1

NEW DELHI INSTITUTE OF MANAGEMENT NEW DELHI

A REPORT ON

"AN EMPIRICAL STUDY OF CORPORATE SOCIAL RESPONSIBILITY OF HERO MOTOCORP LTD,"

SUBMITTED TO: PROF: MEENA SINHA

SUBMITTED BY: NIKUNJ SHARMA

GAMMA-143

ABSTRACT In this thesis, i have undertook a comprehensive review of the CSR Practices presently prevailing at the three target companies, HER ! " C RP,# $or the purpose of investigation, I have chosen %oth primary as well as secondary source of information to get the results# I consulted many %ooks on the related topic like %ooks on CSR and also visited num%er of li%raries for the research purpose# I have mentioned related te&ts in the literature review section of the report# 'fter all the research work and collection of facts, the i have came to know a%out different practices which are prevelant in the target companies# "he study has revealed that Corporate Social Responsi%ility (CSR), for the corporate sector is more a%out corporate community involvement than anything else# "he participation of the corporates in the community %etterment programmes, going %eyond their economic arguments is what they call it CSR# the company that have %een studied Hero !otocorpfound to %e involved in CSR activities#

ACKNOWLEDGEMENT

I would like to e&press my sincere gratitude to the Ne

De!"# I$%&#&'&e O(

M)$e*+e$& for providing me an opportunity to +rite report on , corporate social responsi%ility- where I got an learning a%out no# of csr activities done %y Indian companiey#and I also like to thank to all manger of HER helped me during my pro.ect# ! " C RP# +ho have

I would like to thank my e&ternal guide P,-(. Mee$) S#$") for giving his valua%le suggestion and guidance through out the work in the a%sence of which the accomplishment of this pro.ect work would not have %een possi%le# I would also like to thanks M%.S'/ee0 C")&&e,1ee who is area manager of Hero !otocorp#

2NIKUNJ SHARMA3GAMMA14345

TABLE OF CONTENTS

INTRODUCTION CSR DEFINITION CSR REPORTING CSR-INDIAN PERSPECTI6E CSR-GLOBAL PERSPECTI6E LITERATURE RE6IEW

HERO MOTO CORP LTD BRIEF HISTORY MISSION76ISION STATEMENT CSR ACTI6ITIES

CONCLUSIONS 8 IMPLICATIONS

< INTRODUCTION

"HE +orld 1usiness Council for Sustaina%le 2evelopment has defined corporate social responsi%ility (CSR) as the 3ethical %ehavior of a company towards society3# Corporate Social Responsi%ility (CSR) is a concept which defines that organi4ation, especially (%ut not only) corporations, have an o%ligation to consider the interests of, customers employees, communities, and ecological considerations in all aspects of their operations# "his o%ligation is seen to e&tend %eyond their statutory o%ligation to comply with legislation# Corporate social responsi%ility is more a %usiness 5uestion than a legal 5uestion# "he social and environmental pro%lems that our world faces are intracta%le, comple&, and multi6faceted and there is evidence claiming that %usiness has %een a contri%utor to these pro%lems# !ost of this evidence indicates %usiness is poised to %e one of the more powerful and effective agents in the solutions# ' clear 7%est practice7 for corporations hoping to engage in strategic corporate responsi%ility is to engage with multiple stakeholders and to strategically partner across sectors# It stands to logical reason that one effective partnership to highlight is %etween %usiness and academia8 a not so typical for6profit and not6for6profit partnership# 9ittle focus and attention has %een given to the opportunity and potential of academic partnerships with %usiness to advance the Corporate Social Responsi%ility (CSR) agenda# If we are to truly change the glo%al management paradigm to one of sustaina%ility and integrated strategic CSR, one critical and rudimentary step in this process is to %uild this management mentality into our core management training8 we must educate future management leaders in the critical theory, frameworks, and practice of integrated strategic CSR, .ust as we educate them in traditional areas of finance, marketing, and accounting (:ellie '# !cElhaney, ;npu%lished "hesis)# It is important to distinguish CSR from charita%le donations and 3good works3# CSR goes %eyond charity and re5uires that a responsi%le company take into full account its impact on all stakeholders and on the environment when making decisions# "his re5uires the company to %alance the needs of all stakeholders with its

