

and activeness in

the field of CSR.

Timely Impact

assessment reports

published by TISS

which gives a

better picture of the

impacts on ground

IOC

Healthcare and

Sanitation

Education and

employment-

enhancing

vocational skills

Protection of

national heritage

and promotion of

art & culture Rural

development

projects Safe

Drinking Water

Various

CSR Committee

of the Board

consisting of at

least three

directors, out of

which at least

one director shall

be an

independent

director.

Kolkata,

Tinusukia,

Digboi(Assam)

Mathura,

Begusarai,

Faridabad,

Nashik

128.72 128.72

Indian Oil Sachal

Swasthya Sewa is

one of the popular

and successful

initiatives.

It received SCOPE

meritorious award

for CSR and

responsiveness

OIL

Health Sustainable

Livelihood

Education Skill and

Capacity building

For differently

Abled Environment

Aarogya,Sparsh,OIRDS,Rupantar,Kamdh

enu,OIL Awards-Merit

Scholarships,Dikhya,OIL Siksha Ratna

Puraskar,OIL Super

30,Swanlamban,Sakhyam,Eco-tourism

Project at Kaziranga,Hoolock Gibbon And

CSR Committee

Committee on

Sustainable

Development

Assam,

Arunanchal

Pradesh

133.33 133.33 -


10

Sports Swachh

bharat

Rainforest Biodiversity Conservation

,Sasoni Merbeel Eco-Tourism Project

ONGC

Promoting Health

Care Education &

Livelihood

Environment

Sustainability Rural

Development

Others (Sports,

National Heritage,

setting up homes

etc.)

Varisthjan Swasthya Sewa Abhiyaan ,

ONGC-GICEIT Computer Centre Project,

Utkarsh , Harit Moksha, ONGC-

NSTFDC Hatkargha Prasikshan, ONGC

Hospitals, ONGC-Eastern Swamp Deer

Conservation Projects.

Same as above

Gujarat, New

Delhi, Assam,

UP

664 495

It could not spend

the whole

expenditure as

most of its projects

are still in the

transition phase.

On a positive note,

an increase in the

number of Swamp

deers has been

recorded after the

CSR initiative of

ONGC-WTI.

(TNN,

2014)ONGC has

partnered with

TISS for Impact

assessment and

baseline survey

studies.

GAIL

Upliftment of

beneficiaries

belonging to the

underprivileged

sections &

empowerment of

disadvantaged

groups.

Utkarsh, Padho aur Badho(Edu)

Swavalambh, Garima,Anhad

Gram(Livelihood) Village Devrai ka

Purwa, Aarogya(Health)

Headed by C&

MD as Chaiman

of the committee

Director(HR)

Joint Secretary

of the concerned

ministry.

Delhi/NCR,

Vijaipur ,

Jhabua,Guna(

MP), Haryana,

Interiors of

Gujarat,

Auraiya,

Pata(UP)

119 77.31

GAIL has spent

highly on SBA & it

became the first

Indian PSU to avail

content Index

certified by Global

Reporting Initiative

(GRI).


12

VII. MONITORING MECHANISM

GSPC 1) IN-HOUSE MONITORING. Third Party Impact Assessment by the end of

the year

2) Evaluation and monitoring by CSR Executives and Official on quarterly basis

3) Director's report shall include an annual report on CSR. (Format is mentioned

in the Companies(CSR Policy) Rules 2014)

BPCL

HPCL

IOC

Content to be displayed on the company's website

GAIL

Robust monitoring mechanism providing support at different levels using

measures like:

a. Progress Reports (Monthly & Quarterly)

b. Site Visits

c. Video Conference

d. In-House mechanism

e. Documentary evidence etc.

ONGC A comprehensive Monitoring mechanism will be devised by ONGC to ensure


13

that the CSR process functions as mandated by the Act and the Rules, ensuring

that all Projects / Programmes are duly implemented as budgeted. This will be

done on the basis of the following:

a. Allocation of a separate budget for setting up and running the monitoring

system;

b. Installation of an electronic MIS and human architecture that shall work

together to ensure a firm check on spends and the actual implementation

of activities as planned;

c. Release of funds only against verified utilisations.

