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The Land Acquisition Ultimatum: Communication Pangs and Betrayal of CSR Legacy*

CASE STUDY, CORPORATE SOCIAL RESPONSIBILITY
ET Cases - GSMC, 14 Pages
AUTHOR(S) : Hemant Shrivastava, Fellow, IIM Indore and Prof. Patturaja Selvaraj, IIM Indore

Case Preview

The Land Acquisition Ultimatum: Communication Pangs and Betrayal of CSR Legacy

 

It was a scorching summer day and Naveen Phogat (Phogat), Manager (Security), was in the office of his senior Prem Umang (Umang), General Manager (Mining Project). “Are you kidding?” said Phogat, adding, “Do you really mean that we will publicly announce the commencement of our mining operations at Pakri- Bairat without really settling the outstanding issues?” He was breathless because he felt it was pre-mature and could escalate the situation to cause a blood-bath in the area. He was taken by surprise. Umang had anticipated such a reaction, but he knew that he had to bring his Security Manager on board for successful implementation of the project. He had already been briefed by his seniors at the corporate office: the CEO-cum-Chairman desired that a strong message of commitment towards the project must be made. He wanted Phogat to begin liasoning with Administration and Police for making necessary arrangements to keep trouble-makers at bay. However, Umang was apprehensive about his proposed plan and thought, “Should we really proceed ahead with a mining program without successful land acquisition?”

Phogat was uneasy at the prospect of a bloody confrontation that was building right under his nose. With 30 years in the Police service he knew that public protest under such provocation could deteriorate as tempers would run high and the occasion could be marred by Police firing. He realized that he was helpless in shooting down the preposterous idea as the top leadership wanted desperately to show to the Ministry of Power something concrete about land acquisition and commencement of the project. In his opinion it was a brazen act akin to disturbing a hornet’s nest. The Company had sunk about INR 300 crore till date with no concrete result in sight. The stakeholders, mainly the affected displaced population, were against the commencement of mining operations...................

Government’s Land Acquisition Policy and the Mining Industry

Since the First Five-year Plan starting from Nehru1 s era, Public Sector Companies were seen as an instrument of industrialization and a source of employment generation. Indian Government’s land acquisition policy was implemented with a heavy hand and millions of people were displaced between 1950-1990 by invoking draconian provisions such as ‘eminent domain’ or ‘public purpose’. Mining was nationalized by the government in the 1970’s. The corporate entities in mining were invested with the mandate to build self-sufficiency in the mining of coal to boost power generation...............

North Manpura Coal Mining Project

In terms of reserve and production, Indian coal industry is one among the largest in the world. The industry is dominated by Government-owned Public sector concerns such as Coal India Limited. Due to galloping demand, India has had to import coal to meet the deficit and this trend is likely to persist. Demand for thermal coal and coking coal is surging due to demand from the power and steel sectors. The current coal consumption for thermal power generation is around 600 MT.............

Rashtriya Urja Utpadan Evam Vitran Nigam: A History

The ‘Rashtriya Urja Utpadan evam Vitran Nigam’ (RUUVN) was a top Public Sector Company. It was adjudged as a great company making huge profit with a turnover of over INR 1,00,000 crore. It had diversified into hydel and non-conventional electricity generation. For the year 2011-2012, its profit before tax was INR 9223 crore (See Annexures I and II). Persistent shortage of domestic coal prevented thermal power projects from optimally utilizing their investment..............

Corporate Social Responsibility (CSR)

The company believed that it was obliged to the community because they needed a social ‘license to operate’. Since this foray into captive mining11 was their first venture and the fact that mining inherently was a disruptive activity and imposed environmental penalty, it was the moral and social responsibility of the company to compensate for the same. As a mark of this understanding the company was a signee of the “Global Compact”, an initiative of the United Nations, to launch multipronged CSR activities to mitigate the impact............

