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Transcript of Tata's Rural Venture
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Presentation
OnTATA RURAL VENTUREs
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The Tata Group
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Tata's Cyrus Mistry pushes common rural biz
platform to drive group synergies
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Tata Sons, holding company for the Tata group, is
working on building a centralised rural business
platform that could be leveraged for the entire
groups benefit, instead of each company looking at
it separately.
The group is now working on leveraging these
individual strengths, using the available data and
best practices in its ecosystem, for better use. This
will be further bolstered with collaborated efforts inmarketing to get the best results.
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When Ratan Tata (now chairman emeritus) hadbecome chairman in the early 1990s, he had faced
the problem of group companies not talking to eachother. After he eased out powerful chieftains likeRussi Mody, Ajit Kerkar and Darbari Seth, a group
identity was forged. But collaboration still did nothappen.
Then he established Tata Group Innovation Forum,which set up InnoClusters, or groups of companies
that could work together in different areas.Cyrus Mistry, the present chairman, is taking thislegacy forward by pushing the culture of
collaboration in the group. 5
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According to a study by global consultancy firm
Accenture released last year(2013), since 2000, per-
capita gross domestic product has grown faster in rural
areas at compound annual rate of 6.2 per cent,
compared with 4.7 per cent in urban centres as the
rural income is growing and consumers are buyingdiscretionary goods and lifestyle products, such as
mobile phones, television sets and two wheelers.
Between 2009 and 2012, spending in rural Indiareached $69 billion, significantly higher than the $55
billion spent by the urban population.
This has made companies, such as the Tata group ones,
rush to tap this market. 6
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We are looking at rural finances as our key growth
strategy. So, we have created a separate business
vertical for that, said Praveen Kadle, managing director
& chief executive officer at non-banking financial
company Tata Capital.
Cyrus Mistrysinvestment plan, named vision 2025, laysfocus on four clusters consumer & retail, defence &
aerospace, financial service and retail & infrastructure.
Barring defence & aerospace, the other three verticalshave potential to grow in rural markets.
This initiative is expected to be driven by the newly
created group executive committee (GEC), which works
under the aegis of the Tata Sons board. 7
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TATAs Reaching out to Rural India
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TATAs Reaching out to Rural India
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Content
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Tata Chemicals Limited Overview
Founded in 1939 in CoastalGujarat
Leading manufacturer of
inorganic chemicals in India
Operates Fertilizer plant atBabrala (UP) and Phosphate
plant at Haldia (WB)
Their BusinessesChemicals
Food Additives
Fertilizers
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TATA KISAN SANSAR
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Tata Kisan Sansar (TKS): Evolving ToCustomer Needs
Objectives
Help Farmers Create Value
Improve Relationship with Farmers
Strengthen the Tata Brand in rural areas
Create a new distribution channel foragriculture inputs
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Tata Kisan Sansar The Concept
An approachable & reliable business partner of the
farmer
Offering end-to-end farm management solutions
Providing reliable and top quality agri inputs
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TATA KISAN SANSAR
Tata Chemicals launches Tata Kisan Sansar on October 26,
2004
Tata Chemicals Limitedhad first started with the objectiveof providing agri inputs to the farmers through the Tata
Kisan Kendras (exclusive franchised retail outlets of Tata)
but realizing the need of the hour, moved its proposition
from one-stop agri input shop to one-stop farmers
solution shopwith a clear objective of empowering the
farmers.
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Tata Kisan Sansar
The Tata Kisan Kendras were therefore re-launched asTata Kisan Sansar (TKS-Tata Farmers World)-a ruralagri-retail outlet offering entire range of agri servicesincluding quality agri input products.
Thereafter, the focus has been to de-link thebusinessdependence for the franchisee as well as theorganization from the traditional fertilizer business andprovide value added products as well as innovative
services to the farmers. brand ambassadors of Tata Kisan Sansar enjoy a host of
benefits for a nominal cost of Rs.115 per annum
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TATA Kisan Kendra
Accessto the latest ICT tools,
knowledge above modern farming
technologies and information from
the agri-database created by
agronomists.
Managing the existing knowledge
base of the rural masses and updating
it.Integratingthe knowledge and
techniques of the modern farming
and local knowledge for enhancing
the productivity of the rural farmers.
Evaluates the performance of the
farmers .
Creatinga conducive environment to
harmonize the research and
development, making the rural
masses aware of the new tools and
techniques.
Tata Kisan
Kendra
Access
Manage
IntegrateEvaluate
Create
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TATA Solutions through GIS
This operation involves combing satellite maps, census data, socio-economicand other data collected within the geographic information systems (GIS).
GIS are computerised systems that record, store, analyse and produce mapsand geographic products based on information obtained from differentsources.
The Tata Group's precision-farming concept uses GIS to manage and analysedata collected which includes census data, revenue data, socio-economicsurveys, satellite imagery, soil-mapping data and market studies.
TKS combines collected data with the spatial data generated by the GIS facilityand correlated with socio-economic information such as the name of theowner of a plot of land etc.
When the data-building exercise for the precision-farming project iscompleted, it will reduce the complex task of selecting, mapping and testingland holdings in the command area of the TKS to a few clicks of the mouse.
The initial screen of the GIS Software shows the view of the entire state whereuser gets the choice of selecting the location he wants to select from the state.
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Geographic Information
System
1
5 6
2
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Benefits to the farmers from TKS
Benefitsto the
farmers
Accessibilityto the latest
technologicalknowhow
Easy leasingof the farmequipments
Easyavailability of
credit
Increasedcompetition withinfarmers helps in
improving theproductivity
Betterprices forthe finalproduct
Access to the latestknowledge and
innovation
Knowledgesharing
Availabilityof crop
insurance
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Services & Functions
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Agri Inputs
Fertilizer : Urea, DAP, MOP, NPK etc
Specialty Fertilizers : Zinc Sulphate, Micro Nutrients,
Calcium Nitrate, Organics, Water Soluble Fertilizers
Seeds : Field Crops, Vegetable Crops
Pesticides : Entire range
Cattle Feed : Two Grades
Farm Tools : Manual Implements, Sprayers, Roofing
Sheets, Solar energy devices
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Agri Services
Soil Testing
Advisory Services
Contract FarmingOwn Seed Production
Application Services
Farmer Engagement Programs
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Relationship building:
Farmer membership (individual & group)
Accident insurance to members
Farmer meets
Crop seminars
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Spanning three highly productive agricultural
states, Punjab, Uttar Pradesh and Haryana,TKS will provide solutions to over 14,000
villages in Northern India in its first phase.
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Journey of Tata Kisan Sansar
Phase 1:Tata Kisan Kendra as a retailer of Agri-inputs
Phase 2:Repositioning of Tata Kisan Kendra to Tata KisanSansar thereby considering TKS as a seed to produce
business.
Phase 3:TKS as a solutions provider that helps farmerenhance his productivity and an agent that changes the
face of Indian farming.
