Suzlon India: Be the Stakeholder's Choice

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The case study highlights corporate social responsibility that it undertook within the company by engaging employees in internal projects, expanding to neighboring communities and going beyond business boundaries to be the stakeholder's choice.

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Suzlon India: Be the Stakeholder's Choice

  1. 1. SVKM’s Narsee Monjee Institute of Management Studies Mumbai SUZLON INDIA: Be the Stakeholder’s Choice A CASE STUDYReport prepared by:1. Ankur Salunke2. Balajee S3. Manas Ranjan Kar4. Partho Choudhury5. Ravi Thakur
  2. 2. INTRODUCTION:What started with Sulzer Synthetics P. Ltd has culminated into the world‟s fifth largest wind powerproduction company. Mr. Tulsi Tanti turned a bottleneck into a business opportunity. Quickly realizingthat the shortage of power was stunting his growth in the textile industry, he moved into the renewablesector, and has never looked back since. Suzlon Energy founded by Mr. Tulsi Tanti, has operations in 32countries and manufacturing facilities in countries like India, China and USA has developed a wide rangeof products (Exhibit A) to cater to the wind power industry. The Company introduced the concept of totalsolutions wherein, in addition to the supplies of equipment, the client is offered project execution workcomprising land acquisition, site development, erection and commissioning, foundation and other civilwork and O&M services. These services are offered in conjunction with the Associate Companies (ExhibitB). Suzlon operates the largest wind park in the world, a 584 MW wind park in the EasternGhats-Tamil Nadu.CORPORATE SOCIAL RESPONSIBILITY AT SUZLON:Suzlons CSR starts from within the company, engaging employees in internal projects, expanding toneighboring communities and goes beyond business boundaries to benefit the society at large. The SuzlonGroup has entrusted the Suzlon Foundation with the responsibility to facilitate CSR across all thefunctions and locations. Suzlon is committed to practice sustainable development for “Powering aGreener Tomorrow”. The Foundation ensures that business policies and practices support sustainabilityas its guiding principle. Suzlon Foundation is registered under Section 25 of the Companies Act.I. CSR at Workplace:a. CULTURE:The work culture at Suzlon hinges on the three pillars of corporate values, brand core and philosophy ofglobal assimilation. Agility, creativity, adding value, commitment and integrity are the base values ofSuzlon‟s work culture. Inducting people into Suzlon‟s brand core of sustainable development is a processthat involves imbibing these values and blending the best qualities of the individual with those of theorganization. Suzlon‟s 14,000 employees have helped raise the performance bar in professionalism,opportunity, responsibility, belongingness and accomplishment. Suzlon has leveraged the rich operationalexperience of the worlds finest wind power technology to industriously harness an individual towards apowerful „greener tomorrow‟.As Mrs. Seemantinee Khot, Head, CSR, Suzlon Energy rightly pointed out,‟ Most of the people in therenewable energy companies strongly believe that they want to contribute to the planet, which doesn‟tharm and helps bridge the gap between the various sections of the society.‟
  3. 3. Some other key policies of Suzlon to promote workplace CSR include  Legal compliances to ensure that the suppliers are not employing any children or following “unethical” business practices.  Not allowing employees work for very long hours, helping employees to share a healthy relation with their families - thus, they will be able to balance their personal and professional life.  Ensuring fair treatment to employees and providing equal opportunities to all employees and all applicants - without regards to their race, caste, religion, color, ancestry, marital status, sex, age, nationality, and disability.b. EMPLOYEE INVOLVEMENT:The HR mandate dictates that every employee must involve themselves in at least 2 CSR days peryear. This fosters employee involvement in the core values that Suzlon believes in. Suzlon alsocelebrates World Environment Day to build awareness among the workforce.A payroll CSR is also in place, where an employee through an entirely voluntary participationprocedure, donates a certain percentage of his salary, to NGO‟s of their own bidding, like thoseinvolved in education sector, orphanages, child care etc.Suzlon has also sensitized its employees to induct them into a „Give in Kind‟ sort of program, whereevery month Suzlon sends out a mailer to all its employees exhorting them to donate old clothes,woolens, mobiles and stationery. These initiatives have definitely helped in bringing employeeparticipation in CSR to the fore.c. GLOBAL HSE SPHERE:The Global HSE SPHERE is a structured method and approach to Strategize HSE themes andstrategies by following a reactive and proactive approach to initiate strategic initiatives. Suzlon HSE(Occupational Health, Safety & Environment) is a global initiative that establishes a company-widepractice of setting up and maintaining the highest HSE standards with a dedicated approach andorganizational commitment. With Global HSE SPHERE, Suzlon are committed to achieve zero harmto employees, environment, contractors, communities & property and demonstrate sustainableleadership for effective and enhanced occupational health, safety and environment practices.Simultaneously it propagates effectively and efficiently leverages leadership commitment andstakeholder involvement in executing Suzlon HSE business plan. Suzlon‟s HSE vision and mission arebeing institutionalized by the Global HSE Council (EXHIBIT F) that manages its HSE agenda,strategic initiatives, communications and etc.
