CategoriesPricing

Effects of Price Increase on Coconut Oil Trade

In exactly one year we have witnessed increase in price of coconut oil, coconut, copra and coconut oil cake from its lowest to highest (so far). We are all talking about it because the growth in price has been whopping 3 times! So, I will try to put across some of the wisdom at hind-sight on its effects on various stake-holders. Not many in this industry including us, would have been prepared for this change that seems irreversible now. Till now inflation has happened on most commodities except coconut.

Farmers
Price increase should naturally bring cheer to the farmers. But this time it didn’t bring along the desired cheer to them. The price increase is not because of the increasing demand but more because of scarcity of the commodity. If the farmer had grown 100 nuts last year, sadly he has only grown 50 nuts this year. So, despite 3 times increase in price, his income has only grown 50%. Farmer has also witnessed similar inflation in the cost of his farm inputs like labour, fertilizers, water and so on.
Farmers generally don’t aspire to grow coconuts as much as they do for other cash crops like Arecanut and Rubber. They only cultivate coconuts for their own consumption and for plant diversity in their farm. Justifiably so, as the coconut price was way below his cost of production. This price increase should re-kindle interest in them to take coconut cultivation more seriously. If they do, this should be a great boon for entire coconut industry.

Usage
Coconut Oil finds widespread use in household cooking, baking applications, soaps, hair oil, body massage and so on. In a few of these applications, there are no easy substitutes and the demand is inelastic. That is why price is continuing to rise unabated.
Coconut from the tree was earlier used mostly for making copra and hence coconut oil. The price of coconut and copra was mostly driven by coconut oil and palm oil. Now the scenario is likely to change. Coconut Oil millers find that the coconuts cultivated don’t come as copra to their factory doors. Instead, Coconut is plucked while it is tender, the yield of coconut tree is also higher when tender coconut is plucked. Mature coconut (many times immature) is used extensively for making Desiccated Coconut. The remaining coconut that is still dried into copra again finds usage as edible copra (good shape and color) at higher price. The residue is available as copra for milling.

Coconut Processor
Profitability-wise it has been a great period for coconut traders and processors. They buy raw materials and when they about the sell the finished goods, the price would have increased. More stock one is able to hold and faster one is able to complete the processing cycle, better were is profits. Earlier the price increase brought with it some caution, what if the price comes down tomorrow? Now it has become highly predictable. But it has not been all that rosy.
Working Capital required has increased proportionally. For those with limited working capital his ability to hold stock has reduced. A certain level of stock is required to maintain quality in production (e.g. Time is required for drying copra, filtering oil through sedimentation). Minimum stock is required to meet sudden demands, ensure supply just in case production has been disrupted. While discussing with a Vendor, he was telling about his customer in Coconut Oil industry. Who were once paymasters when it comes to vendor payments have now been delaying his payments.

Adulteration
Extent of adulteration is directly proportional to the price difference between Pure Coconut Oil and its adulterants. Palm Kernel Oil is the often used adulterant owing to its similarities with Coconut Oil. Many other malpractices also go along with adulteration like Underweight and Sales in Black.

Consumer
It is the consumer who has been badly hit by this price increase. He is obviously forced to pay much more. Also, he has to consume adulterated products. In order to keep his expense on cooking oil within budget, he will try substitutes like Palmolein Oil and Sunflower Oil. Worst thing to happen will be when he has changed his edible oil for good, when he doesn’t buy coconut oil again even when the price has come down.

Coconut Oil compared with other edible oils
Coconut Oil will join edible oils like Ghee, Gingelly Oil and Groundnut Oil as premium, local cooking oils. A place where it rightfully belongs. It should be consumed because people want to consume it and not because it is cheap. Each one of them having a cheaper substitute, Vanaspati for Ghee, Ricebran Oil for Gingelly Oil, Palm Kernel Oil for Coconut Oil. Palmolein Oil, Sunflower Oil, Soyabean Oil, Cottonseed Oil and Rice-bran Oil will be for the masses.

