CategoriesTaxation
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Letter for Revision of VAT Rates

This is the letter that we submitted to the Industry Chamber and hence to the Government of Karnataka to clear many of the anomalies in Value Added Tax for Coconut Oil in Karnataka. Majority of these issues are brought out in an earlier post.

To,

The President
Puttur Chamber of Commerce and Industry

Subject :- Revision of Value Added Tax rates for Coconut Oil as Edible Oil

Respected Sir,

With the Union budget and the State budget coming up shortly. As part of the Coconut Oil Industry, we request the Government to

  • Reduce the Value Added Tax rates for Coconut Oil from present levels (5%)
  • Consider coconut oil sold in all quantities (above/below 200 gms) as for edible purpose and apply same rate (instead of 5% and 13.5%)

The following are the points considered to arrive at the above conclusion

  • Coconut Oil is a prime cooking oil not only in Kerala but also in coastal Karnataka.
  • Neighboring states of Kerala and Tamil Nadu don’t have any taxes for Coconut Oil. While in Karnataka VAT is 5% for quantity above 200 grams and 13.5% for quantity equal to and below 200 grams.
  • Under such high tax regime, business that pay taxes can’t compete with businesses that don’t pay taxes. So the market is flooded with adulterated and lower quality products.
  • Various researches have shown that Coconut Oil is good for heart and health, so it should be promoted for use in cooking.
  • Since the price of coconut oil is higher, other edible oils such as palm oil, sunflower oil and soybean oil are being imported without any customs duty and is becoming a threat to indigenous coconut industries and farmers.
  • While other edible oils are trading with lesser taxes, coconut oil with higher taxes is not having a level playing field.
  • Weaker sections of the society who earn daily wages and have to spend for their daily food prefer to buy their cooking oil in smaller quantities like 50 ml, 100 ml and 200 ml. These are now taxed at a whopping 13.5%!
  • Prices of the essential commodities like coconut oil and coconuts have doubled over last one year and is becoming less affordable to majority i.e. middle and lower class consumers.
  • We manufacture coconut oil for edible purpose, we follow the Prevention of Food Adulteration guidelines and have obtained Edible Oil Packing license for the same. But the products we sell attract taxes that are meant for cosmetic items and not edible items.
  • Being an essential commodity, the market is extremely price sensitive and any reduction in taxes will benefit the farmers and lower class consumers tremendously.

Request you to kindly communicate the matter to the respective government departments for taking necessary steps and actions.

Thanking You,

Yours faithfully,

For Cocoguru Coconut Industries Pvt. Ltd.

B. Keshava Ram

Managing Director

Update on 25th February 2011 – Karnataka Government hikes tax rates for goods presently taxed at 13.5% to 14%

Update on 1st August 2012 – Rate is again hiked from 14% to 14.5% with effect from August 1st 2012 to July 31st 2013

CategoriesCoconut Oil
by 2

Beware of Vanaspati, Margarine, Partially Hydrogenated Oils and Trans fats

Edible Oils are in 3 forms on the basis of processing viz. Crude Oil, Refined Oil and Vanaspati. The uninitiated, based on the terms used, will perceive

  • Crude oil is natural and not yet fit for consumption
  • Refined oil is improved and made perfect for consumption
  • Vanaspati, in Sanskrit means ‘lord of forest’, should be very healthy

This is where consumers are misguided by the names and their literal meanings. The fact though is

  • Crude Oil that is just filtered after extracting oil from the oil seed is the healthiest. Unrefined oils still have healthy bioactive components, Vitamin E, flavour and aroma.
  • Refined Oil is highly processed with the use of chemicals and heat to just retain the oil. Even oils extracted from lower quality oil seed can be refined. So, refined oil though pure is not as healthy as corresponding crude/unrefined oil.
  • Vanaspati is formed by partial hydrogenation of refined vegetable oil is extremely harmful. They have Trans fats which are formed as a by product of hydrogenation.

In India, of the total 13 million tons of edible oil consumed, 10% is in the form of Vanaspati and 45% each in refined and unrefined form. Doctors and Health Departments warn consumers against intake of saturated fats, but the real culprit for all the heart problems and obesity are trans fats. Chemical analysis of trans fats gives a logical reason why trans-fats are harmful.