A Change in CSR Strategy

Realizing the constraint and changed nature of CSR, he had initiated the program to sponsor ITI education for the wards of those families transferring land to the company. This initiative saw relative success and helped in land acquisition to some extent. In order to strengthen the social capital of the company he identified some people in the villages willing to collaborate with the company in CSR implementation and land acquisition............

Bull in a China Shop

The affected population went on an offensive. A public hearing was held in 2006 and its timing was preponed to prevent the villagers attending it in full strength. The villagers pre-empted the move and brought their women-folk who staged a sudden violent attack on the company officials at the venue. This caught the company and administration unawares and outwitted them. Post the 2006 public hearing show-down, ingenious methods of powerful protests were organized by the then area MLA.............

The Land Acquisition Problem

The stakeholders had divided opinion about the efficacy of CSR and felt that it could not bring rapprochement unless substantive issues of dispute were addressed. These issues were related to compensation, royalty sharing, annuity enhancement, resettlement and rehabilitation (R&R) provisions, and employment guarantee scheme. The stakeholders had unrealistic expectations due to instigation by politicians, and specially the public representative who used the ‘Confrontation-Compromise-Pressure’ strategy to extract benefits.............

The Resettlement and Rehabilitation Problem

Additionally, the company failed to expedite the construction of R&R colonies for the displaced population. The issue of annuity payment to the displaced landowners was also pending approval of the state government. The failure of the state government in extending approval for the same was misconstrued by the public as unwillingness of the company to extend R&R benefits to the beneficiaries.............

The Agents of Change

Umang was an engineer with MBA from a top notch institute with considerable experience. He was a softspoken man but had a formidable reputation as a No-Nonsense Manager. Being conversant with local culture he had moved incognito in the project area and had befriended some villagers. He strengthened his informal network and used his social network to push the organization’s agenda of land acquisition. He had heard about corruption in CSR distribution of goods............

The Making of Doom’s Day

The company had become optimistic after successfully containing public violence. During the period 2011- 2012, there was no major outbreak of violence and it emboldened the top leadership to consider kickstarting mining operations. Umang had been asked whether they could proceed. Motivated by objectives like career mobility and company’s profit, Umang did not oppose the move............

Caught in the Horns of Dillemma

The project’s delay developed hardened posture of the adversaries. The failure to give assured employment, failed expectation on compensation and R&R, had eroded affiliation need of the community. Extended physical proximity developed resentment and enhanced community’s sense of vulnerability. Loss of productive territory threatened agriculture which was major livelihood for the affected population that posed biological/survival threat. There was no perceived reward value in the public-company interaction...............

Assignment Questions

I. What are the difficulties of land acquisition in India?
II. Does RUUVN’s CSR have impact on local community? Why should the company engage in CSR?
III. What is the role of RUUVN’s top leadership in the conception and implementation of CSR agenda? What was their prime motivation?
IV...............

 Annexures

Annexure I: Financials of RUUVN

Annexure II: Standalone Balance Sheet of RUUVN

 

Teaching Note Preview

The Land Acquisition Ultimatum: Communication Pangs and Betrayal of CSR Legacy

 

Synopsis

RUVVN Limited, a public sector unit (PSU) of Government of India, is headed by a Chairmancum-Managing Director and assisted by a Board of Directors. It is in the business of power generation, transmission and consultancy and is categorized as a company with huge profits, with a turnover of INR One lakh crore. It had diversified into hydel and non-conventional electricity generation. RUVVN also won several awards at national and international levels for its various Corporate Social Responsibility (CSR) initiatives. It was also a signatory of the United Nations’, “Global Compact for Sustainable Environment”. Due to its proactive CSR orientation it had done a commendable job in and around its power station. However their maiden foray into captive coal mining saw their CSR programme floundering initially. CSR and sustainability issues were far more complex in the context of mining. There were serious public protests against land acquisition, compensation and resettlement and rehabilitation policies. The company soon gathered its act together and gave a structured shape to its CSR initiative for different stakeholder groups, viz. youth, the landless and women.

