future group ties up with itc choupal

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Future group ties up with ITC Choupal24 Oct 2007

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Hyderabad is in for more retail action. The Future Group’s Food Bazaar has tied up with ITC

Choupal Fresh to sell fruits and vegetables in the twin cities. It plans to replicate the model in the

other cities if the experiment is successful, said Food Bazaar CEO Sadashiv.

Choupal Fresh is ITC’s food retail chain and operates as wholesale-cum-retail stores. It is equipped with warehousing

and cold chain facilities to stock fresh horticulture products that are directly sourced from farmers.

The retail chain leverages on the extensive backward linkages with farmers and supply chain efficiencies. Food Bazaar

is expected to take advantage of the infrastructure by partnering with ITC’s Choupal Fresh.

“We have tied up with local dealers for the supply of fruits and vegetables . These dealers can now tie up with ITC

Choupal Fresh to make their produce available at the Food Bazaar stores,” he said.

Besides such tie-ups , the company is also planning to invest around Rs 200 crore to expand its reach by doubling the

number of stores by July next year with a host of new product offerings . Food Bazaar has around 90 stores now and

is targeting 180 in seven top cities.

The company has both standalone stores as well as in-house stores in Big Bazaar and it plans to continue the same

format f or the upcoming ones as well. “We also plan to have popular food from east, west, north and south India in all

the Food Bazaar outlets. Initially, it will be introduced in tier-I and tier-II cities only and eventually to all the other

outlets in the countr y,” said Mr Sadashiv.

The Big Picture:

ITC's Agri Business Division, one of India's largest exporters of agricultural commodities, has

conceived e-Choupal as a more efficient supply chain aimed at delivering value to its customers

around the world on a sustainable basis.

The e-Choupal model has been specifically designed to tackle the challenges posed by the unique

features of Indian agriculture, characterised by fragmented farms, weak infrastructure and the

involvement of numerous intermediaries, among others.

The Value Chain - Farm to Factory Gate:



'e-Choupal' also unshackles the potential of Indian farmer who has been trapped in a vicious cycle of

low risk taking ability > low investment > low productivity > weak market orientation > low value

addition > low margin > low risk taking ability. This made him and Indian agribusiness sector globally

uncompetitive, despite rich & abundant natural resources.

Such a market-led business model can enhance the competitiveness of Indian agriculture and trigger a

virtuous cycle of higher productivity, higher incomes, enlarged capacity for farmer risk management,

larger investments and higher quality and productivity.

Further, a growth in rural incomes will also unleash the latent demand for industrial goods so

necessary for the continued growth of the Indian economy. This will create another virtuous cycle

propelling the economy into a higher growth trajectory.

The Model in Action:

Appreciating the imperative of intermediaries in the Indian context, 'e-Choupal' leverages Information

Technology to virtually cluster all the value chain participants, delivering the same benefits as vertical

integration does in mature agricultural economies like the USA.

'e-Choupal' makes use of the physical transmission capabilities of current intermediaries -

aggregation, logistics, counter-party risk and bridge financing -while disintermediating them from the

chain of information flow and market signals.



With a judicious blend of click & mortar capabilities, village

internet kiosks managed by farmers - called sanchalaks - themselves, enable the agricultural

community access ready information in their local language on the weather & market prices,

disseminate knowledge on scientific farm practices & risk management, facilitate the sale of farm

inputs (now with embedded knowledge) and purchase farm produce from the farmers' doorsteps

(decision making is now information-based).

Real-time information and customised knowledge provided by 'e-Choupal' enhance the ability of

farmers to take decisions and align their farm output with market demand and secure quality &

productivity. The aggregation of the demand for farm inputs from individual farmers gives them

access to high quality inputs from established and reputed manufacturers at fair prices. As a direct

marketing channel, virtually linked to the 'mandi' system for price discovery, 'e-Choupal' eliminates

wasteful intermediation and multiple handling. Thereby it significantly reduces transaction costs.

'e-Choupal' ensures world-class quality in delivering all these goods & services through several

product / service specific partnerships with the leaders in the respective fields, in addition to ITC's own

expertise.

While the farmers benefit through enhanced farm productivity and higher farm gate prices, ITCbenefits from the lower net cost of procurement (despite offering better prices to the farmer) having

eliminated costs in the supply chain that do not add value.

