Q13. ABC Ltd. Is a large transnational company having diversified business activities with a huge shareholder base. The company is continuously expanding and generating employment. The company, in its expansion and diversification programme, decides to establish a new plant at Vikaspuri, an area which is underdeveloped. The new plant is designed to use energy efficient technology that will help the company to save production cost by 20 per cent. The company’s decision goes well with the government policy of attracting investment to develop such underdeveloped regions. The government has also announced tax holiday for five years for the companies that invest in underdeveloped areas. However, the new plant may bring chaos for the inhabitants of Vikaspuri region, which is otherwise tranquil. The new plant may result in increased cost of living, aliens migrating to the region disturbing the social and economic order. The company sensing the possible protest tried to educate the people of Vikaspuri region and public in general about how its Corporate Social Responsibility (CSR) Policy would help overcome the likely difficulties of the residents of Vikaspuri region. In spite of this the protests begin and some of the residents decide to approach the judiciary as their plea before the government did not yield any result.
(a) Identify the issues involved in the case.
(b) What can be suggested to satisfy the company’s goal and to address the residents’ concern? (250 words)
(a) The main issue in this case is that the villagers believe that setting up of this new plant would bring chaos because people from different regions and cultures would be working in the factory which would disturb their own values and culture. They also believe that once better-paid employees inhabit the place, everything would become more expensive and affect their buying power. This may disturb the social order and make their life worse.
The company, on the other hand, intends to set up an industry using the latest technology so that they can save their production cost by 20 per cent. They also intend to avail the benefit of the five-year tax holiday offered by the government.
The government is also interested in setting up the industry as that would result in the development of the area and will lead to creation of employment, increase of taxes in future due to the increase in the business activities in the region.
(b) The people of Vikaspuri should be taken into confidence. Even if they have approached the judiciary, the communication link with them should not be broken and a negotiated settlement must be attempted. They must be assured that their interest shall be the top priority for the company. They may be assured of the following:
• Setting up a good school in the area to provide them free and quality education.
• Setting up a hospital for free or at subsidised rates for them.
• Construction of roads and supply of electricity from their captive power plant.
• High compensation for the lands acquired by the company.
• Employment to one member of each family whose lands are acquired. (272 words)