Social Initiatives at Thermax Ltd, case study analysis (CSR)

SOCIAL INITIATIVES AT THERMAX LTD CASE OVERVIEW -

-

-

-

-

-

The Indian law mandate firms to spend 2% of their average profit on the corporate social responsibility. Thermax is an energy and environment engineering company located in india and uk. In 1996, company had INR 300000 capital and 40 people. In 1997,thermax diversified its operation and entered into business making vapor absorption machine , collaborated with sanyo. In 1988, it enter into join venture with babcock and wilcox. In 1995, listed in Bombay stock exchange In 1996, the owner pass away and benefiter wife appointed as a CEO In 2001,After anu aga became chairperson, she reconstruct the company in four steps:- rightsizing, shedding of non-core activities,board reconstitution and cost reduction. Within a span of 5 years, export of thermax slump up and its able to increase 16% sales in 2000-01 and 32% in 1999-2000. In 2001, anu aga stepped down her post and appoint her daughter as vicechairperson, meher pudumjee. In 2005, the boiler and heater division became biggest, it accounted a more than 25% turnover ,air pollution control equipment has 12.9% share and cooling division accounted 11.7% share. In 2004, its remained a zero debt company and In 2005-06,thermox had consolidated revenue amounting to USD 363.9 million. In 2007-08,meher chosen the business standard ‘CEO of the year’ achieving a 40% growth in compound annual growth rate . in 2004-05, she able to took INR 8.5 billion firm to an INR 33 billion in 2010. In 2008, Thermax earned profit exceeding INR 2.5 billion and Thermax featured in the forbes list of ‘Asia’s best under billion’ companies during the year. Aftermath thermax, globalize and expand its operation in Europe and the US. It s operate 19 international office, 12 sales and services and 4 manufacturing facilities across the india and china. In 2015, thermax invest INR 400 million in existing plants to increase chemical produce and new paper chemicals to enhance the portfolio of the new business.

Organizational structure -

Thermax was categorized into boilers and heaters; cooling and heating; power generation; chemical and water ; air pollution control , and renewable energy.

-

-

Thermax have 5 manufacturing location in india and 3 manufacturing plantsin the US, Scotland, and Australia , capacity of 7 manufacturing thermax provides products and services to over 40 countries In the world. In 2013, thermax innovate ‘dry cooler’ the substitute of wet cooling towers and ‘hybrid chillers’ which reduce power consumption by half ,its particular related with heating substance like tea estates.

Beyond the business zone -

-

-

-

-

-

-

-

-

-

In 2007, thermax involve in CSR and formed a Thermax social initiative foundation. TSIF focused on educational initiatives, dedicated to providing quality education to underprivileged children and empolyees to engage themselves in various social activities. Co-incedently anu aga son deceased; she carried beliefs of her son , who believed that” … a substantial part of wealth of the rich has to go to charity”. Aftermath she began a philanthropics activities. Thermax donated INR 26 million amount of money in organization like akanksha foundation and parivaar , those foundation committed to help poor people. Later, she became member of these foundation. Education Thermax signed a memorandum of understanding(MOU) with the school board to set up provide free, good quality education to children. Besides, thermax support akanksha foundation for mentoring program for adolescent for personality development and career counselling. Health safety and environment measures Thermox focus on safety practices reviewed quarterly: internal and external safety audit, encouraged employees to report unsafe conditions and incident , etc. Thermax conducts periodic medical checkups, program to prevent lifestyle disease and environmental initiatives , a solar cooker and new industrial effluent plant were set up at the company’s chinchwad factory. Human resources Thermax requits talented employees for critical role for various program like the graduate engineer trainee, diploma engineer trainee and the thermax graduate programs. Suppliers Thermax banned the use of compulsory labor or child labor. Vendor were required to abide by the applicable laws of the country and vendor were permitted to continue their business with thermax only after accepted the code of conduct provided by company. Outlook Thermax focused on re-orienting its business model and planned to tackle the cyclical nature of business by; growing standard products; capturing revenue spend of customers; funding new businesses and product portfolios. In 2015,Thermax signed an agreement to acquire a 33% stake in first energy private limited.

