“CORPORATE SOCIAL RESPONSIBILITY BY ADITYA

BIRLA GROUP”

Submitted to the

ATHARVA INSTITUTE OF MANAGEMENT STUDIES

in partial fulfillment of the requirements for the Degree of

MASTER OF MANAGEMENT STUDIES

Submitted by

ABHISHEK MAHESH MORE

2017-2018

Project Guide

PROF. PREETI KAUSHIK

ATHARAVA INSTITUTE OF MANAGEMENT STUDIES

Malad-Marve Road, Charkop Naka,

Malad (West), Mumbai 400 095

 CERTIFICATE
This is to certify that the entitled “CORPORATE SOCIAL
project
RESPONSIBILITY BY ADITYA BIRLA GROUP” is the bonafied work carried out by
AJENDRA ASHOK MHATRE student of MMS., Atharva Institute of Management Studies, during
the year 2017-2018 in the partial fulfillment of the requirements for the Degree of Master of
Management Studies and that the project has not formed the basis for the award of any other degree,
associateship, fellowship or any other similar titles.

Place :

Date :

Signature of the Guide Signature of

Director
 ACKNOWLEDGEMENT

The project on “CORPORATE SOCIAL RESPONSIBILITY BY ADITYA BIRLA GROUP”

would not have seen the light of the day without the following people and their priceless
support and cooperation. Hence I extend my gratitude to all of them.

I would like to thank Atharva Institute of Management studies and Research for giving me an
opportunity to learn and understand about Sales and Marketing and Research aspects.

I am also thankful to Dr. R. M. Kumar (Director AIMS) who contributed his valuable time
and gave valuable insights during the development of the project.

Special thanks to Prof. Preeti Kaushik for her valuable guidance in completing this project
and helping me to understand this project better and supporting me with her expertise on the
same to make my project worth for my own benefit and also for the overall benefit of the
objective of the summer project.

Last but not the least; I take pride in thanking my family, siblings and friends for their much-
valued support.
 PREFACE

CSR has become an integral part of corporate strategy. Companies have CSR teams that
devise specific policies, strategies and goals for their CSR programs and set aside budgets to
support them.

CSR has come a long way in India. From responsive activities to sustainable initiatives,
corporate have clearly exhibited their ability to make a significant difference in the society
and improve the overall quality of life. Everyone sees CSR as part of a continuing process of
building long-term value. Everything a company do, helps improve the reputation of
company and encourage customers and other stakeholders to stay involved with it.

This dissertation tries to identify the after effects and how this initiative has helped the
company in its progress.CSR initiatives of some companies have also been discussed.

There may be some scope for improvement but serious efforts have been put into to get the
best results.
 INDEX

SR.NO NAME PAGE NO.

1 INTRODUCTION 01

2 RESEARCH
METHODOLOGY

3 ITC E-CHOUPAL

4 OTHER CSR INITIATIVES

5 PERFORMANCE

6 SUCCESS REASONS

7 RECOMENDATIONS

8 LIMITATIONS

9 BIBLIOGRAPHY
CHAPTER: 1
ABOUT THE
COMPANY

1
 COMPANY PROFILE

ADITYA BIRLA GROUP

2
3
4
 CHAPTER: 2
RESEARCH
METHODOLOGY

5
 DATA SOURCES

The data is purely secondary in nature and the knowledge has been obtained only through
various articles available on various websites.
There is no scope to collect primary data in any form as the topic is theoretical in nature and
does not include any kind of questionnaire to be filled.

RESEARCH OBJECTIVES

The objective of this dissertation is

1. To study the efforts of Indian companies in this field and their impacts on the company
2. To find out how corporate social responsibility is serving as a determinant of corporate
success

RESEARCH METHODOLOGY

The research commences by searching for the articles related to the topic CSR (Corporate
Social Responsibility).Then having a detailed knowledge of the same.

Then, studying the steps taken and efforts made in this field by various Indian companies.
Taking some examples of Indian companies and explaining the efforts made by listing their
contributions. After identifying them, there is study of the results it had on the business and
what positive results came out.

Then explaining by examples of various study that how it has lead to increase in profits and is
one the reason of corporate success. Also there is special emphasis on an Indian company
which can explain the topic better and help to achieve the objectives.

6
LITERATURE REVIEW

1. George Pohle and Jeff Hittner in their study on “ATTAINING SUSTAINABLE

GROWTH THROUGH CORPORATE SOCIAL RESPONSIBILITY” have
highlighted that CEO’s have been long accountable to a varied group of stakeholders-
employees and communities as well as investors. The nature of these relationships is
now changing in ways that significantly affect corporate performance in part due to
the emergence of the internet and continuing globalization companies are becoming
accountable for labor issues and working conditions in their partners as well as their
own.

