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Project cost :41 lakh

Uploaded on : September 2009

Product and its Applications

The burning of Incense stick (Agarbatti) in religious and social functions has been practised in India and many

other countries in the world. Incense ( Latin : incendere, "to burn") is composed of aromatic biotic materials,

which release fragrant smoke when burnt. The term incense refers to the substance itself, rather than to the odor

it produces. Many religious ceremonies and spiritual purificatory rites employ incense, a practice that persists to

this day. The use of incense dates back to biblical times. The Babylonians used incense extensively while

offering prayers to divining oracles . In India , some 2000 BC, various writings mention ' perfumers ' and 'incense

sellers'. Evidence suggests that such oils were used mainly for their aroma.

Agarbatti industry in India is a labour intensive cottage industry. Karnataka State is the leading producer with

Mysore and Bangalore cities being the focal centres. Nearly 1000 units reportedly exist in the State of

Karnataka . Moreover, it is an export-oriented industry.

The incense stick industry in India has promoted social entrepreneurship in the rural and semi urban areas as

more people are coming forward to start their enterprises. Some reputed Indian corporate have also taken the

lead in promoting this trend by training rural women in bamboo cutting, incense rolling, raw incense sorting,

perfuming and packaging of incense sticks. The entry of corporate has helped in mechanization at each step of

the manufacturing process.

Agarbattis are available in different colours and aromas. The burning time of an agarbatti varies from 15 minutes

to 3 hours depending upon the quality and size. Some of the popular fragrances that have captured the

imagination of consumers both in India and abroad include Mogra, Dhoop, Saffron, Sandal, Kasturi, Rose, Nag

Champa , Jasmine, Lavender , Champa , Lily, Cherry, Lemon, Orange, Spices. It is also available in 3-in-1 and 5-

in-1 packs giving the consumer a choice of multiple fragrances in a single pack. These agarbattis are available in

innovative 'Fragrance-Locked' packaging.

Market Potential

India has a leadership position in agarbatti production and fulfils more than half of the world's incense sticks

requirements. India exports Agarbatti to nearly 90 countries. Export earnings have crossed Rs. 400 crore mark

while the domestic market is expected to be nearly 2000 crore. Every year more than 1000 billion sticks are

produced and the market is growing at a rate of 7% per year. Further value addition occurs when incense paste

is hand-rolled on to the sticks to make “raw” incense sticks, which are later perfumed to obtain finished incense

sticks.

The incense stick market faces a sudden upsurge in demand during the festive season. Demand from both

domestic and international sectors peaks up during festivals like Dussehra and Diwali. The market for incense

sticks is very vast and the demand for these incense sticks is high even in the far-flung rural areas. The incense

industry is driven by factors other than commerce like tradition, superstition and religion.

Basis and Presumption The unit will work for 300 days per annum on single shift basis.

The unit can achieve its full capacity utilization during the 2nd year of operation.

The wages for workers are taken as per prevailing rates in this type of industry.

Interest rate for total capital investment is calculated @ 12% per annum.

The entrepreneur is expected to raise 20-25% of the capital as margin money.

The unit would construct its own building.

Costs of machinery are based on average prices of machinery manufacturers.

Implementation schedule

Project implementation will take a period of 8 months. Break-up of the activities and relative time for each activity

is shown below:

Scheme preparation and approval 01 month

SSI provisional registration 1-2 months

Sanction of financial supports etc 2-5 months

Installation of machinery and power connection 6-8 months

Trial run and production 01 month

Technical aspects

Location

The plant can be located at any suitable place keeping in view the marketing convenience, availability of power,

water and skilled manpower.

Salient Features of Process / Technology

Bamboo is washed, dissected and the internal knots cleaned. These are sized up with the desired thickness in

the machine. For making bamboo sticks, the machines/ equipments required are bamboo cross cutting machine

with motor, bamboo forming machine, other helping equipment like saw, smoother, etc. In this project, it is

proposed to procure ready cut bamboo sticks.

