Arvind Mills’ strategy and Programmes for its “Corporate Social Responsibility”

Mr Sanjay Lalbhai, Arvind Mills’ Managing Director has laid the foundation of the company’s approach for its “Corporate Social Responsibility.” The organisations that the company has created for carrying out the programmes for its “Corporate Social Responsibility”, build their programmes on this foundation. The SHARDA Trust, and the Narottam Lalbhai Rural Development Fund (NLRDF) are the company’s two arms for carrying out the Programmes for its “Corporate Social Responsibility.” Therefore, to appreciate the Programmes of these two organisations, it is essential to grasp the foundation of these Programmes.

Arvind Mills’ Foundation for its approach to “Corporate Social Responsibility”

Corporate Social Responsibility (CSR) is the latest buzzword in India today. Almost everyone is charging the Indian corporations to be alive to their ‘Social Responsibility’. But more the noise, less the clarity might be the reality.

We in the Lalbhai Group make a sharp distinction between a corporation being ‘Socially Responsible’ and a corporation undertaking ‘Social Responsibility’. By a corporation being ‘socially responsible’, we mean that the corporation must conduct its operations in a socially acceptable way—in ways that honour ethical values and stakeholders’ concerns, and not merely stockholders’ interests. Its financial statements should be truthful and it must operate within the law and accepted norms of the society. In other words it must be a ‘good citizen.’ But when we say that a corporation is undertaking ‘Social Responsibility’, we mean that the corporation, besides being a 'good‑citizen’, is also addressing societal issues on its own volition. We believe that a corporation’s being a ‘good‑citizen’ is a prerequisite for its undertaking ‘Social Responsibility’. ‘CSR’ goes much beyond ‘good citizenship’.

This view of ‘CSR’ is based on our conviction that corporations and society are interdependent. Though distinct, they are not mutually exclusive. They exist together and function together. Social issues affect corporations and the corporations’ actions in turn affect the society.

Obviously, no corporation can address all the societal issues. It has to make a choice about the societal issues it would address; still more important is the decision about the issues to be left for other organisations to resolve. How should a corporation make its choice? A good criterion for doing so, is what Professor Michael Porter calls the ‘shared value’. This suggests that a corporation should address only those societal issues that would create benefit for the society and the corporation both.

Once we accept the view that corporations and the society must exist together and work together, the debate whether corporations should accept ‘Social Responsibility’ becomes futile. Social Responsibility then gets integrated with the corporation’s total
functioning—results in what Professor Porter calls ‘corporate social integration’. Translating ‘CSR’ into ‘corporate social integration’ would result in corporations treating ‘CSR’ as an integral part of its strategy and stop treating it as an act of philanthropy.

Arvind’s CSR programmes have been informed by these considerations.

SHARDA Trust’s Programmes

The SHARDA Trust is Arvind Mills’ arm for addressing major societal issues in urban India. In 1995, the Arvind Mills established the SHARDA Trust with the charter of helping the urban poor. In Arvind Mills’ view, urban poverty is a major societal issue. The adverse effects of urban poverty on the urban citizens manifest themselves in many ways. Observing a large section of the urban population living under sub human condition is one way in which we see these adverse effects manifesting themselves. Many urban children not getting even good primary education is another manifestation. Similarly, we see the ugly face of urban poverty when we watch many men and women not getting the benefits of modern health care. Obviously, these adverse effects do affect the Arvind Mills since it is a part and parcel of urban India. Addressing these issues, would benefit both, the urban citizens and the Arvind Mills.

Since its inception, the Trust has carried out many projects to help the urban poor. Providing the basic infrastructure in one of Ahmedabad’s slum, which did not have any civic amenities was the first important project the Trust carried out. Its second major project comprised carrying out vocational training programmes for the youth and getting them employment, which had promising opportunities for growth. The third major activity the Trust has started is to help the poor in getting high quality secondary and tertiary health care. Now it is working closely with the Ahmedabad Municipal School Board for upgrading the educational level in Ahmedabad’s municipal schools. In addition, the Trust is expanding its programme for providing secondary and tertiary health care to the poor. In this direction, it is conducting health camps in the city’s distressed areas to identify the major health problems of the residents. By doing so it helps the residents to spot potential health problems early, so that the Trust can get them good medical treatment in a city’s hospital. This effort is a prelude to understanding the health problems of the poor. With this understanding, the Trust aims at designing health insurance plans that can help the poor to get good health care at an affordable cost.

