Presented By Mr. Ravindra Mr. Ajinkya Mr. Mangesh Mr. Sharad Mr. Rahul

Agenda1ITC e-Choupal : An Introduction, Stake holder AnalysisComparison of status of Supply Chain before and after ITC e-Choupal Critical Analysis, and Comparison with HKB Future Scope

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ITC e-Choupal : An Introduction

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 Indias Most Respected Companies (IMRB-Businessworld Survey 2006) Diversified conglomerate with interests ranging from Tobacco to Hospitality

ITCs 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 Indias largest Internet-based intervention Over 40,000 villages linked through 6500 e-Choupals servicing over 4 million farmers

Distinctive sourcing capability for ITCs Foods business

The predicament of Indian FarmersLow Risk Appetite

Low Margins

Caught in a vicious cycle of underdevelopment

Low Investment

Low Value Addition Weak Market Orientation

Low Productivity

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. 2. 3. 4.

Fragmented farms Weak institutions Involvement of intermediaries Information Asymmetry

ITCs Supply chain of Soya bean before eChoupal Initiative

Pakka Adtiya (Registered Dealer)Agri-Input CompaniesDealer/ Stockiest Retailer

Trader

Broker

ITC-IBDAgril University, Met Dept, Insurance Co.VLW (of Dept of Agriculture)

Kaccha Adtiya (Un-Registered Dealer)

Processor

Money Lender

Farmer

ITCs Supply chain of Soya bean after eChoupal Initiative

Supply chain post re-engineeringPricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technolog ical 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

Pricing

Inbound Logistics

Inspection Grading

Weighing and Payment

Hub Logistics

Technolog ical 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

Pricing

Inbound Logistics

Inspectio n Grading

Weighing and Payment

Hub Logistics

Technolo gical 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

Pricing

Inbound Logistics

Inspectio n Grading

Weighing and Payment

Hub Logistics

Technolo gical 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

Pricing

Inbound Logistics

Inspectio n Grading

Weighing and Payment

Hub Logistics

Technolo gical 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

Pricing

Inbound Logistics

Inspectio n Grading

Weighing and Payment

Hub Logistics

Technolo gical 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

Pricing

Inbound Logistics

Inspectio n Grading

Weighing and Payment

Hub Logistics

Technologicalsupport

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

A win-win DealFarmers 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

Transaction cost in Mandi Chain (before e-Choupal)

Transaction cost in Mandi Chain (after e-Choupal)

Synergies for ITC

Generation of Goodwill & positive public opinionBetter 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, e-Governance

Synergy Redefined :The FutureVPN providing SCM, ERP & CRM capability

F A R M E R S

e-choupal rural two-way fulfillment capability

Cigarette Trade Marketing capabilityExpanded FMCG distribution capability

M A R K E T S

Branded Foods

Lifestyle retailing

Education Stationery

Matches & Agarbattis

A basis for strategic partnerships with other FMCG brand owners

Other e-Choupal Initiative

Companies using e-Choupal network

Critical Analysis of ITCs Supply Chain

Stake holder AnalysisPrimary Stakeholders 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

Farmer Community

ITC

Commission Agents (Kachha & Pakka Adatiyas)

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 ChainInformation Logistics at hub Transportation

Who are in problemsLocal Mandi Mandi laborers

Risk associated with e-ChoupalEroded dominance of Commission agent Authenticity of information

Market near Mandi Small processors Problem of Power and internet connectivity

Storage facilities at hub

Comparison with Haryali Kisan Bazar

Hariyali Kisaan BazaarLoan for pass through to farmers

Hariyali kisaan bazaar

Other companies

Extension service

ICICI Bank

Farmers

Repayment of loan with interest

Produce procurement

DSCL

E-chaupalMain Procurement

Haryali Kisaan BazaarRural Retail

objectiveBenefit to the computer application to provide farmers Synergies market information Synergies with products which ITC is manufacturing provide better method of cultivation by trained agronomist Synergies with what DSCL is selling(inputs to agriculture plus other

servicesEconomies of 25-30 km area coverage scale Procurement centre near small town Strategically placed near petrol pump mainly 20-25 km area coverage

Future of e-Choupal

e-Choupal 2.0

ITC e-Choupal Footprint