ITC e-Choupal is an initiative launched by ITC Limited in 2000 to address issues faced by Indian farmers such as fragmented farms, weak institutions, and information asymmetry. It created internet kiosks staffed by farmers in over 40,000 villages, allowing farmers to access real-time market prices and sell directly to ITC. This reduced costs for farmers and ITC by disintermediating commission agents. The model provided economic and social benefits by empowering farmers and building trust between farmers and ITC. ITC is now expanding the initiative through new technologies and services.

1. By
Priyankka Chaurasia
IT, UIT-RGPV

2. Agenda
ITC e-Choupal : An Introduction,
1 Stake holder Analysis
Comparison of status of Supply Chain
2 before and after ITC e-Choupal
Critical Analysis, and Comparison
3 with HKB
4 Future Scope
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3. ITC e-Choupal : An Introduction
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4. ITC :An Overview
 Incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company
 Company rechristened 'ITC Limited‘ in 1974
 One of the 8 Indian Companies to feature in ‘Forbes A-list’ for 2004
 Only Indian FMCG Company to feature in Forbes 2000 List
 Among top in :
 Sustained value creation (BT-Stern Stewart survey)
 Operating profits
 Cash Profits
 Ranks No. 4 among Indian listed Private Sector Companies by market cap. (@ April
09)
 No. 1 in FMCG Sector
 Rated as one of India’s Most Respected Companies (IMRB-Businessworld Survey
2006)
 Diversified conglomerate with interests ranging from Tobacco to Hospitality
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5. ITC’s Agri Commodity Divison
 Farm linkages in 14 states covering Soya, Wheat, Marine
products, Coffee etc. Focus on value added agri commodities
 Unique CRM programme in commodity exports
 Leveraging IT for the transformational ‘e-Choupal’ initiative
Rural India’s largest Internet-based intervention
Over 40,000 villages linked through 6500 e-Choupals
servicing over 4 million farmers
 Distinctive sourcing capability for ITC’s Foods business

6. The predicament of Indian Farmers
Low Risk Appetite
Low Margins Low Investment
Caught in a vicious
cycle of
underdevelopment
Low Value Addition Low Productivity
Weak Market
Orientation

7. ITC e-Choupal
 Started in the year 2000
 Target Area so far 38,000 villages, 6500 kiosks, 9 states
 Wholly owned by ITC
Why it become a success ?
 Only initiative to attempt to combine Services and an
Effective Business Model successfully
Designed to address the issues such as:
1. Fragmented farms
2. Weak institutions
3. Involvement of intermediaries
4. Information Asymmetry

8. ITC’s Supply chain of Soya bean before e-Choupal
Initiative
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9. Pakka Adtiya
(Registered Dealer)
Agri-Input Dealer/
Retailer
Companies Stockiest
Trader
Money
Farmer
Processor
Lender Broker
ITC-IBD
Agril University,
VLW (of Dept of
Met Dept,
Agriculture)
Insurance Co.
Kaccha Adtiya
(Un-Registered Dealer)
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10. Why ITC thought of e-Choupal
The Tactical The Strategic The Social
Imperative Imperative Imperative
ITC’s distance Horizontal
from Farmer spread
Daily price
inflation
Vertical presence
Capture of Intra-
day Price shifts
Risk
Seasonal price
management
Inflation
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11. ITC’s Supply chain of Soya bean after e-Choupal
Initiative

12. Supply chain post re-engineering
Weighing Technolog
Inbound Inspection Hub
Pricing and ical
Logistics Grading Logistics
Payment support
 Pricing
 Previous day’s closing price used as benchmark price for
next day
 Mandi prices communicated to sanchalak through e-Choupal
portal
 Sanchalak inspects the sample, assesses quality and gives
farmer a conditional quote and a note (name/village/quality
tests/approx. quantity/conditional price), if farmer decides to
sell to ITC
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13. Weighing Technolog
Inbound Inspection Hub
Pricing and ical
Logistics Grading Logistics
Payment support
 Inbound Logistics
 Farmer proceeds to the nearest ITC procurement hub with
the note
 Some procurement hubs are ITC factories, others are purely
warehouse operations
 ITC’s aim is to have a processing centre within 30-40 km
radius of its farmers
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14. Weighing Technolo
Inbound Inspectio Hub
Pricing and gical
Logistics n Grading Logistics
Payment support
 Inspection and Grading
 At the ITC procurement hub, laboratory tests are conducted
on a sample of farmer’s produce
 To change farmer’s attitude and appreciating produce
quality, ITC is developing lab tests to reward farmers with
reward points for better quality supply
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15. Weighing Technolo
Inbound Inspectio Hub
Pricing and gical
Logistics n Grading Logistics
Payment support
 Inspection and Grading
 At the ITC procurement hub, laboratory tests are conducted
on a sample of farmer’s produce
 To change farmer’s attitude and appreciating produce
quality, ITC is developing lab tests to reward farmers with
reward points for better quality supply
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16. Weighing Technolo
Inbound Inspectio Hub
Pricing and gical
Logistics n Grading Logistics
Payment support
 Weighing and Payment
 Farmer’s produce is weighed on electronic weighbridge
 He is then given full cash payment
 Freight expenses are reimbursed
 Appropriate documentation at each stage and farmer is
given a copy of that
 Samyojaks handle cash operations
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17. Weighing Technolo
Inbound Inspectio Hub
Pricing and gical
Logistics n Grading Logistics
Payment support
 Hub Logistics
 Farmer transports his produce to the nearest processing
centre or storage hub
 ITC incurs the transportation cost
 The farmer bears the risk of transportation until produce is
delivered and the sale is completed
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18. Inspectio Weighing Technological
Inbound Hub
Pricing n and
Logistics Logistics support
Grading Payment
 Technological support
 Nodal platform catering to commodity blending, agricultural
trading, e-choupal &rural distribution
 24,000 personalized business function points
 110,000+ pre-built business function points
 Integrated Business Systems for Direct Agriculture
Procurement, Rural Distribution, e-Choupal
Management, Exports, Insurance, Aqua Processing &
Commodity blending
 Support for 8 local languages
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19. A win-win Deal
Farmers gain ITC gains
• Better information • Disintermediation
Content savings
• Better info timing • Freight costs
• Less transportation • Quality control
Cost • Risk management
• Transaction duration
• Weighing accuracy
• Professionalism
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20. Transaction cost in Mandi Chain (before e-Choupal)
Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