In the year 2006-07, the SHARDA Trust carried out three major Programmes. The Trust has designed these programmes specifically to help the young persons living in Ahmedaabd’s industrial areas and the urban poor living in the city’s slums and chawls. “A Programme in Practical English and Computer Applications” was the Trust’s first Programme. Its purpose was to upgrade the proficiency of the young persons living in the city’s industrial areas in English and Computer applications and prepare them for well-paying careers in the city’s BPO industry. The Trust designed its second programme to upgrade the educational level in Ahmedabad’s municipal schools. Finally, the Trust’s third Programme was to provide secondary and tertiary health care to the city’s poor.

Trust’s first educational programme for skill upgrading in the financial year
2006-07

Since the year 2005, the Indian economy has been growing at a rapid rate. “The country's gross domestic product (GDP) grew at 8.5 per cent in 2003-04 and 7.5 per cent in 2004-05. The Indian economy is growing at a pace next only to China, expanded at a faster rate of 9.0 per cent during 2005-06 largely on the back of a higher output in the farm sector than previously estimated.” Consequently, the job market in the nation is extremely buoyant. Ahmedabad’s economy, in consonance with the national economy, is also growing rapidly and so is its job market. “Walk-in with Resume & walk-out with a job” says a Timesjobs.com advertisement in Times of India (Ahmedabad edition).

Ahmedabad’s BPO companies, large retail outlets, and corporate hospitals are employing new persons on a large scale. Reliance Retailing has entered the retailing business and is employing many persons for their retail operations.

Unfortunately inadequate supply of young persons with moderate proficiency in English and computer applications, in Ahmedabad, is acting as major constraint on the economic development of these firms in Ahmedabad. Ironically, we see a paradox in Ahmedabad. On one hand, firms do not find suitable young persons to meet their expansion plans and on the other we have, in the city’s industrial areas, many graduates who do not find employment opportunities with good prospects. Poor quality of education the graduates receive in Gujarat, and the difficulties of finding good English teachers, are the obstacles in meeting the needs of this buoyant job market. We sensed the need for preparing the youth from the city’s industrial areas for careers in the city’s emerging industries. Sensing this need, we offered the Programme “Practical English and Computer Applications” in the year 2006-07. The purpose of this to programme is to upgrade the proficiency of the young persons living in the city’s industrial areas in English and Computer applications and prepare them for well-paying careers in the city’s rapidly expanding firms. This was the seventh time when we offered this Programme.

In this Programme, seventy-seven persons registered, but only twenty-seven persons finished the Programme, when we finished the Programme on 25 August 2006. Of these twenty-seven only twenty-one persons completed the Programme satisfactorily. As the programme is very demanding, the dropout rate is high. The average age of the group that continued with the programme was twenty‑four years. Also, the group that continued with the programme comprised 64% men and 36% women.

We found well-paying jobs, in the city’s BPO firms and in a corporate hospital in the city, for twenty-two persons, who wanted us to find a job for them. We are planning to expand the capacity of our programme considering these constraints.

Trust’s Programme for upgrading the education in the city’s municipal schools.

In the year 2006-07 the Trust launched its first educational programme for upgrading the educational programmes in Ahmedabad’s municipal schools. The Ministry of Human Resources, Government of India, has reported about the enrolment of the nation’s children, adolescents, and youth in India’s different educational programmes. This data highlights the need to upgrade the educational programme in the urban India’s and Rural India’s primary schools. The data shows that approximately seventeen crore Indian children were enrolled in class 1 to 8 in the nation’s different schools. However, the enrolment in classes 9 to 12 dropped to approximately three crores, showing that about 81% of the children form the primary schools never reached the Secondary and Higher Secondary schools. The picture is much worse when we come to India’s higher education. The Ministry’s data again shows that, only 32% of the students studying in Secondary and Higher Secondary schools reach the nation’s higher education, thus 68% drop out from the Secondary and Higher Secondary schools. Therefore, only 6% of the students from the nation’s primary education finally reach the country’s higher education.

