coco guru - more brand elements

Update

The Logo for Cocoguru has changed to a simpler one.

Tagline - "Natural Goodness of Coconut"TM

• Reinforces that the brand is about coconut
• Coconut is good naturally for your health. We will slowly start advertising to dispel the myths about cholesterol in coconut.
• Brand delivers coconut products with minimal processing to deliver its natural goodness

Logo

Colors - Only 2 colors are used, they are green and white. White represents purity, innocence and coconut meat. Green represents natural, organic and environment friendly.

Brand name in different lines - While the name appears in packaging especially bottles, there is constraint on width or horizontal space. For 8 characters in cocoguru to be in one line, the font will have to be small. Also people may have a hard time to read and remember cocoguru continuously. So, the break up into 2 lines.

Wheel - Wheel is among the best inventions by man. So, it will suggest that the brand is innovative. Spokes are so designed to show that the wheel is rotating and the brand is progressive and moving forward continuously. Circle also represents the cross-section of coconut.

Ribbon - Ribbon is used to give a platform to show the tagline. Ribbon represents silken grace.

Corporate Logo

SRI is the recursive acronym of Sri Rama Industries. Similar to OIL for Oil India Limited and GNU for GNU Not Unix. The colors brown, green and white and leaf are meant to symbolize agriculture oriented business.

Does buying pre-owned machines save investment/costs?

When setting up a new factory like I am doing now, one is often confronted with a dilemma, should I buy new machines or buy pre-owned (second hand, used) machines at a lesser cost?

Used machines are ready for sale by those who have either shut down their unit or expanding/modernizing their unit. Many times they have not been used for long time, in good working condition and available at half the original price. Such offers look very attractive and is tempting for many cash strapped entrepreneurs. My dad and I visited a couple of such Oil Mills in Kochi and Kangeyam and we were pretty much convinced about buying them out because of the following reasons

1. Quick Project completion - To setup a factory with new machineries requires the lengthy procurement process i.e. Seeking quotations, selection of vendor, negotiations, payment, time for making the machine, transportation and installation. Also buying of accessories for the integration of the machineries to form a production system. For used machines, time till installation is significantly reduced because all the machines are already available at one place.

2. Investment size reduces to 50% of the budgeted investment. Extra money remaining can be used as working capital.

Within a week of this I visited Chennai for a Packaging exhibition and stayed at Raghuram's place there. While discussing my idea, he advised caution. He told me to focus on setting up a state of the art factory with latest machineries. Also he pointed towards the depreciation I can claim. His ideas then didn't affect my opinion. But later while travelling back, I started thinking deeply about what he told. And I came up with the following reasons to suggest that it is not that attractive despite the apparent attractiveness.

Investment - Assume used machineries cost 50% of that of new one.

1. Bank Loan - Banks don't easily give loans to buy used machines, they are comfortable funding machines where the supplier is a manufacturer and has quotations to back the price. Required margin money on machineries is 25% of its value or the bank funds 75% of the machine. While for used machine the buyer has to have 100% of the value or 50% of that of new one. So, initial cash outlay for new machines is 25% vs used machines is 50%.

2. Subsidies - Taking the case of my project of setting up a coconut oil mill. Coconut Board gives 25% subsidy on total investment, Directorate of Industries and Commerce (DIC) gives 15% subsidy, there are a few other incentives also. In short about 40% of total investment is subsidized by government. To get subsidy the industrialist must have gone for bank loan for funding. Both banks and government fund only for new machines. So, it is 50% for used machines vs 60% for new machines scenario. Used machine's advantage is only 10% of the total value.

3. Depreciation - Claiming depreciation on assets helps in showing the investment as an expenditure, this helps in saving tax to be paid on profits. Assuming tax rate of 30%, for new machines 30% of the cost of machines can be saved in taxes while for old machines 30% of 50% value i.e. 15% is the tax saved. So, new machines help in saving 15% more tax than old machines.

After considering Subsidies and Depreciation alone, new machines have 5% advantage (-10% subsidies + 15% depreciation) over used machines! This much is sufficient to answer the question raised in the title of the post. Wait, it is not over there are lot more things to talk about in favour of new machines.

