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(CSR)
IN EMERGING MARKETS
(DISSERTATION REPORT SUBMITTED TOWARDS PARTIAL
FULFILLMENT OF POST GRADUATE DIPLOMA IN MANAGEMENT)
COLLEGE LOGO
Submitted By:
COLLEGE ADDRESS
YOUR NAME
This
is
to
certify
that
the
project
work
entitled
CORPORATE
SOCIAL
ACKNOWLEDGEMENT
Behind every study there stands myriad of people whose help and contribution make it
successful.
It has been a remarkable experience of satisfaction and pleasure for me to work out my
project under the guidance of SUPERVISOR NAME. I am really thankful to her for her
valuable guidance and co-operation during the project work.
I have been benefited from discussions and would also take the opportunity to thank my
friends whose support helped me a lot. A cordial and encouraging environment made it very
easier for me to complete the dissertation.
So this acknowledgement is a humble attempt to earnestly thank her and all those who were
directly or indirectly involved in preparation of this dissertation.
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 e-Choupal 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.
Table of Contents
CHAPTER: 1 ABOUT THE COMPANY .......................................................................... 1
1.1 COMPANY PROFILE ................................................................................................. 2
1.2 LIST OF PRODUCTS & BRANDS ............................................................................. 4
CHAPTER 2: RESEARCH METHODOLOGY .............................................................. 6
LITERATURE REVIEW ................................................................................................... 8
CHAPTER 3: ITC E-CHOUPAL ..................................................................................... 10
3.1 INTRODUCTION ...................................................................................................... 11
3.2 E-Choupal .................................................................................................................. 11
3.3 The Traditional Model ................................................................................................ 12
3.4 E-Choupal and the traditional model ........................................................................... 12
3.5 The e-Choupal business model ................................................................................... 13
3.6 THE E-CHOUPAL SYSTEM .................................................................................... 15
3.7 BENEFITS OF E-CHOUPAL .................................................................................... 16
3.8 COST AND REVENUE STREAM ............................................................................ 18
3.9 WEAKNESS OF E-CHOUPAL ................................................................................. 18
3.10 CHALLENGES .................................................................................................... 19
3.11 THE E-CHOUPAL ADVANTAGE ......................................................................... 20
3.12 THE E-CHOUPAL ROADMAP .............................................................................. 21
CHAPTER 4: OTHER CSR INITIATIVES OF ITC ...................................................... 22
CHAPTER 5: SOME OTHER CSR INITIATIVES BY OTHER COMPANIES
GLOBALLY ...................................................................................................................... 26
5.1 AARTI DRUGS LTD. ............................................................................................... 27
5.2 CADBURY ................................................................................................................ 27
5.3 CAVINKARE ............................................................................................................ 28
5.4 FEDEX:..................................................................................................................... 29
CHAPTER: 1
ABOUT THE
COMPANY
ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of
the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade). The
Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its
competitiveness by empowering Indian farmers through the power of the Internet. This
transformational strategy, which has already become the subject matter of a case study at
Harvard Business School, is expected to progressively create for ITC a huge rural distribution
infrastructure, significantly enhancing the Company's marketing reach.
ITC's wholly owned Information Technology subsidiary, ITC Infotech India Ltd, provides IT
services and solutions to leading global customers. ITC Infotech has carved a niche for itself
by addressing customer challenges through innovative IT solutions.
ITC's production facilities and hotels have won numerous national and international awards
for quality, productivity, safety and environment management systems. ITC was the first
company in India to voluntarily seek a corporate governance rating.
ITC employs over 26,000 people at more than 60 locations across India. The Company
continuously endeavors to enhance its wealth generating capabilities in a globalizing
environment to consistently reward more than 3, 39,000 shareholders, fulfill the aspirations
of its stakeholders and meet societal expectations. This over-arching vision of the company is
expressively captured in its corporate positioning statement:
"Enduring Value. For the nation. For the Shareholder."
CHAPTER: 2
RESEARCH
METHODOLOGY
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.
LITERATURE REVIEW
1. George Pohle and Jeff Hittner in their study on ATTAINING SUSTAINABLE
GROWTH
THROUGH
CORPORATE
SOCIAL
RESPONSIBILITY
have
highlighted that CEOs have been long accountable to a varied group of stakeholdersemployees 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.