VIII. OBSERVATIONS & ANALYSIS

The study of the sector brings us the following set of observations:

A. Focus Areas

In any social context, broad contours which attract maximum attention are: Education,

Health and Livelihood. Focus of CSR is no different. Most companies can be seen tapping

these areas for the ease of operations .Even though, in Indian context, these areas are the most

crucial areas of development; it is always a ‘safe game’ for the companies with minimum risk

factor. All the above mentioned PSUs have tapped their initiative in these domains. PSUs

including ONGC, OIL, and IOC have altered the league by focussing on the less noticed

areas of sports, protection of national heritage, conservation of wildlife etc. It is saddening to

see that there are barely any effort made on the measures for the benefit of armed forces

veterans, war widows and their dependents and hence this important aspect of social aid goes

unnoticed.

B. Budget Allocation

In few cases, there is a discrepancy between the amount of budget allotted and the amount

spent. There could be multiple reasons to it.


14

In recent times, GAIL and BPCL have been sighted saying that the inadequate budget

use is due to the delay in the launch and execution of CSR projects.

In some cases, the gestation period of the project is long, owing to the unutilized

funds.

On the other end, companies like ONGC and IOC have been spending much more than

the statutory requirement. Now the only enquiry remains is of the productivity and outcome

of those investments. (Rathore, 2014).GSPC is in a very dissatisfactory position in terms of

its monetary spending toward CSR.

C. Implementation

Companies vary in their methods of implementing and assessing CSR related issues. This

brings an unwanted heterogeneity in the process. GAIL, ONGC and HPCL have a tie-up with

the CSR initiative of TISS which is responsible for conducting and publishing baseline

surveys and need assessments for their respective CSR projects. This increases their

credibility as well as assists the third party in gauging the impacts and projecting trends of the

projects undertaken by them. It makes the whole mechanism more accountable. Companies

have both the policies of either carrying out the projects on their own or collaborating with a

specialized agency or NGO for the execution of the project but the issue here is the lack of

information and knowledge regarding CSR among these agencies. We are in need of more

platforms like CSR Hubs, DASRA etc. which would add more heft to the planning

component of the CSR.

D. Geographical Variation

Most of the Oil PSUs direct their CSR operations in areas falling in the vicinity of their

production units; this creates an imbalance of opportunities received by one geographical area

over the other. Areas such as Assam, Gujarat, and Maharashtra etc. which are rich in oil and

gas resources are benefiting the most from such initiatives. GSPC, OIL, IOC have their


15

maximum focus on areas where they operate. This is increasing various social difficulties. It

is making the process redundant, creating spatial imbalances and is sidelining the areas which

need more consideration. In fact the Ministry of Corporate Affairs has now permitted to do

CSR projects anywhere in India where there is need rather than doing only in plant areas.

This would remove imbalance of CSR funding and projects and will move towards areas

where needs are still unmet.

E. Role of Government

Companies seem to be allocating a huge share of their funds in government scheme such

as Swacchh Bharat Abhiyaan (SBA), NRLM, etc. Industries are lobbying to these companies

to spend more and more. To illustrate, Coal India Ltd. has spent something as huge as Rs.235

crores towards SBA which is around 50% of its total CSR budget. Such massive amount of

contribution by the PSUs appears to be a way of escaping responsibilities and gives a highly

political fervour to the whole issue. Donating funds to Govt. sponsored programs is not an

ideal solution for CSR and has no permanence to it. Spending of such funds by Govt.

agencies will involve delays, corruption and cost escalations which must be avoided. The

need is to re-allocate the funding and have a more in-depth and researched approach to the

spending .This will benefits the company by building its goodwill, customer loyalty and

improving brand image in the minds of customers and the society at large.

F. Media Focus and Recognition

Unlike other glamorous issues, status of CSR in Public sector undertakings is particularly

not very sought after. The media coverage is scattered .Other than tangible changes in the

policies, rest of the issues do not find any mention in media. HPCL, ONGC have a

remarkable media presence and appeal which keeps them lively and noticeable most of the

time. On the other hand, GSPC and OIL fall weak on the media front.


16

In order to recognize and motivate CSR initiatives, various awards and rankings are

announced by several associations. Oil sector enjoys a regular presence in such forums and is

the winner of several awards and rankings. GAIL has recently been awarded 7th

position by

the Economic Times in its latest report on Best corporate in India in the area of CSR. BPCL

is also a part of that list.