A need to make a profit and reward shareholders ade5uately# "he scale and nature of the %enefits of CSR for an organisation can vary depending on the nature of the enterprise, and are difficult to 5uantify, though there is a large %ody of literature e&horting %usiness to adopt measures %eyond financial ones# Corporate social responsi%ility (CSR) is an e&tended model of corporate governance and then accounts for a voluntary approach to CSR, meant as voluntary compliance with CSR strategic management standards, in terms of an economic theory of self6regulation %ased on the concepts of social contract, reputation and reciprocal conformism# CSR is closely linked with the principles of sustaina%le development, which argues that enterprises should make decisions %ased not only on financial factors such as profits or dividends, %ut also %ased on the immediate and long6term social and environmental conse5uences of their activities# "oday=s heightened interest in the role of %usinesses in society has %een promoted %y increased sensitivity to and awareness of environmental and ethical issues# Issues like environmental damage, improper treatment of workers, and faulty production that inconveniences or endangers customers are highlighted in the media# In some countries government regulation regarding environmental and social issues has increased# Critics of CSR attri%ute other %usiness motives, which the companies more often dispute# $or e&ample, some %elieve that CSR programmes are often undertaken in an effort to distract the pu%lic from the ethical 5uestions posed %y their core operations# It has %een suggested that CSR activity is most effective in achieving social or environmental outcomes when there is a direct link to profits8 hence the CSR slogan 32oing +ell %y 2oing >ood3# "his re5uires that the resources applied to CSR activities must have at least as good a return as that that these resources could generate if applied anywhere else, e#g# capital or productivity investment, lo%%ying for ta& relief, outsourcing, off shoring, fighting against unioni4ation, taking regulatory risks, or taking market risks?all of which are fre5uently6pursued strategies# +hatever altruistic values the company once had %ecomes socially responsi%le only to the e&tent that it enhances the corporate %rand and makes sense for long6term profits# +hich is not necessarily the wrong way to do corporate social responsi%ility@ Profit6seeking corporations,

D constrained and %uttressed %y moderate government regulation and spending, did far more to increase the welfare of the world than a proliferation of Bsocially responsi%le= governments# $irms may %e a%le to reduce their cost of capital %y appealing to socially responsi%le investors#

"he evolution of the relationship %etween companies and society has %een one of slow transformation from a philanthropic coe&istence to one where the mutual interest of all the stakeholders is gaining paramount importance# Companies are %eginning to reali4e the fact that in order to gain strategic initiative and to ensure continued e&istence, %usiness practices may have to %e molded from the normal practice of solely focusing on profits to factor in pu%lic goodwill and responsi%le %usiness eti5uettes# 'n e&amination of some of the factors which have led to the development of the concept of corporate social responsi%ility (CSR) would %e ideal starting ground for the conceptual development of suita%le corporate %usiness practices for emerging markets#

It has %een o%served that consumers consider switching to another company7s products and services, speak out against the company to familyCfriends, refuse to invest in that company7s stock, refuse to work at the company and %oycott the company7s products and services in case of negative corporate citi4enship %ehaviors # 9ast %ut not the least, firms all over the world is %eginning to grasp the importance of intangi%le assets, %e it %rand name or employee morale# nly firms that have gained the goodwill of the general pu%lic and are ideal corporate citi4ens will %e to develop these intangi%le assets into strategic advantages# "he cumulative contri%ution of all the a%ove mentioned factors can %e summari4ed %y figure %elow#

Social responsi%ility theorists assume that profit6ma&imi4ation is incompati%le with %roader social interests, so that managers should %e free to serve society generally rather than e&clusively shareholders# In fact, markets powerfully constrain anti6social corporate conduct# It follows that managers would serve society=s interests %est %y focusing on long6term profit6ma&imi4ation# However, the corporate form inherently gives managers significant slack to diverge from profit6ma&imi4ation# "he solution is to fundamentally change the governance structure of pu%licly held firms toward a partnership6type model that reduces managers= control over the firm=s cash# "his move is facilitated %y the shift toward thicker markets, which decreases firms= need to lock assets up in a strong and dura%le corporate entity# "he main impediment to such a change is the corporate ta&, which gives managers incentives to retain earnings#

Me&"-/% -( CSR ,e0-,&#$* !oon (*FF*) distinguishes &",ee &90e% -( CSR ,e0-,&#$* :;-++'$#&9 #$<-!<e+e$&=, :%-;#)!!9 ,e%0-$%#>!e 0,-/';&#-$ 0,-;e%%e%= )$/ :%-;#)!!9 ,e%0-$%#>!e e+0!-9ee ,e!)&#-$%=# 2uring the initial stages of development of CSR in emerging economies, the community involvement is more along the lines of a philanthropic involvement with company involvement limited to developing minimal or rather the a%solutely necessary amount of communal goodwill necessary to operate in the %usiness environment# 's compared with the developed countries like ;S, CSR in developing countries is seen as part of corporate philanthropy where corporations augment the social development to support the initiatives of the government# However in the ;S it is seen as a strategic tool which helps the organi4ations to have a legitimate e&istence in the society# CSR is considered in%uilt in the %usiness e&istence of the traditional firms in the emerging markets like India# However, trends in this regard are heartening with companies trying to esta%lish strategic alliances with the state and the civil society thus esta%lishing the presence of CSR as an institution in these markets# "he remaining parameters are internal to the firm involving the molding of their %usiness activities while incorporating CSR practices# 's companies start to em%race CSR practices to a greater e&tent, it leads to changes in production processes so that all environmental and societal norms are also satisfied even thought they may not contri%ute to the profit ma&imi4ing o%.ective of the firm# "his will mean that human rights agreements are also upheld taking into account the rights of the local communities# CSR also leads to evolution of employee relations in the company in such a way that employees %ecome ma.or stakeholders with definite decision making powers especially in the area of formulation of CSR policy#

