Imperial Tobacco Company of

India Limited
(ITC)
Presented by
GROUP NO.10
Sumit Roy (06)
Minhaz Hamdule (09)
Kashish Arora (34)
Akansha (35)
Anamika Singh (40)
Tarun Dutt (51)
ITC. Touching your life. Everyday
 Introduction
 India's foremost private sector companies

 No. 1 in FMCG Sector

 Registered office in Kolkata

 Employees over 20000 people

 Annual turnover is of the order US 4.75 billion

 ITC - Business Portfolio
ITC

FMCG Paperboard
Hotels Paper & Agri Business
Packaging Leaf Tobacco
Cigarettes Agri
Commodities
Agriculture in India
 Agriculture is vital to India
 produces 16.7% of GDP, feeds a billion
people, and employs 66% of the
Workforce
 Extensive dependence on Monsoon
 Illiteracy & black-marketing prominent
 Farmers still suffering
 Unfair agricultural system
 Mandi system
 Problem in rural India
ROOT CAUSES IMPLICATION

Fragmentation Weak Bargaining Power

Dispersion No access to real-time

information

Heterogeneity Need for customized knowledge

Weak Dependence on middlemen

Infrastructure
 Mandi system
FARMER MANDI BUYER
 Lack of information
 Local Mandis dominated by commission agents
 Spoilage, Wastage further hamper net productivity
 Multiple point of handling
 Untimely Payments
 Mixing of premium quality produce with inferior to
inflate price
 High dependence on Commission Agent
(Adatiya’s)
 Commission 2.5% to 3%
 Introduction

 Started in the year 2000

 ITC began the silent e-volution of rural India with soya
growers in the villages of Madhya Pradesh

 Target Area so far 38,000 villages, 6500 kiosks, 9 states

 Only initiative to attempt to combine Services and an

Effective Business Model successfully

Designed to address the issues such as:

1. Fragmented farms
2. Weak institutions
3. Involvement of intermediaries
4. Information Asymmetry
 What is e- Choupal ?
The e- choupal Infrastructure

kiosk with Internet Access

•In the house of a trained farmer Sanchalak

•Within walking distance of target farmers
•Additional investments in Solar Power &
VSATs to overcome weak infrastructure
 e- Choupal Platform
Information Transaction PRODUCT
(e.g. Price
Discovery)
Choupal Sagar
Knowledge &
(Customized)

SERVICE
PROVIDERS

Samyoja
Sanchalak k

VILLAGE TOWN PAN-INDIAN

 Why ITC thought of e- Choupal

The Tactical The Strategic

Imperative Imperative
ITC’s distance from
Farmer Horizontal spread

Daily price inflation

Vertical presence
Capture of Intra-day
Price shifts

Seasonal price Inflation Risk management

 How is e- Choupal different?
1. Freedom of Information

 Information & Knowledge is free of cost

 No initial investment of the Sanchalak
 Not subsidized- Govt does not pay , the shareholders look for a
 competitive return.

2. Freedom of Transaction

 Farmers are free to sell their produce anywhere

3. Entrepreneurship

 No salary paid to Sanchalaks – a commission based model

 Transaction-based income stream for the Sanchalak & Samyojak
 E-CHOUPAL NOW

States covered 10

Villages covered 40,000

No. of e-Choupals 6,500

Farmers e-empowered 4 million

How is E- choupal Supply chain better from Mandi system?
 Supply chain- Mandi operation system

Display Weighing
Inbound Outbound
Inspectio Auction and Payment
Logistics Logistic
n Bagging
 Supply chain post re-engineering- ITC

Weighing Technolo
Inbound Inspectio Hub
Pricing and gical
Logistics n Grading Logistics
Payment support
Transaction cost in Mandi Chain (before e-Choupal)

Source: Seminar on Bottom of the

Pyramid and CSR, IIM-K, Sept.
24, 2008
Transaction cost in Mandi Chain (after e-Choupal)

Source: Seminar on Bottom of the

Pyramid and CSR, IIM-K, Sept.
24, 2008
 Network Size in 2005
State Choupals Hubs

Madhya Pradesh 1750 43

Uttar Pradesh 1750 42

Maharashtra 900 22

Rajasthan 500 15

Karnataka 100 2

Andhra Pradesh 150 3

Choupals 5,150 127

Villages 31,000

Farmers 3,500,000

Adding Six New Choupals Every Day

Intend Scaling up to 100,000 Villages in 15 States by 2010
Key components of ITC E- Choupal
implementation that led to its success :

 incorporated “e” into the age old tradition on village E-choupals.

Reorganization of the supply chain. Village A Mandi B Factory C (Old) Village A
hub Factory C ( New) It was developed with full involvement of farmers.