Features - New machines have more and better features compared to the old machine. More importantly, the buyer can get those features that suites his requirements.

Efficiency - New machines would be more optimised than old ones and they will perform better, faster and with lesser power and consumables.

Maintenance - New machines are less susceptible to breakdowns as compared to old machines. Some of the problems encountered with older models would have been sorted out with later versions. That means lesser downtime, better productivity, lesser cost in buying spares and service.

Warranty - New machines come with one year warranty, few free services, installation and training.

Life - New machines have longer life and gives more time to realize value out of the machine.

New machine will give peace of mind (most precious commodity) to the businessman and allow him to concentrate on his business than on the machine. This enables him to keep him ahead of the competitors and better serve the customers.

Similarly, throughout my professional course (BE and MBA), I have always bought new text books and have never been a fan of photo copies or used books.

Does it make business sense to pay taxes?

We see most businessmen do everything they can to avoid paying taxes (I don't mean tax planning as per rules). They common reasons they cite for this are

• Our field is very competitive, other's don't pay, then how can we pay?
• We already have very low margins, if we pay taxes we will make losses
• Anyway the money we pay in taxes are wasted, then why pay?

They are right. There are also other real challenges in properly paying taxes.

• Need to maintain full accounting system - requires knowledge of accounting & tax laws, paying the chartered accountant for his services, dedicate a staff for book keeping.
• Tax officials still claim bribe even when you maintain 100% accounts. Problem is that the bribe amounts are higher than when you don't maintain 100% accounts.
• Many customers are not willing to pay the tax.

Despite all these challenges, I contend that it makes perfect business sense to pay taxes. I will stay away from moral or ethical issues here. I won't say that we need to give back to the society/government etc. My main point is that not paying taxes gets the business into a vicious cycle and severely hampers its growth prospects.

1. Consistency and Simplicity
Maintaining full accounts gives you consistency of Data. You can show the same figures to anybody be it the bank, VAT, Sales Tax, Income Tax, Investors and Management. If somebody asks for your Sales data, you don't have to worry as to who is asking it. With this consistency comes simplcity that allows you to focus on important business issues (how to increase customer value?, how to reduce operating costs? how to get the best out of employees? etc). Instead of worrying about how to escape that government official, how to manipulate data, how do we explain this inconsistency to them etc.

2. Fund Raising and Valuation
Valuation of the business is directly proportional to the sales, profits and assets. Declaring less of them to avoid taxes undervalues your company significantly when you look to raise funds. E.g, if you profits are 1 crore and tax rate is 30%, valuation is taken as 10 x profits. When you declare 1 crore profit, you pay 30 lakhs in taxes and business is valued at 10 crores. But if you instead declare only 10 lakhs as profits, you pay only 3 lakhs in taxes (saving 27 lakhs in taxes) but getting only 1 crore in valuation. In a bid to save 27 lakhs in taxes you lost 9 crore in value.

3. Doing business boldly
When you don't pay taxes, you need to hide your assets, hide information, do only cash transactions. In a bid to hide from tax officials you importantly hide yourselves from customers/prospects. You can't advertise, you can't transport your goods, you fear government officials.

4. Use Government Incentives
Karnataka Industrial policy this time gives Subsidy on Capital Investment & Interest payments, has no tax on electricity and no APMC cess for a few years, no stamp duty, no conversion fine and so on. All these incentives can be claimed only when the records are proper and necessary licenses are obtained. The value of these incentives are much more than the money paid in taxes.

5. Paying Tax doesnot make a Profit making business into a loss making one, it only reduces the extent of profits slightly. VAT introduced in 2003 is such that you only pay tax on the 'value added' than on the 'value sold'. So the tax paid in inputs can be offset from the tax to be paid for outputs which significantly reduces your tax burden.

6. Gives you a correct picture of your business
"You can only manage what you can measure". Accounting gives you that measurement and hence a clear picture about the health of the business. Getting into the details will let you know what went wrong and how it can be corrected. Pilferage & thefts are common problems businesses have to face, inconsistency in stock date will give necessary signals. If proper
records are maintained, the owner/manager need not be physically monitoring the activity, he can delegate the responsibility and just check for accounts at the end of the day. This frees the management from day to day operational issues, allowing him to focus on strategy and growth.

