State Bank of India takes no-frills ATM to rural masses

India's largest bank is turning to one of the country's smallest technology companies for a new minimalist cash machine it hopes will solve the subcontinent's chronic financial services shortage.

State Bank of India (SBI) has 10,000 branches, the second largest network in the world, but struggles to reach the farming communities that make up 70 per cent of India's population.

About 85 per cent of India's workers are employed in the "unorganised sector" – where wages are paid in cash – and at least half do not have a bank account. Hoping to reach the underbanked masses, SBI is trialling a new automatic teller machine (ATM) that costs a tenth of the price of conventional models and is cheap enough to deploy in areas where the average transaction is 100 rupees (£1.25).

Built around a pared-down software platform and connected to a bank via the web, the Gramateller ATM makes do without the frills found on its Indian city cousins, such as the ability to make payments to the local temple.

Instead it includes features useful for country living. A fingerprint scanner provides an identification system suitable for a country where 70 per cent of the population is illiterate. It runs on just 60 watts of electricity – a fraction of the 3,000 watts required by a conventional ATM – to cut the cost of supplying backup power in areas where blackouts are common. The new generation ATM also emits far less heat, which means unlike a traditional cash machine, it does not need to be housed in an air-conditioned closet.

Moreover, though it will only handle a single denomination of currency, the Gramateller can take deposits and deal with dirty and crumpled notes – helpful, since rural users are often suspicious that crisp new cash is forged.

The machine has been developed by Vortex, a Madras-based technology start-up funded by a 2 million rupee (£60,000) investment from Aavishkar, a specialist "micro venture capital" firm that is backed by groups including Deutsche Bank. ICICI, India's largest private bank, is also piloting the technology while one of Indonesia's largest retail banks has told Vortex it will "buy as many ATMs as the company can build" – provided the Gramateller passes its current field tests.

"Manned branches are too expensive; conventional ATMs cost too much and are not equal to the challenges of rural environments," Lakshmimarayan Kannan, of Vortex, said. "We built the Gramateller to bring banking in reach of those not covered today."

Comparisons with developed economies suggest the market for the minimalist ATM is potentially massive. In the US, where credit cards are common, there is a cash machine for every 1,000 people. In India, where cash is still king, there are only about 30,000 machines in the entire county – one for every 43,000 people – and most are densely packed into big cities.

However, the Gramateller is only one of several "branchless banking" models being tested around the world. In the Philippines, for instance, Globe Telecom customers can operate electronic accounts through mobile phones and similar systems are being used across Africa. In India ICICI already uses microfinance institutions, which specialise in granting tiny amounts of credit, as retail agents.

Against mobile-phone based systems, the Gramateller may be relatively vulnerable to thieves. However, Mr Kannan points out that it will carry only about a fifth of the amount of money found in a city ATM. "There won't be a need to have very much cash in our cash machine," he said. "Actually, there are likely to be plenty of assets around it worth more."

ITC to expand its retail footprint

ITC`s lifestyle retailing business division is planning to expand its retail footprint further by setting up more Wills Lifestyle, John Players and Miss Players stores across the country, reports Economic Times.

The company has also embarked on an active exercise to create a stronger brand and retail identity for Wills Lifestyle, which it wants to position as a more international and aspirational brand.

ITC has piloted a new store concept with FRCH Design of the US, a specialist in store and mall design. Three concept stores have already been launched, two in Mumbai and one in Delhi. It is also working with the UK`s Elemental Design and The Friedman Group from the US in areas like product presentation, visual merchandising and retail training.

The company intends to increase the number of Wills Lifestyle stores from 250 to 400 by the end of 2008-09.

Fortis HealthWorld enters rural India with Godrej Aadhaar

Fortis Group company Fortis HealthWorld Ltd (FWHL) on Monday said it has tied up with the rural retail initiative of Godrej Agrovet Ltd, Godrej Adhaar, to open pharmacies in rural areas.

By setting up FHWL pharmacies jointly with Godrej Adhaar, the company seeks to empower the rural India mainly the farming community by providing all encompassing health needs under one roof, FWHL said in a statement.

These stores will also be equipped with a wide range of fast moving health good and support systems. To start with these Aadhaar Pharmacies are being launched at the key Aadhaar centres, at Taran Taran, Batala and Mehta Chowk in Punjab, it added.

"This partnership with Godrej Aadhaar is an integral part of our commitment of providing world class pharmacy and allied services to rural India," FWHL CEO Ashish Kirpal said.

