Somnath Dasgupta

Kolkata, July 10

Entire states in central, southern and northern India have fallen, and over 14,000 villages are under its spell. Next month, the juggernaut will roll quietly into Maharashtra, capturing around 1000 villages.

The juggernaut is ITC Ltd, the Kolkata-based tobacco and cigarettes major that has been quietly pitting its blue-blood management into the task of transforming rural India, even as it walks the fashion ramps from Mumbai to Delhi with branded apparel, or invades yuppie kitchens with canned delicacies.

ITC plans to set up 200 computer kiosks in the Vidharba soyabean region next month. The sheer size of the rollout shows the success of its ambitious information technology programme that was launched way back in 2000 with just six kiosks in Madhya Pradesh to give farmers real-time access to world market trends, input costs and even micro weather reports.

The e-choupals, as ITC calls its computer kiosks, have already captured the hearts of farmers in wide swathes of India. From soya farmers in Madhya Pradesh, to wheat farmers in Uttar Pradesh, coffee growers in Karnataka and prawn farmers in Andhra Pradesh, every group has its own portal (entry by invitation only, please).

Each e-choupal, manned by a trained villager designated the "sanchalak", covers around five villages.

Next to fall will be West Bengal, where ITC aims to prove that the debate about contract farming is pointless, since contracts with individual farmers are an expensive proposition.

As ITC chairman YC Deveshwar readies to meet shareholders at their 96th annual general meeting next Friday, he can claim two roles for his company and himself.

The first, known to all, is that of ITC as a blue-chip corporate which is the market leader in cigarettes, owns some of the best hotels, and is now firmly placed in a wide range of consumer goods.

The second: that of a company transforming the lives of millions of farmers in a cost-effective manner that benefits both ITC and the farmer. In fact, it is ITC’s role in rural India - in e-choupals, in social and farm forestry, even watershed development - that is proving to be the more satisfying of the two.

Look at the impact numbers. For the year to March 31, 2003, ITC reported a net profit of Rs 1,371 crore on gross turnover of Rs 11,025 crore, with cigarettes still accounting for over 80 per cent of profits and sales. While ITC’s cigarette sales grew, increasing taxation and regulation have had the effect of reducing the use of tobacco in cigarette form.

Now check out the e-choupal business: in June 2000, ITC made a modest beginning with just six of them in Madhya Pradesh. In coming month, it aims to install 200 e- choupals. Within a decade, it will cover 100,000 villages in 15 states with 20,000 e- choupals.

ITC aims to spend around Rs 1,000 crore on its rural initiatives in this decade. It will use the same channels to push products into the villages, from insurance to consumer goods. And his captive market? Around 10 million villagers, with none of the hassles of door-to-door surveys and bullock cart rides.

ITC is no stranger to rural India: it is heavily into tobacco buying and support, and has been exporting a host of farm produce. In fact, the e-choupal project was born from the realisation that it should be able to get good quality agri-produce without having to scour the chaotic mandis.

What better way to do it than to help farmers with the best-of-class inputs and information?

After all, the farm sector accounts for nearly 60 per cent of the country’s workforce but contributes barely 23 per cent of GDP. Even so, the economy depends to a large degree on the rural sector to stimulate demand.

"The e-choupal initiative aims to contribute to improving the international competitiveness of Indian agriculture, by enabling farmers to leverage knowledge that is readily accessible with the power of the Internet," says ITC.

The social and farm forestry project, which pre-dates the e-choupal thrust, has expanded beyond ITC’s own needs of fodder for its thriving paperboard and packaging business. ITC plans to cover 100,000 ha of barren private wasteland with green cover in a decade. The company will be planting 600 million saplings on these wastelands, generating additional jobs that will benefit at least 1.2 million people.

ITC’s own research centres created 35 million high- yielding disease-resistant saplings that have greened 16,000ha of fallow wastelands. The social forestry programme has become another example of ITC’s corporate philosophy: nurture some noble ideas without a thought for balance-sheet costs, and you have a business rooted deep in success.

"ITC’s afforestation project is inspired by the deeply worrying realisation that India’s woefully poor forest cover - a meagre 11 per cent of the geographical area of the country against a desirable 33 per cent - bodes unremitting gloom for the rural poor," says ITC.

The action: "ITC has effectively leveraged its long-term need for high quality wood fibre, to manufacture international quality paperboards, to create significant livelihood opportunities for the economically backward owners of private wastelands," says ITC.

The result: creation of grassroots capacities to initiate a continuous and virtuous cycle of sustainable development.

Cost to company: The supply of saplings. And the effort of identifying poor tribals, organising them into self-supporting forest user groups and training them to follow the best practices for growing high-quality timber as a cash crop, while also rearing other species for their own domestic, fodder, fuel and nutrition requirements.

Of course, it also provides a comprehensive package of support and extension services to farmers - from loans to marketing. After a farmer reaps his harvest, he returns the loan to his user group, helping create a village development fund.

At the heart of the green technology initiative is ITC’s research centre in Bhadrachalam in Andhra Pradesh, a place now synonymous with the best in paperboard.

The high-yielding, fast-growing ‘Bhadrachalam’ clones have been produced on a commercial scale, and include 23 site-specific clones adapted to problematic alkaline and saline soils. Within 10 years, ITC will have become self-sufficient in raw materials for its paperboard business.

As Mr Deveshwar had said after the AGM two years ago: "The key is to go the extra mile, toil harder...to try and develop the competitiveness locally".

After many miles and many states, Mr Deveshwar can confidently tell his shareholders: "Your directors look forward to the future with confidence".