Godrej Industries has decided to adopt the economic value addition (EVA) model to reinforce its commitment to the creation of shareholder value. For this purpose it has engaged the services of Stern Stewart & Co, the US-based management consulting firm which pioneered the development of the EVA framework.

The project broadly consists of four phases. The first involves defining EVA for each of the company's businesses. The second phase, which is EVA management, focuses on training operating people on how to improve EVA. Then comes the motivational phase, which consists of evolving a variable remuneration plan to reward improvements in EVA.

The company believes that following the EVA model will enable it to build a mindset that emphasises the creation of value for shareholders. EVA is also expected to complement the Godrej Group's efficiency-enhancement initiatives like TPM and TQM.