Description
In India Air-conditioning industry is approximately around 65 years plus old. Earlier
most of the air-conditioning equipments were assembled and sold. (till mid 1950s.)
Government foreign direct investment (FDI) regulation policies protected the Indian
companies till 1990. Very few organized players like M/s Blue Star Ltd, M/s Voltas ltd. were in existence in the total product range and players like M/s Amtrex Ltd , and others in the small airconditioners segment.
138
Chapter 4
Overview of Air-conditioning Industry and CSR Approaches of Selected
Companies of Air-conditioning Industry .
4.6 Introduction of Air-Conditioning Industry
4.6.1 Historic Perspective of Air-conditioning Industry
4.6.2 Air-conditioning Industry in India
4.6.3 Air-Conditioning Industry Terminology
4.6.4 Air-Conditioning Industry Product Mix
4.6.5 Market Size and Segment Analysis
4.6.6 Competition Analysis Based on Product Segmentation
4.7 Introduction of the Selected Air-conditioning Industry Companies of India .
4.7.1 Introduction of M/s Blue Star Ltd
4.7.2 Introduction of M/s Voltas Ltd
4.7.3 Introduction of M/s Carrier Aircon India Pvt. Ltd
4.7.4 Introduction of M/s ETA Engg. India Pvt. Ltd
4.8 A Study of CSR Activities and Approaches of the Selected Companies
4.8.1 A Study of CSR Approaches of M/s Blue Star Ltd
4.8.2 A Study of CSR Approaches of M/s Voltas Ltd
4.8.3 A Study of CSR Approaches of M/s Carrier Aircon India Pvt Ltd
4.8.4 A Study of CSR Approaches of M/s ETA Engg. India Pvt Ltd
4.9 Synthesis of CSR Approaches of Selected Companies – Diagrammatic View.
4.10 Conclusion
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Chapter 4
Overview of Air-conditioning Industry and CSR Approaches of Selected
Companies of Air-conditioning Industry .
______________________________________________________________________
4.1 I ntroduction of Air-Conditioning Industry
In the ?hot‘ climate country like India, the common meaning or conventional
understanding of the ?Air-conditioning‘ is ?Cooling of the air‘. However Air-
conditioning as per the technical definition is,
“Process of cooling or heating, cleaning, humidifying or dehumidifying air &
distributing the air at proper velocity to achieve desired inside conditions. Air
conditioner equipment power in the U.S. is often described in terms of "tons of
refrigeration". A "ton of refrigeration" is approximately equal to the cooling power of
one short ton (2000 pounds or 907 kilograms) of ice melting in a 24-hour period. The
value is defined as 12,000 BTU per hour, or 3517 watts. Residential central air systems
are usually from 1 to 5 tons (3 to 20 kilowatts (kW)) in capacity.”(1)
Today air-conditioning has become a ?need‘ of modern day life in contrast to its earlier
perception as ?luxury‘ 6-8 years back which is almost a ?necessity‘ now. That has give a
boost to the industry to reach Rs.10,000 Crore mark by the end of the year 2010, and is
expected to grow at Rs.38,000 Crore by the end of 2013. (2) ( Financial Report 2010 :
Blue Star Limited).
In India Air-conditioning industry is approximately around 65 years plus old. Earlier
most of the air-conditioning equipments were assembled and sold. (till mid 1950s.)
Government foreign direct investment (FDI) regulation policies protected the Indian
companies till 1990. Very few organized players like M/s Blue Star Ltd, M/s Voltas ltd.
140
were in existence in the total product range and players like M/s Amtrex Ltd , and
others in the small airconditioners segment.
4.1.1 Historic Perspective
Mr. Willis Haviland Carrier graduated from Cornell University with a Masters in
Engineering, in 1902 developed the first air (temperature and humidity) conditioning
machine. One Brooklyn printing plant owner was troubled due to improper humidity
and heat. Fluctuations in heat and humidity in his plant had caused the dimensions of
the printing paper to keep altering slightly, was creating a misalignment of the colored
inks. The new air conditioning machine created a stable environment and aligned four-
color printing became possible. Mr.W.H.Carrier who is known as ?Father of Air-
conditioning‘ developed a formula for optimizing the application of forced draft fans,
developed ratings of pipe coil heaters & set up a research laboratory. He engineered &
installed the first year-round air-conditioning system, providing for the four major
functions of heating, cooling, humidifying & dehumidifying.
4.1.2 Air-Conditioning Industry in India.
In India Air-conditioning industry is approximately around 65 years plus old. Earlier
most of the air-conditioning equipments were assembled & sold. (Till mid of 1950s.)
Government Foreign Direct Investment (FDI) regulation policies protected the Indian
companies till 1990. Very few organized players like M/s Blue Star Ltd , M/s Voltas
ltd. were in existence in the total product range and players like M/s Amtrex Ltd , and
others in the small airconditioners segment. However post 1992 , ( post liberalization
policies), new players from the global world entered in to the India market, either on
141
their own or with a collaborative partnership business models. Mainly among them are
like M/s Carrier Aircon Ltd , M/s York Ltd , M/s Emerson Climate Technologies etc.
from USA. M/s Sanyo , M/s Toshiba , M/s Daikin and M/s Hitachi ltd are from Japan.
M/s LG Electronics and M/s Samsung Ltd are leading global players from Korea.
Other domestic players moving aggressively are like M/s Videocon Ltd , M/s Godrej
Ltd.
At present in the country over 10 companies are competing Indian AC markets in
different segments. Companies have formulated collaborative business models in
various segments to ensure wide range of products in the various product segments, or
service partnership models have been adopted to enrich services, or collaborations have
been in place for strategic tie ups in the area of designing and engineering capabilities
and to achieve various economics of scale benefits. (3)
4.1.3 AC I ndustry Terminology.
(A) Airconditioning „Ton? ( TR) :
Capacities of the airconditioners or airconditioning systems are measured in the air-
conditioning ?Ton‘ (TR). TR stands for Tones of Refrigeration. Generally product
capacity varies from 0.5 TR to 1200 TR or plus. Domestic air-conditioners of smaller
capacity units vary from 0.5 to 5.0 TR capacities , Air-conditioning systems for light
Commercial projects varies from 5.0 TR to 500 TR capacities and Air-conditioning
systems for industrial projects varies from 200 TR to 1000 TR plus.
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(B) „High Side? and „Low Side? of the Project:
Airconditioning system projects generally used to have two important dimensions. (a)
Supply of main airconditioning equipment from the manufacturer, which is know as
?High Side? of the project in the industry terminology while (b) The other associated
work installation of the equipments, water or refrigerant piping work ,sheet metal duct
work for the air transport etc. are known as ?Low Side? work as per the industry
terminology.
4.1.4 Air-conditioning Industry Product Mix
Air-conditioning industry contains mainly a product mix as per enclosed a product mix
table below as per Table 4.1
Table 4.1 Product Segmentation of HVAC industry
Central Airconditioning
? Screw Chillers
? Scroll Chillers
? Double Skin Air Handling Units
? Fan Coil Units
? Packaged ACs & Ducted Splits
? Long Distance Piping Packaged ACs
Room Airconditioners
? Window Airconditioners
? Split Airconditioners
? Cassette Airconditioners
? Verticool Split Acs
? Concealed Split Acs
Commercial Refrigeration
? Deep Freezers
? Ice Machines
? Water Coolers
? Flexi Water Coolers
? Bottle Coolers
? Milk Coolers
? Bottled Water Dispensers
? Supermarket Display
Cold Storages
? Modular Cold Rooms
? Refrigeration Units
? PUF Insulated Panels
? Ripening Chambers
Specialty Cooling Products
? Process Chillers
? Telepacs
? Precision Airconditioners
? Precision Climate Seed Storages
? Bulk Milk Coolers
? Mortuary Chambers
Transport Cooling
? Bus Air conditioning
? Cold storage vehicles.
? Ship and Air-craft air-conditioning
systems
Special Applications
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Every company offers their own specialty and technology expertise in various product
combinations. How ever selected companies here operates in each product
segmentation and they mainly have solution for the various types of needs and
customers.
4.1.5 Market Size and Segment Analysis
In 2007-08 the estimated market size is close to Rs. 9000 Crore (Source : Financial
Reports of leading player like M/s Blue Star Ltd and M/s Voltas Ltd.). Of this, the
market for central and Industrial air-conditioning was around Rs. 5000 Crores and the
market for the domestic airconditioners like window airconditioners and split
airconditioners was around Rs.4000 Crore. (Diagaram.4.1) Industry has reported high
growth over last few years due to the growth in infrastructure, power, service industry
IT industry etc. in Indian Market. Market has been estimated by leading Industry
players and business analyst to reach around Rs.38000 Crore by 2013. in the next three
years time in India.
Diagram 4.1: Overall Market Size of the Air-conditioning Industry in India.
(Source: Financial Report, M/s Blue Star Ltd- 2009.)
5000
4000
Market size FY 2007-08
(Rs. In Crores)
Central
Airconditioning
Room
Airconditioners
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4.1.6 Competition Analysis Based on Product Segmentation.
Air-conditioning has two major segments: Room Air-conditioning (RAC) & Central
Air-conditioning (CAC).
Room air-conditioning typically signifies air-conditioning for domestic & light
commercial applications wherein each room is air-conditioned by separate small AC
unit. The size of such airconditioners used to be 0.5 Tr to 5.0 Tr.
Commercial and Central air-conditioning is air-conditioning of bigger & multiple areas
with controls at single point. CAC is further branched product wise: Direct expansion
(Dx) systems & Chiller Systems. Dx systems include PAC (Packaged & Ductable Split
systems) & VRF (Variable Refrigerant Flow) systems. (These are the systems normally
used for the commercial air-conditioning projects.) Chillers make use of refrigerant &
water to air-condition the areas.
Diagram 4.2: represents the data of various companies present in the Room
Airconditioners Markets and their relative position in terms of the number of product
unit sold. Data represents that the total market of India was 2220500 units and Korean
giant of consumer durable M/s L.G. Electronics clearly dominated in the market with
600000 units by keeping it‘s next rival and a Indian brand M/s Voltas with a sale of
nearly 325000 units. Others small players in RAC market include Daikin, Fujitsu
General, Fedders International, Kenstar, TCL etc.
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(I) Room Air Conditioners (RAC) Market and Trend.
Diagram 4.2 : Competitor Analysis for RAC (Indian Market) for FY 2007-08
(Source: JARN, Japan Air Conditioning, Heating and Refrigeration News, 2008)
Diagram 4.3 : RAC Market Growth Trend for 3 years in Indian Market.
(Source: JARN, Japan Air Conditioning, Heating and Refrigeration News, 2006, 2007 & 2008)
Diagram 4.3 (above) clearly shows how the market for RACs have grown by leaps and
bound to grow because of the hot India Climate and improved net disposable income of
an individual. In last 3 years. The market size which was 150000 units in FY 2005-06
has grown to 2220000 units by end of FY 2007-08.
LG, 600000
Voltas, 325000
Samsung, 300000
Whirlpool, 10000
0 Videocon, 120000
Onida, 165000
Blue Star, 145000
Godrej , 100000
Hitachi, 105000
Carrier, 48000
Others, 212500
RAC Market Share 2007-08
LG
Voltas
Samsung
Whirlpool
Videocon
Onida
Blue Star
Godrej
1500000
1850000
2220000
0
500000
1000000
1500000
2000000
2500000
2005-06 2006-07 2007-08
Growth of RAC Market over last 3 years in
No. of units
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(II) Packaged Air Conditioners PAC - (Central Air Conditioning Systems):
PACs quality, project execution capabilities & after sales service support plays a major
role in decision making.
Diagram 4.4: Commercial Air-conditioning system (PAC) market growth rate trend in 3 years
in Indian Market. (Source: JARN, Japan Air Conditioning, Heating and Refrigeration News,
May 2006, 2007 & 2008)
The Diagram 4.4 below shows the tread of PAC market of 3 years. It is noteworthy that
out of 8-9 players top three brands M/s Blue Star, M/s Carrier & M/s Voltas together
serve around 70-80% of the market. PAC market has also grown with similar rates as
RAC market, though the market size of PAC is smaller than RAC. (4)
4.2 I ntroduction of the Selected Companies of Air-conditioning I ndustry
For the study purpose four of the leading air-conditioning companies have been
selected.
(1) M/s Blue Star Limited (Indian Multinational Company.)
(2) M/s Voltas Limited (Indian Multinational Company.)
(3) M/s Carrier Airconditioning & Refrigeration Limited (USA based global co.)
(4) ETA Engineering Pvt. Limited (UAE based global Co.)
395000
488000
631000
0
200000
400000
600000
800000
2005-06 2006-07 2007-08
Growth of PAC Market over last 3 years
in TR capacity
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All the four companies selected for the study have a commonality that they have been
present in India and they are present in all the market and product segments of the
Industry. M/s Blue Star Ltd, and M/s Carrier Aircon India Pvt Ltd. are the companies
present in the market only with air-conditioning and refrigeration products, while incase
of M/s Voltas and M/s ETA, although they have other product or project lines, are
popularly known as air-conditioning companies only. Other dominant players like M/s
Samsung, M/s LG Electronics, and M/s Hitachi Air-Conditioners are some of the other
known brand and examples of the industry. However they are well-known consumer
durable brands (mainly present in only room domestic (room air-conditioners) or water
cooler and deep freezer kind of product segments only.) And majority of them are not
present in many of the high ended product segments of air-conditioning industry. These
companies are basically consumer durable organizations with long product lines and
depths which in turn makes them very small contributor to the air-conditioning industry.
4.2.1 I ntroduction of M/s Blue Star Ltd (BSL, hereafter)
(A) Company Profile
M/s Blue Star Ltd. is India's leading central air-conditioning company with an annual
turnover of Rs.2557 crores, ( Year ended, March,2010) a network of 29 offices, 5
manufacturing facilities, 700 dealers and around 2000 plus employees. (Source :
Company website : www.bluestarindia.com)
It fulfils the air-conditioning needs of a large number of corporate and commercial
customers and has also established leadership in the field of commercial refrigeration
equipment ranging from water coolers to cold storages. The Company has also started
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offering Electrical Contracting and Plumbing and Fire Fighting Services. BSL's other
businesses include marketing and maintenance of hi-tech professional electronic and
industrial products, however it contributes a very small amount to the BSL turnover.
The Company has manufacturing facilities at Thane, Dadra, Bharuch, Himachal and
Wada. Company has a three group of companies named as (a) Blue Star Infotech (b)
Blue Star Design & Engineering (c) Blue Star M & E Engineering. Blue Star primarily
focuses on the corporate and commercial markets. These include institutional, industrial
and government organizations as well as commercial establishments such as
showrooms, restaurants, banks, hospitals, theatres, shopping malls and boutiques. BSL
promotes after-sales service as a business, by offering several value added services in
the areas of upgrades and enhancements, air management, water management, energy
management and LEED certification consultancy for Green Buildings.
(B) Company History
Blue Star was founded in 1943, by Mohan T Advani, an entrepreneur. The Company
began as a modest 3-member team engaged in reconditioning of air conditioners and
refrigerators. Blue Star then ventured into the manufacture of ice candy machines and
bottle coolers and also began the design and execution of central air-conditioning
projects. In 1949 it became Blue Star Engineering Company Private Limited. Employee
strength crossed the 1000 mark and the company went public in 1969 to become Blue
Star Limited, as it continues to be called today. In 1984, Ashok M Advani and Suneel
M Advani, the sons of Mohan T Advani, and the present Executive Chairman and
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Chairman took over the operations of the company with a vision of, "To deliver a
world-class customer experience" (5)
4.2.2 I ntroduction of M/s Voltas Ltd (Voltas, hereafter)
(A) Company Profile
Voltas is one of the world's premier engineering solutions providers and project
specialists. The company is one among high brand value and ?TATA‘ group of
company. M/s Voltas Ltd. is India's leading central air-conditioning company with an
annual turnover of Rs. 4830 crores, ( Year Ended March, 2010) a network of offices all
India and 3 manufacturing facilities, and around 3000 employees. (Source: Company
website: www.voltas.com). Voltas offers engineering solutions for a wide spectrum of
industries in areas such as heating, ventilation and air conditioning, refrigeration,
electro-mechanical projects, textile machinery, mining and construction equipment,
materials handling equipment, water management & treatment, cold chain solutions,
building management systems, and indoor air quality. Company also undertakes
electrical power projects environmental and water pollution control, pumping stations
and water supply, and water and waste water treatment projects. Company has
manufacturing units at Thane, Dadra and Pantnagar.
(B) Company History
Voltas is another largest project management and airconditioning company under the
flagship of the ?TATA? group, founded in India in the year 1954. Since 1954 company
has been growing financially and has been a strong and ethical brand name and one of
the important feathers of ?TATA? group of companies in India. (6)
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4.2.3 I ntroduction to Carrier Airconditioning & Refrigeration Limited
(Carrier, hereafter)
(A) Company Profile
Carrier India is a part of Carrier USA, which is in turn representing the United
Technologies Corporation, USA. UTC is global player with year 2010 revenue of USD
$55 billion. The UTC group operates in aerospace & building systems with companies
like Carrier (air-conditioning), Otis (Elevators), Pratt & Whitney (Jet- engines),
Sikorsky (Helicopters), UTC Fire & Security (Chubb & Kidde), Hamilton Sundstrand
and Power. Diagram 4.5 shows the over all business contribution and performance of
UTC and it‘s various business units world wide.
Diagram :4.5 Business Units Vise Revenue for UTC-2010
Carrier USA started its operations in India with setting up of companies namely Carrier
Aircon Limited in 1986, and Carrier Refrigeration Private Limited in 1992. In October,
2006, Carrier Aircon merged with Carrier Refrigeration and the name of the merged
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entity was changed to ?Carrier Airconditioning & Refrigeration Limited? (Carrier
India).
Carrier in India
In India Carrier is present since 1994 with a manufacturing plant at Noida and
employment of More than 700 employees. Company has a factory and ware house
besides Carrier owned total line outlets and sales and service offices across the nation.
Carrier sales couple of brands in the country Carrier and Toshiba (residential)
Carrier India pioneered HVAC dealership concept in the country. The Company has a
network of over 590 sales and service dealers and 1000 distributors and retailers. One of
the strength of the company is their distribution and dealership network. Carrier Air-
conditioning and Refrigeration Ltd. too like other Indian industry giants like M/s Voltas
and M/s Blue Star Ltd is present and focusing mainly on the corporate and commercial
markets, as well as industrial and government markets, with a turn over of close to Rs.
1000 Crore (year end 2010) in India. It is also important to note that Carrier is also
heavily focusing and one of the most recognized brands in domestic room air
conditioners and split air conditioner business. Carrier has a unique segment of the all
four companies selected here is the ?auto and transportation? segment in their
refrigeration products category.
(B) Company History
Founded in 1915 by Dr. Willis Carrier, the inventor of modern air-conditioning, Carrier
has developed into being the world‘s largest provider of air-conditioning, heating and
commercial refrigeration systems (HVACR) with operations in more than 170
countries, employing approximately 29,149 people worldwide and revenues of $11.4
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Billion in 2010 with an operating profit of $ 1.1 Billion. History of M/s Carrier is of
over close to 100 years with many technological alliances and collaborations, however
the most noteworthy collaborations is the Company‘s tie up with world renowned
technology leaders and Japanese major ?Toshiba‘ for their latest upgraded technology of
Variable Refrigerant Volume (VRV) systems.(7)
4.2.4 I ntroduction to ETA Engineering Pvt. Ltd. ( ETA , hereafter)
(A) Company History
ETA in India is a subsidiary of ETA Ascon. In 1973, B.S. Abdul Rahman, a Hong Kong
based Indian businessman, and UAE based entrepreneur Al Ghurairs started the
organization ETA ASCON. Al Ghurairs was traditionally pearl merchants and real
estate owners and a leading business family in Dubai, they realized the potential of
such a venture in the emerging Middle Eastern markets which was then on the verge of
massive growth in its own oil wealth. That gave a birth to a partnership firm Associated
Constructions & Investments LLC (Ascon) now known as ETA Ascon. (8)
(B) Company Profile
ETA Engg.Pvt Ltd. (ETA) in India was started 1994, ETA Engineering undertakes
HVAC projects, Electro-mechanical projects & services (EMPS) and Mechanical,
Electrical and Plumbing (MEP) work including BMS, Internal Electrification and Sub-
station Works meeting International Standards. ETA Engineering has two
manufacturing plants at Sriperumbudur, Chennai and Pondicherry.
ETA ASCON, Dubai, a parent company of ETA Engg India Pvt Ltd. is a multi-faceted
group having a turnover in excess of USD Six Billion with diverse areas of expertise in
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activities such as Builders & Constructions, Engineering – Electromechanical &
Elevator Works, Advanced Fire Fighting, Shipping & Trading, High Voltage
transmission, Desalination, Powder coating, Retail & Leisure Business, Tours &
Travels, Facilities Management, Automobiles, Environment, Manufacturing, etc.
ETA Engineering Pvt. Ltd. is a company registered in India having its registered office
at Chennai and branch offices at major mega and metro cities of India
ETA group of companies in I ndia are
? ETA Engineering Pvt. Ltd. (Air-Conditioning and M & E Services)
? ETA Melco Engineering Co. Pvt.Ltd. ( Mistubishi Elevators & Escalators)
? ETA Construction India Pvt. Ltd. ( Building Constructions)
? Transcars India Pvt. Ltd. (Maruti Dealers)
? Mincore Resources Pvt. Ltd. (Fertilizer & Coal Imports)
? Cresent Enginering College
? ETA Resources Pvt. Ltd. ( Shipping)
Contribution of the ETA Engineering India Pvt. Ltd. is close to Rs. 800 Crore (Year
ended March 2010.) through it‘s Indian operation to the total business sum of the ETA
Ascon as per the information received from the officials of the company during the
personal interview.
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4.3 A Study of CSR – Activities and Approaches of the Above Selected Companies.
In this section, CSR activities and approaches of the following companies in order of
their introduction have been studied with the help of secondary data published by the
companies in their financial reports , various magazines and organized research journal
or the institutions and the companies websites. The order of the study is as follows.
(1) M/s Blue Star Limited
(2) M/s Voltas Limited
(3) M/s Carrier Airconditioning & Refrigeration Limited
(4) ETA Engineering Pvt. Limited
For the sake of study of the broad CSR approaches adopted by the companies the CSR
activities have been classified as follows. (Refer Table 4.2)
(a) A Study of Corporate Governance and Reputation of the Company
(b) A Study of Intrinsic CSR activities of the company (CSR approaches of the
company towards it‘s stake holders like employee, dealers, vendors and
shareholders.)
(c) A Study of Extrinsic CSR activities of the company (Companies philanthropic
activities, responsibility towards the society and global contemporary issues.)
(d) A Study of Corporate Social Performance Index of the company with references
to the Indian Inc.
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Table 4.2 A Study of the selected companies CSR approaches of HVAC Industry
Selected Companies (1) BSL (2) Voltas (3) Carrier (4) ETA
Variables studied for understanding CSR Approaches of the companies
A Study of Company?s
Corporate Governance
Practices
A Study of Company?s
Intrinsic CSR Practices
A Study of Company?s
Extrinsic CSR Practices
A Study of Company?s CSR
performance Index / Social
reporting Practices.
Key areas studied
under each variable
A Corporate Existence of the
Company
Intrinsic CSR approaches
towards employees
Companies strategic belief for
choosing extrinsic CSR areas.
A Study of companies
Performance index on
Karmayog/KLD /ESG etc.
indexes.
B Board of directors and legal
responsibility of the company
Intrinsic CSR approaches
towards stake holders like
dealers/vendors
distribution channels
A Study of companies extrinsic
CSR approaches in the preferred
area of CSR activities.
A Study of companies
investment made through the
indexes for CSR activities.
C Emerging treads or innovative
ways of building good
governance
Intrinsic CSR approaches
towards customers
A Study of community services
and CSR activities carried out by
company/executives.
A Study of social reporting
practices of the company.
D Code of Conduct -Guiding values
and beliefs of the companies
Companies CSR approaches
towards global and
contemporary issues.
Notes :
1) KLD, Kinder Lydenberg Domini
& Co. was the first in developing
social index.
2) ESG – Environment Social and
Governance Index.
E Financial Governance via
Financial Performance and
important financial ratios.
Type and Sources of
Data Collected
Secondary data from financial journals / reports , Companies internal communication magazine, Business magazines, CSR indexes ,
Websites , Research journals/Personal interviews with the Top management executives of the company.
Scale/ Methodology /
Articles referred
Gokarn S. (2009) ?Study of ESG Index? was followed to
understand – Governance parameters.
Gray Robert & Hay (1977) ?Social Responsibility of Business
Managers? and Jadeja J.D(1992) ? Study of CSR Approaches of
selected Industrial Houses of Gujarat.?
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4.3.1 CSR Approaches of M/s Blue Star Ltd. (BSL)
(A) A Study of Corporate Governance of M/s Blue Star Ltd.
(i) Corporate Existence
BSL is in existence with over 65 years and listed in both the Indian stock exchanges
BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) and has a sound
top management leadership who govern the organization.
(ii) Board of Directors – as per Legal and Mandatory Guidelines
BSL has a sound Board of Directors as per the legal guide lines and which they call
?Beyond Legal and Mandatory Guide lines‘ because of the fact that the most of the
directors are active directors and highly educated from the premier engineering or
management institutes of the world and are involved even in the operations of the
company too. Board does have a neutral director as per the guidelines, team headed by
Mr. Ashok M Advani as executive chairman and his brother Mr. Sunil M Advani
following as a vice chairman and managing director. (9)
It is important to note that in the detailed organization chart presented about senior
management of BSL, Corporate Social Responsibility has been represented as a
separate function under the marketing communication department, headed by General
Manager. Corporate Social Responsibility has been clearly defined as a specific
function and which is being handled at the Executive Chairman and President level.
CSR has been integrated with corporate affairs and Corporate Strategy even. Strategic
CSR model (Carroll 1991,Refer Page No. 73,74 of Literature Review Chapter, 3) has
been adopted by the company for their CSR approaches and activities. (10)
157
(iii) Code of Conduct and Practices.
Though BSL does not have ?Code of Conduct‘ as a written document, company does
have clearly spelled out ?corporate purpose‘ (Appendix– XIII), making it clears to all
the stake holders. It indicates that company is concerned about the organizations and
employees behavior towards the business and the society. (11)
Company has a clearly defined guiding values and beliefs (Appendix - XIV) given to
the every employee. Every employee of the company have been given the Guiding
Values and Beliefs of the company in the printed form as well as it has been mandatory
to keep it as ?Screen Saver‘ of their desktop or laptop computer systems. (12)
(iv) Financial Governance
Good Governance leads to the profitability and shareholders wealth maximization, in
case of the Blue Star, investors have trusted them as an ethical organization over 65
years and as a result of good Corporate Governance organization has grown
substantially over a period of time as per enclosed financial snap-shot of last five years
in Table – 4.3
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Financial Performance Snap-Shot
Table – 4.3 (Financial Snap Shot BSL)
Financial Performance March 2005 March
2006
March 2007 March 2008 March 2009 March 2010
Total Income
(Rs.Crore)
930.92 1178.62 1607.41 2233.11 2519.00 2549.00
Operating Profit (Rs.
Crore)
57.85 86.68 116.92 212.60 250.53 264.43
Profit before tax 62.44 69.09 92.60 206.70 238.22 262.66
Net Profit (Rs. Crore) 39.16 48.90 71.18 174.09 180.29 211.49
Operating Margin 6.30% 7.4% 7.3% 9.52% 9.45% 10.3%
Earnings/ share
(Face Value = Rs2)
(Rs.)
21.77 27.19 7.91 19.36 20.04 23.52
Dividend/share (Rs) 10 12 3.0 Na 7 8
(Source : Financial Reports M/s Blue Star Limited)
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Highlights of the Financial Governance
? Audited financial results are declared at the every quarter end, as per the
guidelines and are being analyzed and published time to time. Annual general
meeting with shareholders take place regularly.
? All the data are declared along with analysis and are accessible to the
shareholders time to time.