Mechanization was brought into this industry by the early 1990's. However experience has shown that machine

made incense sticks do not match the fragrance quality produced by hand made incense sticks. This is because

hand made incense sticks is made from aromatic herbs and essential oils of specific plants.

High quality agarbatti is made mostly by hand. In the manufacturing process, the natural gums and resins from

precious woods, such as powdered sandalwood are loaded into vats where they are mixed with other organic

raw materials. Some of the incense is dried and powdered, mixed with a type of natural adhesive and rolled onto

thin bamboo sticks to form sticks, cones and coils.

All the ingredients in powder form are mixed well with water in a specific formulation to a semi solid paste. This

paste is applied to bamboo sticks and rolled on wooden planks uniformly with hands. The raw sticks are dried

and packed in suitable bundles. For manufacture of perfumed agarbattis the concentrated perfume is diluted first

with white oil or diethyl phthalate and raw agarbattis are dipped in the dipping trays. The perfumed sticks are

packed in butter paper bags or polypropylene bags and finally in printed cartons.

Pollution Control

There is no major pollution problem associated with this industry except for disposal of waste which should be

managed appropriately .

Energy Conservation

It involves mostly manual operation.

Production Capacity

Quantity 27,00,000 packets

Installed capacity 40,00,000 lakh packets

Optimum capacity utilization 70%

Working days 300

Manpower 35

Financial Aspects

Fixed Capital

Land & Building Amount (Rs. lakh)

Particulars Amount

Land 300 m 2 01.20

Built up area 150 m 2 12.00

Total cost of land and building 13.20

Machinery and Equipment Amount (Rs. lakh)

Description Amount

Wooden planks for rolling size 600mm x 300mm x 300mm-50 No., Weighing balance 10 kg capacity -2 No., Hand

sieves 100 mesh-6 No., Wooden Racks 250mm x 180mm x 60mm- 9 No., Plastic trays 20 lit. capacity-20 No.,

Aluminium trays for dipping- 2 No., Plastic buckets, mugs, misc. equipment

00.60

Erection & electrification of machinery @10% cost 00.06

Office furniture & fixtures, computer 00.64

Total 01.30

Pre-operative Expenses Amount (Rs. lakh)

Consultancy fee, project report, deposits with electricity department etc 00.50

Total Fixed Capital Amount (Rs. lakh)

(9.1.1+9.1.2+9.1.3) 15.00

Recurring expenses per annum

Personnel Amount (Rs. lakh)

Designation No. Salary Per month Amount

Factory Manager-cum-entrepreneur 1 8,000 00.96

Sales Representative 2 5,000 00.60

Office Assistant- cum- Storekeeper 2 4,500 01.08

Delivery Van Boy 2 4,000 00.96

Skilled workers 4 3,500 00.84

Unskilled workers 25 2,800 08.40

      12.84

Perquisites @15 %     01.54

Total   35   14.38

Raw Material including packaging materials Amount (Rs. lakh)

Particulars Qty (t) Amount

Charcoal Powder 16.00 01.26

Gigatu 13.00 02.30

White chips powder 01.80 00.50

Sandalwood powder 03.00 01.50

Bamboo sticks 15.00 03.30

Kuppam dust 05.40 03.10

Perfumes 04.20 30.00

Diluents 13.00 11.00

Paper cartons 30 lakh 30.00

Wrapping paper 30 lakh 09.00

Inner Paper bags 30 lakh 05.40

Total   35  

Utilities Amount (Rs. lakh)

Particulars Amount (Rs. lakh)

Power 00.46

Water 00.04

Total 00.50

Other Contingent Expenses Amount (Rs. lakh)

Particulars Amount

Repairs and maintenance @10% 00.48

Consumables & spares, others 01.82

Transport & travel 00.30

Publicity, postage, telephone 00.70

Insurance @1% 00.13

Total 03.02

Total Recurring Expenditure Amount (Rs. lakh)

(9.2.1 + 9.2.2 + 9.2.3 + 9.2.4) /td> 104.00

Working Capital Amount (Rs. lakh)

Recurring expenses for 3 months 26.00

Total Capital Investment Amount (Rs. lakh)