CategoriesManagement

A tribute to our best vendor


The Vendor I am talking about is Weigh Control Systems Pvt. Ltd., in particular Mr. Samarjit Biswas. Weighmatics based in Bangalore are manufacturers of Filling Machines, Weigh Bridges and other weight based control systems. Mr. Biswas is the director of the company.

On the first day after I started my life as a Coconut Oil businessman at Puttur, I went with my father to our coconut oil retail outlet. A customer visited the shop and asked for 2 litres of coconut oil. Father asked me to give it in loose by filling his long bottle. Oil was filled in a 50 litre steel drum. It had to be measured in measuring container and filled carefully into the bottle through a narrow mouth. As a first timer I struggled and spilled the oil all over the place mostly on the outer surface of the bottle. The customer and my father were both getting frustrated at what was happening, but they didn’t show any of it towards me. Now that partial quantity was poured, it was difficult to find out the balance portion to be filled. Then our helper came out and helped service the customer. Father said, “Don’t worry, it comes out of practice”. I thought, it was not my cup of tea to dispense oil like that.

I had seen every consumer product dispensed through a Vending Machine in Japan and there was absolutely no human being from the Vendor side. Item and Quantity are to be selected, cash to be inserted, exact change will be dispensed, bill automatically printed and items are rendered. How simple, fast and perfect. When they can dispense difficult to dispense items like Rice and Juice bottles, I thought dispensing a liquid like Coconut Oil should be easy. Though I was not looking for the machine to collect cash, dispense change and print bills, I was at least looking for a oil dispenser given the quantity.

I searched the internet for filling machines with various keywords. I got many results for bottle filling machine that one can use inside the factory for filling bottles in large scale. But couldn’t find one that can be used at a retail counter.

Finally I came across “Flowmatics” which is now rebranded as “Weighmatics”. They said they have already supplying to many edible oil brands in India and overseas. I requested for quote and got a quote in a beautifully written document. I asked for a few customizations, the Sales executive could only deliver lip service but couldn’t come back to me with revised offer and concrete actions. I called him up on his mobile, after a few calls he stopped picking them. I got desperate and called up the landline. This time it was a holiday and instead of receptionist picking up, somebody else picked up and said, “Hello Mr. Keshava Ram, I am Biswas, the director, how may I help you?”. I explained my requirements, he listened carefully and said what can be done and what cannot be done. He understood that I was a first timer and offered to educate me through a live demo at his factory in Bangalore. I promptly made a visit there and learnt about the systems. He took a lot of patience in educating a novice to the field. At that time i felt it was just a marketing pitch, but reflecting back I realise it was a genuine attempt at educating a prospect.

He also told me about his filling machines that I could use inside the factory for filling bottles, cans and tins. I discussed with my father and placed order for 3 machines – Oil Vending Machine, Bottle Filling Machine and Tin Filling Machine. Before coming for erection, they gave me a list of things to get done at site. I promised they will be done by a certain date and they will do their work from that date. Due to inconsistency from our Vendors for Plumbing, Electricals, Fabrication and Civil works, they couldn’t be done. Still, their Service Engineer came, completed his erection works in one day but had to wait for 6 days to do a trial run. Despite that their service fees didn’t increase.

We were happily using their machines to get our work done. After about 4 months, Vending Machine stopped working. We immediately called them for service and next day their Engineer was here. He immediately found that the cables were cut and how? by rats running around. Even if it was our problem, he didn’t charge any service fees as it was within the warranty period.

I started working on setting up the new company and factory. I managed by hiring a fresh graduate as Accounts Executive, after some time the extent of compliance required mounted high and we were not in good position to deal with them ourselves and with the local auditor. I tried through various references and on internet, the options I got were either not good enough or were too expensive. I rang up Mr. Biswas and requested for help, he said, “Don’t worry, I will request my company’s auditor and see if he can help you.” These auditors are always short of time and don’t want to take up any new accounts. The auditor sort of agreed and setup a meeting with me and Biswas. Auditor said, “Normally we don’t take any new accounts, even if they are multinational software companies, we only took yours because you have come through Biswas’s reference”. And the Auditor is serving us well over the last 2.5 years.

