CategoriesCoconut Oil
by 13

Adulteration in Coconut Oil

Recently, 9 coconut oil brands have been banned by food safety department in kerala.

The department has banned oil brands Kera Plus, Green Kerala, Kerala A-one, Kera Super, Kera drops, Blaze, Pulari, Coco sudham and Kallada Priyam from the state on Wednesday, 8 April, reported Asianet News.

Having experience of 3.5 years in this coconut oil market, this is no news, it has been quite rampant. Here are a few relevant points –

  • A famous entrenched brand of Coconut Oil, market leader in Dakshina Kannada and Udupi is adulterated. It is a great case study of how one can build market leadership by satisfying traders than consumers
  • If the brand from Dakshina Kannada has name ending with letter ‘A’ it is definitely adulterated. A market leader will create many followers, who unfortunately have picked up the same bad habbit.
  • Coconut Oil brands from re-packers are more likely to be adulterated than those from oil manufacturers
  • At all India level, a famous brand from east having 5% national market share with tagline “Mera Pyar …” is not pure coconut oil. Legally speaking they have never claimed it is pure coconut oil, but they have not let the consumers know it is not pure either
  • KLF, a major coconut oil manufacturer in a bid to take on adulterated coconut oil with price is introducing blended coconut oil with sunflower oil
  • Oil Millers from Kerala are best friends of coastal karnataka based traders, as they sell coconut oil at lower price and buy copra from them giving a higher price. How is that possible?
  • Consumers have lost faith in coconut oil. Not because coconut oil is bad, but the coconut oil that they get is so bad. Example of how an industry can devalue the product they sell
  • In the midst of all this, genuine oil millers are getting badly affected, traders measure brands only by price. So a forum was started in Kerala to save coconut oil

Palm Kernel Oil
Palm Kernel Oil among oils is the closest to coconut oil in terms of chemical characteristics especially fatty acid saturation level. It blends easily with coconut oil, price is only about 60% that of coconut oil. So, mixing makes perfect sense. As I observed in North Karnataka market especially Belagavi, 90% of oil that is traded as coconut oil is actually palm kernel oil. I met a witty trader who said, “Your coconut oil prices changes with copra prices, but here it doesn’t, it only varies with palm oil prices”. I couldn’t control my laughter. At the time I visited Belagavi, price of so-called coconut oil was lesser than that of its raw material i.e. copra. Their defense is people in villages like to purchase hair oil at cheaper price, after all it is still a vegetable product.

Chips/Paring Oil
While manufacturing Desiccated Coconut Powder, the black skin in coconut is removed and only kernel is powdered and dried to make final product. This skin is a byproduct. It is dried and sold at about 65% of cost of copra. Like copra it is also rich in oil content. But the quality of oil is inferior to that from copra. Most manufacturers mix these chips with copra for oil extraction. Sophisticated manufacturers extract oil separately, refine, bleach and deodorize it to remove of excess FFA, dark colour and bad odour. This is later mixed with pure coconut oil or packed as it is. There is a large such unit in Tiptur that makes “Kasadinda Rasa” as we say in Kannada, turning a waste into a useful thing. Possible defense is it is oil extracted out of coconut and is hence coconut oil. That unit is not to be blamed (legally) as this oil can be used for making soaps. But the re-packers who buy this oil for marketing as edible oil is to be blamed.

The above 2 forms of adulteration can be detected easily by testing for Iodine Value. Iodine Value indicates the degree of saturation in oil, in fact, Iodine Value is equal to the degree of unsaturation in oil. Coconut Oil being highly saturated (92%) has an IV of about 8. All other oils have IV that is much higher. Due to variations is Copra, the allowed range for IV is 7.5 to 10. Paring Oil will have an IV of about 20 and Palm Kernel Oil about 25. So, Coconut Oils tested to have IV of above 10 is definitely adulterated.

