LOGISTICS AND SUPPLY CHAIN MANAGEMENT
LOGISTICS AND SUPPLY CHAIN MANAGEMENT IN ITC
XLRI INSTITUTE OF MANAGEMENT, JAMSHEDPUR
WITH GREAT PLEASURE, WE EXTEND OUR GRATITUDE
TOWARDS PROF. DR.T.A.S.VIJAYARAGHWAN JI, UNDER WHOSE
VALUABLE GUIDANCE, CONSTANT INTEREST AND ENCOURAGEMENT WE
HAVE BEEN ABLE TO COMPLETE THE PROJECT SUCCESSFULLY.
THIS COOPERATION IS NOT ONLY USEFUL FOR THIS PROJECT
BUT WILL ALSO BE A CONSTANT SOURCE OF INSPIRATION FOR
US IN THE FUTURE.
WE ARE ALSO THANKFUL TO ALL THOSE WHO HELPED US
CONSTANTLY IN THE PREPARATION OF THIS PROJECT DIRECTLY
ITC is one of India's foremost private sectors companies with a market capitalization of nearly US $
15 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's Best Big
Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among
India's Most Respected Companies by Business World and among India's Most Valuable Companies
by Business Today. ITC also ranks among India's top 10 `Most Valuable (Company) Brands', in a
study conducted by Brand Finance and published by the Economic Times.
ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging,
Agri- Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel,
Greeting Cards, Safety Matches and other FMCG products. While ITC is an outstanding market
leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports,
it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery,
Branded Apparel and Greeting Cards.
As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly
nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond
the market". In his own words: "ITC believes that its aspiration to create enduring value for the
nation provides the motive force to sustain growing shareholder value. ITC practices this
philosophy by not only driving each of its businesses towards international competitiveness but
by also consciously contributing to enhancing the competitiveness of the larger value chain of
which it is a part." ITC's diversified status originates from its corporate strategy aimed at creating
multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution
reach, superior brand-building capabilities, effective supply chain management and acknowledged
service skills in hotelier. Over time, the strategic forays into new businesses are expected to garner a
significant share of these emerging high-growth markets in India.
ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the
country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The Company's 'e-
Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by
empowering Indian farmers through the power of the Internet. This transformational strategy, which
has already become the subject matter of a case study at Harvard Business School, is expected to
progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the
Company's marketing reach.
ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is aggressively
pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services
and business process outsourcing.
ITC's production facilities and hotels have won numerous national and international awards for
quality, productivity, safety and environment management systems. ITC was the first company in
India to voluntarily seek a corporate governance rating.
ITC employs over 21,000 people at more than 60 locations across India. The Company continuously
endeavours to enhance its wealth generating capabilities in a globalizing environment to consistently
reward more than 3, 95,000 shareholders, fulfil the aspirations of its stakeholders and meet societal
expectations. This over-arching vision of the company is expressively captured in its corporate
ITC was established on August 24, 1910 as the Imperial Tobacco Company of India Limited
in Kolkata. Initially, the company was involved in the trading of imported cigarettes.
In 1925, in a backward integration move, the company started a packaging and printing
The name of the company was changed to India Tobacco Company Limited (I.T.C. Ltd.) in
In 1975, I.T.C. Ltd., through ITC-Welcome group, tied up with the US-based Sheraton
Corporation to enter the hospitality industry. It acquired its first hotel in Madras (later
renamed Chennai) in Tamil Nadu and called it the Welcome group Chola Sheraton.
I.T.C. Ltd established ITC Bhadrachalam Paperboards Ltd. (IBPL) in 1975. The company
started production at its integrated pulp and paper/board manufacturing facility at
Bhadrachalam, Andhra Pradesh, in 1979.
In 1990, I.T.C. Ltd. set up an International Business Division (IBD) for export of
I.T.C. started a greeting cards business under the brand name Expressions in the year 2000.
In the same year, I.T.C. also entered the fashion retailing business by extending its well
known cigarette brand Wills. The retail outlets were called Wills Lifestyle and offered
premium leisure wear for men and women under the Wills Sport brand.
In September 2001, the company was renamed ITC Ltd (without full stops, and with no
meaning attributed to the alphabets).
In 2001, ITC made an entry into the foods business.
In 2002, the company launched another clothing brand, John Players, which targeted the
In 2004, ITC was one of eight Indian companies to make it to the “Forbes ‘A’ List”8 which
featured 400 of “the world’s best big companies”.
In Oct 2005, ITC has launched an exclusive line of prestige fine fragrances and personal care
products under the Essenza Di Wills brand.
In late 2007, ITC launched Fiama Di Wills soaps and shampoos following the success of
Essenza Di Wills.
In Dec 2007 ITC launches ECF (Elemental Chlorine Free). ITC is the first and only Company
in India using the ECF technology.
• Sustain ITC's position as one of India's most valuable corporations through world-class
• Create growing value for the Indian economy and the Company's stakeholders.
• To enhance the wealth generating capability of the enterprise in a globalizing environment
• Deliver superior and sustainable stakeholder value.
ITC's Core Values
The company’s Core Values are aimed at developing a performance-oriented organization that is
highly customer focused and also creates value for those holding stake in it. It fully understands that
it has a commitment to its stakeholders to act as a guardian of the company from stakeholder’s point
of view and deliver results in a manner that actualizes stakeholder’s interest on a long-term basis.
It also delivers on the commitment to its customers by consistently addressing their needs on product
quality, value and overall satisfaction. It respects the values of people and also encourages
individuals to pursue their dreams, values their differences and helps them to experiment in the
pursuit of various opportunities.
ITC firmly believes in the concept of Excellence with their mantra being, “we do what is right, do it
well and win. We will strive for excellence in whatever we do”. It is constantly in the pursuit of better
and newer products, processes, services and management practices. Apart from the interest of
shareholders they also address their commitment to the nation to generate economic value, at the
same time ensuring that in achieving these goals no compromises are made whatsoever in complying
with rules and regulations as specified by law.
ITC believes in practicing ethical behaviour among the corporate citizen. The company follows an HR
policy that is regulated by Teamwork, Trust, Collaboration, Mutuality, Meritocracy, Objectivity,
Collaboration, Self-respect and Human-dignity. It is also deeply committed to make the company a
gender friendly place for each individual while also ensuring enhancement of equal opportunities for
men and women, preventing sexual harassment of any form and the adherence to good employment
practices. It is ensured that the interest of the company is foremost and in this context acceptance of
any kind of gifts or payments from suppliers or customers is viewed as a serious breach of company
discipline. And such acts are also considered as damaging to the reputation of the company.
High standards of house keeping and hygiene are followed to ensure excellent physical working
conditions. It is understood that all the directors, senior management and employees shall conduct
themselves in an honest manner and avoid any conflict of interest.
The top officials and employees of ITC believe that ITC provides them freedom at work and resources
to experiment. Employees take pride in working for ITC for its work culture, environment, and the
way people are treated. They are consulted before a new projectsystem is introduced and their
concerns and suggestions addressed. ITC also gives a lot of input to develop their skill and career.
They give utmost importance to equal opportunities, better work environment.
ITC has a three-tier management structure
At the top are Chairman and Board of Directors, who are responsible for the strategic supervision of
ITC, its wholly owned subsidiaries and their wholly owned subsidiaries. The ITC board is a balanced
board comprising Executive and Non-Executive Directors. The Board ensures that the Company has
clear goals relating to shareholder value and its growth. It sets strategic goals and seeks
accountability for their fulfilment. There are four board committees, namely, the Audit Committee, the
Nominations Committee, the Compensation Committee and the Investor Services Committee.
At the second level is the Corporate Management Committee, which is responsible for the strategic
management of the company's businesses within Board-approved direction/framework. It comprises
all the Executive Directors and three or four key senior members of management.
Third level consists of divisional CEOs of each business assisted by their own divisional management
committees. Corporate Functions of the Executive Management Team includes Planning and
Treasury, Accounting, Legal, Secretarial, Human Resources, Communications, Internal Audit and
Formal 3-tiered governance structure
The company’s organizational structure and governance processes are designed to support effective
management of multiple businesses while retaining focus on each of them." This three-tier governance
structure ensures that:
For and on behalf of the shareholders the company believes in incorporating strategic governance in
its work culture so as to ensure that despite being free from involvement in the task of strategic
management of the Company, it can be conducted by the Board with objectivity, thereby sharpening
and ensuring accountability of management;
With mundane tasks of everyday executive management being delegated the management remains
focused on issues of immediate importance;
The Executive management of the individual businesses that are free of handling strategic
management responsibilities of ITC as a whole is then able to channelize their energies and time in
enhancing the effectiveness and overall growth of their individual units.
Corporate Governance as defined by ITC is a systemic process by which companies
are directed and controlled to enhance their wealth-generating capacity. A company employs vast
sums of societal resources during this process of wealth generation. ITC is of the firm belief that the
governance process being followed should ensure that these resources are used optimally to meet the
aspirations of its stakeholders and society. This is further reflected in the deep commitment of the
company to contribute to the ‘Triple Bottom Line’, which is the development of the nation’s economic,
ecological and social resources.
The company believes in empowering the executive management. But corporate governance ensures a
system of checks and balances to ensure that these powers that are bestowed upon the executive
management are used in a responsible manner so as to meet shareholder and societal expectations.
The core strengths of ITC's governance philosophy are trusteeship, transparency, empowerment and
accountability, control and ethical corporate citizenship. The practice of each of these creates the
right corporate culture that fulfils the true purpose of Corporate Governance.
Overall, the structure of ITC has high complexity because of horizontal differentiation within the
organization. The most visible evidence is that of specialization and departmentation. Complexity also
increases because of spatial differentiation.
The ITC Code of Conduct, as adopted by the Board of Directors, is applicable to all Directors, senior
management and employees of the Company. This Code is derived from three interlinked fundamental
principles, viz. good corporate governance, good corporate citizenship and exemplary personal
conduct. The Code covers ITC's commitment to sustainable development, concern for occupational
health, safety and environment, a gender friendly workplace, transparency and audit ability, legal
compliance, and the philosophy of leading by personal example. Since non-adherence to the code is
brought to the attention of the immediate reporting authority, formalization is also there in ITC.
Decision-making is decentralized, as the company believes in giving executive freedom to
the management to drive the enterprise forward without undue restraints but this freedom of
management should be exercised within a framework of effective accountability.
Looking at the structure and culture of ITC, we can say that its design is based more or less on the
Divisional Structure. ITC has a diversified presence in different industries and each of its businesses
act as an autonomous unit which are coordinated by the top level, i.e. the board and corporate
management committee. The divisional managers are responsible for performance and hold complete
strategic and operating decision-making authority. The top management provides support services to
the divisions. It acts as an external overseer, evaluating and controlling performance. Hence the top
management is free from being concerned with the day-to-day operating details so they can pay
attention to the long term. Big picture, strategic decision making is done at the top level.
Areas of Diversification
ITC has transformed itself from a leading cigarette manufacturer to an umbrella group that offers a
diversified product mix to enhance its brand image and reduce dependency on tobacco related
products. It has forayed into the hospitality service industry and has become a major player in the
hotels segment. Its position in the FMCG (fast moving consumer goods) business is also on a growth
curve; especially its confectionery and biscuits which are slated to achieve the top ranks among its
peers. It has made heavy investments to strengthen its IT (information technology) segment and to
compete with the big players like Infosys and Wipro. Although the ITC group is marketing its image
as an ideal corporate citizen and a company that takes its social responsibility seriously, it still earns
80% of revenues from selling cigarettes and other tobacco related products.
The major areas in which ITC has diversified are:
• Lifestyle Retailing
• Greetings and stationery
• Safety Matches
• Incense sticks
Paperboards and Packaging
• Paperboards and specialty papers
• Agri- exports
Restructuring and Rationalising
ITC in FMCG Sector
ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, it has a
leadership position in every segment of the market. It's highly popular portfolio of brands includes
Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol
The Company has been able to build on its leadership position because of its single minded focus on
value creation for the consumer through significant investments in product design, innovation,
manufacturing technology, quality, marketing and distribution.
All initiatives are therefore worked upon with the intent to fortify market standing in the long term.
This in turns aids in designing products which are contemporary and relevant to the changing
attitudes and evolving socio economic profile of the country. This strategic focus on the consumer has
paid ITC handsome dividends.
ITC's pursuit of international competitiveness is reflected in its initiatives in the overseas markets. In
the extremely competitive US market, ITC offers high-quality, value-priced cigarettes and Roll-your-
own solutions. In West Asia, ITC has become a key player in the GCC markets through growing
volumes of its brands.
ITC's cigarettes are produced in its state-of-the-art factories at Bengaluru, Munger, Saharanpur and
Kolkata. These factories are known for their high levels of quality, contemporary technology and
ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of
the Kitchens of India brand. A more broad-based entry has been made since June 2002 with brand
launches in the Confectionery, Staples and Snack Foods segments.
For ITC, the packaged foods is an ideal business to utilize ITC's proven strengths in the areas of
hospitality, branded cuisine, contemporary packaging and sourcing of agricultural commodities.
ITC's world famous restaurants like the Bukhara and the Dum Pukht, nurtured by the Company's
Hotels business, demonstrate that ITC has a deep understanding of the Indian taste and the expertise
required to translate this knowledge into delightful dining experiences for the consumers. ITC has
stood for quality products for over 98 years to the Indian consumer and several of its brands are
today internationally benchmarked for quality.
All products of ITC's Foods business available in the market today have been crafted based on
consumer insights developed through extensive market research. Apart from the current portfolio of
products, several new and innovative products are under development in ITC's state-of-the-art
Product Development facility located at Bengaluru.
ITC has over the last 98 years established a very close business relationship with the farming
community in India and is currently in the process of enhancing the Indian farmer's ability to link to
global markets, through the e-Choupal initiative, and produce the quality demanded by its customers.
This long-standing relationship is being utilized in sourcing best quality agricultural produce for
ITC's Foods business. The Foods business is today represented in 4 categories in the market. These
1. Ready To Eat Foods
4. Snack Foods
In order to assure consumers of the highest standards of food safety and hygiene, ITC is engaged in
assisting outsourced manufacturers in implementing world-class hygiene standards through HACCP
certification. The unwavering commitment to internationally benchmarked quality standards enabled
ITC to rapidly gain market standing in all its 6 brands:
1. Kitchens of India
Recently, on Aug 1, 2008, ITC Foods has drawn up plans to extend its Kitchen of India brand to
frozen foods. ITC’s Branded Packaged Foods business continues to expand with sales growing by
23% over the previous year. Apart from the development costs of new products, the business has had
to contend with the recent economic slowdown and severe cost increases in input commodities
including wheat, vegetable oil, maize and skimmed milk powder, in addition to the soaring fuel prices.
Having acquired reasonable scale in a relatively short span of time, the business is progressively
focusing on consolidating the portfolio in certain categories, improving market servicing and driving
supply chain efficiencies.
Market and Competition
Indian Foods market is a monopolistic market. There are many competitors in all the categories and
although they all have similar products available at similar prices, they are trying to prove
themselves different through their marketing strategies. However, entry to this business is easy and
ITC has utilized this fact very efficiently to their benefit as they entered into the several categories
among this Foods business.
READY TO EAT
ITC entered into the branded and packaged foods business in with the launch of Kitchens of India
brand. In 2004, the company launched KoI brand fruits and spice conserves and cooking pastes. The
fruits and spice conserves, were developed jointly with Karen Anand, a food expert. Priced at Rs. 70,
these were targeted at the premium segment. The KoI cooking pastes, which were priced at Rs.30 for
a 100g pack, also targeted the high-end market. Multi-purpose cooking pastes were also launched
under the Aashirvaad brand and these were priced at Rs. 10 for 80g pack. The manufacturing of these
products was outsourced to contract manufacturers for saving the operating cost.
ITC entered the branded spices market in 2005 and the Instant Mix segment in 2006, both under the
Aashirvaad Brand. As on April 2006, the total turnover in the Indian ready-to-eat and ready-to-cook
segments was only around Rs. 700 million, but it continued to post an annual growth of 20%. By early
2006, though ITC had captured a 35% market share in the ready-to-eat segment, MTR was the clear
market leader with close to 60% in market share. ITC exported 40-50% of KoI brand products (in
terms of volumes) to the US, Canada, the UK, Switzerland, and Australia.
In May 2006, ITC planned to introduce ten more varieties under the KoI brand within a price range
of Rs. 35 to Rs. 98. In 2007, some new products have been launched under Ready To Eat category like
chutneys, curries, conserves, biryanis (Noor Mahal, Bhori Biryani and some new range of products
under Gharana (Paneer Malai, Keema Mutter). After launching all these products ITC FOODS is
looking to share 50 to 60% of market by 2008-2009.Following are the major competitors ITC is
competing with in Ready to Eat category:
Gits produces the selected range of popular ready to cook and instant
Gits foods that cover a range of ethnic Indian cuisine-and where the
recipes have "Global pallete acceptance".
Offers packaged Bhel puri chats such as Sev Puri, Chana Masala,
Haldirams Samosa, Pakoras, Alu Tikki, Pao Bhaji, Gol Gappa, Dhokla among
Offers packaged sweets,syrups,namkeens, cookies, pickles, aloo
Ethnic Kitchens Masala, Bhujia, Bhelpuri, Chana Dal, Kajui Ladoo and many more
MTR foods currently comprise twenty-two delicious and completely
authentic Indian curries, gravies and rice.
Priya has a range of popular traditional recipes starting from Dal
Makhani, Navaratan Kurma to Palak Paneer, Paneer Butter Masala,
Punjabi Chhole and Rajma Masala along with true southern
delicacies like Andhra Veg Pulav, Mango Dal, Gongura Dal.
Market Share - Ready To Eat
Confectionary market in India is about Rs.2500 crore. It is loosely divided into seven categories:
1. Hard boiled candies
4. Chewing gum
5. Bubble gum
ITC has currently in market with its two brands “Mint-o” and “Candyman”. ITC’s Mint-O fresh
secured a 17% share of Indian cough lozenges market ahead of former leader Perfetti which only
achieved 14.3% with chloromint. The Indian giant marked the confectionary sector in 2002 and has
only two brands “mint-o fresh” and “Candyman”. But in overall confectionary market they are
lagging behind having just 3% market share as compared to market leader Perfetti with more than
37% market and providing larger number of brands.
Perfetti van melle ITC Ltd. Nestle Cadbury
Alpenliebe Candyman . Kit Kat Bubbaloo
. Kit Kat Lite
Alpenliebe Minto . Milky Bar Dairymilk
Creamfills . Munch Eclairs
Alpenliebe Lollipop . Milk Chocolate
. Fun Bar % Star
Big Babol . Polo
. Polo Power mint
. Munch Pop Choc Perk
Center Fruit . Éclairs
Market Share - Confectionery
Perfetti Van Melle
7% 11% Others(Parle,
Joyco, HUL etc.)
