Cashing in on CSR: HLL's 'Do bucket paani...' campaign has helped increase Surf Excel sales by 15 per cent

It shouldn't surprise anyone that Indian companies have just discovered the marketing pay-off of their corporate social responsibility (CSR) initiatives. They could get by with focussing on real or perceived product attributes, and with profit-mindedness being considered a coarse sentiment, any CSR programme they launched was far removed from their core business, brands, even consumers.

There has been a spate of corporate CSR initiatives over the past few years. Companies have been quick to respond to crises (such as the Gujarat earthquake or the tsunami that hit the southern part of the country) or shown inherent goodness in plugging gaps in the government's efforts to provide healthcare and education to all-in a country as vast as India, there will always be gaps-but there has been little effort to link such work to things such as marketing, even corporate strategies. Most CSR activities are, at best, charity, not very different from discrete acts of philanthropy and, at worst, a mere humane façade of a for-profit-only capitalist system.

Which is why recent advertising campaigns by the country's two largest fast moving consumer goods (FMCG) companies Hindustan Lever Limited (HLL) and ITC are significant. The first, a campaign for Surf Excel Quick Wash with the tagline Do bucket paani ab rozana hai bachna (I will save two buckets of water a day), has struck a chord in a country where the shortage of water is an endemic phenomenon. "We decided it would be of immense benefit to a household if a technology could be developed that would reduce the water consumed in the washing of clothes and the amount of effort required while rinsing while delivering superlative cleanliness," says an HLL spokesperson. Surf's sales, say sources in the market, have gone up by as much as 15 per cent since the advertisement, starring actress-turned-social-activist and former Member of Parliament Shabana Azmi, went national (the company had tested the strategy in water-starved Tamil Nadu last year with another actress-turned-social-activist Revathy Menon).

Then, there is ITC's Working for you, Working for India campaign, one strand of which focusses on the company's e-choupal initiative, an effort that seeks to enhance rural incomes, then, sell a variety of products and services to rural customers (apart from sourcing agricultural produce from them). The tagline itself smacks of old-style image-led CSR activity, but given what the e-choupal does, it is actually an attempt to build and position the company's brand around the idea of doing something for the country.

In some way's ITC's e-choupal is a far stronger example of a CSR-brand linkage than the Surf Excel campaign. It is a programme that is obviously advantageous to the company, yet it is accompanied by enough socially relevant goodies to make it look the way a government programme targeted at rural development ideally should. HLL, co-incidentally, has an initiative that fits the bill, its Project Shakti that uses women's self help groups in rural areas to further its reach. "The problem with old-style CSR was that the benefactors were not in control of what they would get," says Vivek Vaidya, a brand consultant. With brand or corporate strategy driven CSR, they are.

-Sahad P.V.

Forty And Ticking
Moore's Law turns 40 and is still relevant, but batteries could play spoilsport.

What a young research director at Fairchild Semiconductor wrote in the April 19, 1965, issue of Electronics magazine has become the driving force behind the semiconductor indus-try. The engineer was Gordon E. Moore and he went on to found and lead a firm called Intel (whose processors are inside 75 per cent of the world's PCs). Today, 40 years on, Moore's Law is one of those things that is frequently evoked, but is it still relevant?

The original law postulates that the number of transistors etched on a single chip of silicon will double every 18 months. Moore admits that he thought up the law (it was termed Moore's Law by physicist Carver Mead; and computer scientist Douglas C. Engelbart commented on the same phenomenon well before Moore) on a lark and that it was to apply for only 10 years. Its resilience has surprised even him. There has been only one significant modification to the law; Moore changed the period of time from 18 months to 24 months to account for increased processor complexity.

Processors moved from tens of thousands of transistors to hundreds of thousands in the 1980s, millions in the 1990s and billions today. And most people interpret Moore's Law incorrectly as saying that the speed at which computers run will increase every two years. The problem is that in the last two years, the maximum speed of commercially available processors has remained constant at around 3.2 GHZ. Why? Reason one: Speed doesn't mean a computer runs faster. While processing speed has remained more or less the same, the number of calculations a computer can handle has increased in the past two years, thanks to 64-bit technologies (the old technology was 32-bit and the still older one 16-bit; 64-bit means the processor has, well, higher processing capability) among others. More transistors on a chip does not equal more speed.