I heard Bharath Goenka of Tally in a talk saying

The life of the business reduces significantly with every mal-practice it does.

You don't be ethical because it is good to be but because you are selfish

coco guru – the brand new brand name

In the list of brand names, I deliberately left out a group of names that start with coco because I had decided that the final name would start with it. I didn’t disclose the brand name till now because I wanted to make sure I can register it for trademark and domain before anybody else. Now coco guruTM is a trademark of Sri Rama Industries. Just applied for registration about 20 days back and got the application number. Registration will be complete in about 18 months after which we can use ® (circled R) instead of TM signifying that it has been registered.

Reasoning behind the choice of name
Our Vision is to make coconut based products, hence the prefix coco. This gives us enough scope to grow around coconuts and also limits us or helps us focus towards opportunities of just coconuts.
We want to at the sweet part of the value chain in making coconut products. So we just want to position ourselves as experts in the field of coconuts. Not as growers, manufacturers, retailers, consultants etc. In fact we intend to not do any of them and just own the brand. It gives us flexibility to do what we want in the coconut product value chain.
Guru is a name that off course signifies expertise and leadership, also the word is universal. Guru is a valid word in Kannada, Hindi, Sanskrit and all Indian Languages. It has also become an accepted word in English. Word guru resonates among Indians as traditional. Guru Bramha, Guru Vishnu, Guru Devo Maheshwara ... List of English words derived from Sanskrit - http://en.wikipedia.org/wiki/List_of_English_words_of_Sanskrit_origin

There are several names that start with coco like cocoraj, cococare, cocojal, cococlear, cocovita, cocovida, cocofresh etc. Similarly there are several names that end with guru like travelguru, codeguru, logodesignguru, domainguru, gadgetguru, cellguru etc. This confirms that cocoguru can be an acceptable name.
The name might look a bit long and difficult to pronounce as a whole. But when broken down in coco and guru, they are extremely simple words with same vowels repeating at even letters. When written in Kannada, it doesn’t have any othu akshara.

How I got this name
I enumerated on many names that start with coco like cocomind, cocobay, cocobazaar, cocohub, cocomaster, cocoway etc and showed it to my dad. He liked cocomaster. As a side note, he said cocoguru without much conviction. I immediately liked it. We discussed with a few people, but got varied responses. I thought it is for us to decide about the final name as we are the ones who have the vision for the brand and the ones who are going to live it. I decided on coco guru and said that is final and I don’t need anybody’s approval for it, to avoid getting into infinite loop of name searching.

Criticisms about the name
1. coco and guru are common words and everybody uses and there is nothing unique or catchy about it.
2. coco is used for not only coconuts but also chocolates because of cocoa. So while I say the brand name over phone with out any aid of picture, the receiver may likely take it as a chocolate.
3. Koka shastra in Sanskrit relates to study on sex. And coco sounds similar to that. Dr. Shreesha Kumar pointed this to me ;-) Well, I don’t think even 1 in every 10 sanskrit scholar would know this let alone normal people.

Online Identities
I registered for domains cocoguru.net and cocoguru.in. Twitter id @cocoguru. My official email id would be keshavaram@cocoguru.net. Unfortunately cocoguru.com is not available. Somebody has acquired it and is not using it.

Useful tools for hunting names
1. Sanskrit Dictionary - spokensanskrit.de
2. Kannada Dictionary - kannadakasturi.com
3. English Thesaurus - thesaurus.reference.com
4. Spreadsheet/scripts for generating names with random characters
5. Blog - businessnamingbasics.com

Why do we need an Automatic Packaging Machine?