G. Overall Performance

On a general level, keeping in mind the diversity of operations, the generosity and

efficiency of budget appropriation , geographical coverage, positive after results and a clean

and appreciative public presence, HPCL, ONGC, BPCL,IOC fare better than the rest.

However, we need to keep in mind that the CSR operations are dynamic in nature owing to

their social resonance, hybrid and heterogeneous applications. We need to maintain a certain

degree of caution before comparing one entity with the other. Any attempt of such kind is

being avoided in this report due to the lack of broader level of data and information.

H. Remarks

Since this report is entirely based on secondary data, we are bound by the limitations of

not being able to assess the ‘on-field impacts’. However, few reports show that even though

the efforts towards social upliftment are apparent, the corresponding policies and

methodology to achieve the same are falling on several grounds. For instance, in Assam,

significant portions of the policy are only focussing on the present requirements emerging

from the end of local representatives, government etc. The methods of selecting the

beneficiaries for the programmes also remain unclear and there have been some omissions

and repetitions in the selection process which is decreasing the worth of the project. This is

pointing out to the lack of public involvement in decision making which questions the

transparency of these initiatives. (Anmol Soni, 2014).


17

However, on the affirmative side companies such as HPCL, IOCL, ONGC, and BPCL are

portraying great examples in terms of CSR management. They have a visible presence in the

public arenas and media. They are collaborating with renowned third party including NGOs,

government bodies, academic institutes etc. to make their efforts more specialized and

effective. They view CSR more as a value rather than a responsibility which is showing

visible differences in the impact of their initiatives.


17

POWER SECTOR

I. BROAD OVERVIEW

The below mentioned table is a result of an extensive study of the secondary data available on the CSR initiatives and efforts of the Power PSUs.

The figures and data primarily take account of the financial year 2014-15:

Company Thematic Focus Projects CSR Committee Areas Of

Operation

Budget

(in Rs. crores) Present Status

Allotted

Spent

NHPC

i) Education

ii) Healthcare

iii) Rural Development

iv) Environment &

Sustainability

v) Women

Empowerment/Senior

Citizen

vi) Swachh Vidyalaya

Abhiyan

vii) CSR Capacity

Building, Sports, Art

& Culture and Other

Initiatives

Various small

initiatives.

1) Board Level CSR

and Sustainability

committee

2) Nodal Officer and

team will be

responsible for

identification &

selection of CSR

& Sustainability

activities and

oversight of the

projects.

3) Unit, regional and

corporate level

teams for

identification,impl

ementation and

monitoring of

HP,

Arunanchal

Pradesh,

Sikkim, J&K,

Assam,

Darjeeling, UP

47.64 52.24 NHPC has

earmarked Rs.40

crores for the

construction of

2242 toilets in

Assam and

Arunanchal

Pradesh under

Swacch Vidyalaya

Abhiyaan

(Kashyap, 2015)


18

CSR&

sustainability

activities

NTPC

Health, Sanitation, Drinking

water, Education, capacity

building, Women empowerment,

Social infrastructure development,

Support to physically challenged

person(PCPs), and activities

contributing towards Environment

Sustainability

Various 1)Board Level CSR and

Sustainability committee

3)NTPC Foundation

4)EVOICE

Simhadri(AP)

Singrauli,

Talcher

(Odisha)

Tanda,singrauli

,Auraiya,

NOIDA,Rihand

,Lucknow,

Dadri (UP)

283.48 205.18 Planning to expand

its activities in skill

development, rural

infrastructure and

women

empowerment. The

company has had

an active presence

in several social

initiatives and

activities

throughout the

year. NTPC-SAIL

got an approval to

expand the

Durgapur plant

conditioned on

increasing their

CSR funding to a

certain extent.

PFC

1) Ensuring environmental

sustainability

2) Sanitation & Provision of

safe drinking water

3) Promoting Education &

employment enhancing

vocational skills

Various Board Level CSR

committee of Directors

headed by an independent

Director

Andhra

Pradesh

Leh(J&K)

Mussoorie,

Gujarat,

Sikkim,

Madhya

117.49 51.68

-------


19

4) Supporting Differently-

able persons

5) Health sector

6) Others

Pradesh, Delhi,

Jharkhand,Chat

tisgarh,Haryana

,WestBengal,

Maharashtra,

Meghalaya

PGC

Rural Development

Environment Sustainability

Skill Development Health

Education



headed by an independent

Director

Delhi,

Meghalaya,

Assam, Patna,

Karnataka, East

Sikkim,

Andhra

Pradesh,

Maharashtra,

HaryanaInterio

rs of Uttar

Pradesh,

Madhya

Pradesh

1.92 1.91 Majority of the

projects were of

infrastructure

development in

rural areas.