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The TKS Structure: A Hub & Spoke Model
The Hub
40 Tata Krishi Vikas
Centres
Business Manager
Agri-Development Off
Soil Scientist
The Spoke
800 Franchisee TKSs110 Agronomists
Reaches more than 25 Lakh
farmers
27,200 villages covered 26
T t Ki S S i Off d (1)
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Tata Kisan Sansar Services Offered (1)
The Hub
Resource Centrecomputerized & a databaseof farmers being built up
Research & Demo Farms Storage facilities
Soil and water testing facilities
Information source and training centre Recreational amenities
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TKS Training for farmers
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T t Ki S S i Off d (2)
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Tata Kisan Sansar Services Offered (2)
The Spokes
Quality Agri-Inputs (fertilizers, seeds, pesticides,
herbicides and micronutrients)
Farm Equipment leasing
Farm Advisory Serviceslatest info on weather,
market pricing & crop production
Contract Farming Farmer Credit Financing
Produce Buyback
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I d t t th ti iti f TKS hi h
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In order to support the activities of TKS, which
are basically franchisee outlets, the supply
chain model that evolved is a hub and spoke
model.
The hub acts as the Resource Center to cater
to the needs of the TKS in its vicinity. Each Resource Center supports primarily 17-18
TKS franchisee outlets in a radius of 50-60 km,
where each TKS caters to 30-40 villagescovering approximately 9 million acres overall.
.
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The hubs were named as Tata Krishi Vikas Kendras, the
word Vikas being synonymous with value added activitiesconducted like organization of farmer meets, repository of
related agriculture knowledge, soil, water and plant testing
laboratory, demonstration farms and also a distribution
center
Presently, there are 32 hubs, which cater to 650 Tata Kisan
Sansars, covering around 22,000 villagesreaching out to
approx. 3.5 million farmers. The Tata Kisan Sansars arespread across 68 districts in the North Zone and 20 districts
in the East Zone spanning 4 and 3 states respectively. The
turnover of TKS was Rs. 493 crores in 2008-09.
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Farming Family Tata Kisan Parivar (TKP)
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Farming Family Tata Kisan Parivar (TKP)
Farmers can either Avail of TKS services by becoming a member of the Tata Kisan Parivar; or
Choose to pay selectively for services
TKPrelationship building initiative
Members of TKP Given training in the latest farming techniques
Offered services at a discount
Taken for educational trips to agricultural unversities
Get family insurance coverage
Kisan Sahyog Parivarfarmers encouraged to form SHGs that provide a platformfor facilitation of credit as well as learning and sharing between them
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Relationship ManagementTata
Kisan Parivar
The farmer relationship initiative is being led throughTata Kisan Sansar Parivar membership, a paid valueadded service, where in key farmers/opinion leadersare enrolled for the membership through invitation.
Tata Kisan Sansar Parivar members are providedcustomized training and accidental insurance for themember and his family.
The Tata Kisan Sansar Parivar membership stands at
40,000 plus as on March Tata Kisan Sansaris an agrisolutions provider in a market used to agri inputretailers. Essential to agri solutions are services thatcomplement our tested product range which driveagricultural productivity.
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Tata Kisan Sansarprovides a range of innovative
and unique services to farmers through a dedicated
team of Krishi Preraks and Agronomists on the field,
giving them that extra edge over traditional farming
practices
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TKS Offerings
The TKS services can be divided into three broad
categories:
Basic services
Output based services
Premium services
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BASIC SERVICES
Soil Testing
For Macro and Micro Nutrients in the soil, helping
the farmer make an informed decision about whatnutrients to apply in his field.
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Cont.
Agri advisory and Complaint Management
On field addressal of various problems faced in crop
cultivation make life convenient for the farmer.Proper and timely advice leads to lesser errors and
increased profitability for the farming community.
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Cont.......
Bringing the latest knowledge to farmers on variousaspects of agriculture helps to update the existingformidable knowledge base of the farming populace,equipping them for tomorrows challenges. This
knowledge covers farm related issues like integratedpest management and integrated nutrientmanagement and is imparted through -
Farmer Meetings at village level
Crop Seminars at central locations
Educational Trips to plants, Agri University fairs etc.
Crop specific mobile programs41
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OUTPUT BASED SERVICES
Contract Farming
Intensive market led cultivation is done through Tata
Kisan Sansar franchisees in select catchment areasthrough the contract farming method. This ensures an
assured market and completes the 360 degree
approach of the TKS philosophyaddressing both
input requirements and output management through
this one stop agri solutions shop.
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Cont.
Own Seed Production
Aimed at the improving the availability of quality
seed in the market as well as fulfilling a gap in theretailing of seeds, TKS does own seed production
for select seeds like Wheat, Paddy etc
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PREMIUM SERVICES
Foliar Application ServicesAn innovative service exclusively available through Tata Kisan Sansar
where controlled and supervised application of a unique blend of
products, which have been tested for their complementary effects on
farm yield, is done through TKS agronomists.
This ensures a bumper yield while maintaining the soil health of the
farmers field and which is customized according to crop .
Addressing areas of crop nutrition as well as crop protection, this
service is an example of departure from traditional practices that Tata
Kisan Sansar is driving, combining accelerated growth with
unprecedented convenience.
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Cont
Farmer Engagement ProgramAnother exclusive and unique initiative by Tata KisanSansar which provides a complete real time analysis of
the entire farming practices with customizedinterventions for select members, with a tracking ofincremental benefits over successive seasons. Thisintensive association with the farmer throughout thecrop cycle is symbolic of the dedication and focus of the
Tata Kisan Sansar team to deliver the best solutions inagri space.
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D A B : Diagnose - Analyse - Benefit
For the farmer of today, speed of solution is
becoming increasingly important. Catering to this
segment, this service is aimed at providing quick
effective solutions for various crop production issues
which goes into a compendium of knowledge for
future use with increased efficiency.
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TCS - mKRISHI
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Despite the penetration of mobiles phones in rural
areas, the potential to leverage it for crucial
information dispersal and provision of valuable servicesremain largely unexplored.
This has been due to various constraints includingdiversity in language and the inability to localize and
personalize services in order to address individualneeds.
Understanding these intricacies,
TCSmKRISHI platform uses mobile technology tocater to the absolute needs of the rural sector.
It offers personalized advisory services in voice andvisual using communication devices like mobile phones.
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mKRISHIserves to achieve the following:
Reach farmers individually to understand theirneeds
Enable farmers to receive important informationabout pesticides, fertilizers and soil and water
conservation Provide critical micro-climate, weather information
in order to plan farming operations
Facilitate better production and cultivationpractices
Improve access to markets, refining the associatedeconomy
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mKRISHI provides farmers with the benefits of
Information and Communications Technology (ICT).
It is an award-winning, patent-pending innovativeplatform that delivers services to rural communities.
It connects farmers with a variety of stakeholderspackaging multiple services through communicationdevices like mobile phones.
It can alsointegrate wireless sensors and scripttechnology with communication devices to provide an
enhanced solution. mKRISHI ensures significant business benefits to the
stakeholders by enabling them to reach the farmersdirectly.
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Empowering The Rural Community
Apart from the technologicalinnovation, mKRISHI has enabled the possibility
for information exchange between various
stakeholders of the rural economy.