Right now we manually fill coconut oil in pouches and seal it. But with increasing demand for oil in pouches and my instinct to relook at everything we do. I thought of using an Automatic machine to pack oil in pouches. That machine is also called as F.F.S machine or Form Fill and Seal machine. Given a roll of plastic sheet, it Forms the shape of pouch, Fills it with exact quantity of oil and Seals the pouch within a matter of 2-3 seconds. I don’t claim the idea to be a stroke of genius as every big oil mill does it. But ours is a small unit and here are my reasons to still go for it -
1. Low manual labour – This is the biggest reason as lack of labour force is the biggest constraint for everybody (homes, farms and industries) in Dakshina Kannada. Manual packaging requires 8 man hours to pack 200 pouches. Automatic machine completely eliminates them. Still little work is required by somebody to just watch the machine operation and feed the inputs (oil and pouch roll) from time to time.
2. Excellent finishing – The finishing of the packets are so perfect that it gives a premium look for the product. This type of finishing helps in charging a higher price or selling more or lowering selling costs.
3. Less leakage – In manual case, there are a little chance that oil leaks even after good packaging. This leads to obvious loss of oil and presence of oil on surface of other packets. More importantly this leads to strain in trade relationships. We lost relationships with at least 3 retailers because of this and failing to acknowledge it as our problem.
4. Accurate measurement – In manual case, there is a variation in measurement of oil filled into the packet. The quantity filled is generally higher as anything lower would lead to rejection by sensitive customers. This variation can cost us maybe 2-3% of the value. Automatic machine would bring this variation down to less than 1%.
5. High speed – Even for slightly viscous liquids like coconut oil, automatic machines pack at 500 pouches per hour. The corresponding figure is 25 for manual packing. During peak season we had to pack about 2000 pouches a week. 80 man hours or 2 people need to work 5 days @ 8 hrs per day on packing. Automatic machine does it in just 4 hours flat! Because of not being able to pack in time, we had lost a few orders last year.
6. Lesser material cost – Material required for Automatic sealing is Low Density multilayered polyethylene film, that for manual is laminated 3-side sealed pouch. In manual case, because the pouch has to be sealed on 3 sides by material supplier, it costs about 35 paise more per pouch. So, automatic machine saves 35 paise per pouch.
7. Long term investment for growth – Benefit of automatic machine only increases with increased volume of packing. For the volume of packing we are currently dealing, it can be managed with a semi-automatic machine. But for the consumer demand for pouches and our growth plans it is better to invest now. It clears of this constraint that of packaging and enables us to tackle other growth constraints.

But the following are the drawbacks
1. High investment – The machine alone would cost 3-4 lakhs. The accessories like Compressor, Stabiliser, Cooler, Storage Tank and Pipeline would cost about 1-2 lakhs. Total investment of about 5 lakhs. Assuming that the machine lasts 10 years, rate of interest is 15% EMI comes to about 8,000 or Annual cash outflow of about 1 lakh. If we pack 50,000 pouches a year, machine cost is 2 Rs per pouch.
2. Risk of failure – This will be the first time we will be installing a machine of this nature. With multiple components involved and lack of experience there is a possibility of failure. If the machine fails there is no manual packaging backup as the material is not suitable for it.
3. Maintenance Cost – Any temporary failure will need a supplier company technician to repair. His charges per day are 1000 and charges for AC train to and fro and lodging.
I have anyway decided to purchase one and posted about 100 enquiries by searching on web and on B2B trade directories. I got about 15 responses within 3 days. I have tough task of now selecting a good machine for less price.

My love for bicycles

To say that I love bicycles is an understatement. I am passionate about it, I am obsessed with it. It has been my best companion for 8 years. More ever, it is healthy, environment friendly, inexpensive and low maintenance. By they way, I just bought a new Hercules AXN DX cycle from Bharat Cycle Centre, Puttur for Rs. 3275. I am very excited about it.




To talk a bit about my history with cycles,
My first cycle
During my 7th standard, I was pestering my dad to get me a new cycle. My dad relented and said he will buy me one if I score more than 90% in mid-term exam. I normally scored about 85%. For this exam I worked hard and managed to score 89.17%, still 5 marks short of landmark 90%. Anyway my dad considered it only as a motivation for me to do well in exams. And he didn’t deny me a cycle for not crossing the mark. So, I got my own cycle Hercules Town N Trek for Rs. 1500 from Imperial cycle centre, Puttur.
I used to roam around every nook and corner of Puttur with my neighbour friend Sadananda. Used to go to Swimming pool at Parpunja 8 kms away along Mysore Road, go to Balnad (our ancestral home) again a village 8 kms away. I went to Philomena high school and college using this cycle except during rainy season. It was great fun.