21. Transaction cost in Mandi Chain (after e-Choupal)
Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

22. Synergies for ITC
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23. Generation of Goodwill & positive public opinion
Better supply chain for ITC’s Food & Agri Businesses
 Costs, Quality, Traceability
Access to the Underserved Rural Markets
 Through a Virtuous Cycle created by “Larger
Incomes”, and founded on “Trust” that is built
New ITES Business Opportunities
 Health, Education, Entertainment, eGovernance
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24. Synergy Redefined :The Future
VPN providing SCM, ERP & CRM capability
F M
A e-choupal rural two-way fulfillment A
R capability R
M Cigarette Trade Marketing capability K
E E
R Expanded FMCG distribution capability T
S S
Branded Lifestyle Education Matches &
Foods retailing Stationery Agarbattis
A basis for strategic partnerships with other FMCG brand owners
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25. Other e-Choupal Initiative
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26. Companies using e-Choupal
network
Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

27. Critical Analysis of ITC’s Supply Chain
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28. Stake holder Analysis
Primary Interest
Stakeholders
Access to information
– Empowered decisions
– Improved agriculture
Economic benefits through lower transaction costs and
Farmer Community process efficiencies
Served with dignity
Knowledge bundled sale of goods and services
Co-opted in product design
Hope for a brighter future
Lower procurement costs
Direct interaction with farmers - Control on quality &
ITC supply security
Low cost distribution channel
Access to market intelligence
Commission Agents Gain access to global markets through ITC and commission
to compensate some of the loss revenue
(Kachha & Pakka
Adatiyas)

29. Efficiencies in e-Choupal network
 Last mile low cost solution
 Full Service approach
 Demand aggregation
 Third party seller
 Extensive use of technology
 Access to information about customers
 Pull based strategy

30. Drivers of Who are in Risk associated
Supply Chain problems with e-Choupal
Information Local Mandi Eroded dominance of
Commission agent
Logistics at hub Mandi laborers
Authenticity of
information
Transportation Market near Mandi
Problem of Power
Storage facilities at and internet
Small processors
hub connectivity
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31. Comparison with Haryali Kisan Bazar
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32. Hariyali Kisaan Bazaar
Hariyali Other companies
kisaan
Loan for pass bazaar
through to farmers
Extension service
ICICI Bank Farmers
Repayment of loan
with interest
Produce procurement
DSCL

33. E-chaupal Haryali Kisaan Bazaar
Main Procurement Rural Retail
objective
Benefit to the computer application to provide provide better method of cultivation by
farmers market information trained agronomist
Synergies Synergies with products which Synergies with what DSCL is
ITC is manufacturing selling(inputs to agriculture plus other
services
Economies of 25-30 km area coverage 20-25 km area coverage
scale
Procurement near small town Strategically placed near petrol pump
centre mainly

34. Future of e-Choupal
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35. e-Choupal 2.0
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36. Version 1.0 v/s Version 2.0
Parameters Version 1.0( the start) Version 2.0( the scale-up)
Idea The concept gave a power of scale to By 2006, 40,000 villages covering 4 million
the small farmers by aggregating them as people.
sellers ( of produce) and as buyers
(of farm inputs)
Farmer’s gain The farmers get bargaining power and a Information on weather, price etc
opportunity of have choice Knowledge on farming methods,
soil testing etc
Purchase of seed, fertiliser to insurance
Farmers sell crops to the ITC centres
cattle care, water harvesting
ITC’s gain Access to inputs for its agri business; ITC was able to procure
offer the use of network to fresh commodities with
other companies reasonable prices from the farmers

37. e-Choupal 3.0.
The Deepening
NEW BUSINESSES:
1) Rural jobs and employability
2) Personalised agri services.
MORE INTERACTION: Through Choupal Saagars and
Haats and via mobile phones
NEW TECHNOLOGY: Use of especially enabled
mobile phones, analytics, new partner
www.themegallery.com Company Logo

38. ITC e-Choupal Footprint
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