CASE ANALYSIS:-

1. Why, what and how of CSR is adopted in Thermax? Thermax is one of the very few companies that has focused of the corporate social responsibility (CSR) and has made it a part of its daily operations. It has not only taken CSR initiatives as a mandated law but has been inclined on humbly spending on development projects and focused more on transparency and accountability. Thermax has been focusing on education and skill building through its CSR initiatives for which it has been spending more than 3% of its net profit. Thermax believes that “Profit is not just a set of figures but of values” and that organizations should stop thinking simply of profits and pay attention to the welfare of the society also. Thermax believes that at least some of the profits made by the company should go to charity and the poor in order to help make world a better place. Therefore, Thermax has been donating frequently to charity and the poor and has also been influencing and motivating its employees to do the same. Thermax has been driving a constant force for CSR initiatives within as well as outside the company. It has under taken various CSR programs to contribute to the society and the community. Their social initiative expands from the field of education, health, safety and environment measures to its suppliers as well as the outlook of the company.

Through

Thermax

Social

Initiative

Foundation

(TSIF),

Thermax has been continuously working to provide free and good

quality formal education as well as informal education to the unprivileged

children.

It

has

also

been

providing

personality

development and career counseling to youngsters in order to provide them with better education opportunities. Thermax has also been focusing on health and safety of workers. It has been providing its employees with various trainings and mock drills to avoid injuries and to enhance performance. Thermax also provides periodical medical checkups for its workers to prevent any occupational diseases. Thermax systematically indentifies talented employees for critical roles and

helps

them

develop

leadership

qualities.

Thermax

has

continuously been helping the career development of its employees. Thermax also promotes healthy competition by allowing the suppliers to not to enter into any undisclosed agreements. It also promotes social initiatives indirectly within its suppliers by making the suppliers to compulsorily abide by the national regulations regarding labor and the rules of the country. Thermax has also focused on using renewable energy to strengthen its green portfolio. It has even developed eco friendly systems promote clean energy and reduce pollution. In this way, Thermax has adopted CSR in its company and has been giving back to the community. Thermax contributing to CSR and social initiatives has not only set an example in the industry but has also helped the ecosystem and the unprivileged people. Its CSR initiatives have also helped them in their business and public relations. These social initiatives have various advantages to Thermax itself as all the funds it spends on social causes do have positive implications in the market for the company. First of all, these social initiatives have positively reinforced the public image of the company. It has made the company more people and environmentally friendly. It has also increased the media coverage for the company making its more popular. This has helped it spread its business worldwide and has helped Thermax gain trust of its

customers and its shareholders. It has also helped Thermax attract potential investors and has helped retain them making its stock price sore up high. But most importantly, the social initiatives have helped boost the employee engagement and motivation. This has been one of the major causes for the increase of the performance of the employees as well as of the overall company itself. Therefore, Thermax has adopted CSR and social initiatives which has not only helped the company but it has also helped many unprivileged individuals as well as the environment. which empower the under rated people and their internal quality as well as ability.

2. In Identify different stakeholders and their role in the process of CSR. Stakeholders are those which are directly or indirectly involved in the process of development of the company. So there are different stakeholders of Thermax Limited. Some of them are illustrated below. Non-market stakeholders    

Several groups ( Corporation, tax-advisers, management consultants Confederation of Indian Industry (CII) Bombay Stock Exchange Forbes magazine

lobby

groups

and

Market stakeholders 1. R.D Aga & Wanson company Role: focused the company function to increase in spending in development projects and more transparency and accountability on the part of firms. 2. Rohinton Aga Rohinton Aga takes forward the company, who joined the company a few years after the inception. Role: He put immense efforts into building its major operations. 3. Sanyo & Babcock and Wilcox Thermax entered into the business of making vapor absorption machines in 1987 in collaboration with Sanyo. Similarly it entered into a joint venture with Babcock and Wilcox to produce steam generation units for heat recovery steam generators (HINRGs) in 1988. And then Thermax became publicly listed company with Bombay stock exchange. 4. Boston consulting group (BCG) Thermax commissioned the BCG group to restructure the company to improve its bottom line. Ultimately the profits were increased and help them to invest more in CSR activities.

