, 2015

TAPMI

Tata Power:
Corporate social responsibility
and sustainability

BY
GROUP F2

PROBLEM STATEMENT:
To establish a separate corporate social responsibility department or modify the prevailing
system to maintain a balance between stakeholders concern as well as long term sustainability
of organization.
EXTERNAL ANALYSIS:
FACTORS
POLITICAL:
High emphasis on Public
Private partnership
Statutory provisions to
fulfil CSR responsibility
Privatization of power
sector to cater increasing
demand of power

Economic Factors:
Standardization of
accounting procedures
US market deregulation
Social Factors:
Technological Factors:
Dot-com Boom

Cultural Factors:

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IMPACT
Need to involve society in the organisational initiatives, hence need
to change the CSR activities to get angle of inclusion

Need to align the CSR initiatives along with the statutory

requirements, to ensure sustainability of efforts

Higher revenue generation capability has given impetus to CSR

activities by organization

This led to issues in transparency of outsourced auditing work and to

the scandals like the one in Enron. (Eg. GAAP- not followed)
Short term volatility in the energy market, thus making planning and
pricing more challenging.
N/A
Companies were capitalizing on it by adding prefix e- to their name
or dotcom in the end of the name. Trading businesses made their
businesses simpler.
N/A

Legal factors:
1.Deregulation of various
sectors
2.Changes in legal
standards
SWOT ANALYSIS

Created opportunity for expansion to various new sectors with a lot

of players coming in to the sector.
Led to increased Litigation risks and applying of consistent
accounting and auditing standards at lower costs.

Strength

Weakness

Is a part of TATA Group

Community development
Col. Prakash Tewari at helm, with his

Difficulty in documentation of key

substantial

communities
Dependence on NGOs
Expansion of business may render

the current structure infeasible

monitoring issues

experience

conservation projects
Employee
Motivation

pertaining to CSR
3 Cs initiative
Well defined 3 step process
CSR activities
MOU with NGO

in

various
initiatives

Opportunity

NGO collaboration
The CSR initiatives may lead to higher

efficiency
Goodwill increase

Critical Factor Analysis

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Threat

Negative perception
decrease in the control over the

initiatives
Increase in bargaining power of
NGOs

a. Expansion of production capacity

The expansion of production capacity leads to the mandatory increase in CSR
activities which will require a more focused approach towards structuring the CSR
activities. It may require modification in the structure of the current CSR program
b. Involvement of employee on voluntary basis
Voluntary support and involvement of the employees will be very crucial as it will
help determine the structure of the CSR initiative. A high employee involvement
may minimize the role of NGOs in the CSR activities. A low employee involvement
will ensure more productive working hours for the company thus making the
proposal of NGO collaboration economically viable
c. Available expertise on CSR
The assessment of expertise of the company in dealing with the CSR issues is very
important as most of these CSR initiatives involve local residents. If the company
doesnt have sufficient expertise in handling them, the implementation of the
initiative can be problem thus requiring involvement of NGOs in the process to a
higher extent
d. Cost to Company
The costs associated with the change in structure will be extremely crucial to the
approval of the proposal as more costs will mean less value to shareholders and will
result in a depleted reserve for the company
e. Stakeholder Awareness towards CSR
Stakeholders should perceive the structure change as in alignment with companys
vision of increasing the shareholder value

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Following are the constraints for the identified critical factors

1. CSR Budget and CTC
If a new department is to created, this would require employees which would entail
costs to the company and also further lead to increase in allocation of funds at the time
the budgets .
2. Change in government policies
With the change in government regime, compliance policies with respect to climatic
regulation, social responsibility will also change.
3. Time of implementation

Alternatives with Implications

Option 1
1. Evolve a new department from existing department with limited involvement of NGOs
2. Would enable TPC to carry out future CSR initiatives in line with its expansion plans
3. Reduce dependence of Company on NGOs/PBO .Commitment of company to CSR
activities at such level would build its reputation and Increases value for stakeholders by
creating a focused CSR unit

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Option 2
1. Coexistence of NGOS and CSR department with equal stakes in the initiatives.
2. Would enable company to carry out future initiatives after expansion is carried out.
3. Provide Tata power with expertise and convenience of implementation
4. Would help companys reputation with local committees with NGOs acting as a bridge
Option 3
1. Improve the existing system to perform CSR activities in collaboration of NGOs and
PBOs
2. TPC and other agencies can synergies their efforts to attain a common in more cost
efficient way. It can be done in the following way:
3. Selection: Employees having prior experience in specific areas will choose relevant
NGOs or PBOs to work with.
4. Motivation: People involved will be suitably awarded, even if the person is not the
employee of TPC. Lax in the work will attract penalties

Recommendation
The recommendation will be Option 2 Coexistence of NGOS and CSR department with
equal stakes in the initiatives due to the following reasons
Reason 1

With the current acquisition and expansion plans, a focused initiative by forming
a separate department would enable TPC to carry out required future CSR

Reason 2
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initiatives and help them deal with community issues more methodologically
Reduce dependence of Company on NGOs , a balance between companys

business objectives and CSR activities can be obtained

Reason 3

Commitment of company to CSR activities at such level would build its

reputation as a socially responsible company

Based on the recommendation the action plan to be suggested is as follows

Action Plan:

An exclusive department should be made out of the existing unit

The department should have well defined objectives and budgets
There should be internal hiring process carried out for the existing employees having

interest and some expertise in CSR initiatives

NGOs should be involved to a limited extent as it is being done now. This will supply

the requisite expertise while the company develops internal expertise in CSR issues.
Once such an expertise is developed, the involvement of NGOs can be gradually

reduced
The stakeholders should be conveyed the strategic importance of this whole process..
They should be conveyed the long term benefits such as increase in the company image
in the business environment which will ultimately lead to increase in shareholders value

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