Mysore
During my 3rd semester of Engineering, Avinash and I decided to go to an expensive gym for 3 months. Gym was about 2 kms far, Avinash had a bike and there was no problem. But 15-20 days later Avinash started showing his talent (that is laziness ;-)) and he stopped coming. I was determined, didn’t want to waste the gym fees and continuity. Avinash suggested me, “Look, our super senior Manjunath just completed his course and has thrown his cycle. So, why don’t you repair it and use it?” It was lying just outside my room at ground floor, I took it and the repair cost me 200/-.
I used it well for 3 years, went around beautiful University Campus, Kukkarahalli lake, Mysore city and everywhere. Since it was not the one I bought, I left it at the same place after I left the hostel.

Japan
I was on an onsite assignment at Japan for 5 months. My living apartment then was 6 kms from office. Monthly local train pass costs 5000 yens. I had to walk half a kilometre each from apartment to railway station and railway station to office. I didn’t like the routine. Also I wanted to cover as many places as possible over there. I didn’t waste any time and bought a new cycle for 15,000 yens, returned it to the same shop for 5,000 yens. Money was not a problem. People on overseas assignments are paid extremely well. It was that well paid period that changed me from being a thrifty spender to a spend thrift now!

I have been at Bangalore and Mumbai for long periods of time. But I didn't have cycle there as they were dusty and busy cities. It wouldn't be a pleasure there to go on a cycle at all.

Now
I need to go to our office/retail outlet, shops for research, roam around for time pass, to ice-cream shop and so on. A cycle is very handy now again. It was easy to own a cycle during teenage and abroad. But now it isn’t easy considering the social stigma attached. If somebody goes by cycle it means he is not well to do. In our family, even my younger brother has his own car apart from my dad’s car. Society asks many questions, assume things their own way. I still bought one, because I thought, if somebody thinks negatively I should give a damn to him, for others who think positively there is no problem. My dad isn’t happy that I bought but I think he will get used to it over time.

List of Brand Names

The following are the initial list of names I came up with over last couple of days. Believe me, it is a very hard exercise. It is not my cup of tea, still essential. The challenge is in finding a common name which can be trademarked. Needs to be thought of from all 360 degrees customers's view. Naming could well be make or break for the brand.
Sanskrit – kairava, amala, prayata, vivikta, hamsa, jalaja, shuchi, sputam, sphatika, vajra, anagha, heera, hiya, mrinala, amiya, amoha, hita
Pure in English – crystal, diamond, lucid, limpid, lucent,
Glorify - Vastava, hallow, anoint, vital, vestal, revel, extol, wallow, rever, laksha
Edible - Delish, aliment, victual, comest, savour, nourish, sapid, esculent, khaadya
Different - Madike, kogile, kokila, tuluva, barsa, ananya, peacock, punarvasu, magnet, cocoon, compass, native

I have now sought help from Prof. Shreesha Kumar, a Sanskrit Professor and a wise man. His knowledge and opinion about this world is amazing. He was the man behind the brand name bindu for mineral water.

The list of other coconut oil brands are
Puttur Market
Aravind, Ishwara, Jeep, Kalpataru, Karavali, Mahalasa, Mangala,
Navami, P D S, Pooja, Prestige, Quality, Ranga
Soorya, Theertha, Train, Uttam, Vikram

Bangalore Market
Parachute, Vatika, Penguin, KPL Shudhi, KLF Nirmal, VVD Gold, Safal
Kera, Sahakari, Laxmi, Arun, Krishna, KV Prabhu, Prakash

International Market
Cocovida, Tropical Traditions, Nutiva, Kokonut Pacific, Tropicai, Kalau

Photo Album of all the coconut oil brands in Puttur
http://picasaweb.google.com/keshavaram/CoconutOilBrandsInPuttur
Also see HUL's Home care portfolio here.

Brand Naming Criteria

Our present brand name is Santhosh, but it was never advertised and very few know it. A survey among 14 retailers at Puttur who sell our oil showed that only 8 of them or 57% of them know that our brand name is "Santhosh". They have always identified us as Sri Rama.