CSR initiatives included vocational training, distribution of goods, construction of roads, providing school infrastructure, sponsoring sports tournaments, sponsoring students to Industrial Training Institutes and running a mobile health service. Although some of its initiatives were well-received, there was trenchant criticism against its lack of communication. There were severe violent attacks on the company’s employees and the project office based at the site..............

Context of the Case

The region of North Manpura Valley, Madhya Pradesh had seen many mining projects coming up. The region was likely to see massive degradation of environment due to forest destruction, high pollution by existing mining activities, illegal coal mining by coal mafia and abuse of local community. Despite being a public sector company, its CSR activities in the region had not been documented officially and made available to public. Of the three coal blocks-Pakri-Bairat Coal Mining Project (PBCMP), Chatti-Bairat Coal Mining Project (CBCMP), and Kajrari Coal Mining Project (KCMP) – allocated to RUUVN, the latter two were de-allocated due to exceeding the time frame for land acquisition.

The case study deals not only with its relation to various stakeholder groups, but also focuses on communication dilemma as to what made the company to go ahead with its mining commencement despite public protest. The central government, after the failure of RUUVN company to acquire the land in the two coal-block areas in the legally designated time period, had no option but to officially announce the lapse of the coal-block allocation (referred here as de-allocation). Therefore the company lost its license to mine coal in the de-allocated area......................

Expected Learning Objectives

The case explores the organization’s strategic approach to CSR, the consequences of hurried, ill-conceived approach of leadership to mining commencement and the political fall-out of coal-block de-allocation on the organization’s effort to kick-start mining operations without winning public cooperation.

A few of the learning objectives are as follows:

  • • To identify the importance of CSR in the context of land acquisition
  • • To understand the consequences of short-sighted approach of leadership in commencing mining operations without public support
  • • To understand the importance of CSR Communication in averting the conflict due to ill-advised planning and strategy

 

Case Positioning and Setting

The case study illustrates the nature and concept of CSR, role of values and leadership in the activities undertaken by the organization. It amplifies the dos and don’ts in land acquisition. It can be used in courses related to CSR, corporate citizenship, ethical leadership, general management, strategic management and public sector business. The case is relevant for MBA class and executive development programs.

Assignment Questions

  • I. What are the difficulties of land acquisition in India?
  • II. Does RUUVN’s CSR have an impact on local community? Why should the company engage in CSR?
  • III. What is the role of RUUVN’s top leadership in the conception and implementation of CSR agenda? What was their prime motivation?
  • IV. ............

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Abstract

This case study brings out the challenges of implementing land acquisition for a new mining project in India, and how corporate social responsibility and corporate communication dilemma provoke stakeholders' resistance. Using land acquisition context, the case explains how corporate identity is metamorphosed posing communication challenges of integrating multiple identities of the corporation. A mapping exercise by Washington-based think tank Rights and Resources Initiative in collaboration with Delhi based Society for Promotion of Wasteland Development revealed 250 land acquisition conflicts in 165 of India's 664 districts. Stakeholders' resistance has increasingly intensified creating legitimacy gaps for corporations because of communication failure. Could the conflict between corporations and civil society based on identity, and value be managed through a program of acceptable action?



Pedagogical Objectives

The case explores the organisation’s strategic approach to CSR, the consequences of hurried, illconceived approach of leadership to commence mining operations without the support of the public.
Few of the learning objectives are as follows:

  • To identify the importance of CSR in the context of land acquisition
  • To understand the consequences of short-sightedness approach of the leadership commencing mining operations without public support
  • To understand the importance of CSR Communication in averting the conflict due to illadvised planning and strategy

Case Positioning and Setting

The case illustrates the nature and concept of CSR, role of values, corporate identity, corporate communication and leadership in the activities undertaken by the organisation. This case amplifies the dos and don’ts in land acquisition. It can be used in courses related to CSR, Corporate Citizenship, Ethical Leadership, General Management, Strategic Management and Public Sector Business. The case is relevant for MBA class and Executive Development Programs.


* GSMC 2016, IIM Raipur

This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
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