Second grade oil
Best copra is white in colour and has a pleasant odour. Rotten copra will be darker and have pungent smell. Due to inferior quality, they are available at a lesser price compared to superior grade. This copra can be mixed with good quality copra during oil extraction. The resulting oil will appear good, but will deteriorate quickly. Copra manufactured from Coconut comes in all grades. Edible grade sells at highest rate and it is separated. Of the remaining, ideally second quality copra should be segregated, but many millers don’t.

This can be detected by just checking the FFA/Acid Value. Lower the acid value better the quality. Good quality oils have FFA of less than 0.7. Allowed is up to 2.0 for edible use.

Refined Coconut Oil
Excess of FFA (Free Fatty Acids) in Coconut Oil can be chemically removing by neutralising with a base, this is called refining. Coconut Oil extracted from second quality copra or that is solvent extracted from coconut oil cake is refined. This refined oil passes all the chemical parameters of food safety, but consumer is deprived of its taste, aroma and quality. We sell our coconut oil cake to a major solvent extractor in Kerala. I just asked him, where do you sell the coconut oil, he said it is finding major demand among re-packers. Re-packers buy inferior quality coconut oil and mix it with refined coconut oil to balance FFA. Surprisingly refined coconut oil is cheaper than just filtered coconut oil.

Use of refined coconut oil can be detected by again checking for FFA. Even the best quality coconut oil will have FFA not less than 0.4. Refining brings FFA down to 0 also. So, if the FFA is abnormally low, it means it has refined coconut oil.

I have leant these things recently, as I was forced to think and find out how other brands are able to sell their coconut oil at a lesser rate. Initially, I used to think

  • They are getting copra at a lesser price
  • Their manufacturing and overhead expenses are lesser
  • Their oil yield might be better
  • They know how to time the market and buy copra when it is at lower price
  • They are satisfied with lower margins
  • They are just doing it for the sake of brand building

But now I understand the various malpractices that are in vogue. I will write a detailed post later about other malpractices.

CategoriesManagement
by 0

80:20 Principle and its application

A business friend gave me a book “The 80:20 Manager“, I didn’t read it for 6 months thinking it is just another self-help book that is good to read but tends to be forgotten after a week. But this was something that was inline with my established beliefs and it was not hard to follow. It rather, gave me confidence to implement what I believed.

In essence, book is about Pareto Principle applied to management. 20% of selected inputs leads to 80% of outputs. For business, 20% of customers can give 80% business and profits.

Since starting 3 years back, business has been journeying in various ways. Here are a few ways in which we got back our focus in the last 3 months.

Other edible oils trading
With coconut oil getting dearer, consumers were shifting from coconut oil to other edible oils. So, our business within existing market was getting reduced. Demand was shifting from bigger SKU like 1 Litre pouch to say 500 ml pouch. So, we had started trading in other edible oils like Refined Palmolein Oil, Refined Sunflower Oil and Lamp Oil. With this, we could

  1. Provide our existing Coconut Oil customers i.e. Retailers with full range of edible oils, so that they could source more from a reliable vendor
  2. Get more income from same customer at same distribution expense and more sales turnover
  3. Use vehicle load fully, keep better tab of fluctuations in other edible oils

But with it,

    1. The focus started shifting away from our core business of manufacturing and marketing coconut oil.
    2. Adequate service could not be given to our customers because of supply disruptions from our vendors.
    3. Lot of works were to be done in transportation, unloading, loading, accounting, leakage processing, payment, selling in credit, managing working capital etc.

What seems like busy work and turnover was actually not contributing towards building Cocoguru brand or increasing bottom-line. So, we just stopped them altogether. That provided a lot of relief and we closed Sullia godown, released a rented vehicle and saved on a few resources.

Distribution
Wholesalers/Retailers were given supply of coconut oil through our Sales Van. For this we had to arm the vehicle with a driver and salesman. To account for those transactions an accountant was required, an officer was required to manage the delivery team. These are unrewarding work for a manufacturer, but had to be done initially to sell our products. The cost was very high, 40% of our company expenditure was going towards sales and distribution. We had 5 delivery vans to supply all over Dakshina Kannada district.