CHAPTER: 3
ITC E-CHOUPAL
10
3.1 INTRODUCTION
Agriculture is the backbone of Indian economy producing 23 percent of GDP, and employs
66 percent of workforce. Because of the green revolution, Indias 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 scarcityera 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. ITCs trail-blazing answer to these problem is the - eChoupal 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.
3.2 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 farmers 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 ITCs 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-
11
Choupal also facilitates the supply of high quality farm inputs as well as purchases of
produce at the farmers doorstep.
3.3 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.
3.4 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.
12
13
Cost
Conventional
market
e-Choupal
Trolly freight
100
Nil
70
Nil
50
Nil
Handling loss
50
Nil
Sub total
270
Nil
Commission agent
100
50
cost of bag
75
Nil
35
Nil
35
35
Freight to factory
250
100
Transit losses
10
Nil
Sub total
505
185
Grand total
775
185
8 percent
2 percent
14
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
Villages covered
6,400
Empowered e-farmers
3.5 million
4. Other benefits to farmers are reimbursed for transport to the procurement hub of eChoupal.
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.
17
18
3.10
CHALLENGES
As the power is usually available for only a few hours a day at on a sporadic schedule, the eChoupal 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.
3.
4.
5.
6.
7.
ITCs 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 ITCs 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
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
19
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.
20
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.
21
CHAPTER: 4
OTHER CSR
INITIATIVES OF
ITC
22
ITC: One of Indias 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.
ITCs 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 ITCs commitment to provide a safe and healthy workplace for its
employees, the Companys 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 ITCs 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.
23
24
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.
2.
25
CHAPTER: 5
SOME OTHER CSR
INITIATIVES BY
OTHER
COMPANIES
GLOBALLY
26
5.2 CADBURY
Cadbury is a global confectionery and beverage manufacturer having its presence in more
than 200 countries worldwide. The company started its operations in India in 1948 and is the
leading manufacturer with 70% volume share of the chocolate market. The company is also a
key player in malted food drinks and sugar confectionery. The company after becoming a
founder member of BCF embarked upon social and community development initiatives and
attaches a lot of importance to social development initiatives.
Close to its factory at Malanpur near Gwalior, the company is working on a project targeting
women's empowerment and female infanticide. The initiative known as the ' Gurikha Project'
was launched in line with Cadbury India's philosophy to serve communities around its factory
locations in partnership with NGOs on a planned and sustainable basis. The projects key
focus is on various aspects of women's inequality, female infanticide and rights of the girl
child.
27
As per a recent survey, the project has succeeded in giving a sense of direction and
confidence to a large number of women of the area and a marked improvement has been
noticed in the general well being of the girl child. Apart from this, the company is also
working on issues like primary education, health & veterinary care, women's income
generation activities and strengthening of the village council. Under the income generation
programme, more than 10 self help groups with monthly savings ranging from 20,00050,000 rupees are functional in the area. Besides this, Cadbury has also helped build a preschool section to the village school building for girl children and a set of classrooms in
another village under the same Panchayat.
5.3 CAVINKARE
CavinKare takes an active interest in supporting organizations working on social issues. C.K
Ranganathan is one of the founder-members of the Ability Foundation an NGO working
towards the rehabilitation of the disabled. His belief took a firm shape when CavinKare
teamed up with Ability Foundation, led by Mrs. Jayashree Raveendran, an NGO that is
primarily working to integrate persons with disabilities into mainstream society; instituted
CavinKare ABILITY Awards to celebrate the exemplary spirit of rare breed of individuals
who have risen above their physical limitations to display that attitude is everything. The
annual awards which has been organized for 5 years in succession till date has gained
enormous recognition. Many celebrities, social workers, civil servants, and people from all
walks of life contribute to the cause by witnessing the awards and also contributing in the
manner they desire towards the just cause.
The CavinKare ABILITY Awards, a total of three awards, are given annually to salute
personal triumphs, the extraordinary spirit of achievement and a looking beyond one's own
self and physical limitations. The awards are
The CavinKare ABILITY Award for Eminence (1Award).
The CavinKare ABILITY Mastery Awards (2 Awards).
28
5.4 FEDEX:
FedEx, which has set itself the objective of being the express carrier of choice, believes that
to achieve this end it has to be first seen as an employer and a neighbor of choice. And while
it has been voted among the best workplaces in the country, it is keen to prove that it is a
conscientious corporate as well.