For filtering systems, we need to pump oil at a pressure and flow has to be adjusted based on filtering speed that varies with the cycle. One solution is to have by-pass valves that releases excess flow. Better solution is to have a Variable Frequency Drive (VFD) when speed of motor can be adjusted at run-time. When I tried looking for vendors, they quotes were very high and many times higher than the cost of pump itself. Again, Biswas gave me a reference of a Vendor in Chennai who offered at a reasonable rate. In between, I had asked for several other references also. But many of them didn’t work too. For Pouch Packing Machine, Air Heater and Centrifugal Blower, Screw Conveyor and Fabrication services. He even shared references of couple of distributors who may be interested in selling our coconut oil. He has also shared with me many industry insights that helped me know more about the industry that I operate in.

We have later purchased Volumetric Bottle Filling Machine, Load Cells for Copra Tank Weighing systems. He has set sight of selling me a Weigh Bridge one day. I have recommended his products to other oil millers and industries. He has got a few orders from them.

In our very fist meeting, he used to call up people and refer to me as his friend. I used to think it was just lame marketing tactic. But over the years I have realised he really meant it. Most vendors talk rubbish that they give good customer service and cater to their needs. Again his company has gone extra mile to meet our needs. He has a team of service engineers to service his machines all over. He isn’t motivated towards service because it is his business or it is good for business, but because he believes his customers needs the service. While in distress or good times, he calls me or I call him. We share jokes, to be specific he cracks jokes and I just laugh, both Veg and Non-Veg, tells me various stories/incidences from his vast experience. He looks young for a man in early 50s, more importantly he thinks like he is young.

When one customer was bargaining over phone for a machine in front of me, he said, “I have already given you the best price. Please understand, if you are to grow, you need suppliers also. They are the pillars of support for any business”. Good suppliers can indeed be strong pillars on which business builds.

 

CategoriesBranding

New Website for Cocoguru

cocoguru.com now has a new website and design. This is the 3rd design since it started. This time the speciality being, the site is all self developed. Here I like to share our development process and ideas.

Domain Registration of cocoguru.com was done earlier with godaddy.com. Hosting was also done at godaddy.com’s server. Being a market leader in web domain and hosting space, it is also the best in business with minimum downtime and reliable service. Dealing with free hosts or any local hosting space provider can be painful at times.

Website static pages can be developed with html on a text editor or html editors like dreamweaver. Also website can be developed with dynamic pages using Content Management System (CMS) softwares. They provide easy user interfaces where even common users can develop and maintain website pages. WordPress, joomla, drupal are among popular CMS softwares. WordPress.org from Automattic Inc. is the most popular free open source platform for website and blog development. Countless themes are designed, plugins are developed to make the complete ecosystem pretty strong and vibrant. Latest version of WordPress 3.5 was installed directly from godaddy’s hosting dashboard. Then the complete website design and development is done by logging into wordpress dashboard.

We strongly believe in minimalism where focus is only on what is required i.e. contents and anything unwanted i.e. flashy designs are ruthlessly deleted. Latest default theme for wordpress i.e. Twenty Twelve was chosen for this site. It is free and there are many other themes and some of them are paid. Once a theme is selected and systematically followed, the site developer can write his contents plainly in text and not bother about formatting. There may be some aspects of the theme that you may not like, they can be modified if you can or you will have to just live with them. A few free plugins like akismet (for spam protection), mappress (for showing maps), tablepress (for tables), sharethis (for social sharing buttons), formbuilder (for creating forms) etc were installed.

Website pages can be developed by adding pages, Blog can be created by just adding posts. WordPress dashboard has a easy Visual and Text editor to add contents. Each page/post comes with a comment form and a button for sharing on facebook, twitter, linkedin, google+ and email. Header, Footer and Menu are common to all pages and posts.

The contents posted are genuinely about us written by me and not website development company. None of the text or photos are copied from other sites. They are free from jargons/exaggerations like customer satisfaction, high quality, modern infrastructure, excellent service, social responsibility, striving towards growth etc. Photos are again taken by me with minimal editing to just crop the required portion. Information is openly shared to enable viewers to clearly understand about us.

Key Message
Small businesses need not use the services of Web Designers to get their website done. They will charge anywhere between 15,000 Rupees to 35,000 Rupees to get a flashy website done. Instead you could do it yourselves and write great contents to attract visitors.

