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A Project Report on

Submitted to:-

Submitted by:-

C. NAGAPAVAN (Assistant Professor)

CHIRANJEEV RAJ

Centre for Business Administration,


School of Management Sciences,
Central University of Jharkhand.
Brambe, Ranchi.

CUJ/I/IMBA/2011/08
Centre for Business Administration
Central University of Jharkhand
Brambe, Ranchi.

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ABOUT ITC
ITC was incorporated on 24 August, 1910 under the name
Imperial Tobacco Company of India Limited. It was changed to
India Tobacco Company Ltd. in 1970. It was renamed as I.T.C.
Limited in 1974. Finally on 18 Sept 2001 it was rechristened as ITC
Limited.
Registered Office at Virginia House, 37 J.L. Nehru Road,
Kolkata.

ENVIRONMENTAL ANALYSIS:INTERNAL ENVIRONMENT-

ITC CORE VALUES:Trusteeship; Customer Focus; Respect to people; excellence;


Innovation and Nation orientation.

PERSPECTIVE:Focus on transforming commodity export business from being a


price-sensitive and a cash leveraged trading operation.

MISSION OF ITC- ABD :To become the first choice supply chain partner for select
international customers accessing the finest agricultural and aqua
products.

VISION OF ITC-ABD:- To create 20,000 e-choupals to spread


into 1,00,000 villages representing 1/6th of rural India.
ITC ABD was established in 1990 which contributes 60% of ITCs
total foreign exchange earnings.
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ITC Agri-business operates in 2 areas:1. Leaf Tobacco by ILTD ITC Leaf tobacco Division which
is Indias largest buyer, processor, consumer and
exporter of cigarettes and tobaccos. It has emerged as a
major exporter of tobacco leaf.
2. Agri-commodities by ITC-ABD ITC Agro-Business
Division.
Where ITC-ABD does fits into ITC Family?
ITC has wide range of business activities:ITC Limited

FMCG

Hotels

Packaging

Paperboards &
Specialty Paper

Information
Technology

Agri-business

Leaf Tobacco
Agri- commodity

The Brand Equity and Public Image is represented by:

ITC-ABD Awards & Honours


1. Golden Star trading house by Govt. of India.
2. UNIDO United nations Industrial development Organization
Award
3. The Ashoka - Changemakers Health for all
4. CSR Award from TERI Tata energy research institution
5. E-choupal initiative applauded by Dr. A.P.J. Abdul Kalam
during his presidentship tenure on 5th june 2007
ITC Chairman Y.C. Deveshwar was recently ranked 7th among
World top 100 CEOs by Harvard Business Review Jan-Feb
2013 edition

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HIERARCHY OF ITC-ABD:-

CEO- S. Shivkumar
COO- Rajnikant rai
VP Finance- Kuryan G. Stephanos
VP HR- L. Prabhakar
GM Channel & Head e-choupal- Shailesh Naik
ITC-ABD Headquarter - HYDERABAD, Andhra Pradesh.

FINANCIAL CAPABILTIES :ITC is the parent company of ITC-ABD. Non- cigarette


business of ITC is worth 5500 crore . 60% of ITC is Noncigarette business i.e. Foods business. ITC-ABD through
its production has fuelled the growth of ITC FMCG
Business in form of contributing to Kitchens of India and
promotion of brands such as Aashirwad atta, potato
chips for Bingo and others.

PRODUCTS OF ITC-ABD:

Coffee

ITC - ABD

Food Grains
Feed Ingredients
Processed Fruits
Aqua Products
Nuts & Spices

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TECHNOLOGICAL CAPABILITIES:1. Coffee - State-of-the-art Curing works to process the raw


coffee supervised by a dedicated team.
2. Food Grains - Products are packed in Polypropylene & Jute
bags. Operational efficiency is achieved by vessel chartering
skills for swift loading and forwarding the cargo for timely
delivery.
3. Food Ingredients - Processed soya beans are manufactured
in leased processing plant under strict quality control team.
4. Processed Fruits - ITC-ABD possess operational logistics,
processing network for fruit packed in aseptic bags, frozen
forms or in cans.
5. Aqua products Products are processed in hygienic
conditions under in-house control norms. Products are
bacteriologically tested. In-house stuffing is present to
maintain product temperature.
6. Nuts & Spices - Packed in Jute bags, polypropylene bags,
paper bags. Strict quality norms are followed.

