The Telegraph
Since 1st March, 1999
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FMCG e-channels take root in villages

Calcutta, Nov. 17: Hindustan Lever’s rural distribution channel ‘e-shakti’ would reach 10 crore consumers in the next four years, chairman M. S. Banga said today.

Hindustan Lever is using ‘e-shakti’ — its electronic distribution network — to penetrate “media-dark” villages, where the company has not been able to make inroads even with product communication.

“We started e-shakti in Andhra Pradesh, and are now rolling it out across the country. Our aim is to reach 100 million consumers in three to four years,” Banga said.

Asked whether Hindustan Lever could join forces with another company in rolling out its electronic distribution channel, Banga said: “We are open to partnership with companies that do not compete with us.”

Hindustan Lever’s ‘e-shakti’ is similar to ITC’s e-choupal network, which has already reached 12,500 villages in five states. It is being scaled up at a breakneck speed — ITC is setting up six choupals per day.

There is, however, one key difference between the two networks: whereas ITC uses its e-choupals to source agricultural commodities, Hindustan Lever plans to sell its products through its rural network. Speaking at the Infocom seminar here today, ITC chairman Y. C. Deveshwar said: “We are looking to reach one lakh villages through 20,000 choupals in 5 to 7 years.”

“By 2010, we expect revenues from the e-choupal network to exceed all other sources,” he added. ITC still earns 70 per cent of its revenues from tobacco sales, but the company is trying to cut its reliance on tobacco to put up with falling volumes.

The e-choupal network would have a “strong multiplier effect” on the economy by empowering the rural masses and creating an environment for greater consumer spending, the ITC chairman said.

“E-choupals help villagers realise a better value for their produce by disseminating knowledge. Previously, a villager wouldn't know about prices beyond his mandi. But he could now access information on prices, inputs, weather and so on through the network.”

Lower income leads to lower spending. And if income grew, spending, too, would increase. “It could even solve Mr. Banga's problem of topline growth,” Deveshwar remarked.

But would the two companies join forces to grab the rural market' Banga and Deveshwar have already discussed joining hands for rainwater harvesting to reduce dependence on rainfall.

To outline the importance of agriculture and the rural market, Deveshwar said seven out of 10 Indians lived in villages, and 60 per cent of the work force was linked to agriculture in some way or the other.

Addressing the Infocom seminar earlier, Banga said Hindustan Lever’s goal was to switch to a “daily planning cycle”. “The objective is to work towards a situation where we would replenish our stock daily.”

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