Csr in a public sector undertaking in india – a case study

International Journal of Management (IJM), – 6502(Print), ISSN 0976 – 6510(Online)
International Journal of Management (IJM), ISSN 0976
Volume 1, Number 2, July - Aug (2010), © IAEME
ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online) IJM
Volume 1, Number 2, July - Aug (2010), pp. 129-140
© IAEME, http://www.iaeme.com/ijm.html ©IAEME

CSR IN A PUBLIC SECTOR UNDERTAKING IN INDIA – A
CASE STUDY
P.Babu Rao
Director (Personnel)
Neyveli Lignite Corporation Limited, India

V.Balakrishnan
Professor –Former Director
Anna University of Technology
Coimbatore, India

ABSTRACT:
Neyveli Lignite Corporation Limited – a Central Public Sector operating in the
backward region of Tamilnadu, has been aggressively pursuing Corporate Social
Responsibility since its inception in 1956. What impact its social development initiatives
had made on sustainable development in this region was not evidently ascertained for
long. The study on Social Sector Activities of Neyveli Lignite Corporation compiled,
collated data on NLC’s spending on social infrastructure development in the project area
and its spending on promotion of education and health in this region. The study also
measured the Human Development Index for this region as an outcome of sustained CSR
initiatives taken by this company for over 50 years. Assessment of life expectancy, adult
literacy and per capita GDP for this region indicated a higher Human Development Index
(HDI) of 0.81 which is higher compared to 0.531 achieved for the state. This finding
conclusively portrait the significant contributions made by Neyveli Lignite Corporation
towards Human development in this backward region through aggressive CSR strategies.
INTRODUCTION
The concept of social responsibility of Business – popularly termed “Corporate
Social Responsibility” – is by no means a recent phenomenon but many observers agree
that the globalization has spurred its growth and prominence. Aaronson argues, Europe
has taken the lead in shaping global CSR debates1.The term CSR includes environmental,
social , and human-rights based impacts and initiatives of companies, Ward and Fox

129

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

elucidate 2, and many countries in both industrialized and the third world take the concept
and practices seriously, explains Hopkins3. The definition of CSR, therefore, is still being
debated and there is no consensus among academicians or practitioners, Mohan observes
4
. Ward and Fox 5argue, whatever the language used, the basic idea is to understand
business as part of society – not somehow separate from it.
NEED FOR THE STUDY
Neyveli Lignite Corporation which sprang to life in the year 1956 as Central
Government owned Public Sector Undertaking, in the backward region of the then South
Arcot District, embarking on mining and power generation activities in a remote place
called Neyveli – 200 Kms South east off Chennai, the capital of Tamilnadu State, has
come a long way. From modest beginning to attaining growth of mammoth proportion, in
a span of more than 50 years, Neyveli Lignite Corporation has consistently contributed to
the development of the local region while making big strides in its core business
activities.
As a model Central public sector employer and responsible corporate citizen,
Neyveli Lignite Corporation has developed resources and infrastructure namely a 369
bed secondary level hospital, Health Centres, Schools, sports infrastructure, School for
the rehabilitation of mentally challenged for supporting social causes of health,
education, rehabilitation and community development. With the help of theses
infrastructures, NLC has undertaken projects on community health, reproductive health,
family welfare, Prevention of transmission of HIV/AIDS from mother to child during
ante-natal period, promotion of literacy, sports and overall community development
activities.
Neyveli Lignite Corporation, which is committed to initiation and implementation
of Corporate Social Responsibility with its mission articulating the concept of social
responsibility business behavior in a progressive way, has created an increasing impact
on the surrounding villages.
Against the above background, this article attempts to bring out compendious
account of NLC’s involvement in social development initiatives and measure the social
impact of such initiatives on sustainable development of the area in which it operates.