Many agri-input companies, rural banks, insurance
companies, governments and agricultural
universities find it convenient and economical to
reach a group of or individual farmers using
TCSmKRISHIplatform.
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Solutions We Offer
TCSmKRISHIplatform can be used as a tool byany organization, including corporate houses and
enterprises, that want to focus on the rural sector
to perform transactions, capture field information,
and process and research that specific critical
information.
The platform can be customized according to the
needs of each customer.
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mKRISHI Lite
mKRISHILite is an Interactive Voice Response (IVR)- based system offered as an entry-level service tofarmer in addition to an experts web-consoleinterface.
Farmers dial a common number (called the IVRservice number).
They follow the directives to perform their
transactions or reach out for solutions / advisories. The availability of information in farmers regional
languages enables better engagement andconvenience.
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With TCSmKRISHIplatforms web-consoles,experts analyze every farmers query and providetheir responses with directives and solutions.
The status of the response to each query is
communicated to the farmers via electronicmessages as and when the queries get read.
Upon the availability of an experts solution,
farmers pull the experts advice via the platform. Farmers are also provided with other alerts like
weather forecasts, market prices, best practices,etc. in either English or their local languages.
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mKRISHI Regular
mKRISHIRegular constitutes a mobile applicationon the farmers handsets pushing information
through the interface between the mobile
application and an experts web-console.
The entire application is customized and
personalized according to the farmers regional
language to aid convenience in communication.
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Other features in mKRISHIRegular include the following: Information push messages sent / received through a
separate inbox in the application
Advice aggregation to track and analyze the historical data of
advices Image capture feature to report abnormalities or raise
requests
An Abnormality Image Gallery catalogue to check for crop
healthmKRISHI Regular also enables enterprises to gather criticalfield information through a customized mobile application withinstantaneous information capture and parallel information
processing for immediate operations planning. 56
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mKRISHI Plus
mKRISHIPlus includes critical weather informationdissemination using Automatic Weather Station (AWS)
in addition to the mKRISHI Regular offerings.
AWS enables pushing JIT location-specific personalized
weather information to the farmers, including
important weather parameters like rainfall,
temperature, humidity, etc. at regular intervals.
Weather being a crucial element for every farmingpractice and operation, providing this information is
vital.
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Business Benefits
TCSmKRISHIplatform integrates multipletechnologies to empower farmers with vital
information based on specific needs like weather,
fertilizer and pest control.
It allows them to check for information in their local
languages with image and voice through mobile
phones and provides the relevant information.
The convergence of these critical technologies with
specificpersonalization and scalability benefits both
customers and farmers.58
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Specific benefits include the following
Technology Convergence Mobile-to-web console
Automatic Weather Station (AWS) and sensors
integration Complex parametric device integration
Research content integrations and linkages
Enterprise back-end integration
Geographical Information System (GIS)
Local language renderers59
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Specific benefits include the following
Personalization Farmer-specific information dissemination
Location-specific information dissemination
Process-specific service customization
Enterprise-specific service packaging
Ease of scalability
Designed specifically to enable large-scale
operations
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Pain Point
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As per World Gold Council estimates, about 60% of the gold in India is
bought in small towns and villages.
Today, goldsmiths and jewellers are cheating gold buyers in a big way
by adulterating the yellow metal with iridium and ruthenium.
Seeing a business opportunity to help gold buyers get pure
gold, GoldPlus from Tata is now hard-selling its jewellery in small
towns across India.
In an effort top compete with local jewellers in rural areas and small
towns, the brand has launched big campaign in rural areas of India
where sale of gold is very high.
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Marketing
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GoldPlus decided to create a promo which would attract attention. Itcreated a 24.5 kilogram gold bangle that gave it an entry into the
Limca Book of Records and took the bangle on a roadshow of 17
towns. Consumers were asked to parcipate in a guess the weight of
the bangle contest.
The company also offered a photo opportunity to visitors, with
options to mail their photographs to five of their acquaintances.
Other innovative promotions include new store openings being
preceded by distribution of gold paper slips to potential customers in
a 3-5 kilometer radius of the store.
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Tata tea Gaon Chalo
Aim:To grow Tata Tea brand value share
Market share of Tata Tea Brand moves from 9.7% to10.9%
Tata Tea ranked the second most trusted beveragebrand in Brand Equity Survey Brand volume growth by 22% over previous year lead
by Complete restage of Tata Tea premium
New price point packs
Future Strategy:Continued innovation & growth of TataTea to enhance value
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Performance against Strategy
Aim :Increasing the Rate of Innovation
Tetley brand restaged; Introduction of Tetley
flavoured tea bags
New Kanan Devan strong launched in Kerala,
market share jumps from 21% to 25.6%
Future Strategy: New initiatives & projects will
fuel growth
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Performance against Strategy
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Performance against Strategy
0.1
0.6
0.9
1.2
1.5
1.9 2
Oct'03 Dec'03 Mar'04 June'04 Sept'04 Dec'04 Apr'05
Future Strategy:New initiatives & projects will fuel growth
Source : All India, AC Nielsen Retail
Audit , April 2005
Growth in market share
Aim : Innovating growth Tata Tea Gold
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Performance against Strategy
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Aim :Systemic address of consumer insightNew brand communication launched for Chakra Gold
supported by outdoor visibility campaign for
strengthening brand postioning
New Agni price point packs 11% growth over PY
Agni migration strategy initiated
Future Strategy:Continuous consumer understandingdriven business plans
Performance against Strategy
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Performance against Strategy
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Aim: Address distribution penetration
Specific sales initiatives to improve rural access
Increased focus on key accounts
Gemini a brand which has >50% market share in
Andhra Pradesh saw a 5% volume growth
Future Strategy : Enhance distribution opportunities
Performance against Strategy
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New Launches/Re launches
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/
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Tata AIG Life Insurance
Tata-AIG Life Insurance Company is a joint venturebetween the Tata Group (74% equity stake) and
American International Group Inc. (AIG) (26% equity
stake).
The company offers a broad range of life insurance
products to individuals and groups.
The products offered to individuals are variations of
term life with or without a savings element, e.g.,
endowment policies and money back policies.
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Tata-AIG Life has been in operation since April 2001
(incorporated on Aug 23, 2000).
While the company itself is relatively new, the Tata
group is widely known in Indian households.
Insuring the bottom of the pyramid
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Tata AIG Life Insurance
Tata-AIG entered into microinsurance as a condition
for acquiring a license to sell insurance in India
Tata-AIGs rural and social team is in the process of
developing and establishing in distribution network.
Consequently, the current figures on number of
clients served.
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The costs of servicing need to be read with caution.
Tata-AIG has sold 34 100 term and endowment life
policies from March 2002 to June 2005, of which
more than half were sold to women.
These products have thus far generated a premium
income of $122 000.
The total cost of establishing the channel to date is
$234 000.1
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A business opportunity rather than an obligation
The structure of the insurance industry leans
towards the urban scenario in terms of products,
delivery, people processes and service.
Insurance is sold, not purchased
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The company started in Andhra Pradesh, where Tata
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AIG was doing a project with the Department for
International Development (DFID), an arm of the
British Ministry of Finance that gives funds on amatching funds basis for financially deepening
activities in rural areas.