  4. 4. II. COMMUNITY DEVELOPMENT Suzlon includes considerations of all major stakeholders in their business practices, such as local communities and the natural environment. They aim to take responsibility for negative impacts they might have on these stakeholders and correct their actions accordingly. Going beyond legal compliance and being accountable to higher ethical standards are aligned with Suzlon‟s values. Suzlon looks at the success of business from the broader perspective of sustainable development achieving the 5 capitals viz. Financial, Natural, Human, Social and Physical (Exhibit C). Their CSR activities are guided by these questions, 1. What is our impact? 2. Whom do we impact? 3. What can we do to offset our impact?Also, to ensure that CSR programs are linked with the corporate group‟s strategies, the locations for CSRinterventions are selected keeping in mind their strategic importance for Suzlon‟s business.The locations are measured on 4 indicators:1. Presence of Suzlon2. Stage of operation3. Community engagement history4 Local development statusScores are given for each indicator. Once scored, the locations are categorized in High, Medium or Lowimportance areas on the basis of the total scores achieved by each location. The rank will determine whichlocation has priority for CSR activities. (Exhibit D)Again here, the broader perspective of sustainable development through development of 5 capitalsdictates the activities. They have been broadly classified in Exhibit C.Also the main agenda of community development for Suzlon is making people aware. Mrs. SeemantineeKhot echoes the same sentiment when she says.‟ Our business is secure only when we are dealing withorganized and educated people. Dealing with unorganized sector is detrimental for business. Businessesnormally border on their brand and legal perspectives. In helping the people grow, we do good to lookgood. In doing our duties we get the license to operate from the same community and build a long-lastingrelationship with them.‟
  5. 5. III. ENVIRONMENTAL CSR:Suzlon is aware of its responsibility towards the environment. It has taken many initiatives to offset itsfootprint in the project areas. Like the yearly beach cleaning exercise conducted by Suzlon employees atDaman and Pondicherry where the beach is cleaned by the employees themselves. CSR Champions1guided by the CSR managers, engage their peers and the community in the exercise. The employees uponcompletion of the exercise report back to the company, to state the impact created through the exercise.Sanitation and plantation drives are conducted regularly by Suzlon in the project areas.The CSR activities of Suzlon results from a „tripartite‟ agreement among the company, government andthe community. Suzlon takes initiatives which are in sync with the community requirements. Before thestart of any project, each stakeholder gives its assessment of their requirement, and the projects arechosen according to corporate and community relevance. Even though the regulatory controls like, sayplanting 50 trees for every wind turbine installed, are not mandatory, but desirable.IV. CSR COUNCIL : External Agency ImplementationIn each state, CSR Councils have been formed to make transparent decisions on relevance of a proposedproject and assessing the credibility of the agency. There are separate CSR Councils for three SEZs. TheCouncil has representatives from different verticals of Suzlon Group. The purpose behind forming theCSR Council is twofold –a) Engage the Suzlonians in CSR activities, andb) Make the decision making process transparent and rational.The Council meetings are held once in a quarter to share the progress of CSR programs. Extra meetingsare arranged whenever there are new proposals to be considered. Along with the Council members andCSR State Head, a representative from the Central Team will also be present in the meetings.One person among the employees is chosen by his peers, who is delegated the responsibility ofrepresenting the SBU in the council. He is called upon to attend a one day workshop of SustainabilitySensitization Programme, to assess his proclivities towards the field. Upon satisfactory completion of thesame, he is authorized to become a member of the CSR Council.--------------------------------------------------------------------------------------------------------1 CSR Champions are chosen amongst the employees to motivate them towards CSR.