ITC entered the staples market in 2002 with wheat flour under the Aashirvaad brand. In 2003, ITC
extended the Aashirvaad brand to edible salt. By early 2006, ITC had a 40% market share in the Rs. 6
billion packaged flour business. Its closest competitor HLL’s Annapurna brand was trailing behind
with a market share of 18%. The market was growing at 12%. Under its Aashirvad brand ITC
FOODS also launched salt, mixers, ready to cook pastes. In the Rs. 4 billion organized salt market (as
of 2006), Tata Salt was the market leader with a 28% market share. ITC had only a 5% share of the
market. Other players in this business are HLL (Knorr Annapurna), Nirma (Shudh), Marico
Industries (Saffola), etc.
Market Share - Staples
21% Mahal, Local
Indian biscuit market is estimated to be around 5000 crore. Biscuit industry in India in the organized
sector produces around 60% of the total production, the balance 40% being contributed by the
unorganized bakeries. ITC with its premium product, SUNFEAST, is acquiring a big share of market.
Within few years, they are able to get 12% share of the market.
Britannia ITC Ltd (Sunfeast) Parle Priyagold
Tiger Marie Parle-g Butter Bite
Nutrichoice Junior Dream cream Krack-Jack Classic Cream
Good Day, Milky Magic Monaco Butter Lite
50 50, Fit kit Kreams Big Boss
Treat Choco Nut Hide and Seek Marie Lite
Pure Magic, Butter Nut Milk Shakti Magic Gold
Market Share - Biscuits
Snacks industry overview
Snacks industry in India is worth 1800 Crores of Rs. and growing at 10% is one of the largest markets
in the world, out of which potato chips holds the major market share of around 85%.
Product Price Product Price Product Price
(ITC Ltd) (Frito Lay) (Haldiram)
Bingo Lays Namkeen
Rs. 5 Rs. 5 Rs. 5
Rs. 10 Rs. 10 Rs. 10
Rs. 20 Rs. 20 Rs. 20
Market Sahre - Snacks
ITC Ltd. started their food division in the year 2001. Since then the growth has been fantabulous.
Their investment has increased year by year considering the scope of food market. However, they
could not sustain the constantly increasing profit margins, mainly because of their valuable
investment in market research, surveys, R&D, costly advertisements and expansion plan. Moreover
they entered in a whole new market of food, but for this market they already had strong distribution
market, which they are using for their tobacco product. So considering all these factors and short
span of time period, surprisingly they did good job, particularly in snacks, biscuits, Ready to Eat and
Annual Results (ITC) ‐ In Rs. Crores
Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04
Sales 13,947.53 12,369.30 9,790.53 7,639.45 6,470.44
Operating profit 4,403.94 3,956.41 3,327.38 2,792.56 2,360.59
Interest 4.61 3.28 11.93 42.43 24.79
Gross profit 5,010.23 4,289.62 3,601.53 2,985.94 2,560.68
EPS (Rs) 8.28 7.18 5.95 8.79 6.43
Annual results in details
Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04
Other income 610.90 336.49 286.08 235.81 224.88
Raw material 4,639.35 5,644.34 4,124.90 2,837.40 2,572.78
Employee expenses 733.32 630.15 541.40 467.26 416.48
Other expenses 4,176.61 2,397.88 1,938.52 1,610.08 1,310.04
Provisions made ‐ ‐ ‐ ‐ ‐
Depreciation 438.46 362.92 332.34 312.87 241.62
Taxation 1,451.67 1,226.73 988.82 836.00 726.21
Net profit / loss 3,120.10 2,699.97 2,235.35 2,191.40 1,592.85
Rate of Increase Sales profit raw material interest
ACTORS AFFECTING NET PROFIT
2005 18.07 18.30 37.58 10.29% 12.19% 71.16%
2006 28.16 19.15 2.01 45.38% 15.87% ‐71.88%
2007 26.34 18.90 20.79 36.84% 16.39% ‐72.51%
2008 12.76 11.31 15.56 ‐17.81% 16.37% 40.55%
Projection for 2009 21.33 16.92 18.98 18.67% 15.21% ‐8.17%
The selling of 13544 crores, with net turnover at 3900 crores registered a growth of 18.4% driven by
the non-cigarette business, which grew by 29% due to new investments in FMCG market. Overall
projection for the year 2009, for sales is projected to be at growth rate of 21.33%.
SALES OF FOOD SECTOR AND ITS PROJECTION:
2006 2007 2008 2009(projected)
Sales (crores) 1230.54 1698.53 2526.60 3410
The foods business is expanding rapidly with sales growth of 35% in the year 2007. This range of
product includes more than 150 different products. The growth of this sector in terms of product
categorization is as follows.
Sales in biscuits category grew by 55%.
Sales in staples category grew by 52%
Sales in confectionary grew by 51%.
Sales in RTE grew by 35%
ITC Food is looking to expand its RTE category to maximize its profit.
ITC’S NEW CHALLENGES:
This food industry is the industry with very less profit margins. So low operation cost is the key. Also,
Indian middle class is price sensitive. In this area international, national and also regional
competition is very tough. With that wheat, petrol and labor cost is increasing day by day. Different
types of restrictions imposed by the government are also playing a vital role in reducing profit
margins. For example, exporting non-vegetarian foods out of India is restricted. To cover this up, ITC
is trying to reduce cost of its biscuits by acquiring mass production of wheat directly from farmers
through its e-chaupal initiatives. Also in this way ITC is able to reduce the price of its staples. As far
as Confectionary market is concerned, ITC is looking to launch its brand of chocolate in
collaboration with an American company. After analyzing the food sector, one can say that it is one of
the toughest market to compete in as all the market giants are already there.
GROWTH AND INVESTMENT PLANS:
This food sector is the most promising field and has already overtaken IT and PHARMACEUTICALS
Sector of India. Even Indian Government is looking to develop this sector. That’s the reason central
Government has already passed several projects for food parks. In this way FDI in this sector is
possible. Also government in its 2006 budget has reduced custom duty from 16% to 8% on packaged
food and also excises duty on instant food mixes. This will help ITC to be competitive in the market.
Recently ITC has started exporting packaged food from its Bangalore plant. It is also planning to
open one more new plant in Calcutta for Indian market. They are looking to add several products in
their RTE list which will be exported as well. Also in late 2007 ITC has acquired one Australian Plant
and seed technology industry. Through this they will provide highly valuable seeds and other
solutions to farmers in India, which ultimately will increase the productivity and cost effectiveness for
their staples and biscuits business.
Its turnover in the foods business was around Rs. 8 billion in 2005-06 which further increased to Rs.
10.2 billion in year 2006-2007.
ITC has decided to make an investment of 300 crores over a period of 5 years. ITC Foods has also
decided not to make heavy investments in manufacturing unless volumes pick up. As of today ITC has
invested 20 crores in R & D and planning to invest further 15 crores to produce new products in
Thus looking at all the strategy of ITC future investment and planning. The future investment plan is
Rate of Increase Sales Operating Profits Net Profit/loss
2005 18.07 18.30 37.58
2006 28.16 19.15 2.01
2007 26.34 18.90 20.79
2008 12.76 11.31 15.56
2009(Projected) 21.33 16.92 18.98
Rate of Increase of Sales w ith Projection for 2009
2005 2006 2007 2008 Projection for
Rate of Increase of O perating Profit w ith Projection for
20.00 19.15 18.90
2005 2006 2007 2008 Projection
Rate of Increase of Net Profit/Loss with Projection for
20.00 20.79 18.98
2005 2006 2007 2008 Projection
Major Strategies Adopted by ITC Foods
Entering the foods business was itself a strategic decision for ITC. While ITC’s core business,
tobacco, was under pressure owing to several factors like government bans on advertising and on
smoking in public places, hikes in the excise duty for cigarettes, and anti tobacco campaigns, ITC
planned to deploy its surplus in the packaged food business where it saw huge business potential.
Following are some of the strategies that ITC adopted to make its food business a success:
• Entering into less competitive or unexplored markets (Ready to eat, Staples, Wafers): When
ITC entered into the foods business in 2001, it focused on unleashing the areas where the
competition is very less or there is no competition. It started with packaged ready to eat food
and later extended that to Aashirvaad brand of edible salt and Atta. Recently ITC has
announced its desire to forge in the frozen foods category in the domestic market. Players in
this category are limited and ITC hope to exploit this fact. Also, in Bingo, although the
competition is tough but there is only one player with whom ITC has to compete i.e. Frito
Lay. This strategy has helped ITC to quickly establish itself in the above mentioned
• Distribution Network: ITC already had a huge distribution network due to its tobacco
business. ITC used this network to distribute their biscuits and wafers. This not only provided
a good launch to their products but also helped in boosting sales. Today, ITC’s Bingo and
Sunfeast are available at nearly 1.8 million outlets whereas Parle is available at only 1.5
• Market differentiation (Ready to eat, Biscuits): ITC started packaged foods business with the
KoI brand of ready-to cook products. They were positioned as premium products with target
groups including tourists, NRIs, etc. In Biscuits also, ITC launched differentiated products in
each and every segment. For e.g. it introduced an Orange Marie, a butterscotch cream
biscuit, chilli flakes in a biscuit and even honey flavor under the Sunfeast brand.
In March 2005, ITC Foods launched Sunfeast Pasta, a whole wheat based product targeted at
children. It was expected to compete with products like Nestle’s Maggie noodles. With this
strategy ITC built for itself new markets.
• Cost control strategy (all products): When ITC started the foods division, its main challenge
was to compete with the players who were already there. To overcome this challenge, ITC
realized that they have to offer products at a price which is either equal or less than what the
competitors are offering. To do this, they planned to capitalize by leveraging the strength of
the group’s other businesses. ITC’s printing and packaging business provided high-quality,
cost-effective, and innovative packaging. ITC also enjoyed cost advantages over its
competitors owing to its electronic procurement system called e-Choupal. This helped ITC to
compete with the best.
• Diversification of products (Biscuits, Wafers, and Ready to Eat): One of the ITC’s
successful strategies has been the method of diversifications among its various products. If we
talk just about Bingo, ITC has come up with 16 flavors in comparison to its competitor ‘Lays’
of ‘Frito Lay’ which has only 4 major flavors. Same is the case with Ready to Eat food
category and Biscuits. This strategy has helped ITC to attract a wide range of market.
• Extensive advertising (Biscuit, confectionary, wafers): Just like a Bollywood movie needs
good publicity to be a super hit, every new product launched in the market needs to be known
to the consumers before it is launched. Advertising is where ITC made the difference in
comparison to its competitors. They hired the best professionals and the best ambassadors in
the country to make their products famous. This is evident form the award winning marketing
campaign for Bingo and Minto Fresh. The tagline "Jab Laila ko karna tha impress to majnu
ne khayi mint o fresh" has stood the test of times and is still widely known and remembered.
Hiring the best people from the film industry and sports (Sharukh Khan and Sachin Tendulkar
for Biscuits, Rakhi Sawant for Minto Fresh) showed ITC’s urge to be the best.
On television, the company booked 10 to 15 spots per channel per day on youth channels such
as MTV and Star World, mass Hindi channels like Zee and Star TV, and news channels. It
also had around 20 spots on a variety of radio channels and advertised in most leading
national dailies. In the top-30 cities, over 1,000 outdoor hoardings advertised the product.
According to industry estimates, ITC spent close to Rs 100 crore on marketing.This kind of
promotion of products helped ITC to make its products known to everyone and now it was not
difficult to attract consumers.
• Regular introduction of new products (all products): Having acquired reasonable scale in a
relatively short span of time, ITC realized that, to remain in the competition it had to
introduce new products regularly. ITC has been expanding its distribution network
aggressively and also their product range. In biscuits and wafers range, it is launching new
products or flavours week after week. Same is the case with Ready to Eat and Kitchen of
• Innovation (all products): When the need to introduce new products arrived, ITC shifted its
focus on to the innovation. Also, ITC was innovative in identifying the market or niche for all
• Maintenance of freshness and hygiene (all products): ITC positioned its wheat flour on the
health & hygiene and value for money terms. Success in the staples business, especially in the
branded and packaged wheat flour business, depended on two factors – an effective
distribution network and the quality of the product. Therefore, ITC attempted to ensure that
the supply chain was responsive, and laid emphasis on making accurate sales forecasts using
inputs from distributors, sales personnel and a well-managed MIS system. To maintain
freshness of the product, the company strove to minimize the transit time by regulating the
shippers to maintain company-specific transit norms. The physical aspects of the supply chain
like warehouses and trucks were closely monitored to maintain cleanliness.
• From Analyzers to Prospectors (Biscuits): When ITC entered the biscuits market with
Sunfeast in 2003, with three varieties of biscuits - glucose, marie, and cream, they did what
any new player in the market does, imitating and emulating the leader that was Britannia.
Their strategy was to manufacture those products which are already a success in the market.
But, as ITC got hold of the market, it started to manufacture flavors which were never heard
of. This was the result of ITC’s desire to exploit new product and market opportunities.
All the above strategies and with the help of launch of Bingo in 2007, ITC finally tasted success in its
food business in 2008 when it became a profitable business for the first time since its launch in 2001
Effectiveness criteria Rating Remarks
Entered into food business because of the various constraints
in cigarette industry.
1 Flexibility 9
Launch of various new products in diverse categories in
accordance to the demand of the consumer market.
Outsourcing manufacturing of confectionary items,
acquisition of an Australian firm for new improved seeds, set
2 Acquisition of resources 8 up new plant in Haridwar, where there is no tax for first 5
Expanding size of work force by expanding target market
Goals are clear and well understood as they are clear about
3 Planning 7 the markets they want to enter in and the markets they do not
want to enter.(they didn’t enter into chocolates, milk products)
Combining various facilities to improve efficiency
(manufacturing along with printing and packaging)
Prices of almost all the products are at par with the
4 Productivity and efficiency 8 competitors. Also their selling has increased considerably at
an average rate of 20-25% in last 6 yrs. In 2007, At their
Haridwar plant they are able to get the more production with
the limited technology and machine utility which they had in
Employees are always consulted before a new project/system
5 Availability of information 8
Timely operations are carried out to maintain freshness of the
6 Stability 9
inputs (Transporters are fined in case of delay)
ITC leverage human capital for competitiveness by nurturing
knowledge, entrepreneurship and creativity
7 Skilled work force 9
It has a no. of training programs which helps the employees
gain exposure to the latest technologies and developments.
Competing Values Framework
Environment Culture Design Structure Leadership Leader’s role
Developmental Adhocracy Idealistic Prime mover
Rational Market‐oriented Rational Expert
Environment in which ITC foods division is operating is highly uncertain because of the immense
competition that they are facing in each category and due to the launch of new products and flavors
in each category every other day. It is also highly intense as the organization’s main strategy to
achieve their goals is through extensive marketing and for that they need to know how their products
are received in the market. To do this, they are conducting various surveys and also they are
launching their products only after a brief research of the market and trials.
ITC Foods’ aggressive effort to capture market share and heavy investments in manufacturing and
infrastructure suggests that they are focusing mainly on both of their short and mid term goals. Thus,
the current design of their organization is rational but as the environment is highly uncertain and
intense, they need to move towards a ‘Developmental’ design. The structure of the ITC Foods’
division is ‘market oriented’ because of the same reason that they are focusing into the market
deeply; but again as the environment is highly uncertain and intense, they need high flexibility within
the organization and hence should move towards an adhocratic structure. Leadership in ITC foods
division is rational as the leader is functioning logically in accordance to the market forces.
Branded Packaged Foods
ITC in Hotel Industry
ITC Limited entered the hotels business in 1975 with the acquisition of a hotel in Chennai, which was
rechristened Hotel Chola. Since then the ITC-Welcomgroup brand has become synonymous with
Indian hospitality. Today amongst India's finest and fastest growing hotel chains, it consists of over
70 hotels across as many destinations in India. These include super deluxe and five star hotels,
heritage palaces, havelis and resorts and full service budget hotels.
The 440-room ITC Maurya at New Delhi is not only amongst the leading business hotel in the
country, but is in a class by itself. Complete with the 'ITC One', the hotel has played host to a galaxy
of world dignitaries, including Bill Clinton and Bill Gates. In fact, even as he was leaving the White
House, the former US President nostalgically recalled the memories of a fabulous Indian meal he and
his family had at the Bukhara restaurant in the hotel.
Bukhara has been declared the Best Indian Restaurant in the world, by 'The Restaurant Magazine',
UK The 386-room ITC Maratha, opened in February 2001, is perceived as amongst the leading and
the finest properties in Mumbai, designed in a grandiose classic style, the hotel pays tribute to
Mumbai's colonial roots and the spirit of the Great Marathas.
In keeping with its plan to have a presence in every major business destination in India, ITC-
Welcomgroup unveiled one of Asia's finest business resort, the 238-room ITC Sonar in Kolkata on
December 31, 2002.
Another landmark hotel - the ITC Grand Central in Parel, Mumbai was formally inaugurated in
January 2005. This five star deluxe property with 242 suites and rooms offers international standards
of service, state of the art amenities and culinary excellence. ITC Mughal at Agra, a proud recipient
of Asia's first Aga Khan Award for Architecture, is an outstanding resort hotel, lavishly spreading
across 35 acres of beautifully landscaped Mughal gardens. ITC-Welcomgroup also pioneered a
holistic concept of "branded accommodation" in the hospitality industry. It was the first to launch the
powerful idea of a 'Hotel within a Hotel' by segmenting and branding the hotel services. It created the
exclusive 'ITC One', 'The Towers' and the 'Executive Club' each catering to the needs of the global
business traveller with unmatched quality and a range of services.
In 2007, ITC-Welcomgroup entered a new phase in its collaboration with Starwood Hotels & Resorts.
ITC-Welcomgroup now has an exclusive tie-up with Starwood in bringing its premium brand, the
‘Luxury Collection’, to India. The seven hotels which are part of this collection are: ITC Maurya in
Delhi, ITC Maratha in Mumbai, ITC Sonar in Kolkata, ITC Grand Central in Mumbai, ITC Windsor
in Bengaluru, ITC Kakatiya in Hyderabad and ITC Mughal in Agra. The agreement also includes the
rebranding of WelcomHotel New Delhi as a Sheraton, while the Chola and the Park in Chennai, and
the Rajputana in Jaipur retain their Sheraton connections. The Welcome Heritage brand brings
together a chain of palaces, forts, havelies and resorts that offer a unique experience. Welcom
Heritage endeavours to preserve ancient royal homes and the historical Indian grandeur, opulence of
romance, valour and adventure for the future Indian generations. Welcom Heritage Hotels, provide a
fine range of hotel services inside these architectural legacies present in Rajasthan, Punjab,
Himachal Pradesh, Madhya Pradesh, Uttaranchal, Jammu & Kashmir, West Bengal, Tamil Nadu,
Haryana and Karnataka.
ITC-Welcomgroup was also the first to brand its cuisine. The Bukhara, the Dakshin and the Dum
Pukht are today powerful cuisine brands, which delight connoisseurs in restaurants in several ITC
Welcomgroup hotels. Others included Dublin, West View and the Pan Asian. Fortune hotels are a
part of the well thought-out growth strategy that brings out the mid-level business and leisure traveler
under the ITC-Welcomgroup umbrella, offering full service properties without compromising on
quality. With a strong presence at Ahmedabad, Thiruvananthapuram, Calicut, Darjeeling,
Jamshedpur, Vapi, Hyderabad, Gurgaon, Indore, Ootacamund, Madurai, Jodhpur, Tirupati and Port
Blair, it will be shortly commissioning several more hotels across India.