2. Paul Hohnen in their paper on “CORPORATE SOCIAL RESPONSIBILITY: An

implementation guide for business” have said that there is no “one –size-fits –all
“method for pursuing a corporate social responsibility (CSR) approach. Each firm has
unique characteristics that will affect how it views its operational context and its
defining social responsibilities. Each will vary in its awareness of CSR issues and
how much it has already done towards implementing a CSR approach.

There are six steps to implement CSR-

1. Conduct a CSR assessment
2. Develop a CSR strategy
3. Develop CSR commitments
4. Implement CSR commitments
5. Report and verify progress
6. Evaluate and improve

7
 3. R. Edward Freeman, S. Ramakrishna Velamuri, Brian Moriarty in their study on
“COMPANY STAKEHOLDER RESPONSIBILITY-A new approach to CSR” have
pointed out the fact that if a company is enriching the lives of its stakeholders, then
asking the additional question of whether or not it is “socially responsible” simply
makes no sense-it is meaningless question. If the company is doing everything to keep
stakeholders happy, then it deserves to be applauded and offered as an example for
other firms to emulate. If it is not doing it satisfactorily as particular stakeholders
think it ought, the n these stakeholders could perhaps offer to help it do them better,
rather than appeal to actions and responsibilities that lie outside its day to day
activities.

“Company stakeholder responsibility” could be assigning a different meaning to

CSR."Company" signals that all forms of value creation and trade –all businesses-need to be
involved. “Stakeholder” suggests that the main goal of CSR is to create value for key
stakeholders. And “responsibility” implies that we cannot separate what we do in the
workplace from ethics.

8
 CHAPTER: 3
ITC E-CHOUPAL

9
 INTRODUCTION
Agriculture is the backbone of Indian economy producing 23 percent of GDP, and employs
66 percent of workforce. Because of the green revolution, India’s agricultural productivity
has improves to the point that it is both self-sufficient and a net exporter of a variety of food
grains, yet most Indian farmers have remained poor. The causes include remnants of scarcity-
era regulation and an agricultural system based on small, inefficient land holdings. The other
constraints are weak infrastructure, numerous intermediaries, excessive dependence on the
monsoon variation between different agro-climate zones, and many others. The unfortunate
result is inconsistent quality and uncompetitive prices, making it difficult for the farmers to
sell his produce in the world market. ITC’s trail-blazing answer to these problem is the - e-
Choupal initiative; the single largest information technology-based intervention by a
corporate entity in rural India that is transforming the Indian farmer into progressive
knowledge-seeking citizens. Enriching the knowledge of farmers & elevating them to a new
order of empowerment. ITC aims to confer the power of expert knowledge on even the
smallest individual farmer enhancing its competitiveness in the global market.

E-Choupal
E-Choupal is a Hindi word which means – “Village meeting place”. E-Choupal is a virtual
market place where farmers can transact directly with a processor and can realize better price
for their produce. E-Choupal makes use of the; physical transmission capabilities of current
intermediaries & aggregation, logistics, counter-party risk and bridge financing. In June
2000, ITC Limited launched e-Choupal in India and now e-Choupal has become the largest
Internet based intervention in rural India. e-Choupal aims to provide farmers ready access to
crop specific real-time information to improve the farmer’s decision making ability thereby
helping them to better align their farm output to the projected demand in Indian market.

E-Choupal, the Web-based initiative of ITC’s IBD, offers the farmer all information about
products and services they need to enhance farm productivity improve farm-gate price
realization and cut transaction costs. Farmers can access the latest local and global
information on weather, scientific farming practices and market prices at the village itself
through the web portal in Indian languages – Hindi, Marathi, Kannada and Telegu. E-

10
Choupal also facilitates the supply of high quality farm inputs as well as purchases of
produce at the farmer’s doorstep.

The Traditional Model

Indian farmers rely on Department of Agriculture, govt. universities, insurance companies
etc. for various inputs such as weather, modern and scientific farming practices and insurance
cover. Farmers approach input retailers who source them from wholesalers who are in direct
contact with manufacturers. After harvest, farmers bring these produce to mandis; in small
multiple lots throughout the year, where beans are auctioned to the traders and agents of the
processing companies in an open outcry method. The government facilitate fair price
discovery and enable aggregation of goods, regulate these market yards. Successful bidders
then bed the beans, weigh them, pay part cash to the farmers, and transport the cargo to the
processing units.