Tata AIG and DFID contributed towards a corpuswhich was used to develop the idea of utilising
grassroots level community workers to develop
infrastructure and collaterals that would promoteand service micro insurance to landless daily-waged
adults in the state.
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Traditionally agents sell insurance to earn a
livelihood. They usually earn a 40-per cent
commission on the first year's premium and 6 to 10
per cent in subsequent years
Agents are enthusiastic about doing sales, they arenot happy giving service, especially if the amount is
small.
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In rural areas, the lack of infrastructure makes
servicing by the agent that much more imperative
but because insurance services in rural areas are
not differentiated from urban, the agents areunable to service them and the credibility of
insurance takes a beating."
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Rural Market into three distinct segments
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Rural Market into three distinct segments
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Target segment
(70% of rural
India)
Shopper at the bottom of the pyramid
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Shopper at the bottom of the pyramid
Rural India contributes to 72% of the populationand the countrys GDP
63% of Indias population will continue to live in the
rural areas even in 2025 according to a McKinseyreport
Rural areas are growing at a robust rate of 25%
While the per capita income is lower than urbanareas, the customer base is thrice that of urban
areas
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The FMCG sector in rural areas is expected to grow
by 40% as against 25% in urban areas in the coming
quarters.
Shampoos have reached < 40% of rural households
as compared to > 70% of urban households.
Refrigerators have penetrated into < 5% of ruralhouseholds as compared to over 35% of urban.
These numbers and more have been telling the
story of many marketing opportunities at thebottom of the pyramid.
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Rural retail formats are characterized by small
retailers, small town markets, Haats (periodic daily
or weekly markets), Mandis (agri markets), Melas
(exhibitions) and mobile traders.
There are also some large format retail stores likethe DSCL Haryali stores, M & M Shubh Labh stores,
TATA/Rallis Kisan Kendras and Escorts rural stores
etc.
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TATA AIG is targeted to find a way of addressing the
last segment.
It would help to fulfil obligation as well as generate
incremental new business."
The challenge was to create a channel which could
handle micro insurancenot the usual agentsbut
organisations and people who would be interested
in selling insurance to the poor and be content toservice the market with small earnings.
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Tata AIG decided to position insurance as a
supplementary livelihood activity, and talk to
community-based women.
"In rural areas it's very difficult for women to find a
source of income, so TATA AIG encourage women tobecome our micro insurance agents, and by
creating relevant products and processes build
capacities in them to sell insurance.
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Tata AIG encouraged the women to formt hi i f fi d ll d th CRIG
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partnerships in groups of five and called them CRIGs
(Rural Community Insurance Groups).
They travel around in branded vans owned by TataAIG, which also double as collection and policy
servicing units. Over four three-day capacity
building modules, women learn soft skills, developinsurance skills and learn data management
through computers. About 150 women are now
earning Rs 700 ($15) a month. Some have graduated to selling regular products to
the rural middle class, and earn as much as Rs 2,000
($43).85
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The model has been replicated in other parts of the
country with some changes.
It's not been easy in states like UP and Rajasthan,
where the men don't allow womenfolk to go out of
the house for work.
Here, the company approached NGO field workersand volunteers.
Today, of the 460 rural agents selling micro
insurance, 60 per cent are women.
A woman agent is typically a cluster leader or an
office bearer of a rural self-help group (SHG).86
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Making a difference One of the big challenges that
the company faced was training the women.
The Insurance Act requires that every person who
sells insurance has to be trained for 100 hours at
designated training centres, all of which are inurban areas.
It was a problem to get women to stay in a city for
so many days.
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Tata AIG has shared its learnings, both in India and
abroad, and now a new micro insurance regulation
allows micro insurance agents with only 25 hours of
training in the village.
The company is confident that this will help rampup its woman force rapidly.
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TATA AIG operate in 10 states (Andhra Pradesh
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TATA AIG operate in 10 states (Andhra Pradesh,
Kerala, Tamil Nadu, Karnataka, Maharashtra,
Gujarat, Jharkhand, West Bengal, UP and Rajasthan)and have more than 50,000 policy holders;
Out of which close to 85 per cent would belong to
the third category (the bottom of the pyramid), forour policy holder survey shows that it is the very
first time that they have bought an insurance policy
and it is our women agents who have reached out
to them.
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Th h d l d f ill l i d
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The company has developed no-frills, low-priced
personal products, for rural markets, that focus on
savings.
A premium of Rs 150 ($3) to Rs 300 ($9) offers
coverage of between Rs 15,000 ($320) to Rs 20,000
($430). Many NGOs, cooperatives/womenfederations and other such rural organisations
including MFIs are partnering with Tata-AIG in
mentoring and monitoring the programme at thegrassroot level.
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With new micro insurance regulations that allow
level commission (companies can now pay 20 per
cent commission through the product's tenure,
giving micro agents a more regular income), TataAIG has developed a new set of productsvariants
of earlier productsand is awaiting regulatory
clearances for them.
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Tata AIG has also evolved its processes to deal with
rural realitiesilliteracy, a cash economy, lack of
birth certificates or proof of age.
The company has settled many claims, ensuring
that the money is given to the beneficiary vide anNGO, so that the proceeds are used well.
Tata AIG is expanding its reach and is planning
micro insurance-based offices across the country.
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TATA AIG have consciously decided to target the
'bottom of the pyramid';
They move up only after gaining a foothold.
They are looking at rural markets more holistically,
as selling only to the very poor is not sustainable for
the company in the long run.
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Last year, the company grew 80 per cent in terms of
both policies and premiums.
They have covered over 18,000 rural individual
policy holders with micro insurance in the first six
months of this year and hope to end the year withover 35,000 policies contributing close to Rs 75 lakh
($161,400) in first premium terms.
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TATA AIG has already make it clear that this is
business, not corporate social responsibility (CSR):
"We have invested money, are working on making it
a sustainable business by creating value for our
customers through a choice of products, and wantto generate long-term profits,".
"The biggest thing about development is having
choices.
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We are educating people about insurance and
about the product choices they haveoffering
them relevant services at their doorstep, including
frequent collection of premiums.
In trying to create value for the rural customer, alivelihood for the agent and a business for itself,
Tata AIG is also changing the face of rural India.
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Rural areas are all locations outside of officially
classified urban areas. Life insurers must sell 7% of
total policies by number (not value) in the first year,
with increasing amounts of up to 16% in Year 5.
With general insurance, 2% of gross premiumincome must come from rural areas in the first year,
3% in Year 2, and 5% thereafter.
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Based in Andhra Pradesh, it is primarily a savingsand credit association with an added insurance
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and credit association with an added insurance
feature.
The co-operatives 8,100 members pay an annualinsurance premium of Rs 100 ($2.20) and receive
insurance cover for life and assets.
Their life cover is Rs 15,000 ($333) in the event of anatural death and double that in the event of an
accidental death.
The funds premium pool is held and operated bymembers of the cooperative.
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Rural India comprises of over 650 000 villages with
over half of them having a population of less than500.
Even the state relies on NGOs to provide services to
remote and poorly connected locations.