130


STUDY METHOD
Comprehensive data on the social sector activities of NLC was collected from the
various departments like CSR division, Hospital Care Delivery System and Education
studying secondary sources like records, reports and registers maintained by the
respective CSR areas and financial data by referring the Annual Report of the Hospital
and Township administration for social overheads. The information/data sought for
pertained to NLC’s spending on social sector, community development projects,
utilization of medical care service by rural population in the last 5 years, enrolment of
rural children in NLC run schools and the overall impact of such development initiatives
on the quality of life of the local population. Secondary data available in the Annual
report of the company was also accessed to make analysis of NLC’s commitment towards
social development initiatives.
OBJECTIVES
• To evaluate NLC’s spending on social sector which cover areas like provision of
Housing, lighting, water supply, health, education, development of sports,
recreational facilities like library, wellness centres, clubs, parks, gardens, roads,
water supply, public health measures, public sanitation, roads, transport that have
huge bearing on the quality of life of employees and their dependants and other
general population.
• To analyse NLC’s overall spending on Community Development activities as
percentage of net profit in the last 5 years from 2004-05 to 2008-09.
• To assess utilization of medical services by rural population in the last 5 years
from 2004-05 to 2008-09.
• To compute the Human Development Index( HDI) for this region as a measure of
impact which NLC created on the overall social development of this region
Hypothesis
H0 : Human Development Index for Neyveli and the surrounding rural area is not in the
high HDI category
H1: Human Development Index for Neyveli and the surrounding rural area is in the high
HDI category

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Statistical Analysis
Spending as percentage of net profit was calculated to verify if spending on social
development, community development, health initiatives and education was on sustained
basis over the last 5 years.
A five year analysis of Percentage of pass achieved by rural students who
appeared for the 10th and 12th Standard public examinations was analysed to examine the
success rate of NLC run schools in promoting higher secondary level education in this
rural area.
Impact of NLC’s spending on community development, health and education was
measured in terms of Human Development Index for Neyveli to infer if Neyveli was
better off compared to the State of Tamilnadu.
RESULTS AND DISCUSSION
Commitment to development of services in the Social Sector
Mining data available in the Township Administration on various facilities
developed and maintained by Neyveli Lignite Corporation that contribute to improved
standard of living of around 3.0 population residing in and around the well developed
Township reveal the following:
Table 1 – Social development infrastructure facilities available in the Township
Facilities Facilities Facilities
1 Residential 21,029 11 College 1 21 General Hospital 1
quarters
2 Shops 1530 12 Library 4 22 Peripheral 5
Dispensaries
3 Sub-Stations 3 13 Reading 6 23 Community Halls 9
Rooms
4 Fuse-off call 16 14 Auditorium 3 24 Vegetable Market 3
5 Water supply 9 15 Theatres 3 25 Guest Houses 3
6 Public Health 13 16 Stadium 1 26 Lodges 3
Centres
7 Roads 450 17 Swimming 1 27 Temples 59
Kms. pool
8 Bore wells 28 18 Clubs 3 28 Mosques 6
9 Overhead Tanks 15 19 Parks 3 29 Churches 21
10 Schools 40 20 Golf Course 1 30 Burial/Cremation 1
ground

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Analyzing the above data it could be inferred that Neyveli Lignite Corporation
which had created 30 development infrastructure in the Township and sustain the
facilities through maintenance had contributed significantly for improving the quality of
life of people residing in this region through provision of holistic environment that meet
out Housing, health, educational, recreational, social and spiritual needs of employee
community and other general public.
The study further revealed the provision of subsidized housing, water and
electricity, public health, sanitation, drainage, lighting, gardens, lawns, recreational
facilities, solid waste management system and free medical care services which the
residing population in this Township enjoy, could lead to enhancement of their quality of
life to a great extent.
The following data dwelt on NLC’s spending on development of a model
Township with all amenities and infrastructure facilities that promote human
development in this Neyveli and surrounding villages.
Table 2 – NLC’s spending on Social Development
(Rs.in Crore)
Medical Spending on
Township care Net profit
social sector
Year Library Transport
maintenance expenditure Rs. In Cr.
as % of Net
Rs. In Cr. profit
2004-05 36.98 0.51 7.84 30.78 1215.006.26
2005-06 38.20 0.55 8.72 33.86 702.35
11.57
2006-07 42.19 0.62 9.57 33.36 566.75
15.12
2007-08 49.44 0.80 11.21 47.52 1101.579.89
2008-09 84.53 0.98 12.52 67.37 821.09
20.15
Average 12.59
The above analysis revealed that NLC had spent an average of 13 % of its net
profit on maintenance of Township which is spread over 50 sq.kilometer with 30
residential blocks that house 21,029 residential quarters provided to around 19,000 NLC
regular employees and another around CISF personnel, which was significant finding.
The Township is home for around 3.0 population which include contract workmen and
general public who consist of businessmen, Bank/Insurance personnel and other
Government personnel who render commercial services to NLC project. It could be
concluded that the standard of living of employee population, their families, contract