But with every intermediary the cost of produce increases to the processor as intermediary
adds his profit margin to the cost although the farmers get the lowest price and margin in the
whole chain.

E-Choupal and the traditional model

The main attraction of e-Choupal is that it connects large and small producer and users and
eliminates the need of middlemen (who are essential in traditional market).

e- Choupal is a virtual market that brings together vendors and customers. Geographical
distance no longer restricts participation of farmers. The main hurdle of traditional market is
that information asymmetry is inherent in the market where as e-Choupal provides for
transparent transaction. The transaction time at the ITC hub is less than at the mandi i.e. 2 or
3 hours where as 1-2 days in mandi.Some more points are:-

 Customer centric and not dependent on intermediaries.

 Capable of being used for many commodities & multiple transactions.
 Easily scalable once it is verified.
 Uses local talent and local people to develop local leaders.
 Uses all the existing institutions and legal frameworks.
 Scientific way of inspection, testing and weighing.
11
 The e-Choupal business model
The model is centered on a network of e-Choupal, information centers equipped with
computer connected to the Internet, locating in rural farming villages. e-Choupal serves as
Choupal (gathering place) and an e-commerce hub. A local farmer acting as a Sanchalak
(coordinator) runs the e-Choupal and the computer usually is located in the sanchalak’s
home. ITC also incorporated a local commission agent known as the Samyojak
(collaborator), into the system as the provider of logistical support.

The critical element of the e-Choupal system and the key to managing the geographical and
cultural breath of ITC’s network by recruiting a local farmer is the sanchalak. Sanchalak
create trust in society and all infrastructure set up is made in his house. Sanchalak receives
commission for every transaction processed through the e-Choupal and also benefited from
increased social status that accompanies the position – a significant advantage in rural Indian
life. Sanchalak act as public officer in ITC project. Sanchalak also aggregates farmers input
as well as purchase orders. Sanchalak undergoes training of basic computer usage, basic
business skills, quality inspection of crop product training etc. The samyojak or cooperating
commission agents also play important role. He earn income by providing logistical services
that substitute for the lack of rural infrastructure by providing information and market signals
on trading transaction. Samyojak is involved in ongoing operation of e-Choupal system,
allowing them revenue streams through providing services such as management of cash,
bagging & labor at procurement hubs, handling of mandi paperwork as licensed principals for
the retail transaction of the e-Choupal.

12
COMAPARISON OF e-CHOUPAL AND CONVENTIONAL SYSTEM

Conventional system vs. e-Choupal

Cost Conventional e-Choupal

market

Trolly freight 100 Nil

Filling and weighing 70 Nil

Labor khadi karai 50 Nil

Handling loss 50 Nil

Sub total 270 Nil

Commission agent 100 50

cost of bag 75 Nil

Labor (stitching and loading) 35 Nil

Labor at factory (unloading) 35 35

Freight to factory 250 100

Transit losses 10 Nil

Sub total 505 185

Grand total 775 185

As percent of produce value 8 percent 2 percent

13
 THE E-CHOUPAL SYSTEM
The previous day’s mandi closing price is used to determine the benchmark Fair Average
Quality (FAQ) price at the e-Choupal, which is static for a given day. The information of
mandi price is communicated through e-Choupal portal. If and when connection fails,
sanchalak calls an ITC field representative. To initiate a sale the farmer brings a sample of his
produce to the e-Choupal. The sanchalak performs the quality test in the farmer’s presence &
must justify any deduction to the farmer. These simple checks and balances ensure
transparency in a process where quality testing and pricing happens at multiple levels. If the
farmer chooses to sell his produce to ITC, the sanchalak gives him a note capturing his name,
his village, quality test report, approx. quantity and conditional price. The farmer takes the
note from sanchalak and proceeds with his crop to the nearest ITC procurement hub. Some
procurement hubs are simply ITC’s factories that also act as collection points.

ITC’s goal is to have a processing centre with a 30 to 40 kms radius of each farmer. At the
ITC hub, a sample of the farmer’s produce is taken and set aside for laboratory test.
Laboratory testing of the sample for oil content is performed after the sale & does not alter
the price. The reason for this is that farmers having historically being exploited are not
immediately willing to trust a laboratory test. After such inspection, the farmer’s cart is
weighed on an electronic weighbridge, first with the produce and then without produce. The
difference is used to determine the weights of his produce. After weighing, the farmer
collects his payment in full at the payment counter. The farmer is also reimbursed for
transporting his crop to the procurement hub.

