ITC Ltd will connect 100,000 villages through its e-choupal network in the next 10 years.
"We have already set up more than 1,000 e-choupals, and hope to link up 100,000
choupals much before the 10-year deadline," chairman Y C Deveshwar said today after
the company's annual general meeting. Each choupal costs between Rs 1.5 lakh and Rs 3 lakh
to set up and the first thousand has cost around Rs 10 crore. Investments will not be a
constraint in rolling out the new network as the initiative has a clear business model.
The network helped the company source raw material from the countryside which was cheaper
and better because it eliminated the intermediary cost and shared the benefit between
buyer and seller, Deveshwar said.
"This FMCG superhighway can serve as a basis for powerful partnerships with other
FMCG brand owners who wish to obtain the benefits of such a wide and deep trade and
distribution capability," he said, adding, "Such strategic partnerships will be
the basis for growth in revenues and shareholder value".
The trade model permits farmers to bypass the traditional mandi and directly transfer
their produce to ITC's depots or factories, reducing procurement and logistics costs. A US
agency linked to a leading American university is carrying out a survey to identify ways
to further reduce transaction costs in the e-choupal network. Deveshwar pointed out that
ITC was not moving away from its tobacco and cigarette business, which still had adequate
potential for growth. However, owing to the attention to new areas, a series of FMCG
products would be launched in the coming months.