What Next
The present template is Twenty Twelve as it is. It needs to be customized to get Cocoguru brand’s feel. More contents are to be updated to make the site content rich.

CategoriesEmployees

What is the Salary?

Cocoguru has now grown to a 25 member organization, with immediate plans to increase the size to 35. When it started operations a year ago, it was about selecting whoever was willing to work with us, without regard to their skills and attitude. We were lucky to get a few good people, and few of them were groomed to be disciplined and develop a sense of ownership towards their roles. Now, with the base set, we will select more people selectively. In this post, I discuss about my experiences/frustrations with those selections and expectations from candidates. It is a mighty challenge to get good people to work for a startup especially in a rural area.

Preparation
In the job advertisements, we would mention the company name, address, working location, vacancy position, qualification, contact details, few times salary range also. Candidates will do well to observe the details carefully before applying. Rather what we see is that they apply blindly and then back out during later stages of selection process due to the very facts already disclosed to them. Good candidates visit the website, find out the company’s product offerings, perform background checks with references, sometimes with existing employees, visualise themselves working here for a long term.

The classic opening question
The job market has tilted so decisively towards sellers i.e. employees that they start calling the shots. This is how a conversation begins
Candidate – “Is this Cocoguru?” (Many times they don’t even bother to pronounce the name)
Me – “Yes, Sir”
Candidate – “You have advertised for a vacancy, right?”
Me – “Yeah, Right”
Candidate – In either a disinterested tone or rude tone, he then asks “What is the salary?”!!!
Me – Unhappy that the discussion is entirely off-direction, I ask “How much do you expect?”
There goes the conversion meaninglessly, each one trying to defend his ego and finally ending the conversation in a bitter manner. The classic opening question leads to an immediate conclusion.

In my theory, money is not everything as it is made out to be. It is merely a currency of “value”. Businesses should make good profits to reflect the value they create to its customers. Employees should take home good salaries for doing a valueable work for the company. Focus should be on creating value and money will follow.

In the above example we have seen how bad the conversation went. Instead it could be much more fruitful, if it went in the following lines
Candidate – “Hello, my name is Vaibhav, I saw your advertisement in today’s Suddi Bidugade, and I am interested in applying for the position of Sales Executive”.
Me – “Okay. Good. Tell us more about yourselves.”
Candidate – “I am from Sentyar, a B.Com graduate, having 6 years of experiece in Line Sales, last 4 years with Dash Marketing Agency selling ITC cigarretes in and around Puttur, Sullia and Subramanya.”
Me – “Why do you want to leave your present job, when it is so easy to sell cigarretes where demand is more than supply that too for a brand like ITC?”
Candidate – “I am liking my job as it is giving me opportunities to meet new people and I have developed good relations with a few retailers. I am only looking for better prospects.”
It would be blunder to say something like “Cigerrate is injurious to health, but Coconut Oil is good for health.” Because we know, you are looking to change for your own benefit and not for our benefit or that of people’s health at large. It will only prove that you are lier.
Me – “How do you plan to increase our sales?”
Candidate – “Sir, what is your present distribution setup? What places do you cover?”
Here, the candidate has not only given a overview of himself, but also has shown keen interest to know more about the company and the job he is going to do.

Brain Drain
Dakshina Kannada is a district that has so many bright talents and great educational institutions. So many top ranks in SSLC, PUC, CET etc go to them. Result percentage is also highest perennially in Dakshina Kannada. But they migrate to cities like Bangalore, Mumbai, Pune, Gulf and America. For all the talent they have, they are happy to work for someone outside. They don’t take risk to build a dream company at home or work for someone who wants to build such a company here (read Cocoguru ☺). It is right if suitable opportunities are not available here, but to squander them when available is bad. Only salaries are compared between 2 opportunities in Bangalore and here. Luxury of being at home with family, lesser travel to work place, staying away from hustle bustle busy city life and much lower cost of living are not considered in the decision making equation.