? Company and the board of directors are sensitive, towards financial performance
(Income has gone up from Rs.930 Crore to Rs. 2549 Crore in last 6 years and
Net profit have gone up to Rs. 211 Crore from Rs. 39.0 Crore)
? Company declares dividends and EPS time to time. (13)
(B) A Study of Intrinsic CSR of M/s Blue Star Ltd.
Intrinsic CSR as defined by various researchers is the ?Company‘s responsibility
towards the direct stake holders of the company like Employee, Dealers, Vendors ,
Share holders etc. who are likely to be affected directly with the companies
performance.‘ This section of the study tries to understand the BSL intrinsic CSR
towards its various stake holder.
(i) Intrinsic CSR Towards Employees
Employee Relations and Development Efforts
Top management of BSL considers shortage of skilled labor as one of the major threat
to the industry and offers following innovative ways to attract the right manpower,
? There are well designed induction and technical orientation programmes. There
is a Corporate Technical Training Organization (located at their Thane Plant)
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which delivers a variety of technical training programmes for the AC&R
business. Engineers who join the Electronics Division get a chance to go abroad
for the training with the principal companies. The Corporate HR runs a menu of
non-technical soft skills training programmes such as Business Communication
Skills and Business Etiquette.
? The Company has many well designed, time tested HR practices such as setting
the performance objectives at the beginning of the year, reviewing employee
performance every year through an annual appraisal system and an annual
compensation review based on market surveys. In addition to a market aligned
salary structure, Blue Star also has a fairly attractive incentive scheme wherein,
the employee gets an incentive based on his department‘s performance coupled
with his own performance rating.
? To have fair and transparent employee relationships BSL also have a 360 degree
feedback for the top executives performance appraisal as well as, HR
department is consistently being evaluated on the ground of the Employee
Satisfaction Index.
? Typically, graduate engineers can look forward to entering real managerial
grades within 4 to 5 years. Once an employee enters the managerial grade, they
are also exposed to a variety of management education programmes including
some programmes at Indian Institute of Management (IIM) - Ahmedabad.
? Blue Star boasts the training programme called the ?Blue Star Way‘, which is
founded on a set of values and beliefs which have evolved over time. These
beliefs have made Blue Star a highly respected, secular organization. In today‘s
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high attrition market, the Company continues to enjoy the privilege of retaining
employees. (approximately less than 15% attrition rate.) (14)
Safety Policy at Works and Manufacturing Philosophy
As a part of Corporate Governance in the company, Company also takes care of
employees in manufacturing and have ?Corporate Safety Policy‘, as shown in the
Appendix - XV. (15)
(ii) Intrinsic CSR with Dealers and Vendors
No company can perform in business well with out the strong channel network in both
consumer durable segment and engineering projects. BSL has wide network dealers in
various product segments. It is important to note that in their project segments they have
conceptualized on ?Brand Exclusivity‘ dealership concept. Dealers are typically called
?Channel Partners‘ or ?Extended Arms‘ in business of BSL. BSL has been successful
enough in retaining its dealer‘s network post liberalization against competition due to its
strong and ethical dealership relationships. According to the company executives
company has achieved competitive advantage or an edge over competition due to the
strong supply chain management. Dealer network has been a ?key growth driver‘ over a
competition to them. BSL offers the following advantages to its dealers as well as
vendors:
? Clearly spelled out dealership agreement and fair terms as well as profit sharing.
BSL dealer enjoys ?Brand Equity‘ of the company.
? Quotas and segmentations of dealers territory in each product category has been
done effectively.
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? Constant support from both branch as well as service department on spear parts
as well as on presales and post sells activities.
? The Company has many well designed; training department gives on job product
and project training. Training centers set up a Pune and Thane plants give them
techno-managerial trainings.
? To have fair and transparent employee relationships BSL also involve best
performing dealers in the decision making process and strategic road maps of
the companies business plan process as well as on various R&D and product
development strategies.
? Professionally designed Dealers Satisfaction Index (DSI) is being evaluated
every year and it has been linked with employee appraisal has been linked with
Dealership Satisfaction Index.
? Elite dealer panel is also offered the other business advantages like they are
exposed to a variety of management education programmes including some
programmes at IIM. Bangalore.
? For a better vendor relationship management, company is equipped with
upgraded software like BAAN (Name of the computer software designing
company following founders name Jan Baan.) and SAP. (System Analysis
Programme). Company has a regional centralized purchase system for factories
and projects department to stream line buying process and to have fair vendor
relationships.
? Company claims to have a long term vendor relationship with vendor and they
do believe that vendors and in time material availability has helped them and is a
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key factor which have given them high edge in achieving their mission of
delivering ?World Class Customer Experience‘.
(iii) Intrinsic CSR towards the Customer
Company is sensitive towards its prime responsibility of ?Maximizing Share Holders‘
fund, as claimed by Friedman in 1970. Customers are key to the success of any
business. Keeping that in mind in their corporate purpose the mission is kept is ?To
deliver world class customer experience.‘ To ensure the and achieving high level of
Customer Relationship Management (CRM) they have taken certain innovative key
steps like on line complaint on websites, toll free customer care numbers, mobile vans,
service centers, trained service dealer network etc. However, it appears that company
does not have any consumers‘ grievance management cell in practice; corporate office
only handles the same.
(C) A Study of Extrinsic CSR of M/s Blue Star Ltd.
It is important to note that the responsibility of the Corporate Social Responsibility and
Corporate Governance have been directly headed by the Executive Chairman and
Managing Director, Mr. Ashok M Advani level. This shows companies commitment to
the social responsibility to the stake holders and the society both.
(i) BSL Corporate Thinking About Extrinsic CSR
BSL Executive Chairman, Ashok M Advani has reported in his speech about his
thinking on BSL CSR initiatives (April 1
st
2008) as follows.
?Since BSL early years more than a six decades ago, we have believed in doing
business in accordance with the basic business principles of our Founder Chairman
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M.T.Advani. These values and practices were first systematically spelt out in the form
of the ?Corporate Philosophy? published 20 years ago.
With the passage of time, the environment changed and so did the company. Five years
ago, we enunciated the ?Values and Beliefs of Blue Star? laying down our
responsibilities to our stake holders. And recently, we put in all together in an integrated
packaged called ?The Blue Star Way? that provides code of conduct for Bluestarites
and Business Associates. Even though our thinking has become more refined and the
language more sophisticated, the essence of M.T. Advani‘s values has remained intact.
He was not satisfied with merely following the laws of the land; he felt it was necessary
to do something extra like helping less privileged people. More than 40 years ago, He
setup Blue Star Education trust to provide financial assistance to children of employees
to acquire higher education and vocational skills that would help them to get decent
jobs. Many of our children have benefited from this assistance and are leading
productive, satisfying lives today. Some years ago, the trustees renamed it to ?Mohan T.
Advani Education Trust‘, in his memory. In the last 15 years, a number of additional
employee welfare trusts have been added to extend the Company‘s welfare activities.
Mr. Ram Malani, who was Chairman before I took over, decided to broaden the
Company‘s social involvement beyond employees, by establishing The Blue Star
Foundation in 1982. The Foundation was created as a public trust, with a corpus
donated by the company for charitable assistance to needy sections of the society. It is
registered under section 80(CC) of the Income Tax Act and donates money for
education, medical assistance, relief of poverty and disaster relief.
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The Company‘s charitable involvement also includes making contributions to match
those of employees for national calamities like the Gujarat earthquake, the Kargil War
and the Tsunami destruction. It is heartening to see that Blue Starites have a strong,
patriotic sense, as does the company.
So far, BSL‘s philanthropic activities have followed a fairly conventional path starting
with employee welfare and moving on to charitable donations for a variety of deserving
causes. This is typical of a number of like-minded Indian business organizations and our
total expenditure has remained relatively modest.
When company was smaller and less profitable, we just could not afford to take up
much more than what we were doing. Happily, the financial constraints are no longer
such a serious problem. BSL‘s rapid growth in recent years has brought the company to
a level where we can consider broadening and enlarging our involvement in social
causes. There are many other challenges facing the society that need to be tackled.
Clearly BSL can and must play a role in this endeavor.
If I elaborate this point, Even though economic growth is enabling making to escape
from the trap of poverty that results, hunger, disease and deprivation, this ?progress? is
extracting a high price from society. Economic development has lead to a number of
new problems there are causing growing concern. These include air and water pollution
that affect our health, the destruction of forests and wildlife with their impact on the
environment, global warming and its catastrophic consequences for future generations,
and depletion of natural resources like oil, leading to high cost and shortages of fuel and
energy.
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Until recently, the CSR was usually, a subject of interest in academic circles and
management schools. The good news in that CSR has emerged in to the public domain
as awareness has spread of the numerous, new social and environmental challenges
facing mankind. These problems are of such great importance that it s no longer enough
for a responsible corporate to focus only on its business while ignoring the wider impact
on the society. It will take the collective participation of Government, Business entities,
NGOs and individuals to tackle the huge challenges that threaten our very existence.
In BSL, we took a decision last year to begin a more active involvement as a good
Corporate Citizen to demonstrate our commitment to CSR. The first step was to choose
from the vast range of possibilities a few specific problem areas to focus on. With
limited available resources, it would be mistake for us to take on too much. We
eventually chose two broad causes :
? Energy conservation
? Environmental Protection.
So far, BSL‘s role in employee welfare and charity has been limited mainly to financial
support. CSR needs much more than money. Managerial and technical involvements are
equally important for achieving tangible results. Each of the chosen areas offers ample
opportunities to use our technical resources and expertise to make a meaningful
difference. And both tie in well with our Corporate Purpose and brand image. This is
why I would like Blue Starites to stand for the actively support our two chosen causes.
The new CSR initiatives will not replace the current philanthropic activities of the
company. These will continue on a bigger scale because deserving humanitarian causes
are always desperately short of funds. We are also getting more active in helping
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villages and people living in the vicinity of our factories. Providing wells and vocational
training for the local people are two simple examples of what can be done that does not
cost much but helps them significantly.
We are now in the process of establishing a small corporate group to drive BSL‘s CSR
programme. They would issue a CSR policy, plan specific projects, monitor
implementation and provide support to projects in the filed.? (16)
Mr. R.G.Devnani , Vice President (Manufacturing). - Blue Star Ltd., has expressed
during the personal interview with researcher that, Corporate Social Responsibility is
very much desirable from the corporate world, because it not only support to the society
and the business but it strengthens country too. While sharing his valuable inputs on
CSR activities of BSL, he mentioned that ?The company has laid down clearly spelled
?Guiding Values and Beliefs of Blue Star? for the employees, to guide them
continuously towards their ethical behavior. On the extrinsic CSR efforts, BSL has been
committed to work towards environment protection. Some efforts made in this direction
are like, company is phasing out non-environment friendly products gradually and
focusing on manufacturing and promoting only the environment friendly products way
ahead of the legal and mandatory guidelines. Mr. Devnani also mentioned that ?BSL
has been continuously improving it‘s products on energy efficiency, for example
recently launched ?Star Rated? products which saves energy by around 15% plus.? On
account of community services he added ?Both company and it‘s employees have taken
lots of initiatives like , helping people and the country in the natural calamities during
the tough time like Kargil War, Gujarat earthquakes, Mumbai train blast through the
donations, Organized Health and T.B. Check up camps at Wada Plant of BSL, Created
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bore wells for the villages near factory as a part of rural development programme,
Education aids to the employees and the society through ?Sahayta foundations‘. BSL
and its management is working towards employee development through training and
education aids, as well as organizing family functions timely, BSL has also supported in
road construction at Dadra Etc.? According to Mr. R.G.Devnani BSL have realized and
started organizing its CSR activities through the senior leadership and management.
BSL has also urged employees and their dealers in extending arms for the community
support and CSR activities. (17)
(ii) CSR Initiatives of BSL :
Blue Star‘s Corporate Social Responsibility (CSR) philosophy is built on three pillars
i.e. Energy conservation; Community development, around its facilities and
Environment protection
(I) Energy Conservation
The Company is highly committed to the cause of protecting the environment. Energy
efficiency of its products remains a corner-stone of its research and development efforts
Air, water and energy management services as well as LEED (Leadership in Energy and
Environmental Design) consultancy for Green Buildings have been part of its business
and practices. The Company has also been contributing in the technical domain in the
use of eco-friendly refrigerants in its products.
Energy Conservation goes beyond using efficient products. A huge amount of energy is
wasted nationally due to sheer ignorance and lack of awareness. Blue Star helps
deserving institutions such as hospitals and colleges to save power by conducting free
walk-through energy audits. The Company has conducted several such audits with
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energy recommendations for Jai Hind College, St Xavier‘s College, Nirmala Niketan
College of Social Work, and National Association for the Blind (NAB), Bombay
Natural History Society (BNHS), JJ School of Architecture and Dilkhush Special
School, amongst others.
(II) Community development around its facilities.
In its efforts towards community development around the Company‘s facilities, the
Company has initiated and sponsored a study programmes in the villages around its
Wada Plant to understand the immediate needs. Vocational training and health emerged
as pressing needs in this underdeveloped region. Blue Star has sponsored the vocational
training courses offered by an NGO, Khewadi Social Welfare Association (KSWA) in
Wada. This centre was set up to support a vocational training initiative for school and
college dropouts to make them employable contributing members of their families and
communities. Regular visits by the Company‘s employees have aided in technical
support to KSWA for conducting the courses.
In addition to the above CSR efforts, the Company sponsors various philanthropic
activities through its Trust, Blue Star Foundation, which has been supporting several
activities in the areas of children education and healthcare apart from relief measures in
national calamities.
Blue Star and its employees firmly believe that, the organizations must look beyond
making profits and should contribute to the development and welfare of the society.
This attitude is most evident in the outreach initiatives organized by Blue Star's
factories. Blue Star factories take active participation in providing temporary shelters
and essentials for the victims of Bhuj earthquake, Company and Employees put equal
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contribution donation to ?Bhuj Earthquake‘ and ?Kargile Relief Funds‘ (Close to Rs. 1.0
Crore.) sponsoring health check-ups and health education programs in local schools.
Their families of the workers and operators are considered an integral part of social
development. Blue Star gives them appropriate advice on personal matters, financial
and investment matters. The family members are also imparted training on diverse
subjects. They are taught English as well.
(III) Environmental Initiatives
Blue Star's factories have been exquisitely landscaped with lawns and flowering plants
dotting the campus. Trees have also been planted on a proactive basis even outside the
Blue Star factories. As a responsible organization, special Effluent Treatment Plants
(ETP) are installed to disposes off the wastes generated. Additionally, all the factories
are designed for rain water harvesting. Blue Star is actively promoting the products
which are fitted with environmental friendly refrigerant gases like R134 A and R 410 A.
(D) A Study of Corporate Social Performance Index of of M/s Blue Star Ltd.
M/s Blue Star Ltd have been sensitive towards the inclusion of their CSR efforts and
activities in their financial reporting since couple of years. They have also reported on
the ?Karmayog CSR Index? about their CSR activities in last two years. Their
comparative ?Karmayog CSR rating? are presented in Table 4.4 and Table 4.5
represents the summary of BSL CSR approaches and practices. (18)
Amount spent on CSR: Blue Star Foundation invest approximately Rs. 1.0 Crore every
year towards the Social responsibility funds since last five years.
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Table 4.4 (Karmayog CSR Index rating BSL)
Sr. No. Year
Turn
Over Rs.
(cr)
Recommended
Minimum CSR Spend-
0.2% of income (Cr)
Actual
CSR
Spend
Net Profit
Rs.(cr)
Sector
Karmayog CSR
Rating
CSR Reach
1
Principal
Areas of CSR
Activity
a b c
1 2005 930 0.78 NA 39 Heavy Engineering
1/5
y
disaster,
education
2 2006 1179 0.98 Approx.
Rs. 1.0
Crore /
Year
49 Heavy Engineering
3 2007 1607 1.42 71 Heavy Engineering
4 2008 2233 3.48 174 Heavy Engineering 1/5 y disaster,
education
environment,
health
4 2009 2519 3.6 180 Heavy Engineering 2/5 y y
1
Karmayog CSR Reach
None
"a": CSR is for employees only
"b": CSR is within the vicinity
"c": CSR is for society at large
"b"& "c" together
Total
Note : " y ": Yes the company conducts this CSR program
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Table 4.5 Summary of CSR Approaches of Blue Star Ltd.
Highlights of Corporate Governance and Ethical Behavior.
? Clearly spelled out ethical guidelines, values and beliefs.
? Regularly following SEBI /RBI guidelines and keeping stake
holders posted about the Cos. Activities.
? Constantly working for shareholders welfare.
? Sound board of director and have been growing over the year
after year and giving fair and reasonable return to shareholders‘
funds.
? Chairman of the company has aim to take the personal and
brand value of company toe take to ?TATA‘ and ?Infosys‘ level
– existence of the company is for over 66 Years.
Intrinsic CSR Approaches
? Taking care of the employees , having professional performance
appraisal system, and performance linked incentive plans.
? Having well constructed training and development center and
consistently empowering employees and dealers through training
and development.
? Having SAP, BAAN kind of software for the better channel and
vendor management.
? Clearly spelled out dealership and policy and vender agreements.
? Having loyal association with the employees and dealers.
Extrinsic CSR Approaches.
? Three main pillars of extrinsic CSR are Energy conservation,
Environment protection and Community development.
? Investing heavily in creating environment friendly products and
being industry leader ,leading the change of technology.
? Through Mohan T. Advani foundation host of community
development activities in the areas near manufacturing plants
are conducted.
? Major examples of donations are, Kargil relief fund, Bhuj earth
quakes, creation of basic facilities at the Villages near Dadra
and Wada plants.
? Conducting ?Energy Audits‘ to promote the ?Energy Savings‘.
? Donation is also made in the area of education.
CSR Reporting / Index.
? CSR concept has been emerging as a Strategic management
concept, however company has started allocating managerial and
professional resources to it, but no structured CSR reporting has
been in practice till the date.
? Karmayog CSR index rates 1 out of 5 based on the variables like
CSR expenditure and supporting society.
? Company invests approx., Rs. 1.0 Crore from the profit towards
CSR causes and community development.
? In it‘s innovative approach towards the extrinsic CSR, Company
has urged a wide dealership network to join hand with the
company and donate Rs.5000 per year for a social cause and
joined BSL- Social initiatives.
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4.3.2 CSR Approaches of M/s Voltas Ltd.
(A) A Study of Corporate Governance of M/s Voltas Ltd.
(i) Corporate Existence
Voltas is a premier engineering solutions providers and HVAC project specialists group
under the ?TATA‘ group of companies. Founded in India in 1954, Company is in
existence with over 60 years and listed in both the Indian stock exchanges BSE
(Bombay Stock Exchange ) and NSE (National Stock Exchange) and has a sound top
management leadership which governs the organization. (19)
(ii) Board of Directors – as per Legal and Mandatory Guidelines
Company has a sound Board of Directors under the leadership of Mr. Ishaat Hussain as
Chairman and Mr. Ashok Soni as Managing Director. (website details till April 2009)
They held board meetings regularly and financial report since 2001 has been inclusive
of summary of the board meetings and annual general meetings of the board as per the
legal requirements. (20)
(iii) Code of Conduct and Practices.
?Whether it be product quality, people, business systems or knowledge or customer
satisfaction, whether it be in contributing to the development of society or protecting the
environment, Voltas sets - and is driven by - new values in all these areas. To institute
excellence at work and to achieve a competitive edge in the marketplace, Voltas has
made the Tata Business Excellence Model (TBEM) a way of life in all activities. TBEM
offers the best way to improve business performance, bringing about a common
platform for people to share their knowledge, follow the best business practices and
pursue excellence across all functions.? claims the Voltas Chairman. (21)
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Companies association with brand TATA has brought in the code of conduct for the
company being clearly spelled out as per the principles laid down for ?TATA? group of
companies. At each level of organization a ?TATA? code of conduct (TCOC) have been
clearly spelled out and company stake holders are expected to adhere to that code of
conduct strictly. Appendix - XVI , gives details about the ?TATA Code of Conduct‘, to
be followed by Voltas employees. It is worth noting that Voltas is the only Indian
organization has ?Code of Conduct‘ as written document in the HVAC industry which
is also available with every employees.
Voltas has developed a „Green Mission” in line with their commitment to
environment as follows
• We minimize wasteful energy consumption in our branded products
• We form representations and alliances with global technology leaders who also
follow a Green path
• We offer -- and encourage the use of -- technologies that purify the air, lower energy
costs, and purify polluted water and industrial/urban effluents. For specifics, read
about Variable Refrigerant Flow, Vapor Absorption Machines, engineered ozone
systems, water management, Vertis Star-Rated ACs, 'green' building projects.
• Finally, we follow the most stringent practices of eco-friendliness, sustainability and
safety in our manufacturing operations. (22)
Ethics At Voltas
The Ethics Counselor, Officers and Ethics Committee promote and facilitate ethical
behavior within the Company, and with all agencies or business partners (including but
not limited to customers and vendors) in their dealings with the Company. The policy
of ethics is followed at all branches, manufacturing units and other locations, overseen
by Location Ethics Counselors. Location-level initiatives include: (23)
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They do follow following activities,
• Periodically conducting both formal and informal sessions on the TCOC
• Inculcating Voltas‘ ethical values among suppliers, vendors and contractors
• Broadening the perception of the TCOC beyond a set of dos and don‘ts
• Encouraging employees to think beyond their normal orientation towards solutions,
using case-studies as a teaching tool for greater understanding and participation. It lays
a strong emphasis on leadership, strategic planning, customer and market focus, process
management, information and analysis.? (24)
Manufacturing values
Voltas' manufacturing plants have all been certified for ISO 9001:2000 by TUV of
India. Voltas plants claims to give the highest priority is given to protection of the
environment, (Appendix XVII, Voltas environment policy). (25)
(iv) Financial Governance
Snap shot of the financial Governance and growth of the company in the last five years
of Voltas Ltd has been displayed here in Table -4.6.
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Financial Performance Snap-Shot
Table – 4.6 (Financial Snap-shot Voltas)
Financial Performance March 2005 March 2006 March 2007 March 2008 March 2009 March 2010
Total Income (Rs.Crore) 1441.14 1904.18 2450.78 3086.17 4070.25 4565.08
Operating Profit (Rs. Crore) 52.62 117.9 155.1 277.6 297.95 455.46
Profit before tax 57.66 91.69 227.9 307.5 367.33 485.64
Net Profit (Rs. Crore) 50.41 70.49 186.08 208.37 254.54 384.56
Operating Margin 3.7% 6.19% 6.33% 9% 13.6% 10%
Earnings/ share
(Face Value = Rs1) (Rs.)
15.2 21.3 5.62 6.32 7.63 11.51
Equity /share (Rs)
Face Value Rs. 1/ Each
22.03 16.27 11.5 72.96 58.48 NA
(Source : Financial Reports M/s Voltas Limited)
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Highlights of the Financial Governance
? Audited financial results are declared every quarter end as per the guidelines
and are being analyzed and published time to time. An annual general meeting
with shareholders takes place regularly.
? All the data are declared along with analysis and are accessible to the
shareholders time to time.
? Company and the board of directors are sensitive, towards financial
performance (Income has gone up from Rs.1441 Crore to Rs. 4565 Crore in
last 6 years and Net profit have gone up to Rs. 52 Crore from Rs. 384.0 Crore)
? Company declares dividends and EPS time to time. (26)
(B) A Study of Intrinsic CSR of M/s Voltas Ltd.
Intrinsic CSR as defined by various researchers is the ?Company‘s responsibility
towards the direct stake holders of the company like Employee, Dealers, Vendors ,
Share holders etc. who are likely to be affected directly with the companies
performance.‘ This section of the study tries to understand the Voltas intrinsic CSR
towards it‘s various stake holder.
(i) Intrinsic CSR Towards Employees :
Voltas Ltd believes in long term employee satisfaction and relationship and that‘s why
tries to increase average employee life of the company year by year. Clearly spelled out
HR policy of Voltas Ltd considers employee as ?an important stake holder? Voltas Ltd
HR policy is as under.
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Voltas HR policy
?The cornerstone of the Voltas Human Resources Management philosophy is the
conviction that the well-being of the company and of its people are interdependent; and
that the company's most valuable assets are its people.? (27)
Voltas commitment to their Human Capital,
(1)To employ the most competent, on the basis of merit
(2)To ensure that every employee is treated with dignity and respect, and in a fair,
consistent and equitable manner
(3) To create a stimulating, enabling and supportive work atmosphere
(4)To aid and encourage employees in realizing their full potential
(5)We recognize that the success of this philosophy depends in a large measure on the
manner in which managers and their team members - at every level - carry out their
duties and obligations to each other and to the company. Without mutual confidence
and loyalty among employees, as well as respect for each other as human beings, our
philosophy will not work.
(6)Managers at all levels are committed to the following principles
(7)Have knowledge of, and accept total responsibility for, the success of the
organization‘s human resources philosophy, policies and procedures, and review them
with team members to ensure their total understanding.
(8)Ensure consistent and fair application of all HR policies.
Employee Relations & Development Efforts
(a) Scientifically designed training programmes like induction training, behavioral
training , technical trainings etc.
(b) Well designed HR policies and in time performance appraisals, incentive based
salaries to ensure fair and transparent employee relationships.
(c) Grants and education scholarships for the children of employees.
(d) Family relationships with in the organization among the employees.
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(ii) Intrinsic CSR with Dealers
Voltas has a dealer network only for the domestic products , the sales and services of
the central airconditioning business has been handled by the company directly, however
they have dealership policy manual, specifying all the terms and conditions clearly and
company is rated high in terms of the relations with the dealers and sub-vendors.
(iii) Intrinsic CSR with Customer
VOLTAS CSR Commitment to Customers:
? Company‘s commitment is to provide a single-window solutions - As a customer,
you're assured of exceptional value in end-to-end solutions integrated and customized
from a one-point source for our all the applications. At Voltas, we believe that our
relationship doesn't end when you buy our products. It's just the beginning.? Says
Chairman of Voltas. (28)
Innovative V- Service Concept of Voltas
V Service – is Voltas after-sales service network. They have designed comprehensive
maintenance contracts at nominal rates to make sure customer‘s Voltas experience is
long-lasting. Customer can avail this service from a number of dealers/franchisees
spread across the country. V- Service Concept is equipped with, Database management,
Service par excellence, Manpower training programs, IT resources and prompt service
vans streamline the service procedure and ensure utmost efficiency, End-to-End
Customer service solutions etc. Voltas does have innovative customer care mechanism
like Website support, Toll free customer service numbers, Service centers spread all
across the country, Call center numbers etc. (29)
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(C) A Study of Extrinsic CSR of M/s Voltas Ltd.
Ratan Tata, ?The Tata group has always believed in returning wealth to the society it
serves. Two-thirds of the equity is Tata Sons, the Tata group‘s promoter company, is
held by philanthropic trusts which have created national institutions in science and
technology, medical research, social studies and the performing arts. The trusts also
provide aid and assistance to NGOs in the areas of education, healthcare and
livelihoods. Tata companies also extend social welfare activities to communities around
their industrial units. The combined development-related expenditure of the Trusts and
the companies amounts to around 2-4 percent of the group‘s net profits.?
Going forward, the group is focusing on new technologies and innovation to drive its
business in India and internationally. The Nano car is one example, as is the Eka
supercomputer (developed by another Tata company), which in 2008 is ranked the
world‘s fourth fastest. The group aims to build a series of world class, world scale
businesses in select sectors. Anchored in India and wedded to its traditional values and
strong ethics, the group is building a multinational business which will achieve growth
through excellence and innovation, while balancing the interests of its shareholders, its
employees and wider society.
Extrinsic CSR is a part of business strategy of the company. It is important to note that
VOLTAS in the Air-conditionining Industry in India spends considerable amount
(average close to 2% of net profit) towards the extrinsic CSR and it is one of the leading
company in the Karmayog CSR index (3/5) and one among the top 100 companies list
of doing extrinsic CSR activities .
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(i) Voltas Thinking About Corporate Sustainability
Ratan Tata, Chairman of TATA group says: ?It is fitting that sustainable value-creation
occurs at Voltas in the spheres of both people and technologies. Today‘s increasing
?Green‘ concerns find an echo in Voltas culture, and in the hearts of Voltas employees.