To sum up ITC-ABD has state-of-the-art technological


capacities which makes it most preferred and those factors
are:Efficient warehouse management
Vessel charting skills
Logistics planning & control on delivery time
0% default record of delivery on time
R & D centres at Bangalore for research in agronomy,
microbiology, plant breeding, genetics and cell biology.
R & D Centres are also at Bhadrachalam and Rajahmundry
(Andhra Pradesh).
Collaboration with IISc( Indian Institute of Science)
Bangalore & University of agriculture science, Bangalore.

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HACCP (Hazard Analysis and Critical Control Point) for


ensuring food safety; ISO 17025 for key-testing protocols
It follows TQM (Total quality management) & 6 sigm

ITC-ABD e-Choupal: (Version 3.0)


A unique initiative by ITC which was the brainchild of
S. Shivkumar. It uses physical transmission capabilities of
current intermediaries - aggregation, logistics, counterparty risk and eliminate middlemen.
Village internet kiosks managed by trained farmers called
Sanchalaks who help in enabling access to website
www.itc.abd.com which helps to gain information in local
language about weather, market price of crops, scientific
crop practices, risk management and also provides
customised knowledge to farmers.
This technology is supported in remote areas
through power back-up by solar panel; upgraded BSNL
exchanges; VSAT equipment installation; mobile choupals
and 247 helpdesk support.
ITC e-choupal has become a case study for graduates of
Harvard Business Schol (HBS) and a forthcoming issue in
World Business Council for Sustainable Development
(WBCSD).

MARKET CAPABILITIES:1. Coffee - Strong procurement centres in Coorg &


Chickmagalur district (Karnataka) in collaboration with
network of agents and select coffee curing works.
2. Food grains - Strong backward linkage on supply
chain with farmers, millers & processors. Loyal
customer base in markets of Middle East & South East
Asia.
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3. Feed Ingredients - Possess integrated value chain


ensuring credibility and zero default record of delivery
time. Exported to customers like - Cargill. Abu Dhabi
Flour Mills, Toepfer etc.
4. Processed fruits - Strong & loyal network with
agriculturists, blender-bottler, end users and off-shore
logistics service providers. Emerged as a reliable
exporter to US, Western Europe and Middle east.
5. Aqua products- State-of-the-art preserving units in
Andhra Pradesh. High level of personalized
communication network.
6. Nuts & Spices - Procurement network in Kerala,
Gujarat, Maharashtra and Rajasthan. Expertise in
business relationship with agents, suppliers and
marketers.
ITC- ABD has established its stronghold position in rural market
through Hariyali- Choupal rural retail chains (275 stores) and
Choupal Sagar which provides FMCG to electronic appliances
to automobiles for rural market.

External
Environment
Micro
Environment

Macro
Environment

MICRO ENVIRONMENT FACTORS:


BANKERS :- ITC-ABD has strong support and good
terms with bankers for financial leverage and
capabilities . Bankers are :ABN-AMRO STANDARD CHARTERED BANK SBI OVERSEAS BANK HDFC BANK LTD. -

KOLKATA
HYDERABAD
HYDERABAD
HYDERABAD
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CUSTOMERS:Marubeni Feed Bunge


Phoenix Commodities Limited Voest Alpine Inter Trading Liberty Commodities Ltd PT Jackson Louis Dreyfus Commodities
Nidera Food grains Abu Dhabi Flour MillsCargill International Concordia Agri Toepfer InternationaL American Key Food Products Barrowlane & Ballard Choei Trading Company Limited Capital Commodities (VLC) Pty Ltd Galdisa S.A JH Lutge Gmbh