1F

CSR )$/ /e<e!-0+e$& +ith the retreat of the state in economic activity in India, the imperative for %usiness to take up wider social responsi%ilities is growing# "he situation is comple& and India is facing a compounded set of corporate responsi%ility challenges# "he Bfirst generation= corporate responsi%ility agenda concerning conflicts %etween companies and communities over the control of natural resources is widespread# E&amples include struggles %etween rice growers and shrimp farms, land disputes %etween plantation owners and indigenous communities, and resistance from communities to mining pro.ects# Het India also faces a range of Bsecond generation= issues relating to ha4ards of industrial production, e&emplified %y the 1GE0 1hopal tragedy, %ut now encompassing a growing num%er of incidents across the su%continent where industrial air and water pollution, and the dumping of waste is going %eyond the limits of social and environmental tolerance# 'nd, finally, as the pace of ur%ani4ation continues and li%erali4ation opens up India to glo%al consumption patterns, many of its cities are simultaneously confronting the Bthird generation= responsi%ility issues related to products and services, whether they are auto pollution norms or pesticide residues in mineral water# +hereas %usiness cannot %e e&pected to take on the role of governments, in a situation where a ma.ority of the population lives %elow the poverty line and has little or no access to %asic pu%lic services such as health, education, water, and electricity, and where there are a multitude of comple& sustaina%ility challenges, CSR certainly has a potential for %ecoming a real tool for development?human, social, and economic# "he pu%lic=s e&pectations of %usiness are also growing# ' "ERI opinion poll in India found that Indians feel that the %usiness sector must play a wider and more e&pansive societal role# In addition to providing good 5uality products at reasona%le prices, companies should strive to make their operations environmentally sound, adhere to high

11 la%our standards, reduce human rights a%uses and mitigate poverty# 1ut the poll also revealed that people are not yet .udging companies in the marketplace according to these

criteria# 2eveloping such market6oriented pressures could %ecome a powerful lever for change# ne e&ample of an initiative that emphasi4es the development role of %usiness is the Sustaina%le 9ivelihoods Pro.ect of the +1CS2 (+orld 1usiness Council on Sustaina%le 2evelopment)3, which aims at doing %usiness with the poor in ways that %enefit them and the company# "he success of this %usiness model will %e instrumental in shaping the future of CSR as a development strategy#

C-,0-,)&e %-;#)! ,e%0-$%#>#!#&9 ? ;',,e$& %;e$),#"oday %usiness managers live under continuous pressure ,to e&cel- or ,to achieve-# Competitive environment %uilds more and more pressure on them to adopt all such methods that might ensure achievement of %usiness goals# Ialues and ethics at this .uncture %ecome irrelevant# Ha4ardous work conditions of mining corporations, cement industries, e&ploiting child la%our in glass and cracker industry, greedy pricing %y pharmaceuticals companies on monopoly products are a few e&amples# However, all companies are not alike and many have come forward for the cause of society# #In *FF*, the top ranking companies included Johnson K Johnson, 'pria Healthcare, Colgate Palmolive and >eneral Electric# Some other companies namely '11, 'racru4 Celulose, >eneral !otors, 2ow Chemical, !itsu%ishi >roup, Lovartis and Rio "into are also involved into the CSR programme while moving ahead in their %usiness# 'sea 1rown 1overi, the Swiss engineering corporation, is a sponsor of the >lo%al Sustaina%le 2evelopment $acility (>S2$) and an active mem%er of the +orld 1usiness Council for Sustaina%le 2evelopment (+1CS2)# It is a world leader in developing eco6efficient