They are the focus of initiatives which are yielding valuable returns, in an increasing
quantum. Community service too takes a technological turn, in which our ?know-how‘
is used to build entrepreneurial self-reliance within the community.
?The current growth of our economy and the confidence with which we face the world
provide a compelling context in which corporate need to engage with the larger social
and ecological habitat. In the coming years, it will more and more be necessary for
Voltas – as for all corporate – to encourage and generate internal passion for
volunteering and community service, as well as to focus the organization's efforts into
sustainable community benefit.?
Voltas team is blessed with the legacy of the parent Tata Group, of being able to return
benefits to society while serving the community and nation. It's an opportunity to spread
joy and happiness, while enhancing one's competitive advantage as well as corporate
reputation. (30)
(ii) Examples of Voltas Extrinsic Community Services.
? Students of Joseph Cardijn Technical Institute Visit Voltas- Thane Plant
Since 2001, Voltas has partnered with the Joseph Cardijn Technical Institute (JCTI) for
vocational training. As its 'core competency project', Voltas conducts a certificate
182
course in air conditioning in coordination with the Institute. Students of JCTI are also
given opportunity to visit Voltas manufacturing plants. (31)
? Voltas Employees Participates in Mumbai Marathon
Since 2009, Voltas volunteers registered enthusiastically for the dream run in the
Mumbai Marathon, It‘s noteworthy that Mumbai Marathon is organized for the social
goal and causes. (32)
? Voltas Ties up with GMRVF for Community Development Initiative
Voltas is allied with GMR Varalakshmi Foundation (GMRVF), the grass-roots change
agent of GMR Industries, as partners in Corporate Social Responsibility. The specific
initiative undertaken is the introduction of a Certificate course in refrigeration and air
conditioning, at the Centre for Empowerment and Livelihood (CEL) at Shamshabad.
The project brings into play the invaluable experience gained by Voltas volunteers
engaged in our Core Competency Project at Mumbai's Joseph Cardijn Technical
Institute over the past 5 years. (33)
? Voltas Employees Support to NGO and Institutes.
Bangalore Voltas employees visits and support ?Anuraga‘, an institute dedicated to
educating poor children from the slums every year. Jamshedpur Voltas employees
helps 'Bharat Sevashram Sangha'. The organization which provides food, clothes and
relief to the poor, and also free schooling, training and medical aid to the destitute.
Lucknow Voltas employees supports 'Prem Niwas', a haven for the destitute, sick and
dying. Chennai Voltas volunteers visits 'Saraswathi Ammal Charitable Trust', a home
for destitute children and the aged and built a sense of confidence and a system of
values amongst the orphan children, as well as to provide support to them. Delhi
183
Voltas supports the National Association for the Blind with a special interest of
supporting visually impaired children in reading and writing Braille, as well as
managing the activities of daily life. Pune Voltas employees are helping the residential
school for poor and underprivileged children. (34)
? Voltas Partners with BOSCO Boys.
A new chapter began at Bosco Boys‘ Training Institute with the launch of the ?Air
Conditioning and Refrigeration Programme for the Disadvantaged' in 2008. The
programme was inaugurated by Mr. Anil Gole, VP-HR and Head of Corporate
Sustainability and has been supported till the date. (35)
(D) A Study of Corporate Social Performance Index of Voltas Ltd.
Voltas have given freely of their time, their talents and financial support to the society
and for the social concerns with the help of NGO and trusts like, J.N. Tata Endowment
, Impact India , Dorab Tata Trust and Multiple Sclerosis Society of India, Shanti
Avenda Ashram, Worldwide fund for nature etc. kind of organized bodies.
The Company has a well-defined framework for implementing its Community
Development philosophy which has really helped the company to get better rating in the
social indexing and rating like, Karmayog CSR index. The same has been tabulated
below in the Table 4.7 and Table 4.8 summaries the CSR efforts of Voltas Ltd. (36)
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Table 4.7 Voltas Karmayog CSR Rating.
Sr.
No.
Year
Turn
Over Rs.
(cr)
Recommended
Minimum CSR
Spend-0.2% of
income (Cr)
Actual
CSR
Spend
Net
Profit
Rs.(cr)
Sector
Karmayog CSR
Rating
CSR Reach
1
Principal
Areas of CSR
Activity
a b C
1 2005 1441 1
As per the
input given
by
Karmayog ,
Voltas has
been
investing
0.2% of net
profit.
51
Heavy
Engineering 3/5
(Karmyaog Index
got developed
since 2008)
y y y
increasing
voluntarism,
community
development
2 2006 1904 1.4 70 Heavy
Engineering
3 2007 2451 3.72 186 Heavy
Engineering
4 2008 3086 4.16 208 Heavy
Engineering
3/5 y y y Environment
protection, Poverty
eradication,
Community
welfare
5 2009 4070 5.1 255 3/5 y y y
1
Karmayog CSR Reach
None
"a": CSR is for employees only
"b": CSR is within the vicinity
"c": CSR is for society at large
"b"& "c" together
Total
Note : " y ": Yes the company conducts this
CSR program
185
Table 4.8 Summary of CSR Approaches of Voltas Ltd.
Highlights of Corporate Governance and Ethical Behavior.
? Clearly spelled out ?TATA Code of conduct? for ethical
guidelines.
? Regularly following SEBI /RBI guidelines and keeping stake
holders posted about the Cos. Activities.
? Enjoying companies‘ existence and high brand equity of TATA
for over 65 years in India Market.
? Sound board of director and have been growing over the year
after year and giving fair and reasonable return to shareholders‘
funds with a concern for the environment and the society.
? Only the Indian organization has a ?Green Mission? statement.
Intrinsic CSR Approaches
? Taking care of the employees, having professional performance
appraisal system and performance linked incentive plans.
? Having well constructed training and development center and
consistently empowering employees and dealers through training
and development.
? Voltas has dealership network only for their product business,
however company is the process of building dealership network
for the industrial and commercial product business.
? Lake clearly spelled out dealership policy for commercial
business however has a loyal employee and vendor network.
Extrinsic CSR Approaches.
? Two main pillars of extrinsic CSR are the Environment
protection and Community development.
? Investing heavily in promoting environment friendly products.
? Through TATA Foundation invest their CSR funds mainly in
the area of education and development.
? Major examples of donations are, Voltas association with
Joseph Cardijn Technical Institute, rural development near their
Thana, Dadra and Pantnagar plants.
? They constantly support through funds to J.N.Tata Endowment
, Impact , Dorab Tata Trust ,Shanti Avenda Ashram, Worldwide
fund for nature etc.
CSR Reporting / Index.
? CSR is a philanthropic concept and values in Voltas. Their
employees are voluntarily contributing to CSR efforts of the
company; however company needs to allocate managerial and
professional resources to it.
? Only the company which has got 3/5 in Karmayog CSR index.
? Company invests 2% of the profitability for the social cause ever
year as per the desired guidelines.
? In its innovative approach towards the extrinsic CSR, Company
has associated itself with many NGOs to reach out public
welfare.
? 2/3
rd
of the earnings of TATA sons is donated to charitable
activities.
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4.3.3 CSR Approaches of M/s Carrier and Carrier India.
Corporate Social Responsibility at UTC (Parent company of Carrier.)
Louis R. Chenevert - Chairman & Chief Executive Officer (2009)
?At UTC, profitability and responsibility go hand in hand. These values are fully
integrated into the way UTC executes its strategies and serves its customers. For
example, 100 percent of the power for this Cabela‘s store in East Hartford, comes from
four UTC Power fuel cells—a source of energy that is efficient and virtually pollution-
free. Responsibility is more than an environmental agenda. It is how we approach
everything we do, from driving innovation to meeting the needs of our customers and
communities. We continuously strive to deliver ever greater results.? (37)
(A) A Study of Corporate Governance.
(i) Corporate Existence
Carrier Corporation is a subsidiary of United Technologies Corporation, registered
under New York Stock Exchange. (NYSE:UTX). Carrier started its operations in India
with setting up of companies namely Carrier Aircon Limited in 1986, and Carrier
Refrigeration Private Limited in 1992. In October, 2006, Carrier Aircon merged with
Carrier Refrigeration and the name of the merged entity was changed to ?Carrier
Airconditioning & Refrigeration Limited? (Carrier India). (38)
(ii) Board of Directors – as per Legal and Mandatory Guidelines
As of January 1, 2010, UTC‘s Board of Directors has 13 directors, 12 of whom are
independent. Each board committee includes independent directors and four committees
are fully independent. Company has a sound Board of Directors as per the legal guide
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lines of New York Stock Exchange. In 2009, UTC increased its overall Dow Jones
Sustainability Indexes rating by 5 points, retained its AAA rating from Innovate
Strategic Value Advisors (now RiskMetrics Group) and was rated 9.5 out of 10 by
Governance Metrics International. Company do obey the rules and regulation laid by
RBI for the MNCs in India. Carrier files it‘s financial operations report to Asian report
and which is merged in Carrier worlds operation, Consolidated financial report is
presented based on these inputs by their parent company United Technologies
Corporations.
(iii) Carrier Code of Conduct, Corporate Purpose.
Carrier is one among the companies which has nicely drafted ?Code of Conduct‘,
?Corporate Purpose‘ policies. Carrier ?Code of Conduct‘ has been mentioned in
Appendix XVIII.
Corporate Purpose Statement.
?We make the world a better place to live by creating a comfortable, productive and
healthy environment, regardless of climate, and by ensuring the global food supply is
transported and preserved for safe consumption.? (39)
Carrier India Vision:
• To be recognized as the leader in every segment we operate in by:
• Being ?customer focused‘ in everything we do and following ACE diligently
• Delivering ?best in class‘ quality in the product as well as aftermarket service
• Being ?environmentally conscious‘ in areas of energy efficiency and pollution
• Establishing a performance culture that respects human values & team work
• Remaining embedded in our core values of EH&S and ethics (40)
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(iv) Financial Governance
Financial governance is not only to ensure the high profitability alone but also to ensure
the sustainability by taking some tough decision. During the US Subprime crisis,
Carrier too had to take some tough concrete steps to ensure the financial sustainability
during the year 2008-09 with down turn in their major market of US, However their
global present helped them to revive faster and to reach back to growth stage. (41)
In 2009, UTC undertook significant restructuring, cost reduction and portfolio
realignment actions to manage the impact of the severe economic downturn. While
revenues of $52.9 billion and earnings per share of $4.12 declined to 11 percent and 16
percent, respectively, compared to 2008, adjusted segment operating margin increased,
reflecting the benefits of such actions. Cash flow from operations less capital
expenditures substantially exceeded net income attributable to common shareowners.
Businesses in balance UTC‘s balanced portfolio of businesses spans geographies,
markets and customer relationships. Table 4.9 represents the financial snap shot of UTC
of last five years.
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Table 4.9 (Financial Snap-Shot UTC/ Carrier)
Sr.
No.
Criteria 2005 2006 2007 2008 2009 2010
1 Revenue (Dollars in billions) 43.4 48.7 55.8 59.8 52.9 54.32
2 Diluted EPS (Dollars per share ) 3.12 3.71 4.27 4.9 4.12 4.74
3 Cash Flow from operations (Dollars in
billions)
4.3 4.8 5.3 6.2 5.4 5.9
4 R&D Expenditure (Dollars in billions) 1.46 1.53 1.68 1.77 1.59 1.74
5 Dividends paid per share (Dollars per share) 0.88 1.02 1.17 1.35 1.54 1.7
6 Debt to Capital (Percent) 32% 30% 29% 41% 32% 32%
(Unit of the figures have been kept as available in the original documents in US $.)
Notes
(1) 2006 figures were rebased lined to include the acquisition of Chubb, Kldde and Rocketdyne.
(2) 40% of UTC revenue have come from US, 27% from Europe, 18% from Asia pacific and 15% from other parts of the world. 58%
of the total business comes through commercial and industrial business segments.
190
Highlights of the Financial Governance of UTC and Carrier Corp.:
Company responded to the global economic downturn in 2009 with actions that led to
$900 million in cost reductions after a series of growth years from 2005 to 2008 and the
employee reduction from 223100 in 2008 to 206700 in 2009 world wide. However, as a
result of the correct measures and, development of new markets like China and India
Company has been steadily on the path of growth in the year 2010 with a significant
increase in its growth and employee strength has again gone back to 208200. The
company also accelerated its efforts to simplify its business model with greater focus on
higher value, more technology-intensive solutions and services activities. As a matter of
fact, South Asian countries like India and China are helping Carrier in its year long
growth story. Carrier is participating in the growth of China and India as these countries
expand their infrastructure. In 2010, Carrier India has grown close to 20% over last year
and crossed the turn over of close to Rs. 1100 Crore in India in the year 2010 even
under the recession effects. In India, the company was awarded a contract to provide
air-conditioning units for apartments that will house athletes participating in the 2010
Commonwealth Games which gave them huge revenue. Even in tough time due to
correct decision making company has managed growth and profitability along with that
they have not compromised on their CSR activities too. In 2009, Carrier strengthened
its sustainability profile, adding environmental stewardship as a core value and
launching a new sustainability branding campaign. In addition, a team of employees in
Carrier‘s manufacturing facility implemented a new lubrication process that reduced
volatile organic compound emissions by more than 80 percent below the 2006 baseline.
(42)
191
(v) Philosophy of Corporate Governance at Parent Company UTC –USA.
It is important to note that In May 2006, UTC re-launched its Code of Ethics and
expanded its ethics training. Since the re-launch, employees have taken 1,881,000 ethics
classes online. Governance at UTC begins with Code of Ethics created in 1990 and re-
launched in 2006. The ultimate aim of the Corporate Governance was,
?To create value for stakeholders, with an ethical culture and 100 percent compliance
with laws and regulations. We measure our governance performance, in part, through
external feedback.?(43)
UTC has a social reporting in practice and had kept a target of improvement in
Governance index by 3 percentage points over 2009 in 2010. In 2009, the survey
response improved by 5 points, from 82 percent favorable to 87 percent. Challenges in
2010 included the increased complexity of defense contracting rules and effectively
communicating and instilling ethical standards across their global operations. For the
year 2011 Carrier did aim based on it‘s 2010 performance that ; ?Their Managers
comply with the ?UTC Code of Ethics? by 3 percentage points in 2011? (44)
(B) A Study of Intrinsic CSR of Carrier.
Carrier being a global organization has more tough challenge over previous two
companies for managing intrinsic CSR towards, customers ,dealers, vendors, employees
and shareholders due to the fact that country to country expectations, culture and
behavior changes of the people.
192
(i) Intrinsic CSR of Carrier Towards Employees
Carrier is operating in more than 170 countries, has over 29,000 plus employees whose
many faces, languages and talents are linked to perform equal for a universal goal that
is ?To provide customers with superior value?, since that is quite tough task make
Carrier, along with parent company United Technologies Corporation, to invests the
most heavily in the development of workforce with an unequaled commitment to
continued training and education – a commitment. To ensure the same Carrier has well
planned and designed training programmes for the various levels of the employees
starting from induction training to technical trainings. Management of the Carrier
claims the great success of their groundbreaking Employee Scholar Program.
Employee Benefits
Carriers the most popular HR quote is,
?Who knows what tomorrow may bring? Say you marry someone with four kids. Or
maybe you've set lofty financial goals. With Carrier, you're not alone. And you're in
control.?
Carrier offers a wide array of benefits besides salary scheme and incentive in the line of
the industry of the country of operation, including ?UTC Choice health and welfare
plans‘, financial security plans, paid time off, health and wellness services, employee
and family services, Medical Care , Dental Care, Vision Discounts, Personal Travel,
Life Insurance , Accidental Death & Dismemberment , Dependent Life Insurance ,
Retirement Programs, Vacation and Holidays, Employee Scholarship Program etc.
Carrier does have other employee oriented schemes for their development like,
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(a) The Company has HR practices such as setting the performance objectives at the
beginning of the year, reviewing employee performance every year through an annual
appraisal system and an annual compensation review based on market surveys.
(b) Time to time information about happenings in the company and industry through
internal communication, website, and informal meetings.
(c) To have a code of conduct based on the legal requirements of the country in which
they are operating. Details about the code of ethics and conduct which company and it‘s
employee are supposed to adhere are given on the company‘s website and training for
about the same is given to the employee about the same. (45)
Employee Policy Commitment of UTC.
?UTC Code of Ethics is our guide to delivering on these commitments; it outlines
expectations and holds all employees accountable for their actions. - We set aggressive
targets and validate our strong performance through rigorous benchmarking. we
investigate the root cause of each serious injury and any occupational fatality, take
corrective actions and implement safety improvements.” (46)
Milestones on Employee Relations.
(a) UTC claims to have reduced total recordable accident rates and lost workday
incident rates by 47 percent and 63 percent, respectively, since 2006. (b) UTC has 20-
year partnership with INROADS, a nonprofit organization providing career training and
internships for minority youth, and our Employee Scholar Program. (47)
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Highlights of CSR Report 2010 (Employee Relations) .
As stated earlier Carrier / UTC is the only company from the select group which has a
social reporting practice. Table 4.10 (Refer Appendix - XX) presents the goal and
achievement report of the UTC towards the intrinsic CSR towards the employees.
Table 4.10 (CSR Report – Employee Relations - Carrier)
Target for 2010 Achievement in 2010 Target for 2011
Increase overall favorable
responses to the 2009 biennial
employee survey by 3
percentage points.
Exceeded objective with 4%
point increase over 2009.
Increase in overall
favorable response by 3%
over 2010 figures
Eliminate work related serious
injuries and zero death figures
3 Employees lost lives – was
viewed negatively
No accidents or loss of
lives
Reduce global lost workday
incident rate to .17 and
recordable incidents to .64 by
year-end 2010.
Considerable progress was made
in 2009, with a reduction in lost
workday incidents of 31 percent
to .18 and a 23 percent decrease
in recordable to .75.
(48)
(ii) Intrinsic CSR with Dealers and Vendors
Carrier is only the company which has a ?Vendor? or ?Supplier? section on the website.
They have spelled out clearly their commitment to the suppliers and dealers (Refer
Appendix XIX). Suppliers are encouraged to give their feedback or suggestion to the
concern person. This certainly suggest the Carriers sensitivity towards it‘s one of the
most important stake holder and that is supply – chain network. Some other notable
initiatives are as under. (49)
195
Willi?s Carrier Dealers Club ( WCDC)
Carrier India has a distributor plus dealer network of over 600 sales and service dealer
and over 1000 plus distributors and retail dealer network in India. Carrier has
segmented it‘s dealership option in three segments mainly as per their product line
segmentation only they are like , (i) Residential and light commercial segment, (ii)
Building system and Services, (iii) Transportation business unit
Carrier believes, in ?Brand Exclusivity‘ model of multi channel marketing. They have
their exclusive dealers in the all three segments. Carrier India has introduced a concept
of ?Willi‘s Carrier Dealer Club?, where the information and data can be exchanged,
business communications and informal gathering between company and the dealer
network takes place. Dealers are encouraged by the company to give feedbacks
regarding market, product, competition etc. Elite Dealers are also made the part in the
decision making process of the company. Carrier commits to give following benefit to
their dealers:
•Clear transparent policies and „Brand Equity? of the company.
•Quotas and Segmentations of dealers territory in each product category has been done
effectively.
•Constant support from both Branch as well as Service department on spare parts as
well as on presales and post sales activities.
•The Company has many well designed; training department gives on job product and
project training.
•Professionally designed Dealers Satisfaction Index or feed back mechanism.
•Elite dealer panel is also offered the other business advantages like foreign trips,
family welfare, gathering in star rated hotels etc.
It is important to note that during the early nineties Carrier was the first company to
bring the dealership concept in ?Project Management‘ business in India. This was a
great challenge to the local companies which had traditional practice of ?managing
196
every business activities by the company‘. However, Carrier business model of
encouraging dealer network was later date widely accepted since it brought, depth in
reach, speed of delivery of services, and cost reduction to the operations. (50)
CSR Reporting for Vendors and Dealers of UTC & Carrier.
Table 4.11 briefs about EHS, reporting and vendor networking report of the UTC from
its CSR reporting.
Table 4.11 (CSR Reporting – EHS)
Target for 2010 Achievement in 2010 Target for 2011
Ensure that all key suppliers
adhere to UTC‘s EH&S
expectations. In 2007, UTC
established baseline EH&S
targets for a group of its key
suppliers.
All met those requirements in
2010, and UTC added a second
group of new key suppliers to
the program.
Continue to expand the
Supplier EH&S program
and align with the UTC
Supplier Gold program.
We continue to work with our
key suppliers to ensure that
best-in-class supply chain
EH&S and sustainability
requirements are met.
UTC made continuous
improvement and made a large
investment towards
improvement in the network.
UTC claims to have supply chain includes more than 50,000 companies, and in 2010,
they have spent more than $30 billion on procurement. UTC Supplier Gold, established
in 2008, is a program to facilitate, accelerate and recognize superior supplier operational
performance. In 2011, they are expecting to spent more than $930 million with diverse
suppliers, representing 10.4 percent of their domestic spend, up from 9.8 percent in
2008.
197
(iii) Intrinsic CSR Towards the Customer
As discussed in the Industry analysis of the Air-conditioning industry, it is extremely
competitive industry in it‘s all the business segments. No company can sustain in to the
market place without customer relationship management. Competitive rivalry of the
industry is driving all the companies to do ?Some thing more? for their customer
relationship management (CRM). Carrier too is responsible and sensitive towards
achieving high level of Customer Relationship Management (CRM). They have taken
certain key steps like.
(a) Formation of nation wide Service Center and Offices.
(b) Innovative website, informs about dealer network, company offices, toll free service
number, and also educate customer about – designing and engineering factors of air-
conditioning system selection like heat load calculation and other energy consumption
related information about the each products.
(c) Customer Service Number - the all-India telephone number of this new centralized
Customer Service toll free number.
(d) Formation of the National Account Cell for the repeat or key customers and also
formation of Customer Grievance Cell.
(e) Training to the Sales and Service dealers. (51)
198
(C) A Study of Extrinsic CSR of Carrier.
(i) Corporate Thinking About Extrinsic CSR
Zubin Irani (2009) Managing Director – Carrier India, reports, “Carrier‘s growth
and success has been built on a foundation of trust – in the quality of our products and
services, in the dedication of our people, and in the many ways we contribute to the
well-being of our communities. This is directly in line with the corporate philosophy of
Carrier‘s parent company, United Technologies Corporation (UTC). Our commitment
to responsible corporate citizenship infuses every aspect of our business. We
consistently pursue fair and ethical standards, whether delivering products and services
to our customers, forging relationships with industry partners, or fostering the personal
and professional development of our employees. Carrier is committed to work with the
society with our core values, and on going commitment to the corporate world,
environmental and social responsibility. Carrier actively supports the communities
where we live and work through community service and charitable contributions. It is
an essential aspect of our overarching mission to make the world a better place, today
and well into the future. At Carrier, our commitment to making the world a better place
to live extends far beyond creating innovative products that enhance people‘s comfort.
We believe that giving back in support of the communities where we live and do
business – through community service and charitable contributions – is a fundamental
aspect of our business. To us, success is not just measured in units sold or dollars and
cents, but the extent that we can help to make in difference in the world. We actively
work to improve communities by supporting initiatives that enrich and enhance people's
199
lives. We partner with organizations, schools and universities to support programs and
provide financial assistance to those in need.?
We do this by:
?Financially assisting community organizations, where Carrier does business;
mobilizing employees and resources to assist community development, promoting
community event sponsorship. ?
Louis R. Chenevert (2009) - Chairman & Chief Executive Officer – UTC USA.
?We believe that successful businesses improve the human condition. We measure our
results through our social dimension score on the Dow Jones Sustainability Indexes,
which includes our corporate citizenship strategy, stakeholder engagement approach
and contributions to nonprofit institutions. In 2010, we increased our social dimension
score by 4 points. With a strategic focus on the environment, math and science
education, and the arts, UTC contributed $19 million to nonprofit organizations in 2009.
We initiated new strategic programs, including the sponsorship of the Sustainable Cities
Design Academy, a joint effort with the American Architectural Foundation, to partner
with governments and private real estate developers to increase the sustainability of
future projects. UTC also joined the National Corporate Team Program of the American
Cancer Society Relay for Life.?(52)
(ii) Community Services of UTC and Carrier.
Top management at UTC believes that Successful businesses improve the human
condition.? UTC is one of the world‘s organization which measures their social
responsibility performance through results through social dimension score on the Dow
200
Jones Sustainability Indexes
1
, which includes their corporate citizenship strategy,
stakeholder engagement approach and contributions to nonprofit institutions.
1
Launched in 1999, the Dow Jones Sustainability Indexes are the first global indexes
tracking the financial performance of the leading sustainability-driven companies
worldwide
As per Social Report , UTC 2010,
“In 2010, we increased our social dimension score by 4 points. With a strategic focus
on the environment, math and science education, and the arts, UTC contributed $19
million to nonprofit organizations in 2010. Average spent of UTC towards the
charitable activities or community services are close to $ 21.0 million in the last five
years.” Mandyck : Carrier?s vice president for Sustainability & Environmental
Strategies.
Carrier do initiated new strategic programs, including the sponsorship of the Sustainable
Cities Design Academy, a joint effort with the American Architectural Foundation, to
partner with governments and private real estate developers to increase the
sustainability of future projects. UTC also joined the National Corporate Team Program
of the American Cancer Society Relay For Life. Recently company donated close to
USD 2 million to Japan earth quake relief fund.? (53)
Some of the notable examples of their community services or suitable development
efforts are as under.
(a) UTC named to Dow Jones Sustainability Indexes for 11th Consecutive year - 2009
UTC has been named to the 2009-2010 Dow Jones Sustainability Indexes (DJSI).
UTC‘s score rose five points over the 2008 score. The 2009 assessment process
reviewed 2,500 companies along 58 difference criteria including corporate governance,
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risk management, climate change mitigation, and codes of conduct, environmental
health and safety results, supply chain standards, corporate citizenship and human
resource management. In 2009, 317 companies were selected for the DJSI World.
(b) Carrier Towards the Sustainable Development (2010)
Against the backdrop of Earth Day 2010, Carrier Corp. demonstrated its environmental
stewardship and ongoing support of the Sustainable Enterprise Partnership (SEP) with a
donation of $35,000. The SEP, collaboration among Syracuse University‘s Whitman
School of Management, the SUNY College of Environmental Science and Forestry
(SUNY ESF), and the Syracuse Center of Excellence in Environmental and Energy
Systems, This third donation brings Carrier‘s total support of the SEP to more than
$100,000. (54)
(c) Carrier India Won 2009 National Energy Conservation Awards- 2009
Carrier India earned the prestigious National Energy Conservation Award of India for
third consecutive years. Carrier also won first prize in the ?Manufacturers of BEE Star
Labeled Appliances (air conditioner) Sector? (Refer Appendix XXI for the details about
Carrier Awards.)(55)
?We are truly honored that Carrier‘s environmental leadership is being recognized with
such prestigious awards,? said Zubin Irani, managing director, Carrier India. (Dec. 14,
2009). (56)
(d) Carrier Corp. Named U.S. Green Building Council Education Provider
Carrier promoted technical expertise in the industry with the expansion of its
sustainable solutions curriculum and has recently been named a U.S. Green Building
Council Education Provider (USGBC EP). (57)
202
(e) Carrier Corp. Donates to China Disaster Relief (2008)
Carrier Corp.‘s Building Systems and Services Asia division has pledged its support for
the China earthquake relief effort by making a $10,000 donation to the China Red
Cross. In addition, UTC donated $250,000. (58)
(f) Carrier Invested $50 Million in India; New R&D Center for green products.
Carrier invested $50 million (Rs 200 Cr) in India during the last three years to build a
new global research and development (R&D) center which will develop green non
ozone depleting products and technology for local and global market. (59)
(g) ETP Recognized as a Partner in Education (2005)
Carrier built new Training and Development Bridge Program at John Tyler High
School. This vocational program provides a combination of technical training and future
employment opportunities in the field of HVAC to the high school students.(60)
(h) UTC Raises Nearly $650,000 for Asian Disaster Relief ( 2005)
UTC's matching gift program aided victims of the Asian tsunami disaster raised nearly
$650,000. Carrier contributions were close to $100,000. The program, raised more than
$270,000 for the American Red Cross International Response Fund; more than
$205,000 for Habitat for Humanity International's Asia Tsunami Response Fund; and
nearly $160,000 for the AmeriCares Foundation's South Asia Earthquake Relief Fund.