  6. 6. V. P.A.L.S.: Bringing the Winds of ChangeSocial Networking seems to be the new way for Corporate Social Responsibility. Suzlon has launched anew brand campaign called P.A.L.S. - the Pure Air Lovers Society. P.A.L.S. is a movement to emphasizethe importance of clean air, while helping to educate people on how to live a more environmentallyresponsible life. The social media campaign, not only helps spread awareness about the brand, but alsohelps in engaging new participants.Identifying the need for a campaign of this nature, P.A.L.S. has already found support from prominentmembers of Indian society like RJ Malishka, Milind Soman, Garson da Cunha and Anil Dharker, who arethe first P.A.L.S. champions. These champions have been tasked with the responsibility of outliningrecommendations and sustaining momentum to ensure the success of the movement.The innovativeness of the campaign can be gauged from the fact that Suzlon would be planting one treefor every registration at their website, www.pals.in. The P.A.L.S. campaign aims to increase in intensityover the coming months with innovative activations and initiatives that aim to drive traffic towardsregistrations, thereby escalating the magnitude and success of the movement.VI. CSR PublicationsSuzlon regularly updates its employees regarding the CSR activities undertaken by the company.LIVEWIRE, a global e-magazine of Suzlon group, always carries a section regarding the CSR activitiesundertaken by the business units. Adding to that, a quarterly newsletter in every state of operations ispublished in the regional language. The newsletter is sent out to the district heads, the local communityand other stakeholders to keep them informed regarding the CSR activities.VII. AWARDS AND RECOGNITIONS Year Awarding Authority Details2010-11 6th in India’s list of Cohn and Wolfe’ IPGBS Top 10 Ranked 6th best green brand of India Green Brands 2011 based on its environmental initiatives.2010-11 Suzlon wins Global Leadership Award for Wins Gigaton Award for global sustainability at COP16 leadership in emissions control and sustainability practices . Suzlon recognized among top six global companies that includes Vodafone Group, Reckitt Benckiser Group, Nike, 3M and GDF Suez.2009-10 Tulsi Tanti awarded Champion of the Earth Mr. Tulsi Tanti was honoured with Champion of the Earth title for Entrepreneurial Vision by the United Nations Environment Program
  7. 7. 2008-09 Suzlon bags Golden Peacock National Training Award The award function was held at the 2008. 9th International Conference on Corporate Governance at London and the award was given by Dr Ola Ullsten, former PM of Sweden.2007-08 TIMEs Heroes of the Environment Awards Mr. Tulsi R. Tanti, CMD, Suzlon Energy Limited - for initiating action on Global Climate Change2006-07 Wind India Conference Awards Best Company - for Corporate Social Responsibility2006-07 India Tech Foundation and Power Stream Journal For Project Management & Energy ENPOWER Award Efficiency and Sustainability2006-07 TERI Alumni Award Entrepreneurship in Energy Environmental Technologies2006-07 The Solar Energy Society of India Award SESI Renewable Energy Pioneer -2005-06 Mr. Tulsi R. Tanti, CMD, Suzlon Energy LimitedVIII. ROADBLOCKSSuzlon Foundation involves community, concerned Government department and Civil SocietyOrganizations in planning, implementation and monitoring development programs. The six monthly 360degree reviews are transparent mechanisms for improving the sustainability of the CSR projects. (75% ofthe projects were rated as "excellent", 15% as "good", the remaining 10% projects rated as "un-satisfactory" would be either closed or revamped next year.). Even though the