I always had a dream to stop doing line-sales ourselves and get distributors to do it for us. But distributors will take it up only when the brand is popular and they are confident of selling it. The margins should also be sufficient to sustain their business by only selling coconut oil.

The tough decision of increasing our selling price has made it possible and very soon. We left out less productive sales people, made enthusiastic sales people as distributors, gave away our existing vehicles to them at a reasonable price. With this we could leave out about 12 people from our payroll, stop renting 2 vehicles, sell 2 of our own vehicles, save the work of 2 accountants, Logistics officer and Top Management. Expenses are very less and under control, selling price is predictable. When the distributors have to sell to earn for their living their performance is even better and sales improved.

Leave Customers
With the eagerness to sell more and acquire as many customers as possible, we tend to serve any customer at any cost. But some customers are not worth our attention. Some need discounts, need credit, need pampering, are difficult to supply, need a different quality, put restrictions on us and still never get satisfied. Bolding leaving them out is a win-win situation for both the customer and us. We can cater to profitable customers better, others can get their desired service from a competitor. For every customer lost, there are a couple of them to be gained.

Piece Work/Contract Labour
If we believe in Theory X, labourers are lazy, they tend to take away maximum wages for minimum work. While employers looks to get maximum work for minimum wages. Mostly the labourers have their say. It is cumbersome for supervisors to get maximum work with quality from them always.
So, to align their work output with their income, we have made a piece work system, where they get paid only for the units of work done and not on attendance. This is system is fair for all workers, they are not paid on seniority, experience or any prejudice, only on output they produce.
In any annual appraisal discussion their only focus is on the revised salary, without any regard to their past performance or skills to be developed, responsibility to be assumed in future. For such people giving instant reward is the way to go.

After doing this their performance have increased multiple folds. Example, for a 5 member team segregating 6 tons of copra a day was very difficult, now 3 members are doing it very comfortably and with better quality.
For bulk quantity loading and unloading, in house labourers weren’t willing to do, so external labours had to be called. Now for 10 paise per kg, they are willing to do.
In packing section, where 9 people couldn’t finish all packing jobs, now after leaving 3 people, the 6 people are having enough time to go for other jobs.

Overall we could leave about 8 less performing people and better performing people are getting handsomely paid. Form 30 labourers we have brought down the count to about 20, work is getting done faster and better, existing labourers are fully engaged and satisfied.

With all these steps, the amount of administration work has come down drastically. Again couple of people who have become redundant were left out. With this lean an organization, it is possible to even double the business without having to add any headcount. Any decline in business can also be managed with minimum overheads. With operations focused and streamlined, way forward is to grow sales through advertising and appointing distributors to cover more area. From accumulating losses for 2 years and not knowing way forward this is a very pleasant situation to be in.

