Financial Daily from THE HINDU group of publications
Monday, Jun 20, 2005
Agri-Biz & Commodities
Corporate - Outlook
ITC plans 30 rural malls; 2nd phase of e-choupal in 2006
Kolkata , June 19
HAVING successfully established the country's first private sector rural mall, ITC Ltd plans to open 30 more such malls in 2005-06, in synergy with its fast growing e-choupal network.
ITC's rural mall - Choupal Sagar - is at Sehore in Madhya Pradesh.
The construction of nine malls is nearing completion (three each in Maharashtra, Madhya Pradesh and Uttar Pradesh). They may be opened within the next few months.
The Sehore mall, housed in 5 acres of land, has a warehouse space of 10,000 sq ft, besides space for storing 10,000 tonnes of grains, with support facilities such as fuel station, food court and training centre. Each mall, on an average, will cost Rs 5 crore.
Sehore Choupal Sagar is manned by 15 people - six employed by ITC and nine outsourced by Samyojak, a village level co-ordinator. The e-choupals are operated by Sanchalaks or supervisors appointed by ITC.
Talking to Business Line on the current year's strategies for leveraging ITC's agri-sourcing capabilities to support the company's branded packaged foods business, Mr S. Sivakumar, Chief Executive, Agri Businesses, ITC, said, once dry bulk grains (such as wheat and soya) sourced mainly from UP, M.P., Rajasthan, Maharashtra, Karnataka and Andhra Pradesh get saturated, the company plans to move into horticulture products through pilots - the second avatar of the e-choupal network sometime in 2006.
He said research for such e-choupal networks had begun. A deeper penetration into the rural areas is required for the second phase of the farm-based Internet intervention.
Emphasising the importance of high value commodities in the agri-portfolio basket, Mr Sivakumar said it was essential to climb up the value chain, given the volatility of the international commodities markets. It is important to properly profile the customers in agri-business (both domestic and international), he said.
On the emerging synergies between the agri-business portfolios and the branded packaged foods business of ITC, Mr Sivakumar said the food business was anchored on a critical supply chain support, of course drawing heavily on the group's in-house core competencies.
Our competitive edge is in terms of cost and quality segregation, he said. About 60 per cent of the agri-commodities sourcing by ITC, particularly the wheat for atta grading, is for captive consumption. The customers (wheat millers) who provide the volume base are spread out in the regional markets, particularly south India.
According to Mr Sivakumar, the four sets of stakeholders of ITC's agri-business are company shareholders (for whom value is being created), farmers (for whom an alternative for higher income has to be provided), traders (who need to be converted into service providers at the farm level), and the Government (with whom the company intends to work in partnership), in that order.
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