- Shri Joy Varghese

Corporate Social Responsibility


At Nalco, when we started our activities in Orissa 29 years ago, there was no such nomenclature like Corporate Social Responsibility or CSR. All that we knew was our Moral Responsibility towards the society.

But today, CSR has become a buzzword in the corporate world. More and more organizations are waking up to this belated realization that beyond productivity and profitability, it is the social accountability that determines their image.

Presently, even before the land is acquired and foundation-stone laid for a project, the company launches its CSR activities in the area. It is presumed that on a solid CSR foundation, a strong business empire can be built.

As a policy, Nalco has been allocating 1% of its net profit of the year for periphery development activities of the succeeding year

Out of this allocable fund:


  • 40% is for Damanjodi sector, where the company’s Mines & Refinery are located;
  • 40% is for Angul sector, where the company’s Smelter & Power Plant are located;
  • and 20% is for other areas.
(including special projects)
At Damanjodi
: Rs.48.88 Cr
At Angul
: Rs.61.10 Cr
Other Areas
: Rs.26.89 Cr
  Rs.136.87 Cr
(Full-fledged hospitals at Damanjodi and Angul)
(Mobile medical units of Nalco visit peripheral villages in Angul and Damanjodi sectors and hold health camps round the year, distributing free medicines.) (To foster scientific temper among rural students, Nalco takes them to Bhubaneswar and shows them Pathani Samant Planetarium, Regional Museum of Natural History and Regional Science Centre.)






Soon after the Super Cyclone in Orissa in the year 1999, Nalco has constructed 197 Primary Schools-cum-Cyclone Shelters, under Prime Minister's National Relief Fund Scheme.

Funds received from PM's Office
: Rs.6.37 Cr
Nalco's contribution
: Rs.1.31 Cr
Total Expenditure
  Rs.7.68 Cr


2008 : To Chief Minister Relief Fund for the victims of Flood in Odisha : Rs.5.00 Cr
2005 : To PM's National Relief Fund for the victims of J&K Earthquake : Rs.2.98 Cr
2005 : To PM's National Relief Fund for the victims of Tsunami : Rs.2.44 Cr
2004 : To Sports Authority of India towards training of Indian Contingent for Athens Olympics : Rs.1.00 Cr
2001 : To PM's National Relief Fund for the victims of Gujarat Earthquake : Rs.1.70 Cr
1999 : For the victims of Super Cyclone in Odisha : Rs.1.39 Cr
1999 : To National Defence Fund during Kargil War : Rs.1.18 Cr




Navratna Nalco has decided to set up a Corporate Social Responsibility Foundation by the end of April, 2010. For this, the company shall be allocating one percent of its net profit every year. So far, Nalco was spending one percent of its net profit for its periphery development programme. With the setting up of Nalco CSR Foundation, the amount now stands doubled. Moreover, the Govt guideline is to spend 5% of the net profit from mining revenue for CSR activities; whereas Nalco has decided to spend 2% from its overall net profit, which is much higher.


Building Nalco does not mean merely contributing to the aluminium capacity of the country. It has involved playing significant roles in the economic development of the areas where Nalco operates. Rehabilitation of displaced families, employment and income generation for local people, development of infrastructure, environment care and humanitarian goodwill missions have earned Nalco a place of pride, not only in the corporate world of India but also in the hearts of the people of Odisha.


Now, the doubling of CSR fund indicates that with the passing years, Nalco has become more mellowed and matured, sharing its success with the society at large.




Creating Nalco has meant much more than contributing to the Indian aluminium industry or to the government exchequer. It has involved the transformation of a simple and naive civilization to a vibrant industrial society, rehabilitating the displaced persons, training local youths, creating direct and indirect job opportunities, besides improving education, communication, transportation, health care and drinking water facilities.

Among all these Corporate Social Responsibility initiatives, the schools set up by the Company stand out as Nalco’s biggest contribution to the society.


Funded by the Company, one English-medium school and one Oriya-medium school, in each of these townships, were started with the management of Delhi Public School Society, New Delhi and Chinmaya Mission Trust, Bombay, respectively, way back in 1983-1984. Subsequently in 1991-92, the management of Oriya-medium schools was entrusted to Sikshya Vikash Samiti, Orissa, and the schools were re-named as Sarswati Vidya Mandir. Presently, around 9000 children are studying in these four schools.