1* technologies in a wide range of industry areas from electric transmission to transportation and is %uilding a glo%al network to install these technologies in many developing and transition economies# 'racru4 Celulose, the world7s largest e&porter of %leached eucalyptus pulp, is often cited for its efforts to promote sustaina%le development through tree plantation, harvesting and pulp production, processed in 1ra4il# >eneral !otors, the world7s largest automo%ile manufacturer is involved in various environmental protection initiatives and partnerships# Similarly, 2ow Chemical, a ;S corporation was selected to participate in the >S2$ for, inter alia, ,a%iding %y the highest standards of human rights, environment and la%our standard norms, as defined %y ;L agencies# !itsu%ishi >roup has %een actively cultivating an image of environmental responsi%ility through advertising and specific environmental pro.ects# Lovartis, the Swiss life science corporation, is another participant in the >S2$ and mem%er of the +1CS2# It is often cited for its efforts in the fields of poverty alleviation and environmental protection# Rio "into, the 1ritish company, is often cited for its standards of environmental reporting and for promoting continuous social development and sustaina%le livelihood# CSR provides a num%er of advantages to %usiness like lowering and limiting litigation, reduction in ta&es, protecting %rand image, improving customer satisfaction and reducing a%senteeism, employee turnover and increasing the a%ility to retain talented employees etc# In India, "ata >roup strongly favors and follows the concept of CSR, while the Reliance >roup argues strongly against it# India7s largest and internationally %est6known "ata group of Companies, founded %y Jamset.i "ata, %elieves in pioneering concept of trusteeship in management# 1enefits of the profits of many of the companies in the group are channelled %ack to the people through the ma.or philanthropic trusts, as e&hi%ited in # It may %e o%served that during recent years profits of the company e&hi%it a fluctuating trend %ut their e&penditure on society is consistent# Learly EF per cent of the capital of the holding company, "ata Sons 9imited, is held %y these "rusts# 's a result, great national institutions have come into %eing in the areas of science, medicine, atomic energy and performing arts#

1/ J#R#2# "ata, who has %een instrumental in conducting the first social audit in India and perhaps in the world, remarks, ,+hile profit motive no dou%t provides main spark for any economic activity, any enterprise which is not motivated %y consideration of urgent services to the community %ecomes outmoded soon and cannot fulfil its real role in modern society-# 1esides "ata >roup, the other companies which have adopted and followed the CSR in India are8 1HE9, +ipro, 1a.a. 'uto 9td#, 9arsen K "ou%ro, Sriram Investments, tis Elevator Co# India, 'CC, 'sian Paints, 1rook 1ond, Colgate Palmolive, Escorts, S'I9, I"C etc# "he contri%ution of these companies towards CSR encompasses various initiatives like starting social trusts, anti pollution measures, adopting villages, family planning clinics, training unemployed youth, and community development activities etc# $urther, they conduct social audits on a voluntary %asis, provide medical, recreational facilities, develop sports, undertake consumer education campaigns, avoiding unethical and deceptive advertising and so on# '4im Prem.i, Chairman of +ipro, has created enormous trust for facilitating primary and elementary education in India# Reliance group, founded %y 2hiru%hai 'm%ani, propounds the other school of thought, which is opposed to CSR as such# ,'s an industrialist my .o% is-, declared 2hiru%hai, ,to produce goods to satisfy the demand# 9et us %e clear a%out it# Everyone has to do his .o%# !y commitment is to produce at the cheapest price and the %est 5uality# If you da%%le in every thing then you make a mess of things# If we cannot take care of our shareholders and employees and start worrying a%out the world, then that is hypocrisy-# "hus, one can evidently find arguments and counter arguments in favour and against the issue of CSR# However in Indian conte&t, acceptance of social responsi%ility is no more than rededicating ourselves to cherished values of our ancestors in the field of %usiness# In older times, whenever people of the country were under the social or natural pro%lems, leading %usinessmen have literally thrown open their treasure chests to provide the re5uired assistance and help to the needy# >andhi.i reminded us of these values, when he propounded the theory of trusteeship# 's a se5uel to that, more and more companies are now reali4ing that they can no more function or to %e .udged solely on the %asis of their thick %ottom6lines and fulfilling their economic o%.ectives only# '

10 positive impact on employees, customers and community at large has assumed an e5ual or greater significance in the overall success of the companies and %uilding their %rand image# "his reali4ation has made them undertake socially responsive actions, which are also strongly proponed %y Iedic philosophy#

CSR-INDIAN PERSPECTI6E India is among the few countries where more than four out of five organi4ations are practicing Corporate Social Responsi%ility (CSR), ranging from donating to local charities to undertaking glo%al fair la%or standards, an international survey conducted %y the Society for Human Resources !anagement (SHR!) has revealed# 'ccording to SHR!, human resources personnel in India, 1ra4il, !e&ico and 'ustralia are more likely than those in the ;nited States to report that their organi4ation has formal CSR policies# 1ra4il reported highest participation rate at G< percent with the ;nited States at G1 percent# "he employees in India and 1ra4il, the survey found, are encouraged to spearhead volunteer programs# In the ;nited States, HR professionals cited contri%utions to society, pu%lic relations strategies and employee activism as top drivers# CSR practices are also seen as important to employee loyalty, morale, retention, recruitment and productivity, all of which are key responsi%ilities of HR professionals# China has the lowest percentage for encouraging employees to spearhead CSR programs and Chinese respondents reported the lowest rate of participation in CSR practices, SHR! reported# ver half of the organi4ations surveyed recogni4e employee participation in volunteer programs, with the ;nited States leading at D* percent# "he study, titled 7*FFD Corporate Social Responsi%ility8 ' Pilot Study,7 surveyed human resource (HR) professionals in India, the ;nited States, China, !e&ico, 1ra4il, 'ustralia and Canada# 3 rgani4ations are increasingly assessing the social and environmental