CategoriesPricing
by 2

Price Increase

We market Coconut Oil all over Dakshina Kannada district for edible use. In order to prevent unhealthy competition that erodes everyones profits, an association is formed among all oil millers. Minimum Price is being set weekly and all oil millers are expected to follow it in selling price of respective brands. Cocoguru started off with its price at 1 Re premium when association started 2 months back. Now we will increase the premium by 1 more Rupee and there by setting a premium of 2 rupees on a product that is valued at about 150. The following are our thoughts behind the price increase
  • Increase Brand Value – Brand Value is measured as Price Premium x Increase in sales because of use of brand name compared to an unbranded one. We invest in increasing our brand value and then look to encash it.
  • Signal of Quality – It is otherwise very difficult to communicate value of our product w.r.t. that of competition. One of the easiest and sure shot way is to increase price. While comparing 2 shirts that are seemingly similar, we tend to think that shirt that is higher priced as one that is better. Food served in a star hotel is supposed to be better than one served in an ordinary hotel because one gets a higher bill there.
  • Reason for Purchase/Sale – People should buy our product because they want it and badly want it, not because it is available at a lesser price.
  • Increase Responsibility – By price increase, in order to maintain and increase sales, one must back it up by improving the quality, service, marketing, be consistent and responsible. This will again be good for the brand.
  • Satisfaction – Company employees, suppliers, salesforce, distributors, retailers and consumers all feel very satisfied, have prestige in being associated with the brand.
  • Insulate from competitor moves – Lower priced brands are always under threat from new entrants and competitive price moves. Whereas premium brands are harder to topple by competitors. Competitors must work very hard to build their brand in order to acquire our customers.
  • Prevent Bargains – When our selling point is lower price, customer always tend to bargain. Transaction then happens only when we yield to the bargain. If we yield to those who bargain, then the one who doesn’t bargain suffers, eventually he too starts bargaining. For a routine FMCG sale, bargaining with the same customer every week is not a smooth way to deal.
  • Futile Price Wars – Price as a competitive advantage is never permanent and not worthy. We can gain a temporary sale by selling at a lower price. But competitor will immediately react by selling his at an even lower price. This will end in a price war with no winners but all badly wounded losers.
Going forward we like to increase the price gap and eventually not lend Cocoguru to price comparision with another brand. Every aspect of our business is undergoing continuous improvement, price will also undergo improvement accordingly.
CategoriesEmployees
by 0

Trip to Mullaiyanagiri


From the company, we had organized a one day trip to Mullaiyanagiri for employees on Sunday, 8th June. 25 out of our 38 employees have been able to make it for the trip. 10 ladies and 15 gentlemen, their age ranging from 20 years to 55 years. Here, I like to summarize the facts and share my opinion on the trip.


After a hectic season ending this summer, we wanted to have a break from routine and have a relaxing session. The group otherwise formally organized with hierarchy, powers and responsibility, will now be informally organized with personal friendships and similar interests.

Usually in business operations it is me who takes final decisions or takes tough calls, where the buck finally stops. But for this trip, I had delegated the responsibility of organizing the trip to my younger colleagues and future leaders Nanda Kishore, Vinod and Shiva Kumar. They are trekking freaks themselves too. I only briefed them about the time duration – 1 day i. e. Sunday without affecting our regular work on Saturday and Monday, people – our employees only and not their families, place – scenic place nearby and budget – 800 per head. They went ahead, selected the place, went there one month in advance to understand the place, booked the bus, arranged for lodging and food, arranged to pickup and drop employees from far away places.

Though a few of us visit other places almost every weekend, for a few it was a once in lifetime, once in a blue moon kind of opportunity. One colleague remarked, for the first time since my college 10 years back, I am freaking out like this. For me, it was otherwise, I didn’t go out till I completed college as I was not allowed. The company management is very happy for providing them that opportunity and their gratitude in return.
Many of us know each other professionally but we don’t know each other personally. Those who are working in our branches at Mangalore and Sullia may not know those working at our factory at Puttur. This was a great chance to know each other and personally. I am surprised at how each of them have different personalities at work and outside work. Some of them who meekly obey orders from superiors at work, now participate freely.

We started from our factory at Puttur on Saturday night 10 p.m. picked up people along the way. Travelled through Charmadi ghats to reach Chikmagalur at 3 a.m. We checked into a lodge only to get fresh and complete our morning activities. They charged 100 per head for the same. Got ready by 6 a.m. Travelled to the base of mullayanagiri hill while enjoying hills, valleys, sunrise and panoramic view of chikmagalur city. Had breakfast at small canteen at base and started trekking to the mullayanagiri peak 4 kilometres away. Everybody enthusiastically marched along, playing many pranks along the way.

We saw many tourists like us that day since it was a Sunday. Being the highest point in Karnataka, it should certainly attract many visitors. We could see lush green mountains, green either with grass or trees. I observe that ghats that are on the western side of malnad have more trees and ghats on the easter side of malnad have more grass.

Mullayanagiri peak has a small temple on top. It also has a couple of caves where one go a decent length inside the hole of hardly 1 metro diameter. Such a cave experience was first time for me, for a claustrophobic, it can be quite an experience. Once can reach the top through well laid out steps, instead we climbed form the back side of the hill to reach the top to enjoy a full 360 degree view of other landscapes visible from top.

