lTC's agri and paperboards businesses turned the corner through a great transformational idea: of becoming globally competitive by empowering entire value chains
ITC's transformational journey through the mid-nineties into the nation-oriented, multibusiness conglomerate that it is today is a story of powerful innovation, an abiding vision to enhance the development of society through unique corporate strategies, and the perseverance to take the road less travelled to achieve these goals. Having had the privilege of leading the organisation over these challenging but exciting years, there is a secret that I can share with you today. Our corporate strategy, which uniquely synergises business objectives with a larger sense of social purpose, was born as much out of an inspiring vision as of necessity.
When I took over as Chairman of lTC, two of our businesses were facing tremendous competitive pressures, perhaps even the threat of closure. The agri-business, which back then concentrated largely on agri-exports, was floundering in the face of competition from large, international companies, which had wider options for risk management and arbitrage. The paperboards business, then residing in ITC Bhadrachalam Paperboards, was also surrounded by adversity. While it had survived financially in a closed economy, despite an uneconomic scale compared to global benchmarks, the opening up of the economy brought down customs duties drastically, exposing it to the rigours of international competition. The choice, according to the financial community, analysts and a section of shareholders, was clear. "Shut them down and cut your losses," they said. We disagreed. Today, with many years of perseverance and conviction, we are proud that we could prove the cynics wrong. Behind these two amazing turnaround stories lies a great transformational idea: of becoming internationally competitive by empowering entire value chains. Imagine going rural with information technology to bring to villagers the power of the cyberworld. Better still, imagine teaching tribals to grow trees to support India's largest value-added paperboards business. With lTC's e-Choupal and social forestry programmes, we set about to create new hopes for rural India, embedding a new source of competitive advantage to our businesses. The e-Choupal initiative is a powerful illustration of the potential of information technology to transform the rural economy, notwithstanding the structure and size of land holdings in India. This alternative model leverages the power of the Internet to empower the small and marginal farmer with a host of services related to know-how, best practices, timely and relevant weather information, transparent discovery of prices, and much more. This digital infrastructure can also be used to channelise services related to credit, insurance, health, education and entertainment. It can also serve as a strong foundation for linking small and marginal farmers to futures markets to facilitate farmer risk-management. The ITC e-Choupal is not just a village digital kiosk with a human interface. The access to e-Choupals, within walking distance from the farm gate, is supplemented through physical infrastructure-the ITC Choupal Saagar-which functions as a hub for a cluster of villages within distances that can be covered with a tractor. These made-to-design hubs also serve as warehouses and rural hypermarkets for a variety of goods. In effect, the e-Choupal infrastructure is potentially an efficient delivery channel for rural development and an instrument for converting village populations into vibrant economic organisations. An environment rife with illiteracy, lack of basic infrastructure and low incomes makes the rollout of this initiative extremely challenging. Despite daunting implementation challenges, the potential benefits of this project have spurred ITC to seek innovative solutions to overcome these constraints. This rural infrastructure project now comprises about 6,500 installations covering nearly 40,000 villages and serving about four million farmers. Over the next seven to 10 years, it is lTC's vision to create a network of 20,000 e-Choupals, thereby extending coverage to 100,000 villages representing one-sixth of rural India. This networked rural delivery system can contribute significantly towards addressing the 'knowledge deficit' highlighted so forcefully by the National Commission on Farmers. It can also meaningfully complement the Bharat Nirman initiative of the government, towards truly securing a "new deal for rural India". The transformational impact of this pioneering initiative continues to earn global and domestic accolades.
Tree Of Life
The promotion of the woodbased industry carries the potential to make a vital contribution towards the creation of rural livelihoods and the restoration of ecological balance. lTC's presence in the pulp-based value chain provides the basis for a significantly enlarged contribution by developing wastelands through the promotion of agro forestry. In partnership with NGOs, the government and the rural community, ITC identifies poor tribals with private wastelands and organises them into self-supporting forest-user groups. Leveraging in-house biotechnology capability, ITC makes available high-yielding, disease-resistant clonal saplings. A comprehensive package of training and extension services is provided to the user groups, facilitating the adoption of best silvicultural practices to meet the needs of both commercial pulpwood and fuelwood. The pace and scope of this initiative have rapidly expanded over the last few years. So far, more than 300 million saplings have been planted over 77,000 hectares under the farm and social forestry programmes. The growing competitiveness of lTC's paperboards business and its increasing market strength provide the impetus for the company to scale up the afforestation endeavour to cover over 100,000 hectares by planting 600 million saplings over the next few years, in the process creating about 40 million person days of employment among the disadvantaged. Such a scale has already positioned ITC as a carbon-positive enterprise. lTC's afforestation endeavour, together with other energy conservation measures, has enabled the company to sequester nearly twice the carbon dioxide emitted by its operations. This 'commitment beyond the market' shapes the quality of lTC's partnerships with the various constituents of its value chains-farmers, suppliers, employees and the state. Such a commitment propels ITC to contribute far beyond servicing financial capital to enlarging economic, social and environmental capital for the nation. This unique spirit of synergising business objectives with a larger sense of social and environmental purpose is what we call a 'triple bottom line approach' -a powerful idea that has inspired lTC's transformation and is at the core of its business strategies.