Every stage of the process is accompanied by appropriate documentation. The farmer is given
copy of lab reports, agreed rates and receipts for his record. Sanyojaks, who are adept at
handling large amount of cash, are entrusted with the responsibility of payment except at
procurement centers. Samyojaks also handle much of the hub logistics, including labor
management at hub, bagging, storage mgmt., transportation from hub to factors and handling
mandi paperwork for the crops procured at the hub and for all this he is paid a 0.5 percent
commission.

14
 BENEFITS OF E-CHOUPAL
“A quiet digital revolution is reshaping the lives of farmers in remote Indian villages.”

e- Choupal delivers real-time information and customized knowledge to farmer’s decision

making ability, securing better quality & price. The e-Choupal initiative also creates a direct
marketing channel, eliminating wasteful intermediation and multiple handling, thus reducing
transaction cost and making logistics efficient.

1. Digital transformation - ITC began e-Choupal with Soya grower in the villages of
M.P. e-Choupal tried to change the stereotype image of farmers of bullock cart.
Farmers now log on to the site through internet kiosks to order high quality input, get
information on best farming practices, prevailing market prices for their crops at
home and abroad for the weather forecast all in the local language. The e-Choupal site
is also helping the farmers discover the best price of their quality at the village itself.
The site also provides farmers with specialized knowledge for customizing their
produce to the right consumer segments. The new storage and handling system
preserves the identity of different varieties right through the ‘farm gate to dinner
plate’ supply chain. Thus, encouraging the farmers to raise their quality standards and
attract higher price.
2. Credit and Insurance - Farmers’ low income and difficulty in accessing credit limits
the capacity to pursue opportunities within and outside the agriculture sector. ITC e-
Choupal proposes the solution of this problem by making partnership with financial
institutions. e-Choupal provide various types of loans like non-cash loans for farm
inputs, loans to sanchalak (sanchalak can better manage credit risk & have better
access to farmers), direct loans to farmers based on sanchalak recommendation,
Insurance & risk management services etc.
3. Leadership development - ITC uses involvement of farmers in content creation
helps to easily customize the information as per the local requirements. Participation
of local farmers ensures provision of adequate and decipherable information to e-
Choupal, which can be employed into the farming, or pricing of the produce. The
increased participation in e-Choupal develops local leadership quality in farmers. The
farmers get attracted towards e-Choupal due to increased profits, added services that
he could get, saving in time and the ability to use e-Choupal for many transactions.

15
 E-Choupal delivers relevant technologies in the hands of the farmers, which can
improve the economic condition of the entire village. E-Choupal is one of the very
few ICT projects in India that has effectively utilized e-commerce transactions for
poverty alleviation. ICT also reduced the number of middlemen between producers
and consumers. Now, simple technology solutions are available to create networks in
rural areas, which can function as virtual marketplaces.

e-Choupal at a glance
States covered 9 States [M.P., Haryana, Uttaranchal,

Karnataka, A.P., U.P., Maharashtra,

Rajasthan and Kerala]

Villages covered 36,000

e-Choupal info kiosks 6,400

Empowered e-farmers 3.5 million

4. Other benefits to farmers are reimbursed for transport to the procurement hub of e-
Choupal.

1. The transaction time at the ITC hub is also much faster than mandi.
2. ITC has given recognition to integral partner in the supply process & not mere as
agricultural producer and thus elevating the level of respect of farmers. Similarly
providing shaded seating area while waiting for their paperwork shows ITC really
care for farmers.

16
 COST AND REVENUE STREAM
E-Choupal has been successful. It has reduced the cost of procurement and the cost of transit
and the material handling cost. Procurement transaction costs are reduced from the industry
standard of 8 percent (farmers incurs 3 percent and the processor incurs 5 percent) to 2
percent (with farmer saving all his 3 percent, and the processor ITC – saving 3 percent).

The total cost incurred on the initiatives so far has been Rs.50 million (Rs.35 million as
capital cost towards computers and other hardware at the kiosks as well as central servers and
Rs.15 million revenue expenditure incurred towards portal development, people overhead
etc.). But ITC has gain benefit Rs. 20 million, which is the equivalent of full investment on
40 percent of the Choupals (Kiosks). In terms of future revenue, the outflow is 52.1 million in
2001-02 which reduces to 3.90 million in 2005-2006 and for 2006-07 is estimated as 2.70
million. Where as inflow in 2001-02 is 15.3 million where as 65.0 million in 2005-2006 and
estimated as 85.0 million in 2006-2007. The internal rate of return (IRR) on the project works
out to be 21.55 percent.