Influence
Influence from a well known person may help get a job in government sector, where performance and results don’t matter. Some candidates who are otherwise not worthy of the job, try to have influence in their selection. Will that influential person be responsible for what the candidate delivers in the job? No, rather he threatens us with negative consequences when he is not selected.

Fixed Salary, Routine Job
Since we have only seen the candidate once and at most had an interview. It will be difficult to determine his worth for the company. So, we place him on probation for a lesser salary, with the intention of increasing it to generous levels once he proves him selves and is made permanent. Even once he is permanent, there will be periodic Appraisals to review his performance and salaries will be increased inline with his performance. Sadly, the candidates don’t think long term, they only compare the salary during probation and assume it to be his lifelong income. Similarly, he has fixed his skill set to what he has acquired till now, without any aim of acquiring new skills on the job. He comes to office with the intention of performing routine jobs where Standard Operating Procedures (SOPs) are defined. Anything beyond the routine takes him completely off-guard.

Office Work vs Field Work
The number of enquiries for office work like Accounting far exceeds that of field work like Sales. Logically, hard work gets paid lot more than easy work. A sales man when he exceeds his targets gets more money in the form of commission. An accountant can at best get his annual bonus on superior performance. When we opened our factory last year for operations, about 50 ladies from nearby areas walked in looking for easy packing kind of jobs under a factory roof. They were willing to work for as low as 80 Rupees per day. The same people are not willing to work in a nearby farm for 250 Rupees a day. Not only about the nature of work but it is also a question of their prestige. They perceive Factory job to be a lot more prestigious than agricultural or household work.

CategoriesCoconut Oil

Difference between Roasted and Cold Pressed Coconut Oil

Our new factory at Kallarpe (Aryapu Village, Puttur) manufactures Roasted Coconut Oil. Our new customers have instantly liked it because of its enhanced aroma and taste. But our Old customers who have used Cold Pressed Coconut Oil manufactured from our old factory at Parladka (Puttur) have various kinds of doubts about it. I seek to clear those doubts here.

Cold Press Coconut Oil
Virgin Coconut Oil is many times referred to as Cold Press Coconut Oil. Virgin Coconut Oil is extracted from fresh Coconut. But, here we refer to oil extracted from Copra (dried coconut).

Copra with about 8% moisture is crushed as it is on Rotary Machine (Chuck/Ghana). Oil is filtered through sedimentation of solid particles for 7 days in settling tanks. The process is extremely simple and requires minimum capital investment.

The resulting oil has crystal clear transparent color, smells and tastes like Copra as it is. Many people like this as it is considered to be natural and local made product.

Roasted Coconut Oil
Copra is cut into small pieces and dried using hot air to about 5% moisture level. This copra is heated for about 1 hour on a multi stage steam-jacketed vessel for roasting. A bit of steam is also added to copra for cooking. This opens up the fat cells and helps in easy oil extraction. Oil is then filtered using Pressure Leaf Filter and Filter Press to remove sediments as and when oil is extracted. This process requires more capital investment for a Steam Boiler, Pipeline, Cooker with Agitator and Motor. Also has higher running cost in fuel for steam generation and power.

The resulting oil has a golden yellow color. It has a stronger smell and taste. It has just the same effect as what roasted Ground Nuts give.

During processing, the temperature of oil and oil cake rise up to 100 degrees, while in cold pressed it is only about 60 degrees. In the process the oil loses moisture and reduces the risk of going rancid. Copra gets sterilized as the bacteria and fungus die, which again prolongs shelf life.

At higher temperatures, triglycerides in other oils start breaking into free fatty acids causing rancidity. But Coconut Oil being mostly Saturated Fat and is quite stable. So, roasting does not deteriorate the quality of oil.

Hair Oil manufacturers prefer Roasted Oil for its stronger smell and longer shelf life. It has a 5% premium in the bulk oil market over Cold Pressed variety. But we are selling at the same price to consumers now. It is something new to them here in Dakshina Kannada market and not yet fully accepted. We have been working hard in educating them about this new variety.

Despite so much of difference they are still the same i.e. Coconut Oil. Both of them are made from same quality of copra, they have the same chemical composition, both have the same miraculous health benefits of coconut oil.

Download Write up of Roasted Coconut Oil FAQ