ITC eChoupal Report_Gr 1_OSCM

8/12/2019 ITC eChoupal Report_Gr 1_OSCM

http://slidepdf.com/reader/full/itc-echoupal-reportgr-1oscm 1/28



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E R P R I S E : S c o p e

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L i v e l i h o o d s

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Contents

Sl No Name of the Topic Page No

1 ITC e-Choupal : An Introduction

2 ITC’s Supply chain of Soya bean before

e-Choupal Initiative

3 ITC’s Supply chain of Soya bean after

e-Choupal Initiative

4 Synergies for ITC

5 Critical Analysis of ITC’s Supply Chain

6 Comparison with Hariyali isan !a"aar7 #uture of e-Choupal

8 Conclusion

9 $eference

1. Into!"ction



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e-Choupal is an initiative by the large agriculture processing company% the Indian Tobacco

Company to e&uipped the rural mass with computer and technology so that they can prepare

themselves to handle various challenges such as fragmented farms% wea' infrastructures and

most important a number of intermediaries( The core ob)ective of the initiatives was to bring

efficiency to the procurement process of ITC which lead to empowerment and sustainability

of the rural farmers(

The e-Choupal initiatives directly lin' the rural farmers with the company for the procurement

of agriculture and a&uaculture products% such as soya beans% coffee% and prawns( Traditionally%

these commodities were procured by ITC from the mandis *ma)or agricultural mar'eting

centers in rural areas of India+% and a number of intermediaries was involved in buying the

produce from farmers and moving it to the mandis( !ut with the e-Choupal initiatives the

farmers are can directly negotiate the sale of their product with ITC( ,ith the IT infrastructure

the farmers are able to access various information such as the demand and the rate in the

mandis% farming practices in addition they are also able to place their order for the agriculture

input products *fertili"ers% seeds etc+( This access to information helps farmers in improving

the &uality of produce and obtaining better prices( lected from the village itself% a literate

farmer acts as the interface between the illiterate farmers and the computer(

#ac$go"n!

ITC incorporated on August ./% 0102 under the name of 3Imperial Tobacco Company4( In

015/ it was reorgani"ed in the name of 3ITC 6td4( It is one of the Indian companies to feature

in 3#orbes A-list4 for .22/ and featured in #orbes .222 list( It has topped in certain values:

Sustained value creation *!T-Stern Stewart survey+

7perating profits

Cash 8rofits

The ITC groups of company have a turnover of $s 5(9 billion yearly( It has a significant

presence in various verticals such as tobacco and cigarettes% paper pac'aging% hotels and



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tourism% IT and agricultural eports( ITC procures various agricultural products such as

soybeans% coffee and oil seeds for eport purpose( The supply chain involve for these product

is very much comple and involvement of a number of players( The farmers sold their

produced to the small traders 'nown as 'achha adat and they sales it to the larger traders

'nown as pa''a adat( This pa''a adat ta'es the produced to the local mandis where they trade

the products with the large traders and ultimately by the bro'er ITC procure the products( This

long supply chain result to high procurement price for ITC and in lost profit opportunities for

the farmers( 7n the other hand because this long supply chain is very time-consuming system%

it’s also results in deterioration in the &uality of the products(

The e-Choupal concept was introduced by ITC in ;une% .222( The-Choupals in the villageswere converted to e-Choupals by setting up the re&uired IT facilities such as computers and

internet connectivity( Initial investment of $s( /2%222 was done for e-Choupal formation with

dial-up connectivity( In some cases the <SATs were installed with an investment of

$s(022%222( The concept was build on a core value to involve the farmers of the village with

e-Choupal in every aspects such as operation% maintenance etc( 7ne Sanchala'% an educated

farmer of the village% was elected among the farmers of the village for the operation of the e-

Choupal( He acts as an interface between the computer and the illiterate farmers% and retrieves

information on the behalf of the farmers(

The ITC covers all the cost for the setting of the e-Choupal and the Sanchala' bears all the

operational costs such as electricity% internet charges etc( A Sanchala' spends around $s(

9222- $s( =222 per year for running of the e-Choupal( 7n the return the Sanchala' is paid a

commission of 2(9 > per ton of processed products( Apart from the above ITC spends around