Japan

Thailand
Austria
London
Indonesia
Singapore
Switzerland
UAE
USA
Singapore
Singapore
USA
UK
Japan
Australia
Mexico
Germany

Muffadlal Enterprises -

Egypt

Nichiryo Limited -

Japan

Sino Japan Chemical Co Ltd The Coca Cola Trading Company Aziende Riunite Caffe SPA Bernhard Rothfos, GmbH Coca Cola International Trade Holland Coffee BV Olam International Limited Orimi Trade Limited Fuga Ag Hanawa Company Ltd Mitsubishi Showa Trading Co. Toyo Marine Gollucke Rothfos Gmbh -

Taiwan
USA
Milan
Germany
USA
The Netherlands
Singapore
Russia
Switzerland
Singapore
Japan
Japan
Japan
Germany

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PROCESSORS :Jagdeesh Marine Bhimavaram Sadaf Seafood Khalsa Overseas Dhulichand Narendrakumar
Exports Ltd
Aseptic Fruit Products(India)
Pvt Ltd
SAM Industries Bhaskar Agro Ingredients Travancore Coffee Curing
Works Kushalnagar Works SLN Coffee Curing Works Chamundi Coffee Curing Works Sargod Coffee Curing Works Anjanaya Sea Foods Sastha Spices & Oleresin Pvt ltd. Excel Foods Private Ltd -

Bhimavaram, AP
Kolkata
Madhya Pradesh
Karnal, Haryana
Krishnagi
Madhya Pradesh
Maharashtra
Kushalnagar
Kushalnagar
Kushalnagar
Chikmanglur
Chikmanglur
Nellore
Kalpeta
Hubli

SUPPLIERS :ITC-ABD has strong procurement network for supply of raw


materials and goods on time and quality ensured.
1. Coffee:- Procurement centre in Coorg & Chickmagalur
(Karnataka).
2. Food grains: - Strong linkage with farmers, millers &
processors.
3. Feed Ingredients :- Soyabean oil processed from leased
processing plants.
4. Processed Fruits:- Strong network with agriculturists,
blenders-bottlers and logistical service providers.
5. Aqua Products:- Supplied from processing units in Andhra
Pradesh and from brackish-water of Vijayawada and Krishna
district for shrimps & prawns.
6. Nuts & Spices:- Procurement network in Kerala, Gujarat,
Maharashtra and Rajasthan.

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COMPETITORS :Godrej Agrovet


DCM Shriram Consolidated ltd.
National Agro Industries
DuPont
Monsanto India ltd.
Advanta India ltd.

MARKET INTERMEDIARIES :C & F Agents:- (Clearence / Carry and Forward Agents)


1. B Devchand and Sons Jamnagar
2. Guru Clearing Haldia
3. Interport Mumbai
4. Leaap International Pvt Ltd - Bangalore, Cochin, Mangalore
5. Friends Kandla
6. Priya Export Agencies Kakinada
7. Nandan Shipping Agency Mumbai
8. Ashirwad Clearance Agency Kandla
9 .Seaways Shipping Company Chennai
10.Merlyn Shipping Comapany Visakhapatnam
11. Ambica Freight Forwarders Nagpur
12. STP Freight Forwarders Chennai
13.Pratyusha Vishakapatnam/Kakinada

Value Chain of Integration (Minimizing Intermediaries )

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MACRO ENVIRONMENT:ANALYSIS

(Based on /Pertaining to Current News)

POLITICAL & LEGAL ENVIRONMENT:ITC-ABD faced challenges when it started its operations
under e-choupal from Govt of India relating to Agriculture
Produce Marketing Act (1937) which prohibited procurement
outside Mandis (rural vegetable/crops market). Later on Govt
offered to waive the mandi tax on produce procured through
e-choupal.
Now still, APMC (Agriculture Produce Marketing) poses a
challenge under which private market can be operated but
under ambit of Govt. So there is need to change agri-mktg
rules 1 to enhance the healthy competition in agriculture
market.
ITC-ABD gets inhibited due to APMC regulation and
Essential Commodities Act .2
Moreover the agriculturists, horticulturists and farm community
have been facing budget and financial constraints . Recently
there were lapses in implementation of debt waiver scheme 3.
This makes the farmers prone to high risk and poor budget
allocation. This is a major constraint for ITC-ABD as they get raw
materials due to procurement from farmers who are suppliers.
There are also legal blockages to business of ITC-ABD and to its
products. Few days back illegal cardamom imports 4 which
occurred in March will affect the Spice trading division of ITC-ABD
affecting farmers and resulting in dipping sales and illegal
substitutes.