UTC matched 100 percent of employee contributions to the fund. (61)
(i) UTC Donates $50,000 to Pakistan Earthquake Relief. (2005)
UTC has donated $50,000 on behalf of the company and its employees to the
International Federation of the Red Cross/Red Crescent to aid in continuing earthquake
relief efforts in Pakistan and Kashmir. (62)
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(j) Employees Helping Employees Recover from Katrina.
UTC employees generated $550,000 for the Katrina affected people UTC matched with
an equal amount from the company for the relief and rehabilitation work. Over 800
pounds of disaster relief items were collected by Carrier employees. (63)
(k) Home Away from Home (Jul. 15, 2004)
Successful business partnerships are formed and strengthened over time. When these
partners team-up to support a community-based organization, the results can be
powerful. Carrier and McDonald‘s Corporation enjoy a special kind of partnership. Not
only does it revolve around world-class food service equipment, it involves supporting
the Ronald McDonald House Charities (www.rmhc.org). Since 1974 Ronald McDonald
Houses have provided a ?home-away-from-home? for families of seriously ill children
who are receiving treatment at nearby hospitals. there are nearly 240 Ronald McDonald
Houses in 25 countries around the world. These homes, as the name infers, have been
made possible with the generous support of McDonald‘s restaurants and many other
corporate partners. (64)
(iii) Carrier and UTC on Environment Protection and Sustainable Solution.
UTC claims to be committed for measuring and reducing the impact of their operations
and products on the environment. They have set aggressive conservation goals. UTC
partner with organizations such as the World Business Council for Sustainable
Development, the World Resources Institute and the U.S. Environmental Protection
Agency‘s Climate Leaders to understand environmental trends and the best ways to
address them. Below enclosed Table 4.12 brief about the UTC and Carriers attempt
towards the environment protection.
204
UTC?s environmental initiatives and plans 2007-10
Table 4.12 (CSR –Reporting – Environment)
Plan for 2007-10 Status till end 2010 Way ahead for 2011
Reduce greenhouse gas
emissions 3 percent annually
and water consumption 2.5
percent annually from 2007 to
2010.
Achieved the same after great
attempt and commitment for the
two years.
Have to Continue to have
consistent improvement in
the same till 2012 as per
new plans at the same
rate.
Decrease green house gas
emissions by 25% and water
consumption by 25% from the
base line of 2006.
Greenhouse gas emissions
decreased 23 percent, and water
consumption decreased 24
percent from the 2006 baseline.
Continue to identify, fund
and implement energy and
greenhouse gas reduction
projects beyond the $100
million target.
Invest $100 million from 2007
to 2010 in energy conservation
projects. Through year-end
2009,
UTC approved $116 million in
energy conservation projects,
including continued investment
in new co-generation power
plants under construction in
Connecticut at Sikorsky‘s
Stratford and Hamilton
Sundstrand‘s Windsor Locks
facilities.
Will have to implement as
per the plans.
Maintain compliance with
environmental permits. In
2009, UTC conducted 118
independent compliance
auditsof facilities worldwide.
Actions to address risks were
identified and systematically
tracked to closure. UTC
operations that were not
scheduled for independent
audits in 2009 conducted
detailed permit reviews to
validate compliance.
Maintain compliance with
environmental permits.
Prepare to launch both the
next generation of
greenhouse gas, air
emissions, water and
waste reduction targets,
and the expanded set of
goals for facilities,
suppliers and products for
2011 through 2015.
Mandyck Carrier‘s vice president for Sustainability & Environmental Strategies
reported ?Carrier was among the first companies to set energy reduction goals for the
factories in 1988. This led Carrier to be the first company-which has wide global
environmental, health and safety goals in 1997 in the industry too. More recently, from
205
2000 to 2009, Carrier reduced its air emissions by 76 percent and water usage by 52
percent on an absolute basis. Since 2006, we have lowered our greenhouse gas
emissions by 33 percent. ?Environment stewardship‘ is one of the most identified ?core
values? of Carrier. Carrier believes that green products must start at a green company
that demonstrates measurable results in four key areas: products, people, production and
practices. We extend our influence across the value chain to reduce, and where possible
eliminate, negative effects on our environment created by factories, products and
suppliers. For more than 20 years Carrier has led with sustainable solutions to advance
energy efficiency and ozone protection, while minimizing the environmental impact of
its manufacturing operations. For its leadership in ozone protection and energy
efficiency, Carrier has been the recipient of numerous local and national environmental
awards. In 2007, Carrier received the U.S. Environmental Protection Agency's Best-of-
the-Best Stratospheric Ozone Protection award, In 2008, Carrier in the United
Kingdom was awarded the Environmental Pioneer in Cooling Award, In 2009, for the
third consecutive year, the Government of India's Ministry of Power awarded Carrier
India First Prize for the National Energy Conservation ? (65)
Some of the notable steps taken by Carrier‘s CSR approaches for the sustainable
development are mentioned here.
(a) Action Against Ozone Depletion.
During the Montreal Protocol air-conditioning companies were agreed to phase-out the
production and consumption of chlorofluorocarbons (CFCs) and hydro
chlorofluorocarbons (HCFCs) used as refrigerants in air conditioning and refrigeration
systems. Carrier Corp. pioneered the phase-out of CFCs for the air conditioning and
206
refrigeration industry in 1994, two years ahead of U.S. requirements and 16 years
before mandates in developing countries. The Montreal Protocol was signed in 1987. As
agreed in the same the phased-out CFC production was planned for developed countries
in 1996 and developing countries starting in January of 2010. The Protocol also
requires all HCFCs to be phased-out in new systems in 2020 for developed countries
and 2030 for developing countries.
(b) Puron Refrigerant from Carrier Offers Solution to R-22 Phase Out. (2008)
It is necessary to phase out R-22, an ozone depleting refrigerant used in some new air-
conditioning systems for more than four decades. To meet this environmental challenge,
Carrier introduced non-ozone depleting alternative cooling solutions with Puron
refrigerant, which was approved in 1997 by the U.S. Environmental Protection Agency.
AppendixXXI represent the major awards won by the Carrier in environmental
leadership.
(D) A Study of Corporate Social Performance Index of UTC & Carrier Corp Ltd.
Corporate Responsibility from greenhouse gas emissions to community investment,
UTC measures corporate responsibility performance in terms of the global indexes.
CSR progress and performance is being measured using key performance indicators
(KPIs). UTC environmental reporting standards encourage the ongoing analysis and
correction of data. Table 4.13 shows the KPI from the Social Reporting of UTC.
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Table 4.13 - UTC CSR Ratings on Various Targets.
Sr.
No.
Criteria 2005 2006 2007 2008 2009 2010
1 Dow Jones Sustainability Index (Total Score) 70 62 69 72 77 77
2 Government Metrics International
Accountability Ratings (Compared to S&P
500 Companies )
10 10 9.5 9.5 9.5 10
3 UTC Charitable Contributions (Dollars in
Millions)
17.9 20.9 20.4 25.5 19.0 19.0
4 Green House Gases (Million Metric Tons –
Co
2
e
2.03 2.48 2.31 2.17 2.03 1.94
5a Industrial Process Waste Million (lbs) -
Recycled
280 298 257 235 193 186
5b Industrial Process Waste Million (lbs) – Non –
Recycled
48 96 80 75 57 54
5 Total Industrial Waste Produced (lbs) 328 390 337 331 250 241
6 World Wide Water Consumption (Million
Gals.)
2156 2177 2040 1926 1644 1600
7 Elimination of materials of concern (goal
achievement )
NA 38% 44% 53% 51% 50%
8 Lost workday incident rate (Cases/ 100
employees)
0.3 0.49 0.31 0.26 0.18 0.13
9 Energy Efficiency (New Products meeting
goal)
NA NA 75% 65% 73% 64%
Note : 2006 figures were rebased lined to include the acquisition of Chubb, Kldde and Rocketdyne.
208
Carrier confirms that in the given economic conditions of recession world wide in 2009
the results have shown significant reduction in CSR expenditure for them, however they
are committed that once after the financial situation will improve they were reduce the
reductions made in 2009 CSR expenditures.
Table 4.14 presented herewith express the summary of the CSR approaches of Carrier
on defined variables.
209
Table 4.14 Summary of CSR Approaches of Carrier / UTC Ltd.
Highlights of Corporate Governance and Ethical Behavior.
? Carrier Corporation is a subsidiary of United Technologies
Corporation, registered under New York Stock Exchange.
(NYSE:UTX). Carrier India existed since 1986 a part of Carrier
global is $11.4 bn USD organization.
? Both UTC and Carrier has a 9.5 out of 10 rating till year ended
2009 for its Governance rating and it‘s AAA rated company on
Governance at Dow Jones Index.
? Carreir India has been following all the legal guidelines of SEBI
RBI strictly . Both UTC and Carrier did not do well on
financial performance during the year 2008 to 2009 due to
global recession..
Intrinsic CSR Approaches
? Taking care of the employees, having professional performance
appraisal system and performance linked incentive plans.
? Having well constructed training and development centers and
consistently empowering employees and dealers through training
and development.
? Carrier owns a ?Willis Carrier Dealer Club‘ and it‘s the company
has brought dealership concept in Indian HVAC industry for the
industrial and commercial product business.
? Carrier dealership network enjoys part of being Carrier USA too
and have clearly spelled out dealership policy.
? Due to the wide dealership network Carrier operates with a
minimum manpower and capital investment.
Extrinsic CSR Approaches.
? Carrier improved it‘s Social Score by 4 points over it‘s previous
year reporting.
? Has a strategic focus on the environment, math and science
education, and the arts.
? Also works on development of new environmental friendly
technology and energy conservation.
? Carrier India Won National Energy conservation award – 2009
? In 2009 company invested Rs. 200 crore for setting up R&D
center for developing green product at India.
? Carrier‘s noteworthy CSR examples are their work in ?Katrina‘
crisis and earth quakes.
? Carrier has won many global prestigious awards from UK,
India, China for their work on energy conservation.
CSR Reporting / Index.
? Carrier is only the company has a CSR reporting and
professionalism in handling CSR at senior management level.
? Is one among the best CSR practicing company of US.
? UTC contributed $19 million to nonprofit organizations in 2009.
Avg. charitable spent of UTC is $ 21.0 million in the last five
years
? Carrier has brought a strategic tie-up with MacDonald‘s for
business and CSR partnership and fund MacDonald‘s ?Home
away from Home? CSR projects across the globe.
? Is only the company takes take accounts and performance of
CSR activities with pre-decided targets.
? All its plants have aims of reducing water consumption and
green gas emissions by 25% every year over previous year.
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4.3.4 CSR Approaches of M/s ETA.
ETA Engineering Private is an Associate company of ETA ASCON Group of
Companies of Dubai, a multifaceted organization and a leading name in the region
known for its commitments for high standards of service. (66)
(A) A Study of Corporate Governance.
(i) Corporate Existence of ETA
ETA with Annual Turn Over in excess of US $.6 Billion, a part of ETA -ASCON
Group of companies, Dubai. employ over 50,000 employees branches in 21 countries
all over the world since last 32 years. ETA is one of the leading Engineering,
Contracting and Trading Company in the UAE with 51% participation from UAE based
AL Gurair Group of ETA. (67)
(ii) Board of Directors – as per Legal and Mandatory Guidelines
ETA India has been following Indian code of conduct and rules and regulations of
Indian trade policy and has the mandatory and legal board of governance as per
requirements headed by Chairman : Mr. Prithvi Raj Singh Oberoi , Vice-Chairman
Mr. Syed Mohammed Salahuddin as per the financial report of 2009. A sound Board of
Directors as per the legal guide lines of SEBI. Company do obey the rules and
regulation laid by RBI for the MNCs in India..(68)
(iii) Corporate Purpose and Code of Conduct of ETA.
ETA Ascon and ETA India, does not have clearly spelled out Code of Conduct and as
the company officials reported they are in the process of constructing the same. ( it was
also not reported on it‘s website www.eta-engg.com till last viewed on 10
th
June 2011,
211
and it was under construction.) However company has a Mission, Vision, Value
statements and Quality policy in practice which has been shown in Appendix XXII.
(iv) Financial Governance
ETA with Annual Turn Over in excess of US $.3.1 Billion, a part of ETA -ASCON
Group of companies, Dubai employ over 50,000 employees branches in 21 countries all
over the world since last 32 years. ETA is one of the leading Engineering, Contracting
and Trading Company in the UAE with 51% participation from UAE based AL Gurair
Group of ETA, however it was not possible for researcher to get the details about the
same from the local branch office and website , however company has been leading
organization of Dubai stock exchange and have a sound financial back up and
governance and one of the important reason said to have it is because more than 50%
equity of the company is beholden by the promoters.
(B) Intrinsic CSR of ETA .
(i) Intrinsic CSR Towards Employees.
ETA Employee Policy
Mr. Prithvi Raj Singh Oberoi Chairman of the group reports,
?We believe enthusiastic and professionally aggressive employees have laid the
foundation of our success and are our most priceless asset. For us mutual development
of both the company and our staff is high priority. We value our employees and ensure
that they too grow with us and excavate their potentials to the utmost extent.?
212
Employee Benefits
ETA offers a wide array of benefits like welfare plans, financial security plans, paid
time off, health and wellness services, and many more employee and family services.
Besides standard salary package they do offer benefits packages includes: Medical
Care, Life Insurance, Vacation and Holidays etc. ETA does have employee oriented
schemes for their development like,
(i) The Company has HR practices such as setting the performance objectives at the
beginning of the year, reviewing employee performance every year through an annual
appraisal system and an annual compensation review based on market surveys.
(ii) Time to time information about happening in the company and industry through
internal communication, website, and informal meetings.
(ii) Intrinsic CSR Towards Dealers and Vendors
ETA is a worlds leading contracting company and taking high value contracts, certainly
believes that the suppliers are prime support to their project success and have build a
chain of national and international chain of loyal suppliers for meeting their project
requirements. However in India they are in a process of building network and
relationships for the suppliers and distributive network channel but their management is
of strong belief that project business essentially needs a supply chain mechanism and
network and durable sales is out of reach without the support of effective dealer
network. Company is consistently engaged in building their network the kind of one
they have in the Gulf countries and other Asian countries.
213
(iii) Intrinsic CSR Towards Customer
ETA world over has a strong base of loyal customer and they do have the most
sophisticated IT network for managing the customer. However in India they are in the
building process of strong customer base. They have Websites, Service station support,
Toll free numbers and established offices with trained personnel for the service
business. ETA top management strongly believes that ?It is extremely competitive
industry in it‘s all the business segments. No company can sustain in to the market place
without customer relation ship management. Competitive rivalry of the industry is
driving all the companies to do ?Some thing more? for their customer relationship
management (CRM)? ETA has taken service business management with the top priority
with following initiatives.
(i) Formation of nation wide Service Center and Offices.
(ii) Innovative website, informs about dealer network, company offices, toll free service
number, and also educate customer about – designing and engineering factors of air-
conditioning system selection like heat load calculation and other energy consumption
related information about the each products.
(iii) Customer Service Number - the all-India telephone number of this new centralized
Customer Service toll free number.
(C) A Study of Extrinsic CSR of ETA.
ETA undertakes its corporate social responsibility through a variety of effective
programs. Since 1973, the company has been serving the community with its outreach
efforts. This has touched the lives of millions.
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(A) ETA Community support programmers.
Major Approaches and Initiatives
(a) Home for the Homeless
ETA Star supports ?Red Crescent Authority? for ?Home for the Homeless‘ programme
with AED 2 million. (Approx. Rs.20 million).ETA Star and its joint venture partners
donate one per cent of total sales during the Holy month of Ramjan to build homes for
the homeless. The donation value is equivalent to one per cent of the total sales of ETA
Star and its joint venture partners Hircon and Star Giga.
(b) Fundraising Campaign for "Homes for the Homeless"
ETA Star Property is developing over 30 million square feet of premium property in
countries across the Middle East and South-East Asia, including UAE and India. ETA
Star Properties is in its third year of partnership with Habitat for Humanity
International, raising awareness and funding for families in need of a place to call home.
The ETA Star "Homes for the Homeless" Program has impacted the lives of 4,255
people to date and hopes to contribute again this year to continue this great work with
Habitat for Humanity. The proceeds raised during this fundraising campaign will
continue to support our strategic goal of changing the lives of more than 4,000 people
across the Middle East, Africa, India, Pakistan, and Bangladesh. The funds also
designated to programs in Jordan and Egypt. (69)
(c)Mobile Medicare Unit ( Health and Civil Services)
ETA ASCON STAR GROUP Supports Help Age India in a big way. They donated
Mobile Medicare unit in Ramanathapuram district. ETA also donated Rs 21,88,190 to,
Help Age India towards running cost & capital cost for one year for running a Mobile
215
Medicare Unit. ETA signed a MOU with Help Age India to support this newly started
unit at cost of Rs 50,53,350 for three years which includes the cost of the new Mobile
Medicare unit Van. ETA also donated Rs 6,00,000 towards the first installment of
approved donation of Rs 12,00,000 for providing free cataract IOL surgeries to 1000
poor elders in the Ramanathapuram District. (70)
(d) ETA Ascon Star Contributes to Red Cross Society of China.
ETA Ascon Star Group has contributed 1.5 million dirhams to the Red Cross Society of
China for the rehabilitation of Sichuan earthquake victims.
(e) ETA Star International Signs MoU with TERI on Environmental Studies
ETA Star International, member of the Dubai-based $5 billion ETA Ascon Star Group,
has signed a Memorandum of Understanding (MoU) with The Energy Research
Institute (TERI) of India to explore areas of co-operation in an effort towards
sustainable development. The other areas of co-operation include conducting
environmental impact studies, energy audits of commercial, residential and industrial
units, Clean Development Mechanism (CDM) studies and reducing carbon footprint in
the UAE.
(f) Humanatarian Aid for the Homeless at Myanmar by ETA Star
ETA Star Properties donated 5000kgs of rice grains for the benefit of people affected by
Cyclone Nargis in Myanmar. The donation is being made through the World Concern
Nargis Relief Team the world's largest international food assistance organization.
216
(g) Ascon?s Donation and Clean Up Campaign
Ascon donated school desks and undertook maintenance works of the old desks for Al
Hudaybiyah Primary School, Dubai. Ascon in coordination with the Western Region
Municipality organized a clean up campaign in Ghayathi city. (71)
(h) ETA Sustainable Development programmes.
Dubai, 20th October 2008:A large number of employees and senior management
officials of ETA Ascon Star Group gathered on October 18 and 19 in Dubai to express
their solidarity with the UN-supported 'Mission Green Earth Stand Up and Take Action'
campaign. Mr. Syed M. Salahuddin, Managing Director of the Group, reported "Only
such a concerted effort by all would make the pledge meaningful and produce the
desired result after all nature is nature and we must preserve it" (72)
(i) ETA?s Attempt on Improvement of Education
BITS, Pilani - Dubai (BPD) was established in Dubai in September 2000 in response to
the growing needs for Quality Engineering Education among the residents of Middle
East. ETA-Star Education, a wholly owned subsidiary of ETA-Star Holdings aims to
provide contemporary education while keeping high moral, social and pastoral values
by setting up a number of schools following different curricula all over the UAE.
Dubai Institute of Business Management popularly known as DIBM was established in
1999 by ETA Ascon. It was started with a vision to provide world-class training &
development programs to corporate houses of diverse sectors across the globe. (73)
Table 4.15 enclosed here, represents the summary to the CSR approaches adopted by
ETA on various variables of study.
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Table 4.15 Summary of CSR Approaches of ETA I ndia /ETA Ascon/ETA Star Group.
Highlights of Corporate Governance and Ethical Behavior.
? ETA with Annual Turn Over in excess of US $.3.1 Billion, a
part of ETA -ASCON Group of companies, Dubai. Employ
over 50,000 employees branches in 21 countries, registered
under Dubai Stock Exchange.
? ETA in India with seven different companies operates under the
RBI / SEBI guidelines and has been emerging large HVAC and
MEP contracting company.
? Financial data of ETA has not been displayed on the website of
ETA star or ETA Ascon, there are very few shareholders‘ at
India , even Financial report of Indian operations is also
difficult to get from ETA , leads to conclude that company
needs to be professional in the corporate communications.
Intrinsic CSR Approaches
? Taking care of the employees, having professional performance
appraisal system and performance linked incentive plans.
? Company is in its inspection date, regularizing training and
development center and other infrastructural facilities.
? Being late entrant in India market conditions ETA has a major
challenge of developing employee loyalty and still they don‘t
have structured dealership network, relaying more on to the
contractors and employees.
? Company has a sound thinking regarding employee welfare and
vendors‘ development; however they are in a process of
implementation of the same.
Extrinsic CSR Approaches.
? ETA Star supports ?Red Crescent Authority? for ?Home for
the Homeless‘ programme with AED 2 million. (Approx. Rs.20
million).
? ETA Star Properties is in its third year of partnership with
Habitat for Humanity, raising awareness and funding for
families in need of a place to call home.
? ETA Supported last year to Help Age India by donating Rs
21,88,190 towards the running cost & capital cost for one year
for running a Mobile Medicare Unit.
? ETA Donated last year Rs 12,00,000 for providing free cataract
IOL surgeries to 1000 poor elders in the Ramanathapuram
District
CSR Reporting / Index.
? Although ETA does host of social activities across the globe
their structured reporting is not done, they need to regularize the
same with a proper allocation of professional management
executives to CSR support.
? ETA invested $5 billion with The Energy Research Institute
(TERI) of India for energy conservation.
? ETA work towards the environmental products development,
education and community services near about their
manufacturing plants as a part of their global CSR programmes.
? ETA owes educational institutions at India and Dubai and
donates a huge part of their operating profit towards the building
and development of the educational institutes.
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4.4 Synthesis of CSR Approaches of the Selected Companies
„Environment Care? – A Common Accountability Approach
From the analysis of the secondary data gathered and the information received during
the personal interviews of the top and middle management executives of the industry it
clearly appears that the leadership and top management of all the four companies BSL,
Voltas, Carrier and ETA have a similar perception regarding the industry being
accountable for the environment damage and global warming. Considering the same,
they all have agreed that, it is their prime responsibility of the industry to ensure the
environment protection. It is revealed from the study that all the companies invest
heavily in to the Research and Development of the environment friendly technology and
towards the environment protection activities. ?Thinking of discharging the CSR
responsibility towards the society, because industry and beholders believes that they are
responsible towards the society? that leads to relating the practices as per the
?Accountability Approach? of CSR. Thus, we can say that, It appears from the study for
that ?Common‘ concern all the companies and their top management is, ?environment‘
because they find they are accountable for the ?damage‘. Majority of the industry CSR
investment is made towards the same by all the companies, so we can say that the all the
companies CSR approach is ?Accountability Approach‘ for the common cause of
?Environment Protection‘.
(A) CSR Approach of Blue Star Limited.
Blue Star is a family firm with equity holding of share holder's fund. Thinking
regarding CSR had started long back, when the founder Mohan T. Advani started
feeling and believing that the organizations should be responsible for the society and
219
people around the society. Trusteeship Approach of CSR believes that, ?Businessman
should act as a trustee of public fund and besides maximizing profits the societal
concerns also should be addressed by the trustees of the fund.? However, prime
objective of the business is to earn profit but being a trustee of the public fund some
contribution should also be made towards the development of the society. BSL CSR
history guides us, that the leadership has a clear understanding about their profit
maximizing role, and besides that, they are concerned for the society but by being a
trustees of the public fund, without deviating from the main purpose of the business.?
Leaders of the organization acts as a responsible trustees of the companies funds and
towards the society - thus we can say that the companies approach towards the CSR is
'Trusteeship Approach' where trustees try to keep the balance between Social Cause and
Profit making.
(B) CSR Approach of Voltas Limited.
Voltas is a TATA group companies and TATA group itself has been working hard to
build ethical brand - TATA, which has clearly defined ?TATA code of conduct‘ and
guidelines for Voltas executives for 'Do' and 'Don't of the business. So besides being
family firm and adopting 'Trusteeship' CSR approach it is clearly visible that Voltas
executives does have element of ?Strategic CSR Approach' in their CSR policy making
and their thinking. Strategic Approach of CSR, includes ?Inclusiveness of business and
Social actions? of the company. Voltas leaders have been attempting continuously to up
bring and build ?TATA‘ as an ethical brand which in turn helps the company in to the
business too. CSR is an important strategic tool for building ethical brand for ?TATA‘
group of companies so as for ?Voltas‘. However the firm is a family firm with a priority
220
of ?increasing shareholders‘ fund , and making profit and top management executives
firmly believes that they act as a trustees of the share holders‘ fund , which means that
their approach is a dual ?strategic CSR approach‘ as well as there is an element of
?Trustee Ship Approach‘ in their CSR strategies.
(C) CSR Approach of Carrier (UTC) -USA
Carrier and UTC is the global organization with an organized CSR department and is
only the company in the industry having CSR reporting in a specified targets like,
?Green gas emission reduction‘ , ?water utility reduction‘ , ?accident rate minimization‘
, ?customer satisfaction rate improvement‘ etc. The CSR targets are reviewed as
professionally as financial or commercial performance of the organization. CSR is
headed at 'Strategic' level and it is integrated as a part of business strategy formulation
and implementation. It is clearly visible that the CSR approach is a 'Strategic CSR'
Approach of the company which is aiming to build ?Sustainable Development‘ and
?Sustainable Brand‘.
(C) CSR Approach of ETA -UAE
Global organization ETA in India is in its introduction stage and is quite unclear about
discharging the CSR. Their main focus is on health and education and their leadership is
investing most of their CSR funds around their factory locations - they consider
themselves accountable for their social behavior and analysis shows that, their CSR
approach is more of an ' Accountability Approach' model of CSR. World over it is
viewed that the company is creating the ?home‘ for homeless and health since the
company‘s main business is the construction and infrastructure development.
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BLUE STAR LIMITED - (Trusteeship Approach)
In BSL Leaders of the organization thinks and acts as a responsible
trustees of the companies funds and towards the society - and
creating a balance between 'Profit' and 'Social Cause' thus we can say
that the companies approach towards the CSR is 'Trustee ship
Approach'
VOLTAS LIMITED
(Trusteeship and Strategic CSR Approach)
Voltas is a TATA group companies and TATA group itself has been
wokring hard to build ethical brand - TATA, which has clear guidlines
for Voltas executives for 'Do' and 'Don't. So besides being family
firm and adopting 'Trustee Ship' CSR apporach it is clearly visible that
VOLTAS executives does have element of 'Strategic CSR Approach' in
their CSR policy making and their thinking.
CARRIER (UTC) -USA
(Strategic CSR Approach)
Carrier and UTC is the global organization with an organized CSR
department and is only the company in the industry having CSR
reporting with a specific format. CSR is headed at 'Strategic' level and
is an important element of business strategy formulation and
implemetation. It's clearly visible their CSR approach is a 'Startegic
CSR' Approach.
ETA - UAE
(Public and Accountability Approach)
ETA in India has invested more of it's CSR funds near about
manufacturing plants being 'accountable to the society' besides they
have been creating facilities for 'health' and 'homes' and 'education'
for the stake holder and society is an example of 'Public Approach'
Their leadership consider themselves accountable for their social
behavior.
A common 'Accountable Approach by
all the companies (BSL,Voltas,Carrier
and ETA ) leadership towards the
'Environment Care' and 'Pollution
Control'
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4.5 Conclusion
It has been noted while studying the CSR approaches of the selected companies that the
companies employees and the management believes in the discharging CSR not only
towards the employees and other important stakeholders of the business, but towards
the whole society too. They are clear in the perception that helping society helps
business too. All the companies have identified different areas of the extrinsic CSR,
however all the companies have been working hard and investing a huge time and other
resources on the primary issue of environmental friendly technology. The other
community services areas are mainly education, health and rural development. It was
interesting to note that global companies have international standards of the social
reporting which national companies must adopt for the betterment of the business and
the society.