5. Meher Padumjee (successor of Anu Aga ) Meher played a vital role in achieving the 40% growth in compound annual growth rate and maintained a zero debt company. She was chosen the business award ‘CEO of the year’ in 2007-08. She helps to achieve the attraction towards the Thermax.

Beyond the business zone 1. Thermax social initiative foundation helps to formalize the CSR program of Thermax. Education For the betterment of poorest of the poor, Thermax was donating a hefty amount of money to Akanksha Foundation and Parivaar in Kolkata. The budget laid out by Thermax for elementary education

amounted to INR 26 million. And TSIF employed a team of 38 fulltime employees and 50 volunteers and part time employees. Thermax signed a memorandum of understanding (MOU) with the Pune Municipal Corporations (PMC) to set up a modern school to provide free and good quality education to children. Similarly ,Thermax supported the CII-Symbiosis Finishing School designed for scheduled Caste/Scheduled Tribe (SC/ST) and Livelihoods Advancement Business School (LABS). Suppliers Thermax supported DEEPEXPO 2010, an exhibition organized by the Dalit Indian Chamber of Commerce & Industry to promote entrepreneurs exclusively from an SC/ST backgrounds. 2. In its quest to provide clean energy and reduce pollution, Thermax signed an agreement to acquire a 33% stake in First Energy Private Limited.

The concepts of CSR and its practice in Thermax. Thermax believes that corporate organisations should think beyond profit and reach out for the wellbeing of the larger society. Guided by the vision of its founder Chairman Rohinton Aga - 'profit is not just a set of figure but of values' - over the years, Thermax has worked on a modest CSR agenda to fulfill its obligations to its wider circle of stakeholders including the communities in which it operates. The CSR programme of the company got a formal structure and a governing body when the Thermax Social Initiative Foundation (TSIF) was formed in March, 2007 as a not-for-profit body registered under Section 25 of the Companies Act. Convinced that education can be the best enabler to come up in life, the Foundation has decided to primarily focus on initiatives in this crucial area. Thermax, as a part of its social obligation, is committed to 

Provide quality education to the underprivileged children.

  

Create an environment that respects the communities and the natural environment. As a signatory to CII's initiative on affirmative action, work to achieve the defined objectives. Involve and encourage employees and their families to participate in the various social initiatives of the company.

Says Anu Aga, Director and former Chairperson, "I would like our company to play a bigger role in community affairs with complete adherence to the tenets of good corporate governance. We will actively commit ourselves to initiatives that can help improve the quality of life of the communities in which we live and work."

Corporate social responsibility(CSR) 

The education for change

Thermax signed a memorandum of understanding with school board to renovate the quality of education , providing food to the children. Collaborating with NGO its provide non-formal education, mentoring program for adolescents for personality development and career counselling. 

Partnership with Akanksha

continuing the son beliefs anu aga start to donated some portion of profit for social activities. Thermax start partnership with akanksha , which worked for the betterment of the poorest of the poor . 

Employee involvement

They focused on health and safety practices for employees. Company review the safety norms on a quarterly basis. Establish emergency plans to deal with any manufacturing related emergency issues. Thermax focused on about maintaining the health of the employees and preventing health related diseases. Periodic health checkups were conducted for workman at all factories premises. They take another environmental initiatives a solar cooker and new industrial effluent plant were setup at the company.



Preparing for Employment

Thermax requite talented manpower for critical issues related divisions. Thermax infused fresh talent various program like the graduate engineer trainee, diploma engineer trainee and the thermax graduate programs. Employee can freely c share their ideas concept and knowledge to their senior. The grapevine communication system was developed by the management .

THE END