133


workmen and their families and the surrounding population who have access to quality
housing, sanitation, public hygiene, drinking water, electricity , road, medical care,
education, sports facilities, wellness centres, recreation, pollution free environment
ensured by green belt which serve as pollution sink would be higher plane as impacted by
sustainable social development initiatives of Neyveli Lignite Corporation.
COMMITMENT TO COMMUNITY DEVELOPMENT INITIATIVES
Neyveli Lignite Corporation has institutionalized community development
initiatives by which this CPSU contributes to sustainable development of the surrounding
villages in the areas of health, education, irrigation, drinking water and other
infrastructure needs required for development like access roads. Based on data collected
from CSR department in NLC Limited, the CPSU’s spending as percentage of net profit
was worked out to analyze the contributions made towards community development for
achieving sustainability in peripheral villages. The four major areas of infrastructure
development taken up for study included education, health, irrigation, roads and drinking
water. The following explains NLC’s spending on peripheral development in terms of
building infrastructure for achieving sustainable development between 2004-05 and
2008-09.
Table 3 – NLC’s spending on community development initiatives
Period School Health Irrigation Road Drinking Net Spending as
Infra. Infra. Infra. Infra. water Infra profit % of Net
Dev Dev. Dev. Dev. Dev. In Cr. profit
2004-
1.20 0.25 - 2.19 1.03 1215.00 0.38
05
2005-
0.25 0.25 0.24 1.52 0.70 702.35 0.42
06
2006-
0.66 0.55 0.13 0.76 0.44 566.75 0.45
07
2007-
0.80 0.25 0.18 1.51 0.95 1101.57 0.33
08
2008-
0.78 0.25 0.16 0.93 0.49 821.09 0.32
09
Total 3.69 1.55 0.71 6.91 3.61 4406.76 0.38

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

134


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

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more than a lakh of rural patients in its 369 bed facility. Analysis of data on utilization by
rural population of health care services provided by NLC explain the major role played
by the company in providing medical care to the rural population:
The following table analyses the utilization of medical care service by rural population in
NLC GH in lakhs and percentage share in total medical expenditure for the period from
2004-05 to 2008-09.
Table 4 – NLC’s spending on community health initiatives and medical care to rural
population
Utilization of
medical service Amount spent on rural Spending as %
Year Income in Cr.
by rural patients population in Cr. of net profit
( in lakhs)
2004-05 1.30 0.24 1215.00 0.02
2005-06 1.19 0.28 702.35 0.03
2006-07 1.37 0.37 566.75 0.06
2007-08 1.38 0.43 1101.57 0.04
2008-09 1.42 0.51 821.09 0.06
Average 1.33 0.37 0.04
Analysing the above data it could be concluded that NLC had spent an average of
0.04 % of its total income towards providing medical care to the surrounding rural
population in the service areas of emergency, Out-patient, Maternity and Family welfare.
COMMITMENT TO EDUCATIONAL INITIATIVES FOR
PROMOTION OF LITERACY IN THIS REGION
Education is one of the major areas of social CSR which Neyveli Lignite
Corporation spearheads to promote literacy in this backward region. NLC since its
inception had developed a network of 13 Schools- 3 Higher Secondary Schools, 2 High
Schools, 5 Middle schools and 3 Elementary Schools to realize the mission of providing
quality education in this region. The rural children have uninhibited access to schools run
by NLC at all levels of primary, high school and secondary education. With private
schools meeting the educational requirements of children of employees, NLC run schools
in the last two decades predominantly serve rural children. Quality education in the best
of learning environment supported by quality labs, library, computer and sports facilities,
which rural children enjoy free of cost had contributed to sustainable development of the
surrounding rural areas.