Tata-AIG took a different approach by having a
department focused solely on microinsurance, so a
single team managed the entire process.
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DIFFERENT SCHEMES OF TATA AIG
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DIFFERENT SCHEMES OF TATA AIG
Tata AIG Life Navkalyan Yojana
Tata AIG Life Ayushman Yojana
Tata AIG Life Sampoorn Bima Yojana
Tata AIG Life Sumangal Bima Yojana
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Tata AIG Life Navkalyan Yojana
http://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/AyushmanYojana/solutionAyushmanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SampoornBimaYojana/solutionSampoornBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SumangalBimaYojana/solutionSumangalBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SumangalBimaYojana/solutionSumangalBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SumangalBimaYojana/solutionSumangalBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SumangalBimaYojana/solutionSumangalBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SumangalBimaYojana/solutionSumangalBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SumangalBimaYojana/solutionSumangalBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SumangalBimaYojana/solutionSumangalBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SampoornBimaYojana/solutionSampoornBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SampoornBimaYojana/solutionSampoornBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SampoornBimaYojana/solutionSampoornBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SampoornBimaYojana/solutionSampoornBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SampoornBimaYojana/solutionSampoornBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/SampoornBimaYojana/solutionSampoornBimaYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/AyushmanYojana/solutionAyushmanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/AyushmanYojana/solutionAyushmanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/AyushmanYojana/solutionAyushmanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/AyushmanYojana/solutionAyushmanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htmhttp://www.tata-aig-life.com/MicroInsurance/NavkalyanYojana/solutionNavkalyanYojana.htm -
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A regular premium payment, low cost term plan
for the rural adults who seek life insurance
protection without any maturity benefit.
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Tata AIG Life Ayushman Yojana
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Tata AIG Life Ayushman Yojana
A single premium plan where the policyholder pays the
premium at the beginning of the policy term.
This is especially useful for those rural people who have aseasonal income.
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Tata AIG Life Sampoorn Bima Yojana
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A low cost insurance plan where the policyholder receives all
the premiums paid during the policy term upon survival until
the term of the policy.
Premiums are payable for only 10 years, while the coverage
is up to 15 years.103
Tata AIG Life Sumangal Bima Yojana
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To encourage regular long term savings from those who preferto set aside some money and get periodic returns, whileenjoying the benefits of insurance protection. We introduce"Tata AIG Life Sumangal Bima Yojana, a limited premium paymoney back plan.
In this plan you have to pay premium for 10 years and you getinsurance protection for 15 years. Enjoy total guaranteedreturns of 120% of the *total policy premium at specifiedintervals during term of the policy.
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SUMMARY OF MARKETING MIX
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SUMMARY OF MARKETING MIX
Product-Price: Special for the bottom of pyramid.
No-frills, low-priced personal products, for rural markets, thatfocus on savings.
A premium of Rs 150 ($3) to Rs 300 ($9) offers coverage ofbetween Rs 15,000 ($320) to Rs 20,000 ($430)
Place
Rural community insurance groups(a group of 5 women)
Travel in branded vans of Tata AIG increasing sales..
Promotion
Projection of Insurance as a supplementary livelihood activity
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Titan Sonata
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Titan Sonata
Sonata, a division of Titan Industries launchedin 1997, targets the mass market in watches.
Priced between Rs 395 ($8) and Rs 1250 ($27),
Sonata is the largest selling watch brand in thecountry, with volumes of over 4 million units
annually.
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Currently 80 per cent of Sonata sales come from
urban areas where consumer awareness for thebrand and its distribution is strong. Last year, the
division made a concentrated effort to focus on the
rural sector. "Our focus comes from a combinationof two factors:providing quality products to the
lower income market,
"The rural market exists, but it is dominated by theunorganised sector.
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80 per cent of rural Indians did not wear a watch.
The reasons ranged from functional to socio-cultural. The need to know time accurately is low;
the sunrise (and sunset) is their timekeeper, as is
their body clock. The ringing of the school bell, thearrival or passing of a train or bus also indicates the
time. Most houses have a wall clock.
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Villagers buy a watch that is usually economic (about
Rs 150 or $3), non-branded and thereforeunreliable. However, they expect the watch to last
at least two years. Rural folk are very price
consciousand must have a very good reason forspending a large amount like Rs 500 ($10). At that
price, they expect a watch that can be passed down
to the next generation.
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While watches are seen as a fashionableindulgence, on the other hand, they connote
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g , , ysuccess and command respect for the owner.
Wearing a watch gives a subtle message that onehas achieved something in life; 'aapki shaan
badhata hai' (it increases social status). A gold
plated watch with a gold bracelet conveys this best.
But, as rural India progresses, farmers no longer
want their children to follow in their footsteps. They
want them to become doctors or engineers. Rural
women, especially, want their children to have a
better future.
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Project Swades
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Project Swades
Sonata launched project Swades, aimed atchanging people's mindsets and making them
aware of the value of time. Titan Sonata used
these learnings to project a watch assomething that will help people progress, The
message communicated to people that a
Sonata watch from Tata is reliable, of good
quality, affordable and can be instrumental to
their success.
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Pilot projects were started in rural Uttar Pradesh and
Tamil Nadu, to test the market. Gaily decorated
mobile vans travelled around villages to generate
interest. Sonata watches were also displayed atlocal melas(fairs) and haats (markets).
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Target customers-20 to 35 year age group, aboutthe kind of products they want, and also trying out
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different price points. So if customers want a watchat Rs 250 ($5), sonata have to see how they candeliver the product in that price.
In rural areas where Sonata does not have a strongdistribution network, there is need for setting up a
parallel distribution system that can provide accessto interior areas at a low cost.
Project Swades is a pilot project and the team is stillgathering information. They hope to have adeliverable business model soon. "The biggestadvantage is that India is progressing and rural Indiaseems to be clear on what it wants.
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Sonata is talking to banks for micro financing, so
that more people can afford to buy watches.Another interesting option for organising financing
is the post office where many people have savings
accounts. Sonata is also looking at trainingyoungsters to market and service the watches. This
will provide the much-needed employment in rural
areas
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Sonata is looking very seriously at driving down
product costs in tune with Mr Tata's dream ofoffering a low-cost watch (priced at around Rs 100
or $2), without compromising on quality. "Our
efforts are fairly encouraging; on paper Rs 175($3.5) seems possible today and we are working
with our vendors to reach the target.
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Khet-Se Agriproduce India
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g p
Khet-Se Agriproduce India, a 50:50 JV of TataChemicals (TCL) and Total Produce, Ireland,
launched its operations with its first state-of-the-art
procurement and distribution facility for fresh fruitsand vegetables at Malerkotla, Punjab. Khet-Se is a
B2B cash and carry business for fresh fruit and
vegetables sourcing, packaging and distribution
across India.
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Contd..
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This distribution centre has the facility of sorting,
grading and packing of all fresh produce; fourripening chambers of 10mt capacity each (to ripenfruits like banana) and four cold storages of 25mteach.