Fixed capital (Refer 9.1.4) 15.00

Working capital (Refer 9.3) 26.00

Total 41.00

Financial Analysis

Cost of Production (per annum) Amount (Rs. lakh)

Recurring expenses (Refer 9.2.5) 104.00

Depreciation on building @ 5% 000.70

Depreciation on machinery @10% 000.07

Depreciation on furniture @ 20% 000.13

Interest on Capital Investment @ 12% 005.10

Total 110.00

Sale Proceeds (Turnover) per year Amount (Rs. lakh)

Item Qty Rate (Rs.) Amount

Agarbatti packets 27 lakh 5.00 135.00

Net Profit per year

    = Sales - Cost of production 

= 135–110 

= Rs. 25 lakh 

Net Profit Ratio

    Net profit X 100 

---------------------

Sales

25 X 100 

---------------

125

= 20 %

Rate of Return on Investment

    Net profit X 100 

------------------------

Capital Investment

25 X 100 

-------------

41

= 61 %

Annual Fixed Cost Amount (Rs. lakh)

All depreciations 00.90

Interest 05.10

40% of salary, wages, utility, contingency 07.16

Insurance 00.13

Total 13.29

Break even Point

    Annual Fixed Cost X 100 

---------------------------------

Annual Fixed Cost + Profit

13.29X 100

------------------

13.29+ 25

= 34.7 %

Addresses of Machinery and Equipment Suppliers M/s Ravi Flour Mills & Industries, 339 Bapujinagar, Mysore Road , Bangalore – 560026

M/s H.P. Nanjudiah Setty & Sons, 62, Gundopath Street , Bangalore – 560053

M/s Ramachandra Pulverisers & Industries, IV Main Road , New Tharagpupet, Bagalore-560002

M/s Mahalakshmi Flour Mills, T-64 Gundopanth St. , Bangalore – 560053

Shakti Flour Mills, Swantantra Building , R.K. Puram, Bangalore

Lakshmi Grinding Mills, Mysore Road , Bangalore – 560026

Mastan Khan & Sons, 14 Pension on Mohalla, I Cross Mysore Road , Bangalore – 560018

G. Anand Rama Setty & Sons, 242 Sulthanpet, Bangalore .

Perfumes Pushpa Perfumery Products, 138 Akkipet Main Road, Bangalore – 2

Lala Banarasi Dass, Khattri, Kannauj (UP)

Saibaba Sugandh Bhandar, 53, Sultapet, Bangalore – 53

Goodwill Agencies, Keshav Nivas, 24 I Main Road, P.B. No. 9715Gandhinagar, Bangalore – 560 009

Naresh Trading Co. , 36 K.V. Temple Street, Bangalore – 53

The Easter Essence Emporium, 204, Nagarthpet, Bangalore – 2

Aromatic Agencies, 36 K.V. Temple Street, Bangalore.

G.M. Ahuja & Co., 15-Old Kasai Road, Behind Raja Market, Bangalore – 560002

M/s Bharani Agencies, P.B. 9506, Gandh Nagar, Bangalore – 9

Mascheijer Aromatics ( India ) Pvt. Ltd., I Floor, Haji Market, OK Road, Bangalore – 560002

Aromatic (India) Pvt. Ltd., 38 Link road, Bangalore – 560003

Bamboo Sticks

R. Ramaiah Arumugamgalli Kalasipalayam, New Extn., Bangalore – 2 

Packing (Paper, Polythene Covers, Polythene Printing And Litho Printing)

M/s Lakshmi Paper Industries, 33-Town Rly.Station Road , Salem – 1, Tamilnadu.

The Paper Products Limited, 60 Chinthamani Street, Chennai-400001

R.K. Paper Industries, C-18 Ambattur Industrial Estate, Chennai-400058

The National Litho Press, P.B. No. 30 Railway Feeder Road, Sivakasi

The Orient Litho Press, P.B. No. 17 Shivakasi.

Contact for more informationInformation Manager

TIMEIS Project

E-mail: timeis@ficci.com