So, I thought of re-branding as "Sri Rama". It would also give some equity to our corporate name "Sri Rama Industries" and vice-versa. Also remove any confusion in the minds of the consumers about the source of the product. But the name is so generic, a look at our local business directory revealed about 12 business that have name SriRama and spelling variations. A search in the trademark registry showed that the name is already registered even for the business category to which we belong. Since we want to go the branded way, using a brand name that cannot be trademarked or used is not a good idea.

I am looking for a new name to brand our coconut oil product. The name should ideally represent any or combination of the following meanings :-
pure, clear, natural, health, quality, edible, tradition, different, sacred

Important criteria in which the names are evaluated with their weightage are
Trademarkeable - It is a must and there is no compromise on that - 1000
1. Simple - Easy to spell, easy to pronounce - 10
2. Memorable - A familiar name will be easy to remember - 3
3. Appropriate - Represents the meaning of the brand - 5
4. Pleasant Association - It should evoke positive emotions while a person hears it. There should not be any negative meaning in another country, language, culture, religion - 10
5. Appealing - The name should appeal to our target audience i.e. Tulu Nadu - 10
6. Extendable - It should be not be restricted to just coconut oil, but to say food products and other businesses - 10

For each name, for each criteria rating will be given as Bad, Neutral and Good. The multiplying factors being -1, 0 and 1 respectively.

Brand Vision

To spread the benefits of coconut to people

People - Consumers, Suppliers and Society
Consumer Benefits - Health - Coconut Oil extracted by least amount of processing to retain maximum benefits of coconut
Supplier Benefits - Give best price for their yield, make it convenient for them to supply and provide education and inputs to improve their yield
Society Benefits - Health, Wealth, Tradition and Environment

The vision for most companies revolves around the consumer rather than product. But we base it on the product because Coconut is a truly great timeless product and its applications gives us enough scope to grow. Hailing from Coastal Karnataka we have a natural competitive advantage for coconuts.

Target Market
People of Coastal Karnataka (Tulu Nadu) origin
35-60 year old
middle income
Cooking purpose

There is no major brand selling coconut oil as a cooking oil and this market needs one.

Brand Characteristics
Coconut
Pure, Clear, Transparent, colourless
Natural, Cold pressed, as good as coconut
Healthy, good for everything, edible
Traditional

Unique Value Proposition
Our coconut oil has crystal clear appearance, this is done by cold pressed method to retain all the natural qualities of coconut to make it ideal for cooking.

Customers vs Competition, Open up or Hide information

In the strategic triangle or 3C model, Customer and Competition are 2 important vertices (Cs) to the main C Corporation. So, the corporation must base its strategies on the customer in reference to that of the competitor. But too often the company fears competition so often that they loose sight of the customers. Sridhar Vembu has a very interesting take regarding this.

Why I am concerned about this is to decide how much I should disclose about our business. Whether I should open up to Customers or hide from Competitors?

Why companies hide information
1. There is nothing good to show. Showing shows only weakness.
2. It takes effort to identify and display useful information on website and marketing communications.
3. To hide secrets from competitors.
4. To keep its card close to chest while negotiations with partners/customers

It is a major cultural difference between Indian and Silicon Valey businesses.
None of the Indian FMCG companies or its honcho’s blog. This is all the official information available on a 600 crore brand parachute. Some Annual Reports of Indian public companies are so Generic that it is difficult to understand what business they do even after a careful reading of whole report. On the other hand we have a company like Zoho which is very open even when it is a privately held company.

I presently believe that companies must focus on customers and let not competition come in way of serving customers. So, if opening up is good for the customers, companies must do it.
After all letting the competitors know what we are doing doesn't mean they would execute that. If it is good and they can't do anything about it, it will only humble them. Some of the well known things like making quality product, earning customer's trust, building strong brands are the most difficult things to do.

I like competition that is healthy. But mostly it is not. It is price competition where they reduce prices by reducing quality, adulteration, reducing quantity, giving poor service and avoiding taxes. In edible Coconut Oil industry it is time the competitors ally themselves to thwart a bigger threat of refined oil and imported oil substitutes.