223
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224
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225
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226
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doc_443959203.pdf
In India Air-conditioning industry is approximately around 65 years plus old. Earlier
most of the air-conditioning equipments were assembled and sold. (till mid 1950s.)
Government foreign direct investment (FDI) regulation policies protected the Indian
companies till 1990. Very few organized players like M/s Blue Star Ltd, M/s Voltas ltd. were in existence in the total product range and players like M/s Amtrex Ltd , and others in the small airconditioners segment.
138
Chapter 4
Overview of Air-conditioning Industry and CSR Approaches of Selected
Companies of Air-conditioning Industry .
4.6 Introduction of Air-Conditioning Industry
4.6.1 Historic Perspective of Air-conditioning Industry
4.6.2 Air-conditioning Industry in India
4.6.3 Air-Conditioning Industry Terminology
4.6.4 Air-Conditioning Industry Product Mix
4.6.5 Market Size and Segment Analysis
4.6.6 Competition Analysis Based on Product Segmentation
4.7 Introduction of the Selected Air-conditioning Industry Companies of India .
4.7.1 Introduction of M/s Blue Star Ltd
4.7.2 Introduction of M/s Voltas Ltd
4.7.3 Introduction of M/s Carrier Aircon India Pvt. Ltd
4.7.4 Introduction of M/s ETA Engg. India Pvt. Ltd
4.8 A Study of CSR Activities and Approaches of the Selected Companies
4.8.1 A Study of CSR Approaches of M/s Blue Star Ltd
4.8.2 A Study of CSR Approaches of M/s Voltas Ltd
4.8.3 A Study of CSR Approaches of M/s Carrier Aircon India Pvt Ltd
4.8.4 A Study of CSR Approaches of M/s ETA Engg. India Pvt Ltd
4.9 Synthesis of CSR Approaches of Selected Companies – Diagrammatic View.
4.10 Conclusion
------------------------------------------------------------------------------------------------------------
139
Chapter 4
Overview of Air-conditioning Industry and CSR Approaches of Selected
Companies of Air-conditioning Industry .
______________________________________________________________________
4.1 I ntroduction of Air-Conditioning Industry
In the ?hot‘ climate country like India, the common meaning or conventional
understanding of the ?Air-conditioning‘ is ?Cooling of the air‘. However Air-
conditioning as per the technical definition is,
“Process of cooling or heating, cleaning, humidifying or dehumidifying air &
distributing the air at proper velocity to achieve desired inside conditions. Air
conditioner equipment power in the U.S. is often described in terms of "tons of
refrigeration". A "ton of refrigeration" is approximately equal to the cooling power of
one short ton (2000 pounds or 907 kilograms) of ice melting in a 24-hour period. The
value is defined as 12,000 BTU per hour, or 3517 watts. Residential central air systems
are usually from 1 to 5 tons (3 to 20 kilowatts (kW)) in capacity.”(1)
Today air-conditioning has become a ?need‘ of modern day life in contrast to its earlier
perception as ?luxury‘ 6-8 years back which is almost a ?necessity‘ now. That has give a
boost to the industry to reach Rs.10,000 Crore mark by the end of the year 2010, and is
expected to grow at Rs.38,000 Crore by the end of 2013. (2) ( Financial Report 2010 :
Blue Star Limited).
In India Air-conditioning industry is approximately around 65 years plus old. Earlier
most of the air-conditioning equipments were assembled and sold. (till mid 1950s.)
Government foreign direct investment (FDI) regulation policies protected the Indian
companies till 1990. Very few organized players like M/s Blue Star Ltd, M/s Voltas ltd.
140
were in existence in the total product range and players like M/s Amtrex Ltd , and
others in the small airconditioners segment.
4.1.1 Historic Perspective
Mr. Willis Haviland Carrier graduated from Cornell University with a Masters in
Engineering, in 1902 developed the first air (temperature and humidity) conditioning
machine. One Brooklyn printing plant owner was troubled due to improper humidity
and heat. Fluctuations in heat and humidity in his plant had caused the dimensions of
the printing paper to keep altering slightly, was creating a misalignment of the colored
inks. The new air conditioning machine created a stable environment and aligned four-
color printing became possible. Mr.W.H.Carrier who is known as ?Father of Air-
conditioning‘ developed a formula for optimizing the application of forced draft fans,
developed ratings of pipe coil heaters & set up a research laboratory. He engineered &
installed the first year-round air-conditioning system, providing for the four major
functions of heating, cooling, humidifying & dehumidifying.
4.1.2 Air-Conditioning Industry in India.
In India Air-conditioning industry is approximately around 65 years plus old. Earlier
most of the air-conditioning equipments were assembled & sold. (Till mid of 1950s.)
Government Foreign Direct Investment (FDI) regulation policies protected the Indian
companies till 1990. Very few organized players like M/s Blue Star Ltd , M/s Voltas
ltd. were in existence in the total product range and players like M/s Amtrex Ltd , and
others in the small airconditioners segment. However post 1992 , ( post liberalization
policies), new players from the global world entered in to the India market, either on
141
their own or with a collaborative partnership business models. Mainly among them are
like M/s Carrier Aircon Ltd , M/s York Ltd , M/s Emerson Climate Technologies etc.
from USA. M/s Sanyo , M/s Toshiba , M/s Daikin and M/s Hitachi ltd are from Japan.
M/s LG Electronics and M/s Samsung Ltd are leading global players from Korea.
Other domestic players moving aggressively are like M/s Videocon Ltd , M/s Godrej
Ltd.
At present in the country over 10 companies are competing Indian AC markets in
different segments. Companies have formulated collaborative business models in
various segments to ensure wide range of products in the various product segments, or
service partnership models have been adopted to enrich services, or collaborations have
been in place for strategic tie ups in the area of designing and engineering capabilities
and to achieve various economics of scale benefits. (3)
4.1.3 AC I ndustry Terminology.
(A) Airconditioning „Ton? ( TR) :
Capacities of the airconditioners or airconditioning systems are measured in the air-
conditioning ?Ton‘ (TR). TR stands for Tones of Refrigeration. Generally product
capacity varies from 0.5 TR to 1200 TR or plus. Domestic air-conditioners of smaller
capacity units vary from 0.5 to 5.0 TR capacities , Air-conditioning systems for light
Commercial projects varies from 5.0 TR to 500 TR capacities and Air-conditioning
systems for industrial projects varies from 200 TR to 1000 TR plus.
142
(B) „High Side? and „Low Side? of the Project:
Airconditioning system projects generally used to have two important dimensions. (a)
Supply of main airconditioning equipment from the manufacturer, which is know as
?High Side? of the project in the industry terminology while (b) The other associated
work installation of the equipments, water or refrigerant piping work ,sheet metal duct
work for the air transport etc. are known as ?Low Side? work as per the industry
terminology.
4.1.4 Air-conditioning Industry Product Mix
Air-conditioning industry contains mainly a product mix as per enclosed a product mix
table below as per Table 4.1
Table 4.1 Product Segmentation of HVAC industry
Central Airconditioning
? Screw Chillers
? Scroll Chillers
? Double Skin Air Handling Units
? Fan Coil Units
? Packaged ACs & Ducted Splits
? Long Distance Piping Packaged ACs
Room Airconditioners
? Window Airconditioners
? Split Airconditioners
? Cassette Airconditioners
? Verticool Split Acs
? Concealed Split Acs
Commercial Refrigeration
? Deep Freezers
? Ice Machines
? Water Coolers
? Flexi Water Coolers
? Bottle Coolers
? Milk Coolers
? Bottled Water Dispensers
? Supermarket Display
Cold Storages
? Modular Cold Rooms
? Refrigeration Units
? PUF Insulated Panels
? Ripening Chambers
Specialty Cooling Products
? Process Chillers
? Telepacs
? Precision Airconditioners
? Precision Climate Seed Storages
? Bulk Milk Coolers
? Mortuary Chambers
Transport Cooling
? Bus Air conditioning
? Cold storage vehicles.
? Ship and Air-craft air-conditioning
systems
Special Applications
143
Every company offers their own specialty and technology expertise in various product
combinations. How ever selected companies here operates in each product
segmentation and they mainly have solution for the various types of needs and
customers.
4.1.5 Market Size and Segment Analysis
In 2007-08 the estimated market size is close to Rs. 9000 Crore (Source : Financial
Reports of leading player like M/s Blue Star Ltd and M/s Voltas Ltd.). Of this, the
market for central and Industrial air-conditioning was around Rs. 5000 Crores and the
market for the domestic airconditioners like window airconditioners and split
airconditioners was around Rs.4000 Crore. (Diagaram.4.1) Industry has reported high
growth over last few years due to the growth in infrastructure, power, service industry
IT industry etc. in Indian Market. Market has been estimated by leading Industry
players and business analyst to reach around Rs.38000 Crore by 2013. in the next three
years time in India.
Diagram 4.1: Overall Market Size of the Air-conditioning Industry in India.
(Source: Financial Report, M/s Blue Star Ltd- 2009.)
5000
4000
Market size FY 2007-08
(Rs. In Crores)
Central
Airconditioning
Room
Airconditioners
144
4.1.6 Competition Analysis Based on Product Segmentation.
Air-conditioning has two major segments: Room Air-conditioning (RAC) & Central
Air-conditioning (CAC).
Room air-conditioning typically signifies air-conditioning for domestic & light
commercial applications wherein each room is air-conditioned by separate small AC
unit. The size of such airconditioners used to be 0.5 Tr to 5.0 Tr.
Commercial and Central air-conditioning is air-conditioning of bigger & multiple areas
with controls at single point. CAC is further branched product wise: Direct expansion
(Dx) systems & Chiller Systems. Dx systems include PAC (Packaged & Ductable Split
systems) & VRF (Variable Refrigerant Flow) systems. (These are the systems normally
used for the commercial air-conditioning projects.) Chillers make use of refrigerant &
water to air-condition the areas.
Diagram 4.2: represents the data of various companies present in the Room
Airconditioners Markets and their relative position in terms of the number of product
unit sold. Data represents that the total market of India was 2220500 units and Korean
giant of consumer durable M/s L.G. Electronics clearly dominated in the market with
600000 units by keeping it‘s next rival and a Indian brand M/s Voltas with a sale of
nearly 325000 units. Others small players in RAC market include Daikin, Fujitsu
General, Fedders International, Kenstar, TCL etc.
145
(I) Room Air Conditioners (RAC) Market and Trend.
Diagram 4.2 : Competitor Analysis for RAC (Indian Market) for FY 2007-08
(Source: JARN, Japan Air Conditioning, Heating and Refrigeration News, 2008)
Diagram 4.3 : RAC Market Growth Trend for 3 years in Indian Market.
(Source: JARN, Japan Air Conditioning, Heating and Refrigeration News, 2006, 2007 & 2008)
Diagram 4.3 (above) clearly shows how the market for RACs have grown by leaps and
bound to grow because of the hot India Climate and improved net disposable income of
an individual. In last 3 years. The market size which was 150000 units in FY 2005-06
has grown to 2220000 units by end of FY 2007-08.
LG, 600000
Voltas, 325000
Samsung, 300000
Whirlpool, 10000
0 Videocon, 120000
Onida, 165000
Blue Star, 145000
Godrej , 100000
Hitachi, 105000
Carrier, 48000
Others, 212500
RAC Market Share 2007-08
LG
Voltas
Samsung
Whirlpool
Videocon
Onida
Blue Star
Godrej
1500000
1850000
2220000
0
500000
1000000
1500000
2000000
2500000
2005-06 2006-07 2007-08
Growth of RAC Market over last 3 years in
No. of units
146
(II) Packaged Air Conditioners PAC - (Central Air Conditioning Systems):
PACs quality, project execution capabilities & after sales service support plays a major
role in decision making.
Diagram 4.4: Commercial Air-conditioning system (PAC) market growth rate trend in 3 years
in Indian Market. (Source: JARN, Japan Air Conditioning, Heating and Refrigeration News,
May 2006, 2007 & 2008)
The Diagram 4.4 below shows the tread of PAC market of 3 years. It is noteworthy that
out of 8-9 players top three brands M/s Blue Star, M/s Carrier & M/s Voltas together
serve around 70-80% of the market. PAC market has also grown with similar rates as
RAC market, though the market size of PAC is smaller than RAC. (4)
4.2 I ntroduction of the Selected Companies of Air-conditioning I ndustry
For the study purpose four of the leading air-conditioning companies have been
selected.
(1) M/s Blue Star Limited (Indian Multinational Company.)
(2) M/s Voltas Limited (Indian Multinational Company.)
(3) M/s Carrier Airconditioning & Refrigeration Limited (USA based global co.)
(4) ETA Engineering Pvt. Limited (UAE based global Co.)
395000
488000
631000
0
200000
400000
600000
800000
2005-06 2006-07 2007-08
Growth of PAC Market over last 3 years
in TR capacity
147
All the four companies selected for the study have a commonality that they have been
present in India and they are present in all the market and product segments of the
Industry. M/s Blue Star Ltd, and M/s Carrier Aircon India Pvt Ltd. are the companies
present in the market only with air-conditioning and refrigeration products, while incase
of M/s Voltas and M/s ETA, although they have other product or project lines, are
popularly known as air-conditioning companies only. Other dominant players like M/s
Samsung, M/s LG Electronics, and M/s Hitachi Air-Conditioners are some of the other
known brand and examples of the industry. However they are well-known consumer
durable brands (mainly present in only room domestic (room air-conditioners) or water
cooler and deep freezer kind of product segments only.) And majority of them are not
present in many of the high ended product segments of air-conditioning industry. These
companies are basically consumer durable organizations with long product lines and
depths which in turn makes them very small contributor to the air-conditioning industry.
4.2.1 I ntroduction of M/s Blue Star Ltd (BSL, hereafter)
(A) Company Profile
M/s Blue Star Ltd. is India's leading central air-conditioning company with an annual
turnover of Rs.2557 crores, ( Year ended, March,2010) a network of 29 offices, 5
manufacturing facilities, 700 dealers and around 2000 plus employees. (Source :
Company website : www.bluestarindia.com)
It fulfils the air-conditioning needs of a large number of corporate and commercial
customers and has also established leadership in the field of commercial refrigeration
equipment ranging from water coolers to cold storages. The Company has also started
148
offering Electrical Contracting and Plumbing and Fire Fighting Services. BSL's other
businesses include marketing and maintenance of hi-tech professional electronic and
industrial products, however it contributes a very small amount to the BSL turnover.
The Company has manufacturing facilities at Thane, Dadra, Bharuch, Himachal and
Wada. Company has a three group of companies named as (a) Blue Star Infotech (b)
Blue Star Design & Engineering (c) Blue Star M & E Engineering. Blue Star primarily
focuses on the corporate and commercial markets. These include institutional, industrial
and government organizations as well as commercial establishments such as
showrooms, restaurants, banks, hospitals, theatres, shopping malls and boutiques. BSL
promotes after-sales service as a business, by offering several value added services in
the areas of upgrades and enhancements, air management, water management, energy
management and LEED certification consultancy for Green Buildings.
(B) Company History
Blue Star was founded in 1943, by Mohan T Advani, an entrepreneur. The Company
began as a modest 3-member team engaged in reconditioning of air conditioners and
refrigerators. Blue Star then ventured into the manufacture of ice candy machines and
bottle coolers and also began the design and execution of central air-conditioning
projects. In 1949 it became Blue Star Engineering Company Private Limited. Employee
strength crossed the 1000 mark and the company went public in 1969 to become Blue
Star Limited, as it continues to be called today. In 1984, Ashok M Advani and Suneel
M Advani, the sons of Mohan T Advani, and the present Executive Chairman and
149
Chairman took over the operations of the company with a vision of, "To deliver a
world-class customer experience" (5)
4.2.2 I ntroduction of M/s Voltas Ltd (Voltas, hereafter)
(A) Company Profile
Voltas is one of the world's premier engineering solutions providers and project
specialists. The company is one among high brand value and ?TATA‘ group of
company. M/s Voltas Ltd. is India's leading central air-conditioning company with an
annual turnover of Rs. 4830 crores, ( Year Ended March, 2010) a network of offices all
India and 3 manufacturing facilities, and around 3000 employees. (Source: Company
website: www.voltas.com). Voltas offers engineering solutions for a wide spectrum of
industries in areas such as heating, ventilation and air conditioning, refrigeration,
electro-mechanical projects, textile machinery, mining and construction equipment,
materials handling equipment, water management & treatment, cold chain solutions,
building management systems, and indoor air quality. Company also undertakes
electrical power projects environmental and water pollution control, pumping stations
and water supply, and water and waste water treatment projects. Company has
manufacturing units at Thane, Dadra and Pantnagar.
(B) Company History
Voltas is another largest project management and airconditioning company under the
flagship of the ?TATA? group, founded in India in the year 1954. Since 1954 company
has been growing financially and has been a strong and ethical brand name and one of
the important feathers of ?TATA? group of companies in India. (6)
150
4.2.3 I ntroduction to Carrier Airconditioning & Refrigeration Limited
(Carrier, hereafter)
(A) Company Profile
Carrier India is a part of Carrier USA, which is in turn representing the United
Technologies Corporation, USA. UTC is global player with year 2010 revenue of USD
$55 billion. The UTC group operates in aerospace & building systems with companies
like Carrier (air-conditioning), Otis (Elevators), Pratt & Whitney (Jet- engines),
Sikorsky (Helicopters), UTC Fire & Security (Chubb & Kidde), Hamilton Sundstrand
and Power. Diagram 4.5 shows the over all business contribution and performance of
UTC and it‘s various business units world wide.
Diagram :4.5 Business Units Vise Revenue for UTC-2010
Carrier USA started its operations in India with setting up of companies namely Carrier
Aircon Limited in 1986, and Carrier Refrigeration Private Limited in 1992. In October,
2006, Carrier Aircon merged with Carrier Refrigeration and the name of the merged
151
entity was changed to ?Carrier Airconditioning & Refrigeration Limited? (Carrier
India).
Carrier in India
In India Carrier is present since 1994 with a manufacturing plant at Noida and
employment of More than 700 employees. Company has a factory and ware house
besides Carrier owned total line outlets and sales and service offices across the nation.
Carrier sales couple of brands in the country Carrier and Toshiba (residential)
Carrier India pioneered HVAC dealership concept in the country. The Company has a
network of over 590 sales and service dealers and 1000 distributors and retailers. One of
the strength of the company is their distribution and dealership network. Carrier Air-
conditioning and Refrigeration Ltd. too like other Indian industry giants like M/s Voltas
and M/s Blue Star Ltd is present and focusing mainly on the corporate and commercial
markets, as well as industrial and government markets, with a turn over of close to Rs.
1000 Crore (year end 2010) in India. It is also important to note that Carrier is also
heavily focusing and one of the most recognized brands in domestic room air
conditioners and split air conditioner business. Carrier has a unique segment of the all
four companies selected here is the ?auto and transportation? segment in their
refrigeration products category.
(B) Company History
Founded in 1915 by Dr. Willis Carrier, the inventor of modern air-conditioning, Carrier
has developed into being the world‘s largest provider of air-conditioning, heating and
commercial refrigeration systems (HVACR) with operations in more than 170
countries, employing approximately 29,149 people worldwide and revenues of $11.4
152
Billion in 2010 with an operating profit of $ 1.1 Billion. History of M/s Carrier is of
over close to 100 years with many technological alliances and collaborations, however
the most noteworthy collaborations is the Company‘s tie up with world renowned
technology leaders and Japanese major ?Toshiba‘ for their latest upgraded technology of
Variable Refrigerant Volume (VRV) systems.(7)
4.2.4 I ntroduction to ETA Engineering Pvt. Ltd. ( ETA , hereafter)
(A) Company History
ETA in India is a subsidiary of ETA Ascon. In 1973, B.S. Abdul Rahman, a Hong Kong
based Indian businessman, and UAE based entrepreneur Al Ghurairs started the
organization ETA ASCON. Al Ghurairs was traditionally pearl merchants and real
estate owners and a leading business family in Dubai, they realized the potential of
such a venture in the emerging Middle Eastern markets which was then on the verge of
massive growth in its own oil wealth. That gave a birth to a partnership firm Associated
Constructions & Investments LLC (Ascon) now known as ETA Ascon. (8)
(B) Company Profile
ETA Engg.Pvt Ltd. (ETA) in India was started 1994, ETA Engineering undertakes
HVAC projects, Electro-mechanical projects & services (EMPS) and Mechanical,
Electrical and Plumbing (MEP) work including BMS, Internal Electrification and Sub-
station Works meeting International Standards. ETA Engineering has two
manufacturing plants at Sriperumbudur, Chennai and Pondicherry.
ETA ASCON, Dubai, a parent company of ETA Engg India Pvt Ltd. is a multi-faceted
group having a turnover in excess of USD Six Billion with diverse areas of expertise in
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activities such as Builders & Constructions, Engineering – Electromechanical &
Elevator Works, Advanced Fire Fighting, Shipping & Trading, High Voltage
transmission, Desalination, Powder coating, Retail & Leisure Business, Tours &
Travels, Facilities Management, Automobiles, Environment, Manufacturing, etc.
ETA Engineering Pvt. Ltd. is a company registered in India having its registered office
at Chennai and branch offices at major mega and metro cities of India
ETA group of companies in I ndia are
? ETA Engineering Pvt. Ltd. (Air-Conditioning and M & E Services)
? ETA Melco Engineering Co. Pvt.Ltd. ( Mistubishi Elevators & Escalators)
? ETA Construction India Pvt. Ltd. ( Building Constructions)
? Transcars India Pvt. Ltd. (Maruti Dealers)
? Mincore Resources Pvt. Ltd. (Fertilizer & Coal Imports)
? Cresent Enginering College
? ETA Resources Pvt. Ltd. ( Shipping)
Contribution of the ETA Engineering India Pvt. Ltd. is close to Rs. 800 Crore (Year
ended March 2010.) through it‘s Indian operation to the total business sum of the ETA
Ascon as per the information received from the officials of the company during the
personal interview.
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4.3 A Study of CSR – Activities and Approaches of the Above Selected Companies.
In this section, CSR activities and approaches of the following companies in order of
their introduction have been studied with the help of secondary data published by the
companies in their financial reports , various magazines and organized research journal
or the institutions and the companies websites. The order of the study is as follows.
(1) M/s Blue Star Limited
(2) M/s Voltas Limited
(3) M/s Carrier Airconditioning & Refrigeration Limited
(4) ETA Engineering Pvt. Limited
For the sake of study of the broad CSR approaches adopted by the companies the CSR
activities have been classified as follows. (Refer Table 4.2)
(a) A Study of Corporate Governance and Reputation of the Company
(b) A Study of Intrinsic CSR activities of the company (CSR approaches of the
company towards it‘s stake holders like employee, dealers, vendors and
shareholders.)
(c) A Study of Extrinsic CSR activities of the company (Companies philanthropic
activities, responsibility towards the society and global contemporary issues.)
(d) A Study of Corporate Social Performance Index of the company with references
to the Indian Inc.
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Table 4.2 A Study of the selected companies CSR approaches of HVAC Industry
Selected Companies (1) BSL (2) Voltas (3) Carrier (4) ETA
Variables studied for understanding CSR Approaches of the companies
A Study of Company?s
Corporate Governance
Practices
A Study of Company?s
Intrinsic CSR Practices
A Study of Company?s
Extrinsic CSR Practices
A Study of Company?s CSR
performance Index / Social
reporting Practices.
Key areas studied
under each variable
A Corporate Existence of the
Company
Intrinsic CSR approaches
towards employees
Companies strategic belief for
choosing extrinsic CSR areas.
A Study of companies
Performance index on
Karmayog/KLD /ESG etc.
indexes.
B Board of directors and legal
responsibility of the company
Intrinsic CSR approaches
towards stake holders like
dealers/vendors
distribution channels
A Study of companies extrinsic
CSR approaches in the preferred
area of CSR activities.
A Study of companies
investment made through the
indexes for CSR activities.
C Emerging treads or innovative
ways of building good
governance
Intrinsic CSR approaches
towards customers
A Study of community services
and CSR activities carried out by
company/executives.
A Study of social reporting
practices of the company.
D Code of Conduct -Guiding values
and beliefs of the companies
Companies CSR approaches
towards global and
contemporary issues.
Notes :
1) KLD, Kinder Lydenberg Domini
& Co. was the first in developing
social index.
2) ESG – Environment Social and
Governance Index.
E Financial Governance via
Financial Performance and
important financial ratios.
Type and Sources of
Data Collected
Secondary data from financial journals / reports , Companies internal communication magazine, Business magazines, CSR indexes ,
Websites , Research journals/Personal interviews with the Top management executives of the company.
Scale/ Methodology /
Articles referred
Gokarn S. (2009) ?Study of ESG Index? was followed to
understand – Governance parameters.
Gray Robert & Hay (1977) ?Social Responsibility of Business
Managers? and Jadeja J.D(1992) ? Study of CSR Approaches of
selected Industrial Houses of Gujarat.?
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4.3.1 CSR Approaches of M/s Blue Star Ltd. (BSL)
(A) A Study of Corporate Governance of M/s Blue Star Ltd.
(i) Corporate Existence
BSL is in existence with over 65 years and listed in both the Indian stock exchanges
BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) and has a sound
top management leadership who govern the organization.
(ii) Board of Directors – as per Legal and Mandatory Guidelines
BSL has a sound Board of Directors as per the legal guide lines and which they call
?Beyond Legal and Mandatory Guide lines‘ because of the fact that the most of the
directors are active directors and highly educated from the premier engineering or
management institutes of the world and are involved even in the operations of the
company too. Board does have a neutral director as per the guidelines, team headed by
Mr. Ashok M Advani as executive chairman and his brother Mr. Sunil M Advani
following as a vice chairman and managing director. (9)
It is important to note that in the detailed organization chart presented about senior
management of BSL, Corporate Social Responsibility has been represented as a
separate function under the marketing communication department, headed by General
Manager. Corporate Social Responsibility has been clearly defined as a specific
function and which is being handled at the Executive Chairman and President level.
CSR has been integrated with corporate affairs and Corporate Strategy even. Strategic
CSR model (Carroll 1991,Refer Page No. 73,74 of Literature Review Chapter, 3) has
been adopted by the company for their CSR approaches and activities. (10)
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(iii) Code of Conduct and Practices.
Though BSL does not have ?Code of Conduct‘ as a written document, company does
have clearly spelled out ?corporate purpose‘ (Appendix– XIII), making it clears to all
the stake holders. It indicates that company is concerned about the organizations and
employees behavior towards the business and the society. (11)
Company has a clearly defined guiding values and beliefs (Appendix - XIV) given to
the every employee. Every employee of the company have been given the Guiding
Values and Beliefs of the company in the printed form as well as it has been mandatory
to keep it as ?Screen Saver‘ of their desktop or laptop computer systems. (12)
(iv) Financial Governance
Good Governance leads to the profitability and shareholders wealth maximization, in
case of the Blue Star, investors have trusted them as an ethical organization over 65
years and as a result of good Corporate Governance organization has grown
substantially over a period of time as per enclosed financial snap-shot of last five years
in Table – 4.3
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Financial Performance Snap-Shot
Table – 4.3 (Financial Snap Shot BSL)
Financial Performance March 2005 March
2006
March 2007 March 2008 March 2009 March 2010
Total Income
(Rs.Crore)
930.92 1178.62 1607.41 2233.11 2519.00 2549.00
Operating Profit (Rs.
Crore)
57.85 86.68 116.92 212.60 250.53 264.43
Profit before tax 62.44 69.09 92.60 206.70 238.22 262.66
Net Profit (Rs. Crore) 39.16 48.90 71.18 174.09 180.29 211.49
Operating Margin 6.30% 7.4% 7.3% 9.52% 9.45% 10.3%
Earnings/ share
(Face Value = Rs2)
(Rs.)
21.77 27.19 7.91 19.36 20.04 23.52
Dividend/share (Rs) 10 12 3.0 Na 7 8
(Source : Financial Reports M/s Blue Star Limited)
159
Highlights of the Financial Governance
? Audited financial results are declared at the every quarter end, as per the
guidelines and are being analyzed and published time to time. Annual general
meeting with shareholders take place regularly.
? All the data are declared along with analysis and are accessible to the
shareholders time to time.
