Suman Das Sarma & Sutapa Raha
THIS is one mega-repositioning. ITC is moving from a cigarette major to a farm- to- FMCG
(F2F) major. Mr. Y. C. Deveshwar, chairman, ITC Ltd, says focus in the next decade will be
on the "farm and FMCG superhighway that can be used as an effective infrastructural
link to align Indian farmers with markets." But he is quick to add: "of course,
we will still be making cigarettes."
Here's a peek into Deveshwar vision… Rs 5,000 crore business (at current prices) from
ITC'' F2F in the next seven years. ITC's tobacco and cigarette business, which has a major
80% plus share in overall sales of around Rs 10,000 crore, is likely to come down
sizeably.
Little wonder that Mr. Deveshwar does not mention the "cigarette" word often
these days. In fact, the ITC chairman's 16-page theme speech at the company's annual
general meeting (AGM)- Transformational Change in Rural India- does not utter the word
"cigarette" even once.
Explaining ITC's future strategy Mr. Deveshwar said it would be pivotal on three types of
business- agri-trading, two- way marketing of products and services in and out of villages
and the branded FMCG segment.
"Ultimately we hope to see a convergence or a chain link between the farm products
and the branded end," he said.
What is the business sense behind an F2F strategy? "Cut out intermediaries, reduce
cost of logistics through IT-enabled services (e-choupals), get captive product sourcing
and acquire a unique access to a trade marketing and distribution channel."
ITC is targetting "multiple crops and geographies, encompassing value chains
associated with soya, wheat, rice, acqua products, coffee, wood fibre, etc across 14
states of the country. "The aim is to create a low-cost IT-based interactive
transaction and fulfilment channel to cover 1 lakh villages representing one-sixth of
Indian villages. Today ITC has already set up 1,020 choupals or parallel IT-enabled direct
marketing and procurement terminals and we are adding 4 choupals per day," the ITC
chairman added.
Agreeing that such extension work in the farm area needs more physical attention, he
stresses that the use of IT will only make things easier. "The digital infrastructure
can also be used for channelising services related to credit, insurance, health, education
and entertainment, in addition to serving as a strong foundation for creating a vibrant
futures market to facilitate farmer risk management," he added.
While F2F may not be key competency area of BAT, the single largest block stake-holder in
ITC, Mr. Deveshwar said: "BAT has also approached the power of what we are
doing."
