CASE STUDY: POSCO For eight-year-old Rakesh Bardhan, it is protest time.

Decked out in a black T-shirt and a matching handkerchief wrapped around his head, he is off to join hundreds of farmers, labourers and fishermen standing between a generations-old way of life and Indias biggest single foreign direct investment. Local people are protesting against the planned construction of a $12 billion steel mill by South Koreas Posco in Orissa. If the company wants to set up its project, let them first kill us, Bardhan shouts over the speeches and slogans blaring out from loudspeakers. If our land goes, everything will go. We will not get food, clothes or education. The Posco protests are another storm warning in an environment growing increasingly hostile to what many Indians see as a nexus of corrupt politicians and businessmen profiting from kickbacks and forced land acquisition as foreign firms vie for a place in the Indian market. How the stand-off plays out will be closely watched at home and abroad for signs of how relations are changing between investors, the government, and Indians affected by big projects. Farmers accuse the Orissa government of being in cahoots with big business to trick them out of land their families have held for generations. They believe their best shot at a decent life is holding on to their farm incomes, and accuse police of beating up villagers and burning crops to force them to leave. We will not sell at any cost or under any pressure, said Kabir Chandra Pradhan, a 46-year-old grower of betel. Posco is the latest in a number of high-profile projects that have been held up by protests. Tata Motors said on Wednesday it was challenging in court a decision by the newly elected government in West Bengal to reclaim land Indias top vehicle maker owns but abandoned in 2008 due to violent protests. Many say India urgently needs more Poscos foreign companies pouring cash into one of the worlds fastestgrowing economies, revamping rusty infrastructure and providing thousands of new manufacturing jobs for a population of 1.2 billion people. After weeks of agitation in which women and children like Rakesh formed human rings to block police, the state government was forced to suspend its land acquisition on Tuesday. Only half of the 4,000 acres of land needed for the site have been acquired, though it was due to start pumping out 4 million tonnes of steel a year by 2011. The project is a barometer for Indias investment climate, as the central government walks a tightrope between cultivating economic development and sustaining the livelihoods of the worlds biggest number of poor.

Foreign direct investment is key to providing the billions of dollars worth of new highways, ports and industrial plants India needs to maintain economic growth as it grapples with high inflation, rising interest rates and dampened investor confidence. FDI fell 28.5% to $19.4 billion in 2010-11, the last fiscal that ended in March, as foreign investors shunned India over policy paralysis from a series of corruption cases, regulatory hurdles and lack of reform. Posco is only one of numerous high profile projects in the energy sector that have been held up by red tape, protests and fights between local and federal authorities. ArcelorMittal and Tata Steel too have faced delays. Investors are also concerned by how long the government is taking to rule on Vedanta Resources plan to buy Cairn Energys Indian assets, a potential $9.6 billion deal the firms agreed last August but which has been held up by a dispute involving the state-run oil exploration firm. Q1) If you would be the CEO of the company, you would have thought of Profit or People. Justify your answer with the decision that you would have taken. Q2) POSCO Group has used CSR activities as a core strategy to set up steel factory in Orissa Do you agree with the statement. Q3) Government should allow POSCO to set up a steel factory in Orissa. Do you agree with the statement?

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Q1) If you would be the CEO of the company, you would have thought of Profit or People. Justify your answer with the decision that you would have taken. Had I been the CEO of the company, I would have thought both for the people and for the profits. I would have held a meeting personally with the local people/ farmers of the area and would have given them appropriate compensation for their land. I would have made a three-pronged strategy is based around rural development, education and healthcare. I would have taken up the opportunity and provided those services to the
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community where the government has failed to do its role. I would have also offered them jobs in my company along with a good salary so that they do not feel that the acquisition of their land has taken away their earning capacity. I would set up schools and colleges in their area so that their children are well educated and can help them in the upliftment in the living standards of their families. I would have made them realize the importance of development of their area. I would have also offered them medical facilities and other necessary facilities based on their requirements. I would have opted for a win-win situation. I would have developed my project in such a way that it was in favor of the people. I would have ensured that the practices run in the factory are safe and sound for the workers. ***************

Q2) POSCO Group has used CSR activities as a core strategy to set up steel factory in Orissa Do you agree with the statement. On an international level, corporate social responsibility (CSR) has been a major focus for POSCO, the only major steel company listed in the Dow Jones Sustainability Indexes, which track the performance of leading companies deemed to operate in a socially responsible manner. Similarly in India, CSR has been the core strategy that was developed by POSCO. POSCO India has aimed to become a company that contributes positively to the society and has goodwill amongst its customers. POSCO believes in mutual development of the community and the society through continuous CSR initiatives. The POSCO India project has strived to raise the standard of living of the people of Orissa through programs on workplace safety and health, and education & welfare programs that extend to the local community. A detailed corporate social responsibility plan has been prepared, which includes in-depth inputs from the Government of Orissa and other relevant bodies.

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Q3) Government should allow POSCO to set up a steel factory in Orissa. Do you agree with the statement? The Government should allow POSCO to set up a steel factory in Orissa as it is endowed with huge natural resources of iron ore. The state has over 3.3 billion tones reserves of iron ore. The first and the foremost advantage the state possesses is the easy logistical support. The coastal state will prove beneficial for the companies and will be more cost saving proposition for exports of finished goods to all possible locations for steel producers. These mineral resources can be exploited for value addition within the state. With POSCO India being one of the highest Foreign Direct Investment for the country, it will not only provide an extensive value addition to the mineral wealth of Orissa but also take the state and the nation to the zenith of global steel industry.

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