ITC in Agricultural Industry
ITC's International Business Division (IBD) is the country's second largest exporter of agriproducts
with exports of over Rs. 1000 Crores (Rs. 10 billion). Its domestic sales of agriproducts are in excess
of Rs. 1500 Crores (Rs. 15 billion). It currently focuses on exports of :
• Feed Ingredients – Soyameal
• Foodgrains - Rice (Basmati & Non Basmati), Wheat, Pulses
• Edible Nuts - Sesame Seeds, HPS Groundnuts, Castor oil
• Marine Products - Shrimps and Prawns
• Processed Fruits - Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit Products, Fresh
• Coffee & Spices - Coffee, Black Pepper, Chilly, Turmeric, Ginger, Celery and other Seed Spices
Although one of the relatively younger business divisions of ITC, it has, in a short span established
itself as a first-choice supply chain partner of several leading international customers. Its major
customers include Cargill, Marubeni, Toepfer, among others, who source agriculture commodities
and food products from India. Its customer relationship management has enabled it to achieve a very
high reputation for quality, reliability and value added services. ITC's unique strength in this business
is the extensive backward linkages it has established with the farmers. This networking with the
farming community has enabled ITC to build a highly cost effective procurement system. ITC has
made significant investments in webenabling the Indian farmer. Christened 'e-Choupal', ITC's web
plan for the farmer centres around providing Internet kiosks in villages.
Farmers use this technology infrastructure to access on-line information from ITC's farmer friendly
website. Data accessed by the farmers relate to the weather, crop conditions, best practices in
farming, ruling international prices and a host of other relevant information.
Currently, the 'e-Choupal' website - www.echoupal.com - provides information to farmers across the
nine States of Madhya Pradesh, Haryana, Uttaranchal, Uttar Pradesh, Rajasthan, Karnataka,
Maharashtra, Andhra Pradesh and Kerala. ITC plans to extend the 'e-Choupal' to cover 10 million
farmers across 100,000 villages covering 15 Indian states. Following the impressive success of e-
Choupal, the Company unveiled the first 'Choupal Saagar' near Sehore in Madhya Pradesh in August
2004. Eighteen more 'Choupal Saagars' have commenced operations in the states of Madhya
Pradesh, Maharashtra and Uttar Pradesh. The 'Choupal Saagar' is a rural hypermarket which
provides multiple services under one roof. It creates a platform for farmers to sell their produce.
Farmers can also buy quality products for their farm and household consumption from 'Choupal
Saagar'. These rural malls also provide farmers the invaluable additional services of soil testing,
banking, insurance, medical facilities and restaurant. Such mall, in synergistic combination with the
e-choupal network, serves as the core infrastructure to support ITC's rural distribution strategy. Over
the next 7-10 years ITC plans to open over 700 such hypermarkets. The business is progressing a
pilot project for retailing fresh fruits and vegetables. Three Choupal Fresh Cash & Carry Stores are
currently operational at Hyderabad, Pune & Chandigarh. The Company has set up a complete
warehousing and cold chain infrastructure for ensuring the availability of fresh products in the
market, besides direct linkages with the farmers for sourcing farm fresh produce.
In Processed Fruits category, ITC exports from HACCP Certified plants to Western Europe, North
Africa, Mid-East, Japan and North America, a wide range of Processed Fruits products made from
Mango (Alphonso, Kesar & Totapuri), Guava, Papaya, & Pomegranate for Industrial and Consumer
use. ITC is the leading Indian exporter of Organic Fruit Products Certified to European (EC
2092/91) & US (NOP) Standards.
Fresh Table Grapes & Pomegranates are sourced from ITC's EUREPGAP Certified Farmer groups
& retailed through prominent supermarkets like Sainsbury's & Albert Heijn in Europe , Daiei in
ITC's countrywide network of procurement teams, handling agents and contemporary warehousing
facilities enable it to source quality merchandise even at short notice. ITC's processors are
handpicked reliable outfits which ensure hygienic processing and modern packaging. Strictest quality
control is exercised at each stage to preserve the natural flavour, taste and aroma of the various agri-
ITC has been a significant exporter of seafoods from India since 1971. It exports frozen as well as
cooked shrimps and other seafood products to Japan, USA and Europe. Its well-known brands
include Gold Ribbon, Blue Ribbon, Aqua Kings, Aqua Bay, Aqua Feast and Peninsular. ITC's
International Business Division continues to use innovation as its core strategy to retain its position
as the one-stop shop for sourcing agri-commodities from India.
ITC’s e- choupal
ITC’s International Business Division, one of India’s largest exporters of agricultural commodities,
has conceived e-Choupal as a more efficient supply chain aimed at delivering value to its customers
around the world on a sustainable basis. The e-Choupal model has been specifically designed to
tackle the challenges posed by the unique features of Indian agriculture, characterised by fragmented
farms, weak infrastructure and the involvement of numerous intermediaries, among others.
The Value Chain - Farm to Factory Gate:
‘e-Choupal’ also unshackles the potential of Indian farmer who has been trapped in a vicious cycle of
low risk taking ability > low investment > low productivity > weak market orientation > low value
addition > low margin > low risk taking ability. This made him and Indian agribusiness sector
globally uncompetitive, despite rich & abundant natural resources. Such a market-led business model
can enhance the competitiveness of Indian agriculture and trigger a virtuous cycle of higher
productivity, higher incomes, enlarged capacity for farmer risk management, larger investments and
higher quality and productivity. Further, a growth in rural incomes will also unleash the latent
demand for industrial goods so necessary for the continued growth of the Indian economy. This will
create another virtuous cycle propelling the economy into a higher growth trajectory
Choupal: A Time-Honored Tradition
The village of Dahod appeared to be an unlikely setting for a technological revolution. Located 25
kilometers south of Bhopal in India’s central state of Madhya Pradesh, Dahod was dominated by
soybean farmers who made their living as their ancestors did, harvesting their crop and selling it in
the local market yard. In Hindi, the word for this meeting place was choupal. The choupal
constituted an informal assembly, a forum that villagers could call their own, a place where
knowledge could be shared and captured.
In 1998, International Business Division (IBD) had grossed Rs. 450 crore ($100 million) in
agricultural commodities sales, a marginal addition to the total Rs. 7701 crore ($2 billion) in sales
generated by ITC’s other divisions, which included tobacco, paperboard, retail, hospitality, and
foods, among others.
The soybean and its derivatives comprised two-thirds of ITC’s agricultural export business. ITC
sourced soybeans from farmers located throughout rural Madhya Pradesh. Madhya Pradesh (MP)
had been dubbed India’s “soyabowl,” as its farmers contributed 4 million of India’s 5 million tons of
soybean crop. ITC had had a 100-year relationship with farmers (based originally on the tobacco
industry) that gave it an integrated presence along the entire value chain, from procuring soybeans
from farmers and processing the beans in exclusively hired processing plants, to exporting the
processed soymeal via vessel loads and container shipments. When soybeans were processed, about
80% of the crushed bean was turned into soymeal, a high-protein extract that was added to poultry
and cattle feed. ITC exported soymeal to countries such as China, Pakistan, Bangladesh, and the
United Arab Emirates, as well as other parts of Southeast Asia. The remaining 20% of the soybean
material became edible oil, highly valued for its nutritional content and a very popular cooking
medium in the domestic market.
ITC had been successful in selling soybean oil domestically and processed soymeal internationally,
but both the input and output sides of the agricultural supply chain in India were still far from
efficient. The limited technological resources in India had constrained the dissemination of know-how
in rural farming communities. Farmers did not have access to quality inputs, such as sowing seeds,
herbicides, and pesticides, or information, such as accurate weather reports, that would help them
improve their crop quality as well as the process of bringing it to market. They did not reap financial
benefits from any profits made off the valuable soybean-derived materials. In fact, farmers were
losing 60-70% of the potential value of their crop, with agricultural yields only a third to a quarter of
Similarly, on the output side, middlemen clogged the supply chain, reducing profit margins for both
farmers and buyers such as ITC. Unfair practices affected the way the farmers were paid, the
weighing of the produce, and the amount of time taken by the process. This drastically increased
transaction costs, slashing potential profits for the farmer.
Both farmers and soybean processors were locked in an unproductive cycle. Farmers had limited
capacity for risk and therefore tended to minimize their investment in crops, lest inclement weather or
pests destroy their investment. This, however, meant a lower-value crop, which translated into slim
margins for both the processor and the farmer. With such risk aversion, farmers were also loath to
experiment with new farming methods. Since this meant that few new sources of value were found,
the cycle continued unabated.
Stunted Growth: From Field to Factory
Farmers in Madhya Pradesh made their living in much the same style as their predecessors 50 years
earlier. The process of getting crops to market began with farmers harvesting the soybeans and
loading them onto tractors and bullock carts. Farms varied in size from under five acres for a small
farmer to greater than 12 acres for a large farmer. An average farmer, with about nine acres of
farmland, could expect an annual net income of approximately Rs. 20,000 ($443) from soybeans and
wheat together. After the harvest, farmers hauled their loads of produce 30-50 kilometers to the
closest mandi and then waited for the crop to be auctioned. The auction began when a government-
appointed bidder valued the produce and set the initial bid. From here, government-licensed buyers
called commission agents (CAs) bid upwards until the crop was sold.
ITC contracted with a specific CA in each mandi to bid on behalf of the company. Prices were
authorized by ITC’s office in Bhopal, MP. Here ITC employed a team of traders who followed the
global market. Although the CA knew what price ITC would pay, nothing prevented him from buying
from the farmer at a much lower price, selling to ITC at market price, and pocketing the difference.
Once a CA won an auction, the farmer brought his tractor to that CA’s shop in the mandi and waited
for the produce to be weighed on a manually operated balance scale that accommodated only small
increments of the lot. The actual weight of the crop was often manipulated at this point because of the
inaccuracy of the crude beam scales. For example, if the farmer brought 20 quintals of loose soybeans
to the mandi, he could expect to lose about 10 kilograms total during the transactions, or 0.5% of his
original lot. This translated to a loss of about 100 Rs. ($2.22) per lot. After the weighing process, the
product was bagged and the farmer was paid. According to the law, CAs were supposed to pay the
farmer immediately, but, in smaller mandis, farmers were often paid after an unofficial credit period.
The CA would simply tell the farmer to return after a few days for the money.
On any given day, at least 1,000 farmers could be found trying to file into the market to sell their
produce. Some had to wait for two or three days just to get into the crowded marketplace. Once
inside the mandi, the farmer was faced with further challenges of the chaos and pressure that
characterized the market yard. The Bhopal mandi, hosting an average of 1,700 farmers a day and the
sole destination for farmers in Dahod, was a dusty yard with a perimeter of booths belonging to the
various CAs. It teemed with adolescent boys who ran through the crowd, kicking up dust and eating
beans off the farmers’ carts. Laughing, joking men loitered and watched the auctioneers.
Farmers suffered as a result of the time it took to sell produce in the mandi, for they were dependent
on timely cash flow for subsistence. Thus, when harvest time arrived, they all descended upon the
mandi at once. The crop had to go to market immediately, and, more importantly, it had to be sold.
Farmers were stuck in the position of not being able to turn down a CA’s offer; in many cases it had
taken him all day to reach the mandi from his village, and to return with a full cart of unsold produce
would be a waste of time and money. Farmers rarely had access to adequate storage facilities in
which to hold the crop if it was not sold. If a farmer were able to store the soybeans, and sell before
or after harvest, without the time pressures associated with a perishable product, he would have more
leverage over their value. This was impossible, however, under the prevailing system, where the
farmer did not have other options.
Once a transaction had taken place, the CA brought the produce to an ITC processing facility. There,
ITC paid him for the cost of the soybeans. This was effectively a reimbursement, since the CA had
paid the farmer in the mandi from his own resources at the time of the sale.
The farmers’ isolation from one another and lack of telecommunications meant they had no way of
knowing ahead of time what price would be offered the day they arrived at the mandi other than word
of mouth. As a result, price discovery occurred only at the end of their growing and selling process.
Knowledge shared and captured in the traditional choupal could be extraordinarily useful to farmers,
but it had traditionally been limited to verbal communication. In the absence of telecommunications,
and even electricity in some places, news from the closest city could take days to reach an outlying
The uncertainty surrounding cash flow prevented the farmers from creating a sound financial base;
instead, they had become locked into subsistence living. Prices of Indian soybeans generally followed
the agriculture futures market on the Chicago Board of Trade and the Kuala Lumpur Commodity
Given the volatility of the spot market, and the fact that the value of agricultural commodities was
based on largely uncontrollable factors such as weather, disease, and pest infestation, farmers needed
to be aware of market activity. They needed to understand their product in its global context, so that
they could plan their activities with more confidence.
The e-Choupal was based on the knowledge sharing found in the traditional choupal model, but took
the concept one step further. ITC supplied a computer kit to each village with the following
1. A PC with a Windows/Intel platform, multimedia kit, and connectivity interface
2. Connection lines, either telephone (with bit rate between 28.8 and 36 Kbps) or, more commonly, VSAT
(in 75% of e‐Choupals; average 2003 usage 64 Kbps inbound, 1 Mbps outbound)
3. A power supply consisting of UPS and solar‐powered battery backup
4. A dot‐matrix printer
The total setup cost to ITC was Rs. 170,000 ($3,762) per choupal. Another Rs. 100,000 ($2,213) was
spent on people, travel, communication, software, and training. With the arrival of these components,
nightly choupals at the home of Kamal Chand Jain were no longer limited to stories and gossip of the
village. Farmers were instead accessing the World Wide Web through a site dedicated specifically to
them, ITC’s <www.soyachoupal.com>. This Web site was updated by the ITC Bhopal office. The data
uplink, however, took place in Bangalore, home of ITC Infotech India Ltd., ITC’s own information
technology subsidiary responsible for developing the software. The site contained much useful
information that was previously unavailable to farmers in Madhya Pradesh.
The site opened up by welcoming farmers into the “community” of the e-Choupal. There were eight
links to the areas of key information that comprised the e-Choupal: weather, best practices, crop
information, market information, FAQs, news, feedback, and information about ITC. The feature set
had been developed progressively with full involvement of the farmers using the system.
Weather page : India had no private weather service; the government was the only provider of
weather information. Before the e-Choupal, weather forecasts were rarely communicated to the
remote villages of the rural farmers. When they did reach the villages, they were too generalized and
did not accurately cover the 30.75 million hectares of Madhya Pradesh. Farmers needed to know
their regional weather in order to accurately expect the rains. ITC negotiated with the Indian
Meteorological Department, the national weather service, to get localized forecasts for district
pockets of 70-80 square kilometers within MP. The result was that, on the soyachoupal weather page,
a farmer could click on his home district to see his localized forecast. This knowledge made a lot of
difference in the timing of various farm operations such as the application of herbicides and
Furthermore, the difference between harvesting before or after a big rainfall drastically affected the
quality of the crop. Ill-timed rains reduced the value of a soybean crop irrespective of the amount of
money that was put into it at sowing time. “Farmer A,” for example, might spend 8,000 Rs.
($177)/hectare on inputs in the hopes of getting 15,000 Rs. ($332) in return. Similarly, “Farmer B”
could put in 5,000 Rs. ($110)/hectare and get about 10,000 Rs. ($221) in return. Poor rains,
however, would reduce the value of both A’s and B’s crops to a 6,000 Rs. ($133) return. Without
reasonable knowledge of weather trends, there was reduced incentive for a farmer to spend additional
money to produce a higher-quality crop from higher-quality seed. Without an accurate weather
forecast, farmers tended to err on the side of frugality. The ability to predict rain patterns would
therefore make a difference to the quality of soybeans sown by the farmers. The <soyachoupal.com>
site served to reduce farmers’ weather-based risks and took the guesswork out of determining the best
time to harvest.
Best practices page :Here a farmer could find out what other farmers of similar land area and crop
volume were actually doing and compare these “actual” practices to the “ideal” practices described
on the page. This was done in the simple local Hindi vernacular, not in obscure academic lingo. This
way, the farmer could immediately identify the gaps between what he was doing and what he should
have been doing. Such practices included how to prepare the soil before sowing and how to space the
seeds as they were sown. For example, 18-inch spacing was considered “best practice”; many
farmers, however, had been spacing their seed rows nine inches apart, which meant that their crops
did not receive proper ventilation or light. Such conditions led to an undernourished crop.
Crop information page :This section contained instructional material such as “How to take a good
soil sample” and information as to why soil testing was required. It also provided suggestions for
further actions to be taken based on soil-test results.
Market information: Four links on this page gave the farmer the options of exploring world demand,
world production, mandi trading volume, and mandi price lists. This way the farmer became involved
in the context of his livelihood. He was given knowledge about the mandi: the prices (lows and highs),
as well as the number of bags that had arrived at the mandi to date, and the estimated daily arrivals
(usually about 40,000 tons/day in the peak season). The farmer could thus assess the demand for his
produce at a particular mandi. This information used to be available only from research institutions
or corporations. Now it was being provided directly to the farmer. The site also contained a link to
the Chicago Board of Trade, where farmers could find a seven-to-10-day market outlook and track
global soybean price trends. One of ITC’s strengths was its ability to communicate with the global
News page: This contained excerpts of relevant news items, such as the government’s decisions on
subsidies or minimum support prices (MSPs), and innovations in other countries’ farming systems. If
a farmer did something that was particularly successful or innovative, that was posted to the news
section as well. This recognition provided incentive for the farmers, who would otherwise not have the
chance to be heard, to try new things.
Lastly, <www.soyachoupal.com> had a place for suggestions. One of the advantages of the system
was that the <soyachoupal.com> site could be continually tailored to the needs of the farmers. ITC
had relied on farmers’ input since the start of the project, and, in an effort to keep the site’s content
dynamic and relevant, it was important that the farmers could continue to be involved in its
improvement. The e-Choupal served different purposes over the changing seasons. At harvest time,
for example, farmers were more concerned about prices, at sowing time they were more concerned
about weather forecasts.
The e-Choupal initiative was based on the belief that the farmer needed an alternative to the mandi
system. By participating in the e-Choupal network, farmers were offered new channels through which
they could sell directly to ITC, thus eliminating the cost inflation and cheating that occurred through
the middlemen. ITC selected a lead farmer in the village to become the caretaker of this equipment
and a liaison between ITC and the farmers. The Sanchalak had to be someone whom people felt
comfortable visiting and someone who, in turn, welcomed such gatherings in his or her home.
In the evening, 15-20 people at a time showed up at the Sanchalak’s home for the usual choupal
gathering. The ITC computer system that had been put in place offered new impetus to the
discussions. In addition to the regular chatter, the Sanchalak would use his assigned user name and
password to access <www.soyachoupal.com> and share with his neighbors the interactive features of
the site. The Sanchalak had received some basic IT training from ITC, as well as instruction in
effective methods of communication. This qualified him to open the site to other farmers, who could
then navigate the site themselves. The log-in feature was designed with the idea of offering
customized content based on the log-in location; in the future, if the content were to evolve into a
more personalized form, individual farmers would log in themselves. Until then, however, the
Sanchalak, distinguished for his literacy and communication skills, served as the liaison between ITC
and the farmers.