Tata Chemicals has strong links with Indian farmerswith its sales of fertilisers, chemicals and othergrower requirements through its network of Tata
Kisan Sansar distribution centres throughout India. This will help Khet-Se have a big advantage in
sourcing high quality fresh produce.117
Khet-Se aims to bridge the gap between producer
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Khet Se aims to bridge the gap between producer
and end consumer which will significantly increase
efficiencies, improve shelf-life and reduce productloss in the supply chain. For this, it has already
partnered with farmers to develop their skills to
raise the quality of Indian farm produce throughtraining on good agricultural practices
Khet-Se plans to partner with small retailers and
help them in developing competencies to managetheir business more effectively
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straightline.in
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straightline.in
Tata-SAIL joint venture to help rural Bengal shoponline2007
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Concept
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p
Straightline.in, the e-shop of Mjunction Services, aTata Steel-SAIL joint venture, is set to offer rural
people in West Bengal opportunities to buy an array
of products online directly from manufacturers.
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Purpose
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p
To provide the facility, straightline.in has forged apartnership with Gramin Sanchar Society,
commonly known as Grasso.
The purpose behind the partnership is to takeadvantage of services of Grassos more than 200
community information and service centres (CISC),
which being spread across the state, are already
offering rural people a host of e-services including
rural telephony, mobile banking and information on
Agriculture.121
Benefits
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As these CISCs have direct access to people in thoseareas, these centres have been chosen by the e-
shop as an ideal platform to reach out to people
and draw them into e-commerce. The people will get various products directly from
manufacturers at competitive prices and with
assured delivery of the ordered products.
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Benefits (cont.)
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The e-retailing will kick off with products likeconstruction materials such as TMT bars,manufactured by SAIL and Ramswarup Industries,pipes by Tata Pipes, cement by Lafarge, paints by
Berger Paints and storage and PVC tanks producedby Patton Tanks.
Farm inputs like seeds, fertilisers, pesticides and
agricultural implements have been lined up as thenext products for e-transaction. These are to befollowed by electronic appliances, fabricationproducts and consumer goods.
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TATA BP Solar
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TATA BP Solar Making the sun rise
Tata BP Solar has been
at the forefront of solar
energy field since 1991.
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Over 70 per cent of India's population lives in the
rural areas, but 70 per cent of electricity generatedis used in urban areas," says AK Vora, Managing
Director of Tata BP Solar. "Even in the future, rural
areas will continue to get an unequal share ofpower, because urban needs will keep on
increasing.
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The power of the sun
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p
Tata BP Solar is playing a key role in helpingbridge the urban-rural energy divide.
In India, energy planners think of powerrequirements only in terms of large MWs. But,
says Vora, in villages you need small amounts ofpower; for homes and businesses such as shopsand flour mills.
Solar power can provide energy security and,therefore developmental opportunities to 700million rural Indians.
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Cont..
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"Solar power is clean, eco-friendly and the mosteasy-to-set-up source of power. You don't needlarge transmission towers, lengthy cabling andheavy switchgear. You can light an entire village in
less than a week," says K Subramanya, COO, TataBP Solar.
The needs of the rural people are simple: fuel forcooking, water for drinking, light for studying,and television and telephone for entertainmentand connectivity.
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Tata BP Solar has a slew of products such as solar homelighting systems, solar lanterns, solar cookers and solarhot water systems, the innovation is in the packagedsolutions that they have designed for specific segmentsin rural India:
Sunbank, a customised package for rural banks that arebeing computerised, consists of a power pack alongwith solar modules, batteries and controllers, andprovides power for three to six hours a day. Thecompany is looking at powering ATMs next.
Suraksha, a solar-powered communication system,helps police stations function effectively.
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India has tens of thousands of primary healthcentres, but most of them have very little or nopower and vaccines need to be refrigerated at
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power, and vaccines need to be refrigerated attemperatures lower than 6C. The health centre
package, Arogya, includes a solar powered vaccinerefrigerator manufactured indigenously by thecompany and approved by the World Health
Organisation (WHO). In Madhya Pradesh, the Rajya Siksha Abhiyan has
given computers to over 3,000 rural schools, butrealised that there is no power to operate them.
Tata BP Solar is proposing to put together a schoolpackage called Tejas, which powers computers, TVs,lights and fans. Specific packages for e-governance
and panchayats are now being developed130
The government is driving banking, farming,
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education and health activities in rural areas, and
Tata BP Solar is ensuring that these initiatives bearfruit through the use of solar energy.
"Each of our package solutions addresses the
government's agenda in different areas," saysSubramanya. "We are also understanding the real
needs of villagers and developing products
depending on the budget, playability and productuse."
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One work-in-progress product is a low-cost solar
lantern.
The present lantern, a bestseller, is priced at Rs
4,000 ($80), too expensive for the rural segment.
The company's R&D department is relooking at theproduct to bring the price down to Rs 1,250 ($27).
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They are also developing a rural solar water heater,
smaller in size (40 to 50 litres) and cheaper than thecurrent range, sold primarily in urban areas for
between Rs 18,000 ($387) to Rs 45,000 ($969),
depending on the size. The target is to take it to the market by the end of
this year at a cost less than Rs 4,000 ($80).
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Arunodaya
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Arunodaya, the company is trying to make banksaware of the positive cost-benefit ratio of solar
products, and banks have started giving loans.
Arunodaya'sobjective is not to market solarproducts but to spread awareness about solar
energyand its applications through seminars and
workshops.
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"The customers are a by-product ofArunodaya'sactivities," says Vora, who points out that Tata BP
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Solar has a greater responsibility towards
promoting solar energy and developingapplications, as it is the leader in this field in India.
Tata BP Solar products have transformed lives in the
villages of Punjab, Uttar Pradesh, Haryana, Keralaand Tamil Nadu. It has done pioneering work in
Rajasthan, Assam, Orissa, West Bengal, Bihar,
Chattisgarh, Jammu and Kashmir, and north east
India.
The idea is to make the sun shine on rural India, to
brighten its future.135
Lighting up Ladakh
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Most Ladakhis lived a harsh life without electricity,
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till Tata BP Solar and the Ladakh Renewable Energy
Development Agency (LREDA) joined hands to lightup their world.
In a short time-frame, Tata BP Solar installed 8,700
solar home lighting systems and delivered 6,000solar lanterns to 80 remote villages and hamlets
situated at altitudes between 2,600 m (8,500 ft)
and 5,000 m (16,500 ft) above sea-level, over rough
terrain in bone-chilling weather.
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Half the villages were accessible only on foot; some
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were a three-day trek from the nearest motorable
road.
On June 4, 2002, the first of 118 trucks loaded with
solar products set off from the company'ssophisticated manufacturing facility in Bangalore to
Ladakh, over 3,000 km away, a journey that took
two whole weeks.
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Just four months later, 14,000 homes in dozens of
villages in Ladakh were illuminated each night by agolden glow. Thirty-six teams of local people were
trained to install the products and educate the
people. "Our team has done amazing work in thatdifficult terrain.
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Today, the company has a regional office in Leh
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the highest solar service centre in Indiaan on-site
project management team and more than 70locally-trained technicians.
A grateful Buddhist monk at Strongday Gompa in
Zanskar summed up his feelings, "Solar light is likegiving eyes to a blind man."