"The rural market in India holds huge potential for pharma industry. Godrej Aadhaar with its extensive reach in Rural areas is uniquely positioned to provide a platform for products and services for rural areas," Godrej Agrovet Ltd CEO B S Yadav said.

Fortis HealthWorld is the retail arm of the Fortis Group, which is planning to set up retail network of health stores across the India.

Hariyali Kisan Bazaars: DSCL

Hariyali Kisan Bazaars are helping transform rural India by providing all manner of services to farmers.

While the retail revolution in urban areas is going ahead at its own pace, the retailing in rural areas is also getting modernised in a unique manner to cater exclusively to the wide-ranging needs of customer-farmers. The trend setter in this case has been the “Hariyali Kisan Bazaar” chain launched by the DCM Shriram Consolidated Ltd (DSCL) in 2002-03 with a well-conceived model of value-added retailing.

Beginning with just five outlets, the Hariyali chain has already grown into 127 centres spread across seven states. Interestingly, the turnover of this chain has clocked a massive 75 per cent growth in last one year due to higher sales and rapid expansion of the network. The footfalls in each of these outlets averaged around 150 to 200 per day, rising to even 1,000 a day during key phases of the cropping cycles.

The spectacular success of the DSCL initiative has, significantly enough, attracted the attention of the Harvard Business School which took it up as a case study and discussed it in the prestigious international agri-business seminar held last month in Boston.

Indeed, what sets the Hariyali enterprise apart from normal retailing is that it goes beyond just the sale of farm inputs or household necessities to provide farmer-clients technical guidance and other support services to improve farm productivity and net returns. All the salesmen in these bazaars, notably, are agricultural graduates and trained agronomists. Besides offering guidance on cropping patterns and technology issues, they also hold training courses at various Hariyali centres and even visit the farmers’ fields to offer on-the-spot problem-solving counsel.

Besides, Hariyali outlets are information technology-enabled and have running strips displaying current as well as futures prices of agricultural commodities. The farmers are advised on post-harvest operations like grading of farm produced to fetch higher prices in the market. Many outlets have petrol and diesel dispensing stations attached to them. The bottomline is that these centres seek to meet most, even if not all, the needs of the farmers under one roof.

The men behind this rural retail movement, Ajay S Shriram and Vikaram S Shriram, DSCL’s chairman and vice-chairman, respectively, attribute its success to winning the trust of the farmers through the supply of genuine products and fair and transparent business. They have, indeed, chosen to adhere to the best practices for retailing as are followed by organised urban retail ventures. As such, these outlets deal mostly in branded products of reputed companies, offering the customers wide range to choose from. “The farmers want good quality products and they are willing to pay for them,” they maintain.

DSCL plans to expand its outlets to have an all-India presence in about two years. “We want to open Hariyali centres in all agriculturally important areas,” say the Shriram brothers. The products on offer, apart from all farm inputs, range from consumer durables like television sets, dish TVs, mobile phones and washing machines to factory-packed grocery, luggage items, cosmetics and toys.

DSCL has already tied up with ICICI Bank for providing banking services at the Hariyali outlets. Talks are in progress to have similar arrangements with a few other banks, including HDFC Bank. For providing insurance cover, the company has tied up with ICICI Prudential and some others.

The scope of the Hariyali model is now proposed to be enlarged to provide warehousing facilities to enable farmers to defer the sale of their produce to get better returns. Five warehouses with an area of around one lakh square feet are currently under construction in various northern states. These are likely to become operational in the next couple of months. The receipts of these warehouses for stored products will allow farmers to get bank loans against them.

Not only that, a medical centre is being set up at one of the Hariyali outlets in Punjab with facilities for tele-medical services. Fortis Hospital is collaborating in this venture. Besides, DSCL is in touch with NIIT to offer computer training facilities at Haryiali bazaars.

Indeed, the Hariyali bazaar initiative has shown how well thought out initiatives in rural retailing can help transform Indian agriculture and improve the economic conditions and living standards of village dwellers, even while being a commercially sustainable business. As such, there can be little doubt that rural retailing on modern lines is here to stay.

Reliance Retail to sell connected homes concept

Tata's Infinity Retail, Future Group's e-Zone already have tie-ups with Microsoft for the same.

Mukesh Ambani’s Reliance Retail has entered into an agreement with Microsoft to launch the ‘connected homes’ concept. GETTING WIRED Connected homes offers users the opportunity to connect all their consumer durables, electronic and IT products at home with their personal computer or laptops through Microsoft software such as Windows Vista and X Box The computer and the products are connected through wireless technology. http://fmcg-marketing.blogspot.com/2007/10/croma-electronics-megastore-tata-groups.html Reliance Retail’s consumer durable and IT format, Reliance Digital, is planning to launch the concept at its upcoming store in Gurgaon in the NCR region.