$s( 9222 every year for the maintenance of the e-Choupals( The ITC also provides formal

trainings to the Sanchala's for operating the e-Choupal(

The farmers are able to access various information from e-Choupal includes crop prices%

weather% scientific farming practices% farmer peer groups% and soil testing services( All the

information are provided in hindi language for the farmers so that they can easily understand

the messages( The farmer carries a sample of his produce to a local 'ios' and receives a spot



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&uote from the Sanchala'( If the farmer accepts the &uote% he can transport the produce

directly to an ITC centre and get the payment within two hours(

The ITC provides the transportation to the farmers to bring their produce to the Collection

centres( The produce is weighed in modern weighbridge with accuracy( Apart from that ITCreimbursed the transportation cost to the farmers( If a farmer is in very remote area he has an

option to sell the produce to the Sanchala'( !y this system the farmers are able to avoid the

hectic procedures in the local mandis where there is no accuracy of measurement% chances of

damage of the produce% late payments and other unavoidable issues( The intermediaries are

not removed from the chain instead they have become a essential part of the chain 'nown as

Samayo)a's * coordinators+ who assists ITC in establishment of the e-Choupals buy field

survey and other activities( They manage the physical transportation of sales made at the e-

Choupal% collect price data from local auctions% and maintain records( These coordinators earn

a 0 percent commission on product processed(

2. ITC%s S"ppl& chain of So&a 'ean 'efoe e(Cho"pal

Initiati)e

ITC ?roup’s International !usiness @ivision *I!@+ was started in 0112( This division is

engaged in eports of a wide range of agricultural commodities( It contributes almost 2> of

ITC ?roupBs total foreign echange earnings( ITC-I!@ has developed a focused approach on

strengthening its core competencies in some of selected commodities( Today% ITC-I!@

continues delivers agri-commodities li'e #eed Ingredients - Soyameal% #oodgrains - $ice

*!asmati Don !asmati+% $apeseed Eeal% ,heat ,heat 8roducts% 8ulses% Coffee% !lac'

8epper% dible Duts - Sesame Seeds% H8S ?roundnuts and Earine products li'e Shrimps and

8rawns( The largest eport of ITC-I!@’s is soybean meal *a rich source of protein+ which are

eported to the animal feed mills around the world% competing with several transnational

trading companies% mainly from the FSA% !ra"il% and Argentina(

The traditional Supply chain for Soya bean was as bellows before the e-Choupal initiative of

ITC



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Farmer

Agri-InputCompanies

Dealer/

StockiestRetailer

Agril University,Met Dept,

Insurance Co.

!" #o$ Dept o$Agriculture%

Money!en&er

'akkaA&tiya#Registere& Dealer%

(acc)aA&tiya#Un-Registere& Dealer%

*ra&er

+roker

' r o c e s s o r

ITC-IBD

fficient bac'ward lin'age is essential for any eporting company in the competitive global

mar'et( !ut eisting supply chain for soybean procurement through mandi was a bad

eperience for ITC- I!@( The cost factor was not at all favour of farmers or ITC( In this

whole process cost incurred by farmers and ITC can be depicted as bellow(

#armer incurs *$s

per ET+

Trolley freight to Eandi G0.2

6abour G92

accha Adtiya G092

Handling 6oss G92

Total G52

8rocessor Incurs*$s per ET+

accha Adtiya G022

Cost of ?unny !ags *net+ G59

#rieght to #actory G0.2

Handling at Eandi G/2

TotalG9

Total*$s per ET+ G529

*Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 200!