(Radhika Merwin,

2015)

RECL

As specified in Schedule 7 of the

Companies Act, 2013.



Communication Strategy

Punjab,

Rajasthan, UP,

Bihar, MP,

Telangana, AP,

Maharashtra,

Bihar, Odisha,

Jharkhand,

Meghalaya

103.25 103.25 There has hardly

been any media

reporting of

RECL's CSR

initiatives in the

year 2015.


20

II. MONITORING MECHANISM

NHPC

Departmental Monitoring Committee (2-3 members) deputed at Power stations to closely monitor the process. For specialized subject matter, a committee of experts will be formed involving external agency.

Reporting to the Nodal Offices on a monthly basis .Nodal Office has to report to Board Level committee on a quarterly

basis. The department encourages regular feedbacks from beneficiaries.

NTPC Regular reviews are done at Unit Level. Periodic MIS on CSR related matters are conducted. Reviews done both at regional and companywide level

PFC

The Implementing Agency shall be responsible for the monitoring process and shall provide period reports to PFC.

Preparation of progress reports in form of: quarterly reports for CSR committee and Annual CSR reports for Board Of

Directors. PFC shall conduct mandatory impact assessment reports for projects exceeding Rs.10 crores. For others, the report shall be made on case to case basis within a specified monetary budget.

PGC

CSR Committee shall be responsible for overall execution .Impact assessment reports to be prepared by external agency for

projects exceeding Rs. 3 crores. The Board has to be kept informed about the status of CSR activities on a timely basis

Other projects shall be evaluated on the basis of the guidelines & rulles framed and approved by the MD and the

Chairman.20% of the projects below Rs.2 crores and all individual projects above Rs.2 crores shall be audited internally.

RECL

Proper screening, checks, balances by the CSR committee. Impact Assessment mandatory for projects exceeding Rs.200 lacs. Rest to be covered under a limit of 5% of the administrative overheads of the CSR. Tie Ups with other company can be done for mega-projects.


23

III. OBSERVATIONS & ANALYSIS

The study of the sector brings us the following set of observations:

A. Focus Areas

The thematic focus of more and more companies in the power Sector seems to be

coinciding with one another. The top areas of attention are Health, Education and Rural

Development.

NTPC is seen to be focussing on the development of local communities. In a published

interview, S.K Jain, the head of CSR of NTPC stresses on the fact that focus should be on

doing the projects which government cannot engage directly into. Activities like

infrastructure development should be left at their end. CSR should focus more on community

participation and development. (Manku, 2015).

In power sector, there are no substantial efforts on preserving national heritage, sports and

the measures for the benefit of armed forces veterans, war widows and their dependents..

Also, detailed reports on CSR initiatives across all these companies show a major

contribution of CSR funds towards government schemes. Their needs should be addressed

through CSR budget allocations

B. Budget Allocation

NTPC is one of the highest contributors of expenditure towards CSR in the year 2015.

(RADHIKA MERWIN, 2015) It has represented its expenditure allocation divided on the

basis of geographical location instead of focus areas. NHPC is allocating money more than

the statutory requirement and PFC appears to be spending less than the sanctioned amount.

The reason for the same is yet again the gestation period of the projects (as mentioned in the

Annual Report 2014-15).It has allocated approximately half its CSR budget towards Swacch

Vidyalaya Abhiyaan. PGC seem to be allocating a very menial sum towards CSR in

comparison to rest of its counterpart in terms of monetary budget.


24

C. Implementation

What is interesting about power sector is that most of the included PSUs have opted for

direct implementation of the CSR projects rather than collaborating permanently with any

third party. NHPC clearly mentions in its official document about not having any impact

assessment reports relating to CSR. There are few Impact assessment reports available

publicly relating to the baseline surveys and Impact studies of the PSUs in Power sector. The

tie ups with NGO are very limited in this sector. NTPC has had tie-ups with just 4-5 NGOs in

the past 1 year and has employed contractors on temporary basis for some projects. Most of

the operations had been carried in-house only with a major participation by the employees of

the company. (Manku, 2015). On analysing the CSR initiatives of PFC in the FY 2014-15,

we find that in most of the cases the implementing agency had been government and State

department bodies, institutes etc. There had been minimum NGO interaction in this case.