Reason two: Heat. A billion transistors packed into a space the size of a fingernail can generate significant amounts of heat. Already, the best innovations in computer design are being made in the space of fan design, because fans are loud and bulky. Stories of laptops burning laps are getting all too frequent. The reason behind this is....

Reason three and this is very important: Power. You may not realise, but your desktop is not that cheap to run. And don't you just hate it when your laptop battery starts dying? This problem is not unique to computers-it impacts everything that uses microprocessors. The new Sony PSP, for instance, cannot run at top speed because if it did, the battery would discharge before you could finish a race in Need For Speed. Your new mobile phone probably has less battery life than the old Nokia 5110 you owned seven years ago.

There have been no major developments in battery technology in the past few years, barring Matsushita's new Oxyride batteries and those are pretty expensive. Thus, while power demand from portable electronics devices grow at over 25 per cent a year, the amount of power on a battery grows only 8 per cent a year (according to a research report by the Boston Consulting Group).

A few years ago, some scientists speculated that physical barriers of space (how small could transistors get?) would kill off Moore's Law. Today, with nanotechnology addressing that issue, it looks like the more intractable problem of power will eventually spell the end for a principle that has guided semiconductor research for the past four decades.

-Kushan Mitra

CORPORATE
Adieu, Rs 44,000 Crore
Not really, say both Posco and Orissa. The deal is still on.

Will they, won't they? Orissa CM Navin Patnaik may yet have the last laugh

What was once touted as a fairy-tale investment ($10 billion, Rs 44,000 crore at the current exchange rate) by a foreign firm (Korea's Posco) in a poor state (Orissa) has rapidly turned into a game whose sub-theme could well be 'the other guy blinked'. The April 14 deadline for the signing of a Memorandum of Understanding (MoU) between the two parties came and went with no appreciable change in the positions of either. The deal was off, said some. No, say the Orissa Government and Posco's representative in India.

Orissa's reluctance to play ball is surprising and then, it isn't. The story of how the then government of the state of Maharashtra played ball with Enron for a $2.9-billion investment (the Dabhol project) is well known. For the record, Posco's investment in Orissa, if it happens, will break that company's record for the highest-announced Foreign Direct Investment (FDI) in India. Orissa Chief Minister Navin Patnaik's opponents have keenly tracked his negotiations with Posco, hoping that he will bend the state's 48-year-old policy of allowing no iron ore to be moved out of it (a policy framed to encourage investment in the state).

Nor is Posco's love affair with Orissa surprising. Although the company has, on occasion, spoken to the media about how it could choose to locate its plant in Brazil instead, or China (largely motivated by the desire to force the Orissa government's hand), it cannot really find a better location than Orissa. One reason could be access to markets. Part of the company's investment will go into developing a sea port and China is reasonably close to Orissa by sea and likely to remain the world's largest consumer of steel for some time to come. It can also service other markets in South-east Asia.

Everyone is keen the deal go through. "We have reached an agreement on the supply of 600 million tonnes of iron ore for captive use only. But there are other issues that still need to be cleared. Nevertheless, the project is still on course," says Bhaskar Chatterjee, Principal Secretary, Mines, Orissa. Posco's chief representative in India, Sang Moo Doh, sings a similar tune and says his company is hopeful of signing an mou with the state government very soon. And the country's Prime Minister Manmohan Singh has jumped into the fray with his office suggesting that the Central Government could grant Rs 1,000 crore to Orissa towards the development of the railway that will carry the ore to Posco's plant. Everyone is still waiting.

-Ashish Gupta

Q&A
"For Our Clients, India Is Different"

"With 6.5 million retail outlets, the Indian market is like no other we've seen"

Steven M. Schmidt is president and CEO of ACNielsen, the global market research major. With a background in the FMCG (fast moving consumer goods) sector, where he has had stints with Pillsbury, Pepsi and Procter & Gamble, Schmidt is in a vantage point to assess where India stands today as a market. How different is it and is it as promising as made out to be? He shares his thoughts on some of these issues in an interview with Business Today's Priya Srinivasan on a recent visit to Mumbai, India.