Weather forecasts and mandi transactions were printed out and posted on a notice board in the
Sanchalak’s house. This way, the Sanchalak did not need to open the Web site with the arrival of
every visitor. Farmers could stop in and read the printed information at any time throughout the day.
If a farmer was unable to read, he only had to ask the Sanchalak’s advice. It was in the Sanchalak’s
best interest to advise the farmer correctly, for better-quality produce from each farmer would fetch a
higher price from ITC, and this meant a greater commission for the Sanchalak, as well as supporting
his reputation as an honest broker.
Farmers brought samples of their soybean crop to the Sanchalak’s home, where he was equipped by
ITC with moisture meters and other tools used to assess the quality of the beans. The company
provided “control samples” with which the Sanchalak could perform a quality comparison. Each
Sanchalak was trained (as part of orientation) in quality assessment of his particular crop, so he
would be qualified to judge the material based on damage or foreign matter. The soyachoupal Web
site provided the “best material price” for “best-quality” beans, so when farmers brought their crop
sample to the Sanchalak, he priced the material based on its degree of variance from that “best-
quality” example. The Sanchalak then determined whether or not each farmer’s sample matched
what he had learned to identify as the best material. Using the samples, he could physically show the
farmers: If you grow it like this, you will get a better price.
Reorganizing the Supply Chain
The physical setup of the e-Choupal kiosks facilitated a new kind of supply chain, of which technology
was at the crux. Trading outside the mandi, for example, was very difficult before the e-Choupal.
First, the mandi provided the only means for price discovery, and farmers reasonably assumed they
would fare best in open auction. Second, transactions outside the mandi were officially prohibited by
the Agricultural Produce Marketing Act. The government had confined agricultural transactions to
the mandis to protect the farmers from exploitation by unscrupulous buyers. Open auctions were
considered the best safeguard against this. At the conception of the e-Choupal, however, ITC was
able to convince the government of the potential benefits to the farmers and the economy, and the
government amended the act to legalize purchases of beans (and other agricultural commodities)
outside the mandi. The transparency of the e-Choupal - the fact that the Web site was accessible to
anyone, including the government, to cross-check ITC’s prices at any time -facilitated the
government’s acceptance of the initiative.
The Web technology brought price discovery to the village level. This changed the way farmers did
business. First, empowered with the knowledge of what price he would get at an ITC hub, as well as
the reports on prices at nearby mandis, the farmer was able to make an informed decision about
where to go to sell his beans. This knowledge was important, given the costs associated with
traveling to the mandi with the beans. By learning about prices in the village itself, the farmer could
determine how his revenue would compare to the cost of transportation. If he felt he could get a
better deal at the mandi through the open auction process, he could choose to go there. But given the
uncertainty of the mandi versus the set published prices offered by ITC’s hubs, in addition to the perk
of being reimbursed for transport cost, farmers began regularly defecting from the mandis and
Second, by following the real-time prices on the Web site, the farmers could decide when to sell.
Knowing the price in advance meant that the farmer could go to an ITC hub (assuming he was happy
with ITC’s price) on his own schedule, even if there were no other reasonable bids on the beans at the
A third feature distinguishing the eChoupal was its transparency. It is arguable that prices could be
communicated to farmers by other means, such as telephone or radio broadcast. These methods,
however, still relied upon spoken word. The ability to actually see prices being offered, in writing, on
the computer screen (in spite of the illiteracy of some of the farmers), was instrumental in establishing
the trustworthiness that made the e-Choupal effective. The Web model was also more scalable, since
one kiosk could be used by hundreds of farmers.
Without price discovery via the Web portal in the villages, selling to ITC hubs directly might be little
different than going to the mandi. In fact, the mandi might be more attractive because the farmers
would have the opportunity to sell in an open auction. But with the e-Choupal, the farmer was able to
make his own informed choice. ITC worked to make its hubs attractive destinations for farmers. In
addition to competitive pricing, the hubs contained multiple amenities that were not available to
farmers in the mandis.
The ITC Hubs
ITC had five processing units in Madhya Pradesh and 39 warehouses, making a total of 44 points to
which a farmer could bring his soybeans. This compared to 51 large soybean-based mandis in the
state. The farmers traveled an average of 20 kilometers to reach a hub, the range being five to 30
kilometers. ITC had 1,695 e-Choupals in MP, covering 8,400 villages and reaching 80% of soybean-
and wheat-growing areas in the state. The physical architecture of the e-Choupal model called for a
Web kiosk within walking distance (less than five kilometers) and a hub within driving distance (less
than 30 kilometers) of every targeted farmer. To make sure this was fulfilled, ITC added three
processing hubs and 36 warehouses in MP after the e-Choupal project got under way. The distance
between farms and hubs was about the same as what a farmer would travel to get to a mandi.
Once the farmer arrived at one of ITC’s hubs, his beans were weighed on a computerized
weighbridge, and the weight was multiplied by ITC’s published price. The farmer then received cash
on delivery. ITC maintained enough cash in a secure kiosk at the processing plant so that the farmer
was fairly and immediately paid. In addition, the farmer was reimbursed for the cost incurred
transporting his material to the factory. Depending on how far the farmer had traveled, ITC repaid
him based on fixed freight-cost parameters, and that sum was added to the payment for the produce.
Simple amenities at the ITC processing plant made the experience considerably more pleasant than at
the mandi alternative. After the soybeans had been weighed, a tented seating area provided the
farmer with a shaded spot for him to sit and await payment. Restroom facilities were available. None
of these existed at the traditional mandi. In addition, there were 15-liter jugs of soybean oil available
for purchase. ITC made a point of saying, “This is your oil; this was made from your beans.” When
the farmer bought soybean oil directly from ITC, he skipped four or five people in that supply chain,
keeping his own purchasing costs to a minimum. The oil was pure and unadulterated because it came
directly from the ITC factory.
As an added convenience, the processing facility included a soil-testing lab on the premises, where
scientists offered recommendations for fertilizers or additives based on the chemical composition of
the farmer’s sample. This took three days, while the alternative - going to a government lab - would
take longer. Scientists employed by ITC made recommendations on the nutrient dosages that the soil
needed based on its properties. They did not recommend any specific brand of fertilizer; they just
gave the farmer the soil properties, and then the farmer could choose his own brand of fertilizer
based on his soil composition. Freedom of choice was an important principle of the e-Choupal
For his involvement in the ITC procurement process, ITC paid the Sanchalak a 0.5 % commission on
the sale of soybeans. He was, after all, effectively doing ITC’s buying - buying that would otherwise
have taken place at the mandi. The e-Choupal system effectively turned the Sanchalak into an
entrepreneur, for he also had the opportunity to earn a 2%-3% commission on orders placed for input
items, such as herbicides, sowing seeds, and fertilizers, provided through ITC. Instant-glow gas
lanterns and edible oil were also popular sells. With the help of commission from edible soybean oil
sales, Dahod Sanchalak Jain earned about Rs. 35,000 ($775) over the three to four months of the
2002 soybean season.
ITC benefited because of the increase in turnover resulting from Sanchalaks organizing and
mobilizing farmers to sell to the company. The farmers were happy to have a better-defined channel
through which to sell. But what of the middlemen, the commission agents of mandi life ? All of ITC’s
CAs were kept, albeit with a new title: Samyojak. In this role, former CAs were given additional
money-making opportunities within the e-Choupal system. ITC mandated that its CAs become
Samyojaks if an e-Choupal was being set up in their geographic area. In most cases the
transformation was achieved by convincing CAs of the potential revenue to be gained through the
transactions in the e-Choupal. The Samyojak role comprised three major areas of responsibility: 1)
setting up the e-Choupals; 2) facilitating ITC’s purchasing transactions; and 3) helping with ITC’s
In the establishment of new e-Choupals, the Samyojak assisted ITC teams in village surveys to lay the
groundwork. This meant assisting in the selection of the Sanchalak, acting as a liaison between
villagers and ITC, and helping villagers understand the potential for the new system to be more
efficient and profitable for all parties.
Samyojaks also managed warehousing hubs attached to the processing facilities that stored bought
soybeans. They assisted in the logistics of the cash disbursements to farmers arriving at the
processing facility. They also helped facilitate transportation links for farmers who could not reach
the ITC processing facility themselves.
ITC’s selling transactions comprised the “one-stop-shop” feature of the e-Choupal. Farmers could
buy herbicides, sowing seeds, gas lanterns, fertilizers, and soybean oil among other sundries directly
from the company. While the Sanchalak had the responsibility of aggregating the orders in his village,
the Samyojak would assist in actually moving the goods from ITC’s manufacturing units to the e-
Choupals and/or warehousing hubs.
Three systems enabled ITC to sell and deliver goods to farmers through the e-Choupal. The first was
at the village level, where the Sanchalak aggregated demand for products through orders placed by
his fellow farmers. This was done during the traditional choupal time. The Sanchalak then e-mailed
the order to ITC, and the items were either a) picked up by the Sanchalak at the ITC warehousing
hub, or b) delivered by the Samyojak to the villages. In either case the Sanchalak collected cash
payments from his neighbors and remitted them to ITC. Seeds and fertilizers were sold in this way.
The second system did not involve any prior orders. Instead, the Sanchalak bought products based on
estimated demand and stocked them in his home. Products sold this way were again procured by
either Sanchalak pickup or Samyojak delivery. This system was most effective for consumer goods
such as salt, matchboxes, soybean oil, and confectionary items. These were all ITC products, and
both the company and the Sanchalak earned a fee from any sales.
The third system for selling additional goods through the e-Choupal was “shopping” for the products
at the ITC processing facility. When Sanchalaks and farmers visited the ITC facility to sell their
produce, they also had the opportunity to peruse the warehousing hubs for items on which they might
like to spend their freshly earned cash. Samyojaks managed these warehouses, assisting ITC in
creating retail storefronts in the setup for 2003.
This interactive feature of the e-Choupal system created an opportunity for ITC, the Sanchalak, and
the Samyojak to turn profits that were simply not possible under the traditional system. The
Sanchalak’s job of arranging and mobilizing the farmers to take their soybeans directly to the ITC
processing facility meant greater revenue for the company and commission for the Sanchalak. It was
estimated that ITC saved $5/ton on freight cost; from those savings, ITC would reimburse the farmer
for the time it took to travel to the ITC facility. The farmer, in turn, earned an average increase of
For the Samyojak, income potential in the e-Choupal system exceeded that of a CA in a mandi. ITC
paid 1% of the transaction value to the CA when buying through the mandi. The typical CA turned his
cash three times in a month during October to December (the time of peak activity), meaning that his
gross return came to 3% per month for three months. Thereafter, money lay idle for the most part,
except during May and June, when wheat and pulses were harvested. For an ITC Samyojak, there
were more frequent opportunities to earn commission off farm inputs and other products being sold
through the e-Choupal. Commissions ranged from 2% to 5% per transaction, depending on the
product. Samyojaks who assisted ITC in cash disbursements at processing units earned a fee of 1% of
the transaction. The advantage of this was that the Samyojak now had the potential to earn from his
working capital year-round.
The e-Choupal leveraged the physical capabilities of the current middlemen while removing them
from the flow of information and market signals. CAs-turned-Samyojaks had good terrain knowledge
as well as long-standing relationships with villagers, which ITC also hoped to leverage. Samyojaks
continued to operate out of mandis as hub points, allowing the e-Choupal system to coexist with
In fact, ITC continued to buy from the mandis even as the e-Choupal gathered steam. By 2003, ITC
was procuring about 50% of its soybeans from the mandis and 50% from the e-Choupal. The
company hoped to shift the ratio to about 20% mandi, 80% e-Choupal, as new hubs were added to the
e-Choupal system. The hubs had limited capacity, and, at certain points in the season, when market
prices for soybeans were particularly low, ITC benefited from buying from the mandi as well as the e-
Choupal in order to maximize procurement. Furthermore, the mandi provided a source of “market
intelligence” for ITC, as Samyojaks continued to operate there as well. Samyojaks still got a
significant amount of income from their work in mandis; they could not yet afford to work solely for
Principles of the e-Choupal
The e-Choupal depended strongly on trust. The Web site was simply a medium for the more
important human element, the interaction. Interaction was, after all, the initial driver of the choupal
concept. No contract bound farmers to sell to ITC once they used the Web site. ITC did not ask for
commitment; the farmer was free to do as he wished. In fact, the farmer could use all of the e-
Choupal’s facilities, soak in all the information, and still choose to take his crop to the mandi.
The bet was that, once given these tools, farmers would realize on their own that selling directly to
ITC was the best alternative to the mandi.
To ensure the Sanchalak’s integrity in the process, when he received the computer equipment he took
an oath that connected him to ITC. At this oath-taking event, the Sanchalak pledged, before the entire
village, to uphold ITC’s high standards; not to use the computer for “wrongful” purposes; and to
maintain the ethics, image, and concept that ITC has created through the <soyachoupal.com> site. In
addition, the ITC logo was painted on the front of the Sanchalak’s home. This vibrant green and
yellow mural stretched across the wall from floor to ceiling, identifying the Sanchalak as a liaison of
ITC. Through these steps, ITC created a sense of pride and responsibility that infused the Sanchalak
nominations. The Sanchalak became a highly visible figure after the ITC overhaul; as a result,
potentially unscrupulous Sanchalaks were deterred from taking advantage of the system. If a
Sanchalak were to act dishonestly at any point, it would create uproar throughout the village, and
ITC would be able to take immediate action. Because the role was viewed as an honor, however,
Sanchalaks usually treated their duties with the utmost pride and seriousness.
There were many benefits realized by ITC when the company found a way to buy directly from
farmers. First, ITC had more control over the quality of the product it sourced. Direct contact with
the farmer enabled knowledge sharing in terms of best practice for sowing, irrigation, and
harvesting; therefore, ITC had some additional leverage over what was available to them for
purchase. Higher-quality produce, of course, enabled more competitive pricing in the international
market. Furthermore, buying directly from the farmer reduced the chance of the produce being
adulterated with impurities (which often happened with middlemen).
Hunting for Growth
Soon after soybeans started showing promise, ITC had set up pilot e-Choupals in three other crops in
three different regions of India that were as diverse from one another as possible and representative
of all crops in ITC’s product portfolio: coffee in Karnataka, aqua (seafood) in Andhra Pradesh, and
wheat in Uttar Pradesh. Learnings from these pilots were expected to help the company scale up on a
national level. Each of these projects shared a common management approach with respect to their
scale and scope: First, pilot-test the concept in a small number of villages; second, make changes
based on the learning from the pilot phase and validate them in a larger number of villages; and
third, grow the project to reach as many villages as possible and saturate the region. ITC called this
approach “Roll Out, Fix It, Scale Up.”
As seen with soybeans, margins could be generated in many other commodities through logistics cost
savings between the farm and the factory, where non-value-added activities were eliminated. ITC
could potentially generate value via three other primary mechanisms: traceability (i.e.,
accountability for the quality of the product vis-à-vis its source), ability to match farmer production to
consumer demand, and facilitation of an electronic marketplace. The three new e-Choupal models
were essentially a validation of these mechanisms.
With aqua products, or seafood, traceability provided an opportunity for ITC to generate value (and
additional revenue) through the e-Choupal. Global consumers of India’s seafood would pay premium
prices for shrimp that could be traced back to its source. If ITC were able to tell customers not only
where a given commodity came from but also how it was produced (e.g., with antibiotics or not),
significant gains would be possible. By controlling the source, ITC could guarantee the safety and
sanitation of the product and thus receive higher prices.
Similarly, when ITC had greater knowledge of just what it was purchasing when procuring crops
from rural farmers, value increased for both the company and the farmer. The wheat market was an
example of this. Wheat varied greatly in both chemical composition and physical appearance, and,
through the e-Choupal, farmers learned to recognize which physical characteristics represented
certain chemical qualities, such as gluten, protein, or starch content. Customers placed orders based
on these chemical qualities. When ITC became able to analyze the crop before purchase, at the farm
level, and then purchase and store it by chemical-composition category, there was an opportunity for
cost savings, as it was expensive to separate wheat after it had been purchased and aggregated at the
mandi. The farmer, too, benefited from this education. By identifying his high- and low-quality wheat,
he could then price the varieties appropriately. He could command a higher price for the high-
quality wheat and offer low-quality wheat at a reasonable price to customers who might need it, say,
for animal feed. This way, he did not have to charge one low price for an amalgamation of wheat of
Coffee presented a new challenge to ITC. Coffee was an estate crop, grown by a large number of
small-scale farmers. ITC had a deep knowledge of coffee farm practices; much research had already
been done on the industry. The price volatility of coffee was high; variance from base price could
reach 40% (compared with 20% volatility in the soybean market), and buyers would routinely renege
on contracts if prices altered beyond tolerance. Market participants were savvy speculators. The
importance of an agent in coffee transactions was paramount, and effective price discovery was often
the critical part of a deal. With its electronic-trading platform, called Tradersnet, ITC improved real-
time price discovery by hosting anonymous trades and letting the prevailing selling prices be known.
Information sharing carried over to ITC’s customers as well.
e-Choupal as a Marketing Channel
ITC’s vision for marketing via the e-Choupal involved three features: superior product and distinctive
functional benefits, process benefits (simplified transactions between buyer and seller), and
relationship benefits (farmers’ willingness to identify themselves and reveal their purchasing
behavior). ITC had conceived ideas for various input items that could be developed for new business
given this framework. The company believed that these products could be made available to farmers
through the e-Choupal, thus increasing the value of the farmer’s product as well as generating
additional revenue for ITC.
Fertilizers Farmers spent an average of Rs. 26,000 crore ($5.7 billion) annually on urea,
diammonium phosphate (DAP), and muriate of potash (MOP). Still, farmers could not easily access
the fertilizers they needed. Thirty-five percent of DAP and 100% of MOP were imported. Logistics
had proved to be complicated for most companies. They were unable to access many rural markets
because of fragmented, or non-existent, distribution channels.
Agrichemicals Farmers also spent Rs. 3,500 crore ($774.5 million)/year on insecticides, herbicides,
and fungicides. The agrichemical market was highly fragmented and consolidated by multinational
corporations such as Dupont, Novartis, and Cyanamid. New chemicals were introduced frequently;
however, their life cycles in the market were only two or three years. Given the short product cycle,
big companies needed immediate market access. Farmers, too, suffered when they could not access
these products. High costs of labor, for example, hurt soybean and wheat farmers whose fields could
have been covered with herbicides, instead of weeding workers, at a lower cost.
Seeds This was a relatively small, fragmented market of Rs. 3,000 crore ($663.9 million)/year, but
only 4% of farms used commercial seed. Government-promoted seed corporations made different
types of seeds available though cooperatives, and large multinational companies had entered the
market with better-quality material. Still, there were lead times of up to three years to make seed
varieties available to rural farmers.
Insurance Currently, Indians were collectively paying Rs. 50,000 crore ($11 billion) in yearly life
insurance premiums, and that market was expected to reach Rs. 150,000 crore ($33 billion) by 2010.