Chemistry of Fats
Fatty acids are characterized as either saturated or unsaturated based on the presence of double bonds in its structure. If the molecule contains no double bonds, it is said to be saturated; otherwise, it is unsaturated to some degree. A saturated fat has no double bonds, has the maximum number of hydrogens bonded to the carbons, and therefore is “saturated” with hydrogen atoms. The more double bonds in the fatty acid the more vulnerable it is to rancidity, as free radicals attack double bonds.

In most naturally occurring unsaturated fatty acids (and all saturated fatty acids), the hydrogen atoms are on the same side of the double bonds of the carbon chain (cis configuration — from the Latin, meaning “on the same side”). However, partial hydrogenation reconfigures most of the double bonds that do not become chemically saturated, twisting them so that the hydrogen atoms end up on different sides of the chain. This type of configuration is called trans, from the Latin, meaning “across.” The trans conformation is the lower energy form, and is favored when catalytically equilibriated as a side reaction in hydrogenation.

The trans configuration is straighter, while the cis configuration is noticeably kinked. Trans fats have a much higher melting point (45 °C), due to the ability of the trans molecules to pack more tightly, forming a solid that is more difficult to break apart. This notably means that it is a solid at human body temperatures (37 °C).

In essence, hydrogenated oil/trans fats are stable making the food products last longer and are solids at body temperature making it harder to digest.

Why Hydrogenate?
Hydrogenated oils are more stable than corresponding natural oils with unsaturated fats. Saturated fats are mostly found in animal sources (Butter, Ghee etc) which are scarce and hence expensive. Oils from vegetable sources are mostly unsaturated, abundant and less expensive. So, partial hydrogenation of less expensive unsaturated fats from vegetable sources is an attractive commercial proposition. They are not only stable and make the fried food product last longer but also adds to the taste. That is why we find widespread use in commercial cooking in Breads, Cookies, Cream Biscuits, Sweets, fried snacks, chocolates and ice creams.

Health Risks
The primary health risk identified for trans fat consumption is an elevated risk of coronary heart disease. The reason is trans fat increases the level of LDL or bad cholesterol and decreases HDL or good cholesterol. Other ill-effects are Alzheimer’s disease, Cancer, Diabetes, Obesity, Liver dysfunction and infertility in women.

Prevention of Food Adulteration Act specifies that the melting point of Vanaspati be strictly less than 41 °C. That means manufactures must ensure that hydrogenation is stopped before melting point reaches that point. Also, the labels in packed food products must show the amount of trans fats in the food sample. ITC, Britannia and the likes who are branded manufacturers of such food products clearly mention that Trans fats are bad for health just like Cigarette packs mention ‘Smoking is injurious to health’.

It is highly advised that consumers avoid all commercially prepared foods (Bakeries, Hotels and Packed foods) to the extent possible. One should also carefully read the labels for its ingredients and nutrition values. Food items containing Edible Vegetable Fat or having Trans fats value more than 2% should be avoided.

Sources – http://en.wikipedia.org/wiki/Trans_fat

CategoriesPacking
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Dimensions of the most economical Carton Box

Problem Statement – To economically design a carton box to pack 20 half litre pouches

Regular Slotted Carton
Carton box is formed from regular slotted carton (RSC). The image shows how a cardboard is cut to form a carton box.

Solution

If l is the length, b the breadth and h the height of a formed carton box, then the area of the cardboard shown above is 2 * (l + b) * (b + h). Cost of the carton box is directly proportional to the area of the card board used. So, the problem boils down to reducing the area of cardboard for a given volume of carton box.

Minimise 2 * (l + b) * (b + h), given l * b * h = V, a constant

Ideally, the surface area of any cuboid is 2*(l*b + b*h + l*h), but there is an extra 2b2 area in the figure. That extra area becomes the inside flaps during forming of carton box. It gives additional strength to carry load inside the carton box. Also, in order to avoid that area, the card board has to be cut into a more complex shape. With that area, cutting the card board is a simple i.e. a rectangle of length 2*(l + b) and breadth (b + h).

We know that, the cuboid with minimum surface area for a given volume is a ‘cube’. But that is not the case here as there is extra 2b2 area.

Let F(l, b, h) = (l + b) * (b + h) = lb + lh + b2 + bh       Ignore the factor 2 for time being

To eliminate factor ‘l’ from the expression, substitute l = V/bh     (Since lbh = V)

F(b,h) = V/h + V/b + b2 + bh

Differentiate partially w.r.t. ‘h’,   Fh(b,h) = -V/h2 + b

Equating to zero, we get, b = V/ h2

Substituting for V = lbh, we get, b = lbh/h2 or l = h.