1< impact of their %usiness decisions,3 according to Susan !eisinger, president and chief e&ecutive officer of SHR!# 3's a result of glo%ali4ation, I %elieve more organi4ations will incorporate CSR practices in their %usiness strategies# 's these practices increase, HR professionals will play a larger role in CSR programs, from strategy to implementation,3 she said# In the ;nited States, 1ra4il, 'ustralia and Canada, the main o%stacles to CSR programs were reported to %e cost, unproven %enefits and lack of support from senior management# 3+hile some organi4ations consider cost to %e an o%stacle to CSR practices, others point to improved image, competitive advantage and greater market share as clear %enefits,3

stated !eisinger# +hile the types of CSR practices varied among countries, they did not vary %y organi4ational sector# $or6profit pu%lic and private companies, nonprofit organi4ations and government agencies reported participating in the same types and range of practices# 'ccording to SHR!, this study has revealed that the ma.ority of organi4ations across these seven countries have policies pertaining to corporate social responsi%ility# "he report presents a glo%al view of corporate social responsi%ility practices and the integration of corporate social responsi%ility in organi4ations7 %usiness decisions# Intra6organi4ational responsi%ility for creating and implementing corporate social responsi%ility strategies is also e&plored in the report# $loods, droughts, cyclones, earth5uakes, landslides and avalanches are some of the ma.or natural disasters that repeatedly and increasingly affect (+orld 2isasters Report 1GGG, International $ederation of Red Cross and Red Crescent Societies, Report of High Powered Committee on 2isaster !anagement, >overnment of India, *FF1)# In the 1GDFs and the EFs# Earth5uakes, droughts and famines were the %iggest killers in India# "he situation stands altered today, it is pro%a%le that a com%ination of factors altered today, it is pro%a%le that a com%ination of factors like %etter reservoir management and food security measures have greatly reduced the deaths caused %y droughts and famines# $loods, high winds and earth5uakes dominate the reported in.uries, with ever increasing

1A num%ers in the last ten years# "he last three decades have %een associated with a large num%er of earth5uakes in 'sia that have a relatively high in.ury to death ratio# In India, the role of CSR has %een gaining momentum for a decade now# "he realisation that the participation of the private sector can foster the pu%lic6private partnership is vital in terms of sharing resources, %ringing in e&pertise and appropriate technologies# "his can enhance visi%ility of campaigns, and %ringing a%out civil society response# Stressing the need for management stewardship for giving a thrust to nation7s economic development, President 'PJ '%dul :alam on D !ay *FFD while distri%uting the corporate social responsi%ility awards urged the corporate India to contri%ute to the upliftment of society %esides creating wealth# 3$or a prosperous and developed India, the important thrust will %e on the growth in the num%er of such creative leaders who can

create wealth to their institutions and also contri%ute to the upliftment of the environment and the people in their neigh%ourhood,3 # L"PC was also one of the industrial houses that have %een on this occasion# :alam said the industry houses should %e concerned a%out their corporate social responsi%ility and give 3more to the society than what they have drawn#3 :alam said education should %e an important part of the corporate social responsi%ility and industry can do a lot in rural areas %y providing infrastructure for the schools in the form of drinking water, sanitation, transport, sports comple&es and computer facilities# In addition, he said, corporate houses can arrange special lectures for im%i%ing value6%ased education to improve 5uality of learning %y children# He said schools in India can have at least one hour of moral science classes every week to help students ac5uire 3enlightened feelings and enlightened powers3 to understand daily events and the gospels of permanent truth linking man to his environment# Referring to the issue of energy independence, the President said %usiness houses can take up urgent action for conservation of energy, promoting use of renewa%le energy to the ma&imum e&tent in their plants and facilities#