Tata’s Infinity Retail and Future Group’s e-Zone have already tied up with Microsoft to launch the concept as a pilot project at their stores.

Connected homes offers users the opportunity to connect all their consumer durables, electronic and IT products at home with their personal computer or laptops through Microsoft software such as Windows Vista and X Box, among others. The computer and the products are connected through wireless technology.

Reliance Digital will showcase the Microsoft products in a 500 sqft area in the store. Initially, it will be a pilot project and, depending on the success, the company is planning to open many such kiosks at Reliance Digital stores, which is eyeing revenues of Rs 20,000 crore by 2011, according to company sources.

At present, Reliance Digital has three stores and will have two more by March and aims to have nearly 50 stores by the end of the next financial year.

“If the pilot project succeeds, we will have the connected homes concept in all our stores,” said a Reliance Retail executive.

Reliance Retail has also tied up with Apple to open iStores in the country.

iStores sell Apple products such as Macintosh, i-Mac, iPod, and software and support services. Reliance Retail has three iStores and plans to launch 40 more in the next 18 months.

Tata’s Infiniti Retail has tied up with Microsoft to launch MS@Retail, a ‘connected homes’ concept at Croma outlets from October 2007. It was envisaged as a shop-in-shop pilot kiosk at Croma’s Juhu outlet.

“After the launch of the concept, we have seen a huge surge in our laptop sales. We are also planning to take it to our other stores,” said Ajith Joshi, CEO, Croma.

Croma has nine stores now and plans to add nine more in the next couple of months.

“The connected homes concept has gained popularity in the US and it will catch up in India, too, as users are benefiting from its usage,” said Joshi.

Future Group’s e-Zone, which tied up with Microsoft in January 2008 for its Hyderabad store, is taking the concept to its 28 other stores across the country, starting with a 30,000 sq ft store it is planning at Bangalore.

According to Manoj Kumar, CEO, e-Zone, “After the launch of the pilot, the sale of Microsoft products have gone up by five times. We are planning to take it to all our stores soon,” Kumar said. The company is planning to set up nearly 110 new e-Zones in the next 18 months.

After the success with Croma and e-Zone, Microsoft is believed to be taking the concept to all the major cities of India and ensuring its presence in major outlets.

Deepika Padukone: ITC vs HUL

In a queer coincidence, the newest star on the block, Deepika Padukone, features in different commercials belonging to rival camps. She has been roped in by ITC to promote its Fiama Di Wills soap brand, and is also seen in a rather dated commercial of Close-Up which has been revived by rival HUL.

While the Fiama Di Wills print advertisement has been recently unveiled, the "Kya aap Close-Up karte hain...." commercial dates back a couple of years when Deepika was a budding model.

Though Fiama Di Wills and Close-Up belong to different categories, and thus, do not compete, ITC is a fierce rival to HUL which has till date towered over meek and strong brands alike, in the highly competitive FMCG sector.

ITC has already marked a foray into core FMCG categories-soaps and shampoos. Industry observers say that it would eventually expand the basket to include more personal products. ITC's good financial backing is expected to assist the company in competing against the might of HUL.

On why ITC roped in Deepika, Sandeep Kaul, general manager, personal care business, ITC, said: "The Fiama Di Wills Brand personality is that of today's modern, confident, intelligent and aware woman. Deepika is the perfect embodiment of this personality."

Reasons for the revival of the old Close-Up commercial could not be ascertained. HUL is said to be within its legal bounds to feature a commercial done years ago, which brings forth the question: Would Deepika's Liril commercial done some years ago also be revived? There are no answers to this one, but if that happens, then the star would be seen promoting two rival brands from the same category.

While ITC did not respond to a TOI query, all an HUL spokesman said was, "the right on any creatives which are generated shall be governed by the law of the land".

O&M was responsible for the creative three years ago and Lowe, which is handling the Close-Up brand for HUL now, refused to comment. Advertising sources, however, said: "If the ad works for the company, they would use it. Ad agencies don't change creative elements unless there is consumer boredom."

BBDO's Josy Paul said, "It is opportunistic thinking and increases the buzz in the market."