Unfortunately the data does not show the demographic and the socioeconomic profile of the students who dropout of the nation’s educational system in the very early stages. However, it is not difficult to make a judgement about the characteristics of these early drop outs. Approximately 70% of Indians live in rural areas and therefore a vast majority of the children dropping out early belong to rural India. Similarly, most of the students in urban India, who drop out from educational system in the very early stages, belong to the poorest section of the urban society. It is well known that most children from the poorest section of urban society study in the city’s municipal schools.

About one hundred and sixty thousand children study in Ahmedabad’s municipal schools. These comprise approximately 39% of all the students studying in the city’s primary schools. Obviously, if many children from the city’s primary schools get poor quality of education then the city’s industry would find it extremely difficult to get the skilled workforce for its emerging “knowledge industries.”

How poor is the quality of education that the city’s municipal schools impart? A report form the Times of India provides us a glimpse of this poor quality of education in the primary schools. It says “that Antop Hill in Wadala is a municipal school. It is very different from a madrassa. Boys and girls here sit on benches and face sari-clad teachers. But, they have something in common with the madrassa. Low IQ, atrocious arithmetic, poor geography and shameful vocabulary. Students, aged 10-12, whom the reporter met at the municipal school couldn’t spell doctor¼Neither of the students could get it right when asked to multiply eight by eight.” (Mohammed Wajihuddin ‘Hunger is in the syllabus’ Times Review| Culture Curry Sunday Times 17 December 2006, Ahmedabad Edition)

If this is the quality of education that the municipal schools impart, then is a matter of surprise that the students from these schools would not progress beyond the primary school level?

Clearly, if the nation wants to increase the size of its well‑educated people, then the nation must improve the primary education in rural India, and the education that the municipal schools impart in urban India. This was the logic behind our decision to launch an educational programme to improve the quality of education in the city’s municipal schools.

In the year 2006-07 we signed a Memorandum of Understanding (MOU) with the Ahmedabad Municipal Schools Board allowing us to set up educational centres in the municipal schools. The MOU also says that the SHARDA Trust would invest in the computers and projectors that the Trust would use in these centres and the Trust would use its own trainers for teaching in these centres. Further, the Trust would invest in redesigning the interior décor of the class rooms that the Trust uses for its educational centres.

In the year 2006-07 the Trust has set up one educational centre in the city’s municipal school located in Shapur area of the city. This school is only for boys and almost all the students of this school come from a large slum called Shnakarbhuvan located near the school. Similarly, the Trust has set up another centre in a “Heritage bungalow” owned by a Trust belonging to the Lalbhai family. The “Heritage bungalow” is located near a few large chawls. Students from these chawls study in the city’s municipal school and come to the educational centres to upgrade their education. This centre started functioning from November 2006.

In the municipal school the Trust has installed sixteen new computers and ten in the “Heritage bungalow” Further, the Trust has redesigned the interior décor of the educational centre to create an environment conducive for making learning “an enjoyable experience without making it frivolous.”

In these centres we teach students studying in class V, VI, and VII, and teach them computer applications, English, and basic Mathematics. The reason for the choice of these subjects is self-explanatory and requires no explanation. It is sufficient to stay that without understanding of these subjects, a child would be a misfit in the contemporary world.

Our observations showed that the children coming from the slums and chawls see life in its raw form. We met a nine‑year‑old boy from Shankarbhuvan who knew many things about narcotics and the wayward ways of the police. Clearly, for such children it would make no sense to teach only the abstract ideas, tools and techniques of any subject. We therefore decided to follow Gandhiji’s advice for educationist that says “we must teach for life, through life and throughout life.” Our educational programmes therefore start with a concrete problem that the students have familiarity with and through these problems we teach the students the logical foundation of a subject. Our experience has been very rewarding.

