E-Choupal: Transforming

the Rural India

Presented by:
Group 10

Gyanendra

Mahaboob Basha

Akshaykumar

Gagan Patil

Sachin Jain

Krishanu Barua

Agenda
1

ITC e-Choupal : An Introduction

Comparison of status of Supply Chain

before and after ITC e-Choupal

3
4

Critical Analysis of Supply Chain

Future Scope

ITC

ITC e-Choupal : An Introduction

Incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company
Now, the ITC group is one of the Indias foremost sector companies, with a
diversified presence in tobacco, hotels, paperboards, speality papers, packaging,
agri-business, branded apparel, packaged foods, and other FMCG products.
ITCs Agri Commodity Divison
Its international Business Division (IBD) was created in 1990 as an agro-trading
company, which trades in commodities like food-grains, coffee, black pepper,
edible nuts, marine products and processed fruits.
Farm linkages acovering Soya, Wheat, Marine products, Coffee etc. Focus on value
added agri commodities
Leveraging IT for the transformational e-Choupal initiative

Rural Indias largest Internet-based intervention

Over 40,000 villages linked through 6500 e-Choupals servicing over 4 million
farmers

ITC E-Choupal
Started in the year 2000
Target Area so far 40,000 villages, 6500 kiosks, 10 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

ITCs Supply chain of Soya bean before e-Choupal Initiative

Company Logo

Why ITC thought of e-Choupal

The Tactical
Imperative
ITCs
ITCs distance
distance
from
from Farmer
Farmer
Daily
Daily price
price
inflation
inflation
Capture
Capture of
of
Intra-day
Intra-day
Price
Price shifts
shifts
Seasonal
Seasonal
price
price Inflation
Inflation

The
Strategic
Imperative
Horizontal
Horizontal
spread
spread
Vertical
Vertical
presence
presence
Risk
Risk
management
management

The Social
Imperative
Helps
Helps and
and
motivates
motivates
farmers
farmers to
to
bring
bring in
in
better
better quality
quality
Reduces
Reduces
conflicts
conflicts
among
among the
the
farmers
farmers

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ITCs Supply chain of Soya bean after e-Choupal Initiative

Supply chain post re-engineering

Pricing
Pricing

Inbound
Inbound
Logistics
Logistics

Inspecti
Inspecti
on
on
Grading
Grading

Weighin
Weighin
g
g and
and
Payment
Payment

Hub
Hub
Logistics
Logistics

Technolo
Technolo
gical
gical
support
support

Pricing
Previous days 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
Company Logo

Pricing
Pricing

Inbound
Inbound
Logistics
Logistics

Inspecti
Inspecti
on
on
Grading
Grading

Weighin
Weighin
g
g and
and
Payment
Payment

Hub
Hub
Logistics
Logistics

Technolo
Technolo
gical
gical
support
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
ITCs aim is to have a processing centre within 30-40 km radius of its
farmers

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Pricing
Pricing

Inbound
Inbound
Logistic
Logistic
s
s

Inspecti
Inspecti
on
on
Grading
Grading

Weighin
Weighin
g
g and
and
Paymen
Paymen
tt

Hub
Hub
Logistic
Logistic
s
s

Technol
Technol
ogical
ogical
support
support

Inspection and Grading

At the ITC procurement hub, laboratory tests are conducted on a
sample of farmers produce
To change farmers attitude and appreciating produce quality, ITC is
developing lab tests to reward farmers with reward points for better
quality supply

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Pricing
Pricing

Inbound
Inbound
Logistic
Logistic
s
s

Inspecti
Inspecti
on
on
Grading
Grading

Weighin
Weighin
g
g and
and
Paymen
Paymen
tt

Hub
Hub
Logistic
Logistic
s
s

Technol
Technol
ogical
ogical
support
support

Weighing and Payment

Farmers 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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Pricing
Pricing

Inbound
Inbound
Logistic
Logistic
s
s

Inspecti
Inspecti
on
on
Grading
Grading

Weighin
Weighin
g
g and
and
Paymen
Paymen
tt

Hub
Hub
Logistic
Logistic
s
s

Technol
Technol
ogical
ogical
support
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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Pricing
Pricing

Inboun
Inboun
d
d
Logistic
Logistic
s
s

Inspecti
Inspecti
on
on
Grading
Grading

Weighin
Weighin
g
g and
and
Paymen
Paymen
tt

Hub
Hub
Logistic
Logistic
s
s

Technologic
Technologic
al
al
support
support

Technological support
24,000 personalized business function points (information system)
110,000+ pre-built business functions
Integrated Business Systems for Direct Agriculture Procurement,
Rural Distribution, e-Choupal Management, Exports, Insurance and
Processing
Support for 8 local languages

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A Win-Win Deal
Farmers gain
Better information
Content
Better info timing
Less transportation
Cost
Transaction
duration
Weighing accuracy
Professionalism

ITC gains
Disintermediation
savings
Freight costs
Quality control
Risk management

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Transaction cost in Mandi Chain (before e-Choupal)

Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

Transaction cost in Mandi Chain (after e-Choupal)

Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

Synergies for ITC

Generation of Goodwill & positive public opinion
Better supply chain for ITCs 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

Critical Analysis of ITCs Supply

Primary
Chain Interest
Stakeholders

Farmer Community

ITC

Commission Agents

Access to information
Empowered decisions
Improved agriculture
Economic benefits through lower transaction costs and
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 &
supply security
Low cost distribution channel
Access to market intelligence
Gain access to global markets through ITC and
commission to compensate some of the loss revenue

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

Drivers of
Supply Chain

Who are in
problems

Information

Local Mandi

Logistics at hub

Mandi laborers

Transportation

Market near Mandi

Storage facilities
at hub

Small processors

Risk
associated
with eChoupal
dominance of
Commission agent
Authenticity of
information
Problem of Power
and internet
connectivity

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Parameters
Idea

Future of eChoupal
Version 1.0( the start)

The concept gave a power of scale to

Version 2.0( the scale-up)

By 2010, 40,000 villages covering 4 million

the small farmers by aggregating them as people.

sellers ( of produce) and as buyers
(of farm inputs)

Farmers 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

ITCs 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

Version 1.0 v/s Version 2.0

E-Choupal Version 3.0 (the Deepening)

NEW BUSINESSES:
1) Rural jobs and employability
2) Personalised agri services.
MORE INTERACTION: Through Choupal information via mobile
phones and internet
NEW TECHNOLOGY: Use of especially enabled mobile phones,
analytical information, new partners

ITC e-Choupal Footprint

Thank You !