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This analysis was the first trigger point for re-engineering the whole supply chain% the idea

that was conceived by ITC as they were thin'ing of reducing overall supply chain cost to

become more competitive compared to other mar'et players(

2.1. *h& ITC tho"ght of e(Cho"pal

As per the case study written by uttayan and $ao of The Fniversity of Eichigan !usiness

School *.22+ there were three reasons for which ITC thought of re-engineering the Supply

chain(

a. The Tactical Impeati)e

• ITC%s !istance fom +ame , As there was no direct interaction of ITC with farmers

ITC’s 'nowledge about crops% suppliers and hence supply ris'% control on &uality of

product was very limited

• -ail& pice inflation , Eostly the "dtiya# buy both good and bad &uality at different

price throughout the day and sell it to ITC by miing both the &uality at a single price

and hence ITC had a very little command over &uality(

• Seasonal pice Inflation, As last day’s mandi price acts as benchmar' price for net

day most of the times "dtiya# inflate the price for a prolonged period and in the

process overall seasonal procurement prices of ITC shoot up(

• Capt"e of Inta(!a& Pice shifts, ITC provided the "dtiya# a price range for a day

to buy within( If agent’s average buy price within the day is less ITC’s given price

then he sold to ITC at their price and poc'eted the whole benefit( If the agent’s

average buy price within the day is higher than ITC’s price he bought it but the Adtiya

stored it and sold it it to ITC very net day at higher price( In this process Adtiyas too'

the whole benefit of intra-day price shifts

'. The Stategic Impeati)e



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,ith globali"ation and opening up of Indian mar'et in early 12s several competitors li'e

Cargil% 7lam International etc( entered Indian mar'et that had better margin-to-ris' ratio

because of wider options for ris' management( Hence in 011= ITC tried to address the

following advantages that were en)oyed by their competitors

• oi/ontal spea! - 8resence in do"ens of countries allows customer proimity and a

diversified supply base

• 0etical pesence J Integration allows companies to etract supply-chain efficiencies

• is$ management J 7perating in countries where financial and logistical institutions

to manage ris' lowers the cost of bearing ris's

To address hori"ontal integration deficiency% ITC heavily ban'ed upon IT and hence the idea

of e-Choupal was conceived% a customi"ed IT application and realignment of business goals

and processes to manage ris' and build ITC’s 'nowledge base(

c. The Social Impeati)e

ITC thought of the long-term development of rural India as competitive supplier and buyer of

a range of goods and services( Hence ITC ban'ed upon e-Choupal venture

Indian distribution channels are marred with inefficiencies emanating from a rigid

bureaucracy improper infrastructural support for the various sta'eholders( Decessity being

the mother of invention goes the line that was )ustified by ITC-I!@’s uni&ue initiative that

aimed at integrating the interests of all the sta'eholders minus the impediments of an

inefficient supply chain(

3. ITC%s S"ppl& chain of So&a'ean afte e(Cho"pal

Initiati)e

An analysis of the supply chain post re-engineering



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Illustrating the benefits in terms of cost ta'ing the same soyabean eample% we arrive at the

following figures

#armers Incurs *$sKET+ Trolley #reight to ITC Hub $s 0.2

8rocessor Incurs *$sKET+ Commision to Sanchala' $s 92

Cost of ?unny !ags *net+ $s 59

Storage and Handling at Hub $s /2

Cash @isbursement Costs $s 92

Total cost of Chain $s 9

!est 8ractices followed by ITC at each stage of the supply chain

a. Picing

• 8revious day’s closing price used to determine benchmar' price for a given day

• This info and previous day mandi prices communicated to sanchala' through e-

Choupal portal( @aily mandi prices fed by commission agents into the portal

• Sanchala' inspects the sample that farmer brings to him% assesses &uality and ma'es

deductions *if any+ to benchmar' price% gives farmer a conditional &uote

• !enchmar' price represents upper limit on &uoted price

• If farmer decides to sell to ITC% sanchala' gives him a note J nameKvillageK&uality

testsKappro( &uantityKconditional price



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'. "t'o"n! ogistics

• #armer proceeds to the nearest ITC procurement hub with the note

• Some procurement hubs are ITC factories% others are purely warehouse operations

• ITC’s aim is to have a processing centre within 2-/2 'm radius of its farmers

c. Inspection ga!ing

• Sanchala' does the first inspection as a visual inspection% and inspect for foreign

matter% moisture content

• Conditional pricing is based on this

• At the ITC procurement hub% laboratory tests are conducted on a sample of farmer’s

produce

• The tests are conducted after the sale% price is not altered

• To change farmer’s attitude and appreciating produce &uality% ITC is developing lab

tests to reward farmers with reward points for better &uality supply

!. *eighing pa&ment

• #armer’s produce is weighed on electronic weighbridge

• He is then given full cash payment

• #reight epenses are reimbursed

• Appropriate documentation at each stage and farmer is given a copy of that

• Samyo)a's handle cash operations

e. "' ogistics



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• #armer transports his produce to the nearest processing centre or storage hub