Rewriting the problem, by substituting l = h, we get,

V = bh2

Area = 2 * (h + b)2

(h + b)2 is minimum when (h + b) is minimum, since (h+b) can’t get negative.

Minimise (h + b), given bh2 = V

Let, F(b,h) = h + b

We can eliminate the variable b by substituting for b = V/h2

F(h) = h + V/ h2

On differentiation, F’(h) = 1 – 2V/h3

Equating to zero, we get, h3 = 2V or h = (2V)1/3

Now, b = V/h2 or b = (V/4)1/3

For optimal solution, l = (2V)1/3, b = (V/4)1/3 and h = (2V)1/3

In our case of 500 ml pouches, though the volume of coconut oil is 10 litres, about 25% allowance should be given to accommodate the pouch film, and the pouch though flexible is not a perfect fluid to occupy all the space inside the box. So, the volume of carton box required is 12.5 litres or 12500 cubic cms. So, the dimensions of carton box area l = 29.24 cms, b = 14.62 cms and h = 29.24 cms for V = 12500.


Comparison
At present, we are using the standard sized carton box for both half litre and one litre pouches. We don’t have any other option now as our order quantities are small.

l = 32, b = 19 and h = 21, V = 12768 cm3 and A = 4080 cm2

For V = 12768, with minima solution, we have just arrived, l = 29.45, b = 14.72, h = 29.45 A = 3902 cm2

Or the ideal solution is 4.35% better. It may look insignificant but carton box is a packing raw material with repeated use and large quantity. So, it can result in significant cost savings. At Cocoguru, we examine each of these items for its costs and try and minimise it without compromising on customer value.

Cutting Costs is not about Cutting Corners but about careful Value Engineering.

CategoriesTaxation
by 5

Cocoguru Coconut Industries Private Limited – Incorporated


Company Facts

Name – Cocoguru Coconut Industries Private Limited

Registered Office
IV-616,Sri Rama Building, Main Road,
Yelmudi, Puttur Taluk, Dakshina Kannada District,
Karnataka State, India. PIN – 574201

Business Activity – Manufacturing of Coconut based products, Presently Pure Coconut Oil

Promoters –
Shivashankar Bhat – Chairman
Keshava Ram – Managing Director
Santhosh – Director
Gayathri Devi – Director
Incorporation Date – 2nd September, 2010 (World Coconut Day)

Why Cocoguru Coconut Industries?
Cocoguru brand has a simple vision of “spreading the benefits of coconut to people”. Brand was launched in early 2010 to direct Sri Rama Industries’ focus on manufacturing coconut based products. Now the business activities of the brand Cocoguru are separated to a new company. Having the same product brand and corporate brand simplifies the branding process.

Dissecting each aspect of the name, we have

  • Cocoguru – Trademark, brand name
  • Coconut – Vision, brand essence is about Coconuts
  • Industries – Business activity is not just about trading/marketing, it also involves manufacturing

Why Private Limited company?
Forming a company is not compulsory as

  • The cost of incorporation, amount of procedures and regulations are high in a company
  • All the promoters and top management personnel are in the same family
  • The company has no external equity investors as of now

Yet we have formed a company because

  • It enables separation of personal and business activities
  • It enables us to raise funds though sale of equity when chances of raising debt funds have exhausted
  • It enables professional management by bringing in professional managers on merit and family can cede day to day management activities to them.
  • Promoters are very serious about the business; want to scale it to a high level and become a Public Limited company

What is the future of Sri Rama Industries?
Sri Rama Industries is a proprietorship concern started in 1987 by Shivashankar Bhat for Coconut Oil manufacturing.

  • The existing manufacturing setup at Parladka will be tailored to just provide job work service. Whereby local farmers can get oil extracted from their own copra using our facility.
  • The existing retail outlet cum copra collection centre at Yelmudi will be used to distribute Cocoguru company’s products to local, Puttur market and collect copra on behalf of Cocoguru Company.
  • The 1st floor of the building at Yelmudi will be rented out to the company for its Registered Office.
  • Sri Rama Industries being the owner of trademark Cocoguru, will license it to the company for marketing its products.
  • Sri Rama Industries will also carry out non-coconut based businesses like trading of Til Oil, Pepper and Honey.

What now/next for the Company?
The company has the following agenda for the next 1 year.