Life Insurance Corporation (LIC) was a government-run insurance provider that had already taken a
shine to rural markets. Even in the relatively poor states of West Bengal and Bihar, 6 million rural
farmers had taken out policies. In 2000, private insurance companies were allowed to enter the
market, and, as a result, at least 12 new companies were seeking to expand their business into rural
India to compete with LIC. By 2003, rural business comprised 16% of LIC’s portfolio, but only 9% of
private companies’ portfolios. These markets were largely untapped because of a lack of trustworthy
intermediaries. ITC believed that it could create a relationship of trust and help farmers understand
the rules and benefits of insurance plans. Eventually, ITC envisioned Sanchalaks being able to offer
the e-Choupal infrastructure to LIC agents for a fee or to set up its own insurance brokerage
An opportunity also existed for other types of insurance policies, covering fire, marine, motor, and
workmen’s compensation. Insurers, however, had been biased toward larger accounts, leaving less
prosperous farmers unable to participate. Insurers lacked quality data on risks and parameters of
farm life and were hesitant to insure rural customers. With ITC as a liaison, however, data on rural
farmers could be delivered to insurance companies, thus demystifying and uncovering the rural
Credit A national survey in 2001 had shown that Indians were saving about 30% of their annual
income, though not through financial institutions. Both private- and public- sector banks lacked a
customer-friendly approach and were often avoided by rural farmers. One of the main reasons that
farmers avoided saving through banks was that they were often linked to a loan. If a farmer had
savings in the same bank he had borrowed from, the bank could demand that he use those savings to
pay back the loan. Oftentimes farmers would rather defer the loan and simply save their cash in their
homes, unbeknownst to the bank.
ITC believed that a system of trust engendered through the Sanchalak would facilitate financial
transactions. It could channel rural farmers into the mutual fund arena and earn a commission from
banks on farmers’ investments, using the technology introduced in the e-Choupal. Choupal
discussions would create data on likelihood to invest, and the results would be stored in a data
warehouse for future campaigns.
Once the sourcing of their core commodities was sufficiently strengthened, and cost-effective supply
chains were running efficiently through the e-Choupal, other business opportunities would develop.
The poor and fragmented rural consumers were traditionally underserved, but the demand was
growing with rising aspiration levels triggered by.
<www.soyachoupal.com> Welcome Page
A first-time visitor to <www.soyachoupal.com> finds this page. Farmers are inv enter the Site via
the link (written in Hindi) in the center of the page.
Screenshot of Farmer Sign-In Page
This page invites farmers into the community of the e-Choupal, though the Sanchalak must first type
in his assigned user name and password (left column). The links on the left address the following
• Districtwide weather information for Madhya Pradesh
• Best practices for soybean farming -Districtwide crop information for Madhya Pradesh -
• FAQs -News -Feedback -Company information
Screenshot of Weather Page
This page features a map of the districts of Madhya Pradesh. Each district is “clickable,”
and leads the Sanchalak to his localized weather forecast. The day’s general weather
forecast for the state runs as a marquee along the top of the screen.
Screenshot of Market Information Page
This page shows world soybean production in metric tons. From left to right, the
countries’ volumes listed are the United States (75.38 mt), Brazil (38.4 mt),
Argentina (26.5 mt), China (15.4 mt), India (5.2 mt), and other countries (12.2 mt).
The e-Choupal system gives farmers more control over their choices, a higher profit margin on their
crops, and access to information that improves their productivity. By providing a more transparent
process and empowering local people as key nodes in the system, ITC increases trust and fairness.
The increased efficiencies and potential for improving crop quality contribute to making Indian
agriculture more competitive. Despite difficulties from undependable phone and electric power
infrastructure that sometimes limit hours of use, the system also links farmers and their families to the
world. Some sanchalaks track futures prices on the Chicago Board of Trade as well as local mandi
prices, and village children have used the computers for schoolwork, games, and to obtain and print
out their academic test results. The result is a significant step toward rural development.
The e-Choupal model demonstrates that a large corporation can play a major role in recognizing
markets and increasing the efficiency of an agricultural system, while doing so in ways that benefit
farmers and rural communities as well as shareholders. Critical factors in the apparent success of the
venture are ITC’s extensive knowledge of agriculture, the effort ITC has made to retain many aspects
of the existing production system, including maintenance of local partners, the company’s
commitment to transparency, and the respect and fairness with which both farmers and local partners
WHAT WORKS: ITC’S E-CHOUPAL AND PROFITABLE RURAL TRANFORMATION
Rural India is a difficult business location. Transport, electric power, and information infrastructure
are inadequate. Business practices are underdeveloped or outdated. Lack of access to modern
resources has resulted in an under-trained workforce. Rural society is structured around subsistence
and is unprepared for modern products and services. These constraints, along with many others, have
dissuaded most companies from taking on the challenge of rural commerce. Yet such an engagement
can serve a dual agenda: bridging rural isolation and the resulting disparities of education and
economic opportunity, while at the same time creating a potentially large profit opportunity for the
organization willing to tackle the inefficiencies. ITC’s e-Choupal initiative began by deploying
technology to re-engineer procurement of soya and other crops from rural India. It has gone on to
serve as a highly profitable distribution and product design channel. The effort holds valuable lessons
in rural engagement and demonstrates the magnitude of the opportunity while illustrating the social
and development impact of bringing global resources, practices, and remuneration to the Indian
THE PARADOX OF INDIAN AGRICULTURE
Agriculture is economically and socially vital to India. It contributes 23% of the GDP, feeds a billion
people and employs 66% of the workforce. Agriculture’s share of GDP has shrunk steadily but at
23% it remains a critical component of the economy.
GDP by Sector
Yet despite this economically vital role, Indian agriculture has until recently been regulated in an
archaic fashion that limits its productivity. Non-optimal farming practices and capricious weather
patterns left post-Independence India with an under-performing agricultural sector, acute food
shortages, and dependence on food imports. Legislation from this period brought heavy government
intervention in agriculture, including control of land ownership, input pricing, and regulated of
product marketing. Produce could only be sold in government-recognized locations to authorized
agents. Processing capacities, private storage, futures trading and transport were restricted. The
result was corrupt and inefficient systems, in which starvation existed alongside granaries
overflowing with food stocks of over 60 million metric tons. At the same time, the unprofessional
business environment made the sector unattractive to modern companies and blocked their influence
in rationalizing the market.
High Production yet Impoverished Producers
The goal of being self-sufficient in food supply brought Indian agriculture into the mainstream of
political and social consciousness. The Green Revolution brought great strides in agricultural
productivity to some parts of India and made the country a net exporter of most food grains by the
mid-1970’s, thus resolving previous famine paradoxes. However, the Indian farmer did not progress
correspondingly. After independence, the government parceled and redistributed larger land holdings
to rectify historical inequities and entrust ownership to end cultivators, thus encouraging
productivity. In subsequent years, ownership ceilings were legislated and inherited land was
partitioned into smaller lots, such that by 2003, the typical Indian farm is a very small-scale
operation with total landholdings often measured by fractions of an acre. Unable to realize economies
of scale, most Indian farmers are very poor as a result of land redistribution policies. Figure below
illustrates that in 1993, agricultural labourers in most states made barely enough to keep a three-
person family above the poverty level.
Figure: Incomes of Agricultural Labourers
In recent decades, the economy has been growing far more rapidly in non-agricultural areas,
especially the service sector in urban areas. From 1993 to 2003, the (primarily urban) service sector
has seen its share of national GDP rise by 11.6%, while rural agriculture has seen its share of GDP
decline by 5.01% over the same period. There is a vast disparity in access to education and
opportunities between urban and rural India. This means that farmers rarely know of non-
agricultural opportunities and likely would not have the resources to pursue them even if adequate
information were available. Remedying this asymmetry of opportunity will require providing rural
India with both the knowledge of opportunities and the ability to pursue them. ITC’s e-Choupal is an
example of how a commercial venture can provide a channel for knowledge and opportunity, bringing
global resources and practices to Indian villages as well as higher incomes for farmers, and helping
create the conditions for many other enterprises to cater to the rural market.
PRODUCTION CHANNELS PRIOR TO THE e -CHOUPAL
There are three commercial channels for soy: traders, government-mandated markets (mandis), and
producer-run cooperative societies for crushing in cooperative mills (see Figure below). In addition,
farmers traditionally keep a small amount of their crops for their personal consumption and get the
produce processed in a small-scale crushing-plant called a ghani. The system varies among states
and districts, as does the percentage of produce going through each channel, but on average, 90% of
soy crops are processed through traders and mandis.
Figure: Operation of the Mandi Distribution System
The Agricultural Products Marketing Act legislated the creation of mandis to enable a more equitable
distribution of the gains from agriculture among producers, consumers, and traders. The mandi is
central to the functioning of the marketing channel, and acts as delivery point where farmers bring
produce for sale to traders. In the soy growing areas of Madhya Pradesh, a mandi typically serves
around 700 square kilometers, although the area served by a mandi varies by state. With traditional
grains, large portions are used by the farmer or bartered for different crops. But since soy is not
native to the Indian palate, its major market is the crushing plant and nearly the entire crop must be
exported. This makes the mandi a vital part of the soya chain.
Mandi trading is conducted by commission agents called adatiyas (brokers who buy and sell
produce).They are of two types: kachha adatiyas are purchasing agents that buy only on behalf of
others and pukka adatiyas who finance trade as representatives of distant buyers and sometimes
procure crops on their own account. All the adatiyas belong to the Agarwal and Jain community, an
economic class distinct from farmers. This community manages grain trade across the entire country
including south India, a remarkable feat considering the vast cultural and social diversity across the
nation. The lack of professional competition combined with the communal stranglehold on rural
trading has made commission agents extremely wealthy. Commission agents from medium sized
mandis can possess assets and incomes in the millions of dollars. The adatiyas established and grew
the soy industry on the basis of familial and community trust, with buying and selling based upon oral
agreements. Their expansive personal networks within the industry and their financial influence make
them a formidable presence.
The operation of the Mandi consists of a number of different stages, from the logistics of transporting
grain to the market to quality inspection, auction, bagging and weighing, and payment. Based upon
local information within the village, farmers decide in which of the nearby mandis to sell. They
transport their crops to the mandis in carts drawn by animals or tractors. Very often, to avoid peak-
time crowds, farmers will arrive at the mandi the night before they intend to sell. When the mandi
opens in the morning, farmers bring their carts to display areas within the mandi.
The inspection by buyers is by sight. There is no formal method of grading the produce and the only
instrument used is the moisture meter; the crop is not tested for oil content.
Figure: Mandi Operation Process
Once potential buyers have inspected the produce, a mandi employee conducts the auction, where
commission agents place bids. The auctions are typically open oral auctions with incremental
bidding. The auction represents a stark contrast from the buyer’s and seller’s perspectives. For the
farmer, the moment is pivotal: a scant 30 seconds assesses the results of six months of investment and
hard work and establishes the value of one of only two or three paydays he will have in the year. For
the commission agent, on the other hand, the moment is routine; he has many more carts of produce
to buy and his margin is assured irrespective of the price.
Once the price has been established by the auction, the farmer moves the cart to the weighing area
run by the buying commission agent. In most cases, the weighing area is in the mandi complex. In
some cases, especially if the mandi is small, the weighing area may be at the commission agent’s
home near the mandi. Here, the produce is transferred from the cart into individual sacks. The sacks
are then weighed, one at a time, on a manual scale. After weighing, the full value of the grain is
calculated. The farmer goes to the agent’s office to collect a cash payment. The agent pays a mandi
fee (1% of purchase value in Madhya Pradesh) to the mandi. The bagged produce is then loaded on to
the buyer’s trucks and transported to the processing plant.
Limitations of the Mandi System
The mandi system does not serve the farmer well, and is burdened by inefficiency. Because the farmer
does not have the resources to analyze or exploit price trends, the timing of the sale may not result in
the optimal price for the crop. Moreover, since the actual sale price is determined at the auction, by
the time the farmer gets the price, it is too late to go to another mandi to make his sale. Other
expenses and inefficiencies exist: the overnight stay near the mandi costs the farmer money; most
crops are displayed in open air courtyards, and are therefore subject to being negatively affected by
the weather; the inspection process is unscientific and often arbitrary, tending to favour the buyer,
and generally does not provide an incentive to farmers to invest in better seed or farming practices
that lead to higher quality—even though quality, especially oil content, matters to soy processors.
In addition, farmers find the auction process demeaning. Agents belong to a close-knit community
that is socially and economically distinct from the farmers’ community. While they may not collude in
pricing, they do collude in establishing the practices of the trade that uniformly favour agents and
exploit the farmers’ situation. The farmers also bear the cost of bagging and weighing the crop, which
is done by mandi labourers—part of whose compensation is the sale of spilled produce. Needless to
say, these labourers ensure that some portion of each lot is spilled.
Farmers feel that the weighers consistently under-weigh their produce by applying practiced and
timely nudges to the scale. Historical intimidation and long queues waiting behind them dissuade the
farmers from protesting. To add to this exploitation, the farmer is never paid the full purchase price
up front but is paid a partial amount and asked to return to the mandi later for the remainder.
Farmers are not paid interest on the remaining sum—although crushers pay agents usurious rates for
the privilege of delayed payment—and repeating the trip to the mandi costs farmers time and money.
Since the crop has already been delivered, however, the farmers are at the agents’ mercy.
Apart from the exploitation of the farmer, there are other inefficiencies in the system. The multiple
points of handling in the supply-chain require the produce to be bagged, which takes four to five times
longer to be unloaded at the processing plant than unbagged produce. Traders generally do not have
the capacity to store and manage different qualities and grades of produce, inhibiting efforts to
produce better crop grades. Pricing is set locally at the mandis, and is not reliably tracked or
reported nationally, resulting in a lack of information that reduces the opportunity for arbitrage and
leads to market inefficiency. In addition, regulatory restrictions tend to limit arbitrage to small
The mandi system also does not serve trading companies such as ITC well; its inefficiencies make the
mandi far from an optimal procurement channel. From the company’s point of view, the key problem
is the agent’s control of the market and the resulting distortions of price and quality. Agents purchase
grain on a trading company’s behalf. Some of the produce they buy is of good quality and therefore
commands a premium price, while other crops are of poor quality and therefore sell at a discount. In
any given day, an agent purchases produce with a range of crop quality at a range of prices. The
agent often mixes the different quality crops together and charges the trading company a single price
near the higher end of the price spectrum.
Not only does the agent inflate the price to trading companies, he also inflates the price at the mandi.
As we have seen, high-quality produce is used to make an entire lot of lower quality produce
acceptable. Because of its value to agents, agents pay an inflated premium for high-quality produce,
which drives up the high crop price at the mandi for the day. Very few farmers actually get the price
for top-quality produce, but this price acts as a benchmark for the next day’s pricing, thereby
inflating the mandi price over a period of time and increasing costs for trading companies.
Additionally, the trading company establishes a daily price range for its agent to buy within. If the
agent’s average buy price that day is lower than the low end of the established price, the agent sells
the grain to the trading company at the established low price and pockets the difference. If, however,
the average buy price is higher than the trading company’s established high price, the agent will still
buy the produce but will report to the company that since its price was not high enough, no grain
could be bought. The agent will store the grain and sell it to the trading company the next day when
the established price has been raised to make-up for the previous day’s procurement shortfall.
Commission agents therefore capture the entire benefit of intra-day price shifts. The agents therefore
operate without risk of loss of profit. Officially, the agents’ commission is 1% of ITC’s price. In
reality, ITC estimates that the agents’ operating margin is around 2.5-3%.
As a result of the commission agent structure in the traditional mandi system, ITC had no direct
interaction with the farmer. This gap created a range of supply-chain issues, including limiting ITC’s
knowledge of its crops, suppliers, and supply risks, as well as limiting the company’s ability to
improve crop quality and quantity by bringing modern agricultural practices to the farmers.
The company developed its e-Choupal strategy as a way to communicate directly with the farmer and
to bypass the inefficiencies arising out of the agents’ intermediation, thereby achieving “virtual
VISION AND PLANNING BEHIND THE e-CHOUPALS
Implementing and managing e-Choupals is a significant departure from commodities trading.
Through its tobacco business, ITC has worked in Indian agriculture for decades, from research to
procurement to distribution. ITC’s translation of the tactical and strategic challenges it faced and its
social commitment into a business model demonstrates a deep understanding of both agrarian
systems and modern management. Some of the guiding management principles are:
Re-engineer, Not Reconstruct
The conventional view of transforming established business systems begins with the failures of the
current system and develops means to change it. ITC took a different approach by looking at the
successes of the current system and identifying what they could build on. ITC not only retained the
efficient providers within the mandi system but also created roles for some inefficient providers. This
philosophy has two benefits. First, it avoids “reinventing the wheel” in areas where ITC would not be
able to add value through its presence. Second, it recruits and engages members of the rural
landscape thereby making their expertise available to ITC while preventing their expertise from being
shared with ITC’s competition.
Address the Whole, Not Just One Part
The farmers’ various activities range from procuring inputs to selling produce. Currently, the village
trader services the spectrum of farmers’ needs. He is a centralized provider of cash, seed, fertilizer,
pesticides, and also the only marketing channel. As a result, the trader enjoys two competitive
benefits. First, his intimate knowledge of the farmer and village dynamics allow him to accurately
assess and manage risk. Second, he reduces overall transaction costs by aggregating services. The
linked transactions reduce the farmers’ overall cost in the short term, but create a cycle of
exploitative dependency in the long-term. Rural development efforts thus far have focused only on
individual pieces rather than what the entire community needs. Cooperatives have tried to provide
agricultural inputs, rural banks have tried to provide credit, and mandis have tried to create a better
marketing channel. These efforts cannot compete against the trader’s bundled offer. Functioning as a
viable procurement alternative, therefore, must eventually address a range of needs, not just the
An IT-Driven Solution
From the conception of the model, an IT-based solution was recognized as fundamental to optimizing
effectiveness, scalability, and cost. Information technology is 20% of all the effort of ITC’s e-Choupal
business model, but is considered the most crucial 20%. The two goals envisioned for IT are:
• Delivery of real-time information independent of the transaction. In the mandi system, delivery,
pricing, and sales happen simultaneously, thus binding the farmer to an agent. E-Choupal was seen
as a medium of delivering critical market information independent of the mandi, thus allowing the
farmer an empowered choice of where and when to sell his crop.
• Facilitate collaboration between the many parties required to fulfill the spectrum of farmer needs.
As a communication mechanism, this goal is related to the commitment to address the whole system,
not just a part of the system.
ITC did not hesitate to install expensive IT infrastructure in places where most people would be wary
of visiting overnight. It is a manifestation of the integrity of rural value systems that not a single case
of theft, misappropriation, or misuse has been reported among the almost 2,000 e-Choupals.
Modularity of Investments, in Size and Scope
ITC managed its investments modularly along the scope and scale axes in what it terms “rollout-
fixitscale up” and “pilot-critical mass-saturation.” This incremental control of investment levels
along with the clarity of revenue streams and the social import were critical in getting board
approval for the initiative.
Risk Assessment and Mitigation
ITC identified the following risks as it designed the business model:
• Radical shifts in computing access will break community-based business models.
• The sanchalaks are ITC’s partners in the community, and as their power and numbers increase,
there is a threat of unionization and rent extraction.
• The scope of the operation: the diversity of activities required of every operative and the speed of
expansion create real threats to efficient management.
