Onjus - Squeezed Out: Introduction In May 1997, Onjus, a 100% orange juice was launched by Enkay Texofood Ltd.

(ETL)1 in the niche market of fruit juices and virtually created a new product category. By 1999, Onjus gained a 19% share (Refer Table II) in the tetra-pack fruit beverages market (Refer Exhibits I and II).

However, the success of Onjus seemed to be short lived. In 1999, the Director General of Investigation and Registration (DGIR)2 lodged a complaint with the Monopolies and Restrictive Trade Practices Commission (MRTPC),3 against Onjus being sold as a natural fruit juice.

As a result, Onjus was not sold in the market for sometime. Meanwhile, the competition in the market had heightened with the launch of PepsiCo's Tropicana.

Further, ETL's textile division, which was making losses4 (Refer Table I), owed around Rs.870 million to Financial Institutions (FIs) that asked the company to pledge the Onjus and Life5 brands against the loans.

To avoid the impending closure of its textile division, ETL channeled the cash flows from the food business into the textile business. This didn't go down well with the FIs and they decided against investing in the foods business, leading to the shutdown of both the divisions in early 2001. TABLE I TURNOVER (In Rs. bn) FISCAL YEAR TOTAL 1994-95 1995-96 1996-97 1997-98 1998-99 2.01 2.58 3.16 2.84 1.25 TEXTILE DIVISION N.A 2.03 2.43 1.53 0.25

Background ETL, then called as Enkay Synthetics, was started as a textile company in the early 1980s. The company was involved in making, bleaching, and dyeing of polyester yarn.

During 1988-89, with competition becoming fierce in textiles, Tulsidas Goyal (Goyal), Managing Director of the company identified agro-processing as a focus area. In 1990, Goyal set up a plant in Vapi in Gujarat state, to process guavas, mangoes and bananas into puree and concentrates.

Enkay Synthetics was merged with the fruit-processing unit and renamed as Enkay Texofoods Ltd. The company was successful in the export markets (Europe and the Middle East), and some of its clients were Nestle, Unilever, Pepsi, Coke and Heinz. ETL's fruit-processing plant was approved by the US Food and Drug Administration (FDA).6

Juicy Prospects In May 1997, ETL launched Onjus on a natural taste proposition. It was launched as an 'on the move drink' in a 250 ml straw pack for outdoor consumption, with a tagline - 'Squeezed to please'. ETL had done some preliminary research before the launch of Onjus. Based on the findings from their research, Onjus was given a sweeter taste compared to the imported juices. But at the same time, an element of bitterness was retained to emphasize on the naturalness. Onjus used oranges from Florida and Brazil adding the Indian mandarin to suit Indian taste buds.

The pricing was also based on the market research study, which showed that volumes came from the Rs.5Rs.9 segment. Goyal decided to concentrate on volumes and priced a 250ml pack at Rs.9. Through Onjus, ETL planned to drive the shift from carbonated drinks to natural juices. Natural juice was considered healthier than carbonated drinks. But, the quality of raw materials at the juice outlets prevented people from trying out natural juice. Thus, the frequency of consumption was limited. ETL saw in this a business opportunity. Juicy Prospects Contd... Onjus was an instant success and this was partly attributed to its first-mover advantage. Its success was attributed to the ATA model of 'Availability, Taste and Affordability', and to its distribution network. The network spanned 302 towns across general stores, supermarkets and departmental stores. In April 1998, Onjus doubled its capacity from 80,000 to 1,60,000 packs per day. By 1998, Onjus had become a Rs.600 million brand and had also penetrated the household segment with its 1-litre tetra-packs. In the same year, ETL increased the price of the 250ml pack to Rs.12. The 1-litre pack was sold at Rs.44. In early 1999, Onjus entered the institutional segment and was available in military canteens, hotels and clubs. Onjus was also served on some airlines during flights.

TABLE II TETRA PACK FRUIT BEVERAGES MARKET (NOVEMBER 1999)

Company ETL Dabur PepsiCo Others Source: ORG-MARG Survey

Brand Onjus Real Tropicana -

Market Share (%) 19 53 21 7

Oranges Turn Sour In August 1999, the DGIR filed a complaint against Onjus with the MRTPC. The DGIR accused ETL of indulging in deceptive and unfair trade practices by misleading consumers regarding the quality of oranges used in Onjus. The DGIR charged that ETL had declared Onjus as containing natural orange juice concentrate and water on the outer pack, which was contrary to the test reports. This followed a complaint received by the DGIR from Uma Shankar Mishra (Mishra) of Ghaziabad. Submitting that it had not added any additives to the orange juice, ETL said that the additional sugar was on account of the blend and the additional pulp cells. It further contended that the composition of sugar in the fresh juice and Onjus were almost matching and the company had declared on the pack that it was reconstituted from orange concentrate. However, according to the analysis submitted by the complainant, total sugar in fresh orange juice was 9.35%, whereas in Onjus it was 13.04%. The company maintained that as per the CODEX standard, the total quantity of added sugar could go up to 5% but did not deny using added sugar or beta-carotene in its 'natural' juice. ETL however, claimed that Onjus was reconstituted from natural orange juice concentrate being imported from South, Central and North America.

