ICICI Bank is the largest retail bank in the private sector. ITC is known for businesses ranging from tobacco to hotels to foods. But when these companies target customers at the bottom of the pyramid, they step into the other's shoes and go beyond their traditional business.

Sometimes, like ITC has done, they even put on the costume of a market research company or an advertising agency. "If the resources at the bottom of the pyramid can be leveraged, as opposed to ruing the lack of resources, wonders can be done. This is a major hypothesis that got validated," says S Sivakumar, chief executive, Agri Business, ITC Ltd [Get Quote].

Take the case of ICICI Bank [Get Quote] that encountered a particular problem. The bank had financed 200,000 villagers across the country to buy buffaloes. But these customers were unwilling to buy more than two to four buffaloes.

The bank could not convince these customers to increase their stock to a sizeable number, such as 20 buffaloes. The rationale of the villagers was simple. More buffaloes would mean hiring additional help to look after the herd.

On the contrary, four buffaloes can be managed by the family members. Then, the buffaloes could be accommodated in a small courtyard, rather than building a large shed for the herd.

Importantly, as Nachiket Mor, executive director, ICICI Bank points out, "The implication of a financial risk is high when you own a large herd."

The bank embarked on a pilot project with a company that supplies cattle feed. Around 150 rural households who were the bank's customers were covered during this trial phase.

Buffaloes owned by these households were put on a diet of cattle feed supplied by the company. The milk yield from these buffaloes increased by 50 per cent.

"We could now give loans for fodder. We had discovered a market for a new product," says Mor. The company now plans to tap its existing client base (200,000 buffalo owners) for fodder finance.

"In a rural finance strategy it's important to find viable revenue chains," says Mor.

For ITC, its eChoupal initiative used the formula of roll-out, fix-it, scale-up. "We take a project into the market even if it is 70 per cent right. We then look at how to better it and keep fixing it," says Sivakumar.

In the course of making corrections, the company stumbled upon new business avenues.

ITC realised that it was not enough to just procure from the farmer. Because it was investing as much as Rs 300,000 on a single eChoupal (farmer's residence) or as much as Rs 5 crore (Rs 50 million) on a Choupal Sagar (warehouse), ITC decided to go beyond just buying the agricultural produce.

It also started selling goods and services through the same channel to improve the revenues. Soon, agri inputs (seeds, chemicals, fertilisers), farm equipment (tractors, implements), consumer goods (FMCG, durables, apparel, footwear) and even financial products (insurance, credit, savings) were sold through this channel.

"The shared infrastructure and range of products reduce the unit cost of delivery," says Sivakumar.

The company's logic was simple. Bundle information into the process of selling, so that the value for money equation is demonstrated. The approach was the same, whether it's selling weedicides, salt or life insurance.

Take the case of insurance. ITC created an audio-visual that demonstrates how other needs (regular cash flow, incidents like weddings and illnesses in the family and so on) are not met since the family does not have a regular income after it loses the head of the family who has no life insurance.

ITC also gets existing insurance policy holders to talk with their peers. Also, many farmers did not take insurance policies as the agency structure was not very strong, claim conditions were unknown and so on.

The company improved service levels by providing farmers with information on how to claim money, when to pay premiums and so on.

Also, if ITC had to get more farmers to buy from them, it also had to improve the income of farmers. Hence, the company started helping them with information on how to get higher yields per acre, better quality of produce and lower transaction costs.

"If a company helps you increase your revenue, there is a greater chance that consumers would trust and buy from them," he says.

Soon ITC saw other opportunities. Most companies that ITC was working with had two problems -- a poor consumer understanding and product focus. To address the issue, it began conducting market research for other companies in industries ranging from consumer goods to agri inputs.

These services now account for about 15 per cent of ITC's revenue from its agri business division. As ITC got more attention from the farmer community, it extended its services to include ads and promotions.

To be sure, ITC is not the only company to get under the skin of the farming community. The north-India based DCM Shriram, which has businesses ranging from sugar and fertilisers to farm inputs marketing, set up Krishi Vikas Kendras six years ago.

The idea behind KVKs was to create a better relationship with the farmers and the community as well as provide agri supplies with the sole aim of increasing their productivity.

"Selling and retailing was not the objective and we basically aimed at imparting agri know-how, informing the community about issues such as sanitation and hygiene, addressing the girl-child issue and so on," reveals Rajesh Gupta, business head, Hariyali Kisaan Bazaar.

Today, DCM Shriram Consolidated Ltd [Get Quote] has more than 100 KVKs in north India.

But the KVK initiative led DCM Shriram to newer areas such as setting up a rural retail chain. "The aim was give the farmer the same respect and attention that an urban consumer gets in a metro city mall," says Vikram S Shriram, vice chairman and managing director.

"We were also aiming at addressing the issue of delivery of quality products and services at the right time," says Ajay S Shriram, chairman and senior managing director, DSCL. For instance, if there is a disease in the crop, the farmers got a solution from the neighbourhood trader.

For buying agri inputs the farmers used to interact with the local trader and not the company. "On many occasions the solution from the trader may not be unbiased. There was a business opportunity as a need of farmers was unmet on time," says Ajay.

The company launched its first Hariyali Bazaar in July 2002 in the Hardoi district of Uttar Pradesh. The company currently has 16 such outlets.

Each Hariyali Bazaar is spread across two to three acres of land, has warehouses for agri inputs as well as farm produce. Some even have vet centres with doctors and medical facilities attached to them.

"The approach is four-pronged. Provide the right inputs of the right quality at the right time; ensure last-mile delivery of the latest and relevant agricultural technology; low-cost and fair financing; and direct linkages for the farmers' produce," says Ajay.

But the Bazaars did not just stock products manufactured by DCM Shriram, as it decided to give farmers choice. The salesmen are agricultural graduates to give relevant advice to the farmers.

Each complex has a farmers' training centre, where farmers are taught ways to maximise their returns. The salesmen are given mobile phones so that they are available to farmers at all times.

To make things work better, the Hariyali Bazaar was open on Sundays, too, and the work timings were extended because many farmers got time only after the day's work was over. At present, each centre caters to about 10,000 farmers in 80 to 100 villages in its catchment area.

The company claims that the average turnover per store is around Rs 3 crore (Rs 30 million) and these stores break even in 1.5 years after being opened. DCM Shriram plans to open about 32 stores by the end of the financial year. Last week, a branch of ICICI's facility at the Hariyali Kisan Bazaar was inaugurated at Del Paderva village (Hardoi, UP).

Two outlets, one in UP and another in Punjab, have Bharat Petroleum outlets with Pure for Sure licences. An FMCG section started operating in UP's Shahjahnpur outlet in May. The company is looking at including pharmacies, contract farming and seed production too.