Case ITC E-Chaupal

8/7/2019 Case ITC E-Chaupal

1/24

1999-2003 ITC ltd

Serving the Bottom Tier MarketsITC eChoupal Experience Sharing


2/24

1999-2003 ITC ltd


3/24

1999-2003 ITC ltd

Low Risk Appetite

Weak Market

Orientation

Low InvestmentLow Margins

Low ProductivityLow Value Addition

Caught in a vicious

cycle ofunderdevelopment


4/24

1999-2003 ITC ltd

Scope of Presentation

No access to market, no idea of prices of his produce in the market.

Sell off Kachcha crop to Adat at a very low price farmer and the Indian Agriculture

globally uncompetitive.

#2


5/24

1999-2003 ITC ltd

GENERAL PRODUCTS OFITC e- CHOUPAL

Processed Fruits (Mango, Guava, Papaya etc.)

Food Grains (Rice, Wheat and Pulses)

Feed Ingredients (Soya bean )

Edible Nut (Groundnut)

Coffee & Spices

Marine Products (Shrimps and Prawns )


6/24

1999-2003 ITC ltd

Inbound logistics include the receiving,

warehousing, and inventory control of inputmaterials.

Operations are the value-creating activities that

transform the inputs into the final product.

Outbound logistics are the activities required to

get the finished product to the customer, including

warehousing, order fulfillment, etc.

Marketing & Sales are those activities

associated with getting buyers to purchase the

product, including channel selection, advertising,pricing, etc.

Service activities are those that maintain and

enhance the product's value including customer

support, repair services, etc.


7/24 1999-2003 ITC ltd

FARMER MANDI BUYER


8/24


9/24 1999-2003 ITC ltd #3

Picture of Indian Agriculture before and after ITC e-choupal:

Before After

Conventional farming methods Scientific farming methods

Compromise on yield and qualityof the produce

Improve yield and quality of theProduce

Agree to whichever pricesquoted

Get better prices on Output

Adat used any method to decideon the price of the output. NoIncentive to invest on betterquality of seeds.

Using Appropriate methods todecide on the price of output.Motivating the farmers to investin better quality seeds.

Attractive export markets Weak infrastructure &inconsistent quality


10/24 1999-2003 ITC ltd

The Network of 6500 e-choupal centers spread across40000 villages has emerged as the gateway of an

expanding spectrum of commodities like wheat, rice, soya,

maize, spices, coffee and aqua products.The e-choupal initiative ahs been featured in the World

Development report 2008 of the World Bank and Economic

Survey of Government of India.It is a Havard Case study today.


11/24 1999-2003 ITC ltd

The Value Chain - Farm to Factory Gate

#9

AgriInputRetailer

Farmer

P

rocessor

Kaccha

Adat

Pakka

Adat

Money Lender

Trader

Broker

Dep

tofAgri

Input

Cos

Seed

Fertilizers

Chemicals

Practices

Stockist

Govt

Univ.

Met Dep

MSPInsurance

Practices

Weather


12/24 1999-2003 ITC ltd

SYSTEM

FARMERS

SANCHALAK

PC andINTERNE

T

CHOUPAL

SAGARSAMYOJAK

ITC


13/24 1999-2003 ITC ltd

In other words..

#13

AgriInputRetaile

r

Farmer

Processor

Kaccha

Adat

Money Lender

Trader

Broker

De

ptofAgri

Input

Cos

Seed

Fertilizers

Chemicals

Practices

Stockist

Govt

Univ.

Met DepMSP

Insurance

Practices

Weather

Choupal

Sanchalak


14/24 1999-2003 ITC ltd

The e-Choupal assists the farmer in the following

ways:

1) Provides farmers with real time information and

customized knowledge, enabling them to improve

productivity quality of produce and price realization.

2) Allows for aggregation of demand for farm inputs

from individual farmers thus giving them, access to

high quality inputs from reputed manufacturers at

competitive prices.

3) Eliminates middle men multiple handling multipletransportation and wastages hereby significantly

reducing transaction costs.


15/24 1999-2003 ITC ltd


16/24 1999-2003 ITC ltd #17

Key Success Factor Self Sufficient Infrastructure

Power Connectivity

Training


17/24 1999-2003 ITC ltd

Transaction cost in Mandi Chain

(before e-Choupal)

T ti t i M di Ch i


18/24

1999-2003 ITC ltd

Transaction cost in Mandi Chain

(after e-Choupal)


19/24

1999-2003 ITC ltd

States covered: Madhya Pradesh, Haryana, Uttarakhand, Karnataka, AndhraPradesh, Uttar Pradesh, Rajasthan, Maharashtra, Kerela and Tamil Nadu).

ITC Infrastructure:

Computer

Internet

Multimedia

Broadband

Smart Card

Physical Reach:

Choupals within walking distance

Multipurpose WH hubs within driving distance

Key Intermediaries:

Sanchalak (1 per cluster of 5-6 villages) 1500/state Sanyojak (1 per group of 10-15 choupals) 100/state

ITC (support the farm produce marketing end)

#23

The Privileged Assets of eChoupal


20/24

1999-2003 ITC ltd

Using the e-choupal infrastructure of reach & scale & keeping the Sanchalakas the pivot ..

The launch of initiatives that can :

Improve Farmer Livelihoods

Long Term Community Impact programmes

Pilot in 4 districts of MP & UP

Livestock Management programmes

Water Management

Self Help Groups focusing on women

Synergising the skills of

ITC s management skills,

e-choupal reach

The knowledge & experience of NGOs

#25

The New Wave..Sunehra Kal !!


21/24

1999-2003 ITC ltd

Rural Indias largest & most effective Interactive Transaction & FulfillmentChannel

Covering 200,000 villages across 14 States through 50,000 choupals

1/3rd of all Indian Villages

Building capability to deliver superior shareholder value sustainably

Also contributing to

Enhancing global competitiveness of Indian Agriculture

And, Raising the standard of living in Indian villages

#26

Our Vision


22/24

1999-2003 ITC ltd #30

Our MissionImprove the Quality of Life in Rural India.


23/24

1999-2003 ITC ltd

QUESTIONS1. The competitors try to attract the farmers by

providing them higher prices for their produce than e-Choupal. How to overcome this?

2. What could be done to improve the Samyojak- ITC e-Choupal relationship?

3. What action should be taken against the Sanchalaks,who unionize and extract unwarranted Rents fromITC e- Choupal?

4. How to generate a sense of trust in the farmers mindwith respect to the laboratory tests conducted?


24/24

1999 2003 ITC ltd

Thank You.

#31

ITC Limited

e-Choupal

Documents

Case ITC E-Chaupal