 In-depth knowledge of rural markets User friendly websites - Site provided

information on weather, best practices, crop information, market information,
FAQ’s, news, feedback and information about ITC. Beneficial for processor as
well as farmer Improved logistic facility Selection of Sanchalak and Samyojaks
Evolving an appropriate user interface Vast scope for rural development

 E-choupal was “one stop shop”. ITC hubs were better equipped than mandis.
Rest rooms Electronic weighing machines Cash on delivery Transportation cost
was reimbursed. Tented seating area. Soil testing lab on premises.
 ITC’s Aqua Care Centre
 Kakinada, Andhra Pradesh
 Revolutionized the concept of shrimp
seed testing.
 Sophisticated laboratory detects
 the deadly White Spot virus in the
shrimp seed
 advises farmers on appropriate remedial
action.
 Choupal Saagar
 Physical infrastructure hub that comprises collection and storage
facilities and a unique rural hypermarket that offers multiple
services under one roof.

 agri-sourcing centers, shopping centers, and facilitation centers

 This landmark infrastructure, which has set new benchmarks for

rural consumers also incorporates farmer facilitation centres with
services such as sourcing, training, soil testing, health clinic,
cafeteria, banking, investment services, fuel station etc.

 24 'Choupal Saagars' have commenced operations in the states

of Madhya Pradesh, Maharashtra and Uttar Pradesh.

 ITC is engaged in scaling up the rural retailing initiative to

establish a chain of 100 Choupal Saagars in the near future.
What’s in it for ITC?
• Better supply chain for ITC’s Food & Agri Businesses
 Costs, Quality, Traceability

• Access to the Underserved Rural Markets

 Through a Virtuous Cycle created by “Larger Incomes”, and
founded on “Trust” that is built

• New ITES Business Opportunities

 Health, Education, Entertainment

• Shareholder Value through Serving Society

 Also, the infrastructure serves as a reliable delivery
mechanism for resource development initiatives (e.g.
water,animal management)
What’s in it for the farmer?
 Payment on Delivery

 No malpractices

 Reduction in wastage and spillage

 Increased yields

 Transaction costs are reimbursed

 Power of Scale to the Small Farmer

 Customized Knowledge despite Heterogeneity

 Real time information despite Distances

4 A’s
Availability: 
 It emphasizes on the availability of the
goods and services to the end
consumers.
 In the case of e- choupal the products
are available continuously because
sanchalaks maintains continuous
inventory and maintains aggregate
demand.
Affordability: 
 It focuses on product pricing.
 ITC buys from farmers directly in the last
days closing price and even pays them
for transportation. Goods are weighted
electronically and hence farmers are no
more cheated as they used to be
previously.
 Hence it is a win-win situation both for
farmers and the company.
Acceptability: 
 It focuses on convincing the customer to buy the product.

 ITC’s e- choupal initiative is proving the farmers with real

time updated information on weather.

 It is providing them customized knowledge in the form of

farm management and risk management.

 lower transaction cost.

 financial services in the form of life, general, health and

crop insurance.
Awareness:
 It focuses on making people aware of the product.
 active servicing up to rural outlets.
 It is providing them with wide range of product categories.
 Moreover it has made entrepreneurs out of farmers as they are
managing most of the work, it instills in them the sense of
ownership.
 Promotion in local haats & melas
 In local festivals
 Information through Sanchalaks

“This enthusiastic response from farmers has

encouraged ITC to plan for the
extension of the ‘e- Choupal’ initiative to
altogether 15 states across India
over the next few years.”
Future plans
 Scalability

 Sourcing IT-enabled services from rural India

 Elaborate rural Marketing & Distribution strategy

 Use of ITC hub for selling of other products to rural community

 Agro-extension

 Use of e- choupal portal for advertising

 channelize other services related to micro-credit, health and

education through the same 'e-Choupal' infrastructure
 Choupal Mahotsav
 A rural marketing initiative, in Uttar Pradesh.
 First event - March 26-April 18 (three-day event)

 Held at---- 8 ITC Choupal Saagars spread across the state

in locations including Hathras, Chandauli, Hardoi, Badaun,
Bahraich and Gonda.

 happen twice a year, coinciding with the two harvest

seasons of Rabi in March and Kharif in november.

 provide opportunities for marketers to interact with, engage

and above all, showcase their products and activities
targeted at rural consumers. The participating brands include
Superia, Vivel, Monsanto, TVS Motors, Bharat Petroleum,
JCB, Tata Magic, Tata Tea, ACC Cement and Texmo Pumps.
Marketing
 pre-activation publicity is being carried out across these
villages
 handing out leaflets
 putting up posters
 banner activities
 door to door invites.

 More than 1,00,000 rural consumers from more than 2,000

catchment villages are expected to attend the rural
interactive platform.
Training
Power Connectivity

Website
 ITC Limited

eChoupal Sagar
Thank You