? Company and the board of directors are sensitive, towards financial performance
(Income has gone up from Rs.930 Crore to Rs. 2549 Crore in last 6 years and
Net profit have gone up to Rs. 211 Crore from Rs. 39.0 Crore)
? Company declares dividends and EPS time to time. (13)
(B) A Study of Intrinsic CSR of M/s Blue Star Ltd.
Intrinsic CSR as defined by various researchers is the ?Company‘s responsibility
towards the direct stake holders of the company like Employee, Dealers, Vendors ,
Share holders etc. who are likely to be affected directly with the companies
performance.‘ This section of the study tries to understand the BSL intrinsic CSR
towards its various stake holder.
(i) Intrinsic CSR Towards Employees
Employee Relations and Development Efforts
Top management of BSL considers shortage of skilled labor as one of the major threat
to the industry and offers following innovative ways to attract the right manpower,
? There are well designed induction and technical orientation programmes. There
is a Corporate Technical Training Organization (located at their Thane Plant)
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which delivers a variety of technical training programmes for the AC&R
business. Engineers who join the Electronics Division get a chance to go abroad
for the training with the principal companies. The Corporate HR runs a menu of
non-technical soft skills training programmes such as Business Communication
Skills and Business Etiquette.
? The Company has many well designed, time tested HR practices such as setting
the performance objectives at the beginning of the year, reviewing employee
performance every year through an annual appraisal system and an annual
compensation review based on market surveys. In addition to a market aligned
salary structure, Blue Star also has a fairly attractive incentive scheme wherein,
the employee gets an incentive based on his department‘s performance coupled
with his own performance rating.
? To have fair and transparent employee relationships BSL also have a 360 degree
feedback for the top executives performance appraisal as well as, HR
department is consistently being evaluated on the ground of the Employee
Satisfaction Index.
? Typically, graduate engineers can look forward to entering real managerial
grades within 4 to 5 years. Once an employee enters the managerial grade, they
are also exposed to a variety of management education programmes including
some programmes at Indian Institute of Management (IIM) - Ahmedabad.
? Blue Star boasts the training programme called the ?Blue Star Way‘, which is
founded on a set of values and beliefs which have evolved over time. These
beliefs have made Blue Star a highly respected, secular organization. In today‘s
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high attrition market, the Company continues to enjoy the privilege of retaining
employees. (approximately less than 15% attrition rate.) (14)
Safety Policy at Works and Manufacturing Philosophy
As a part of Corporate Governance in the company, Company also takes care of
employees in manufacturing and have ?Corporate Safety Policy‘, as shown in the
Appendix - XV. (15)
(ii) Intrinsic CSR with Dealers and Vendors
No company can perform in business well with out the strong channel network in both
consumer durable segment and engineering projects. BSL has wide network dealers in
various product segments. It is important to note that in their project segments they have
conceptualized on ?Brand Exclusivity‘ dealership concept. Dealers are typically called
?Channel Partners‘ or ?Extended Arms‘ in business of BSL. BSL has been successful
enough in retaining its dealer‘s network post liberalization against competition due to its
strong and ethical dealership relationships. According to the company executives
company has achieved competitive advantage or an edge over competition due to the
strong supply chain management. Dealer network has been a ?key growth driver‘ over a
competition to them. BSL offers the following advantages to its dealers as well as
vendors:
? Clearly spelled out dealership agreement and fair terms as well as profit sharing.
BSL dealer enjoys ?Brand Equity‘ of the company.
? Quotas and segmentations of dealers territory in each product category has been
done effectively.
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? Constant support from both branch as well as service department on spear parts
as well as on presales and post sells activities.
? The Company has many well designed; training department gives on job product
and project training. Training centers set up a Pune and Thane plants give them
techno-managerial trainings.
? To have fair and transparent employee relationships BSL also involve best
performing dealers in the decision making process and strategic road maps of
the companies business plan process as well as on various R&D and product
development strategies.
? Professionally designed Dealers Satisfaction Index (DSI) is being evaluated
every year and it has been linked with employee appraisal has been linked with
Dealership Satisfaction Index.
? Elite dealer panel is also offered the other business advantages like they are
exposed to a variety of management education programmes including some
programmes at IIM. Bangalore.
? For a better vendor relationship management, company is equipped with
upgraded software like BAAN (Name of the computer software designing
company following founders name Jan Baan.) and SAP. (System Analysis
Programme). Company has a regional centralized purchase system for factories
and projects department to stream line buying process and to have fair vendor
relationships.
? Company claims to have a long term vendor relationship with vendor and they
do believe that vendors and in time material availability has helped them and is a
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key factor which have given them high edge in achieving their mission of
delivering ?World Class Customer Experience‘.
(iii) Intrinsic CSR towards the Customer
Company is sensitive towards its prime responsibility of ?Maximizing Share Holders‘
fund, as claimed by Friedman in 1970. Customers are key to the success of any
business. Keeping that in mind in their corporate purpose the mission is kept is ?To
deliver world class customer experience.‘ To ensure the and achieving high level of
Customer Relationship Management (CRM) they have taken certain innovative key
steps like on line complaint on websites, toll free customer care numbers, mobile vans,
service centers, trained service dealer network etc. However, it appears that company
does not have any consumers‘ grievance management cell in practice; corporate office
only handles the same.
(C) A Study of Extrinsic CSR of M/s Blue Star Ltd.
It is important to note that the responsibility of the Corporate Social Responsibility and
Corporate Governance have been directly headed by the Executive Chairman and
Managing Director, Mr. Ashok M Advani level. This shows companies commitment to
the social responsibility to the stake holders and the society both.
(i) BSL Corporate Thinking About Extrinsic CSR
BSL Executive Chairman, Ashok M Advani has reported in his speech about his
thinking on BSL CSR initiatives (April 1
st
2008) as follows.
?Since BSL early years more than a six decades ago, we have believed in doing
business in accordance with the basic business principles of our Founder Chairman
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M.T.Advani. These values and practices were first systematically spelt out in the form
of the ?Corporate Philosophy? published 20 years ago.
With the passage of time, the environment changed and so did the company. Five years
ago, we enunciated the ?Values and Beliefs of Blue Star? laying down our
responsibilities to our stake holders. And recently, we put in all together in an integrated
packaged called ?The Blue Star Way? that provides code of conduct for Bluestarites
and Business Associates. Even though our thinking has become more refined and the
language more sophisticated, the essence of M.T. Advani‘s values has remained intact.
He was not satisfied with merely following the laws of the land; he felt it was necessary
to do something extra like helping less privileged people. More than 40 years ago, He
setup Blue Star Education trust to provide financial assistance to children of employees
to acquire higher education and vocational skills that would help them to get decent
jobs. Many of our children have benefited from this assistance and are leading
productive, satisfying lives today. Some years ago, the trustees renamed it to ?Mohan T.
Advani Education Trust‘, in his memory. In the last 15 years, a number of additional
employee welfare trusts have been added to extend the Company‘s welfare activities.
Mr. Ram Malani, who was Chairman before I took over, decided to broaden the
Company‘s social involvement beyond employees, by establishing The Blue Star
Foundation in 1982. The Foundation was created as a public trust, with a corpus
donated by the company for charitable assistance to needy sections of the society. It is
registered under section 80(CC) of the Income Tax Act and donates money for
education, medical assistance, relief of poverty and disaster relief.
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The Company‘s charitable involvement also includes making contributions to match
those of employees for national calamities like the Gujarat earthquake, the Kargil War
and the Tsunami destruction. It is heartening to see that Blue Starites have a strong,
patriotic sense, as does the company.
So far, BSL‘s philanthropic activities have followed a fairly conventional path starting
with employee welfare and moving on to charitable donations for a variety of deserving
causes. This is typical of a number of like-minded Indian business organizations and our
total expenditure has remained relatively modest.
When company was smaller and less profitable, we just could not afford to take up
much more than what we were doing. Happily, the financial constraints are no longer
such a serious problem. BSL‘s rapid growth in recent years has brought the company to
a level where we can consider broadening and enlarging our involvement in social
causes. There are many other challenges facing the society that need to be tackled.
Clearly BSL can and must play a role in this endeavor.
If I elaborate this point, Even though economic growth is enabling making to escape
from the trap of poverty that results, hunger, disease and deprivation, this ?progress? is
extracting a high price from society. Economic development has lead to a number of
new problems there are causing growing concern. These include air and water pollution
that affect our health, the destruction of forests and wildlife with their impact on the
environment, global warming and its catastrophic consequences for future generations,
and depletion of natural resources like oil, leading to high cost and shortages of fuel and
energy.
166
Until recently, the CSR was usually, a subject of interest in academic circles and
management schools. The good news in that CSR has emerged in to the public domain
as awareness has spread of the numerous, new social and environmental challenges
facing mankind. These problems are of such great importance that it s no longer enough
for a responsible corporate to focus only on its business while ignoring the wider impact
on the society. It will take the collective participation of Government, Business entities,
NGOs and individuals to tackle the huge challenges that threaten our very existence.
In BSL, we took a decision last year to begin a more active involvement as a good
Corporate Citizen to demonstrate our commitment to CSR. The first step was to choose
from the vast range of possibilities a few specific problem areas to focus on. With
limited available resources, it would be mistake for us to take on too much. We
eventually chose two broad causes :
? Energy conservation
? Environmental Protection.
So far, BSL‘s role in employee welfare and charity has been limited mainly to financial
support. CSR needs much more than money. Managerial and technical involvements are
equally important for achieving tangible results. Each of the chosen areas offers ample
opportunities to use our technical resources and expertise to make a meaningful
difference. And both tie in well with our Corporate Purpose and brand image. This is
why I would like Blue Starites to stand for the actively support our two chosen causes.
The new CSR initiatives will not replace the current philanthropic activities of the
company. These will continue on a bigger scale because deserving humanitarian causes
are always desperately short of funds. We are also getting more active in helping
167
villages and people living in the vicinity of our factories. Providing wells and vocational
training for the local people are two simple examples of what can be done that does not
cost much but helps them significantly.
We are now in the process of establishing a small corporate group to drive BSL‘s CSR
programme. They would issue a CSR policy, plan specific projects, monitor
implementation and provide support to projects in the filed.? (16)
Mr. R.G.Devnani , Vice President (Manufacturing). - Blue Star Ltd., has expressed
during the personal interview with researcher that, Corporate Social Responsibility is
very much desirable from the corporate world, because it not only support to the society
and the business but it strengthens country too. While sharing his valuable inputs on
CSR activities of BSL, he mentioned that ?The company has laid down clearly spelled
?Guiding Values and Beliefs of Blue Star? for the employees, to guide them
continuously towards their ethical behavior. On the extrinsic CSR efforts, BSL has been
committed to work towards environment protection. Some efforts made in this direction
are like, company is phasing out non-environment friendly products gradually and
focusing on manufacturing and promoting only the environment friendly products way
ahead of the legal and mandatory guidelines. Mr. Devnani also mentioned that ?BSL
has been continuously improving it‘s products on energy efficiency, for example
recently launched ?Star Rated? products which saves energy by around 15% plus.? On
account of community services he added ?Both company and it‘s employees have taken
lots of initiatives like , helping people and the country in the natural calamities during
the tough time like Kargil War, Gujarat earthquakes, Mumbai train blast through the
donations, Organized Health and T.B. Check up camps at Wada Plant of BSL, Created
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bore wells for the villages near factory as a part of rural development programme,
Education aids to the employees and the society through ?Sahayta foundations‘. BSL
and its management is working towards employee development through training and
education aids, as well as organizing family functions timely, BSL has also supported in
road construction at Dadra Etc.? According to Mr. R.G.Devnani BSL have realized and
started organizing its CSR activities through the senior leadership and management.
BSL has also urged employees and their dealers in extending arms for the community
support and CSR activities. (17)
(ii) CSR Initiatives of BSL :
Blue Star‘s Corporate Social Responsibility (CSR) philosophy is built on three pillars
i.e. Energy conservation; Community development, around its facilities and
Environment protection
(I) Energy Conservation
The Company is highly committed to the cause of protecting the environment. Energy
efficiency of its products remains a corner-stone of its research and development efforts
Air, water and energy management services as well as LEED (Leadership in Energy and
Environmental Design) consultancy for Green Buildings have been part of its business
and practices. The Company has also been contributing in the technical domain in the
use of eco-friendly refrigerants in its products.
Energy Conservation goes beyond using efficient products. A huge amount of energy is
wasted nationally due to sheer ignorance and lack of awareness. Blue Star helps
deserving institutions such as hospitals and colleges to save power by conducting free
walk-through energy audits. The Company has conducted several such audits with
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energy recommendations for Jai Hind College, St Xavier‘s College, Nirmala Niketan
College of Social Work, and National Association for the Blind (NAB), Bombay
Natural History Society (BNHS), JJ School of Architecture and Dilkhush Special
School, amongst others.
(II) Community development around its facilities.
In its efforts towards community development around the Company‘s facilities, the
Company has initiated and sponsored a study programmes in the villages around its
Wada Plant to understand the immediate needs. Vocational training and health emerged
as pressing needs in this underdeveloped region. Blue Star has sponsored the vocational
training courses offered by an NGO, Khewadi Social Welfare Association (KSWA) in
Wada. This centre was set up to support a vocational training initiative for school and
college dropouts to make them employable contributing members of their families and
communities. Regular visits by the Company‘s employees have aided in technical
support to KSWA for conducting the courses.
In addition to the above CSR efforts, the Company sponsors various philanthropic
activities through its Trust, Blue Star Foundation, which has been supporting several
activities in the areas of children education and healthcare apart from relief measures in
national calamities.
Blue Star and its employees firmly believe that, the organizations must look beyond
making profits and should contribute to the development and welfare of the society.
This attitude is most evident in the outreach initiatives organized by Blue Star's
factories. Blue Star factories take active participation in providing temporary shelters
and essentials for the victims of Bhuj earthquake, Company and Employees put equal
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contribution donation to ?Bhuj Earthquake‘ and ?Kargile Relief Funds‘ (Close to Rs. 1.0
Crore.) sponsoring health check-ups and health education programs in local schools.
Their families of the workers and operators are considered an integral part of social
development. Blue Star gives them appropriate advice on personal matters, financial
and investment matters. The family members are also imparted training on diverse
subjects. They are taught English as well.
(III) Environmental Initiatives
Blue Star's factories have been exquisitely landscaped with lawns and flowering plants
dotting the campus. Trees have also been planted on a proactive basis even outside the
Blue Star factories. As a responsible organization, special Effluent Treatment Plants
(ETP) are installed to disposes off the wastes generated. Additionally, all the factories
are designed for rain water harvesting. Blue Star is actively promoting the products
which are fitted with environmental friendly refrigerant gases like R134 A and R 410 A.
(D) A Study of Corporate Social Performance Index of of M/s Blue Star Ltd.
M/s Blue Star Ltd have been sensitive towards the inclusion of their CSR efforts and
activities in their financial reporting since couple of years. They have also reported on
the ?Karmayog CSR Index? about their CSR activities in last two years. Their
comparative ?Karmayog CSR rating? are presented in Table 4.4 and Table 4.5
represents the summary of BSL CSR approaches and practices. (18)
Amount spent on CSR: Blue Star Foundation invest approximately Rs. 1.0 Crore every
year towards the Social responsibility funds since last five years.
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Table 4.4 (Karmayog CSR Index rating BSL)
Sr. No. Year
Turn
Over Rs.
(cr)
Recommended
Minimum CSR Spend-
0.2% of income (Cr)
Actual
CSR
Spend
Net Profit
Rs.(cr)
Sector
Karmayog CSR
Rating
CSR Reach
1
Principal
Areas of CSR
Activity
a b c
1 2005 930 0.78 NA 39 Heavy Engineering
1/5
y
disaster,
education
2 2006 1179 0.98 Approx.
Rs. 1.0
Crore /
Year
49 Heavy Engineering
3 2007 1607 1.42 71 Heavy Engineering
4 2008 2233 3.48 174 Heavy Engineering 1/5 y disaster,
education
environment,
health
4 2009 2519 3.6 180 Heavy Engineering 2/5 y y
1
Karmayog CSR Reach
None
"a": CSR is for employees only
"b": CSR is within the vicinity
"c": CSR is for society at large
"b"& "c" together
Total
Note : " y ": Yes the company conducts this CSR program
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Table 4.5 Summary of CSR Approaches of Blue Star Ltd.
Highlights of Corporate Governance and Ethical Behavior.
? Clearly spelled out ethical guidelines, values and beliefs.
? Regularly following SEBI /RBI guidelines and keeping stake
holders posted about the Cos. Activities.
? Constantly working for shareholders welfare.
? Sound board of director and have been growing over the year
after year and giving fair and reasonable return to shareholders‘
funds.
? Chairman of the company has aim to take the personal and
brand value of company toe take to ?TATA‘ and ?Infosys‘ level
– existence of the company is for over 66 Years.
Intrinsic CSR Approaches
? Taking care of the employees , having professional performance
appraisal system, and performance linked incentive plans.
? Having well constructed training and development center and
consistently empowering employees and dealers through training
and development.
? Having SAP, BAAN kind of software for the better channel and
vendor management.
? Clearly spelled out dealership and policy and vender agreements.
? Having loyal association with the employees and dealers.
Extrinsic CSR Approaches.
? Three main pillars of extrinsic CSR are Energy conservation,
Environment protection and Community development.
? Investing heavily in creating environment friendly products and
being industry leader ,leading the change of technology.
? Through Mohan T. Advani foundation host of community
development activities in the areas near manufacturing plants
are conducted.
? Major examples of donations are, Kargil relief fund, Bhuj earth
quakes, creation of basic facilities at the Villages near Dadra
and Wada plants.
? Conducting ?Energy Audits‘ to promote the ?Energy Savings‘.
? Donation is also made in the area of education.
CSR Reporting / Index.
? CSR concept has been emerging as a Strategic management
concept, however company has started allocating managerial and
professional resources to it, but no structured CSR reporting has
been in practice till the date.
? Karmayog CSR index rates 1 out of 5 based on the variables like
CSR expenditure and supporting society.
? Company invests approx., Rs. 1.0 Crore from the profit towards
CSR causes and community development.
? In it‘s innovative approach towards the extrinsic CSR, Company
has urged a wide dealership network to join hand with the
company and donate Rs.5000 per year for a social cause and
joined BSL- Social initiatives.
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4.3.2 CSR Approaches of M/s Voltas Ltd.
(A) A Study of Corporate Governance of M/s Voltas Ltd.
(i) Corporate Existence
Voltas is a premier engineering solutions providers and HVAC project specialists group
under the ?TATA‘ group of companies. Founded in India in 1954, Company is in
existence with over 60 years and listed in both the Indian stock exchanges BSE
(Bombay Stock Exchange ) and NSE (National Stock Exchange) and has a sound top
management leadership which governs the organization. (19)
(ii) Board of Directors – as per Legal and Mandatory Guidelines
Company has a sound Board of Directors under the leadership of Mr. Ishaat Hussain as
Chairman and Mr. Ashok Soni as Managing Director. (website details till April 2009)
They held board meetings regularly and financial report since 2001 has been inclusive
of summary of the board meetings and annual general meetings of the board as per the
legal requirements. (20)
(iii) Code of Conduct and Practices.
?Whether it be product quality, people, business systems or knowledge or customer
satisfaction, whether it be in contributing to the development of society or protecting the
environment, Voltas sets - and is driven by - new values in all these areas. To institute
excellence at work and to achieve a competitive edge in the marketplace, Voltas has
made the Tata Business Excellence Model (TBEM) a way of life in all activities. TBEM
offers the best way to improve business performance, bringing about a common
platform for people to share their knowledge, follow the best business practices and
pursue excellence across all functions.? claims the Voltas Chairman. (21)
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Companies association with brand TATA has brought in the code of conduct for the
company being clearly spelled out as per the principles laid down for ?TATA? group of
companies. At each level of organization a ?TATA? code of conduct (TCOC) have been
clearly spelled out and company stake holders are expected to adhere to that code of
conduct strictly. Appendix - XVI , gives details about the ?TATA Code of Conduct‘, to
be followed by Voltas employees. It is worth noting that Voltas is the only Indian
organization has ?Code of Conduct‘ as written document in the HVAC industry which
is also available with every employees.
Voltas has developed a „Green Mission” in line with their commitment to
environment as follows
• We minimize wasteful energy consumption in our branded products
• We form representations and alliances with global technology leaders who also
follow a Green path
• We offer -- and encourage the use of -- technologies that purify the air, lower energy
costs, and purify polluted water and industrial/urban effluents. For specifics, read
about Variable Refrigerant Flow, Vapor Absorption Machines, engineered ozone
systems, water management, Vertis Star-Rated ACs, 'green' building projects.
• Finally, we follow the most stringent practices of eco-friendliness, sustainability and
safety in our manufacturing operations. (22)
Ethics At Voltas
The Ethics Counselor, Officers and Ethics Committee promote and facilitate ethical
behavior within the Company, and with all agencies or business partners (including but
not limited to customers and vendors) in their dealings with the Company. The policy
of ethics is followed at all branches, manufacturing units and other locations, overseen
by Location Ethics Counselors. Location-level initiatives include: (23)
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They do follow following activities,
• Periodically conducting both formal and informal sessions on the TCOC
• Inculcating Voltas‘ ethical values among suppliers, vendors and contractors
• Broadening the perception of the TCOC beyond a set of dos and don‘ts
• Encouraging employees to think beyond their normal orientation towards solutions,
using case-studies as a teaching tool for greater understanding and participation. It lays
a strong emphasis on leadership, strategic planning, customer and market focus, process
management, information and analysis.? (24)
Manufacturing values
Voltas' manufacturing plants have all been certified for ISO 9001:2000 by TUV of
India. Voltas plants claims to give the highest priority is given to protection of the
environment, (Appendix XVII, Voltas environment policy). (25)
(iv) Financial Governance
Snap shot of the financial Governance and growth of the company in the last five years
of Voltas Ltd has been displayed here in Table -4.6.
176
Financial Performance Snap-Shot
Table – 4.6 (Financial Snap-shot Voltas)
Financial Performance March 2005 March 2006 March 2007 March 2008 March 2009 March 2010
Total Income (Rs.Crore) 1441.14 1904.18 2450.78 3086.17 4070.25 4565.08
Operating Profit (Rs. Crore) 52.62 117.9 155.1 277.6 297.95 455.46
Profit before tax 57.66 91.69 227.9 307.5 367.33 485.64
Net Profit (Rs. Crore) 50.41 70.49 186.08 208.37 254.54 384.56
Operating Margin 3.7% 6.19% 6.33% 9% 13.6% 10%
Earnings/ share
(Face Value = Rs1) (Rs.)
15.2 21.3 5.62 6.32 7.63 11.51
Equity /share (Rs)
Face Value Rs. 1/ Each
22.03 16.27 11.5 72.96 58.48 NA
(Source : Financial Reports M/s Voltas Limited)
177
Highlights of the Financial Governance
? Audited financial results are declared every quarter end as per the guidelines
and are being analyzed and published time to time. An annual general meeting
with shareholders takes place regularly.
? All the data are declared along with analysis and are accessible to the
shareholders time to time.
? Company and the board of directors are sensitive, towards financial
performance (Income has gone up from Rs.1441 Crore to Rs. 4565 Crore in
last 6 years and Net profit have gone up to Rs. 52 Crore from Rs. 384.0 Crore)
? Company declares dividends and EPS time to time. (26)
(B) A Study of Intrinsic CSR of M/s Voltas Ltd.
Intrinsic CSR as defined by various researchers is the ?Company‘s responsibility
towards the direct stake holders of the company like Employee, Dealers, Vendors ,
Share holders etc. who are likely to be affected directly with the companies
performance.‘ This section of the study tries to understand the Voltas intrinsic CSR
towards it‘s various stake holder.
(i) Intrinsic CSR Towards Employees :
Voltas Ltd believes in long term employee satisfaction and relationship and that‘s why
tries to increase average employee life of the company year by year. Clearly spelled out
HR policy of Voltas Ltd considers employee as ?an important stake holder? Voltas Ltd
HR policy is as under.
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Voltas HR policy
?The cornerstone of the Voltas Human Resources Management philosophy is the
conviction that the well-being of the company and of its people are interdependent; and
that the company's most valuable assets are its people.? (27)
Voltas commitment to their Human Capital,
(1)To employ the most competent, on the basis of merit
(2)To ensure that every employee is treated with dignity and respect, and in a fair,
consistent and equitable manner
(3) To create a stimulating, enabling and supportive work atmosphere
(4)To aid and encourage employees in realizing their full potential
(5)We recognize that the success of this philosophy depends in a large measure on the
manner in which managers and their team members - at every level - carry out their
duties and obligations to each other and to the company. Without mutual confidence
and loyalty among employees, as well as respect for each other as human beings, our
philosophy will not work.
(6)Managers at all levels are committed to the following principles
(7)Have knowledge of, and accept total responsibility for, the success of the
organization‘s human resources philosophy, policies and procedures, and review them
with team members to ensure their total understanding.
(8)Ensure consistent and fair application of all HR policies.
Employee Relations & Development Efforts
(a) Scientifically designed training programmes like induction training, behavioral
training , technical trainings etc.
(b) Well designed HR policies and in time performance appraisals, incentive based
salaries to ensure fair and transparent employee relationships.
(c) Grants and education scholarships for the children of employees.
(d) Family relationships with in the organization among the employees.
179
(ii) Intrinsic CSR with Dealers
Voltas has a dealer network only for the domestic products , the sales and services of
the central airconditioning business has been handled by the company directly, however
they have dealership policy manual, specifying all the terms and conditions clearly and
company is rated high in terms of the relations with the dealers and sub-vendors.
(iii) Intrinsic CSR with Customer
VOLTAS CSR Commitment to Customers:
? Company‘s commitment is to provide a single-window solutions - As a customer,
you're assured of exceptional value in end-to-end solutions integrated and customized
from a one-point source for our all the applications. At Voltas, we believe that our
relationship doesn't end when you buy our products. It's just the beginning.? Says
Chairman of Voltas. (28)
Innovative V- Service Concept of Voltas
V Service – is Voltas after-sales service network. They have designed comprehensive
maintenance contracts at nominal rates to make sure customer‘s Voltas experience is
long-lasting. Customer can avail this service from a number of dealers/franchisees
spread across the country. V- Service Concept is equipped with, Database management,
Service par excellence, Manpower training programs, IT resources and prompt service
vans streamline the service procedure and ensure utmost efficiency, End-to-End
Customer service solutions etc. Voltas does have innovative customer care mechanism
like Website support, Toll free customer service numbers, Service centers spread all
across the country, Call center numbers etc. (29)
180
(C) A Study of Extrinsic CSR of M/s Voltas Ltd.
Ratan Tata, ?The Tata group has always believed in returning wealth to the society it
serves. Two-thirds of the equity is Tata Sons, the Tata group‘s promoter company, is
held by philanthropic trusts which have created national institutions in science and
technology, medical research, social studies and the performing arts. The trusts also
provide aid and assistance to NGOs in the areas of education, healthcare and
livelihoods. Tata companies also extend social welfare activities to communities around
their industrial units. The combined development-related expenditure of the Trusts and
the companies amounts to around 2-4 percent of the group‘s net profits.?
Going forward, the group is focusing on new technologies and innovation to drive its
business in India and internationally. The Nano car is one example, as is the Eka
supercomputer (developed by another Tata company), which in 2008 is ranked the
world‘s fourth fastest. The group aims to build a series of world class, world scale
businesses in select sectors. Anchored in India and wedded to its traditional values and
strong ethics, the group is building a multinational business which will achieve growth
through excellence and innovation, while balancing the interests of its shareholders, its
employees and wider society.
Extrinsic CSR is a part of business strategy of the company. It is important to note that
VOLTAS in the Air-conditionining Industry in India spends considerable amount
(average close to 2% of net profit) towards the extrinsic CSR and it is one of the leading
company in the Karmayog CSR index (3/5) and one among the top 100 companies list
of doing extrinsic CSR activities .
181
(i) Voltas Thinking About Corporate Sustainability
Ratan Tata, Chairman of TATA group says: ?It is fitting that sustainable value-creation
occurs at Voltas in the spheres of both people and technologies. Today‘s increasing
?Green‘ concerns find an echo in Voltas culture, and in the hearts of Voltas employees.