• ITC incurs the transportation cost

•

The farmer bears the ris' of transportation until produce is delivered and the sale iscompleted

f. Technological S"ppot

• Dodal platform catering to commodity blending% agricultural trading% e-choupal rural

distribution

• ./%222 personali"ed business function points

• 002%222L pre-built business function points

• Integrated !usiness Systems for @irect Agriculture 8rocurement% $ural @istribution%

e-Choupal Eanagement% ports% Insurance% A&ua 8rocessing Commodity blending

• !uilt-in commission calculation engines

• Fsage of pre-built components for 6ogistics% Sales% #inancials

• Support for = local languages

3.1. The #enefits that acc"e! to ITC '& "se of technolog&

+"nctions #enefitse-Choupal management Single window for monitoring and controlling all

Sanyo)a' and Sanchala' through e-Choupal

@iverse !usiness 8rocesses Standardi"ation across product groups and also

meeting the diverse re&uirements



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8roductivity 7n time finance boo' closure

Stoc' Information Eulti-level stoc' visibility across enire supply

chain

Control of Subcontracting operation <isibility of subcontract operation for a&ua

3.2. in(in !eal

+ame gains ITC gains

!etter info content !etter info timing

6ess transportation costs

Transaction duration

,eighing accuracy

8rofessionalism

@isintermediation savings #reight costs

Muality control

$is' management

#armers benefit from more accurate weighing% faster processing time% and prompt payment%

and from access to a wide range of information% including accurate mar'et price 'nowledge%

and mar'et trends% which help them decide when% where% and at what price to sell( #armers

selling directly to ITC through an e-Choupal typically receive a higher price for their crops

than they would receive through the mandi system% on average about .(9> higher *about

FSN per ton+( The total benefit to farmers includes lower prices for inputs and other goods%

higher yields% and a sense of empowerment( The e-Choupal system has had a measurable

impact on what farmers chose to do: in areas covered by e-Choupals% the percentage of

farmers planting soy has increased dramatically% from 92 to 12> in some regions% while the

volume of soy mar'eted through mandis has dropped as much as half( At the same time% ITC

benefits from net procurement costs that are about .(9> lower *it saves the commission fee



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and part of the transport costs it would otherwise pay to traders who serve as its buying agents

at the mandi+ and it has more direct control over the &uality of what it buys( The system also

provides direct access to the farmer and to information about conditions on the ground%

improving planning and building relationships that increase its security of supply( The

company reports that it recovers its e&uipment costs from an e-Choupal in the first year of

operation and that the venture as a whole is profitable(

4. S&negies of e(Cho"pal ith ITC%s othe '"siness

4.1. Sta$ehol!e anal&sis of ITC e(Cho"pal

Pima& Sta$ehol!es Inteest

#armer Community

• Access to information

J mpowered decisions J Improved agriculture

• conomic benefits through lower transaction costs

and process efficiencies

• Served with dignity

•

nowledge bundled sale of goods and services• Co-opted in product design

• Hope for a brighter future

ITC

• 6ower procurement costs

• @irect interaction with farmers - Control on &uality

supply security

• 6ow cost distribution channel

• Access to mar'et intelligence

Commission Agents

* Kachha "datiya# $ Pa%%a

"datiya#+

• gain access to global mar'ets through ITC and

commission to compensate some of the loss revenue



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4.2. n!estan!ing the S&negies

