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Now, e-choupal goes pay-to-use
Hindustan Times - 29 Jul 2005

ITC Ltd is preparing to leverage its e-choupal distribution and procurement network over the next year by allowing other companies to use it. Already, 40 companies have come on board to use the distribution facility.

The director's report in the company's annual report for 2004-05 says, "What began as an effort by your company to re-engineer the supply chain in respect of commodity procurement is rapidly transforming into a highly efficient, low cost fulfillment capability, not only for ITC, but also for those who wish to obtain the benefits of such a wide and deep marketing and distribution capacity."

Presently, the network has 5,200 choupals, reaching 31,000 villages and three million farmers, especially in Madhya Pradesh, Uttar Pradesh, Rajasthan, Karnataka, Maharashtra, Andhra Pradesh and Kerala, the report says.

On the procurement front, the report notes that e-choupal has helped ITC establish its Aashirvaad brand atta as the leader in the segment. The company is trying to use the procurement advantage and replicate the success with its Sunfeast brand of biscuits and snacks. However, the company will offer the procurement facility selectively, so that its advantage in products like atta or biscuits is not compromised.

The report says that for commodity trading the company may be "exploring opportunities to become sourcing partners for large and organized players".

The company plans to go into exports of value added products and also enter into long term deals with the animal-feed industry for procuring soya. The report notes, "Nearly 40 companies, both from the public and the private sectors are already being served by the network." The products include agri-inputs, vehicles, consumer durables, insurance products and marketing services.

The company will now invest in training Sanchalaks who man the e-choupals and is deploying a comprehensive network management system. The company had also started a rural hypermarket titled Choupal Sagar in Madhya Pradesh. An FMCG analyst said, "The rural network is important for an FMCG company as it allows these companies to reduce the intermediary cost." Sources close to the company said that Nagarjuna Fertilisers, Monsanto, Eicher, Hero Cycles, LIC and ICICI Prudential have, among others, used ITC's e-choupal network for marketing their products.