How important a market is India to ACNielsen? What kind of revenues do you expect to see from here?

India is very important to ACNielsen. We are at about $30 million (Rs 132 crore) in India currently and want to double that in the next three years. The challenge lies in accurately auditing this market. With 6.5 million retail outlets of all kinds, it's like no other market we've seen. So, just measuring market shares for clients is a task. In China, 1 per cent of the stores do 35 per cent of the business, while in India, just 3 per cent of the total market has been penetrated by modern (organised) retail. I am not saying this is good or bad, no value judgements, just that this is a very different market. When you travel on the streets here, just the sheer number and variety of outlets is simply unique.

What are some of the challenges you face as an integrated provider of market information, research and media strategies, in a market like India?

For one, there is the lack of scanned data that makes data mining quite impossible. The other issues could be branding, communication, huge income disparities and media fragmentation.

Do you think local firms have an edge over the MNCs, given the challenges you have stated?

If we look at our top 10 clients in India, about six or seven are local and they are critically important to us. It's all about cost structures and branding strategies of individual companies. I do see the MNC products present everywhere in the FMCG segment where they definitely have a foothold, but I suppose they have to figure out if it is economically viable for them to serve every segment of this market. From our perspective (as a research house), this market is not very different from any others that we service in terms of what we offer, but from our client's perspective, this is a very different market.

Saving Hindustan Salt
Why revive a loss-making PSU salt-maker?

Union heavy industries minister Deb: Love me, love my PSUs

Even by bureaucracy's hare-brained standards, this is an egregious plan. The Board for Reconstruction of Public Sector Enterprises (BRPSE) wants the government to revive a state-owned salt manufacturer that has a piffling 1 per cent share of the market, Rs 90 crore of accumulated losses on its books, and three near-defunct factories. Sure, there are 280 employees whose livelihoods are at stake. But in the long run, it may be cheaper to offer them a voluntary retirement scheme (VRS) than spending Rs 3 crore a year on wages and other expenses.

But, it seems, Hindustan Salt, which falls under Union Heavy Industries Minister Santosh Mohan Deb's portfolio, isn't the only ailing PSU that BRPSE's Chairman Prahlad Basu wants to breathe life into at the cost of the Finance Ministry. Set up in December last year-ironically, its setting up was announced by the Finance Minister P. Chidambaram in his 2004 budget-the board is responsible for advising the government on whether to sell or close chronically-sick PSUs. Possibly, because of the UPA's political compulsions (its Communist allies can't brook sell-offs, forget closures), BRPSE has recommended more revivals than closures. Cement Corporation of India and Madras Fertiliser Ltd., with accumulated losses of Rs 1,638 crore and Rs 63.74 crore (2003-04), respectively, have also been recommended for revival by Basu, who was earlier Secretary in the Ministry of Mines. In the latter's case, BRPSE has recommended the government guarantee Rs 150 crore the company plans to raise from the market.

Unfortunately for Finance Minister Chidambaram, who would rather have such PSUs sold at salvage price, the BRPSE has a host of other PSUs under its preview. Some of them are Bharat Opthalmic Glass, Heavy Engineering Corporation, Hindustan Cables, and Hindustan Photo Films. Why the government needs to be in any of these businesses is, of course, a question BRPSE isn't asking.

-Ashish Gupta

EUREKA
Sold On Art

Osian's Tuli: Art's new poster boy

Want to invest in art but don't have skills enough to back the right (dark) horse? No sweat. Neville Tuli wants to help. The 40-year-old Tuli, Chairman of Osian's, India's premium auction house and art archive, is on a mission to convince fund managers to start including art in their investment portfolio. Tuli, who has done considerable work in making art popular, admits that there are hurdles like the lack of a sophisticated market or even reliable information, but says they can be overcome. "If there can be a mutual fund for real estate, why not art?" he asks. The biggest problem with investing in art, however, is valuation, but Tuli expects that to change too when the retail market for art, estimated to be growing at 30-35 per cent a year, matures. Meanwhile, Tuli wants to raise awareness of art so that more people appreciate the idea of art as a collateral. He's even considering setting up an art university in Delhi. Talk about a wide canvas.

-Priyanka Sangani