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NEED OF SUNBANK
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THEY BANK ON SUNBANK
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TATA SPECIFICATION
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SOLAR POWER PACKS
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Tata Rallis
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Rallis India is one of Indias leading agrochemicals
companies.
It has more than 150 years of experience inservicing rural markets and a comprehensive
portfolio of pesticides, herbicides, fungicides and
plant nutrients for Indian farmers
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The company has factories in five locations in Indiaand a network of 1,500 distributors that reach more
than 40,000 retail counters.
It has the largest agrochemicals capacity in thecountry (10,000 tonnes per annum of technical
grade pesticides and 30,000 tonne litres per annum
of formulations).
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Rallis: Strengths today
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Number 2 in domestic CP business
Widest reach in domestic market place
Strong Brand equity and large product portfolio Desired co-marketing partner for RBCs
Quality manufacturer of Pesticides
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Known as Tata (Rallis) in rural India.
Brands carry Tata name
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y
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Areas of business
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The domestic formulation business caters to thecrop protection and yield enhancement needs of
the Indian farmers through a wide portfolio of
products, including insecticides, fungicides,
herbicides, plant-growth nutrients and seeds.
The domestic institutional business caters to the
bulk and technical requirements of institutional
customers.
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The international business handles exports ofpesticides to all parts of the world. The export
basket includes technical-grade pesticides, branded
formulations and contract-manufactured products.
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Tata Rallis have had their first encounter with a conceptthat is set to change their entire business contract farming.
Farmers now have only to get to one of four Rallis Kisan
Kendras (RKKs) and fulfil their entire spectrum of needs, be
they agricultural products like pesticides and insecticides,credit, an assured buyer, or even expert advice.
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The RKKs are at the four locations at which thecompany has set up the contract farming projects:
at the pilot project in Hoshangabad, at Bangalore
for fruits, at Nashik for vegetables, and at Panipatfor Basmati rice
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The company has come together with creditprovider ICICI and buyers of agricultural produce
like HLL and Food World to provide a one-stop shop
of all solutions for farmers.
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Rallis originally a pure agri inputs company has
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Rallis, originally a pure agri-inputs company, has
covered many milestones to unshackle the farmerwith its contract farming initiatives. Because of its
strong background and history in the rural sector,
Rallis is in a good position to execute the contract-farming model.
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The changes
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Gaining the farmers confidence was the key to thesuccess of Rallis's model.
The idea was to entrench in the farmers minds that
this was not another purely academic experiment.Rather, it was crucial to make them see that the
experiments success would mean their success as
well. "We didnt want to be remembered as fly-by-
night operators," asserts Mr Oberoi.
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Although the company has extensive reach in the
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Although the company has extensive reach in the
agricultural world, its expertise is restricted toseeds, fertilisers and good research practices.
To overcome the lack of expertise in its non-core
businesses, the company decided to partner withexisting service providers and to extend the
network to the farm. The partner, in turn, stood to
benefit from the Rallis-Tata association and gaininroads into the rural segment.
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To provide easier finances and lend easy credit to
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To provide easier finances and lend easy credit to
the farmers, ICICI was roped in. For ICICI, the modelexpectedly provided a platform to reach out to a
larger rural audience.
To ensure produce offtake, Rallis tied up with HLL.The latter was looking for standardised good quality
wheat for its processed atta.
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When this partnership took its wares to the farmersof Hoshangabad, where the first experiment was
carried out, there was cause for great satisfaction.
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With the increase in available funds, farm creditwent up. Offtake was assured as was the quality of
the produce and the farmer saw better returns for
himself.
The project was aimed at giving true value to all
participants of the initiative. "The idea was to take
to the farmer any person who could give the best
credit along with the best market experiencethrough a Kendra.
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Rallis is now on the verge of commercialising itssuccessful model. After a few loose ends are tied up,though.
One of the problems with the current system is that the
farmers are not being charged for most of the facilitiesprovided by the partners. In a commercial set-up, thefarmers would require to pay, either on an annual basisor by offering allied facilities like soil testing at a
nominal fee. "There is no such thing as a free lunchNot only is the method of levying the charge yet to bedecided, the willingness of the farmer to be a part ofsuch a deal also remains untested.
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Rallis is aspiring to add further value to the model
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Rallis is aspiring to add further value to the model
by ensuring good irrigation and continuous watersupply through extensive drip irrigation and
watershed management projects. The company is
already working on certain joint ventures to thisend.
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RALLIS INDIA LIMITED A TATA ENTERPRISE
T t i i t th t id
RALLIS INDIA LIMITED A TATA ENTERPRISE
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Tata companies coming together to provide more
than just agricultural facilities to rural India. Forinstance, to ensure that farmers are not exploitedand are able to comprehend what is communicated,
it is important to educate them. Teaching the farmer to use computers and access
mails may be an area where companies couldextend their capabilities. The conglomerate does
not rule out using its telephony, Internet, steel,software, education and other in-house companiesto better rural conditions. Effectively, the farmer isall set to gain. 176
Tata Motors
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Tata Motors Ace Tata Motors Nano
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Tata Motors Ace
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India's plans to link villages with towns andtowns with cities across the country, through
world-class highways and all-weather roads, is
going to dramatically change lifestyles, both in
terms of transportation of goods as well as
people. Tata Motors, India's leading auto
manufacturer, is gearing itself to address and
accelerate this transformation.
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Cont..
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Tata Motors commercial vehicles are knownfor their reliability and durability.
Seven out of every 10 trucks on Indian roads
proudly carry the Tata logo. But the smallest vehicle it made was a four-
tonner, which was too big to be economically
deployed in large numbers in small towns.
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Tata Motors had consciously decided to focus on
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Tata Motors had consciously decided to focus on
being a customer-centric company rather than aproduct-centric one, developing products that fit
customer requirements rather than making
customers adjust their requirements to suit existingvehicles.
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Changing customer attitudes are driving the markettoday. Issues like reliability and low maintenance
costs are now basic requirements, not product
differentiators. The key to success is how well youlearn the differentiators,"
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Who is the customer?
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acquisition-price-sensitive customer
return-on-investment customer
looking-for-a-balancecustomer
only-performance
customer
who is looking only at
price, not performance
who is willing to pay a price
for better value
who weighs both price andperformance.
who is willing to pay a higher
price for it
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Therural customer is not too aware of features andbenefits,
And is found more at the lowest end of the pyramid,
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while the educated urban customer lies at the second
level.
In both urban and rural India, there will be customers in
all the four segments, in varying percentages. "The
challenge, as competition increases, is to bring outproducts that provide the benefits of one segment at
the price point of the lower segment,".
The company targeted customers, largely from semi-urban and rural areas, who fell into the two bottom
layersof the pyramid, which cover 85 per cent of the
market. 183
What does Customers want?
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Through its interaction with customers, the
company learnt that the five essential
attributesthey look for in a small commercial
vehicle are lower operating costs (as
compared to a three-wheeler), reliability,
durability, safety and comfort, andmost
important of alla viable businessproposition.