The Status of Execution:

Launched in June 2000, 'e-Choupal', has already become the

largest initiative among all Internet-based interventions in rural India. 'e-Choupal' services today



reach out to over 4 million farmers growing a range of crops - soyabean, coffee, wheat, rice, pulses,

shrimp - in over 40,000 villages through 6500 kiosks across ten states (Madhya Pradesh, Haryana,

Uttarakhand, Karnataka, Andhra Pradesh, Uttar Pradesh, Rajasthan, Maharashtra, Kerela and Tamil

Nadu).

The problems encountered while setting up and managing these 'e-Choupals' are primarily of

infrastructural inadequacies, including power supply, telecom connectivity and bandwidth, apart from

the challenge of imparting skills to the first time internet users in remote and inaccessible areas of

rural India.

Several alternative and innovative solutions - some of themexpensive - are being deployed to overcome these challenges e.g. Power back-up through batteries

charged by Solar panels, upgrading BSNL exchanges with RNS kits, installation of VSAT equipment,

Mobile Choupals, local caching of static content on website to stream in the dynamic content more

efficiently, 24x7 helpdesk etc.

Going forward, the roadmap includes plans to integrate bulk storage, handling & transportation

facilities to improve logistics efficiencies.

As India's 'kissan' Company, ITC has taken care to involve farmers in the designing and management

of the entire 'e-Choupal' initiative. The active participation of farmers in this rural initiative has created

a sense of ownership in the project among the farmers. They see the 'e-Choupal' as the new age

cooperative for all practical purposes.

This enthusiastic response from farmers has encouraged ITC to plan for the extension of the 'e-

Choupal' initiative to altogether 15 states across India over the next few years. On the anvil are plans

to channelise other services related to micro-credit, health and education through the same 'e-

Choupal' infrastructure.



Another path-breaking initiative - the 'Choupal Pradarshan Khet', brings the benefits of agricultural

best practices to small and marginal farmers. Backed by intensive research and knowledge, this

initiative provides Agri-extension services which are qualitatively superior and involves pro-active

handholding of farmers to ensure productivity gains. The services are customised to meet local

conditions, ensure timely availability of farm inputs including credit, and provide a cluster of farmer

schools for capturing indigenous knowledge. This initiative, which has covered over 70,000 hectares,

has a multiplier impact and reaches out to over 1.6 million farmers.

Would he get a fair price for his crop?

Farmer Ashutosh Dixit was never sure.

Not any more. Thanks to ITC.

Awards

ITC's e-Choupal has won numerous awards:

United Nations Industrial Development Organisation (UNIDO) Award at the

international conference on Sharing Innovative Agribusiness Solutions 2008at Cairo for

ITC's exemplary initiatives in agri business through the e-Choupal.

The Ashoka - Changemakers 'Health For All' Award 2006 for the Rural Health Services

model for delivery of health services through the e-Choupals.

The Stockholm Challenge 2006. This award is for using information technology for the

economic development of rural communities.

Innovation for India Award 2006 for ITC e-Choupal in the Social Innovations

category for business organizations. The first of its kind in India, based on parameters of

number of lives impacted, degree of impact on organization and environment, uniqueness,

leverage of resources and whether it was scalable and sustainable, e-Choupal was declared as

one of 'India's Best Innovations'.

The Development Gateway Award 2005 (previously known as the Petersberg Prize) for the

trailblazing e-Choupal initiative. ITC is the first Indian company and the second in the

world to win this prestigious award.

The 'Golden Peacock Global Award for Corporate Social Responsibility (CSR) in

Emerging Economies for 2005'. The Company received this award for its e-

Choupal and social and farm forestry initiatives that are impactfully transforming lives and

landscapes in rural India.

http://www.itcportal.com/sustainability/lets-put-india-first/fair_price.aspx









The Corporate Social Responsibility Award 2004 from The Energy and Resources

Institute(TERI) for its e-Choupal initiative. The Award provides impetus to sustainable

development and encourages ongoing social responsibility processes within the corporate

sector.

The inaugural 'World Business Award', instituted jointly by the International Chamber of

Commerce (ICC), the HRH Prince of Wales International Business Leaders Forum

(IBLF) and the United Nations Development Programme (UNDP). This award

recognises companies who have made significant efforts to create sustainable livelihood

opportunities and enduring wealth in developing countries.

future group ties up with itc choupal

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