Calcutta, Sept. 13: ITC will start selling life insurance products this month through e-choupals, its click-and-mortar rural distribution network. The tobacco major will be selling products of both Life Insurance Corporation of India (LIC) and private insurers.
ITC is in talks with a number of private insurance companies, and will be finalising the tie-ups soon. It made a presentation to LIC on the strengths of its e-choupal network, and has decided to sell policies written by the state-owned insurance major company.
S. Sivakumar, chief executive of ITC’s agri-business division, said: “A six-month pilot project will get underway with 50 choupals in Madhya Pradesh. It will eventually be rolled out in Andhra Pradesh, Uttar Pradesh and Karnataka. Next year, we will start selling general insurance products.”
ITC currently has some 1,100 choupals and work on 150 more are is in progress. By the end of the financial year, ITC plans to have around 2,000 choupals around the country. In the second phase of expansion, ITC will extend its network to Maharashtra, Tamil Nadu, West Bengal and Kerala, Sivakumar added.
ITC chairman Y.C. Deveshwar had earlier said the tobacco major might underwrite its own policies in future. In the last annual general meeting, the ITC chairman said the company had plans of selling a wide range of financial products and services through its e-choupals.
ITC had, in the past, considered entering the insurance business in partnership with Eagle Star, an arm of BAT Plc, which has since been sold off to ING Barings. Watson Wyatt, an actuary, had even conducted a study for ITC before the tobacco major abandoned its plan of entering the business.
ITC has also been planning to sell consumer goods through its e-choupals. “We are selling edible oil now. In six months, we will be introducing salt, sugar and other food products. But since FMCG companies already have well-established distribution networks, selling financial products should offer better margins.”
ITC’s agri-business has recovered significantly from the “brink of a crisis” thanks to the coming of the monsoons, albeit late. Sivakumar said turnover from the agri-business should grow by over 60 per cent to Rs 1,600 crore this year.
“The situation has significantly improved since mid-July when things were looking ominous. We are now on course to achieving our targets for the year. Much of the growth this year will be due to increased export of non-basmati rice,” he said.