No More Onion Tears!

While peeling, cutting and frying onions may bring tears to many eyes, Manoj Mahanta meets up with a first generation entrepreneur Satyajit Roy, MD & CEO – EGK Foods Pvt. Ltd. who has made processing onion his business and is smiling all the way…

When did the bizarre idea of selling ‘fried onion’ first germinate in your mind?

 It all started about two-and-a-half years ago in our kitchen. For more than a decade now it has been a family ritual to make mutton biryani on Sundays and everyone looks forward to it. In the preparation, most of the Sunday morning goes-by peeling, chopping and frying of onions, and with it came the suffering of burning eye due to onion fumes and tears. One day completely fed-up, I just happen to shoot-out, "surely fried onions must be available in the market, why don’t you pick them up”. And I began searching for it online, only to realise that fried onions were only available abroad in retail stores and not in India. After a little thinking about the amount of onions used in Indian kitchens, it appeared to me as a good business idea. And I decided to check out if it was a viable business option. We arranged small 100 gram packets of fried onions and made it available at a store in NSCI (National Sports Club of India), and to our surprise it simply worked like a magic.

How did the market react to the concept of ‘Fried Onions’? How tough was it to get consumer to buy the product?

Being a completely new product category, our biggest challenge was to educate the consumer, and also changing age-old kitchen habits. These things don’t happen overnight and it involves a lot of convincing of the customer, a reason why we chose to go B2B. Though retailing was a more profitable option yet we decided to shift our marketing game-plan from B2C to a B2B model to rake-in volumes. But we were confident that in the metro cities with greater awareness about the product more and more kitchens will start using our product, because one saves a lot of time and efforts. And it is these markets which were going to drive our business in the years ahead.

When did you decide to change the marketing approach from B2C to B2B?

Initially, we started with a B2C approach but soon realised that larger kitchens were in bigger need of our product and we worked out deals with chains of restaurants like: Zafaran and Delhi Darbar. In the beginning there was a lot of resistance from these restaurants, because each one of them told us that "we fry our own onions” and that they were doing that for years. We had to be patient with them and continued investing our time and efforts. After almost a year-and-half the orders started trickling in. Over the last one year, we have seen tremendous growth in business. Just to put it in context, a year ago we were selling 20 kgs. per day and now we are selling 500 kgs. per day whereas we have orders upward of 1000 kgs. per day.

 Today, majority of our business is B2B. We supply to restaurants, caterers, hotels, etc. who stand to significantly save on the time and efforts, because they no longer have to go through the painful process of frying onions in large quantity on a daily basis. Also, as the product is priced competitively these businesses find great sense in using our products because they know that the onion prices otherwise are highly volatile and can impact their business. The fact that our prices remain constant throughout the year, our clients feel assured that there are no surprises. 

Is the company investing to better understand consumer trends and preferences?

In the last year or two years we are spending on researching consumer preference. We have realised that the consumer is desperately looking out for alternatives to get a respite from labourious tasks of the kitchen. They would like to spend more time with their family and doing more of what they enjoy. Obviously, the trend visible in the metro cities is finding their way to the mini-metros and villages. And we are heavily investing ourselves to cash on this trend so as to come up with products that would meet these demands.

What initiatives has the company taken to ensure quality standards are met at all times?

One good thing about our B2B approach is that we are constantly in touch with our clientele. We receive regular feedback as to what was ‘right’ or ‘not right’ with our product. This really enables us to keep improving on the production processes to such an extent that today we can boast of our product having reached a high level of standardisation. Now as the same product is offered through our B2C channels, the end product that our retail customer is getting is virtually at par with international standards. Also, we have a Food Technologist on board, we have standard operating and manufacturing procedures, our sourcing of raw material goes through a thorough quality check... all this ensures that the consumer gets the same quality product throughout the year at the same cost.

 Can you throw some light on the competition faced at the marketplace? And, what steps are being taken to retain the leadership position?

We were the first to move into the ‘fried onions’ space. Earlier the consumers had access to ready-to-use dehydrated onion whose application in cooking is different as they were not meant to be eaten directly like the fried onions. Now, that we have opened a completely new product segment on the retail shelves several ‘Me-too’ products have started entering the market space. But because our products are highly standardised, we have not seen any of our clients leave us for our competitors selling at a lower prices. While we continue to retain our markets, the good thing is that our competitors are only helping us create greater awareness for the new product category by educating the end-users, which only help us grow faster. We feel ‘the more, the merrier’, because they will only expand our market.        

 Considering the fact that onion prices are highly volatile, how do you ensure the supply of onion continues unhindered through the year?

We are sourcing onions mainly for the Lasalgaon-Pimpalgaon region of Nashik, because it already has an established facility for grading and undertaking ancillary processing prior to shipping them to our factory. The fact that we offer very competitive rate to the farmers ensures that we get good quality yield throughout the year. Over-and-above to ensure that the supplies to our factory continues unhindered we are entering into contract farming agreements with about 25 farmers on a pilot basis, and if things work-out we hope to sign up with more farmers. 

 Furthermore, we have been in regular contact with over 8000 farmers through the World Bank’s MSRLM (i.e. Maharashtra State Rural Livelihood Mission) program. Under it, we are helping farmers set up production houses in the villages creating both direct and indirect employment for the locals. In the long run, we hope to create a decentralised system of procurement and processing whereby there will be mother plants at strategic locations and smaller processing plants in the villages. 

What are your future plans on product development?

Right now, we have only one product – fried onions, but over the next 12-18 months we hope to explore into everything connected to onions ranging from powder, pickles, paste, jellies, sauces... One of the reasons for expanding in this category is that there is an abundance of onions in Maharashtra, and a considerably large portion of it is wasted. Clearly there is a gap in the demand-supply chain, and we are trying to fill this gap by setting up processing units across the region producing onions.

Can you take through the journey of how and when you decided to be an entrepreneur?

I finished my HSC and dreamt of doing Computer Science and Engineering and I went to MIT. But within a year, I realised that I don’t want to do engineering. After that I joined a string of courses – BMS, BMM, BA, B.Com and one-after-another I opted out of each of them. I tried everything, but couldn’t finish anything. But one good thing that I did while struggling with academics is that I worked - first with a Call Centre, then with a Car Rental Company handling logistics, later with taxi aggregators and so on. But when I decided to switch into a new sector, companies were not forthcoming in hiring me because I had not completed my academics. The few who offered me a job wanted me to start from entry level position. It was simply ridiculous, though I didn’t possess any degree per se but considering my diverse experience I expected a decent job profile. I continued my job hunt for 3-4 months, and when I realised it was not happening the only alternative open to me was to start an enterprise, and that’s when I decided to try my luck. 

My experience as a start-up entrepreneur was equally disastrous, I went to start about 3-4 companies and each of them failed miserably. My bizarre business ideas ranged from growing mushrooms to aggregating all city Chaatwalas to offering insurance to puppies… Though each of these failures appeared to be de-motivating and discouraging at that point of time, now when I look back it feels they showered me with pearls of wisdom. They brought along a lot of learning, now I know ‘what not to do in a business’. Today, I can proudly say, "I am, what I am, because of all the failures I have seen early in my life”.