In the mandi system, there was a mark up of 7-8 percent on the price of soybean from the
farm gate to the factory gate of this mark-up 2.5 percent was born by the farmer while 5
percent was borne by ITC with e-Choupal, ITC cost are down to 2.5 percent. In absolute
terms, both the farmers and ITC save about $ 6 per metric ton.

WEAKNESS OF E-CHOUPAL
Although e-choupal helps eliminate the middleman and therefore allows farmers to get a
better price for what they grow, it does nothing to solve the more fundamental problem of the
inherent inefficiencies created by so many tiny farms.

In addition, it relies on infrastructure, which is often lacking in rural communities. Electricity

and telecommunication services can sometimes be less than 100 percent reliable in some of
the places where e-Choupal has been implemented. Finally, although there is no longer a
middleman, e-Choupal can be no more effective than the sanchalak (coordinator) in each
community.

17
 CHALLENGES
As the power is usually available for only a few hours a day at on a sporadic schedule, the e-
Choupal computer cannot always be accessed when information is needed. Phase imbalances
leads to damage of equipments. Telecommunication infrastructure in villages is poor.
Telephone exchange also have limited battery backup. In addition, there is no local support
staff to maintain or troubleshoot telephone exchanges. The support team is also short-staffed.

Other challenges are: -

1. Illiteracy about computer in rural areas as well as rural population has low trust on
electronic system.
2. Selection of an educated, intelligent, reliable and matured person as a sanchalak.
3. Improper knowledge about rural market.
4. Vicious circle of intermediaries (Adatiya & Brokers).
5. Improper and complex user interface on e-Choupal.
6. Lack of rules and regulation related to electronic Choupal.
7. Mistrust about inspection, testing and weighing of produce on centers.

ITC’s example show the key role of IT in providing and maintaining by a corporation, but
used by local farmers – to bring transparency, to increase access to information, and to
catalyze rural transformation, while enabling efficiencies and low cost distribution that make
the system profitable and sustainable . Critical factors in the apparent success of the venture
are ITC’s extensive knowledge of agriculture, the effort ITC has made to retain many aspects
to the existing production system, including retaining the integral importance of local
partners. ITC e-Choupal is committed to transparency and respect and fairness towards
farmers as well as local partners.

There are several issues which the company has addressed. Firstly, it is not just tweaking
around but a greater efficiency in the supply chain. One of the problems in redesigning
supply chains is how to use different tools, thus making the various players still own the
chain. Here, the farmer and the team are involved in painting the big picture, so there is
enthusiasm and a feeling of ownership.
Further, how do you avoid a channel conflict by finding space for the middle-men? Upton
also points out that the 'roll out, fix it, scale up' model is a new approach to strategic
18
management. The philosophy here is that the terrain has so many uncertainties that gaps will
exist. So, unlike in the past, where focus was on well-laid strategic plans, here you give
experimentation-based strategies more weightage.

THE E-CHOUPAL ADVANTAGE

ITC's e-Choupal project is a winner—for farmers who get better remuneration and for the
company that's assured quality inputs for its business

1. IT for the Masses

The e-Choupal project covers over 35,000 villages in Madhya Pradesh, Uttar Pradesh,
Maharashtra, Karnataka, Andhra Pradesh, Rajasthan, Haryana and Uttaranchal providing
millions of farmers with critical information on farming. The Choupal services are being
delivered by over 6,000 Sanchalaks and over 17,000 Upa Sanchalaks to these remotest areas.

2. Multiple Benefits

Farmers can look at weather forecasts, order fertilizer and herbicide, and consult an
agronomist by e-mail when their crops turn yellow. At some e-Choupals they can even buy
life insurance, apply for loans and also check their children’s exam results.

While much has been written about the social benefits of ITC’s e-Choupal, the matter of the
fact is that the project was conceptualized with a pure business focus to create farmer
communities in villages to facilitate sourcing of high-quality farm produce for the company’s
fast growing agribusiness.

3. Better Payment

In IT parlance, e-Choupal is an intelligent blend of applications like CRM and supply chain
management. For instance, by helping the farmer identify and control his inputs and farming
practices, and by paying more for better quality, ITC has been able to preserve the source and
improve the quality of produce.

19
The project was built using .NET. The first implementation of a Soya Choupal took eight
months but later extensions like the Aqua Choupal for aquamarine farmers took between six
and eight weeks.

Today e-Choupal is a flexible, easy to deploy solution. ITC Infotech provided an in-house
team of 25 to 30 people in the initial stage and this gradually came down to around 20 people,
and finally a five-member team to maintain the project.

The portfolio of commodities sourced has been vastly expanded to include maize, barley,
sorghum, and pulses, and the sourcing cycle is extended almost around the year. In the
commodities market, these two factors are helping ITC create a definite competitive
advantage.