+

5

1

8

9

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S

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T

S

Cigaette Ta!e 8a$eting capa'ilit&

Branded

Foods

Expanded FMCG distribution capability

e-choupal rural two-way fulfillment

capability

VPN providing SCM, ERP CRM capability

Lifestyle

retailing

Education

Stationery

Matches &

Agarbattis

A basis for strategic partnerships with other FMCG brand owners

ITC’s e-choupal initiative stands as a classic eample of CS$ i(e of corporate strategy lin'ing

business purpose to larger societal purpose( It is acting as a catalyst with alignment with the

farmer in transforming the scenario of Indian rural mar'et( It is not only providing access to

latest information to them but also developing local leadership and creating profitable

distribution( #rom the company’s point of view it is improving the supply chain by reducing

the procurement cost% improving &uality and traceability(

ITC’s strategic intent is to promote e-choupal as a significant two wat multi dimensional

channel which can efficiently carry goods and services out of and in to the rural India(The

networ' of 9222 e-Choupal centres spread across /2222 villages has become an outlet to

various agri-commodities li'e wheat% soyabean% rice% a&ua-products% mai"e etc( The reverse

flow carries #EC?% durables% automobiles% ban'ing and insurance services in the rural areas(

As of today ITC e-choupal is one of the top 9 alternate channels for 6IC policy sales amd is

contributing to 02> of the total weather insurance mar'et in India(



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5. e(Cho"pal , citical anal&sis

5.1. *hee ae the efficiencies in e(Cho"pal neto$;

• ast mile sol"tion ith lo cost, the effective web based innovative channel created

by ITC made close interaction with farmers and ITC( Although this channel was

primarily meant for procuring agriculture output from producers but later on ITC

envisaged this channel to be utili"ed as distribution of other products to farmers li'e

agriculture inputs% #EC? products etc( and needless to say this channel reduced the

distribution cost of these products substantially because same channel is used for both

farmers’ output and input and other necessary items( Fsing same logistics for large

&uantity of product leads to economics of scale to the ITC(

• +"ll Se)ice appoach, instead of supplying agriculture inputs only as in traditional

networ'% ITC sells these inputs with information( A chronic problem of Indian

agriculture is application of fertili"ers indiscriminately without soil testing( -Choupal

came out here with solution( It does sell all agriculture inputs with re&uired

information through websites and services li'e soil testing at the doorstep of farmers(

• -eman! aggegation, one of the hurdles in the traditional distribution system is to

serve farmers highly scatted in remote areas where physical infrastructure is a

limitation( Here in ITC e-Choupal% sanchala' at village level collect the individual

orders from farmers then aggregate it before pass on this order to hub( Thus this

uni&ue system optimi"e the utili"ation of the system with the benefit of both farmers

and ITC because farmers get products at discount price and ITC increases its margin

by selling bul' &uantity at low price(

• Thi! pat& selle, it is well established that there is huge untapped potential of rural

mar'ets( $eali"ing this% -Choupal is selling various products of third party *e(g HF6+

who otherwise find difficulties in channeli"ing their products in traditional way( -



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• Infomation, information on price of produces at different mandis% availability of

inputs% management crops etc is disseminated very smoothly using web based

technology( 7t ma'es farmers to be attached with e-Choupal and transact through it(

• ogistics at "', scientific weighing machine% good pac'aging system% resting place

at the hubs are the core competencies of e-Choupal system(

• Tanspotation, as hubs are located near to the villages it is easy for the farmers to

get their produce there by bulloc' cart( So locational advantages has enhanced the

efficiency of choupl supply chain(

• Stoage facilities, ITC has sophisticated and scientific storage structure at the hub

from where produce is transported to processing centre(

• Capacit& of stoage facilities, big storage structures at ITC hub managed by s'illed

persons are instrumental in ma'ing the entire chain viable(

• Conscio"s a'o"t ="alit&, ITC always emphasi"es on &uality of the farmers’ produce(

#ramers get report on &uality of his produce( It helps farmers to enhance the &uality of

their produce which in turn increase value addition to the chain(

5.3. *ho ae in po'lems 'eca"se of e(Cho"pal

• peation of an!i, scale of operation of eisting mandis under A8EC act is

substantially reduced( It is losing revenue in the form of ta which in turn impedes the

infrastructure development of these mandis( In many places these mandis have become

redundant with the replacement by e-Choupal(

• Theat to man!i la'o"es, many mandi labourers who were engaged in various

value addition activities li'e weighing% bagging% grading lose their )obs due diversion

of products from mandi to ITC hub(

• #a//a nea man!is, mar'et near the mandis is also reported to be losing sales as

farmers selling at hub purchasing their essential items from choupal sagar ad)acent to

the hubs(



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• Theat to the e<isting pocessos, there are large number of unorgani"ed processors

who were procuring from farmers% are now facing problem of acute shortage of raw

material as farmers are now selling their produces at hub for better prices and services(