RECL is in collaboration with Teach for India initiatives in Mumbai and Delhi.

D. Geographical variation

Similar to that in Oil sector, we see concentration of activities in few geographical

locations. Owing to the availability and abundance of natural resources and hence the

presence of these power PSUs, majority of CSR initiatives are bestowed in the North-Eastern

region of India including Assam, Arunanchal Pradesh, Sikkim, Meghalaya etc. NTPC has a

more diversified presence resulting in a more scattered pattern geographically. It has invested

greatly in areas of West Bengal, Jharkhand, Chhattisgarh, Telangana, Uttar Pradesh, Odisha

and Bihar. Other PSUs have a fairly decent coverage in central India including areas of Delhi,

Uttar Pradesh, Maharashtra, Madhya Pradesh, and Chhattisgarh etc.

E. Role Of Government

Government control and dominance has a more prominent presence in the Power sector.

Major fraction of the CSR budget of these enterprises is being directed towards government


25

schemes like Swacchh Bharat Abhiyaan, Swacchh Vidyalaya Abhiyaan etc. This is indicating

a misuse of the funds.

F. Media Focus and Recognition

The media presence and the public appeal of the power sector are weaker as compared to

that of the Oil Sector. Out of all the above studies PSUs, NTPC has the maximum presence in

various media portals .The company is involved in various CSR activities throughout the year

which makes it visible on the charts of public recognition. Next is RECL which has a fairly

decent existence in the media. Its collaboration with TFI and Centre for Social Responsibility

and Learning are the covered issues in media. NHPC’s media presence is feeble. The Indian

Express reports the CSR initiatives of NHPC to be a way to please the community and make

its way smoother towards its disputed Lower Subansiri project. (Kashyap, 2015). On the

other hand, PFC and PGC hold a very poor media presence and can hardly be traced for their

CSR initiatives.

G. Overall Performance

On a general level, keeping in mind the diversity of operations, the generosity and

efficiency of budget appropriation , geographical coverage, positive after results and a clean

and appreciative public presence, NTPC, RECL and NHPC have a stronger hold on the CSR

front over the other two companies.

H. Remarks

An overall study of the Power sector PSUs points out the blacks, whites and the greys of

the sector. NTPC is one of the most reputed names in the countries in terms of CSR

initiatives .It is distinguished for its comprehensive Resettlement & Rehabilitation (R&R)

policy covering community development (CD) activities. However, the overall efforts of the

Power sector seem to be scattered and ill-planned. It lacks in specialization and focus .The

composition is denser towards Health, environment issues and community development


26

initiative. These areas are undoubtedly very crucial but they require a more serious approach

of dealing.


27

SHORTCOMINGS

It is unquestionable that the state of affairs of CSR for Public Sector Undertakings is and

will always be very dissimilar to that of private sector. PSUs are the patrons of the economy

and they are by default endowed with the responsibility of maximizing the utility of the

individuals. They have along with them, multiple stakeholders, and multiple objectives and

most importantly lack of freedom of independent operations (Lewis, 2013).This challenging

work environment makes their operations more complex in terms of understanding and

execution.

In Indian context, the CSR concept is in its nascent stage. Even though, the PSUs have

been obliged for over half a decade to assimilate these practices into their business operation,

CSR is still experimental. It is prone to vulnerabilities and faults and it craves for some

serious attention. My observation of the state of CSR in Indian PSUs has revealed the

following drawbacks:

a. There is a lack of clarity in the whole process. CSR as a concept is adopted

vaguely and for name sake. The company needs to be more sensitized

about the social scenario in India which would make them more aware and

clear about the issues they are dealing with. The social scene is multi-

dimensional and inter-connected (Hub, 2011)whereas the CSR initiatives

are technical and issue specific.