When the e-Choupals were conceived, they faced a fundamental regulatory obstacle. The Agricultural
Produce Marketing Act, under whose aegis mandis were established, prohibits procurements outside
the mandi. ITC convinced the government that e-Choupal would operate according to the spirit of the
Act and thus e-Choupal procurement was in line with its goals. Since ITC would not be using the
mandi infrastructure for its procurement, and would have to incur its own costs with the e-Choupal.
infrastructure, the government offered to waive the mandi tax on the produce procured through the e-
Choupal. However, ITC recognized that the tax was a major source of revenue for the government
and local mandis and, as ITC’s competition was also subject to the tax, the tax itself was not making
ITC uncompetitive. ITC therefore chose to continue paying the tax rather than risking the
relationships with the government and the mandis.
THE BUSINESS MODEL
The model is centered on a network of e-Choupals, information centers equipped with a computer
connected to the Internet, located in rural farming villages. e-Choupals serve both as a social
gathering place for exchange of information (choupal means traditional village gathering place in
Hindi) and an ecommerce hub. A local farmer acting as a sanchalak (coordinator) runs the village e-
Choupal, and the computer usually is located in the sanchalak’s home. ITC also incorporate a local
commission agent, known as the samyojak (collaborator), into the system as the provider of logistical
ITC has plans to saturate the sector in which it works with e-Choupals, such that a farmer has to
travel no more than five kilometers to reach one. The company expects each e-Choupal to serve about
10 villages within a five kilometer radius. Today its network reaches more than a million farmers in
nearly 11,000 villages through 2,000 e-Choupals in four states (Madhya Pradesh, Karnataka, Andhra
Pradesh, and Uttar Pradesh), and the network is expanding rapidly. Of the e-Choupals in Madhya
Pradesh, the one in Khasrod services about 500-700 farmers in 10 villages; another e-Choupal in
Dahod services 5,000 farmers in 10 villages. The average usage is about 600 farmers per e-Choupal
in the soy cropping area, with fewer in wheat, coffee, and shrimp.
The critical element of the e-Choupal system, and the key to managing the geographical and cultural
breadth of ITC’s network, is the sanchalak. ITC channels virtually all its communication through the
local sanchalak. Recruiting a local farmer from the community for this role serves several purposes:
• For generations, the Indian farmer has been betrayed by individuals and institutions. Trust is the
most valuable commodity in rural India. No transaction will happen without trust, irrespective of the
strength of the contract. The sanchalak is selected to provide this vital component in ITC’s system.
• ITC need not invest in building and securing a physical infrastructure such as a kiosk for housing
the e-Choupal computer.
• The sanchalak is trained in computer operation and can act as a familiar and approachable human
interface for the often illiterate farmers and other villagers.
• ITC expects to leverage the profit-making power of the small-scale entrepreneur.
Sanchalaks indicate three equally-weighted motivations for assuming their role: a means to help their
community, a profitable business for themselves, and a means of getting access to a functional
computer. The sanchalaks receive a commission for every transaction processed through the e-
Choupal and also benefit from increased social status that accompanies the position—a significant
advantage in rural Indian life. ITC insists that sanchalaks should not give up farming, for this would
compromise the trust that they command. To help ensure that sanchalaks serve their communities and
not just themselves, ITC projects the role as a public office: hence the title “sanchalak,” and a public
oath-taking ceremony where the sanchalak takes an oath to serve the farming community through the
e-Choupal. Successful sanchalaks usually have a number of common characteristics, including risk-
taking ability and the willingness to try something new, ambition, and the aspiration of earning
additional income through the e-Choupal. Sanchalaks are usually of median wealth and status in their
communities, able to read and write, and are part of an extended family large enough so that they can
find time to service the e-Choupal.
Sanchalaks undergo training at the nearest ITC plant. They receive education on basic computer
usage, the functions of the e-Choupal Web site, basic business skills, as well as quality inspection of
crops. For the sale of products through e-Choupal, the sanchalaks receive product training directly
from the manufacturer with ITC involving itself only in product design and facilitation. Nonetheless,
their role requires considerable entrepreneurial initiative and entails some operational costs, between
US$60 and US$160 per year, for electricity and phone-line charges; the latter of which are gradually
declining as ITC replaces phone-based Internet connections with a VSAT system.
Selecting and training the sanchalaks is just the first step. Most do not have retail experience and may
lack motivation to actively promote ITC products. ITC employs a variety of motivation techniques to
encourage sales. One technique is to hold a ceremony where sanchalaks are presented with their
annual commission checks and public announcements of earnings are made. Stories how sanchalaks
spent past commissions serve to demonstrate the income potential and spurs non-performers to work.
The zeal to perform sometimes leads to territorial disputes, but ITC does not interfere in their
resolution because it encourages sanchalaks to better serve their customer-base.
A secondary, but still important, role is played by the samyojaks, or cooperating commission agents.
Samyojaks earn income from ITC by providing logistical services that substitute for the lack of rural
infrastructure, by providing information and market signals on trading transactions to the e-Choupal
system. In effect, ITC uses agents as providers of essential services, not as principals in a trading
transaction. They play an especially important role in the initial stages of setting up the e-Choupals,
because they know which farmers grow soya, what kind of families they have, what their financial
situation is, and who is seen as “acceptable” in the villages and might thus make a good sanchalak.
ITC is strongly committed to involving samyojaks in the on-going operation of the e-Choupal system,
allowing them revenue streams through providing services such as management of cash, bagging and
labor in remote ITC procurement hubs, handling of mandi paperwork for ITC procurement, and as
licensed principals for the retail transactions of the e-Choupal.
Since the e-Choupal system by-passes the agent-controlled mandis and has considerably reduced
commission income, why do agents agree to cooperate with ITC? First, the company has made it
clear that they will continue to buy produce through the mandis. Second, the company offers
significant commissions for samyojak services. Finally, the agents are fragmented and fear that if they
do not agree to work with ITC, another agent will gain the promised e-Choupal revenues. One
samyojak reported that he saw globalization as an irresistible trend, and although he saw loss of
revenue in the short-term, his long-term interest lay in cooperating with an international company.
THE e-CHOUPAL SYSTEM
The re-engineered supply chain looks very different from the existing system and has the following
Figure: e-Choupal Supply Chain
The previous day’s mandi closing price is used to determine the benchmark Fair Average Quality
(FAQ) price at the e-Choupal. The benchmark price is static for a given day. This information and the
previous day mandi prices are communicated to the sanchalak through the e-Choupal portal. The
commission agents at the mandi are responsible for entering daily mandi prices into the e-Choupal. If
and when the Internet connection fails, the sanchalak calls an ITC field representative.
Inspection and Grading
To initiate a sale, the farmer brings a sample of his produce to the e-Choupal. The sanchalak inspects
the produce and based on his assessment of the quality makes appropriate deductions (if any) to the
benchmark price and gives the farmer a conditional quote. The sanchalak performs the quality tests in
the farmer’s presence and must justify any deductions to the farmer. The benchmark price represents
the upper limit on the price a sanchalak can quote. These simple checks and balances ensure
transparency in a process where quality testing and pricing happen at multiple levels.
If the farmer chooses to sell his soy to ITC, the sanchalak gives him a note capturing his name, his
village, particulars about the quality tests (foreign matter and moisture content), approximate
quantity and conditional price.
Weighing and Payment
The farmer takes the note from the sanchalak and proceeds with his crop to the nearest ITC
Procurement hub, ITC’s point for collection of produce and distribution of inputs sold into rural
areas. Some procurement hubs are simply ITC’s factories that also act as collection points. Others
are purely warehousing operations. ITC’s goal is to have a processing center within a 30 - 40
kilometer radius of each farmer. There are currently 16 hubs, but there will eventually be 35 in the
state of Madhya Pradesh.
At the ITC procurement hub, a sample of the farmer’s produce is taken and set aside for laboratory
tests. A chemist visually inspects the soybean and verifies the assessment of the sanchalak. It is
important to note that this is the only test assessment before the sale. Laboratory testing of the sample
for oil content is performed after the sale and does not alter the price. The reason for this is that
farmers, having historically been exploited, are not immediately willing to trust a laboratory test.
Therefore pricing is based solely upon tests that can by understood by the farmer. The farmer accepts
foreign matter deductions for the presence of stones or hay, based upon the visual comparison of his
produce with his neighbours. He will accept moisture content deductions based upon the comparative
softness of his produce when he bites it.
ITC is working to change farmer attitudes towards laboratory testing. It is developing an appreciation
of better quality by using the subsequent lab tests to reward farmers with bonus points if their quality
exceeds the norm. At the end of the year, farmers can redeem their accumulated bonus points through
the e-Choupal for farm inputs, or contributions toward insurance premiums.
After the inspection, the farmer’s cart is weighed on an electronic weighbridge, first with the produce
and then without. The difference is used to determine the weight of his produce.
After the inspection and weighing are complete, the farmer then collects his payment in full at the
payment counter. The farmer is also reimbursed for transporting his crop to the procurement hub.
Every stage of the process is accompanied by appropriate documentation. The farmer is given a copy
of lab reports, agreed rates, and receipts for his records.
Samyojaks, who are adept at handling large amounts of cash, are entrusted with the responsibility of
Payment , except at procurement centres near large ITC operations where ITC is handles cash
disbursement. Samyojaks also handle much of the procurement hub logistics, including labour
management at the hub, bagging (if necessary), storage management, transportation from the hub to
processing factories, and handling mandi paperwork for the crops procured at the hub. For his
services in the procurement process, the samyojak is paid a 0.5% commission.
Prior to the introduction of e-Choupal, farmers’ access to agricultural information was incomplete or
inconsistent. The only sources of information were word of mouth within the village and the
commission agent. E-Choupal allows farmers daily access to prices at several nearby mandis. Some
e-Choupal sanchalaks have taken this a level further by accessing external pricing sources such as
prices on the Chicago Board of Trade, in order to track global trends and determine the optimum
timing of sales. Moreover, through e-Choupal, farmers have access to prices and make the critical
decision of when and where to sell his crop. Both factors work together to provide the farmers a
better price for their crops.
Under ITC’s system, farmers no longer bear the cost of transporting their crops to the mandi and are
instead reimbursed for transport to the procurement hub. The transaction at the ITC hub is also much
faster than at the mandi, usually taking no more than two or three hours. Moreover, ITC’s electronic
weighing scales are accurate and not susceptible to sleight of hand like the manual weighing system
at the mandi. The system also does not require produce to be bagged, which avoids the associated
loss of produce by intentional spillage. Thus the e-Choupal system has logistical and transaction
Finally, the ITC procurement centre is a professionally run operation where the farmer is treated with
respect and served as a customer. The dignity accorded farmers by the professional process of the e-
Choupal cannot be understated. ITC’s recognition that farmers are not simply agricultural producers,
but integral partners in the supply process has elevated the level of respect paid to them. Simple
provisions such as a shaded seating area where farmers can sit while waiting for their paperwork
serve as indicators of ITC’s respect for farmers and their produce. Though intangible, the self-
confidence created by this professional treatment is affecting the way farmers conduct themselves.
Sanchalaks and even commission agents have noted a change in farmer attitudes.
The incremental income from a more efficient marketing process is about US$6 per ton, or an
increase of about 2.5% over the mandi system. Farmers also can make use of the information
available to them through e-Choupal to improve yields. Moreover, the seed, fertilizer, and consumer
products offered them through e-Choupal cost substantially less than through other local sources
such as village traders. Thus there are meaningful net economic benefits to farmers, and it is having a
measurable impact on what farmers choose to do: in areas covered by e-Choupals, the percentage of
farmers planting soy has increased dramatically, from 50 to 90% in some regions, while the volume
of soy marketed through mandis has dropped by as much as 50%
The commissions paid to the agents under the mandi system were not excessive, but because of the
inefficiencies discussed earlier, the true cost of intermediation through the mandi system was between
2.5 % and 3% of procurement costs. While retaining commissions paid for the sanchalaks’ services,
the 0.5% commission paid to them is significantly less than the costs associated with the mandi
system. Direct reimbursement of transport costs to the farmer is estimated to be half of what ITC used
to pay the commission agents for transport to their factory. Removal of intermediary manipulation of
quality and the ability to directly educate and reward quality in the customer base results in higher
levels of quality in e-Choupal procurement. This results in higher oil yields, which, in turn, lead to
higher profits for ITC.
e-Choupal also allows ITC to develop long-term supplier relationships with farmers and attain some
degree of supply security over time. Risk is also managed in the e-Choupal system by a far stronger
information infrastructure. Sanchalaks and samyojaks working on behalf of ITC provide excellent
bottom-up information on pricing, product quality, soil conditions, and expected yields. This allows
ITC to better plan future operations.
Figure: Transactions Costs Under the Mandi and E-Choupal Systems
In the mandi system, there was a mark up of 7-8% on the price of soybean from the farm gate to the
factory gate. Of this mark up, 2.5% was borne by the farmer while 5% was borne by ITC. With e-
Choupal, ITC’s costs are now down to 2.5%. Figure above shows transaction costs incurred by the
farmer and ITC per metric ton of soy procured in the mandi and e-Choupal. In absolute numbers,
both the farmers and ITC save about US$6 (Rs 270) per metric ton.
Sustaining Commercial Volume
“Virtual vertical integration” can only work if there is a continuous flow of information between the
e-Choupals and ITC. Because of the number and physical dispersion of the e-Choupals, this
communication must be initiated by the sanchalaks. If their motivation to communicate with ITC
diminishes, the channel will still function for procurement, but will lack the vitality to supply risk
management, distribution, or product design. Maintaining continuous commercial flow keeps the
sanchalak motivated to spend time and money calling the ITC representative to ask about new
products, convey village demand, and providing ITC with local updates. An example of the power of
local information was seen early in e-Choupal implementation. A competitor attempted to divert
produce coming to the ITC factories by stationing representatives on the roads leading up to the
plant. This person would stop farmers on their way to the ITC hub and offer them a price higher than
the ITC rate at the competitor’s plants. Farmers alerted the sanchalaks and they in turn provided ITC
with the information necessary to address the situation. Sanchalaks thus provide an essential role in
the chain of communication.
ITC maintains commercial volumes by sequencing procurement and sales year-round, thereby
securing the continuous flow of commission checks through e-Choupals. Purchases and sales have
been arranged so that kharif (the cropping season that coincides with India’s monsoon, July through
October) and rabi (winter cropping season in irrigated areas) inputs and procurement maintain a
steady stream of revenue for sanchalaks.
Scaling the Model
Profitable re-engineering requires the unambiguous understanding of value provided, the
circumstances in which they are applicable, and the revenues they are capable of generating. ITC’s
model identifies three sources of value for the company that can help scale the model:
• Crop Specific Intervention: ITC recognized that agrarian systems vary by crop. This means that the
inefficiencies in the supply chain, the correction required from e-Choupal , and the magnitude and
timing of the resulting revenues will differ by crop. For example, the systems, and consequently the e-
Choupal models and payback streams, for coffee and shrimp are very different from those for
soy.ITC’s goals for soy intervention reflected this nuanced analysis and the project was targeted with
recovering the entire cost of infrastructure from procurement savings. This is contrasted with the
coffee and shrimp efforts where the source of e-Choupal value is such that the investment recovery
horizon is much longer.
• Low-Cost Last Mile: The same system of physical and information exchange that brings produce
from the village can be used to transfer goods to the villages. As infrastructure has already been paid
for by procurement, it is available at marginal cost for distribution. This ties in nicely with ITC’s
larger goal of transformation into a distribution super-highway. ITC's current channels reach areas
with populations of 5,000 and above. e-Choupals allow penetration into areas with populations less
than 5,000. Products such as herbicides, seeds, fertilizers, and insurance policies, as well as soil
testing services are sold through e-Choupal. e-Choupal as a distribution channel begins in
agriculture but extends well into consumer goods and services. In the traditional channel, comprised
of mobile traders and cycle-based distributors, farmers lack the resources to make informed
purchasing decisions. More often than not, traders and distributors do not understand the farmers’
issues and end up selling them products and services that do not satisfy their needs. With many larger
companies hesitating to serve the rural market, farmers often do not have variety in their choice of
products and services. This lack of choice means that not only are farmers forced to buy whatever is
available, they often must pay a premium for those products.
• Intelligent First-Mile: The global resources, best practices, and remunerations that the e-Choupal
brings to farmers have encouraged innovation and provided an avenue to see their ideas realized.
This illustrates ITC’s vision of using e-Choupal as the “intelligent first mile.” Farmers are now
coming up with products and services that ITC could provide to further improve operations. Farmers
are demanding that ITC certify and make available the “Samrat” variety of seeds that is preferred
over the currently certified JS300 variety. Some farmers have urged ITC to bring its resources to bear
on onion and potato crops. Responding to the fact that the Indian onion crop is regarded as inferior
to the Chinese crop in the world market, farmers recognize that this is due to the lack of availability
of high quality seeds and information. They have approached ITC with a suggestion to create e-
Choupals for these crops, pointing to the mutual profitability of such an effort.
ITC’s objective is not to be a platform provider for sale of third-party products and services but
rather a network choreographer who orchestrates bi-directional demand and supply of goods through
a collaborative business model. ITC intends to differentiate itself by serving only those products and
services to which it can add value. ITC’s core asset is its knowledge of the customer. By transforming
the value chain and setting up a platform for procuring commodities from them directly, they now
have a foundation for forging a close relationship with the farmers. This relationship leads to a better
understanding of the issues plaguing farmers. Through e-Choupals, hubs, and processing centers,
ITC has the ready infrastructure needed to implement an alternative channel for distribution of goods
and services to rural India. e-Choupals can double as storefronts and hubs as centers for stocking
inventory. In the long term, ITC sees vast opportunities from its e-commerce platform and low-cost
In addition, the information infrastructure implemented by ITC can be used to enhance its business
decision-making, better manage risk, and identify opportunities for cross-selling and up-selling. The
company can leverage detailed transactional data and transform it into actionable knowledge. Data
mining and data warehousing will help company executives to better understand the behaviour of
their customers, identify unfulfilled needs and ways to serve them efficiently. The communication
infrastructure compensates for the lack of physical infrastructure needed for marketing products and
services in rural India. It enables rapid, low-cost information dissemination and a trusted brand for
introducing new products, while minimizing the need for a travelling sales force. Online ordering and
order management eliminate the need for physical storefronts. And the IT infrastructure and local
sanchalak provide customer intelligence, thus maximizing customer satisfaction and profitability.
Characteristics of the Operating Environment
Understanding the constraints imposed by the physical and social environment in e-Choupals operate
is necessary to provide the context for understanding the system design.
Overcoming Power Constraints
Power availability in rural India is unreliable and the quality of power is sub-standard. As power is
usually available for only a few hours a day and at on a sporadic schedule, the e-Choupal computer
cannot always be accessed when information is needed. Access to information in a timely manner is
critical to the success of the business model. ITC has overcome the problem of local power supply by
providing a battery-based UPS (uninterrupted power supply) backup. With the reliability of a battery
backup, the sanchalak can use the system at least twice a day—in the morning to check the prevailing
mandi prices, and again in the evening to check the rate ITC is offering the next day. While the
battery backup addresses the power supply issue, insufficient line power during the day poses the
challenge of not having enough power to charge the backup battery. This has caused ITC to explore
other power sources and ultimately ITC decided to use solar battery chargers. One full day of
sunlight is enough to charge the battery for 70 to 80 minutes of computer usage.