It is indeed threat to the small scale processor in long run(

5.4. is$ associate! ith e(Cho"pal

• o!e! poe of commission agents, the commission agents operating in mandis are

very powerful with respect to controlling price in favour of buyers( ,ith e -choupal in

place their activities reduced to managing activities at hub( The margin they earn at

hub is also low compared to what they were earning from mandis( It triggers an uneaserelationship between commission agent *samyo)a'+ and ITC which can possible be

threat to ITC as other competing players can cash in on this unease relationship(

• Inte"pte! c"stome Se)ices, empirical studies shows that despite good

coordination among sanchala' % samyo)a' and ITC processors% still there is grievances

among sanchala's with regard to timely supply of inputs% information etc( this problem

interrupt the continuous flow of services provided by e -choupal(

5.5. Citical anal& sis "sing 0al"e Chain nal& sis

+ameo$

gilit& > This refers to the drives need for fleibility in supply chain when there is increasing

sources of uncertainty

!apta'ilit&( This refers to the way supply chain needs to fit in the changing needs when

there are challenges li'e changing need for productKmar'etKtime



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lignment- This refers to alignment in differential interests of multiple players when there is

a trend towards distributed supply chain

6. Compaison 'eteen e(Cho"pal an! a&ali :isan

#a/aa

6.1. #"siness o!el of ai&ali :isan #a//a

H! is an initiative from @SC6% a leader in agri-input sector in India( H! is a pioneering

pro)ect as it contributes to rural and agricultural development while being a profitable

business venture( ach H! centre caters to communities within a .9-2 'm perimeter and

impacts the life of about .2%222 households( H!’s business model is to provide targeted

services to farmers in remote regions( It also reinforces the need for farming communities to

have access to information and technology( At present% there are 2. stores of H! in eight



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states vi"--F(8% $a)asthan% 8un)ab% Harayana% Chattisgarh% Eaharashtra% E8 and A(8% and also

there is plan for epansion in these states(

ach H! outlet has a &ualified agonomist which provides technical advice for cultivation

of various crops( These agronomists help the farmers to cultivate crops which are fetching

good return in the mar'et and farmers get great moral support to go for any crop without

hesitation or ris'( In 8un)ab% farmers are going for intercropping of Eoong with Cotton which

has helped them in increasing their income by $s5922-=222 per acre( H! has also

contributed in increasing yield by giving farmers improved seed varieties( In F8% farmers are

now getting more yields by using hybrid paddy seeds( 7n an average they are getting 02

&uintals more paddy per acre(

HK

B



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6i'e ITC e-Choupal% H! is also providing 'nowledge about mandi prices and commodity

futures to the farmers( #armers are also provided with ATE access( H! is also creating local

employment by training local youths which then provide information and 'nowledge of high

return crops(

Retailing

Consumer

oo&s

Financial

Services

t)er

Services

.ealt),

/&uca-

tion

Retailing

Farm

Inputs

Agri

Services

utput

"are-

)ousing

utput

+uy0ack

utput

Finance

New ‘Base of pyraid! odels

"ariyali #isaan Ba$aar

'rocurement )u0

'lat$orm $or mult iple service provi&ers

In the above system H! is in integration with ICICI ban' for providing financial help to the

farmers(



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The model is very much similar to e-Choupal% ecept that whatever is procured from the

farmers are given to the companies who in food processing as ITC is into this business in

contrast @SC6 is not doing that as it not in the food business(

6.2. Compaison

e(Cho"pal a&ali :isan #a/aa

Eain ob)ective 8rocurement % $ural $etail

!enefit to the

farmers

computer application to provide

mar'et information

provide better method of cultivation

by trained agronomist

Synergies Synergies with products which

ITC is manufacturing

Synergies with what @SC6 is

selling*inputs to agriculture plus

other services

conomies of

scale

.9-2 'm area coverage .2-.9 'm area coverage

Loan for pass through to

farmersExtension service

Other companies

Produce procurementRepayment of loan with

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8rocurement

centre

near small town Strategically placed near petrol

pump mainly

7. +"t"e of ITC e(Cho"pal

Initial success of e -Choupal showed how technology can be used in remote hinterland to

change the rural economy where timely and authentic information is limited( It is indeed and

reengineering the eisting supply chain to safeguard the interest of all the sta'eholders( -