In the year 2006-07 the daily average attendance in the municipal school was one hundred and sixty students. In the “Heritage Bungalow” seventy‑six students on average attended the classes during the year 2006-07. Therefore, in the year 2006-07 two hundred and thirty-two students attended our programme in the two centres.

Our capital expenditure for setting up these two centres, in the year, was approximately, fifteen‑lakh‑rupees. Similarly, the “direct recurring expenses” in these centres for the year 2006-07 was about rupees six lakhs.

How effective was our training educational programme? We quote what nine years old girl Dishita Prmar said about our educational programme. She said “Lilavati Bungalow (“Heritage Bungalow”) is good. (saras che). I like learning here. Our school timing is in the afternoon and I feel sleepy. But here, at Lilavati Bungalow, I like to study because of the way the teachers teach and because we have much space to play. In school we have a computer but we do not use it. I learnt to use a computer for the first time in the computer class here. ¼Now I can type ABCD, parts of the body, and days of the week all in English. I play computer games like Dots, Blocks, Bricks, and Zeek. I ask Sir (the teacher) if I do not understand anything in the class. Therefore, I have no difficulty in the computer class. Had I not come here, I would not have learnt to use a computer (na aya hot to computer na shikwa malte). If you do not know how to use a computer, then you do not get a job anywhere (computer na awade to kyaye naukari na male). English is also necessary (English bi joiye). If I had not come to study here, I would not know, in English, the weekdays and parts of the body.” (Moulding Futures The Story of Dishita Jayeshbhai Parmar, © 2007: Strategic Help Alliance for Relief to Distressed Areas SHARDA Trust, Asoka Spintex Premises, Naroda Road, Ahmedabad 380025)

We conclude our discussion about our educational programme by a quotation from an educationist. This quotation aptly sums up the importance of our task in upgrading the quality of education in the city’s municipal schools. Barbara Colorose said “If kids come to us [educators/teachers] from strong, healthy functioning families, it makes our job easier. If they do not come from strong healthy functioning families, it makes our job important.” (http://www.storytellingmonk.org/ref/quotes/educ.htm)

Trust’s Programme for helping the urban poor, get secondary and tertiary health care

In 1998, the Trust launched its Programme for helping the urban poor get secondary and tertiary health care. (Health Care Programme) This Programme was born out of the Trust’s observations that the poor need to get high quality secondary and tertiary health care just as they need to get primary health care. However, the Trust noted that though there are many organizations helping the urban poor to get primary health care, there are hardly any organizations that help the urban poor get secondary and tertiary health care. Therefore, the Trust decided to launch its Programme to fulfil the need of the urban poor for getting secondary and tertiary health care. In 2006-07 the Trust expanded the Programme to conduct health camp in the city’s Distressed Areas (slums and chawls) and help the persons with a potential health problem to get prompt treatment in a city’s good hospital.

Our Health Care Programme had four components. The first component comprised sharing the cost of treatment with patients who had already gone to the city’s hospitals for getting secondary and tertiary health care. In this component we shared two-thirds of the cost the patient incurred in the hospital for her/his treatment with an upper limit of about seven thousand rupees. The Programme’s second component consisted of conducting health camps in the city’s distressed areas (slums and chawls), and identifying persons who had major potential health problems. We treated all those patients coming to the health camp who did not need further investigations in the Out Patient Department of the Jeevraj Mehta Hospital. Our team asked these patients to continue the treatment that the hospital had prescribed and then come for a check on the date the hospital had given for a check up. In the third component of the Programme, we took the persons who needed further investigations or needed hospitalisation to the Jeevraj Mehta Hospital. Finally, in the Programme’s fourth component, we paid the fees of eight mentally retarded children from slums and chawls to attend the Navjeevan Trust’s Programme for mentally retarded children. We did so because the mentally retarded children cannot look after themselves. Unfortunately if they come from poor families, then their parents cannot find anybody to look after these children when the parents go for work. Consequently, such children are vulnerable to child abuse.

