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BEST PROJECT - e-Choupal, ITC International Business Division
PCQUEST - 09 Jun 2004

Project Head: S Sivakumar, CEO, ITC IBD and VVR Babu, CIO, ITC
Location: Six states, To extend more

The e-Choupal project scored high in all the four categories under consideration: innovative idea, technologically challenging project, delivering social benefits and bringing business benefits. No wonder then that the jury was unanimous in its opinion that the project is the best IT implementation project in the country.

Much has been written about the social benefits that ITC’s e-Choupal project has been delivering to the farmers in rural India. Strangely enough, this project has its origins back in 1999 in four terms that are currently buzzwords in the IT industry: CRM, supply-chain management, de-risking and knowledge management.

That was the time when ITC’s then agribusiness division was facing serious challenges to its very existence. The division was into agricultural products trading – commodities trading. The country was opening up and trading majors were seriously considering local operations. Also, commodities trading does not offer may barriers to entry, with commodities (say, Soya) from one region being easily replaceable by the same commodity from another region of the same specifications. To entrench its position, ITC decided to treat the business as a service business, and to look for non-standard needs of customers.

Thus was born project Symphony, which in turn gave birth to the e-Choupal initiative.

The first step under Symphony was a CRM initiative to understand the needs of customers, particularly their non-standard needs. Eighty customers in 35 countries, who contributed to 70 percent of the divisions turnover were identified for this effort. Based on the information collected, ITC identified a $1 billion opportunity space in which it could operate! That led to second step of the project. To meet these opportunities, ITC had to deliver on quality and quantity specifications, which meant that it needed better control over its supply chain, right up to the producer. Now the agricultural commodity market in India is based on the village mandi system, where producers or middlemen bring in the produce to be sold. Usually, the mandi system does not monitor the quality of the product. Also, the produce gets aggregated, so that quality information is lost anyway. It is this context that e-Choupal was conceived as a supply-chain management system, reaching right up to the producer.

e-Choupal combines a Web portal in the local language and PCs with Internet access placed in the villages to create a two-way channel between ITC and the villagers. The project started with a pilot in June 2000 in Madhya Pradesh with Soyabean farmers. Currently, it covers six states, and multiple commodities like prawns, cotton and coffee with 4000 Choupals.

Plans are to reach 15 states by 2010, covering 100,000 villages with 20,000 Choupals.

A set of websites provides the farmers with information on best practices and prevailing prices in the local and international markets. E-mail acts as the conduit for communication between individual farmers and ITC. Farmers can ask ITC about farming practices and also sell their products to ITC through the system, etc.

Each e-Choupal is equipped with a PC with Internet connectivity, printer and UPS. In case the power supply is erratic, a solar panel is provided, and if Internet connectivity is not up to the mark, then a VSAT connection is provided along with another solar panel to support that.

Currently, field testing of notebooks in place of PCs is on in Madhya Pradesh. The IT part of each e-Choupal costs about Rs 1.3 lakh. Each e-Choupal is estimated to pay back for itself in 4.5 years.

By building a network of warehouses near the production centres and by providing inputs to the farmers and test output at the individual farm level, ITC is able to preserve the source and quality information of produce purchased. By helping the farmer identify and control his inputs and farming practices and by paying better for better quality, ITC is able to improve the quality of produce that it purchases. In the commodities market, these two combine to help ITC create the differentiator that it set out to establish in the beginning.

The effort has paid rich dividends in the domestic markets as well. It is able to customize its products to local tastes as it is able to identify source of inputs currently. For example, the Aashirvaad brand of atta that is sold in the Delhi markets has a different combination, compared to the one sold in the South.

The e-Choupal network is now being used to sell ITC as well as third-party products to the villages. It is also being used to provide services like rural market research to those interested. “The next stage of the project,” in the words of Chief Executive of the IBD, S Sivakumar, “is to provide IT-enabled services to the villages, services like health advisories, education and e-governance.” They are eagerly waiting for broadband Internet as set out in the recent TRAI approach paper to become a reality.

The bottom line: Leveraging IT to deliver business and social benefits.