Nearly a decade ago, Close-Up was caught in a similar wrangle with rival Colgate-Palmolive, when an old commercial featuring model Ruby Bhatia was revived ahead of a new Colgate product commercial which had the same model. The embarrassment was such that Colgate was forced to replace Bhatia.

Unilever Growth to Sputter as P&G Takes Market Share in India

Unilever, which sells soap to more than 500 million Indians, may see global revenue growth slow in 2010 as Procter & Gamble Co. and ITC Ltd. step up marketing in Asia's third-biggest economy.

The world's second-largest consumer products maker has relied on accelerating shipments of Surf Excel detergent in India to make up for sluggish sales in Europe. Now Cincinnati- based Procter & Gamble is stocking Indian stores with Olay skin- care products after nearly halving the local prices of Ariel and Tide detergents in 2004.

Asia and Africa, which make up about a third of Unilever's worldwide sales, will see their share of the company's growth fall to 2 percent in 2010 from 3.3 percent in 2007, according to Brussels-based brokerage Petercam SA. Revenue from the two continents rose 11.4 percent in the first nine months of last year, helping offset 1.9 percent growth in Europe and 4.2 percent in North and South America.

``Unilever is quite heavily dependent on the region for growth, so a slowdown there would hurt growth at Unilever as a whole,'' said Yann Gindraux, an analyst at Vontobel Holding AG in Zurich, speaking about Asia and Africa. He rates the stock ``sell'' and expects sales in the regions to expand by 9 percent in 2009 from 11 percent last year.

Unilever's overall sales growth will slow to 4.9 percent in 2010 from an estimated 5.3 percent in 2007, according to the median of five analysts in a Bloomberg survey.

2010 Expectations

P&G, the world's largest consumer-goods maker, will continue to gain share in the next five years in India, according to Ali Dibadj, an analyst at Sanford C. Bernstein in New York, who rates the stock ``outperform.'' Hindustan Unilever Ltd., 52 percent owned by the London- and Rotterdam-based parent, lost ground in shampoo, bath soap, toothpaste and tea in the quarter ended Sept. 30, compared with the year earlier, according to the company. Its share of the shampoo market declined by more than a percentage point to 47.7 percent, the company said.

ITC, the largest Indian cigarette maker and partly owned by British American Tobacco Plc, is also making inroads. It started selling more brands including Fiama Di Wills shampoo and Superia soap last year as the government raised tobacco taxes.

`Profitable' Cigarettes

The tobacco maker ``has a very profitable cigarettes business which will help it to invest and expand its personal- care portfolio,'' said Anand Shah, an analyst at Angel Broking in Mumbai, who has a ``neutral'' rating on the stock. ``It has the ability to take losses in this segment as long as it grows its sales. This strategy will still satisfy investors.''

Rising prices of raw materials have made it more difficult for consumer-goods makers to pass on higher costs. The price of palm oil, used to make soaps and foods, has surged 70 percent in the past year.

``Given the competition, profitability will continue to be under pressure,'' said Macquarie Securities Ltd. analyst Unmesh Sharma, who has an ``underperform'' rating on Hindustan Unilever. He expects the stock to drop to 180 rupees ($4.57) in the next year from 190.9 rupees. The company has a market value of about $11.8 billion.

India is Unilever's biggest market in Asia, generating about 6 percent of annual sales. It has sold soap in the country since 1888 and controls about half of the sales of products such as skin creams, bathing soaps and shampoo.

Cescau Sells

Chief Executive Officer Patrick Cescau has sold frozen food and perfume units to boost performance. Unilever aims for sales growth, excluding acquisitions, divestments and currency swings, of 3 percent to 5 percent annually through 2010. P&G revenue, on that basis, rose 5 percent in fiscal 2007, partly because of China and India.

Cescau is also trying to take on Nestle India Ltd. and ITC in food. Hindustan Unilever wants to convince urban consumers to shift from fresh to manufactured food such as Knorr soup. Indian packaged-food sales reached $14 billion, compared with unpackaged sales of $275 billion, according to a company presentation last year.

``As incomes increase, people will be spending more on products such as chocolates and other packaged food,'' said Suhas Naik, who helps manage the equivalent of $200 million at IL&FS Ltd. in Mumbai. ``This is where the growth will come from. The penetration of these products is still very low in India.''

Unilever's Indian operating profit as a percentage of sales declined to 14 percent in 2006 from more than 20 percent in 2003, according to data on Unilever's corporate Web site. The margins exclude restructuring costs and gains on disposals.

``It's very surprising that given their brand recognition in India, they aren't more aggressive in entering new businesses,'' said Angel Broking's Shah.