1D "he %usiness houses, :alam said, can also work on development of solar energy and wind energy either on stand6 alone mode or in partnership with Indian and European firms for providing a cost effective energy sources to the community# "he strategy to achieve energy independence, he said, should focus on increasing use of renewa%le energy (solar, wind and hydro power), electrical power from nuclear energy and %io6 fuels# He said the industry should consider participating in world knowledge platform missions 66 water, health, agriculture and food process, knowledge products, transport, ha%itat, disaster management and capacity %uilding 66 as %usiness opportunities, while simultaneously fulfilling corporate social responsi%ility# "he society makes a corporation guilty for engaging in profits# 1usiness is stuck with la%els of %eing e&ploitative# In course, the corporation loses self6esteem# "his mindset has to change# He felt that an individual7s contri%ution to social good has greater impact than a corporate7s per se (1usiness 2aily from "HE HIL2; group of pu%lications "uesday, Lov 10, *FFA)#

1E

CSR-GLOBAL PERSPECTI6E "oday7s glo%ali4ation raises new challenges regarding how to develop trading relationships that support the ;L7s !illennium goals of reducing poverty and ensuring greater environmental security#Companies are aware that they can contri%ute to sustaina%le development %y managing their operations in such a way as to enhance economic growth, increase competitiveness and ensuring at the same time environmental protection and promoting social rights# "hus, Corporate social responsi%ility (CSR) is a concept where%y companies integrate social end environmental concerns in their %usiness activities and in interaction with their stakeholders on a voluntary %asis# Corporate social responsi%ility is one of the responses to the im%alances resulting from the acceleration of the glo%ali4ation process8 im%alance %etween the rapid process of li%erali4ation and the time necessary to ela%orate the international regulatory framework for these e&changesM im%alance %etween the advanced governance systems in industriali4ed countries, and the lack of such governance in developing countries as well as at international levelM im%alance %etween the highly developed economic pillars of glo%al governance (I!$, +orld 1ank, +" ) and the em%ryonic state of the social and environmental pillars of such a system# In this glo%al conte&t, voluntary social and environmental practices of %usiness, going %eyond companies7 e&isting legal o%ligations, can play a ma.or role in filling the governance gap in an innovative way# CSR is not a su%stitute, %ut a complement to hard law# 's such it must not %e detrimental to pu%lic authorities7 task to esta%lish %inding rules, at domestic andCor at international level, for the respect of certain minimum social and environmental standards# "he focus of the de%ate in this respect has now moved on from a simple dichotomy %etween voluntary and %inding instruments, towards the overarching

1G challenge of devising reporting tools and verification mechanisms to ensure proper compliance with CSR commitments#

HERO MOTO CORP LTD

BRIEF HISTORY +hen Hero Cycles and Honda !otor Company of Japan inked their .oint venture in India in 'pril 1GE0, few could have imagined that the two would go on to create history and %ecome the su%.ect of a case study at %usiness schools, internationally# 1ut that7s the Hero !otocorpsaga for you# In a little over two decades, the world7s largest manufacturer of %icycles and the glo%al leader in motorcycles have created not only the world7s single largest motorcycle company %ut also the most endearing and successful .oint venture for Honda !otor Company worldwide# "he company has sold over 1< million motorcycles and has consistently grown at dou%le digits since its inception and today, every second motorcycle sold in the country is a Hero Honda# In two decades, Hero !otocorphas %uilt two world6class manufacturing facilities at 2haruhera and >urgaon in Haryana that now churn out over / million %ikes per year# In this period, Hero !otocorphas set up over *0FF customer touch points, comprising a mi& of dealers, service centres and stockists across rural and ur%an India# "oday, Hero !otocorpis an amalgam of winning networks and relationships with internal and e&ternal stakeholders, including Investors, 2ealers, Iendors and Employees# "hese relationships have helped the company hold on to the mantle of +orld Lo#1 for years in succession# +hat makes Hero !otocorpwell, Hero Honda, is synergy# "he two partners, leaders in their respective domains, have %een a%le to consistently draw on each other7s strengths# "he Hero >roup7s deep domain knowledge of the Indian market and its supplier network has meshed with Honda7s mastery over four6stroke engine technology to create modern

