Pradeep Gooptu, Sambit Saha in Kolkata

ITC is tying up with Bharat Petroleum Corporation Ltd (BPCL) to sell cooking gas through its e-choupal network in Madhya Pradesh and Uttar Pradesh.

Both ITC and BPCL officials confirmed the development, and a formal announcement to this effect will be made soon.

"We are expanding the product range available on the e-choupal network and liquefied petroleum gas (LPG) is one of them," an ITC official said.

BPCL would use the tie-up to expand its rural reach. The rural market has become the new battleground for LPG players, with urban areas witnessing near-saturation. LPG sales, dominated by public sector firms , grew by 11 per cent this fiscal, with the rural market contributing a significant chunk of new connections. BPCL's sales, however, grew by 15 per cent in 2003-04. The company has 25.6 per cent market share in the segment.

"There is a strong sales growth from rural and semi-urban areas with consumer preference shifting from fuels such as wood, coal and kerosene to LPG," an industry expert said.

Companies faced problems in marketing LPG to households scattered in far-flung areas. As parallel trading centres attracting the affluent rural citizen, e-choupals provide ideal reach and excellent connectivity to interior locations, sources said.

The ITC's e-choupal Internet backbone will permit good inventory and customer relationship management. ITC has been adding on 4-5 new e-choupals daily, aiming to cover more than two-thirds of the rural population in the country with focus on select commodities in specific states.

The e-choupal network is expected to touch 4,100 installations by March 2004, reaching out to 2 million farmers in close to 18,000 villages in the states of Madhya Pradesh, Uttar Pradesh, Maharashtra, Karnataka, Rajasthan and Andhra Pradesh.

Pilot-runs in respect of various rural marketing initiatives were under way and business models were being fine-tuned prior to scaling up.

For example, Megatop Insurance, an ITC subsidiary, provides insurance services to rural households in Andhra Pradesh and Madhya Pradesh. With this, ITC aims to become the largest insurance service providers to rural customers with a major customer base by leveraging its e-choupal network.

The e-choupal network has been used as a mechanism to create and intermediary-free market in specific products in select states, such as soya in Madhya Pradesh.