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Dealing an Ace
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The company realised that the entry level forthe semi-urban and rural market was a
product between a three-wheeler and a pick-
up truck, at a price-sensitive level. It put
together a team to develop such a vehicle,
and it came up with an Ace.
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A sturdy vehicle that can carry loads up to 1.5
tonnes over distances up to 300 km, the Ace is a
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four-wheeler at a price slightly higher than a three-wheeler, but offering greater stability, safety and
comfort. More important, the operating cost was
extended to a product lifecycle cost, which covered
purchase cost, operating cost and resale price. "It
has the lowest product lifecycle cost; that is our
USP.It is essentially a last-mile load carrying vehicle,
useful in congested cities as well.
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Tata Motors took the Ace on road shows through
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Tata Motors took the Ace on road shows through
villages and demonstrated the features andbenefits.Customers were encouraged to test drive
the vehicle,The brand communication for the Ace
was 'All the goodness of the Tata Truck now in amini size'thereby the descriptor of the category
as a mini-truck. Using the metaphor of an elephant
(a mother elephant representing the Tata truck),
the Ace was simply called the baby elephant.
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Finessing the finance
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The low-price-high-performance Ace has cast itsspell on auto financers in urban areas, who nowoffer five-year financing for the vehicle (three-wheelers get only two/three-year financing), so
that customers pay a monthly instalmentapproximately the same as that for a three-wheeler. "The instalment payment has gonedown and income has increased, boosting net
earnings. The customer is happy and our saleshave jumped. It's a win-win situation.
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The Ace has been so successful that the company is
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p y
struggling to meet demand. Today, the Ace isavailable in only nine states, and Tata Motors is
enhancing its capacity before launching the vehicle
in more states. The wheel of fortune rolls swiftlythrough semi-urban and rural India, as Tata Motors
changes people's lives for the better.
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Tata Motors Nano
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In rural India, transportation facilities are stillin their nascent stage and Nano will serve a
great purpose there
- Tata Motors Chairman Ratan Tata
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Tata Motors Nano
Tata Motors has decided to focus on semi urban and rural markets to sell
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Tata Motors has decided to focus on semi urban and rural markets to sellthe peoples car apart from the middle class in the urban areas.
Distribution: Tata Motors is implemenng a hub- and-spoke model forNanos distribution, which would mean that it would involve increasingdealership points as well as adding sales and customer touch points.
The proposed rural marketing would be a network
that is as near the customer as possible. Tata envisions providing the tools for local
mechanics to assemble the car in existing autoshops or even in new garages created to cater toremote rural customers.
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Tata Teleservices
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In India's metros, state capitals and small towns,telephones have morphed into cell phones. From thehigh-powered executive in his tinted-glass Mercedes tothe vegetable seller down the road, people everywhereare chatting, getting information and doing business on
the cell phones. But it's a different story in India's villages, where many
are yet to see a telephone. Communication is still aproblem, and most villages are yet to savour thebenefits of Alexandra Graham Bell's remarkable
invention. Of the 70 per cent of our population thatlives in rural India, only 1.5 to 2 per cent are connectedthrough a telephone.
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In 2002, in an effort to increase rural tele-density, the government set up a universalservice obligation (USO) fund. Telecomoperators had to give a certain percentage of
their gross revenues to this fund. It alsomandated thatevery telecom operator mustprovide telephone services in rural areas eachyear, up to a certain percentage of theirannual business turnover, which would besubsidised from the USO fund.
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Tata Teleservices Ltd (TTSL), which started
operations in 1996 in Andhra Pradesh, is a major
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telecom player in India. Over the years, it hasexpanded its network and today covers 2,500 towns
in 20 circles. It is the market leader in the fixed
wireless telephony market, with a customer base of
over 2.8 million. TTSL has bid successfully to provide
telephone services in 242 SDCAs (short distance
charging areas). It sees rural telephony not just as a
service to India's villagers, but also as a greatbusiness opportunity.
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Darryl Green, CEO of Tata Teleservices, expands on
the company's philosophy, "There is a huge amount
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of satisfaction in working in the rural areas. In urbanareas, the telephone has become an integral part of
life. But in rural areas, people have to travel long
distances on foot or a bicycle to find out good or
bad news from family and friends. For them to be
able to pick up a phone and get that news in a
second, makes this business that much more
meaningful."
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Challenges
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Villages cannot be accessed easily owing totheir remote location; setting up a network isfraught with difficulties
The investment required is high and the
returns are very low, as many villagers cannotafford the cost of telephone services.
It's also difficult to get people to work in
these areas; they are remote and lackamenities.
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Cont
Electricity is one of the primary requirements for
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Electricity is one of the primary requirements for
telecom services, but many villages do not have
electricity.
Diesel generators are expensive and can work only
as a stopgap measure.
The government is supposed to help telecom
companies get electricity, but the companies have
to do most of the work and also bear the cost
To communicate the benefits of the product to the
people, as many of them are illiterate.197
The cost of the service has been adapted for the
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rural customer. In the pre-paid scheme, thecompany retains ownership of the phone, so there
is no deposit to be paid, just an activation fee which
ranges from Rs 600 ($13) to Rs 800 ($17). If thecustomer wants to stop subscribing to the service,
the company takes back the phone. TTSL is trying to
develop lower cost phone models to attract more
customers.
198
Another key learning has been in setting up adistribution network. The company has set up athree-tier networkwith a main distributorwholooks after a large area, generally an SDCA, and has
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g , g y ,
feeders (on his pay roll) which feed into 'runners'people appointed and trained by TTSLwho visitvillages on a bicycle or a two-wheelerat definedtimes on defined days of the week, selling rechargevouchers and servicing equipment; each runnercovers between 200 to 300 customers. Thecompany has also joined hands with Tata Chemicals'
Tata Kisan Sansar network, disseminatinginformation through these centres and using themas local distributors.
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Tata Teleservices has invested Rs 240 crore ($51
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million) in rural telephony in these 242 SDCAs,covering Rajasthan, Bihar, UP East, UP West,
Maharashtra, Andhra Pradesh, Karnataka, Punjab
and Haryana. It will reach out to more than6,00,000 subscribers by end March 2007. It hopes
to get more subscribers and induce existing
customers to move up to value-added products and
services.
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Other Collaborative Initiatives
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TATA-AGRICO TIE Ups WITH HARIYALI KISAAN BAZAAR
WITH ITC
WITH GODREJ AGROVET LIMITED (AADHAR)
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Tata Sky
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FEATURES TO ATTRACT RURALCUSTOMER
Jingle: Isko Laga Dala to Life Jinga Lala appealing to the
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Jingle: Isko Laga Dala to Life Jinga Lala, appealing to the
rural mass. Inclusion of Radio Reception and Development of Visual
Radio service.
Combined Product with Television - Rural Areas , especiallyand Niche Segment Targeting if Combined with LCDs.
Variety in Movie Listing with Bollywood and RegionalChannels. Regional Disparity: Provide free regional packs inlocal areas to
ensure switch from Cable TV to
DTH service, i.e. provide free south Jumbo pack forcustomers in all Southern States.
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AAMIR: THE BRAND AMBASSADOR
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