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

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examination, NLC run schools which predominantly serve the surrounding rural
population had contributed to promotion of higher secondary level school education
among the rural population and in turn impacted their quality of life.
HUMAN DEVELOPMENT INDEX OF NEYVELI COMPARED TO
THAT OF THE STATE
NLC’s spending which averaged around 16 percent of its net profit during the
period from 2004-05 to 2008-09 on development of social infrastructure which include
maintenance of well developed Township with all necessary facilities like Hospital,
Schools, recreational facilities, provision of housing, civic amenities like water,
electricity supply, gardens, lawns, clubs, sports facilities which include swimming pool,
gyms, libraries, theaters, places of worship, in addition to competitive pay, perks and
incentives to both regular and contract workers, provided a significant leading that its
social CSR initiatives would have impacted the Human Development index for this
backward region. In order to test this Hypothesis the following parameters were analysed
and compared with that of the state of Tamilnadu:
Table 7 Human Development Index for Neyveli
Sl.No Index Neyveli Tamilnadu
1 Life Expectancy at birth 71.55 68.45
2 Infant Mortality 5.79 44
3 Birth rate 8.1 18.5
4 Death rate 3.68 7.7
3 Adult Literacy ( mean schooling 12 years 8.4
years)
4 Combined gross enrolment 90 % 70 %
5 Per capita GDP in current prices 3,79,668.00 2097.99
Social Infrastructure
1 Sanitation 100% 40%
2 Drainage 100% 35 %
3 Safe drinking water 100% 40 %
4 Over crowding 3943/Sq.km 478/sq.km
5 Access to health care services 100 % 60 %
6 Provision of education 0.28 High school/ 0.02 High school
sq.km area /sq.km (Cuddalore)
HUMAN DEVELOPMENT INDEX FOR NEYVELI
Life Expectancy at Birth: 25 years (Minimum) 85 years (Maximum)
Life Expectancy at Birth for Neyveli is 75 years

138


Life expectancy index = 75 – 25 / 85-25 = 0.833
Adult literacy rate: 0 percent and 100 percent
Adult Literacy rate for Neyveli is 90 %
Adult Literacy Index = 90 – 0 / 100-0 = 0.90
Combined gross enrolment ratio= 0 percent and 100 percent
Combined gross enrolment ratio for Neyveli is 100 %
Combined gross enrolment index= 100-0/100-0 = 1.00
Educational attainment for Neyveli = [ 2( 0.90) + 1(1.00) ]/3= 0.93
Real GDP percapita ( PPP$) = $ 100 and $ 40,000
GDP per capita for Neyveli is 5333 $
GDP per capita ( PPP$) for Neyveli is
Log ( 6793) – log ( 100) / log ( 40000) – log ( 100) = 0.70
Human Development Index for Neyveli is 0.833 + 0.90 + 0.70 = 0.81
Neyveli’s HDI of 0.81 when compared to the state HDI of 0.531 and the country’s HDI
of 0.472 is bracketed in high HDI category.
CONCLUSION
Neyveli Lignite Corporation, which embedded in its vision the Corporate Social
Responsibility objectives, had contributed significantly to the Human development of this
region by spending 13 % of its net profit on development of social infrastructure like
housing, health, medical care, drinking water, electricity, education, sanitation, public
hygiene, roads, recreation , sports and worship centers that promote religious harmony.
The company had also spent 0.04 % and 0.54 % of its net profit for provision of medical
care and education respectively to the surrounding rural population. The higher HDI of
0.81 achieved by NLC for this region compared to 0.531 of Tamilnadu reveal the
company’s consistent efforts towards achieving the goal of sustainable development by
fully realizing its CSR vision and mission.
REFERENCES
1. Aaronson, S.A. (2002) ‘How the Europeans Got a Head Start on Politics to
Promote Global Corporate Social Responsibility’, PP.356-367, International
Journal Corporate Sustainability. Corporate Environmental Strategy,

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9(4).Elsevier Science Inc.Ruth Hillary, Editor-in-Chief, Scott Wilson
Kirkpatrick & Co Ltd., London UK.
2. Ward, H and T.Fox (2002) Moving the Corporate Citizenship Agenda to South,
London: IIED.
3. Hopkins, M (2003) The Planetary Bargain: Corporate Social Responsibility
comes of age, London: Macmillan Press.
4. Mohan .A (2001) ‘Corporate Citizenship: Perspectives from India’, Journal of
Corporate Citizenship, Sheffield: Greenleaf Publishing.
5. Ward, H and T.Fox (2002) Moving the Corporate Citizenship Agenda to South,
London: IIED.

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Csr in a public sector undertaking in india – a case study

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