. Change agri-marketing rules to help farmers gain. Business Line, Hyderabad. Retrieved November 5, 2013,
from http://www.thehindubusinessline.com/industry-and-economy/agri-biz/change-agri-marketing-rules/
2. Subsidies difficult to roll back. Business Line, Hyderabad .Retrieved November 19, 2013, from
http://www.thehindubusinessline.com/industry-and-economy/agri-biz/subsidies-difficult-to-roll-back/
3. (2013, March 6). Major Flaws in 52000 cr farm loan waiver scheme: CAG. Business Line, pp. 01.
4. (2013, march 4).Spices Board alerts Customs to act against illegal cardamom imports. Business Line, pp. 15.

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So firm needs to adapt and find short-term as well as longterm solutions to survive and grow in the political and legal
environment of the nation.

ECONOMIC ENVIRONMENT:This is the most critical and sine qua non factor for a firm to
cope-up and grow in the long run .
Long-term and recent economic situations will have a
significant impact upon ITC-ABD business operations.
ITC ABD processes food grains and spices which are packed in
hygienic jute bags under strict quality norms. But price hike by
Govt in jute 1 would raise the procurement price of jute as a
packing material for the customer.
ITC-ABD is known for delivering quality products on time due
to efficient vessel chartering skills and strong logistics which
helps to make it a competitive exporter. Govt is on the way to
partially deregulate port tariffs2 in which operators can fix higher
charges than the regulator ( government s body)
recommendation once a year. High tariff charge by the private
port developers would mean the price rise in the marine/vessel
freight transport cost for ITC-ABD.
In case of agriculture economic reforms, policy, budget, GDP
and purchasing power of the consumers will shape the firms
policy and decisions. Food Inflation due to fiscal deficit3 and
market factors is a prime cause and concern for ITC-ABD as it
would influence its procurement decision from suppliers and
trading in the rural market.
Moreover agriculture subsidies and food subsidies 4 provided
by Govt needs to be implemented properly but with a long-term
visionary policy which is lacking in India.
Proper crop insurance 5 is another problem for farmers in India
making them deprive of timely premiums. This poses a challenge
for ITC-ABD to be in constant sync with the economic changes in
India.
i

1. (2013, April 3). Govt hikes support price for jute. Business Line, pp. 16.
2. (2013, March) Govt partially deregulates port tariffs. Business Line, pp. 14.
3. (2013, April 4) Food inflation: Blame the fisc, not the private trade, Business Line, pp. 7.
4. Subsidies difficult to roll back. Business Line, Hyderabad .Retrieved November 19, 2013, from
http://www.thehindubusinessline.com/industry-and-economy/agri-biz/subsidies-difficult-to-roll-back/
5. Crop Insurance. Retrieved from http://www.tejas/iimb.ac.in/interviews/

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SOCIAL & CULTURAL ENVIRONMENT:Several social and cultural factors may affect the agri
business operations of ITC-ABD in India.
Agriculture in India faces a cultural efficiency problem in
case of agriculture productivity.
Societal distribution is unequal in case of agricultural trend
where rice and paddy are prevalent and other multi-crops
are ignored.
Agriculture in India being stigmatised as a low-profile occupation,
high risk and low returns. The next generation of farming
community has been on the verge of drift from agriculture to
service sector jobs. Their indigenous knowledge could not be
encashed properly so there is a need of well-managed agriculture
supported with latest and affordable technology.