*F and fuel6efficient machines at afforda%le prices for India 7s *<F6/FF million strong middle class# Progressively through the 1GEFs, the 1GGFs and now in the *FFFs, Hero !otocorphas relied on / R7s66 Reach, Research and Relia%ility as its %asic %uilding %locks# ;sing feed%ack from the market, a fully6e5uipped RK2 center has consistently created %est practices in designing, testing and harmoni4ation, %esides placing strong emphasis on road safety and ride 5uality# "his emphasis has helped Hero !otocorp%uild products that are ahead of their time# In the 1GEFs, for e&ample, Hero !otocorp%ecame the first company in India to prove that it was possi%le to drive a vehicle without polluting the roads# "he company introduced new generation motorcycles that set industry %enchmarks for fuel thrift and low emission# ' legendary 7$ill it 6 Shut it 6 $orget it7 campaign captured the imagination of commuters across India , and Hero !otocorpsold millions of %ikes purely on the commitment of increased mileage# Hero !otocorpwas also one of India 7s first automotive companies to get close to the customer# ver the years, feed%ack has flowed %ack and forth seamlessly through a uni5ue CR! program 6 the Hero !otocorpPassport Program which now has over *#< million mem%ers on its roster# "he program has not only helped Hero !otocorpunderstand its customers and deliver value at different price points, %ut has also created a loyal community of %rand am%assadors# "he %est is yet to come# Hero !otocorpis powering its way through a market that is still to unleash its true potential, as %arely two per cent of the population has %een penetrated so farN It isn7t surprising that the company is in no mood to take its hand off the throttle# 's 1ri.mohan 9all !un.al, the Chairman, Hero !otocorp!otors succinctly puts it, 3+e pioneered India7s motorcycle industry, and it7s our responsi%ility now to take the industry to the ne&t level# +e7ll do all it takes to reach there#77 MISSION76ISION STATEMENT HER ! " C RP 9"2 !ISSI L

*1

Hero Honda=s mission is to strive for synergy %etween technology, systems and human resources, to produce products and services that meet the 5uality, performance and price aspirations of its customers# 't the same time maintain the highest standards of ethics and social responsi%ilities# "his mission is what drives Hero !otocorpto new heights in e&cellence and helps the organi4ation forge a uni5ue and mutually %eneficial relationship with all its stake holders# HER ! " C RP 9"2 !'L2'"E Hero motocorp ltd is a world leader %ecause of its e&cellent manpower, proven management, e&tensive dealer network, efficient supply chain and world6class products with cutting edge technology from Honda !otocorp Company, Japan# "he teamwork and commitment are manifested in the highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership status#

**

CSR ACTI6ITIES

Hero !otocorp takes considera%le pride in its stakeholder relationships, especially ones developed at the grassroots# "he Company %elieves it has managed to %ring an economically and socially %ackward region in 2haruhera, Haryana, into the national economic mainstream# 'n Integrated Rural 2evelopment Centre has %een set up on 0F acres of land along the 2elhi6Jaipur Highway# "he Centre6complete with wide approach roads, clean water, and education facilities for %oth adults and children6now nurtures a vi%rant, educated and healthy community# "he $oundation has adopted various villages located within vicinity of the Hero motocorp factory at 2haruhera for integrated rural development# "his includes8

Installation of deep %ore hand pumps to provide clean drinking water# Constructing metalled roads and connecting these villages to the Lational Highway (LH 6E)# Renovating primary school %uildings and providing hygienic water and toilet facilities# Ensuring a proper drainage system at each of these villages to prevent water6 logging#

*/ Promoting non6conventional sources of energy %y providing a <F per cent su%sidy on %iogas plants#

*0

HERO MOTOCORP AND CORPORATE SOCIAL RESPONSIBILITY In the year *FFF, Hero !otocorp ltd, formulated its mission statement and corporate philosophy# "he first to introduce cleaner four6stroke engines in the country, environmental concerns are close to the company=s corporate heart which is why they go that e&tra mile to ensure that each one of the hi6tech four6stroke motor%ikes goes meets the most demanding of pollution norms at every level# "his is a policy the company has followed since its inception#

"he company 'n Integrated Rural 2evelopment Centre has %een set up on 0F acres of land along the 2elhi6Jaipur Highway# "he Centre6complete with wide approach roads, clean water, and education facilities for %oth adults and children6now nurtures a vi%rant, educated and healthy community# "he Hero $oundation has adopted various villages located within vicinity of the Hero motocorp factory at 2haruhera for integrated rural development# "his includes8 Installation of deep %ore hand pumps to provide clean drinking water, Constructing metalled roads and connecting these villages to the Lational Highway (LH 6 E), Renovating primary school %uildings and providing hygienic water and toilet facilities, Ensuring a proper drainage system at each of these villages to prevent water6logging, Promoting non6conventional sources of energy %y providing a <F per cent su%sidy on %iogas plants# "he company has also set up the Raman !un.al Iidya !andir which %egan with three classes and has now grown into a modern Senior Secondary, C1SE affiliated co6educational school with over 1*FF students and A1 teachers# "he school has a spacious playground, an ultra6modern la%oratory, a well6e5uipped audio visual room, an activity room, a well6stocked li%rary and a computer centre#

*<

R)+)$ M'$1)! Me+-,#)! H-%0#&)!

