Case Study on Monopolistic and Restrictive Trade Practises
Onjus - Squeezed Out
"Onjus is to 100% fruit drinks what Cadbury's is to chocolates and Fevicol to adhesives."
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.
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),
"Onjus is to 100% fruit drinks what Cadbury's is to chocolates and Fevicol to adhesives."
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.
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),