"As an organization, we aim to be the preferred express carrier. For this, we also have to be
preferred neighbors," says Mr. Jacques Creeten, Managing Director, Indian Subcontinent, and
FedEx.
According to him, commitment to corporate social responsibility or CSR, at FedEx, goes
beyond the annual donation to a charitable organization.
Employees meet every six months to decide among themselves in what way the company can
touch the lives of people in their immediate environment.
A good example of such an engagement is FedEx's tie up with CRY in the field of education,
which not only aims at providing basic education to underprivileged children, but also at
supporting their overall development. It has donated Rs 15 lakh towards four CRY-supported
projects that is expected to impact the lives of 15,000 children.
As part of its involvement in a project called Arambh, the organization has been addressing
issues of women and children in the slums of Navi Mumbai.
5.5 LG ELECTRONICS
LG Electronics has hiked its budget for community development activities from Rs 2.5 crore
to Rs three crore. Of this, Rs 1.5 crore will be allocated to LGs 38 branch offices for use
in local activities. The remaining Rs 1.5 crore will be spent by the head office in the Greater
Noida area. As part of its initiatives in corporate social responsibility, LGE has also launched
a new initiative with New-Delhi based NGO Prayas that works for the upliftment of
underpriveleged children. Under LG Prayas, LG will contribute a sum of Rs 25 lakh to
sponsor Prayas social activities
29
In keeping with its plan of supporting organizations committed to social causes, LG will also
be tying up with Helpage India, an NGO that looks after the aged. It already has a tie-up
with another NGO Jan Shikhan Sansthan for generating self-employment opportunities for
unemployed in the form of tailoring, knitting etc.
Its community development initiatives include a focused plan for providing health services
to underprivileged children, animal healthcare and enhancing professional skills of
unemployed youth. It has also adopted 24 villages in the vicinity of its factory in Noida.
Prayas, which began as an emergency relief and rehabilitation initiative for destitute children
in Delhi in 1988, has expanded its area of operation to include institutional care, alternative
education and vocational training to neglected street and working children. It caters to the
needs of 50,000 slum kids in Delhi, Gujarat and Bihar, through 65 centers under 13 projects
and three shelter homes.
5.6 NOKIA
Nokia with its mission to 'connect people' is the world leader in mobile communications. The
company is deeply concerned about ethical business practices and believes that personal and
organizational integrity is essential to long term relationships- whether with customers,
employees or stakeholders. The organization is committed to development initiatives and is
supporting numerous projects in partnership with several community and charitable
organizations worldwide. The focus of its community initiatives are centered on education,
corporate giving and disaster relief.
Keeping in line with their international programme of employee volunteering called 'Helping
Hands', Nokia India is involved with an NGO working with children with disabilities in
Delhi. Nokia's employees provide support to the NGO in terms of help and training in
accounts, human resources, IT, working with children and other activities. Environment is
another issue that is high on the agenda of the company. The packaging of all their phones is
made from recycled paper. Clear instructions are also provided for correct disposal of used
batteries with every handset.
30
5.8 SONY
Environmental Conservation Activities
Established
Partnership
with NGO
to
Address
the
Issue
of Climate
Change
In July 2006, Sony signed an agreement with the World Wide Fund for Nature (WWF) global
environmental NGO, to join its "Climate Savers Programme". Under the program, Sony has
agreed to partner with the WWF to reduce greenhouse gas emissions at Sony's sites around
the world, reduce carbon dioxide emissions from product use by lowering the annual energy
consumption of major Sony products and cooperate with the WWF to raise consumer
awareness of global warming prevention.
Promoting Product Energy Saving
In February 2007, Sony received a Sustainable Energy Europe Award from the European
Commission, the first consumer electronics and Entertainment Company to earn this
prestigious prize. The award recognized Sony for its voluntary commitment and efforts to
improve the energy efficiency of its products, as well as its disclosure of information to
consumers. As of February 2007, all Sony televisions sold in Europe had standby power
consumption below 1 watt, with 30 models achieving a standby power consumption of only
0.3 watts, below the market average. In Japan, Sony's KDL-40J3000 model BRAVIA LCD
31
television has achieved an energy-conservation level of 180% relative to Japan's energysaving laws, representing the industry's highest energy-saving performance.