Choupal is now envisaged to bring more benefits in deprived rural mar'ets( !oth customers

and corporate can leverage upon it in future in following ways

• Spea! of technolog&, e-Choupal is instrumental in ma'ing villagers particularly student

technology enabled( Students get their documents printed from choupal saving time and

visit to nearby towns( Sanchala's are now connected with not only domestic price but also

price movements in international mar'ets( This is for sure will enhance the 'nowledge

base of farming community and improve the decision ma'ing power(

• ccess to ce!it, access to timely credit at low cost is thrust areas of government policy(

The concerns here is effective and suitable distribution networ' to provide credit to the

needy farmers( In future e-Choupal is epected to address this problem in following ways

a+ -Choupal can reduce the transaction and administration cost of credits(

b+ !an's can touch informal sector which is crying for credit needs(

c+ Instead of providing credit in cash% financial institution can provide credit in 'ind

with tie up with input mar'ets to minimi"e the unproductive use of credit(

d+ Sanchala' is the best person to tell about client’s credit history% amount of credit

needs% fleible repayment etc( in this way sanchala' helps ban's designing suitable

loan products(



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e+ There is lot of opportunity to tie up with ban's% input competition to ta'e this

intervention in new height(

• )aila'ilit& of ins"ance po!"cts, micro insurance is increasingly being tried out in

rural areas but problem with this product is lac' of awareness% affordability% availability

and acceptability( -choupal can be utili"ed to usher the micro insurance mar'et in rural

areas in following ways

a+ 8roduct designing part will be &uite easy for the insurer once they receive actual

information on insured% the ris' associated with% previous insurance eperience etc(

b+ There can be tie up between ITC and insurance agency with respect to collection of

premium but it must be at the convenience of farmers

c+ There is greater opportunity for weather insurance to be sold through e-Choupal

$enewal of premium will be easy as sanchala' in his choupal can trac' on status of

premium of every client through website

d+ The web based technology can be used to pay premium ma'ing it simple and speedy

7.1. e(Cho"pal )esion 3.?

The concept 3e-cChoupal4 has able to reach four million farmers in a period of si years

*.222-.22+ and ITC has a vision of reaching 022 million farmers in net few years( $ecently

it has come up with the version (2% which is a bundle of innovative services to the farmers(

!ut there is reason why ITC has come up with version (2%

3The core business of sourcing the commodities directly from farmer was restricted by the

government as it has a speculation that the concept may endanger the farmer’s interest both

economically and socially( As a result the whole sale price was hi'ed up and the inflation

reached two digit numbers(4

!efore discussing about the version (2% here we have tried to do a comparative analysis of the

two previous versions(



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Paametes 0esion 1.?@ the statA 0esion 2.?@ the scale("pA

I!ea The concept gave a power of scale tothe small farmers by aggregating themas sellers * of produce + and as buyers

* of farm inputs +

!y .22% /2%222 villages covering /million peoples(

+ame%s gain The farmers get bargaining powerand a opportunity of have choice

• Information on weather

price etc

• nowledge on farming

methods%soil testing etc

• 8urchase of seed% fertiliser to

insurance

• #armers sell crops to the ITCCenters

• cattle care% water harvesting

ITC%s gain • Access to inputs for its agri

business offer the use of networ' toother companies

• ITC was able to procure

fresh commodities atreasonable prices from the farmers

0esion 3.?