Right from the inception, importance was given to set up good schools in Nalco’s own townships at Angul and Damanjodi, as education for the employees’ children was one of the top priorities of the management. But more significantly, the doors of the schools were kept open for the children of Nalco’s associates and other meritorious children living in the vicinity, which is more than 30% of the total strength of these schools. As a result, the educational subsidies provided by Nalco were passed on to non-Nalco children as well.


Sisu Mandir


As per financial calculations made a couple of years back, following is the annual educational subsidy provided to each child in Nalco-aided schools:

Delhi Public School, Angul : Rs.12,391
Delhi Public School, Damanjodi : Rs.15,412
Saraswati Vidya Mandir, Angul : Rs.11,981
Saraswati Vidya Mandir, Damanjodi : Rs.19,354


That is, on an average, each child gets a subsidy of about Rs.15,000 per annum; when multiplied by student strength of 9000, it works out to a whopping Rs.13.5 crore per annum. This includes more than 30% for non-Nalco children. Financials apart, the role of Nalco in creating responsible citizens of tomorrow is perhaps more momentous. And come to think of it, Nalco has been extending these facilities for the past 27 years, without ever tom-tomming about it!


The other day, I laid my hands on an ONGC publication, named Saga of Courage & Conviction. I would like to share a small but thought-provoking excerpt from it, which touched me.


Well, after the Kargil war, General V.P. Mallik wrote a comprehensive book titled, Kargil: From Surprise to Victory, wherein he has mentioned about Mrs Sudha Murthy. And I quote:


“After the war, one day Sudha Murthy, wife of Narayan Murthy, the then Chairman of Infosys Ltd., rang me up. She asked me for the names and addresses of the personnel who had been captured by the Pakistani Army at Kaksar and then killed after interrogation. I had these details sent to her. In a rare gesture of sympathy, she met the families of these personnel and also gave them monetary assistance from the Infosys Foundation which is involved in citizens’ welfare programmes.”


During and after the war, many public and private organizations had contributed to the Kargil Welfare Fund in 1999, including Nalco. In that year, our employees had also donated one day’s salary amounting to Rs. 18 lakhs, while the Company contributed Rs. 1 crore, to this Fund.


But the fact that General Mallik chose to narrate just one story reflects the fact that it is not important what you give, what is important is how you give. It was the passion of Mrs Murthy that fascinated General Mallik to mention the story. It is the expression of genuine care and concern that distinguishes one company from another.


There are different ways of treating an ailing person: Allopathy, Homeopathy, Naturopathy …But, it is the Empathy of the treating surgeon and his team, which impacts instantly. A patient hearing, a thoughtful look, a gentle touch and a few encouraging words do not cost anything. But all these caring and sharing ways do wonders in recuperation of the ailing man. But unfortunately, due to shortage of time, and other priorities in life, we treat the poor and needy persons around us with Apathy, which perhaps is more debilitating than the social malady one suffers from.


So, as we plan to set up Nalco Foundation to execute our Corporate Social Responsibility in a planned and passionate way, the Nalco team could take a leaf from the Infosys Foundation in general and Mrs Murthy in particular. Let’s be more empathy-driven in our ventures rather than meeting per se the responsibilities thrust upon.


With the rapidly changing corporate environment, more functional autonomy, operational freedom etc., CPSEs today are required to adopt CSR as a strategic tool for sustainable growth.

CSR, in the present context, means not only investment of funds for social activities but also integration of business processes with social processes.


An Enterprise needs to address the concerns of the society in which the enterprise is operating. There should be free interaction between enterprises and community leaders.

In order to address the social needs of the community, viable projects need to be identified to meet its requirements.


CPSEs may approach Corporate Social Responsibility as a professional management process, with a long-term strategy, integrating it with corporate strategies.


CSR activities may be planned in parallel to the business plan, looking at every possible opportunity to link and integrate business plans with the social and environmental concerns available.



• A long-term Corporate Social Responsibility Plan needs to be prepared matching with the long-term business plan;
• This may be broken down into short-term and medium term plans, specifying activities to be undertaken, budgets allocated, responsibilities and authorities defined, and measurable results expected.


The Plan must clarify implementation guidelines involving:


  • Participation of Voluntary Organizations, Specialist Organizations and Community Based Organizations;
  • Base-line Surveys;
  • Documentation of the experience;
  • Setting up a CSR Hub with participation of Deptt of PE, SCOPE and CPSEs;
  • Monitoring and Evaluation;
  • Lessons learnt for future use.