They are the focus of initiatives which are yielding valuable returns, in an increasing
quantum. Community service too takes a technological turn, in which our ?know-how‘
is used to build entrepreneurial self-reliance within the community.
?The current growth of our economy and the confidence with which we face the world
provide a compelling context in which corporate need to engage with the larger social
and ecological habitat. In the coming years, it will more and more be necessary for
Voltas – as for all corporate – to encourage and generate internal passion for
volunteering and community service, as well as to focus the organization's efforts into
sustainable community benefit.?
Voltas team is blessed with the legacy of the parent Tata Group, of being able to return
benefits to society while serving the community and nation. It's an opportunity to spread
joy and happiness, while enhancing one's competitive advantage as well as corporate
reputation. (30)
(ii) Examples of Voltas Extrinsic Community Services.
? Students of Joseph Cardijn Technical Institute Visit Voltas- Thane Plant
Since 2001, Voltas has partnered with the Joseph Cardijn Technical Institute (JCTI) for
vocational training. As its 'core competency project', Voltas conducts a certificate
182
course in air conditioning in coordination with the Institute. Students of JCTI are also
given opportunity to visit Voltas manufacturing plants. (31)
? Voltas Employees Participates in Mumbai Marathon
Since 2009, Voltas volunteers registered enthusiastically for the dream run in the
Mumbai Marathon, It‘s noteworthy that Mumbai Marathon is organized for the social
goal and causes. (32)
? Voltas Ties up with GMRVF for Community Development Initiative
Voltas is allied with GMR Varalakshmi Foundation (GMRVF), the grass-roots change
agent of GMR Industries, as partners in Corporate Social Responsibility. The specific
initiative undertaken is the introduction of a Certificate course in refrigeration and air
conditioning, at the Centre for Empowerment and Livelihood (CEL) at Shamshabad.
The project brings into play the invaluable experience gained by Voltas volunteers
engaged in our Core Competency Project at Mumbai's Joseph Cardijn Technical
Institute over the past 5 years. (33)
? Voltas Employees Support to NGO and Institutes.
Bangalore Voltas employees visits and support ?Anuraga‘, an institute dedicated to
educating poor children from the slums every year. Jamshedpur Voltas employees
helps 'Bharat Sevashram Sangha'. The organization which provides food, clothes and
relief to the poor, and also free schooling, training and medical aid to the destitute.
Lucknow Voltas employees supports 'Prem Niwas', a haven for the destitute, sick and
dying. Chennai Voltas volunteers visits 'Saraswathi Ammal Charitable Trust', a home
for destitute children and the aged and built a sense of confidence and a system of
values amongst the orphan children, as well as to provide support to them. Delhi
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Voltas supports the National Association for the Blind with a special interest of
supporting visually impaired children in reading and writing Braille, as well as
managing the activities of daily life. Pune Voltas employees are helping the residential
school for poor and underprivileged children. (34)
? Voltas Partners with BOSCO Boys.
A new chapter began at Bosco Boys‘ Training Institute with the launch of the ?Air
Conditioning and Refrigeration Programme for the Disadvantaged' in 2008. The
programme was inaugurated by Mr. Anil Gole, VP-HR and Head of Corporate
Sustainability and has been supported till the date. (35)
(D) A Study of Corporate Social Performance Index of Voltas Ltd.
Voltas have given freely of their time, their talents and financial support to the society
and for the social concerns with the help of NGO and trusts like, J.N. Tata Endowment
, Impact India , Dorab Tata Trust and Multiple Sclerosis Society of India, Shanti
Avenda Ashram, Worldwide fund for nature etc. kind of organized bodies.
The Company has a well-defined framework for implementing its Community
Development philosophy which has really helped the company to get better rating in the
social indexing and rating like, Karmayog CSR index. The same has been tabulated
below in the Table 4.7 and Table 4.8 summaries the CSR efforts of Voltas Ltd. (36)
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Table 4.7 Voltas Karmayog CSR Rating.
Sr.
No.
Year
Turn
Over Rs.
(cr)
Recommended
Minimum CSR
Spend-0.2% of
income (Cr)
Actual
CSR
Spend
Net
Profit
Rs.(cr)
Sector
Karmayog CSR
Rating
CSR Reach
1
Principal
Areas of CSR
Activity
a b C
1 2005 1441 1
As per the
input given
by
Karmayog ,
Voltas has
been
investing
0.2% of net
profit.
51
Heavy
Engineering 3/5
(Karmyaog Index
got developed
since 2008)
y y y
increasing
voluntarism,
community
development
2 2006 1904 1.4 70 Heavy
Engineering
3 2007 2451 3.72 186 Heavy
Engineering
4 2008 3086 4.16 208 Heavy
Engineering
3/5 y y y Environment
protection, Poverty
eradication,
Community
welfare
5 2009 4070 5.1 255 3/5 y y y
1
Karmayog CSR Reach
None
"a": CSR is for employees only
"b": CSR is within the vicinity
"c": CSR is for society at large
"b"& "c" together
Total
Note : " y ": Yes the company conducts this
CSR program
185
Table 4.8 Summary of CSR Approaches of Voltas Ltd.
Highlights of Corporate Governance and Ethical Behavior.
? Clearly spelled out ?TATA Code of conduct? for ethical
guidelines.
? Regularly following SEBI /RBI guidelines and keeping stake
holders posted about the Cos. Activities.
? Enjoying companies‘ existence and high brand equity of TATA
for over 65 years in India Market.
? Sound board of director and have been growing over the year
after year and giving fair and reasonable return to shareholders‘
funds with a concern for the environment and the society.
? Only the Indian organization has a ?Green Mission? statement.
Intrinsic CSR Approaches
? Taking care of the employees, having professional performance
appraisal system and performance linked incentive plans.
? Having well constructed training and development center and
consistently empowering employees and dealers through training
and development.
? Voltas has dealership network only for their product business,
however company is the process of building dealership network
for the industrial and commercial product business.
? Lake clearly spelled out dealership policy for commercial
business however has a loyal employee and vendor network.
Extrinsic CSR Approaches.
? Two main pillars of extrinsic CSR are the Environment
protection and Community development.
? Investing heavily in promoting environment friendly products.
? Through TATA Foundation invest their CSR funds mainly in
the area of education and development.
? Major examples of donations are, Voltas association with
Joseph Cardijn Technical Institute, rural development near their
Thana, Dadra and Pantnagar plants.
? They constantly support through funds to J.N.Tata Endowment
, Impact , Dorab Tata Trust ,Shanti Avenda Ashram, Worldwide
fund for nature etc.
CSR Reporting / Index.
? CSR is a philanthropic concept and values in Voltas. Their
employees are voluntarily contributing to CSR efforts of the
company; however company needs to allocate managerial and
professional resources to it.
? Only the company which has got 3/5 in Karmayog CSR index.
? Company invests 2% of the profitability for the social cause ever
year as per the desired guidelines.
? In its innovative approach towards the extrinsic CSR, Company
has associated itself with many NGOs to reach out public
welfare.
? 2/3
rd
of the earnings of TATA sons is donated to charitable
activities.
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4.3.3 CSR Approaches of M/s Carrier and Carrier India.
Corporate Social Responsibility at UTC (Parent company of Carrier.)
Louis R. Chenevert - Chairman & Chief Executive Officer (2009)
?At UTC, profitability and responsibility go hand in hand. These values are fully
integrated into the way UTC executes its strategies and serves its customers. For
example, 100 percent of the power for this Cabela‘s store in East Hartford, comes from
four UTC Power fuel cells—a source of energy that is efficient and virtually pollution-
free. Responsibility is more than an environmental agenda. It is how we approach
everything we do, from driving innovation to meeting the needs of our customers and
communities. We continuously strive to deliver ever greater results.? (37)
(A) A Study of Corporate Governance.
(i) Corporate Existence
Carrier Corporation is a subsidiary of United Technologies Corporation, registered
under New York Stock Exchange. (NYSE:UTX). Carrier started its operations in India
with setting up of companies namely Carrier Aircon Limited in 1986, and Carrier
Refrigeration Private Limited in 1992. In October, 2006, Carrier Aircon merged with
Carrier Refrigeration and the name of the merged entity was changed to ?Carrier
Airconditioning & Refrigeration Limited? (Carrier India). (38)
(ii) Board of Directors – as per Legal and Mandatory Guidelines
As of January 1, 2010, UTC‘s Board of Directors has 13 directors, 12 of whom are
independent. Each board committee includes independent directors and four committees
are fully independent. Company has a sound Board of Directors as per the legal guide
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lines of New York Stock Exchange. In 2009, UTC increased its overall Dow Jones
Sustainability Indexes rating by 5 points, retained its AAA rating from Innovate
Strategic Value Advisors (now RiskMetrics Group) and was rated 9.5 out of 10 by
Governance Metrics International. Company do obey the rules and regulation laid by
RBI for the MNCs in India. Carrier files it‘s financial operations report to Asian report
and which is merged in Carrier worlds operation, Consolidated financial report is
presented based on these inputs by their parent company United Technologies
Corporations.
(iii) Carrier Code of Conduct, Corporate Purpose.
Carrier is one among the companies which has nicely drafted ?Code of Conduct‘,
?Corporate Purpose‘ policies. Carrier ?Code of Conduct‘ has been mentioned in
Appendix XVIII.
Corporate Purpose Statement.
?We make the world a better place to live by creating a comfortable, productive and
healthy environment, regardless of climate, and by ensuring the global food supply is
transported and preserved for safe consumption.? (39)
Carrier India Vision:
• To be recognized as the leader in every segment we operate in by:
• Being ?customer focused‘ in everything we do and following ACE diligently
• Delivering ?best in class‘ quality in the product as well as aftermarket service
• Being ?environmentally conscious‘ in areas of energy efficiency and pollution
• Establishing a performance culture that respects human values & team work
• Remaining embedded in our core values of EH&S and ethics (40)
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(iv) Financial Governance
Financial governance is not only to ensure the high profitability alone but also to ensure
the sustainability by taking some tough decision. During the US Subprime crisis,
Carrier too had to take some tough concrete steps to ensure the financial sustainability
during the year 2008-09 with down turn in their major market of US, However their
global present helped them to revive faster and to reach back to growth stage. (41)
In 2009, UTC undertook significant restructuring, cost reduction and portfolio
realignment actions to manage the impact of the severe economic downturn. While
revenues of $52.9 billion and earnings per share of $4.12 declined to 11 percent and 16
percent, respectively, compared to 2008, adjusted segment operating margin increased,
reflecting the benefits of such actions. Cash flow from operations less capital
expenditures substantially exceeded net income attributable to common shareowners.
Businesses in balance UTC‘s balanced portfolio of businesses spans geographies,
markets and customer relationships. Table 4.9 represents the financial snap shot of UTC
of last five years.
189
Table 4.9 (Financial Snap-Shot UTC/ Carrier)
Sr.
No.
Criteria 2005 2006 2007 2008 2009 2010
1 Revenue (Dollars in billions) 43.4 48.7 55.8 59.8 52.9 54.32
2 Diluted EPS (Dollars per share ) 3.12 3.71 4.27 4.9 4.12 4.74
3 Cash Flow from operations (Dollars in
billions)
4.3 4.8 5.3 6.2 5.4 5.9
4 R&D Expenditure (Dollars in billions) 1.46 1.53 1.68 1.77 1.59 1.74
5 Dividends paid per share (Dollars per share) 0.88 1.02 1.17 1.35 1.54 1.7
6 Debt to Capital (Percent) 32% 30% 29% 41% 32% 32%
(Unit of the figures have been kept as available in the original documents in US $.)
Notes
(1) 2006 figures were rebased lined to include the acquisition of Chubb, Kldde and Rocketdyne.
(2) 40% of UTC revenue have come from US, 27% from Europe, 18% from Asia pacific and 15% from other parts of the world. 58%
of the total business comes through commercial and industrial business segments.
190
Highlights of the Financial Governance of UTC and Carrier Corp.:
Company responded to the global economic downturn in 2009 with actions that led to
$900 million in cost reductions after a series of growth years from 2005 to 2008 and the
employee reduction from 223100 in 2008 to 206700 in 2009 world wide. However, as a
result of the correct measures and, development of new markets like China and India
Company has been steadily on the path of growth in the year 2010 with a significant
increase in its growth and employee strength has again gone back to 208200. The
company also accelerated its efforts to simplify its business model with greater focus on
higher value, more technology-intensive solutions and services activities. As a matter of
fact, South Asian countries like India and China are helping Carrier in its year long
growth story. Carrier is participating in the growth of China and India as these countries
expand their infrastructure. In 2010, Carrier India has grown close to 20% over last year
and crossed the turn over of close to Rs. 1100 Crore in India in the year 2010 even
under the recession effects. In India, the company was awarded a contract to provide
air-conditioning units for apartments that will house athletes participating in the 2010
Commonwealth Games which gave them huge revenue. Even in tough time due to
correct decision making company has managed growth and profitability along with that
they have not compromised on their CSR activities too. In 2009, Carrier strengthened
its sustainability profile, adding environmental stewardship as a core value and
launching a new sustainability branding campaign. In addition, a team of employees in
Carrier‘s manufacturing facility implemented a new lubrication process that reduced
volatile organic compound emissions by more than 80 percent below the 2006 baseline.
(42)
191
(v) Philosophy of Corporate Governance at Parent Company UTC –USA.
It is important to note that In May 2006, UTC re-launched its Code of Ethics and
expanded its ethics training. Since the re-launch, employees have taken 1,881,000 ethics
classes online. Governance at UTC begins with Code of Ethics created in 1990 and re-
launched in 2006. The ultimate aim of the Corporate Governance was,
?To create value for stakeholders, with an ethical culture and 100 percent compliance
with laws and regulations. We measure our governance performance, in part, through
external feedback.?(43)
UTC has a social reporting in practice and had kept a target of improvement in
Governance index by 3 percentage points over 2009 in 2010. In 2009, the survey
response improved by 5 points, from 82 percent favorable to 87 percent. Challenges in
2010 included the increased complexity of defense contracting rules and effectively
communicating and instilling ethical standards across their global operations. For the
year 2011 Carrier did aim based on it‘s 2010 performance that ; ?Their Managers
comply with the ?UTC Code of Ethics? by 3 percentage points in 2011? (44)
(B) A Study of Intrinsic CSR of Carrier.
Carrier being a global organization has more tough challenge over previous two
companies for managing intrinsic CSR towards, customers ,dealers, vendors, employees
and shareholders due to the fact that country to country expectations, culture and
behavior changes of the people.
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(i) Intrinsic CSR of Carrier Towards Employees
Carrier is operating in more than 170 countries, has over 29,000 plus employees whose
many faces, languages and talents are linked to perform equal for a universal goal that
is ?To provide customers with superior value?, since that is quite tough task make
Carrier, along with parent company United Technologies Corporation, to invests the
most heavily in the development of workforce with an unequaled commitment to
continued training and education – a commitment. To ensure the same Carrier has well
planned and designed training programmes for the various levels of the employees
starting from induction training to technical trainings. Management of the Carrier
claims the great success of their groundbreaking Employee Scholar Program.
Employee Benefits
Carriers the most popular HR quote is,
?Who knows what tomorrow may bring? Say you marry someone with four kids. Or
maybe you've set lofty financial goals. With Carrier, you're not alone. And you're in
control.?
Carrier offers a wide array of benefits besides salary scheme and incentive in the line of
the industry of the country of operation, including ?UTC Choice health and welfare
plans‘, financial security plans, paid time off, health and wellness services, employee
and family services, Medical Care , Dental Care, Vision Discounts, Personal Travel,
Life Insurance , Accidental Death & Dismemberment , Dependent Life Insurance ,
Retirement Programs, Vacation and Holidays, Employee Scholarship Program etc.
Carrier does have other employee oriented schemes for their development like,
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(a) The Company has HR practices such as setting the performance objectives at the
beginning of the year, reviewing employee performance every year through an annual
appraisal system and an annual compensation review based on market surveys.
(b) Time to time information about happenings in the company and industry through
internal communication, website, and informal meetings.
(c) To have a code of conduct based on the legal requirements of the country in which
they are operating. Details about the code of ethics and conduct which company and it‘s
employee are supposed to adhere are given on the company‘s website and training for
about the same is given to the employee about the same. (45)
Employee Policy Commitment of UTC.
?UTC Code of Ethics is our guide to delivering on these commitments; it outlines
expectations and holds all employees accountable for their actions. - We set aggressive
targets and validate our strong performance through rigorous benchmarking. we
investigate the root cause of each serious injury and any occupational fatality, take
corrective actions and implement safety improvements.” (46)
Milestones on Employee Relations.
(a) UTC claims to have reduced total recordable accident rates and lost workday
incident rates by 47 percent and 63 percent, respectively, since 2006. (b) UTC has 20-
year partnership with INROADS, a nonprofit organization providing career training and
internships for minority youth, and our Employee Scholar Program. (47)
194
Highlights of CSR Report 2010 (Employee Relations) .
As stated earlier Carrier / UTC is the only company from the select group which has a
social reporting practice. Table 4.10 (Refer Appendix - XX) presents the goal and
achievement report of the UTC towards the intrinsic CSR towards the employees.
Table 4.10 (CSR Report – Employee Relations - Carrier)
Target for 2010 Achievement in 2010 Target for 2011
Increase overall favorable
responses to the 2009 biennial
employee survey by 3
percentage points.
Exceeded objective with 4%
point increase over 2009.
Increase in overall
favorable response by 3%
over 2010 figures
Eliminate work related serious
injuries and zero death figures
3 Employees lost lives – was
viewed negatively
No accidents or loss of
lives
Reduce global lost workday
incident rate to .17 and
recordable incidents to .64 by
year-end 2010.
Considerable progress was made
in 2009, with a reduction in lost
workday incidents of 31 percent
to .18 and a 23 percent decrease
in recordable to .75.
(48)
(ii) Intrinsic CSR with Dealers and Vendors
Carrier is only the company which has a ?Vendor? or ?Supplier? section on the website.
They have spelled out clearly their commitment to the suppliers and dealers (Refer
Appendix XIX). Suppliers are encouraged to give their feedback or suggestion to the
concern person. This certainly suggest the Carriers sensitivity towards it‘s one of the
most important stake holder and that is supply – chain network. Some other notable
initiatives are as under. (49)
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Willi?s Carrier Dealers Club ( WCDC)
Carrier India has a distributor plus dealer network of over 600 sales and service dealer
and over 1000 plus distributors and retail dealer network in India. Carrier has
segmented it‘s dealership option in three segments mainly as per their product line
segmentation only they are like , (i) Residential and light commercial segment, (ii)
Building system and Services, (iii) Transportation business unit
Carrier believes, in ?Brand Exclusivity‘ model of multi channel marketing. They have
their exclusive dealers in the all three segments. Carrier India has introduced a concept
of ?Willi‘s Carrier Dealer Club?, where the information and data can be exchanged,
business communications and informal gathering between company and the dealer
network takes place. Dealers are encouraged by the company to give feedbacks
regarding market, product, competition etc. Elite Dealers are also made the part in the
decision making process of the company. Carrier commits to give following benefit to
their dealers:
•Clear transparent policies and „Brand Equity? of the company.
•Quotas and Segmentations of dealers territory in each product category has been done
effectively.
•Constant support from both Branch as well as Service department on spare parts as
well as on presales and post sales activities.
•The Company has many well designed; training department gives on job product and
project training.
•Professionally designed Dealers Satisfaction Index or feed back mechanism.
•Elite dealer panel is also offered the other business advantages like foreign trips,
family welfare, gathering in star rated hotels etc.
It is important to note that during the early nineties Carrier was the first company to
bring the dealership concept in ?Project Management‘ business in India. This was a
great challenge to the local companies which had traditional practice of ?managing
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every business activities by the company‘. However, Carrier business model of
encouraging dealer network was later date widely accepted since it brought, depth in
reach, speed of delivery of services, and cost reduction to the operations. (50)
CSR Reporting for Vendors and Dealers of UTC & Carrier.
Table 4.11 briefs about EHS, reporting and vendor networking report of the UTC from
its CSR reporting.
Table 4.11 (CSR Reporting – EHS)
Target for 2010 Achievement in 2010 Target for 2011
Ensure that all key suppliers
adhere to UTC‘s EH&S
expectations. In 2007, UTC
established baseline EH&S
targets for a group of its key
suppliers.
All met those requirements in
2010, and UTC added a second
group of new key suppliers to
the program.
Continue to expand the
Supplier EH&S program
and align with the UTC
Supplier Gold program.
We continue to work with our
key suppliers to ensure that
best-in-class supply chain
EH&S and sustainability
requirements are met.
UTC made continuous
improvement and made a large
investment towards
improvement in the network.
UTC claims to have supply chain includes more than 50,000 companies, and in 2010,
they have spent more than $30 billion on procurement. UTC Supplier Gold, established
in 2008, is a program to facilitate, accelerate and recognize superior supplier operational
performance. In 2011, they are expecting to spent more than $930 million with diverse
suppliers, representing 10.4 percent of their domestic spend, up from 9.8 percent in
2008.
197
(iii) Intrinsic CSR Towards the Customer
As discussed in the Industry analysis of the Air-conditioning industry, it is extremely
competitive industry in it‘s all the business segments. No company can sustain in to the
market place without customer relationship management. Competitive rivalry of the
industry is driving all the companies to do ?Some thing more? for their customer
relationship management (CRM). Carrier too is responsible and sensitive towards
achieving high level of Customer Relationship Management (CRM). They have taken
certain key steps like.
(a) Formation of nation wide Service Center and Offices.
(b) Innovative website, informs about dealer network, company offices, toll free service
number, and also educate customer about – designing and engineering factors of air-
conditioning system selection like heat load calculation and other energy consumption
related information about the each products.
(c) Customer Service Number - the all-India telephone number of this new centralized
Customer Service toll free number.
(d) Formation of the National Account Cell for the repeat or key customers and also
formation of Customer Grievance Cell.
(e) Training to the Sales and Service dealers. (51)
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(C) A Study of Extrinsic CSR of Carrier.
(i) Corporate Thinking About Extrinsic CSR
Zubin Irani (2009) Managing Director – Carrier India, reports, “Carrier‘s growth
and success has been built on a foundation of trust – in the quality of our products and
services, in the dedication of our people, and in the many ways we contribute to the
well-being of our communities. This is directly in line with the corporate philosophy of
Carrier‘s parent company, United Technologies Corporation (UTC). Our commitment
to responsible corporate citizenship infuses every aspect of our business. We
consistently pursue fair and ethical standards, whether delivering products and services
to our customers, forging relationships with industry partners, or fostering the personal
and professional development of our employees. Carrier is committed to work with the
society with our core values, and on going commitment to the corporate world,
environmental and social responsibility. Carrier actively supports the communities
where we live and work through community service and charitable contributions. It is
an essential aspect of our overarching mission to make the world a better place, today
and well into the future. At Carrier, our commitment to making the world a better place
to live extends far beyond creating innovative products that enhance people‘s comfort.
We believe that giving back in support of the communities where we live and do
business – through community service and charitable contributions – is a fundamental
aspect of our business. To us, success is not just measured in units sold or dollars and
cents, but the extent that we can help to make in difference in the world. We actively
work to improve communities by supporting initiatives that enrich and enhance people's
199
lives. We partner with organizations, schools and universities to support programs and
provide financial assistance to those in need.?
We do this by:
?Financially assisting community organizations, where Carrier does business;
mobilizing employees and resources to assist community development, promoting
community event sponsorship. ?
Louis R. Chenevert (2009) - Chairman & Chief Executive Officer – UTC USA.
?We believe that successful businesses improve the human condition. We measure our
results through our social dimension score on the Dow Jones Sustainability Indexes,
which includes our corporate citizenship strategy, stakeholder engagement approach
and contributions to nonprofit institutions. In 2010, we increased our social dimension
score by 4 points. With a strategic focus on the environment, math and science
education, and the arts, UTC contributed $19 million to nonprofit organizations in 2009.
We initiated new strategic programs, including the sponsorship of the Sustainable Cities
Design Academy, a joint effort with the American Architectural Foundation, to partner
with governments and private real estate developers to increase the sustainability of
future projects. UTC also joined the National Corporate Team Program of the American
Cancer Society Relay for Life.?(52)
(ii) Community Services of UTC and Carrier.
Top management at UTC believes that Successful businesses improve the human
condition.? UTC is one of the world‘s organization which measures their social
responsibility performance through results through social dimension score on the Dow
200
Jones Sustainability Indexes
1
, which includes their corporate citizenship strategy,
stakeholder engagement approach and contributions to nonprofit institutions.
1
Launched in 1999, the Dow Jones Sustainability Indexes are the first global indexes
tracking the financial performance of the leading sustainability-driven companies
worldwide
As per Social Report , UTC 2010,
“In 2010, we increased our social dimension score by 4 points. With a strategic focus
on the environment, math and science education, and the arts, UTC contributed $19
million to nonprofit organizations in 2010. Average spent of UTC towards the
charitable activities or community services are close to $ 21.0 million in the last five
years.” Mandyck : Carrier?s vice president for Sustainability & Environmental
Strategies.
Carrier do initiated new strategic programs, including the sponsorship of the Sustainable
Cities Design Academy, a joint effort with the American Architectural Foundation, to
partner with governments and private real estate developers to increase the
sustainability of future projects. UTC also joined the National Corporate Team Program
of the American Cancer Society Relay For Life. Recently company donated close to
USD 2 million to Japan earth quake relief fund.? (53)
Some of the notable examples of their community services or suitable development
efforts are as under.
(a) UTC named to Dow Jones Sustainability Indexes for 11th Consecutive year - 2009
UTC has been named to the 2009-2010 Dow Jones Sustainability Indexes (DJSI).
UTC‘s score rose five points over the 2008 score. The 2009 assessment process
reviewed 2,500 companies along 58 difference criteria including corporate governance,
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risk management, climate change mitigation, and codes of conduct, environmental
health and safety results, supply chain standards, corporate citizenship and human
resource management. In 2009, 317 companies were selected for the DJSI World.
(b) Carrier Towards the Sustainable Development (2010)
Against the backdrop of Earth Day 2010, Carrier Corp. demonstrated its environmental
stewardship and ongoing support of the Sustainable Enterprise Partnership (SEP) with a
donation of $35,000. The SEP, collaboration among Syracuse University‘s Whitman
School of Management, the SUNY College of Environmental Science and Forestry
(SUNY ESF), and the Syracuse Center of Excellence in Environmental and Energy
Systems, This third donation brings Carrier‘s total support of the SEP to more than
$100,000. (54)
(c) Carrier India Won 2009 National Energy Conservation Awards- 2009
Carrier India earned the prestigious National Energy Conservation Award of India for
third consecutive years. Carrier also won first prize in the ?Manufacturers of BEE Star
Labeled Appliances (air conditioner) Sector? (Refer Appendix XXI for the details about
Carrier Awards.)(55)
?We are truly honored that Carrier‘s environmental leadership is being recognized with
such prestigious awards,? said Zubin Irani, managing director, Carrier India. (Dec. 14,
2009). (56)
(d) Carrier Corp. Named U.S. Green Building Council Education Provider
Carrier promoted technical expertise in the industry with the expansion of its
sustainable solutions curriculum and has recently been named a U.S. Green Building
Council Education Provider (USGBC EP). (57)
202
(e) Carrier Corp. Donates to China Disaster Relief (2008)
Carrier Corp.‘s Building Systems and Services Asia division has pledged its support for
the China earthquake relief effort by making a $10,000 donation to the China Red
Cross. In addition, UTC donated $250,000. (58)
(f) Carrier Invested $50 Million in India; New R&D Center for green products.
Carrier invested $50 million (Rs 200 Cr) in India during the last three years to build a
new global research and development (R&D) center which will develop green non
ozone depleting products and technology for local and global market. (59)
(g) ETP Recognized as a Partner in Education (2005)
Carrier built new Training and Development Bridge Program at John Tyler High
School. This vocational program provides a combination of technical training and future
employment opportunities in the field of HVAC to the high school students.(60)
(h) UTC Raises Nearly $650,000 for Asian Disaster Relief ( 2005)
UTC's matching gift program aided victims of the Asian tsunami disaster raised nearly
$650,000. Carrier contributions were close to $100,000. The program, raised more than
$270,000 for the American Red Cross International Response Fund; more than
$205,000 for Habitat for Humanity International's Asia Tsunami Response Fund; and
nearly $160,000 for the AmeriCares Foundation's South Asia Earthquake Relief Fund.