The second problem with power is quality. Voltage fluctuations are endemic. The UPS unit is the most
affected component. As a result of the erratic power supply, fuses are susceptible to being blown. To
overcome this problem, ITC plans to install specially designed UPS units that remain effective
between 90V and 300V. In order to control voltage spikes, they have introduced spike suppressors
and filters. Phase imbalances, which lead to damage of equipment, have been addressed through the
use of isolation transformers to correct neutral voltages.
Most e-Choupal villages lack proper roads, limiting vehicle access. As such, public transportation
access to many of the villages is infrequent. Some villages are served only once or twice a day by
rural taxis. The population relies on two-wheeled bicycles and motorbikes and bullock carts as the
main means of transportation. Moving equipment into and out of the villages is not an easy task.
Providing system support and maintenance requires the technician to travel from outside areas to
visit the e-Choupal. For these, and other reasons ITC initially placed e-Choupals in villages that are
within a ten to fifteen kilometer radius of a city.
Telecommunication infrastructure in villages is poor. Telephone exchanges are subject to sporadic
power supply and have limited battery backup. When power is lost, phones cease to function. In
addition, there is no local support staff to maintain or troubleshoot telephone exchanges. The support
team at the main exchange typically is responsible for eight to ten villages and is short-staffed. The
turn-around time for fixing problems is often measured in days, not hours. Overhead telephone lines
are exposed to the elements and run alongside high voltage power lines which can cause transmission
quality problems. Currently, village telecommunication infrastructure is designed to carry voice
traffic only and transmission speed is so slow that it renders Internet access impractical.
Before the arrival of e-Choupal, most villagers had never seen a computer. ITC realized the
importance of appropriate user interfaces. They organized meetings and focus groups of farmers to
gather information about potential user groups. The main focus of these meetings was to determine
what information farmers wanted to see, how the information would need to be presented (graphics or
text), and how often each page would need to be refreshed. The feedback that was collected from
these focus groups was used in the design of the functionality and user interface of the application.
The IT infrastructure can be comprehensively understood in the four layers outlined in Figure below.
Figure: E‐Choupal System Technology Specification
The four layers are distinct but deeply interconnected and share goals and constrains.
The hardware and software infrastructure captured in the first three layers cannot exist in isolation.
They need people, processes, and services to setup, maintain and run them. In the e-Choupal,
training, system support (repairing technical problems), and application support (usability query
resolution) would provide the most unique information.
Training the sanchalaks to use a computer effectively is deemed vital to the success of e-Choupal.
Sanchalaks function as the human interface of the e-Choupals and therefore must be able to both
operate the computer and access the information requested by farmers.
The computer installed in the e-Choupals is usually the first computer in most villages. Immediately
after sanchalaks are recruited, they are invited to the nearest ITC plant for a day-long training
program. The majority of this training is centred around getting the sanchalaks comfortable with the
equipment. This first phase of training is comprised of the following:
• The fundamentals: What is a computer? What is its purpose and practical applications?
• Basic equipment training: Turning the computer on and off, using the mouse, keyboard, printer etc.
• Software training:
o Word processing:
How to use Ankur
How to type in Hindi
How to open, close, and save files
How to create and edit document
o Web Browsing: How to use a Web browser and find information on the Internet.
o e-Choupal Applications: How to use the soya choupal Web site.
What information is available on the Web site and how can it be accessed?
At the time of installation, a coordinator usually accompanies the vendor who installs the system. The
sanchalak is given some of the same basic training by the vendor. ITC then leaves allows the
sanchalak to experiment with the computer for about a week. During this time, typically the younger
members of his family also get to use the computer. ITC has observed that children are quick learners
and are eager to learn more.
After the first week, the sanchalaks are invited to the hub or the plant for the second phase of training.
In order to gauge their level of comfort, they are asked to operate the computer. Based on
observation, customized training is then provided to raise each user’s comfort and competency level.
Sanchalaks may also bring their children or other members of the family that are interested in
learning about the computer. During this phase sanchalaks are trained use the e-Choupal Web site
and to access information from the site. Sanchalaks are given the opportunity to voice their concerns
and ask questions during training. Sanchalaks are generally enthusiastic about learning the computer
skills required to carry out their work.
After a month, trainees are brought in for a third and final phase of initial training. By this time,
sanchalaks are usually fairly familiar with operating the computer and accessing information. The
goal of this session is to learn to troubleshoot common problems. ITC hopes that improving the
troubleshooting capacity of sanchalaks will significantly reduce maintenance and system support
costs. Sanchalak are taught about the importance of other devices such as the UPS and the battery
backup. They are given guidelines on what to look for when there is a problem. For instance, they are
instructed on the significance of the display lights on the devices. When sanchalaks call for technical
help, these details help the support staff identify and resolve problems, perhaps even over the phone,
without the necessity of a site visit.
ITC considers training to be a continuous process, and one that requires a concerted effort from all
field operatives, not just the support staff. All field operatives are encouraged to provide technology
assistance when they visit e-Choupals. When the local coordinator visits an e-Choupal, he may be
required to help with usability issues, even though this is not his primary job.
ITC has about 15 engineers who provide field infrastructure support to the e-Choupals. They average
about one or two calls a day. Each e-Choupal is visited about twice a month for infrastructure
support. In order to overcome transportation problems, ITC purchased a fleet of approximately 25
motorcycles for its support staff. The support cost is estimated at US$6.60 (Rs. 300) per visit.
A majority of the issues reported are software-related. Users’ lack of familiarity with the operating
system has led to software issues. For instance, some users inadvertently delete desktop icons and
then have to call for help. On other occasions, failures have occurred when users download and
install untested or unapproved software.
Another issue encountered by the support staff has been the malfunctioning of equipment due to
voltage fluctuations. About 20-30% of the calls to support staff are related to a blown fuse in UPS
units. Sanchalaks have now been provided with replacement fuses and have been trained to change
fuses on their own. Support for hardware failures is provided by the vendor.
In the future ITC proposes to improve service and lower costs of infrastructure support through
remote help desk tools and network automation.
The e-Choupal system is designed to gather customer information over time. The sources, structure,
management, and use of this data are addressed within the information architecture. The technical
details are routine, but the data itself and its potential uses are exciting. Data about the rural
customer such as their location, creditworthiness, consumer preferences, financial position, and
spending patterns represent the first link between this vast untapped market and urban commerce.
Such information will eliminate the “unknowns” of rural engagement and enable planning,
marketing, and sales of a range of products.
The information gathering is currently semi-automated. Information on each sanchalak is gathered
during user registration. The sanchalak also keeps a record of farmer visits, inquiries, purchases, etc.
The Q & A section of the Web site allows for two-way transport of data that is then stored in a
database. The Web site does not currently process live transactions, but ITC has plans to do so in the
The Web database tracks the Internet usage patterns at e-Choupals. From this database, ITC has
gathered information such as peak usage periods, preferred Internet destinations, information most
sought after, information least sough after etc. ITC intends to leverage the information gathered to
help better understand the behaviour of their customers, identify unfulfilled needs, and develop ways
to serve them efficiently.
From dial-up to VSAT: Connectivity Evolution in e-Choupals
ITC realized very early that the existing telecom infrastructure was not capable of supporting data
traffic. Working with C-DoT (Centre for Development of Telematics), they determined that that lack
of synchronization between the village exchange and the main exchange was a major issue. C-DoT
proposed the installation of RNS kits in the village exchanges. Even after the installation of RNS kits,
however, the data throughput was a mere 12 Kbps. This is not sufficient to support their application
requirements. With the help of C-DoT, ITC made modifications to the RNS kit which helped them
achieve 40 Kbps throughput.
Despite achieving a significant improvement in the throughput rate, sporadic power supply in the
village exchanges meant that the dial-up solution was not reliable. Even if the e-Choupal had power,
the telephone exchange might not, thereby rendering the system inoperable.
As the e-Choupal model has progressed, ITC has realized that dial-up connectivity is not sufficient to
drive proposed future applications. In order to support transactional capabilities and multimedia
applications, the company needs reliable connectivity with better throughput. They therefore have
decided to adopt a satellite-based technology (VSAT) which enables a throughput rate of up to 256
Kbps. This is, however, an expensive solution, costing about US$2,650 (Rs. 120,000) per installation.
The application layer represents the logical muscle that rests atop the skeleton of technical
infrastructure.Understanding the application architecture gives us a view of the functions enhanced
by information technology and also illustrate how business processes may be adapted to deal with
constraints upon the IT infrastructure.The Web site www.soyachoupal.com is the gateway for the
farmer. The Web site is protected and requires a user ID and password to login. As of now sanchalaks
are the only registered users. Immediately after recruitment, an account is created for the sanchalak
and he is given a user ID and password to access the system.
Figure: Features of the e-Choupal Web Site
The sanchalaks and others who use the system have learned that there now is a wide variety of information at
their fingertips that they can access and benefit from. The following table lists just a few popular Internet
Figure: Other Internet Resources Accessed at the e-Choupal
The implied Uncertainty (Demand and Supply ) Spectrum
Predictable low level of implied demand Highly uncertain demand
Supply and uncertainties and supply
Demand supply uncertainty
Most of the agricultural products are example of low level of implied demand uncertainty but
significant supply uncertainty based on weather . So our ITC e-chaupal falls in this category.
Highly Somewhat Somewhat Highly
Efficient efficient responsive responsive
The responsiveness spectrum
This supply chain is capable of low costs and the focus of this supply chain is clearly on efficiency
Zone of strategic fit
Implied uncertain spectrum
Place of ITC e-chaupal in Zone of strategic fit
The ITC e-chaupal supply chain can easily be fitted to position A shown in the figure.
At present ITC E-chaupal under Intercompany Interfunctional Scope which believe in maximizing the
entire supply chain surplus .It forces every stage of the supply chain to look across the supply chain
and evaluate the impact of its action on other stages as well as on the interfaces.
THE SOCIAL IMPACT OF e‐CHOUPAL
A major impact of the e-Choupal system comes from bridging the information and service gap of
rural India. Agricultural research centres (such as the Indian Council for Agricultural Research),
universities, and other agencies in India have developed several practices and technologies to
improve productivity and crop quality. The impediment to implementation has been affordable, large-
scale dissemination of this knowledge. The e-Choupal system leverages technology that can reach a
wide audience literally at the click of a mouse. The constant presence of sanchalaks, who themselves
are farmers who apply these techniques, ensures that the practices actually make their way from the
Web site to the field. Some areas about which information and services are provided by the e-Choupal
Web site and e-commerce system include:
• Weather: This is a very popular section on the Web site because it provides localized weather
information at the district level. Other public sources generally provide only aggregated statelevel
weather information. e-Choupal’s weather information is intelligently coupled with advice on the
activities in the agricultural lifecycle. One farmer observed that prior to e-Choupal, unreliable
weather information would result in prematurely planted seeds that would be washed out by early
rains. The availability of accurate rain information has cut losses due to weather by more than half.
• Agricultural Best Practice: Scientific practices organized by crop type are available on the Web
site. Additional questions are answered through FAQs and access to experts who respond to emails
from the villages.
• Customized Quality Solutions: After sale of a crop is completed, ITC performs laboratory testing of
the sample collected. Based on these results, farmers are given customized feedback on how they can
improve crop quality and yield.
• Intelligent Product Deployment: Inputs such as fertilizers and pesticides are not generic in their
application. The optimal application is relative to the soil and crop. Determining these parameters
requires services such as soil testing. Past providers brought inputs but not the information and
services required to make them effective. ITC’s “full-service” approach corrects this by coupling the
input sale to the information on the Web site and services such as soil testing.
The collective impact of better information and new services can be gauged by the fact that prior to e-
Choupal, soy cultivation was on the decline. Productivity was stagnant and farmers saw no future in
it. In Khasrod, soy production declined from a high of 100% to 50% of farmers planting soy and was
expected to decline further. Since ITC’s involvement, soy is seen as profitable again and nearly 90%
of farmers are planting the crop.
A second major area of impact stems from the ability of the e-Choupal system to open a window on
the world and thus impact the future of the villages in which they operate. Computers are bringing the
same resources to villages as they brought to urban India, and their impact is no less dramatic. This,
coupled with higher incomes and changes in farmers’ attitudes, is causing several shifts in the social
fabric of village life.
Some accounts from villages include:
• Children are using computers for schoolwork and games. A particularly poignant story is that of
Khasrod, where 2,000 local students used the local e-Choupal to print their grade sheets, saving them
days of waiting and travel time.
• Sanchalaks use the Internet to chat extensively among themselves about the status of operations and
agriculture in their villages.
• Villagers access global resources to learn about agriculture in other parts of the world and are
taking action to compete in the world outside, not merely in the local mandi.
• Youngsters in the village use computers to research the latest movies, cell-phone models, and cricket
Winners and Losers
Not everyone has benefited from the introduction of e-Choupals. Indeed, lost income and jobs is
directly connected to the overall increase in efficiency in the e-Choupal system. Some of the players in
the mandi system have suffered loss of revenue. They include:
• Commission agents: Despite ITC’s best efforts to maintain mandi volumes and compensate
commission agents for lost income, there is little doubt that on the whole they have lower incomes as
a result of the introduction of e-Choupals.
• Mandi labourers: The workers in the mandi who weighed and bagged produce have been severely
impacted by the drop in volume. In the Sonkach mandi, for example, some 28 tulavatis and 300
laborers have been affected. ITC’s long-term vision is to employ many of these people in the hubs in
much the same functions as they perform in the mandi.
• Bazaars near the mandi: When farmers sold produce in the mandi, they would also make a variety
of purchases at local bazaars. This revenue has now been diverted to shops near the ITC hubs. This,
however, can be considered a diversion of revenue rather than elimination.
• Some mandi operations: ITC still pays mandi tax for all the crops procured through e-Choupals but
it now pays the tax to the mandi nearest to the procurement center. As a result, taxes are being
diverted from several mandis to the few mandis near procurement hubs. The result of this is that
regional mandis have lost taxes that contribute to maintaining their infrastructure.
• Competing processors: Even before the advent of the e-Choupal, the soya crushing industry suffered
from severe overcapacity (half of all capacity was excess). The efficiency pressures imposed by e-
Choupal has spurred industry consolidation.
Weakness of e-choupal
Although e-choupal helps eliminate the middleman and therefore allows farmers to get a better price
for what they grow, it does nothing to solve the more fundamental problem of the inherent
inefficiencies created by so many tiny farms.
In addition, it relies on infrastructure, which is often lacking in rural communities. Electricity and
telecommunication services can sometimes be less than 100 percent reliable in some of the places
where e-choupal has been implemented. Finally, although there is no longer a middleman, e-choupal
can be no more effective than the sanchalak (coordinator) in each community.
ITC in conjunction with local farmers created the e-choupal system that is acting as a catalyst in
rural transformation by providing access to latest information of the agro sector, developing local
leadership and creating a profitable distribution. It helps in alleviating rural isolation, improves
productivity and income, create transparency for farmers - which improves the economic condition of
Agriculture is the backbone of Indian economy producing 23 percent of GDP, and employs 66 percent
of workforce. Because of the green revolution, India’s agricultural productivity has improves to the
point that it is both self-sufficient and a net exporter of a variety of food grains, yet most Indian
farmers have remained poor. The causes include remnants of scarcity-era regulation and an
agricultural system based on small, inefficient land holdings. The other constraints are weak
infrastructure, numerous intermediaries, excessive dependence on the monsoon variation between
different agro-climate zones, and many others. The unfortunate result is inconsistent quality and
uncompetitive prices, making it difficult for the farmers to sell his produce in the world market. ITC’s
trailblazing answer to these problem is the - e-choupal initiative; the single largest information
technology-based intervention by a corporate entity in rural India that is transforming the Indian
farmer into progressive knowledge-seeking netizens. Enriching the knowledge of farmers & elevating
them to a new order of empowerment. ITC aims to confer the power of expert knowledge on even the
smallest individual farmer enhancing its competitiveness in the global market.
Benefits of e-choupal
“A quiet digital revolution is reshaping the lives of farmers in remote Indian villages.” e-choupal
delivers real-time information and customized knowledge to farmer’s decision making ability,
securing better quality & price. The e-choupal initiative also creates a direct marketing channel,
eliminating wasteful intermediation and multiple handling, thus reducing transaction cost and making
· Digital transformation - ITC began e-choupal with Soya grower in the villages of M.P. e-choupal
tried to change the stereotype image of farmers of bullock cart. Farmers now log on to the site
through internet kiosks to order high quality input, get information on best farming practices,
prevailing market prices for their crops at home and abroad for the weather forecast all in the local
language. The e-choupal site is also helping the farmers discover the best price of their quality at the
village itself. The site also provides farmers with specialized knowledge for customizing their produce
to the right consumer segments. The new storage and handling system preserves the identity of
different varieties right through the ‘farm gate to dinner plate’ supply chain. Thus, encouraging the
farmers to raise their quality standards and attract higher price.
· Credit and Insurance - Farmers’ low income and difficulty in accessing credit limits the capacity to
pursue opportunities within and outside the agriculture sector. ITC e-choupal proposes the solution of
this problem by making partnership with financial institutions. e-choupal provide various types of
loans like non-cash loans for farm inputs, loans to sanchalak (sanchalak can better manage credit
risk & have better access to farmers), direct loans to farmers based on sanchalak recommendation,
Insurance & risk management services etc.
· Local leadership development - ITC uses involvement of farmers in content creation helps to easily
customize the information as per the local requirements. Participation of local farmers ensures
provision of adequate and decipherable information to e-choupal, which can be employed into the
farming, or pricing of the produce. The increased participation in e-choupal develops local
leadership quality in farmers. The farmers get attracted towards e-choupal due to increased profits,
added services that he could get, saving in time and the ability to use e-choupal for many
transactions. E-choupal delivers relevant technologies in the hands of the farmers, which can improve
the economic condition of the entire village. e-choupal is one of the very few ICT projects in India
that has effectively utilized e-commerce transactions for poverty alleviation. ICT also reduced the
number of middlemen between producers and consumers. Now, simple technology solutions are
available to create networks in rural areas, which can function as virtual marketplaces.
Other benefits to farmers
Farmers are reimbursed for transport to the procurement hub of e-choupal. The transaction time at
the ITC hub is also much faster than mandi. ITC has given recognition to integral partner in the
supply process & not mere as agricultural producer and thus elevating the level of respect of farmers.
Similarly providing shaded seating area while waiting for their paperwork shows ITC really care for
Cost and revenue Stream
e-choupal has been successful. It has reduced the cost of procurement and the cost of transit and the
material handling cost. Procurement transaction costs are reduced from the industry standard of 8
percent (farmers incurs 3 percent and the processor incurs 5 percent) to 2 percent (with farmer
saving all his 3 percent, and the processor ITC – saving 3 percent). The total cost incurred on the
initiatives so far has been Rs.50 million (Rs.35 million as capital cost towards computers and other
hardware at the kiosks as well as central servers and Rs.15 million revenue expenditure incurred
towards portal development, people overhead etc.). But ITC has gain benefit Rs. 20 million, which is
the equivalent of full investment on 40 percent of the Choupals (Kiosks). In terms of future revenue,
the outflow is 52.1 million in 2001-02 which reduces to 3.90 million in 2005-2006 and for 2006-07 is
estimated as 2.70 million. Where as inflow in 2001-02 is 15.3 million where as 65.0 million in 2005-
2006 and estimated as 85.0 million in 2006-2007. The internal rate of return (IRR) on the project
works out to be 21.55 percent.