Environmental Conservation at Sites
Sony is engaged in a variety of environmental conservation activities at its sites as it works
towards its "Green Management 2010" mid-term group environmental targets, to be
achieved by 2010. In fiscal 2006, Sony's emissions of greenhouse gases (calculated in terms
of CO2) totaled approximately 2.03 million tons, down 9% from fiscal 2000 levels.
Furthermore, waste from Sony sites was approximately 193,000 tons, down 30% from the
fiscal 2000 level, while the amount of water used dropped approximately 16% from fiscal
2000 to 24.18 million cubic meters.
5.9 TUPPERWARE
Through a programme called Tupperware children's fund, Tupperware establishes
charitable Alliances with non-profit organizations offering solution based, life-enhancing
programmes and resources that have positive impact on children and families.
In India, money from the proceeds of each sale of Tiwi Munch goes towards this noble cause.
32
5.10 DABUR
Daburs CSR initiatives are driven through Sustainable Development Society or SUNDESH,
an outcome of the vision of Dabur India Ltd founder Dr. S.K Burman.
SUNDESH
Sustainable Development Society (SUNDESH) is sworn to the mission of ensuring overall
socio-economic development of the rural & urban poor on a sustainable basis, through
different participatory and need-based initiatives. It aims to reach out to the weaker and more
vulnerable sections -- such as women and children, illiterate and unemployed of the society.
Today, SUNDESH operates in Ghaziabad and Gautam Buddha Nagar district of Uttar
Pradesh, and has -- more recently established presence in Rudrapur district of Uttrakhand.
Over the years, it has contributed to many worthy causes, addressing childrens literacy,
improving healthcare services, skill development, and environment, to name a few.
Medicinal Plant Project An initiative by Dabur Nepal Pvt. Ltd.
Dabur Nepal Pvt. Ltd. is a joint venture company established in the year 1989 when probably
very few investors had their roots in Ayurveda. Dabur Nepal has started the project on
medicinal plants in Nepal to provide the modern technology for cultivation of the
required medicinal herbs of Himalayas to the farmers. The only eco-friendly project of
CSR nature in Nepal, this initiative is fully integrated with the companys business vision.
A state-of-the-art Greenhouse facility has been set up at Banepa, which has the capability
to produce 5-6 million saplings of medicinal plants per annum. All the required climatic
parameters for uniform growth of saplings of the medicinal plants like temperature, humidity
etc. are controlled by automatic computer systems. Besides helping preserve natural
resources, this initiative has also gone a long way in generating employment and income for
local people and improving the socio-economic conditions of local populace in the
Himalayan Kingdom.
33
CHAPTER: 6
ITCs
PERFORMANCE
SINCE INCEPTION
OF e-CHOUPAL
34
Year
gross
income
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
8069.37
8827.11
9982.46
11194.47
12039.92
13585.39
16510.51
19636.53
21966.84
23678.46
35
2000
2001
2002
2003
2004
2005
2006
2007
2008
PBT
1228.95 1600.3 1780.26 2056.19 2319.06 2673.07 3269.19 3926.7 4571.77 4825.74
36
2009
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
37
YEAR
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
DPS (ACTUAL)
0.75
1.35
1.5
3.1
2.65
3.1
3.5
3.7
38
YEAR
DPS
(ADJUSTED)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0.75
1.36
1.51
2.02
3.15
4.05
4.75
5.37
5.69
39
year
2000
Sales 2475.45
2001
2002
2003
2004
2005
2006
2007
2008
2009
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.
40
CHAPTER: 7
REASONS FOR
THE SUCCESS OR
HIGH PROFITS OF
ITC
41
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.
Thats 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.
traditional atta market (where consumer purchases wheat and grinds it) shows a 35% shift to
our packaged brand.
42
43
7. CONRIBUTION OF E-CHOUPAL
The agribusiness segment, procures rice, soya, coffee, wheat, tobacco, potatoes for trading
and internal consumption.
ITCs 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.
Thats where we had immense support from ITCs e-Choupal that ensured consistency in
wheat quality.
These are some of the reasons of ITCs success or high profits of which one is corporate
social responsibility.
44
INTERPRETATION AND
RECOMMENDATIONS
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INTERPRETATION
After the completion of dissertation named CORPORATE SOCIAL RESPONSIBILITY IN
EMERGING MARKETS I would like to conclude that in todays 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 companys 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
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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.
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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 ITCs 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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