UTC matched 100 percent of employee contributions to the fund. (61)
(i) UTC Donates $50,000 to Pakistan Earthquake Relief. (2005)
UTC has donated $50,000 on behalf of the company and its employees to the
International Federation of the Red Cross/Red Crescent to aid in continuing earthquake
relief efforts in Pakistan and Kashmir. (62)
203
(j) Employees Helping Employees Recover from Katrina.
UTC employees generated $550,000 for the Katrina affected people UTC matched with
an equal amount from the company for the relief and rehabilitation work. Over 800
pounds of disaster relief items were collected by Carrier employees. (63)
(k) Home Away from Home (Jul. 15, 2004)
Successful business partnerships are formed and strengthened over time. When these
partners team-up to support a community-based organization, the results can be
powerful. Carrier and McDonald‘s Corporation enjoy a special kind of partnership. Not
only does it revolve around world-class food service equipment, it involves supporting
the Ronald McDonald House Charities (www.rmhc.org). Since 1974 Ronald McDonald
Houses have provided a ?home-away-from-home? for families of seriously ill children
who are receiving treatment at nearby hospitals. there are nearly 240 Ronald McDonald
Houses in 25 countries around the world. These homes, as the name infers, have been
made possible with the generous support of McDonald‘s restaurants and many other
corporate partners. (64)
(iii) Carrier and UTC on Environment Protection and Sustainable Solution.
UTC claims to be committed for measuring and reducing the impact of their operations
and products on the environment. They have set aggressive conservation goals. UTC
partner with organizations such as the World Business Council for Sustainable
Development, the World Resources Institute and the U.S. Environmental Protection
Agency‘s Climate Leaders to understand environmental trends and the best ways to
address them. Below enclosed Table 4.12 brief about the UTC and Carriers attempt
towards the environment protection.
204
UTC?s environmental initiatives and plans 2007-10
Table 4.12 (CSR –Reporting – Environment)
Plan for 2007-10 Status till end 2010 Way ahead for 2011
Reduce greenhouse gas
emissions 3 percent annually
and water consumption 2.5
percent annually from 2007 to
2010.
Achieved the same after great
attempt and commitment for the
two years.
Have to Continue to have
consistent improvement in
the same till 2012 as per
new plans at the same
rate.
Decrease green house gas
emissions by 25% and water
consumption by 25% from the
base line of 2006.
Greenhouse gas emissions
decreased 23 percent, and water
consumption decreased 24
percent from the 2006 baseline.
Continue to identify, fund
and implement energy and
greenhouse gas reduction
projects beyond the $100
million target.
Invest $100 million from 2007
to 2010 in energy conservation
projects. Through year-end
2009,
UTC approved $116 million in
energy conservation projects,
including continued investment
in new co-generation power
plants under construction in
Connecticut at Sikorsky‘s
Stratford and Hamilton
Sundstrand‘s Windsor Locks
facilities.
Will have to implement as
per the plans.
Maintain compliance with
environmental permits. In
2009, UTC conducted 118
independent compliance
auditsof facilities worldwide.
Actions to address risks were
identified and systematically
tracked to closure. UTC
operations that were not
scheduled for independent
audits in 2009 conducted
detailed permit reviews to
validate compliance.
Maintain compliance with
environmental permits.
Prepare to launch both the
next generation of
greenhouse gas, air
emissions, water and
waste reduction targets,
and the expanded set of
goals for facilities,
suppliers and products for
2011 through 2015.
Mandyck Carrier‘s vice president for Sustainability & Environmental Strategies
reported ?Carrier was among the first companies to set energy reduction goals for the
factories in 1988. This led Carrier to be the first company-which has wide global
environmental, health and safety goals in 1997 in the industry too. More recently, from
205
2000 to 2009, Carrier reduced its air emissions by 76 percent and water usage by 52
percent on an absolute basis. Since 2006, we have lowered our greenhouse gas
emissions by 33 percent. ?Environment stewardship‘ is one of the most identified ?core
values? of Carrier. Carrier believes that green products must start at a green company
that demonstrates measurable results in four key areas: products, people, production and
practices. We extend our influence across the value chain to reduce, and where possible
eliminate, negative effects on our environment created by factories, products and
suppliers. For more than 20 years Carrier has led with sustainable solutions to advance
energy efficiency and ozone protection, while minimizing the environmental impact of
its manufacturing operations. For its leadership in ozone protection and energy
efficiency, Carrier has been the recipient of numerous local and national environmental
awards. In 2007, Carrier received the U.S. Environmental Protection Agency's Best-of-
the-Best Stratospheric Ozone Protection award, In 2008, Carrier in the United
Kingdom was awarded the Environmental Pioneer in Cooling Award, In 2009, for the
third consecutive year, the Government of India's Ministry of Power awarded Carrier
India First Prize for the National Energy Conservation ? (65)
Some of the notable steps taken by Carrier‘s CSR approaches for the sustainable
development are mentioned here.
(a) Action Against Ozone Depletion.
During the Montreal Protocol air-conditioning companies were agreed to phase-out the
production and consumption of chlorofluorocarbons (CFCs) and hydro
chlorofluorocarbons (HCFCs) used as refrigerants in air conditioning and refrigeration
systems. Carrier Corp. pioneered the phase-out of CFCs for the air conditioning and
206
refrigeration industry in 1994, two years ahead of U.S. requirements and 16 years
before mandates in developing countries. The Montreal Protocol was signed in 1987. As
agreed in the same the phased-out CFC production was planned for developed countries
in 1996 and developing countries starting in January of 2010. The Protocol also
requires all HCFCs to be phased-out in new systems in 2020 for developed countries
and 2030 for developing countries.
(b) Puron Refrigerant from Carrier Offers Solution to R-22 Phase Out. (2008)
It is necessary to phase out R-22, an ozone depleting refrigerant used in some new air-
conditioning systems for more than four decades. To meet this environmental challenge,
Carrier introduced non-ozone depleting alternative cooling solutions with Puron
refrigerant, which was approved in 1997 by the U.S. Environmental Protection Agency.
AppendixXXI represent the major awards won by the Carrier in environmental
leadership.
(D) A Study of Corporate Social Performance Index of UTC & Carrier Corp Ltd.
Corporate Responsibility from greenhouse gas emissions to community investment,
UTC measures corporate responsibility performance in terms of the global indexes.
CSR progress and performance is being measured using key performance indicators
(KPIs). UTC environmental reporting standards encourage the ongoing analysis and
correction of data. Table 4.13 shows the KPI from the Social Reporting of UTC.
207
Table 4.13 - UTC CSR Ratings on Various Targets.
Sr.
No.
Criteria 2005 2006 2007 2008 2009 2010
1 Dow Jones Sustainability Index (Total Score) 70 62 69 72 77 77
2 Government Metrics International
Accountability Ratings (Compared to S&P
500 Companies )
10 10 9.5 9.5 9.5 10
3 UTC Charitable Contributions (Dollars in
Millions)
17.9 20.9 20.4 25.5 19.0 19.0
4 Green House Gases (Million Metric Tons –
Co
2
e
2.03 2.48 2.31 2.17 2.03 1.94
5a Industrial Process Waste Million (lbs) -
Recycled
280 298 257 235 193 186
5b Industrial Process Waste Million (lbs) – Non –
Recycled
48 96 80 75 57 54
5 Total Industrial Waste Produced (lbs) 328 390 337 331 250 241
6 World Wide Water Consumption (Million
Gals.)
2156 2177 2040 1926 1644 1600
7 Elimination of materials of concern (goal
achievement )
NA 38% 44% 53% 51% 50%
8 Lost workday incident rate (Cases/ 100
employees)
0.3 0.49 0.31 0.26 0.18 0.13
9 Energy Efficiency (New Products meeting
goal)
NA NA 75% 65% 73% 64%
Note : 2006 figures were rebased lined to include the acquisition of Chubb, Kldde and Rocketdyne.
208
Carrier confirms that in the given economic conditions of recession world wide in 2009
the results have shown significant reduction in CSR expenditure for them, however they
are committed that once after the financial situation will improve they were reduce the
reductions made in 2009 CSR expenditures.
Table 4.14 presented herewith express the summary of the CSR approaches of Carrier
on defined variables.
209
Table 4.14 Summary of CSR Approaches of Carrier / UTC Ltd.
Highlights of Corporate Governance and Ethical Behavior.
? Carrier Corporation is a subsidiary of United Technologies
Corporation, registered under New York Stock Exchange.
(NYSE:UTX). Carrier India existed since 1986 a part of Carrier
global is $11.4 bn USD organization.
? Both UTC and Carrier has a 9.5 out of 10 rating till year ended
2009 for its Governance rating and it‘s AAA rated company on
Governance at Dow Jones Index.
? Carreir India has been following all the legal guidelines of SEBI
RBI strictly . Both UTC and Carrier did not do well on
financial performance during the year 2008 to 2009 due to
global recession..
Intrinsic CSR Approaches
? Taking care of the employees, having professional performance
appraisal system and performance linked incentive plans.
? Having well constructed training and development centers and
consistently empowering employees and dealers through training
and development.
? Carrier owns a ?Willis Carrier Dealer Club‘ and it‘s the company
has brought dealership concept in Indian HVAC industry for the
industrial and commercial product business.
? Carrier dealership network enjoys part of being Carrier USA too
and have clearly spelled out dealership policy.
? Due to the wide dealership network Carrier operates with a
minimum manpower and capital investment.
Extrinsic CSR Approaches.
? Carrier improved it‘s Social Score by 4 points over it‘s previous
year reporting.
? Has a strategic focus on the environment, math and science
education, and the arts.
? Also works on development of new environmental friendly
technology and energy conservation.
? Carrier India Won National Energy conservation award – 2009
? In 2009 company invested Rs. 200 crore for setting up R&D
center for developing green product at India.
? Carrier‘s noteworthy CSR examples are their work in ?Katrina‘
crisis and earth quakes.
? Carrier has won many global prestigious awards from UK,
India, China for their work on energy conservation.
CSR Reporting / Index.
? Carrier is only the company has a CSR reporting and
professionalism in handling CSR at senior management level.
? Is one among the best CSR practicing company of US.
? UTC contributed $19 million to nonprofit organizations in 2009.
Avg. charitable spent of UTC is $ 21.0 million in the last five
years
? Carrier has brought a strategic tie-up with MacDonald‘s for
business and CSR partnership and fund MacDonald‘s ?Home
away from Home? CSR projects across the globe.
? Is only the company takes take accounts and performance of
CSR activities with pre-decided targets.
? All its plants have aims of reducing water consumption and
green gas emissions by 25% every year over previous year.
210
4.3.4 CSR Approaches of M/s ETA.
ETA Engineering Private is an Associate company of ETA ASCON Group of
Companies of Dubai, a multifaceted organization and a leading name in the region
known for its commitments for high standards of service. (66)
(A) A Study of Corporate Governance.
(i) Corporate Existence of ETA
ETA with Annual Turn Over in excess of US $.6 Billion, a part of ETA -ASCON
Group of companies, Dubai. employ over 50,000 employees branches in 21 countries
all over the world since last 32 years. ETA is one of the leading Engineering,
Contracting and Trading Company in the UAE with 51% participation from UAE based
AL Gurair Group of ETA. (67)
(ii) Board of Directors – as per Legal and Mandatory Guidelines
ETA India has been following Indian code of conduct and rules and regulations of
Indian trade policy and has the mandatory and legal board of governance as per
requirements headed by Chairman : Mr. Prithvi Raj Singh Oberoi , Vice-Chairman
Mr. Syed Mohammed Salahuddin as per the financial report of 2009. A sound Board of
Directors as per the legal guide lines of SEBI. Company do obey the rules and
regulation laid by RBI for the MNCs in India..(68)
(iii) Corporate Purpose and Code of Conduct of ETA.
ETA Ascon and ETA India, does not have clearly spelled out Code of Conduct and as
the company officials reported they are in the process of constructing the same. ( it was
also not reported on it‘s website www.eta-engg.com till last viewed on 10
th
June 2011,
211
and it was under construction.) However company has a Mission, Vision, Value
statements and Quality policy in practice which has been shown in Appendix XXII.
(iv) Financial Governance
ETA with Annual Turn Over in excess of US $.3.1 Billion, a part of ETA -ASCON
Group of companies, Dubai employ over 50,000 employees branches in 21 countries all
over the world since last 32 years. ETA is one of the leading Engineering, Contracting
and Trading Company in the UAE with 51% participation from UAE based AL Gurair
Group of ETA, however it was not possible for researcher to get the details about the
same from the local branch office and website , however company has been leading
organization of Dubai stock exchange and have a sound financial back up and
governance and one of the important reason said to have it is because more than 50%
equity of the company is beholden by the promoters.
(B) Intrinsic CSR of ETA .
(i) Intrinsic CSR Towards Employees.
ETA Employee Policy
Mr. Prithvi Raj Singh Oberoi Chairman of the group reports,
?We believe enthusiastic and professionally aggressive employees have laid the
foundation of our success and are our most priceless asset. For us mutual development
of both the company and our staff is high priority. We value our employees and ensure
that they too grow with us and excavate their potentials to the utmost extent.?
212
Employee Benefits
ETA offers a wide array of benefits like welfare plans, financial security plans, paid
time off, health and wellness services, and many more employee and family services.
Besides standard salary package they do offer benefits packages includes: Medical
Care, Life Insurance, Vacation and Holidays etc. ETA does have employee oriented
schemes for their development like,
(i) The Company has HR practices such as setting the performance objectives at the
beginning of the year, reviewing employee performance every year through an annual
appraisal system and an annual compensation review based on market surveys.
(ii) Time to time information about happening in the company and industry through
internal communication, website, and informal meetings.
(ii) Intrinsic CSR Towards Dealers and Vendors
ETA is a worlds leading contracting company and taking high value contracts, certainly
believes that the suppliers are prime support to their project success and have build a
chain of national and international chain of loyal suppliers for meeting their project
requirements. However in India they are in a process of building network and
relationships for the suppliers and distributive network channel but their management is
of strong belief that project business essentially needs a supply chain mechanism and
network and durable sales is out of reach without the support of effective dealer
network. Company is consistently engaged in building their network the kind of one
they have in the Gulf countries and other Asian countries.
213
(iii) Intrinsic CSR Towards Customer
ETA world over has a strong base of loyal customer and they do have the most
sophisticated IT network for managing the customer. However in India they are in the
building process of strong customer base. They have Websites, Service station support,
Toll free numbers and established offices with trained personnel for the service
business. ETA top management strongly believes that ?It is extremely competitive
industry in it‘s all the business segments. No company can sustain in to the market place
without customer relation ship management. Competitive rivalry of the industry is
driving all the companies to do ?Some thing more? for their customer relationship
management (CRM)? ETA has taken service business management with the top priority
with following initiatives.
(i) Formation of nation wide Service Center and Offices.
(ii) Innovative website, informs about dealer network, company offices, toll free service
number, and also educate customer about – designing and engineering factors of air-
conditioning system selection like heat load calculation and other energy consumption
related information about the each products.
(iii) Customer Service Number - the all-India telephone number of this new centralized
Customer Service toll free number.
(C) A Study of Extrinsic CSR of ETA.
ETA undertakes its corporate social responsibility through a variety of effective
programs. Since 1973, the company has been serving the community with its outreach
efforts. This has touched the lives of millions.
214
(A) ETA Community support programmers.
Major Approaches and Initiatives
(a) Home for the Homeless
ETA Star supports ?Red Crescent Authority? for ?Home for the Homeless‘ programme
with AED 2 million. (Approx. Rs.20 million).ETA Star and its joint venture partners
donate one per cent of total sales during the Holy month of Ramjan to build homes for
the homeless. The donation value is equivalent to one per cent of the total sales of ETA
Star and its joint venture partners Hircon and Star Giga.
(b) Fundraising Campaign for "Homes for the Homeless"
ETA Star Property is developing over 30 million square feet of premium property in
countries across the Middle East and South-East Asia, including UAE and India. ETA
Star Properties is in its third year of partnership with Habitat for Humanity
International, raising awareness and funding for families in need of a place to call home.
The ETA Star "Homes for the Homeless" Program has impacted the lives of 4,255
people to date and hopes to contribute again this year to continue this great work with
Habitat for Humanity. The proceeds raised during this fundraising campaign will
continue to support our strategic goal of changing the lives of more than 4,000 people
across the Middle East, Africa, India, Pakistan, and Bangladesh. The funds also
designated to programs in Jordan and Egypt. (69)
(c)Mobile Medicare Unit ( Health and Civil Services)
ETA ASCON STAR GROUP Supports Help Age India in a big way. They donated
Mobile Medicare unit in Ramanathapuram district. ETA also donated Rs 21,88,190 to,
Help Age India towards running cost & capital cost for one year for running a Mobile
215
Medicare Unit. ETA signed a MOU with Help Age India to support this newly started
unit at cost of Rs 50,53,350 for three years which includes the cost of the new Mobile
Medicare unit Van. ETA also donated Rs 6,00,000 towards the first installment of
approved donation of Rs 12,00,000 for providing free cataract IOL surgeries to 1000
poor elders in the Ramanathapuram District. (70)
(d) ETA Ascon Star Contributes to Red Cross Society of China.
ETA Ascon Star Group has contributed 1.5 million dirhams to the Red Cross Society of
China for the rehabilitation of Sichuan earthquake victims.
(e) ETA Star International Signs MoU with TERI on Environmental Studies
ETA Star International, member of the Dubai-based $5 billion ETA Ascon Star Group,
has signed a Memorandum of Understanding (MoU) with The Energy Research
Institute (TERI) of India to explore areas of co-operation in an effort towards
sustainable development. The other areas of co-operation include conducting
environmental impact studies, energy audits of commercial, residential and industrial
units, Clean Development Mechanism (CDM) studies and reducing carbon footprint in
the UAE.
(f) Humanatarian Aid for the Homeless at Myanmar by ETA Star
ETA Star Properties donated 5000kgs of rice grains for the benefit of people affected by
Cyclone Nargis in Myanmar. The donation is being made through the World Concern
Nargis Relief Team the world's largest international food assistance organization.
216
(g) Ascon?s Donation and Clean Up Campaign
Ascon donated school desks and undertook maintenance works of the old desks for Al
Hudaybiyah Primary School, Dubai. Ascon in coordination with the Western Region
Municipality organized a clean up campaign in Ghayathi city. (71)
(h) ETA Sustainable Development programmes.
Dubai, 20th October 2008:A large number of employees and senior management
officials of ETA Ascon Star Group gathered on October 18 and 19 in Dubai to express
their solidarity with the UN-supported 'Mission Green Earth Stand Up and Take Action'
campaign. Mr. Syed M. Salahuddin, Managing Director of the Group, reported "Only
such a concerted effort by all would make the pledge meaningful and produce the
desired result after all nature is nature and we must preserve it" (72)
(i) ETA?s Attempt on Improvement of Education
BITS, Pilani - Dubai (BPD) was established in Dubai in September 2000 in response to
the growing needs for Quality Engineering Education among the residents of Middle
East. ETA-Star Education, a wholly owned subsidiary of ETA-Star Holdings aims to
provide contemporary education while keeping high moral, social and pastoral values
by setting up a number of schools following different curricula all over the UAE.
Dubai Institute of Business Management popularly known as DIBM was established in
1999 by ETA Ascon. It was started with a vision to provide world-class training &
development programs to corporate houses of diverse sectors across the globe. (73)
Table 4.15 enclosed here, represents the summary to the CSR approaches adopted by
ETA on various variables of study.
217
Table 4.15 Summary of CSR Approaches of ETA I ndia /ETA Ascon/ETA Star Group.
Highlights of Corporate Governance and Ethical Behavior.
? ETA with Annual Turn Over in excess of US $.3.1 Billion, a
part of ETA -ASCON Group of companies, Dubai. Employ
over 50,000 employees branches in 21 countries, registered
under Dubai Stock Exchange.
? ETA in India with seven different companies operates under the
RBI / SEBI guidelines and has been emerging large HVAC and
MEP contracting company.
? Financial data of ETA has not been displayed on the website of
ETA star or ETA Ascon, there are very few shareholders‘ at
India , even Financial report of Indian operations is also
difficult to get from ETA , leads to conclude that company
needs to be professional in the corporate communications.
Intrinsic CSR Approaches
? Taking care of the employees, having professional performance
appraisal system and performance linked incentive plans.
? Company is in its inspection date, regularizing training and
development center and other infrastructural facilities.
? Being late entrant in India market conditions ETA has a major
challenge of developing employee loyalty and still they don‘t
have structured dealership network, relaying more on to the
contractors and employees.
? Company has a sound thinking regarding employee welfare and
vendors‘ development; however they are in a process of
implementation of the same.
Extrinsic CSR Approaches.
? ETA Star supports ?Red Crescent Authority? for ?Home for
the Homeless‘ programme with AED 2 million. (Approx. Rs.20
million).
? ETA Star Properties is in its third year of partnership with
Habitat for Humanity, raising awareness and funding for
families in need of a place to call home.
? ETA Supported last year to Help Age India by donating Rs
21,88,190 towards the running cost & capital cost for one year
for running a Mobile Medicare Unit.
? ETA Donated last year Rs 12,00,000 for providing free cataract
IOL surgeries to 1000 poor elders in the Ramanathapuram
District
CSR Reporting / Index.
? Although ETA does host of social activities across the globe
their structured reporting is not done, they need to regularize the
same with a proper allocation of professional management
executives to CSR support.
? ETA invested $5 billion with The Energy Research Institute
(TERI) of India for energy conservation.
? ETA work towards the environmental products development,
education and community services near about their
manufacturing plants as a part of their global CSR programmes.
? ETA owes educational institutions at India and Dubai and
donates a huge part of their operating profit towards the building
and development of the educational institutes.
218
4.4 Synthesis of CSR Approaches of the Selected Companies
„Environment Care? – A Common Accountability Approach
From the analysis of the secondary data gathered and the information received during
the personal interviews of the top and middle management executives of the industry it
clearly appears that the leadership and top management of all the four companies BSL,
Voltas, Carrier and ETA have a similar perception regarding the industry being
accountable for the environment damage and global warming. Considering the same,
they all have agreed that, it is their prime responsibility of the industry to ensure the
environment protection. It is revealed from the study that all the companies invest
heavily in to the Research and Development of the environment friendly technology and
towards the environment protection activities. ?Thinking of discharging the CSR
responsibility towards the society, because industry and beholders believes that they are
responsible towards the society? that leads to relating the practices as per the
?Accountability Approach? of CSR. Thus, we can say that, It appears from the study for
that ?Common‘ concern all the companies and their top management is, ?environment‘
because they find they are accountable for the ?damage‘. Majority of the industry CSR
investment is made towards the same by all the companies, so we can say that the all the
companies CSR approach is ?Accountability Approach‘ for the common cause of
?Environment Protection‘.
(A) CSR Approach of Blue Star Limited.
Blue Star is a family firm with equity holding of share holder's fund. Thinking
regarding CSR had started long back, when the founder Mohan T. Advani started
feeling and believing that the organizations should be responsible for the society and
219
people around the society. Trusteeship Approach of CSR believes that, ?Businessman
should act as a trustee of public fund and besides maximizing profits the societal
concerns also should be addressed by the trustees of the fund.? However, prime
objective of the business is to earn profit but being a trustee of the public fund some
contribution should also be made towards the development of the society. BSL CSR
history guides us, that the leadership has a clear understanding about their profit
maximizing role, and besides that, they are concerned for the society but by being a
trustees of the public fund, without deviating from the main purpose of the business.?
Leaders of the organization acts as a responsible trustees of the companies funds and
towards the society - thus we can say that the companies approach towards the CSR is
'Trusteeship Approach' where trustees try to keep the balance between Social Cause and
Profit making.
(B) CSR Approach of Voltas Limited.
Voltas is a TATA group companies and TATA group itself has been working hard to
build ethical brand - TATA, which has clearly defined ?TATA code of conduct‘ and
guidelines for Voltas executives for 'Do' and 'Don't of the business. So besides being
family firm and adopting 'Trusteeship' CSR approach it is clearly visible that Voltas
executives does have element of ?Strategic CSR Approach' in their CSR policy making
and their thinking. Strategic Approach of CSR, includes ?Inclusiveness of business and
Social actions? of the company. Voltas leaders have been attempting continuously to up
bring and build ?TATA‘ as an ethical brand which in turn helps the company in to the
business too. CSR is an important strategic tool for building ethical brand for ?TATA‘
group of companies so as for ?Voltas‘. However the firm is a family firm with a priority
220
of ?increasing shareholders‘ fund , and making profit and top management executives
firmly believes that they act as a trustees of the share holders‘ fund , which means that
their approach is a dual ?strategic CSR approach‘ as well as there is an element of
?Trustee Ship Approach‘ in their CSR strategies.
(C) CSR Approach of Carrier (UTC) -USA
Carrier and UTC is the global organization with an organized CSR department and is
only the company in the industry having CSR reporting in a specified targets like,
?Green gas emission reduction‘ , ?water utility reduction‘ , ?accident rate minimization‘
, ?customer satisfaction rate improvement‘ etc. The CSR targets are reviewed as
professionally as financial or commercial performance of the organization. CSR is
headed at 'Strategic' level and it is integrated as a part of business strategy formulation
and implementation. It is clearly visible that the CSR approach is a 'Strategic CSR'
Approach of the company which is aiming to build ?Sustainable Development‘ and
?Sustainable Brand‘.
(C) CSR Approach of ETA -UAE
Global organization ETA in India is in its introduction stage and is quite unclear about
discharging the CSR. Their main focus is on health and education and their leadership is
investing most of their CSR funds around their factory locations - they consider
themselves accountable for their social behavior and analysis shows that, their CSR
approach is more of an ' Accountability Approach' model of CSR. World over it is
viewed that the company is creating the ?home‘ for homeless and health since the
company‘s main business is the construction and infrastructure development.
221
BLUE STAR LIMITED - (Trusteeship Approach)
In BSL Leaders of the organization thinks and acts as a responsible
trustees of the companies funds and towards the society - and
creating a balance between 'Profit' and 'Social Cause' thus we can say
that the companies approach towards the CSR is 'Trustee ship
Approach'
VOLTAS LIMITED
(Trusteeship and Strategic CSR Approach)
Voltas is a TATA group companies and TATA group itself has been
wokring hard to build ethical brand - TATA, which has clear guidlines
for Voltas executives for 'Do' and 'Don't. So besides being family
firm and adopting 'Trustee Ship' CSR apporach it is clearly visible that
VOLTAS executives does have element of 'Strategic CSR Approach' in
their CSR policy making and their thinking.
CARRIER (UTC) -USA
(Strategic CSR Approach)
Carrier and UTC is the global organization with an organized CSR
department and is only the company in the industry having CSR
reporting with a specific format. CSR is headed at 'Strategic' level and
is an important element of business strategy formulation and
implemetation. It's clearly visible their CSR approach is a 'Startegic
CSR' Approach.
ETA - UAE
(Public and Accountability Approach)
ETA in India has invested more of it's CSR funds near about
manufacturing plants being 'accountable to the society' besides they
have been creating facilities for 'health' and 'homes' and 'education'
for the stake holder and society is an example of 'Public Approach'
Their leadership consider themselves accountable for their social
behavior.
A common 'Accountable Approach by
all the companies (BSL,Voltas,Carrier
and ETA ) leadership towards the
'Environment Care' and 'Pollution
Control'
222
4.5 Conclusion
It has been noted while studying the CSR approaches of the selected companies that the
companies employees and the management believes in the discharging CSR not only
towards the employees and other important stakeholders of the business, but towards
the whole society too. They are clear in the perception that helping society helps
business too. All the companies have identified different areas of the extrinsic CSR,
however all the companies have been working hard and investing a huge time and other
resources on the primary issue of environmental friendly technology. The other
community services areas are mainly education, health and rural development. It was
interesting to note that global companies have international standards of the social
reporting which national companies must adopt for the betterment of the business and
the society.
223
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doc_443959203.pdf