ETL also enclosed a copy of the certificate of origin, which showed that the company used frozen concentrated Kinnow juice imported from a Holland-based company. Approaching the MRTPC, the DGIR said, "It is evident the juice was neither natural nor an orange juice, but the fact was that it was a Kinnow9 juice,"10 which differed from oranges in tastes, quality and price.

It also said presenting Onjus as natural orange juice was misleading and false which, "could cause loss/injury to the general public who were buying it under the impression of a natural orange juice."11 Following this, on September 16, 1999, the MRTPC initiated an inquiry against ETL.

The whole episode had tarnished Onjus' brand image. To resurrect the brand image and to reassure its consumers about the purity of Onjus, ETL launched a promotional drive that had ETL's salespersons making presentations outside select retail outlets. The salespersons not only sold the ETL brands but also tried to convince the consumer about the purity of Onjus. The promo was backed by enhanced in-shop display.

As a part of the promo, ETL also introduced 'Dial an Onjus' scheme in Chennai, Bangalore, Cochin, Hyderabad, and Chandigarh. Consumers who ordered Onjus worth Rs.300 got free home delivery. They also stood to win gifts like Onjus T-shirts and caps, watches, music systems, etc. This was followed by the launch of 'Telephonjus' - a toll-free number (2224545), which could be dialed to order Onjus at home. Initially, the service was limited to the Mumbai region. The minimum order amount was fixed at Rs.100. However, in October 1999, the MRTPC restrained ETL from marketing its product as a natural orange juice. On January 6, 2000, ETL won a reprieve from the MRTPC and had the order restraining ETL from marketing its product as a natural orange juice, vacated. The two-member bench consisting of senior member Sardar Ali and member Moksh Mahajan vacated the order and found that the 'balance of convenience' tilted towards Onjus. The MRTPC made it clear that the Commission was not making any observations on whether Onjus was a natural orange juice or not, but there would be no restriction on ETL selling the brand. Onjus is Squeezed With the success of Onjus, Goyal decided to concentrate more on the foods business, which meant he had to get rid of the loss-making textile division. In 1998-99, the textile division had made losses to the tune of Rs.220 million. The losses resulted in huge debts.

ETL owed around Rs.870 million to various FIs including the IDBI, ICICI and IFCI, in the form of secured and unsecured loans. Besides, the company also owed money to commercial banks. Of the Rs. 870 million, Rs.320 million was outstanding against the textiles division and the remaining amount was outstanding against ETL as a whole.

The FIs permitted Goyal to offload 20% stake in ETL and stipulated that the money received should be utilized to pay the entire debt. The FIs also insisted that the debt of the textile division be paid from the fruit processing division, but Goyal opposed the idea.

In early 1999, Goyal tried to offload a 20% stake in ETL to Foreign Institutional Investors (FII), but failed. The FIIs were not willing to invest in a company with unrelated businesses, but were not averse to investing in a hived-off food-processing venture. As Goyal failed to offload stake to the FII, the financial institutions asked ETL to pledge Onjus and Life brands in lieu of debt. Following this, the company filed a proposal for restructuring of debts and hiving off of textile division into a separate company, Avon Synthetics Ltd.

The institutions approved the de-merger of the textile division with ETL in a 1:1 ratio. With the approval, Goyal decided to go for the de-merger and later sell off the textile division at an appropriate time and pay off the debts. Meanwhile, to prevent the textile division from being closed down, the cash flows from fruit business were channeled into the textile business. The FIs did not appreciate the development and decided against investing in both the businesses of ETL. This led to the shut down of both the textile as well as the food-processing units in late 2000.

Will Onjus Make a Comeback? Goyal planned to re-launch Onjus in mid-2001. He said, "We are getting ready to roll out the brands in the next two months. Nothing has really changed and nobody has been able to make a dent in the market while we have been away. Consumers like our taste and will always come back to it."12 However, analysts felt that the chances of Onjus making a comeback were slim. Almost 200 people working on the brand had quit, and it would be difficult for the company to get the right people to market the brand. Analysts also felt that it would take a lot for the brand to pull itself out of the financial crisis before it hoped to stage a re-entry.

Meanwhile, competition had heightened in this category. PepsiCo's Tropicana, launched in mid-1998, was very successful and had garnered a 35% market share by 2001. The product's greatest advantage was that it was a well-established brand in the US and was backed by PepsiCo's vast distribution network of more than 600,000 outlets in India. Against this backdrop, analysts felt that Onjus might just get side tracked unless it made a quick comeback.