TECHNOLOGICAL ENVIRONMENT:Technological impositions are rampant in agriculture. First of all


processing plant for a single crop is not viable to set up.1
Integration of irrigation sources and its availability is a
major need for farmers.
Latest technology is costly and not easily feasible in India.
However KVKs (Krishi Vigysn Kendra)2 and NGOs have
worked to harness indigenous technology which has been
well tapped by ITC-ABD in case of Spices & Nuts and food
grains.
Ensuring quality of produce through IT platform technology such
as E- Choupal by ITC-ABD has brought sufficiency in exports.
Andhra Pradesh has unveiled Indias 1st action plan 3
1 . Subsidies difficult to roll back. Business Line, Hyderabad .Retrieved November 05, 2013, from
http://www.thehindubusinessline.com/industry-and-economy/agri-biz/subsidies-difficult-to-roll-back/
2. KVKs. Retrieved from http://www.tejas/iimb.ac.in/interviews/
st
3. (2013, March 18). AP unveils countrys 1 action plan for farm sector. Business Line, pp. 16.

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for farm sector to provide 3622 cr for agriculture power. This


would help ITC-ABD as it has HQ in Hyderabad and a strong
procurement network accompanied with processing plants for
food and fruits
DEMOGRAPHIC ENVIRONMENT :ITC-ABD has correctly identified the demographic segments
and its implications as an external macro factor on its
operations. Govt of India promotes export of foodgrains and
provides tax waivers through agri-export zones. There has
been an upsurge in demands from Middle east, USA, Europe
and African nations. Recently Egypt the worlds largest
organised commodity importer , is in talk to import wheat
from India 1 by its own amending food security laws. This
emerges out to be a big opportunity for ITC-ABD which is a
major wheat exporter.
Moreover demographic strata is classified on various
elements. A recent study revealed that Gujarat per capita
food expenditure is highest 2 followed by Maharashtra &
Haryana. This can be a huge growing marketing for food
grain products of ITC-ABD.

NATURAL ENVIRONMENT :-

Be it any firm related to food processing or food exporter it is


dependent heavily on natural environment and its elements.Heavy
rains or droughts affect the crops such as Chikmagalur district
(Karnataka which is a Coffee supplier to ITC-ABD has experienced
blossom showers .3 This will result in a good production for ITCABD.
Monsoon, rain-fed rivers and quality of soils determine the natural
environment for agriculture as well as agri-business firms in India.

1.
2.
3.

(2013, March 20). Egypt in talks to import wheat from India. Business Line, pp. 16.
(2013, March 13). Bengal spends least on food, household goods. Gujarat tops. Business Line, pp. 15.
(2013, March 16). Karnataka coffee belt gets good blossom showers. Business Line, pp. 16.

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SWOT ANALYSIS OF ITC - ABD


SWOT is an acronym for
S- Strength
W- Weakness
O- Opportunity
T- Threat
Its an effective management analysis tool for describing the
external and internal environment of a firm/organization
operating under important factors.

S- Strength of ITC ABD :


The biggest Strength of ITC-ABD is the trust of farmers
earned through its E- Choupal programme.
Strong procurement network with suppliers , farmers ,
millers and processors which enables quality
purchase of raw materials.
R & D research centre located in Bangalore the hub of
agriculture and genetomy research.
Strong chain of integrated processing plants, expertise
in agri-management practices and adherence to
HACCP and ISO certifications has made it a preferred
firm for customers.
Large base of loyal customers in international arena
making it a major exporter of coffee, aqua products and
feed ingredients enabling it as a top earner of foreign
exchanges.
Strong financial support by parent brand ITC which in
turn gets funded by ITC-ABD (60% foreign exchange to
ITC) and ITC FMCG products supply is fuelled by agribusiness.
ITC ABD strategic location in Hyderabad, Andhra
Pradesh , so the firm harnesses the connectivity for
supply chain, brackish water of state for exporting
aqua products and strong presence of infrastructure.