In the mandi system, there was a mark up of 7-8 percent on the price of soybean from the farm gate to
the factory gate of this mark-up 2.5 percent was born by the farmer while 5 percent was borne by ITC
with e-choupal, ITC cost are down to 2.5 percent. In absolute terms, both the farmers and ITC save
about $ 6 per metric ton.
As the power is usually available for only a few hours a day at on a sporadic schedule, the e-choupal
computer cannot always be accessed when information is needed. Phase imbalances leads to damage
of equipments. Telecommunication infrastructure in villages is poor. Telephone exchange also have
limited battery backup. In addition, there is no local support staff to maintain or troubleshoot
telephone exchanges. The support team is also short-staffed.
Other challenges are: -
· Illiteracy about computer in rural areas as well as rural population has low trust on electronic
· Selection of an educated, intelligent, reliable and matured person as a sanchalak.
· Improper knowledge about rural market.
· Vicious circle of intermediaries (Adatiya & Brokers).
· Improper and complex user interface on e-choupal.
· Lack of rules and regulation related to electronic choupal.
· Mistrust about inspection, testing and weighing of produce on centres.
ITC’s example show the key role of IT in providing and maintaining by a corporation, but used by
local farmers – to bring transparency, to increase access to information, and to catalyze rural
transformation, while enabling efficiencies and low cost distribution that make the system profitable
and sustainable . Critical factors in the apparent success of the venture are ITC’s extensive
knowledge of agriculture, the effort ITC has made to retain many aspects to the existing production
system, including retaining the integral importance of local partners. ITC e-choupal is committed to
transparency and respect and fairness towards farmers as well as local partners.
The e-Choupal advantage
ITC's e-Choupal project is a winner—for farmers who get better remuneration and for the company
that's assured quality inputs for its business Imagine an illiterate farmer in a remote village in
Madhya Pradesh sitting at a desktop wired up to the WWW through a small VSAT link, powered by a
tiny power generator by the side, and surfing away to glory downloading invaluable information
about weather forecasts and sowing trends. Imagine farmers checking prices for soya beans at the
nearest government-run market, or even on an international commodities exchange.
IT for the Masses
The eChoupal project covers over 35,000 villages in Madhya Pradesh, Uttar Pradesh, Maharashtra,
Karnataka, Andhra Pradesh, Rajasthan, Haryana and Uttaranchal providing millions of farmers with
critical information on farming. The Choupal services are being delivered by over 6,000 Sanchalaks
and over 17,000 Upa Sanchalaks to these remotest areas.
Farmers can look at weather forecasts, order fertiliser and herbicide, and consult an agronomist by
e-mail when their crops turn yellow. At some e-Choupals they can even buy life insurance, apply for
loans and also check their children’s exam results. While much has been written about the social
benefits of ITC’s e-Choupal, the matter of the fact is that the project was conceptualised with a pure
business focus to create farmer communities in villages to facilitate sourcing of high-quality farm
produce for the company’s fast growing agribusiness.
In IT parlance, e-Choupal is an intelligent blend of applications like CRM and supply chain
management. For instance, by helping the farmer identify and control his inputs and farming
practices, and by paying more for better quality, ITC has been able to preserve the source and
improve the quality of produce. The project was built using .NET. The first implementation of a Soya
Choupal took eight months but later extensions like the Aqua Choupal for aquamarine farmers
took between six and eight weeks.
Today e-Choupal is a flexible, easy to deploy solution. ITC Infotech provided an inhouse team of 25 to
30 people in the initial stage and this gradually came down to around 20 people, and finally a five-
member team to maintain the project. The portfolio of commodities sourced has been vastly expanded
to include maize, barley, sorghum, and pulses, and the sourcing cycle is extended almost around the
year. In the commodities market, these two factors are helping ITC create a definite competitive
Power cuts in rural areas can run for eight to 10 hours. ITC even went so far as to provide gensets at
a few locations hoping to spur DoT to doing the same. It didn’t work out and in 2001 ITC shifted its
focus to using Ku Band VSATs. Power remained a problem and it was solved by using solar panels.
The e-Choupal Roadmap
ITC now plans to leverage its e-Choupal infrastructure to sell third-party products, provide rural
market research services, and in the social sector, to provide services like health advisories and
enable e-governance. ITC e-Choupal has embarked in on providing best of the class retailing and
shopping experiences to the rural consumers by building retail shopping complexes that provide
integrated facilities under one roof. Under the brand ‘Choupal Sagar,’ these shopping complexes
house—a procurement centre, retail store, food court, farmer facility centre and healthcare clinic. In
healthcare services, a pilot project has been launched along with leading corporate healthcare
service providers, to extend reliable and quality healthcare services to the remotest villages. Several
health camps conducted during the pilots are encouraging and the project is in the midst of scaling up
to other locations. ITC e-Choupal is currently piloting delivery of quality education services to the
rural areas leveraging the physical and digital infrastructure developed for commodities sourcing
and consumer retail services.
STRATEGY FOR THE FUTURE
ITC recognizes the limitations of today’s e-Choupals as a vehicle of procurement efficiency. Not every
crop lends itself to such an intervention. In crops such as soy where value can be maximized,
followers will soon imitate ITC and eliminate the company’s competitive advantage. ITC’s vision for
e-Choupal extends many generations as e-Choupal evolves into a full-fledged orchestrator of a two-
way exchange of goods and services between rural India and the world. The soy e-Choupal is “Wave
1,” with several more to follow.
• Wave 2. The source of value in this generation will be identity preservation through the chain. This
is a significant source of value in crops such as wheat, where the grade of the grain determines its
end use. The ability to separate different grades from field to consumer will command a price
premium. E-Choupals in Uttar Pradesh have already started wheat procurement.
• Wave 3. This wave takes identity a step further by building the concept of traceability into the supply
chain. This is vital for perishables where traceability will allow ITC to address food safety concerns
and once again provide a value that the customer is willing to pay for. Shrimp is a good example of a
crop for which Wave 3 will be important. ITC’s intervention in such products will occur level of
production. ITC will define standards that producers must adhere to and work with farmers to ensure
product quality. Farmers in turn will get the best price from ITC because ITC commands the
• Wave 4. The first three waves fill institutional voids while Wave 4 creates institutions. The first three
waves apply to environments in which ITC is the sole buyer in the e-Choupal channel. In commodities
where the underlying markets have reached a high degree of efficiency, such basic sources of value
will not exist. In crops such as these, e-Choupal will serve as the market-place where multiple buyers
and sellers execute a range of transactions. A good example of this is coffee. ITC’s source of value
will be the sunk cost of the IT infrastructure and the transaction fees.
• Wave 5. While the first four waves related to sourcing from rural India, the fifth wave elaborates the
rural marketing and distribution strategy. This is not the same as the rudimentary distribution of agri-
inputs that is being done today. ITC plans to bring together knowledge of the customer, knowledge of
the business, deployed infrastructure, its reputation, and experience gained over the first four waves,
with an organization of people, processes, and partners. This base will allow ITC to bring value-
added products and services to rural India.
• Wave 6. After the sourcing of goods from rural India, ITC’s last wave has the ambitious vision of
eventually sourcing IT-enabled services from rural India. Telemedicine, eco-tourism, traditional
medicine, and traditional crafts are some of the services that can be sourced from rural India. While
still a ways off, it is an agenda that inspires scale of the vision and potential impact on development in
Analysis of Technology Costs
Figure : Cost Allocation of Technology Requirements
ITC in Paper Industry
ITC is one of the world's most modern and contemporary manufacturers of packaging and graphic
series of boards. ITC's Paperboards business has a manufacturing capacity of 360,000 (TPA) tonnes
per annum and is India's market leader across all carton-consuming segments including cigarettes,
foods, beverages, pharma, personal care & toiletries, durables and match shells. ITC makes some of
the premium graphic boards used for greeting cards, covers, sleeves, tags and playing cards. The
Company produces both Virgin and Recycled boards spanning the full requirement of a packaging
customer. The erstwhile ITC Bhadrachalam Paperboards Limited was incorporated in 1975. It set up
an integrated pulp and paper/board manufacturing facility in 1979 at Bhadrachalam in Andhra
Pradesh in South India, 300 kms. east of Hyderabad. Since then, the mill facilities have been
continuously upgraded to achieve internationally benchmarked quality standards and operational
efficiencies. In 1998, the Paperboards business commissioned a new production line for coated
boards. This production line incorporated Paper Machine 4, with original capacity of 120,000 tonnes
per annum (TPA) and finishing & packing lines sourced from internationally renowned suppliers.
This machine has been fitted with a sophisticated 'Web Detection and Inspection system' and since
been modernised further with the addition of the latest web forming technology.
The PM4 board machine can deliver international quality boards for Cigarette, Liquid, Food and
Pharma Packaging by providing a flawless surface for print reproduction. To meet the growing
requirement for high quality paperboards , PM5 was commissioned in 2003 with a capacity of 80,000
In September 2002, ITC's Bhadrachalam Paperboard Unit commissioned a 110,000 TPA Elemental
Chlorine Free (ECF) fibre line. This is a state-of-the-art fibre line and the only one in India, which
meets effluent norms, set by the Ministry of Environment and Forests of the Government of India and
Pollution Control Boards. The product range has also been enhanced as ECF pulp uniquely fulfills
the demand for food-grade packaging and environment-friendly paper. To meet its growing need for
bleached pulp, a second ECF pulp line with a capacity of 120000 TPA is now nearing completion at
ITC is the largest exporter of coated boards from India. The Company exports nearly 15 percent of
the coated boards it produces. Its coated boards fulfill exacting customer requirements in Malaysia,
Sri Lanka, Bangladesh, Iran, Australia, UAE, UK, Italy, Poland and Russia.
ITC has set up India's first world-class plant for the manufacture of premium Cast Coated Boards
that meet highly sophisticated packaging and printing requirements. The Unit at Bollaram has been
expanded further to accommodate specialized converting production lines. ITC has added a modern
Poly-extrusion line to its production facility, to meet the growing demand for food packaging and
beverage cups. A 2nd poly-extrusion line is due for commissioning in Jan 2008 , to meet the growing
demand for barrier boards. The Super-Calendering line installed at Bollaram Unit near Hyderabad
has also added Art Boards and Ivory Cards to its product range. ITC has also pioneered the
development of Liquid Packaging Boards and Plasterboard liners. Continuous product development
has reinforced ITC's market leadership in the Paperboards business.
ITC's Paperboards business has a strong customer focus. The Company's Paperboards business
devoutly practices a 'TPM' philosophy during each stage of manufacture. Lean management
techniques have also been introduced in making the operations more responsive and efficient.
Statistical Process & Quality control supplement the state-of-the-art on-line process controls and
scanning systems in the production lines. ITC is the premier manufacturer of Specialty Papers in
India, with a diversified product portfolio. ITC's Specialty Papers are used in the manufacture of
opaque lightweight fine printing papers, cigarettes, papers for decorative laminates, electrical
insulation-grade papers , fireworks fuse tissue and automotive filter paper.
This Division pioneered the manufacture of Specialty Papers for the Indian cigarette industry in 1949.
It currently offers a comprehensive range of Cigarette Tissues, Plug Wrap, Tipping Base, Printed
tipping papers and Metallising Base.
The Specialty Papers Unit of PSPD at Tribeni, Chandrahati, West Bengal aims to reach out and fulfill
existing and emerging customers needs. The Unit reconfigures systems and processes to meet specific
customer requirements. Quality control processes at the Unit are designed to ensure consistent high
quality at every stage of manufacture. On-line monitoring and documentation of production
parameters are carried out for continuous correction and updation of quality standards.A Product
Development Team ensures Total Quality Management (TQM) in all operations. The TQM group
closely dovetails its operations with marketing, production and research teams to ensure international
standards in products and services. The business creates long-term product development solutions on
the basis of customer specifications and market trends.ITC has demonstrated strong capability in
product development and research in pulp and paper. The Company has collaborated with the United
Nations Development Programme (UNDP) and the Government of India on research programmes to
develop high quality pulp. The Division exports cigarette tissues and décor paper for laminates to
Iran, Turkey , Nepal, and Bangladesh.
ITC in Apparels
ITC’s Lifestyle Retailing Business Division has established a nationwide retailing presence through
its Wills Lifestyle chain of exclusive specialty stores. Wills Lifestyle, the fashion destination, offers a
tempting choice of Wills Classic work wear, Wills Sport relaxed wear, Wills Clublife evening wear,
fashion accessories, Essenza Di Wills – an exclusive range of fine fragrances and bath & body care
products for men and women and Fiama Di Wills – a range of premium shampoos and shower gels.
Wills Lifestyle has also introduced Wills Signature, designer wear by leading designers of the
country. With a distinctive presence across segments at the premium end, ITC has also established
John Players as a brand that offers a complete fashion wardrobe to the male youth of today. The
recent launch of Miss Players with its range of trendy fashion wear for young women has been a
successful addition to the youth portfolio. With its brands, ITC is committed to build a dominant
presence in the apparel market through a robust portfolio of offerings. This season, Wills Lifestyle
presents a complete fashion wardrobe that complements every facet of your lifestyle - at work, when
you're relaxed, while you party and for those special occasions. Wills Lifestyle has been established
as a chain of exclusive specialty stores providing the Indian consumer a truly 'International Shopping
Experience' through worldclass ambience, customer facilitation and clearly differentiated product
presentation. Our stores have established themselves as preferred shopping destinations in the prime
shopping districts across the country.
At Wills Lifestyle, customers can browse at leisure, and shop in a relaxed and pleasing atmosphere.
The use of space is refreshing, which is reflected even in the spacious changing rooms. Every store
offers an international retailing ambience with the extensive use of glass, steel and granite, reflecting
the most contemporary trends in store design, thereby creating a splendid backdrop for the premium
offerings. superbrand 2006 was awarded to Wills Lifestyle by the Superbrands Council of India. At
the Images Fashion Awards 2001 & 2003, Wills Lifestyle was declared ' The Most Admired Exclusive
Brand Retail Chain of the Year'. Wills Lifestyle is now title partner of the country’s most premier
fashion event - Wills Lifestyle India Fashion Week. Taking the celebration of the event to its stores,
Wills Lifestyle has partnered with leading designers Rohit Bal, Rajesh Pratap Singh, Manish
Malhotra and Rohit Gandhi - Rahul Khanna to create a new edition of Designer wear, which is now
available at Wills Lifestyle Wills Sport, fashionable relaxed wear for men and women has, over fifteen
seasons, become the vibrant face of contemporary fashion. At the Images Fashion Awards 2001, Wills
Sport was declared ‘The Most Admired Brand Launch of the Year'. Following this, Wills Sport was
declared 'The Most Admired Women's wear Brand of the Year', at Images Fashion Awards 2002. This
season, Wills Sport presents a collection designed to complement your exuberant lifestyle. Vibrant
designs create magic in breezy fabrics. Racy stripes and enchanting details add charm to the purest
linen and cotton. Wills Classic work wear was launched in November 2002, providing the premium
consumer a distinct product offering and a unique brand positioning. Featuring luxurious fabrics
crafted to perfection with the most contemporary styling, Wills Classic work wear is positioned as the
brand for new age leaders, who are changing the rules of business and encouraging a dynamic
culture of enterprise, innovation and teamwork. Showcasing the epitome of new age luxury. Featuring
the finest shirts, crafted in Italy. Complemented by exquisite trousers and jackets, made by European
master craftsmen. Experience a new language of charming sophistication this season. Wills Lifestyle
complements the range of premium apparel with a tempting choice of fashion accessories.
This season a wider choice of accessories will be offered across ties, cuff links, socks, caps, hand
bags, wallets, belts, eyewear and shoes. With the introduction of premium formal and relaxed jackets
in the range, Wills Lifestyle will continue to offer the definitive look of the season. Continuing with its
philosophy of bringing to Indian consumers world class products that enrich the quality of their lives,
ITC launched Essenza Di Wills - an exclusive range of fine fragrances and bath & body care products
for men and women in July 2005. Inizio, the signature range under Essenza Di Wills provides a
comprehensive grooming regimen with distinct lines for men (Inizio Homme) and women (Inizio
Femme).The rich and sensual fine fragrances are all day offerings designed by the leading
international fragrance houses in France. The personal care range includes a host of bath and body
care products that share the same olfactory signature of the men’s and women’s fine fragrances to
offer you a harmonized fragrance experience.
ITC forayed into the youth fashion segment with the launch of John Players in December 2002 and
John Players is committed to be the No. 1 fashion brand for the youth. This foray leverages ITC’s
proven competencies in understanding consumer insights, brand building and design capabilities.
Hrithik Roshan, Superstar and Youth Icon, with his innate style, vibrancy and playfulness best
personifies the core attributes of the brand as its ambassador.
FMCG Business Initiatives Lifestyle Retailing
FMCG Business Initiatives Personal Care Products
FMCG Business Initiatives Incense sticks
ITC in Information Technology
ITC InfoTech, a global IT services company, is today one of India’s fastest growing IT and ITES
service providers. Since it's inception in October 2000, the company has established itself as key
player in offshore outsourcing, providing outsourced IT solutions and services to leading global
customers. While an enterprise range of technology capabilities and world class quality processes
form the foundation of ITC InfoTech’s cutting-edge IT service strength, a sharp domain focus ensures
that IT and It’s delivery always places business needs ahead of technology.
The company enjoys the rare advantage of having a practitioner's expertise with a strong vertical
focus in Consumer Packaged Goods (CPG) and Retail, Travel, Hospitality and Transportation, and
Manufacturing - domains that its parent, ITC Limited, has traditionally dominated - as well as in the
main stay of technology service providers: Banking, Financial Services and Insurance.
ITC InfoTech offers services through a global delivery platform with a strength of over 2,000
employees and delivery centers across North America, Europe and Asia-Pacific that serve Fortune-
listed companies in 42 countries. ITC InfoTech conforms to the highest standards in international
process quality, with ISO 27001, ISO 9001, SEI CMM Level 5 and BS 7799 accreditations. These
reflect the company’s ongoing enterprise-wide focus to ensure that every engagement, program and
project delivers international quality consistently.
Industry Recognition: Premier analyst and market research agencies have recognized ITC InfoTech’s
position as the preferred IT partner. It has been:
Featured amongst Top 100 Global Outsourcing Companies in the Leaders category - International
Association of Outsourcing Professionals
Ranked amongst Top 10 Specialty Application Development Providers – Global Services, CMP
Named amongst major Indian global service providers for PLM implementation and engineering
services - ARC Advisory
Listed as a leading Player in CRM & CPG Space – Forrester
Mentioned amongst Top Offshore SAP Service Providers - Forrester
Referred to as a Key Offshore Testing Services Provider - AMR Research
STRATEGIES OF ITC