  • Areas related to the business of the PSE as a natural corollary to the business;
  • Assistance to be mostly project based rather than donation, so as to generate community goodwill, create social impact and visibility;
  • Finalizing of time-frames and various milestones before commencement of a project;
  • Involving of suppliers in order to ensure that the supply-chain also follows the CSR principles;
  • Emphasis on principles of Sustainable Development, based on the immediate and long-term social and environmental consequences of the activities undertaken;
  • Improvement of the existing ecological conditions;
  • Ensuring skill enhancement and employment generation by co-creating value with local institutions and people.





  • CSR Activities to be carried out by Specialist Agencies;
  • Such activities generally not to be conducted by CPSE employees / staff;
  • Specialist Agencies to include NGOs, Institutes, Academic Organizations, Civil Society / Community-based Organizations, Trusts, Missions etc., who have requisite expertise;
  • Utmost efforts to be made to find out the reliability, and track record of the NGOs / Organizations entrusted with CSR activities;
  • Initiatives of State Governments as well as Central Government Departments / Agencies could be dovetailed/ synergized with CSR activities;
  • Avoidance of any duplication of CSR activities by the CPSEs, the State Governments and local level Programmes.


The CSR budget to be mandatorily created through a Board Resolution as a percentage of net profit in the following manner:



Net Profit in a Financial Year (Previous Year) (% of profit)
(i) Less than Rs. 100 crore 3% – 5%
(ii) 100 crore to Rs. 500 crore 2% – 3% (Subject to a Min. of 3 cr)
(iii) 500 crore and above 0.5% – 2%


  • The CSR Budget to be fixed for each financial year. This funding not to lapse – must be transferred to a CSR Fund, which will accumulate – as in the case of non-lapsable pool for North East.
  • In case CPSEs have different Profit Centers like Factories / Plant locations, they may be allocated separate CSR budgets to be spent by them under the Annual CSR Budget allocations.



  • Monitoring of the CSR projects is very crucial and needs to be a periodic activity of the Enterprise;
  • The Board of CPSEs should discuss the implementation of CSR activities in their Board meetings;
  • The CPSE should bring a separate paragraph / chapter in the Annual Report on the implementation of CSR activities / projects including the facts relating to physical and financial progress;
  • The implementation of CSR guidelines to form a part of the Memorandum of Understanding to be signed between CPSE and the Government;
  • The performance of CSR should be monitored by the Ministry / Department on regular basis;
  • In MoU Guidelines from 2010-11 onwards, 20% has been earmarked out of the non-financial parameters for performance under CSR.
  • For proper monitoring of CSR activities, companies may appoint a CSR committee or a Social Audit Committee or a suitable, credible agency to critically assess fulfillment of social obligations.
  • CSR projects should also be evaluated by an independent external agency. This evaluation should be both concurrent and final



  • Impacts made may be quantified to the best possible extent with reference to base line data, which need to be created by the CPSEs before the start of any project. Hence, Base-line Surveys mandatory.
  • The documentation relating to CSR approaches, policies, programmes, expenditures, procurement, etc. to be put in the public domain, particularly through the internet.


The Department of Public Enterprises, in conjunction with SCOPE and the CPSEs will create a CSR Hub which will undertake / facilitate the following activities:

  • Nation-wide compilation, documentation, and creation of database;
  • Advocacy;
  • Research;
  • Preparation of Panels of Implementing Organizations;
  • Promotional activities, including production of short films, printing of brochures, pamphlets etc.;
  • Conferences, Seminars, Workshops – both national and international;
  • Act as a Think Tank;
  • Any other matter as entrusted to it from time to time by the DPE;
  • The Hub will begin operations with funding provided by DPE;
  • It will, however, be free to receive funds from;


(i) SCOPE and both Central as well as State CPSEs;
(ii)UN Agencies, reputed international agencies such as World Bank, EU and other multilateral bodies and organizations;
(iii)Reputed National and State Bodies;
(iv)Govt. Departments, Autonomous Organizations, Planning Commission, Attached and Subordinate Offices, Corporations etc.;
(v)Philanthropic Missions, Trusts, etc. of national and international repute.
(vi)Decisions relating to the location and functioning of the HUB will be taken by DPE. SCOPE will be kept informed of such decisions and will be free to offer suggestions, inputs etc.