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W Weakness of ITC ABD:


Restricting itself to regional markets of Karnataka,
Tamil Nadu & Andhra Pradesh .
ITC- ABD has a portfolio of products . But it still lags
behind in export of coffee and ornamental fish which is
a hidden potential for increasing foreign exchanges.
Farmers need proper crop insurance, micro-credit
facilities and automated farm equipments which still is
beyond reach of farmers in which ITC- ABD should
diversify in.
Being an agri business enterprise it must concentrate
on processing of cheap and quality ethanol and other
bio-diesel fuels which is the need of the hour.
ITC ABD must focus on acquisition of foreign agribusiness firms and expand to emerging markets such
as Brazil, China, West Africa and Latin countries which
would definitely open new avenues of market.
Legal lobbying for common interests is a requisite to
influence the Govt to amend APMC Act and essential
Commodity reforms.
Choupal Sagar - the rural retail outlet which is on a
slow expansion mode and is still a far-off for many
farmers.
Absence of large-scale of mobile telephony
technologies to assist farmers which would be a
cheaper and efficient technology platform.

O Opportunity for ITC ABD :


E-Choupal Version 3.0 which is a better version
and linked to rural employment youth portals
would leverage the technological capacities of
firm.
Approval of 61 agri-export zones in India would
help in boosting ITC- ABD export revenue.
Capital goods purchased for agriculture to be
duty-free is an economic benefit for the firm.

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Emergence of Shrimp and prawn entrepreneurs


in Andhra Pradesh which would fuel ITC - ABD
aqua division business as partners.
Action Plan to be launched in Andhra Pradesh
for agriculture power which would be a first of its
kind injecting a 3622 crore.
Rapid rise of online retail websites such as
Flipkart.com , snapdeal.com and others can have
tradable products of ITC-ABD such as Shrimps
and prawns ( for city customers \ hotel chains);
fresh fruits \ vegetables. It will help in shifting or
diversifying to tastes of urban youth market using
pre-tested online and cheaper technology
platform.
Eco-tourism can become a brighter avenue for
ITC-ABD in those villages whose face has
progressed tremendously making it a model
village.

T Threat for ITC-ABD : Rising Indian competitors like Godrej


Agrovet, DCM Shriram consolidated and
foreign companies in India such as DuPont,
Monsanto etc.
APMC Act which is a blockage for open
market operations in India.
Essential Commodities Market Regulation in
which Govt can anytime have their own
decision on the required minimum storage of
produce.
Lack of infrastructure such as Irrigation
facility, Warehouse, strong supply chain and
rural transportation.
Red-tape bureaucracy in the implementation
of agricultural reforms is a bbig threat
Digital Gap and slow technology adsorption
in rural areas affect farming business.
No competition in selling of agri-produce
and agri-insurance products in rural areas.
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Electricity problem, system crash, e-choupal


hacking, lack of Commodities trading market
knowledge among farmers could easily
impose a threat on the business of ITC
ABD.

FUTURE PREDICTION OF ITC ABD:


Future is an unseen child born and reared in the cradle
of present actions which nourishes it either as an
irresponsible one or as a bright and responsible man.
Based on SWOT Analysis and company report findings,
ITC- ABD is spearheaded towards a bright future with EChoupal 3.0 as a torchbearer in the fists of farmers.
Soon ITC- ABD is going to face a tough competition
regarding online trading of agricultural products .
Expansion of rural retail malls is still in a nascent stage
which would grow gradually in future.
Penetration of ITC ABD processed fruits and fresh
products in Tier -1 and Tier-2 cities would be on rise in
coming days.
Cost to company would increase as investment gets
injected into establishing 20,000 choupals in villages
and maintaining them in case of power generation
fluctuations.
Today is the age of e-commerce but in near future mcommerce (Mobile Telephony Network) would be a
viable option for rural farmers.
ITC-ABD would invest in agri-export zones and add
export oriented products to its portfolio.

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ITC ABD is poised to become as the preferred agri-

exporter and increase the loyal customer base by


replicating its indigenous business model of harnessing
the fortune at the bottom of the pyramid and emerging
as a socially responsible institution which would be
synonym to innovation and catalyst to 2nd Green
Revolution in India.

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