company tries its best toprovide for the community in the best possible manner through it CSR initiatives, some projects are alsoshelved due to their failure to achieve their goals. We mention two such projects which were shelvedduring the last year due to such constraints, 1. Project SAFAL: Youth employability programmes in Daman and Pondicherry were closed down due to failure to achieve targets. The initial target was to employ 500 youths, but only 300 youths turned up for the programme. In the end, only a handful of them were actually employed. The reasons cited were that the curriculum of the programme was not suited to the youth‟s temperament. Also, the skills taught to the youth were not enough to make them employable. 2. A Biodiversity Project in Karnataka was also shut down due to financial constraints. Also the long term commitment to the project did not support Suzlon‟s lack of technical expertise. Even though the project was pretty ambitious, it failed to take off due such unaccounted-for factors.
  8. 8. IX. CONCLUSIONWhat is complicating things for Suzlon is the widespread suspicion in the industry circles that it is facingserious cash-flow problems post the 2008 global financial crisis, which has led the investors to dump theirshares at the exchange subsequently decreasing its credit ratings. When international crude oil priceswere surging in the recent past, India‟s biggest wind power equipment manufacturer, Suzlon Energy, usedto be a favorite with investors betting big on the future of clean wind energy amid growing climate changeconcerns. However, the widening global crisis with the falling global crude prices has led to a tighteningfinancial squeeze for the wind power projects across the world as investors feel that the fight againstclimate change is going to take a backseat. So it remains to be seen, does the condition of the parent firmstagnate Suzlon Foundation‟s initiatives towards society improvement and its ongoing CSR activities?Only future will tell.
  9. 9. EXHIBIT A PRODUCT COUNTRY SPECIFICATION AVAILABILITY Rated power 2100 kW Cut-in wind speed 4 m/s All Markets India, Brazil, Rated wind speed 14 m/s Italy, Nicaragua, Portugal, S88-2.1 MW Cut-out wind speed 25 m/s Romania, Spain, Turkey, America, Australia & China 50 years gust wind 59.5m/s speed Rated power 1500 kW Cut-in wind speed 4 m/s S82-1.5 MW India & China Rated wind speed 14 m/s Cut-off wind Speed 20 m/s Survival wind speed 52.5 m/s Rated power 1250 kW Cut- in wind speed 3 m/s S66-1.25 MW India Rated wind speed 14 m/s Cut-off wind speed 22 m/s Survival wind speed 52.5 m/s Rated power 1250 kW Cut- in wind speed 3.5 m/s Rated S64-1.25 MW India & China wind speed 14 m/s Cut-off wind speed 25 m/s Survival wind speed 59.5 m/s Rated power 600 kW Cut-in wind speed 4 m/s Rated wind S52-600 KW India speed 13 m/s Cut-off wind speed 25 m/s Survival wind speed 59.5 m/s Rated Power 2250 KW Cut- in Wind Speed 4 m/s Cut-out S88 MARK- II DEFIG China Wind Speed 25 m/s Wind ClassIIA / IIBRotational Speed 12.0-18.0 (rpm)
  10. 10. EXHIBIT BThe Associate companies and Market Share1. Suzlon Towers and Structures Limited, 2. Suzlon Power Infrastructure Limited,3. Suzlon Infrastructure Services Limited, 4. Suzlon Gujarat Wind Park Limited,5. Suzlon Structure Limited, 6. SE Forge Limited,7. SE Composites Limited, 8. Suzlon Wind International Limited,9. SE Electricals Limited 10. Suzlon Rotor Corporation11. AE Rotor Holding B.V. and 12. Suzlon Energy A/S