In the first component we helped twelve patients, in the second three hundred and sixty-three (363) and in the third ninety-seven patients (97). Therefore, one hundred and nine (109) patients got substantial help from the Trust while the three hundred and sixty-three (363) patients who came for the medical camp also got benefits that they would not have got on their own. Consequently, in the Health Care programme the Trust helped four hundred and seventy-two (472) poor persons, in the year 2006-07.

In the year 2006-07 the Trust spent about four lakh rupees for providing this medical help. Of this amount the Trust spent about 84% for transporting the patients to the hospital, paying the hospital bills and for buying medicines and refreshments for the patients.

After getting experience of working with the distressed area's community, in getting them secondary and tertiary health care, the Trust plans to forge a health insurance scheme for the poor. In the contemporary world, the Health Sciences have progressed rapidly and very high quality health care facilities are now available. The only difficulty is that such good quality health care is beyond the reach of the poor. Consequently, the need for effective and efficient health insurance policies is now far greater than ever before.

How effective was our Health Care programme? Ms Jyoti Jumani, a research scholar, records Mr Narangbhai, Chavda’s experience of getting benefits from the Trust’s Health Care Programme. Narangbhai’s experience gives a glimpse of the Programme’s effectiveness. We report his experience below.

In 2005, normal life changed completely for Narangbhai, a former labourer in Ahmedabad’s Aryodaya Ginning Mills, (now closed) because of an insect bite. Next morning his left leg swelled and became huge. Progressively the condition of the leg worsened in spite of the treatment he received in different hospitals and from private practitioners. On 9 January 2007 when a team from SHARDA Trust visited him he could walk with considerable difficulty. The team was shocked to see a pus-soaked bandage unravelling a leg that looked rotten. On 15 January, The team admitted him to Jivraj Mehta Hospital, a public hospital in Ahmedabad. After he received skin grafts in the hospital he continued to improve and the hospital finally discharged him on 16 February 2007, a month after he was admitted.

In June 2007, nearly four months after he was discharged from the hospital, a hale and hearty Narangbhai, told the case writer:

“In the hospital they removed two buckets of pus. It is like getting a new birth (jeevan navu ayu am kahewaya). I do not have any savings and do not have medical insurance. Where would I get the money to pay for the hospital expenses? I would have resigned to fate had; the Trust not intervened and paid for my treatment. I did not have so much money to pay the hospital’s bill for about thirty-nine thousand rupees. If not treated, the bone would have begun to rot and they would have had to amputate my leg. The Trust paid for my cure. My son Jaswant is hardly able to make two ends meet. The SHARDA Trust’s team remained with me throughout. My case was like sunya mathi sarjan (creation out of nothing). I was in the hospital for more than a month.”

Fit to walk, Narangbhai felt proud in displaying his cured leg. He has a card from the Ahmedabad Municipal Transport Corporation, which entitles old people to travel free on any bus route within the city. Narangbhai does full justice to this card. And, proud of his mobility and independence, he claimed: ‘I had participated in Gandhiji’s freedom movement and spent seven days in jail’. (The Insect Bite, The Health Ordeal of Narangbhai Savabhai Chavda © 2007: Strategic Help Alliance for Relief to Distressed Areas SHARDA Trust, Asoka Spintex Premises, Naroda Road, Ahmedabad 380025)

The SHARDA Trust received generous financing for its educational programmes in municipal schools and its Health Care Programme. The S. M. Shah Settlement provided the financing. Arvind Mills besides contributing to this financing, provides infrastructure support for carrying out these programmes. It pays the salaries of the top team in the SHARDA Trust that provides leadership to these programmes and office space, stationary, computers for the SHARDA Trust’s staff.

Programmes of Narottam Lalbhai Rural Development Fund (NLRDF) for helping the rural poor.