In version (2 of e-Choupal concept% ITC has tried to integrate various verticals of the

farmer’s need( The strategy is to deepen the e-Choupal concept in the rural area and cover the

maimum number of the farmers in short time( ITC has given three core areas in version (2

and they are%



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aA Ne '"siness !e)elopment,

In this strategy ITC added two new anchor businesses to e-Choupal and they are

• $ural )obs and employability * tied up with Eonster India+

• 8ersonalised agri services plus strengthening eisting commodity sourcing

'A oe inteactions,

3Choupal Sagar4 is the eclusive rural outlet of ITC% where the farmers can access their

desired products and the information on various products( !y this initiative various #EC?

companies with agri-input companies are able to reach the rural mass which was earlier a

myth( Apart from that ITC has tied up with D7IA to provide appropriate infrastructure bymobile service so that dissemination of the information related to farming% pricing and other

valuable information can be assessed by the farmers and enable communication between the

farmers and the company(

cA Ne technolog&,

!y mobile phones the farmers will able to get the information related to their cropping

pattern% price etc( The uni&ue feature of this facility is that the farmers will get c"stomise!

se)ice as per their need(

8. Concl"sion



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ITC e-Choupal is serving the dual agenda by bridging the rural isolation and the resulting

disparities of education and economic opportunity% while simultaneously creating a potentially

large profit opportunity for the organisation willing to tac'le the inefficiencies( The model

shows how a large corporation can blend a social mission and an ambitious commercial

venture that it can contribute in rationali"ing the mar'ets and increasing the efficiency of

agriculture system( The model is also shows how Information Technology in bringing

transparency% increasing information( merging areas li'e telemedicine% e-?overnance%

education and entertainment will soon included in the gamut of service of e-Choupal networ'(

The model eemplifies sustainable convergence of apparently contradictory ob)ectives of

shareholder value maimi"ation and creation of social wealth( It is the core tenet that drives

and is crucial to the scalability of the model( The pro)ect started in Eadhya 8radesh *Central

India+ with a pilot of choupals *village community 'ios's+ in ;une .222% and as of today% is

scaled up to 9/22 choupals across states *E8% F8% arnata'a% A8% Eaharastra% $a)asthan+

reaching %922%222 farmers engaged in 0. agri-commodities in 9222 villages( ITC e-

Choupal% with its digital infrastructure and associated human and organi"ation capacities built%

has already become rural India’s largest Internet based intervention and is surging towards the

vision of servicing 022%222 villages by .202 reaching out to 02 million farming households(

#rom .222-2/% ITC’s mar'et share went up from => to 0.>% the transaction costs came down

from => to .> and the farmers’ price reali"ations went up by .2 to .9> through better price

discovery% low wastages% yield improvements and new trading contract formats( The e-

Choupal system gives farmers more control over their choices% provides a transparent process%

a higher profit margin on their crops% access to information that improves their productivity

and above all respect and fairness for the local people and communities(



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9. efeences

http:KKplanningcommission(gov(inKreportsKsereportKserKstdyOictK/Oe-choupal>.2(pdf

www(dscl(comK!usinessOAgreeOHaris!"r([email protected]

http:KKwww(farmingfirst(orgK.221K2=Khariyali-'isaan-ba"aar-developing-rural-businesses-in-

indiaK

http:KKwww(caseplace(orgKd(aspPdG.1/

http:KKwww(business-standard(comKindiaKnewsKharyali-'isan-ba"aars-to-go-nationalK.999K

http://planningcommission.gov.in/reports/sereport/ser/stdy_ict/4_e-choupal%20.pdf

http://www.dscl.com/Business_Agree_HarKisBzr.aspx?PID=27

http://www.farmingfirst.org/2009/08/hariyali-kisaan-bazaar-developing-rural-businesses-in-india/


http://www.caseplace.org/d.asp?d=2943

http://www.business-standard.com/india/news/haryali-kisan-bazaars-to-go-national/255635/

http://planningcommission.gov.in/reports/sereport/ser/stdy_ict/4_e-choupal%20.pdf

http://www.dscl.com/Business_Agree_HarKisBzr.aspx?PID=27



http://www.caseplace.org/d.asp?d=2943

http://www.business-standard.com/india/news/haryali-kisan-bazaars-to-go-national/255635/

ITC eChoupal Report_Gr 1_OSCM

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Transcript of ITC eChoupal Report_Gr 1_OSCM