THE E-CHOUPAL ROADMAP

ITC now plans to leverage its e-Choupal infrastructure to sell third-party products, provide
rural market research services, and in the social sector, to provide services like health
advisories and enable e-governance.

ITC e-Choupal has embarked in on providing best of the class retailing and shopping
experiences to the rural consumers by building retail shopping complexes that provide
integrated facilities under one roof. Under the brand ‘Choupal Sagar,’ these shopping
complexes house—a procurement centre, retail store, food court, farmer facility centre and
healthcare clinic.

In healthcare services, a pilot project has been launched along with leading corporate
healthcare service providers, to extend reliable and quality healthcare services to the remotest
villages. Several health camps conducted during the pilots are encouraging and the project is
in the midst of scaling up to other locations.

ITC e-Choupal is currently piloting delivery of quality education services to the rural areas
leveraging the physical and digital infrastructure developed for commodities sourcing and
consumer retail services.

20
 CHAPTER: 4
OTHER CSR
INITIATIVES OF
ITC

21
ITC: One of India’s most valuable companies continuously strives to be a ‘Citizen First’
entity. ITC has always attached critical importance to its responsibility to contribute to
preserving and enriching the environment.

ITC’s contribution to sustainable development extends beyond Environment, Health and

Safety considerations. Through its philosophy of ‘Transforming Lives and Landscapes’, ITC
is empowering farmers, greening wastelands, irrigating dry lands, creating women
entrepreneurs and educating rural children. Through these initiatives ITC has touched the
lives of over 2 million villagers across the country.

Ensuring Occupational Health & Safety

In keeping with ITC’s commitment to provide a safe and healthy workplace for its
employees, the Company’s Occupational Health and Safety norms go beyond the
requirements of the Factories Act, 1948

ITC also strives to go further than merely complying with International Labor Organization
(ILO) requirements on worker safety and health

Conserving Energy

ITC strives to conserve energy in all its operations by reducing specific energy consumption.
It also endeavors to increase the use of waste material for energy generation.

ITC Units continuously explore the potential for renewable energy. Different ITC Units have
undertaken initiatives to use renewable energy sources such as biomass, wind and solar
power.

Reducing Greenhouse Gases

As part of ITC’s concern for global warming, the Company began efforts to become a
carbon-positive corporation.

India is a signatory to the Montreal Protocol of 1987. The Government of India has
consequently formulated a policy to phase out various Ozone Depleting Substances (ODS) on
a priority basis. All ITC Units have detailed plans in place to conform to this policy.

22
Restoring the Ecological Balance

ITC has effectively leveraged its need for wood fiber to provide significant livelihood
opportunities to economically backward wasteland owners.

The Company has undertaken extensive tree plantation, at all its Units, and major
afforestation and watershed development programmes across the country. So far some 35
million saplings have been planted over 16,000 hectares, generating employment for about
160,000 people.

Apart from the obvious benefits of increasing the forest cover this effort also directly
contributes to moisture conservation, groundwater recharge and a significant reduction in
topsoil loss due to wind and water erosion.

Leaf-litter continuously enriches depleted soils. This further reduces the consumption of
fertilizers and pesticides, thus preventing the chemical pollution of groundwater sources

Conserving Water

ITC has always endeavored to be a water-positive corporation by returning to the

environment more water that it uses. ITC’s guidelines on water management require that all
Units minimize the use of water through conservation and recycling.

Treated effluent is reused or recycled wherever appropriate. ITC strives to restore to the
environment as much as possible of the precious water it uses. ITC Units have efficient
wastewater treatment plants that treat wastewater to standards of purity that are significantly
better than prescribed standards. ITC business units evaluate the potential for rainwater
harvesting and implement them wherever feasible. Rainwater harvesting initiatives have been
increasing over the years. The total rainwater harvested across all ITC units was around
250,000 KL in 2002-2003.

23
Enhancing Eco-Efficiency

The ITC Environment Health and Safety Policy and Codes of Practice require all Units to
take EHS issues into consideration in identifying and using resources. The Company
continually strives to:

1. Maximize the efficient use of resources

2. Eliminate unnecessary toxic and hazardous resources

3. Give preference to renewable, recycled, recyclable, reused and reusable resources

All ITC Units consistently endeavor to reduce generation of waste and maximize its
recycling. Wastes are systematically segregated as hazardous, bio-medical, nuclear, non-
hazardous, and biodegradable and non-biodegradable, to be appropriately treated, recycled or
disposed.