!ulti6specialty hospital set up %y the Hero !otocorp, e5uipped with the latest diagnostic and surgical technology# "he Raman !un.al !emorial Hospital provides healthcare to the rural population in and around 2haruhera, and also caters to accident and trauma victims driving along the 2elhi6Jaipur highway# 1esides setting up a modern hospital, the $oundation also regularly provides doorstep health care services to the local community# $ree health care and medical camps are now a regular feature in the Hero >roup7s community outreach program#

R)+)$ M'$1)! S0-,&% C-+0!e@

"he Raman !un.al Sports Comple& developed %y the Company has %asket%all courts, volley%all courts, and hockey and foot%all grounds are used %y the local villagers# In the near future, sports academies are planned for volley %all and %asket %all, in colla%oration with Lational Sports 'uthority of India#

6-;)&#-$)! T,)#$#$* Ce$&,e In order to help local rural people, especially women, Hero !otocorp has set up a Iocational "raining Centre# So far *A %atches comprising of nearly A*< women have %een trained in tailoring, em%roidery and knitting# "he Company has helped women trained at this center to set up a production unit to stitch uniforms for Hero !otocorpemployees# Interestingly, most of the women are now self6employed#

*A

A/'!& L#&e,);9 M#%%#-$

"his Scheme was launched on *1st Septem%er, 1GGG , covering the near%y villages of !alpura, :apriwas and Sidhrawali# "he pro.ect started with a modest enrollment of /A adults# Hero !otocorpis now in the process of imparting 'dult 9iteracy Capsules to another 1FF adults %y getting village heads and other prominent villagers to motivate illiterate adults#

M),,#)*e% -( '$/e,0,#<#!e*e/ *#,!% !arriages are organi4ed from time to time, particularly for girls from %ackward classes, %y the $oundation %y providing financial help and other support to the families#

*D

CONCLUSIONS 8 IMPLICATIONS "he study has revealed that Corporate Social Responsi%ility (CSR), for the corporate sector is more a%out corporate community involvement than anything else# "he participation of the corporates in the community %etterment programmes, going %eyond their economic arguments is what they call it CSR# Hero !otocorp is found to %e involved in CSR activities# However, the degree of their involvement differs from company to company## 's regard the %enefits of CSR for the corporates is concerned, almost all the factors that have %een enlisted in the interview schedule are found to %e important for the corporates that have %een studied# "he company is found to %e having codified CSR rules and >uidelines for their employees as well as non employees also w#r#t# environmental policy measure, la%our rules and disaster management policies etc# $or e&ample, the environmental policy of Hero !otocorp #"he company have incorporated these Rules and >uidelines in their vision documents# "he codified CSR guidelines of a company, argues the respondents, positively enhances the image of the corporates# "he respondents %elieve that it is through the CSR activities a company gets more positive pu%licity than the advertisements given %y the companies to %oost the sale of the products of the companies# 'ttitudes to %roader social responsi%ility issues have changed drastically in the past few years# "he factors leading to this trend are the glo%al standards set %y the international corporate houses and the corresponding domestic pressure associated with it# 'lthough CSR itself re5uires money for its implementation, the o%.ectives set %y the corporate houses as part of CSR activities and their reali4ation have positive impact on

*E

the profit and corporate image of the %usiness houses#

"here is no fundamental

dichotomy %etween long6term profit6ma&imi4ation and social responsi%ility# Education and health welfare of the under privileged sections of the society are rated higher in the practice of CSR activities followed %y the corporates that have %een studied# "his is followed %y environment and health# ne thing should %e noted here is that whereas the education and health measures taken %y the corporates are more voluntary in nature the environmental activities are more due to governmental enforcements# "he corporates have their employee volunteers in their head5uarters as well as in their respective fields, they have a greater role to play in the later case# "he num%er spreads to thousands and varies according to the si4e of the company and the diversification of the same# 's regards the %udgetary provision for CSR activities %y the companies, all the three companies that have %een studied do have a separate %udgetary provisions for the CSR activities# "he share of CSR %udget out of the total %udget of the company varies from one to the other and it depends on the si4e of the company, the total %udget outlay of the company and the CSR policies and practices followed %y it# In the present study, it is L"PC which takes the lead followed %y followed %y Hero !otocorpand 'CC# 's regards the company policy on CSR activities is concerned, it constitutes an integral part of the company=s policies and do not undertake it in a fragmented manner rather in an integrated and participative method# 'part from the need factors and the governmental directions, the companies have also undertaken various CSR activities for their employees and non6employees as part of their image %uilding process and to earn good will# CSR activities are more effective for the company than pursuing advertisement methods#

*G "he present study has also revealed that the companies not only pursue CSR activities %ut also undertakes review measures at regular intervals to o%.ectively assess their implementation# "he reviews are normally undertaken at two stages i#e# after completion of a pro.ect and annually# Each CSR pro.ect is reviewed separately to assess the impact it has created in the conte&t of the o%.ectives for which the pro.ect was conceived and implemented %y the company#

/F