The needs of the rural poor are very similar to the needs of the urban poor. Except contextual differences, the needs of the urban and rural poor are very similar. Skill upgrading programmes are desperately needed for the rural poor. Poor quality of education, and unemployment, are the banes of rural India. Consequently, the rural areas need vocational programmes so that the poorly educated and unemployed youth can find better job prospects in nearby cities. Similarly, the poor children living in rural areas need a better infrastructure in their schools. Finally, the rural poor need help including financial help, for improving the yields in their farms so that they can improve their earnings. NLRDF has designed its programmes to fill these needs.

Vocational Programmes for rural poor.

The Khedbrahma taluka of Gujarat’s Sabarkantha district is a tribal and a hilly area. Except agriculture, there are no industries that can provide promising career opportunities for the rural youth who are poorly educated and have no marketable skills. Consequently, unemployment is a major problem facing the youth of that region. The irony is that Arvind Mills located in nearby Ahmedabad, is desperately looking for young persons with minimum educational qualifications to work in their garment factory. In this situation, we in NLRDF saw a unique opportunity to help the poor youth in the Khedbrahma taluka. NLRDF’s team requested the Arvind Mills to provide training for about sixty youth from the Taluka for working in the company’s garment factory. The company readily agreed to do so. Now these sixty young persons are working in the company’s garment factory and earning a regular monthly income. More than earning a regular income, these young persons have found a direction for improving their career. If this experiment succeeds, the NLRDF would get more young persons from nearby rural areas to work in the city’s emerging garment industry.

This example is a text book illustration of a corporation creating, immediately, mutual benefits for the society and the corporation.

Upgrading the infrastructure in a rural primary school.

The existing class room of a school in a village is old unsuitable for teaching the school’s children studying in classes I, II, III, and IV. In the monsoon, rain water leaks into the school’s building. Also, the school is short of space for teaching the growing number of children in the area. To meet this crying need for a better infrastructure, the NLRDF constructed in a nearby primary school, a room with RCC structure. In addition, the NLRDF provided the minimum teaching material and equipment that a school needs. After completion of the classroom, the NLRDF handed over to the school the better equipped classroom.

Helping the rural poor in improving the yields in their farms

Non availability of good quality seeds, and poor irrigation facilities impede the productivity of agriculture in rural India. Realising this need, the NLDF team provided five kilograms of improved Sahara Brand Maize Seeds to each of the sixty-six families in the Tandalia village. The NLDF team purchased the seed from Khedbrahma Kharid Vechan Sangh, Khedbrahma. Similarly, the team supplied, two and half kilograms of the improved Mug seed to each of the thirty-two farmers who possessed better irrigation facilities. These improved seed would yield better-quality and higher yield for the farmers and require the farmers to use less quantity of water in their farms. Consequently, the productivity of their farms would improve. This experience of using better seeds would motivate the farmers to use good quality seeds in the future. In addition, the team supplied vegetable‑seeds to the Self Help Groups of women in the area for their kitchen gardens. The team collected the samples from the Horticulture department, Himmatnagar.

The Khedbrahma taluka of Gujarat’s Sabarkantha district, as we have pointed out above, is a hilly area. Consequently, the land of the area is extremely uneven and therefore, the rain water does not percolate. Obviously, the water table in the region is very low leading to poor crop yields. To remedy the situation, we decided to reduce the slope of the land. For doing so, we “cut and filled” the slopes, making the topography of the land less uneven. We have carried out this activity where twenty-seven farmers had their farms. We do hope that this measure would improve the crop yield for these twenty-seven farmers giving them higher income from their land.

Concluding remarks.

Carrying out the projects we described above has convinced us in Arvind that when a company deploys its expertise, knowledge, skills, financial resources, and clout to address a social problem, it generates long‑term “mutual benefits.” It creates, to use Professor Porter’s words, “shared value” for the company and the society.

The Late President Kennedy had warned that if the sections of the society that have financial resources, skills, and expertise do not help the society’s poor then their long term interests will suffer. He said “If a free society cannot help the many who are poor, it cannot save the few who are rich."

Some of the importannt programme events as captured in camera follows :

Municipality School