The ITC e-Choupal Initiative

ITC: An Overview
 Incorporated on August 24, 1910 under the name of
'Imperial Tobacco Company
 One of the 8 Indian Companies to feature in ‘Forbes A-
list’ for 2004
 Diversified conglomerate with interests ranging from
Tobacco to Hospitality
 Farm linkages in 14 states covering Soya, Wheat, Marine
products, Coffee etc.
1. Objectives of ITC’s e Choupal initiative
Make IBD globally competitive on par with the other
subdivisions
Develop a supply chain and improve its efficiency
Get better deal for ITC and farmers
Obtain better quality produce
Build trust and obtain long-term partnership with farmers.
Future objectives
Scalablity
Use of ITC hub for selling other products to the rural
community
Agro –Extention services( crop insurance, crop credit
Use e-Choupal website for advertising
2 ) Changes bought in the Supply Chain :

Existing Supply Chain

Changed Supply chain
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
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
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
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
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
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
Value to Stake-Holders
Farmer Community
 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
ITC
 Lower procurement costs
 Direct interaction with farmers - Control on quality & 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
3. Conclusion
To make this model more sustainable ITC should own
the kiosks and appoint sanchalaks as manager to
monitor the activities . This will help ITC to overcome
the future threats of inefficient services due to
personal problems of kiosks owner and will have
ownership rights on the kiosks.