University of Vaasa - Vaasan yliopisto

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business houses should follow this for a variety of reasons like education or religious
activities through foundations or trusts. The difference between then and now is that
the donations, monetary or otherwise were from the personal wealth of the promoters
and did not belong to the shareholders as it does now. Over time, philanthropy took
the shape of adoption of a village, providing basic infrastructure or education but
such activities were kept at an arm’s length and did not constitute an integral part of
the business. Many activities in the guise of CSR have had absolutely no connection
with the core business operations and were mostly done with a selfish motive of
buying peace with the surrounding community. They did not have a strategy nor a
well laid out plan for long-term implementation and were and still are dependent on
the annual budget allocations. The responsibility of the corporation ended with the
disbursement of the budgeted funds and no measure was taken to check the success
of the program. What most companies failed to understand is that CSR is not an
unrelated activity but is one which leads to a win-win situation both for the
organization and the beneficiary. When this is the attitude, the first to feel the axe
during a downturn or recession is the CSR.
The changing business philosophy is the result of businesses being more
competitive. Liberalization has opened doors to new competition and business
houses felt the need for being innovative. Contrary to the perception of most people
and organizations, CSR now is not only restricted to larger organizations or cash rich
MNCs but is adopted by medium concerns too and there exists a difference between
the ‘do good’ activities’ which are often passed off as CSR and reported in the glossy
annual reports and those which have been integrated into the business
strategy. Those organizations which did walk the talk of CSR did so as their
promoter family believed in it. Where the Board of Directors is silent or indifferent
in this matter, it is the CEO or the top management which shapes the CSR
policy. True cases have been witnessed about the conviction of the leaders both in
India and the rest of the world.
India in the old economic system was no better than any other developing nation. In
a country of a teeming billion population, unequal wealth distribution, the
shareholders of a company, being widely scattered were recognized as the only
stakeholders even that to the extent of the receipt of dividend only. But in the
present market economy with competition from every quarter, the companies are
judged not only by their financial performance but also by the level of their corporate
citizenship. We find different models of CSR which have become the central theme
in business strategies. One such case of a pure business model is that of South India
Paper Mills (SIPM).
“Kaveri Valley Paper Mills’ as it was known then was started in 1947-48 on a small
scale, manufacturing paper, five ton a day with the second hand Japanese machinery
imported from Malaysia after World War II. The recession in early 1950s forced its
closure and it remained closed till 1959 until A. Patel from East Africa decided to
invest a portion of his wealth back in his home country. Patel apart from being a
barrister with a flourishing practice was Her Majesty the Queen’s Counsel and was
decorated with CBE. He was also the Minister for Industries in independent Uganda
under Obote’s regime. Patel was acquainted with the then Prime Minister Nehru and
Sardar Patel and on one of his visits to India learnt that a paper mill was up for sale
in Southern India. Visits to this remote corner of the country, discussions with the