Nearly 44% of solid waste from ITC’s paper business is currently recycled while solid waste
production has reduced by 12%.

24
 CHAPTER: 5

ITC’s
PERFORMANCE
SINCE INCEPTION
OF e-CHOUPAL

25
 ITC’s PERFORMANCE SINCE INCEPTION OF e-CHOUPAL

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
gross
income 8069.37 8827.11 9982.46 11194.47 12039.92 13585.39 16510.51 19636.53 21966.84 23678.46

1. GROSS INCOME OF ITC : 2000-09 (Rs in crores)

Interpretation- The above graph of GROSS INCOME OF ITC 2000-09

clearly depicts that the gross income of company is rising since 2000 (e-choupal
initaition).It fhas risen from 8069.37 in 2000 to 23678.46 in 2009.The figures for
gross income has risen by 193.68% in the span of 10 years.

26
2.PROFIT BEFORE TAX OF ITC: 2000-09 (Rs in crores)

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
PBT 1228.95 1600.3 1780.26 2056.19 2319.06 2673.07 3269.19 3926.7 4571.77 4825.74

Interpretation- In the above graph of PROFIT BEFORE TAX OF ITC it can

be clearly seen that the profit before tax of company is rising continously from 2000
onwards (i.e since the e-choupal inititaive) with no deflection from the ordinary
trend.It was 1228.95 in 2000 and 4825.74 in 2009.

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 3.PROFIT AFTER TAX OF ITC: 2000-09(Rs in crores)

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
PAT 792.44 1006.26 1189.72 1371.35 1592.85 2191.4 2235.35 2699.97 3120.1 3263.59

Interpretation- The above graph of PROFIT AFTER TAX OF ITC highlights

the fact that profit after tax (PAT) of the company is rising from 2000-09.The figures
are comtinously rising except in the year 2005-06 where it is somewhat constant
because the difference in figures of the two years is very small comapred to all the
years.The diffrence is is only 43.95 crores.

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 4. DIVIDEND PER SHARE (ACTUAL) OF ITC : 2000-09 (Rs in crores)

YEAR 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

DPS (ACTUAL) 0.75 1 1.35 1.5 2 3.1 2.65 3.1 3.5 3.7

Interpretation- The graph of DIVIDEND PER SHARE (ACTUAL) OF ITC

shows the increasing trend of dividend per share since 2000,the year in which e-
choupal was started.The trend is noticeble from 2005-07 as in 2005 DPS(3.1) was at
its peak from 2000 onwards but in 2006 ,it suddenly dropped to 2.65 but soon the
company recoverd in the following year 2007 with the same figure of 3.1 in 2005.so
the graph shows a falling and rising trend from 2005-07.

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 5. DIVIDEND PER SHARE (ADJUSTED) OF ITC : 2000-09 (Rs in crores)

YEAR 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
DPS
(ADJUSTED) 0.75 1 1.36 1.51 2.02 3.15 4.05 4.75 5.37 5.69

Interpretation-In the graph of DIVIDEND PER SHARE (ADJUDSTED) OF

ITC it can be clearly seen that the dividend is increasing from 2000 but it is to be
noticed that till 2003 the rate of increse in dividend is slow and from 2003 onwards
the figures are sarply rising .The dividend in 2000 is 7.58 times greater than what it
was in the year 2000.

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6. SALES OF ITC :2000-09 (Rs in crores)

year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Sales 2475.45 2516.44 3155.90 3712.00 4109.85 4846.89 6463.15 8207.88 9543.59 10529.60

Interpretation- The graph of SALES OF ITC 2000-09 clearly depicts that the sales trend is
also increasing from 2000-09.But in the year 2000-01 the trend is nearly constant as the rise
is very small because of small increase in sales figure .The increase in sales figure from 2000-
01 is only of 40.99 crores.

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 CHAPTER: 6

REASONS FOR
THE SUCCESS OR
HIGH PROFITS OF
ITC

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1. COMPETITIVE NATURE

They have been three years into the Indian foods market and ITC Foods are challenging for
heavyweights like PepsiCo, HLL and Britannia in three different segments simultaneously.
The launch of Bingo snacks was ITC Foods’ fifth line of foods business after staples,
biscuits, ready-to-eat and confectionery businesses.

They have a good consumer response and this response to the offerings show a better
success ratio. They have a clear connect with consumers in an otherwise tough market. To
get the fundamentals right, ITC foods segmented consumer needs and identified gaps in the
market. Product development answers the gaps thrown up by consumer research.

