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Published by: Archit Srivastava on Feb 22, 2011
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02/22/2011

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ITC e-Choupal

By KAJAL FAIYAZ

Agenda

1

ITC e-Choupal : An Introduction, Stake holder Analysis

2

Comparison with HKB

3

Future Scope

ITC e-Choupal : An Introduction

4 among Indian listed Private Sector Companies by market cap. 1 in FMCG Sector ` `  Ranks No. 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 No.ITC :An Overview      Incorporated on August 24. (@ April 09)    Rated as one of India·s Most Respected Companies (IMRB-Businessworld Survey 2006) Diversified conglomerate with interests ranging from Tobacco to Hospitality .

Wheat. 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 . Marine products.ITC·s Agri Commodity Divison  Farm linkages in 14 states covering Soya. Coffee etc.

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

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.ITC e-Choupal Started in the year 2000 ` Target Area so far 38. 4.000 villages. 2. 3. Fragmented farms Weak institutions Involvement of intermediaries Information Asymmetry .

Why ITC thought of e-Choupal The Tactical Imperative ITC·s distance from Farmer Daily price inflation The Strategic Imperative Horizontal spread The Social Imperative Vertical presence Capture of Intraday Price shifts Seasonal price Inflation Risk management Company Logo .

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 Company Logo .

Transaction cost in Mandi Chain (before e-Choupal) .

Transaction cost in Mandi Chain (after e-Choupal) .

Synergies for ITC Company Logo .

and founded on ´Trustµ that is built Health. Entertainment. Education.Generation of Goodwill & positive public opinion Better supply chain for ITC·s Food & Agri Businesses ` Costs. Quality. eGovernance Access to the Underserved Rural Markets ` New ITES Business Opportunities ` .Traceability Through a Virtuous Cycle created by ´Larger Incomesµ.

Synergy Redefined :The Future VPN providing SCM. ERP & CRM capability F e-choupal rural two-way fulfillment A capability R M Cigarette Trade Marketing capability E R Expanded FMCG distribution capability S Branded Foods Lifestyle retailing Education Stationery Matches & Agarbattis M A R K E T S A basis for strategic partnerships with other FMCG brand owners .

ECHOUPAL WEBSITE MARATHI SOYABEEN .

ECHOUPAL WEBSITE MARATHI ² EMAIL .

Other e-Choupal Initiative Company Logo .

Companies using e-Choupal network .

.

Stake holder Analysis Primary Stakeholders y Interest 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 y Farmer Community y y y y y y ITC y y y Commission Agents (Kachha Adatiyas) & Pakka .

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 Information Logistics at hu Transportation Storage facilities at hu Who are in pro lems Local Mandi Mandi la orers Risk associated with e-Choupal Eroded dominance of Commission agent Authenticity of information Market near Mandi Small processors Pro lem of Power and internet connectivity Company Logo .

Comparison with Haryali Kisan Bazar Company Logo .

Freedom of Information Information & Knowledge is free of cost No initial investment of the Sanchalak Not subsidized.How is eChoupal different? 1.Govt does not pay . ` 2. the shareholders look for a competitive return. Entrepreneurship No salary paid to Sanchalaks ² a commission based model ` . Freedom of Transaction Farmers are free to sell their produce anywhere ` 3.

Hariyali Kisaan Bazaar Hariyali kisaan bazaar Other companies Loan for pass through to farmers Extension service ICICI Bank Farmers Repayment of loan with interest Produce procurement DSCL .

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

Future of e-Choupal Company Logo .

0 .e-Choupal 2.

40.000 villages covering 4 million the small farmers by aggregating them as people.Version 1. price etc opportunity of have choice Knowledge on farming methods.0 v/s Version 2.0( the scale-up) By 2006. offer the use of network to other companies ITC was able to procure fresh commodities with reasonable prices from the farmers .0 Parameters Idea Version 1. water harvesting ITC s gain Access to inputs for its agri business. fertiliser to insurance Farmers sell crops to the ITC centres cattle care.0( the start) The concept gave a power of scale to Version 2. sellers ( of produce) and as buyers (of farm inputs) Farmer s gain The farmers get bargaining power and a Information on weather. soil testing etc Purchase of seed.

new partner .e-Choupal 3. MORE INTERACTION:Through Choupal Saagars and Haats and via mobile phones NEW TECHNOLOGY: Use of especially enabled mobile phones.0. analytics. The Deepening NEW BUSINESSES: 1) Rural jobs and employability 2) Personalised agri services.

ITC e-Choupal Footprint .

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