b. Schedule 7 of the Companies Act, 2013 is an exhaustive list and it limits

the scope of operations of CSR. It omits the dynamics of the social

situations in India. For instance, it hardly talks about the betterment of

urban poor or migrants who are directly or indirectly affected by

operations of economy and does not acknowledge the people working

under the ‘informal sector’ of the economy . There is no inclusion of


28

promoting art & culture in the schedule which is in contradiction of the

Directives issues by DPE in 2010 (Jacob, 2013) and again points out to the

limitation that the Schedule possesses.

c. There is a widespread Communication Gap between the PSUs and the

communities. Even though, the PSUs employ mediators who supposedly

know the community and their situations better, there still are loopholes

which results in incomplete knowledge and makes the initiatives just

another act of charity.

d. There is a lack of coordination between the local governments and the

companies. They are not on the same level of understanding and this

makes the exchange of resources and plans a tedious and time-taking

procedure. (Sethi, 2013)

e. Redundant & Fragmented CSR activities. Many focus area of the

studied PSUs overlaps with each other (mostly Health care, Environment

protection and Education). The objective remains the same yet the efforts

are fragmented into different directions. In some cases, there are more than

one PSU operating in the same geographical area. For instance, both OIL

and IOC are working rigorously in areas of Assam itself. This makes the

work repetitive and hence leads to resource wastage.

f. Lack of Transparency and Liability is yet another important

shortcoming. There is no tangible way to hold the companies accountable

for what they have or have not done. Only a handful of individuals will

have the first hand information of corporate conduct (Jiao Luo, 2012). An

outsider’s reliability lays only on the official documents produced by them

which sometimes are nothing more than just a statutory compliance. The


29

CSR mechanism lacks the necessary discipline and strictness and thus

makes it a fairly gullible progression.

g. There is an absence of extensive documentation and follow ups in the

structure. Every PSU adopts its own method of documenting their impacts

and conducting their field survey (Some of them don’t even do that). This

brings a widespread heterogeneity in operations and leaves no benchmark

for inter or intra sector comparison.

h. These CSR projects have a very long gestation period. Social processes are

indeed slow and require patience but in this case, without any robust plan

of action, the initiatives become stagnant and futile.

i. The CSR initiatives of the PSUs are under the pangs of excessive

government control and authority. A large chunk of their finances are

getting directed towards mainstream government initiative and funds .For

PSUs it is nothing more than ‘an easy way out’ and for government it is

yet another way to raise huge funds for its projects. CSR in the PSU sector

is a relatively politicized affair and it ends up serving the interest of the

bureaucracy. As pointed out in an audacious Case Study by the

Transparency International India, CSR of PSUs is tending to be bias

towards its shareholders, ministries and related government bodies. This

leads to a misuse of the appropriated fund of CSR. (India, 2014)

j. There is a major issue of trust-deficit between the NGOs and the corporate.

The former believes in understanding a social issue at its core and adopting

a more4 focussed and patient approach towards mitigation that problem

whereas, the latter wants quick, quantifiable ,visible results. This leads to a

misunderstanding between the two groups. PSUs do not make substantial


30

efforts either on understanding the nuances of a social issues or on

recognizing and selecting the most effective NGO for a particular issue.

(Kaur, 2014)


31

RECOMMENDATIONS

After having a detailed analysis of the conditions of CSR in the Oil and Power sector

PSU, I hereby attempt to offer few suggestions to mitigate the problems:

a. Extensive Documentation: There is a need to document and refer the

impact and findings of the CSR activities initiated by the PSUs. These

records will help us to trace the course of the action of the activities, and

will help in figuring out the drawbacks and will assist further

improvements. These documents and reports can later be compared against

the nationally published demographic indicators which will give us a

broader picture of the changes on the society.

b. Need of Expertise: The sector needs more expertise and focus where

bodies who are specialized in the arena of field research, planning,

execution and follow ups of social initiatives needs to be brought on board.

CSR portals can be used strategically as a mid-link to connect companies

to its prospective specialized social body. A strict check has to be kept on

the credibility and intentions of these organizations .A well laid guideline

of who, why and how to select needs to be formulated unanimously.