  11. 11. EXHIBIT C 2010-2011 CSR Budget Allocation Financial 15% 1% Capital 4% 43% Natural Capital 17% 18% Social Capital Human Capital Enhancing Local Communitys Financial Resources • Livestock health care services and fertility treatment to increase productivity. • Promotion of sustainable agriculture practices. • Forming and linking womens savings, credit groups and micro enterprises to banks (SHGs). • Product development and marketing support to indigenous artisans". Conserving and Enhancing Natural Resources in Business Surrounding • Soil and water conservation on wind farm lands. • Rain harvesting and recharging of ground water. • Plantation of local tree species to increase green cover and biomass. • Promotion of natural farming and eco-friendly enterprises. Strengthening Social Capital • Forming and strengthening of Community Based Organizations (CBOs). • Empowering women through Self Help Groups (SHGs). • Gender sensitization for womens empowerment. • Influencing Health Behavior Change. Enhancing Human Resources • Imparting functional literacy to rural women. • Providing quality teaching material in primary schools. • Giving technical training to youths to increase employability. • Giving life skill education to children especially those out of school. • Availing quality medical treatment. Improving Physical Resources • Reviving drinking water sources. • Improving village sanitation. • Decentralized health clinics. • Rural (solar) electrification
  12. 12. EXHIBIT DRank determination Table for each location to assess priority for CSR activities.
  13. 13. EXHIBIT E Status of Various Projects undertaken by Suzlon FoundationPROJECT STATE TIME PARTNERS FRAM EAnimal Vaccination Daman OngoingComputer Literacy for Daman Aug08- NIITTeachers. Oct 09Anandshala. Gujarat Jul08- Centre for Environmental Education Jul10 (CEE)Deepening of Village Gujarat May- Suzlon Infrastructure LimitedPond June08Fighting Anemia for Girls Gujarat July- Arogya Dec08Bio-Diversity Park Karnataka Ongoing Suzlon Infrastructure Limited and Applied Environmental Research FoundationPEHCHAN. Karnataka Ongoing PCIDistribution of Solar Madhya May- Suzlon Foundation TeamLanterns. Pradesh June08Empowering women for Madhya April08 Concept Societysustainable livelihood. Pradesh -Mar11Rain Water Harvesting. Maharashtra June08 Supa Business Unit Team and Gram -July09 Gourav Pratishtan ( Pani Panchayat Pune)Providing Skill Based Maharashtra Nov07- Indian Institute of Education-VigyanTraining Oct10 AshramPEHCHAN Maharashtra Ongoing PCIReuse, Reduce, Recycle Maharashtra June08 Supa Business Unit TeamCanteen Waste & Water -July09
  14. 14. Enhancing Rural Water Maharashtra April- Government of MaharashtraResources. Oct08PEHCHAN Pondicherry Ongoing PCIGreen Hands - Tree Pondicherry June08 ISHA FoundationPlantation. -May09Rural Electrification Rajasthan May- Suzlon Foundation Teamthrough Solar Lanterns. June08Shrijan Rajasthan July08- NA June11PEHCHAN Tamil Nadu Ongoing PCIGreen Hands - Tree Tamil Nadu June08 ISHA FoundationPlantation. -May09
  15. 15. EXHIBIT FGLOBAL HSE AT SUZLON:
  16. 16. ANNEXURE A: CORPORATE GOVERNANCE AT SUZLONSuzlon Energy Limited claims that its philosophy of corporate governance rests on the 5 pillars ofintegrity, accountability, equity, transparency and environmental responsibility. Suzlon strives to build aninclusive business model – which takes into account the interests and concerns of employees, customers,vendors, service providers, local communities and government.The Board of Directors (“the Board”) of Suzlon Energy Limited is made up of 6 members, of which 2 areexecutive positions, while 4 are non-executive (independent) positions, implying that more than 50% ofthe directorship positions are that of Independent Directors, as required by Clause 49(I)(A). Thecompany‟s Board maintains and operates 5 Board Committees (“Committee”) to focus on specific areasand make informed