  • A new factory, at new site, to manufacture and pack coconut oil
  • Factory will be highly mechanized/automated/modern, ISO 22000 Food Safety management standard
  • Have a copra crushing facility of 15 tons in 24 hours
  • Acquire all the necessary licenses and commence production in 6 months.
  • Spread the market/distribution network for Cocoguru products from Puttur to whole of Dakshina Kannada
  • Begin supply of edible copra and by products like Oil cake and 2nd quality copra

Company got incorporated on 2nd September, recognized as World Coconut Day. For the company that does its business with coconuts, its truly a great day to be born. Seek the blessings and everything (kalpa) of ‘Kalpavrisksha’ for the company’s great future.

CategoriesCoconut Oil
by 0

Book Review – “The Coconut Oil Miracle” by Bruce Fife

If a 250 page book has to be written exclusively on one product, without much repetition, making full sense with understandable logic, by veteran nutritionist, then this should suggest how miraculous the product (Coconut Oil) should be. Now, why isn’t there a similar book that talks about the so called healthy and widely used oils like Sunflower Oil, Soyabean Oil or Hydogenated Oils (Vanaspati)?

Book is smartly organised because the author understands that readers have been misinformed so far. In the first chapter he works on dispelling the deeply held myths. In the next he builds the foundation by discussing about the basic of fats and human body. In each of the subsequent chapters he discusses each one of those benefits giving scientific reasons and examples. To conclude he guides the reader on how one can buy and use coconut oil.

Summary of the book
The truth about the miraculous benefits of coconut oil has been hidden by the western companies to protect their business interests. Tropical oils like Coconut Oil and Palm Kernel oils used to be popular in America and was a threat to their domestic soyabean oil industry. In order to popularise their products they had to somehow prove that tropical oils were bad. So they funded a research to say that coconut oil contains saturated fats and saturated fats are the cause for heart related diseases. They proved this by testing using a hydrogenated fat on rat. Later the went on a massive campaign against tropical oils and promoting their oils. The domestic edible oil companies made their monies but with it went the health of average american. He has acquired obesity, heart disceases and many others.

Saturated fats are highly stable as all the carbon atoms have formed bonds with hydrogen atoms and carbon atoms bond with each other through stable single bonds. Unsaturated fats have a few double bonds between carbon atoms and they are free to break down into toxic free radicals and oxidation causing rancidity. Oxidation and free radical formation are accelerated when heat, light and pressure is applied. That is why Coconut oil can be stored conveniently for 2 years while other oils hardly last 6 months.

Fatty acids have chains of varying length of carbon atoms ones with less than 12 carbon atoms are medium chain and more than 12 atoms are long chain. Shorter the length easier it is to digest. Fatty acids found in coconut oil are medium chain and they are quickly digested by lever to get energy while other fats are stored. That is why replacing other oils by coconut oil can promote weight loss. Also coconut oil is used by athletes who need quick burst of energy.

Coconut Oil has excellent anti-bacterial, anti-fungal and anti-viral properties with no side effects. That is why it is among the ultimate natural medicine. If people come to know of this the pharmaceutical companies will lose business big time. Coconut Oil is used in most Ayurvedic therapies and ancient Indians were aware of the benefits. AIDS has no cure and AIDS patients are advised to consumer coconut oil as it gives them immunity that they severely lack.

Coconut Oil is a great anti-oxidant, removes dead cells and gives complexion to skin and hair. It is very good at preventing premature aging of skin.

Coconut Oil can be Virgin or refined(RBD – Refined, Bleached & Deodorized). Virgin is one which is extracted by least amount of processing, it has the natural coconut smell and taste. In Refined version it is subjected to about 200 degree heat and chemicals, it is bland and will not overpower the taste of food on which it is used. Author recommends the Virgin Coconut Oil.

This is just a summary and the book contains a lot more interesting facts and analysis to make for a fascinating reading. I personally am both delighted and angered on reading the book. Delighted because I have grown up (still continue) consuming coconut oil for all purposes (edible and cosmetic). Never knew such wonderful properties of coconut oil. Angered because the american companies, doctors have maligned people from consuming coconut oil into unhealthy refined and hydrogenated oils. The author or I don’t suggest that Coconut Oil is the only healthy oil. Other healthy fats are Butter/Ghee, Olive Oil, Til Oil and Palm Kernel Oil in raw form. But Virgin Coconut Oil is the healthiest of all.

Read the book online @ Google Books

Buy the book @ flipkart.com