Assistance can be taken by specialized bodies such as CSR Hub by Tata

Institute of Social sciences and more such initiatives should be encouraged

in the initial base building of CSR by the companies as well as the

governments. In addition to this, various new websites like BSE-

Sammaan, CSRxchange(in the process of launch), Samhita etc are in place

which aim at facilitating the interaction of Corporate on one hand and the

respective shareholders on the other and brings them together on a


32

platform to exchange their ideas and resources. Such initiatives need high

encouragement by the government bodies.

c. Capacity Building: Even though the PSUs need to seek some expertise in

the initial stages of working, the focus should primarily be on building

one’s own capacity and involving itself more and more in the planning and

implementation of the CSR initiatives. The implementation should solely

depend upon the company by the way of employee engagement,

establishing special CSR cell within the company itself and many more of

such innovative initiatives. WE believe that taking excessive assistance

from the outside organizations would hamper the sustainability factor of

this model and hence should be handled more carefully.

d. Dynamic Collaborations: The collaborations need to be made more

entwined and co-dependent. The companies need to join hands with

several stakeholders including the local-government, NGOs, other

corporate with the same objectives, expert bodies, community

representatives, social-researchers etc. This will strengthen the premise of

the CSR operations and bring sustainability to the efforts.

e. Role of Media: Media has always been a very powerful method to reach

out to the maximum number of people in the minimum time. CSR

initiatives of these PSUs should look out for more media presence as it

would acknowledge their efforts as well invite people with common

objectives to draw closer and aid the PSUs with the CSR operations. Very

interesting theory of Corporate Social Responsiveness tried to highlight

theoretically the benefit of CSR through “iceberg effect” diagram. The

results showed that just like iceberg, except the recognition and


33

appreciation, the larger part of CSR initiatives for the company are

invisible in the form of publicity, image building, expansion of customer

base and profit. (D. Y. Chacharkar, 2004).This brings to us a caution to

draw a line of demarcation between genuine media usage vs. unwanted,

glamorous publicity.

f. Accountability and Transparency: In order to keep a clear track on the

reliability of the CSR operations of the PSUs and avoid any dubious

actions, the accountability should be made more absolute. The provisions

of Article 135 of the Companies Act, 2013 and the guidelines on

Corporate governance of central Public Sector Enterprises, 2010 by the

Department of Public Enterprises can be merged into one and the

regulating bodies can be made more particular about the non-compliance

about the non-seriousness of the CSR approach. Initiatives such as The

Integrity Pact by TII needs more encouragement and structure as they can

be a very effective method of ensuring checks and balances over the CSR

operations.

g. Flagship Projects: The PSUs instead of spending on multiple generic

issues without a substantial plan, should try to narrow down their focus to

some integral areas which they can specialize in and should formulate a

more extensive and innovative plan which could be their flagship project

and hence become something distinct to that PSU. This will not just make

the approach more directed but will also act as a footprint to be followed

by other corporations.


34

CONCLUSION

In a retrospective fashion, there is no doubt that the situation of CSR in India has changed

drastically. It has taken a major leap from a mere compliance based approach to a more

strategic and planned approach in order to mitigate the social woes of the society it co-exists

with. With the change in definition, its importance has changed too. The world around is now

keen and aware to see that in what ways are the Responsible Corporate citizens paying their

debts towards the society. This is certainly increasing pressures on the corporate as well as

the communities. Indian PSUs are already very aware of their responsibilities and obligations

towards the society. All they still lack in is the right direction and approach. In order to

become a co-existent part of society, PSUs need to fit in the shoes of the communities and try

to make CSR a household term. The compliances of CSR has to be done in a way that it

involves maximum shareholders and generate their interest towards this economically and

socially feasible ‘charity plan’. Once the PSU is able to create a synergy between all the

stakeholders of the society, it would be a win-win position for all the interest groups. PSUs

have to emphasize on the changing needs and aspirations of the citizens and the society. The

approach has to be more sensitive, compassionate and at the same time more focussed and

specialized. The discussion gets even more severe for sector such as Energy which falls under

one of the highest spenders of CSR in India. (Ramanathan, 2015). It is high time for PSUs in

the sector to understand the seriousness of the situation and make an attempt to rope in all the

related stakeholders, choose a specialized co-partner/expertise for the execution and aspire to

achieve a social approval from the community at large.

Finally, the very philosophy of CSR is premised on aspirations and goodwill. In an

attempt to mandate it legally, we are aiming at an impossible task of legislating aspirations

(Karnani, 2013). Thus to facilitate it, PSUs have to start taking genuine interests in their


35

social endeavours which is undoubtedly their share of burden too and assist the process of

bettering this world in a cohesive and participatory manner.


36

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