We started descending down at 10 a.m. Reached the base at 11 a.m. We had ordered for lunch at the same place where we had breakfast. Since we had to go to Bababudanagiri next and had nothing to do here, we had an early lunch at 12 p.m.

Mobile tower on top of Bababudganagiri is clearly visible and just a 2 hour trek from Mullayanagiri but along road one has to travel 20 kms. Road is still under construction, so we had to park our bus well before Duttapeeta and go by public Jeep. He also took us to another place 4 kms away with a small lake and view point. Finished that part of site seeing by 3 p.m. and it was time to come back.

Weather was excellent for site seeing. It was bright and sunny, there were no clouds so far off places were visible. There was no rain, so cameras could be taken out without fear. Rainy season is yet to arrive formally, so all the streams and rivers were with no water. At that altitude, humidity was low, so unlike in Puttur/Mangalore where we would sweat profusely without doing anything, there we were not sweating at all. it made it that much easy that we were trekking easily even under mid-day sun. But when we were heading back after Mudigere along Charmadi ghat rains had come and it stopped us from enjoying the breathtaking views of the ghats. While going up the ghats we couldn’t see because it was night, while coming back it was rains. Can’t complain about it when we chose to travel in rainy season.

Dinner was ordered at Suprabha’s uncle’s place at Somanthadka off Ujire. Thanks to their family for arranging it. After dinner at 8 p.m. we reached Puttur at 9.30. People were dropped to their respective places by 10.30. A satisfying and pleasurable trip comes to an end. Bad thing being, People had to come back to work on Monday as usual after this.

Thanks to the organizers who made the trip such a jolly ride without hiccups. I would like to highlight their responsibility and sacrifices. After such a tiring journey, they dropped people to heir home with their personal vehicles. They gave away the best opportunities to us while they took away what was left. On a 22 seater bus, they sat near the driver, didn’t sleep for a moment in their entire night journey. They freshened themselves up at the bus-stand while rest of us did it at lodge to save time for us. They came first and went back last. Not many appreciate them for the good things they have done, but any shortcomings are immediately observed and mentioned. It is not easy to hold 25 people together throughout the journey and make everybody happy, but they did it. This will give them a good experience of how to lead in their organizational duties in times to come.

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CategoriesCoconut Oil
by 1

How much I love Coconut Oil

“Choose a job you love, and you will never have to work a day in your life.” – Confucius

I have chosen a job that I love, that of building a business. I am marketing a product that I deeply love myself. I living my own life and not someone else. Coconut Oil manufacturing has been a family business started by my father. I didn’t get into it as part of his succession planning, I got into it out of my own interest. Rather he didn’t want me to join it as he didn’t want me to face the hardships that he faced. But I forced myself in and building Cocoguru has been my dream.

Here, I like to discuss about my personal preference for Coconut Oil and experiences with it.

My father started a Coconut Oil mill in Puttur in 1988 and I was in 1st standard class then, it was right next to our home in the same compound. So, I have physically been very close to Coconut Oil mill. But mentally, I wasn’t at all involved in it. Even my younger brother used to get involved in it but I didn’t show an iota of interest in it. My parents used to force me to go there. I used to take the tools to repair my cycle. As I was interested in Physics and Mechanics, I used to observe how motors rotate and power is transmitted from motor to the oil extraction machine. As I showed inclination to studies and brother towards business, it was planned in family that brother would continue the business and I would have a white collar job outside.

Hair Oil
Till I was 25, I never used to apply hair oil. Once I had felt that my hair was feeling dry and felt the need for hair oil. I bought Parachute. It smelled so nice and different from coconut oil manufactured at our mill. I didn’t know why even though it was Pure Coconut Oil, it smelled like that. Then, I assumed it must be perfumed. Also the oil used to retain the quality for longer time. Then I developed the habit of applying coconut oil on my scalp. One to moisturise hair and scalp and Two to experience the fragrance of coconut oil in the process of applying it. I continue the habit today, but this is how the liking towards coconut oil started.