decisions within the delegated authority. Each committee functions according to thecharter that defines its composition, scope, power and role in accordance to the Companies Act, 1956 andthe Listing Agreement. All the committees have been suggested to be set up by Annexure 1C of Clause 49,whose membership and her considerations are in accordance with Clause 49(II)(A).Currently, the 5 committees are: 1. Audit Committee (Mandatory) 2. Investors‟ Grievance (Shareholders‟) Committee (Mandatory) 3. Remuneration Committee (Non-mandatory) 4. Securities Issue Committee (Non-mandatory) 5. ESOP Committee (Non-Mandatory) Minimum Composition of Name of Director Position Requirements Board (as per Clause 49) Chairman & Mr. Tulsi R Tanti Managing Director 33.33% - Mr. Girish R Tanti Executive Director Mr. Ajay Relan Independent Director Mr. Ashish Dhawan Independent Director Mr. Pradip Kumar 66.67% 50% Independent Director Khaitan Mr. V Raghuraman Independent DirectorManagement Code of Ethics:-Suzlon has disclosed (under Clause 49(1) (D)(i) and Clause 49(1)(D)(ii)) a Management Code of Ethicsapplicable to all members of the Board and other members of senior management (this comprises of allmembers of management one level below the executive directors, including all general managers andfunctional heads). This code discusses issues regarding personal and professional integrity and honesty,conflict of interest coming in the way of dispersal of fiduciary responsibilities of the affected parties(including outside employment, directorships and business interests), corporate opportunities, insidertrading and compliance with government laws, rules and regulations, as well as any violations of the code(Suzlon Energy Limited Code Of Conduct for Prevention of Insider Trading (SEL COCPIT)). The focus ofthis code are encompassed in three words: “Renewable” (ethical behavior must be repeatable day afterday), “Respect” (have respect for all stakeholders keeping in mind the cultural diversity of the company)and “Refreshing” (strive to inspire fresh thinking and practices).As part of its open-door CorporateGovernance policy, and under Annexure 1D(7) of Clause 49, the company has instituted an Ombudsman,since 1st February 2010, to act as an intermediary between the concerned company official and anyemployee who might want to discuss any perceived or real malpractice, impropriety, abuse or wrongdoingby any stakeholder in the company, and also expects employees to come forward and voice these concernswithout fear of retribution.
  17. 17. References1. Suzlon Foundation .Strategy (n.d.).Retrieved August 26, 2011, from http://www.suzlonfoundation.org/strategy.html2. Suzlon Knowledge Book .Knowledge Book . Retrieved August 26, 2011, from http://www.suzlon.com/pdf/Knowledge%20Book.pdf3. Annual Report .Annual Report 2010-11 .(2011, July 30) Retrieved August 26, 2011, from http://www.suzlon.com/images/investor_annual_result/12_Annual-Report-1011.pdf4. Awards .Awards . (n.d.). Retrieved August 27, 2011, from http://www.suzlon.com/about_suzlon/awards.aspx?l1=1&l2=1&l3=665. Suzlon Energy . Wikipedia. (n.d.). Retrieved August 26, 2011, from http://en.wikipedia.org/wiki/Suzlon_Energy6. Khot, S (2011, August 30). Telephone interview.7. p.a.l.s . What do p.a.l.s do?. (n.d.). Retrieved August 27,2011, from http://pals.in/#what-palsdo8. Market Share. World Wind Market: Record Installations, But Growth Rates Still Falling. (2011, August 4). Retrieved August 27, 2011, from http://www.renewableenergyworld.com/rea/news/article/2011/08/world-wind-market-record- installations-but-growth-rates-still-falling?cmpid=rss
  18. 18. C S S UD E A E T IS

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