2. ROBUST SUPPLY CHAIN

Their food business plan is backed by a robust supply chain and effective distribution to
ensure consistency in supply and quality. And their communication and brand cut through the
advertising clutter and define clearly the values associated with the product. Celebrity
advertising with Sunfeast biscuits, for instance, helped quick recall in a segment where it
competed with old established brands. Success in foods requires a keen understanding of the
supply chain for farm produce. A robust distribution network across India is also a big plus.

3. CONSISTENCY IN QUALITY

The challenge in the FOOD market is to offer consistency in quality.

That’s where Aashirvaad scores over competitors who could not offer that quality
consistency.

The biggest certificate for Aashirvaad atta is that sales picked up substantially purely on word
of mouth from satisfied consumers. The consumers are biggest ambassadors and advertisers.
The pricing too has been competitive. Consumers’ track on conversion levels from
traditional atta market (where consumer purchases wheat and grinds it) shows a 35% shift to
our packaged brand.

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4. HIGH MARKET SHARE

ITC holds close to 70 per cent of the domestic market for cigarettes with the segment’s
contribution to the top line averaging 65 per cent and profits 85 per cent for the four years
ended March 2009. With strong pricing power to pass on excise duty hikes, operating
margins have averaged a healthy 25 per cent, much higher than rivals such as Godfrey
Philips.

ITC may remain the market leader in the cigarette business, growing in high single-digits in
terms of volumes. ITC’s ‘mindshare’ among consumers, is going to be hard to dent by rivals
such as Philip Morris and Godfrey Philips. The business is likely to remain the major cash
cow, continuing to fund efforts to diversify into other businesses.

5. IN HOUSE PRODUCTION

In-house production of cartons filters and paper, coupled with efficient raw tobacco
procurement, have made ITC a highly integrated player. In house production helps them to
save time and cost. There is no delay and dependability that can hamper the smooth supply of
materials.

6. DIVERSIFIED PORTFOLIO

To diversify its revenues and profits, ITC has charted several forays into consumer products
such as garments, confectionery, consumer staples, bakery products, snacks and stationery
products.

In the FMCG business, ITC has over the past couple of years moved from segments such as
matches, snacks and consumer staples ITC does enjoy a competitive edge in bakery products
or consumer staples by virtue of its well established agri-product supply chain such as atta
into the more highly competed soaps and personal products.

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7. CONRIBUTION OF E-CHOUPAL

The agribusiness segment, procures rice, soya, coffee, wheat, tobacco, potatoes for trading
and internal consumption.

ITC’s much-admired e-Choupal, which is part of this segment, essentially provides

information to farmers procures directly from them and also doubles up as a mechanism for
distribution of FMCG products and other services. For now, operating margin in this segment
tends to swing quite sharply with the commodity prices and is likely to remain on the lower
single-digit figures.

Foods business needs a strong, quality-oriented and dedicated supply chain. Buying wheat
from the open market would mean different quality at different times.

That’s where we had immense support from ITC’s e-Choupal that ensured consistency in
wheat quality.

‘These are some of the reasons of ITC’s success or high profits of which one is corporate
social responsibility.’

36
INTERPRETATION AND
RECOMMENDATIONS

37
INTERPRETATION

After the completion of dissertation named ‘CORPORATE SOCIAL RESPONSIBILITY IN

EMERGING MARKETS’ I would like to conclude that in today’s competitive era CSR has
an important role to play.

CSR initiatives practiced by the companies contribute to the profit and success of the
company. As an example in the success of ITC ,CSR initiative e- Choupal has an important
role to play as it is one of the success factors of ITC.This has been showed with the help of
graphs that depict the company’s performance since the e-Choupal has been initiated(2000).

With time many other companies have started taking interest in this kind cause.

RECOMMENDATIONS

1. The companies practicing CSR should provide information about the after effects of
their CSR initiative. This would help the stakeholders to understand the initiative
better.

2. Companies should focus more on CSR initiatives as it leads to the growing profits for
the company.

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LIMITATIONS

39
 Limitations
1. CSR initiatives practiced by companies were easily available but the results of these
initiatives are hard to find out.

2. It was difficult to find out the contribution of the CSR practices to the profit of the
company after they were initiated.

40
 REFRENCES

1. Sandeep K. Krishnan, Rakesh Balachandran , Corporate Social Responsibility as a

determinant of market success: An exploratory analysis with special reference to
MNCs in emerging markets

2. Kuttayan Annamalai, Sachin Rao, what works ITC’s e-Choupal and profitable rural
transformation

3. A guide to corporate social responsibility.

4. www.e-choupal.com

5. www.karmayog.org

6. www.itcportal.com

7. www.businessline.com

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