Cooling Effect
When I was in hostel, I used to wash clothes on my own. I was famous for that as I used wash clothes more frequently than others. I had to wash more frequently probably because I used to wear one pair only for one day 🙂 After washing, due to detergents the hands used to feel hot and dry. To moisturise and cool, I used to apply coconut oil on hand, remaining oil on hands and legs. Now, I see coconut oil being used for same reason even in commercial establishments like Cement plants. Today, I get bulk orders from cement plants just for the purpose of cooling and moisturising hands after handling cement.

Oil Pulling
My mother is very health conscious and she used to do oil pulling. She also advised me to do oil pulling for having good oral health. Since I love coconut oil and am looking for new ways to experience it. I started oil pulling, my dental health surely improved. Tooth sensitivity and swollen gums were gone. It is a great way for me to test the quality of our product also. While, oil pulling that is rinsing oil inside the mouth, I wouldn’t mind if I swallow some bit.

Instant Energy
I am someone who like to eat regularly, I like to have my breakfast, lunch and dinner early and at same time everyday. But when I travel, I cannot stick to these routines. I don’t like eating junk food outside. When I feel hungry, my energy levels come down. Then I drink about 5 ml of coconut oil. Coconut oil is different from other edible oils in that it is easily digestible and hence provides instant energy. Also it leaves a very good taste in the mouth.

Sales Pitch
I sometimes go with our sales van to develop new business or get feedback from customers. When I approach a new customer to develop business, he is normally reluctant. Then I pour some drops of oil on his hand to smell it. Since ours is roasted coconut oil it smells more then conventional coconut oil. He now gets interested. He enquires about price and business terms and business starts.
Many times customers have raised doubts about the purity of our product and claim that it is perfumed and not natural. I pour a few drops of oil on my mouth in front of them and swallow it. It convinces them and I get satisfied too.

Oil Smell
A lot of smell comes out of our factory during oil extraction. It reaches the road that is a good 150 metres away all nearby residents. For me to sit in the factory and experience it the whole day is blissful. My clothes retain that smell, when I go out, people ask and I feel good about it. It happens only with Coconut Oil.

On the contrary, my experience with other oils especially Sunflower Oil is different. At my hostel at Mysore, Kitchen was on ground floor and Dining Hall was right above it on 1st floor. Meant all the kitchen smell especially that of cooking oil (Sunflower Oil) would be felt at the dining hall. I was slow at eating, meant I had to experience the smell for longer time. If you don’t like the smell, the time spent feels that much longer. The clothes would retain the smell, so I had to feel it for long time even after I had left the hostel mess. So, I used to wear different set of clothes to mess, take it off and wear a different set once I come back. At a lodging in Erode, the restaurant was right below the room and I had to endure the smell for the whole night. There are a lot of restaurants with poor kitchen ventilation where Oil vapours circulate around our eating tables. I avoid such hotels.

Oily Food
I avoid eating all oily foods when I eat out. Because they mostly use cheaper oils like Sunflower Oil, Palmolein Oil or Vanaspati. A good oil can add a lot of taste and juiciness to food. I particularly like oily foods prepared by Goud Saraswat Brahmin community. At our home oil usage is very less and food tastes bland. A close relative used Cocoguru coconut oil for preparing all the items at their function. I tasted all the items there including Poori and Jilebi that I hadn’t tasted as per my recent memory. At our factory canteen we prepare one deep fried dish a week to test the quality of our oil. For diwali, we prepare Boondi Ladu using our coconut oil and distribute it to employees and customers. There are a few local foods like Charmuri, Omlet, Pathrode, Fish Fry and Banana Chips that must use Coconut Oil to taste good.

Overall, I use coconut oil to appeal to my 3 senses smell, taste and touch. Only a poet can explain well how good it feels rest of us have to experience it to understand it.