raw agarbatti business module (incense industry)

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K h a r g h The Incense of India Raw Agarbatti Industry Business ModulePresentation By: Sanjay Kumbhar : Roll No 107 Athira Nair : Roll No 079 Joseph Phillip : Roll No 001 Rachita Patel : Roll No 067 Vinod Bopche : Roll No 109

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Raw Agarbatti Business Module (Incense Industry) , MSME project

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Page 1: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…

Presentation By:Sanjay Kumbhar : Roll No 107Athira Nair : Roll No 079Joseph Phillip : Roll No 001Rachita Patel : Roll No 067Vinod Bopche : Roll No 109

Page 2: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Flow of Presentation ***

Unique Business Proposition

Introduction, Executive Summary.

Perceived Advantage & Social Benefits

Production & Sales Strategy

Pricing Strategy.

Material Projections & Costing

Cost of P&M and Rent

SCOT Analysis

Mitigation Strategy for Challenges

Cash Flow

Financial Ratios

Conclusion

Page 3: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** UNIQUE BUSINESS PROPOSITION***

Creation of a mechanised facility for bulk manufacture

of Agarbatties or Sandal Sticks for supplying to

established market players.

Transformation from unorganized household industry to

Organized Micro Enterprise (with investment in

equipment does not exceed Rs. 10 lakhs2 and investment

in plant & machinery not exceeding Rs. 25 lakhs1)

Venture to be located in suburban area or Micro Small

& Medium (MSME) industrial estates in the outskirts of

Dombivli.

Supply of finished goods to major markets including

Gujarat and Karnataka in addition to Mumbai for retail

packaging & branding.Source: 1. MSMED Act 2006 (RBI website); 2. Ministry of Small Scale Industries notification No.S.O.1722(E) dated October 5, 2006

Page 4: Raw Agarbatti Business Module (Incense Industry)

AGARBATTI MAKING : MANUAL TO MECHANISED

Page 5: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Introduction ***

Page 6: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Introduction ***

Introduction:Incense Invention by Chinese monks around 200 CE. Earlier reference in Vedas- the Atharva-veda & Rigveda-Incense- burning was used both to create pleasing aromas & as medicinal tool. It is widely used by most religions, casts, across the universeVision: Create sustainable Micro Sector Enterprise in the niche market.

Mission: Uplift lifestyle of urban & rural residents and create employment with Women empowerment.

Page 7: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…Perceived Advantages / Social Benefits Low initial investment & start-up costs. Limited space requirements Assured demand for bulk supply of raw agarbatties Scope of MSME loan from MIDC, banks and District

Industries Promotion Council(DIPC) under priority sector.

Skill up-gradation & minimum level of training required. Lesser expenses on marketing and promotion

warranted. Generation of employment in USK & SSK sector

laborers. Gainful income generation opportunities for urban poor. Non-polluting and environment friendly production. Uplift of Rural & Urban living & women empowerment.

Page 8: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** SCOT Analysis ***

Strength• Strategically located• Ease availability of Manpower• Eco-friendly Product• Lean cost base• Less Skill Manpower• Minimum Initial Investment

Challenges• Enhance people’s efficiency with training

• Scarcity of resources while seasonal employment.

• Disorganized • Unstructured workforce –attrition• Highly labour oriented• Brand Creation

Opportunities• High Potential/Demand• Demography of urban & Rural• High social exposure for urban & Rural

Threats• Imports by Multinational Players• Dependency on supply of Bamboo• Competition can mushroom very fast

Page 9: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Production Strategy ***

Initial business module- for 10 No. of semi-automatic

machines

The machine capacity- 10Kg/Hour, depends on skillset of

manpower

The production efficiency depends on skill of manpower &

enhance with experience, hence assumed 5% incremental

every year.

The wastage on finished goods- 1% & raw materials- 3%

Quantity in

Kg/Day

Quantity in

Kg/Annum

Quantity in

Kg/Day

Quantity in

Kg/Annum

Quantity in

Kg/Day

Quantity in

Kg/Annum

Quantity in

Kg/Day

Quantity in

Kg/Annum

Quantity in

Kg/Day

Quantity in

Kg/Annum

Avg. 468 121680 491 127764 516 134152 542 140860 569 147903

Year 2 Year 3 Year 4 Year 5Year 1M/C

No

Page 10: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Sales Strategy ***

Huge Potential- INR 5475Cr Turnover Industry (125e7/1000*365*600/1e7/5)

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

1.00% 95 1.00% 106.21 1.00% 122.1415 1.00% 140.46273 1.00% 154.51

120463 114.44 126486 134.34 132811 162.22 139451 195.88 146424 226.24

M/C

No

Year 1 Year 2 Year 3 Year 4 Year 5

Page 11: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Raw Material Pricing ***

India- Price Sensitive Country

Item consumption

rate amount

Bamboo sticks

0.309 Rs 65/kg 20.09

jiggat 0.252 Rs 30/kg 7.56

charcoal 0.324 Rs 4.0/kg 1.30

Saw dust 0.144 Rs 4.0/kg 0.58

TOTAL 37.25

Page 12: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Raw Materials- Bamboo Sticks ***

M/C No

Year 1 Year 2 Year 3 Year 4 Year 5

Quantity in Kg/Annum

Amount in Lac/Annum

Quantity in Kg/Annum

Amount in Lac/Annum

Quantity in Kg/Annum

Amount in Lac/Annum

Quantity in Kg/Annum

Amount in Lac/Annum

Quantity in Kg/Annum

Amount in Lac/Annum

0.309 65 0.309 71.5 0.309 78.65 0.309 86.515 0.309 95.1665

  

  

  

  

  

 

  37599 24.44 39479 28.23 41453 32.60 43526 37.66 45702 43.49

Page 13: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Raw Materials- Jiggat ***

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

0.252 38 0.252 41.8 0.252 45.98 0.252 50.578 0.252 55.6358

30706 11.67 32241 13.48 33853 15.57 35546 17.98 37323 20.77

M/C

No

Year 1 Year 2 Year 3 Year 4 Year 5

Page 14: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Raw Materials- Charcoal ***

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

0.324 4.0 0.324 4.4 0.324 4.84 0.324 5.324 0.324 5.8564

39479 1.58 41453 1.82 43526 2.11 45702 2.43 47987 2.81

M/C

No

Year 1 Year 2 Year 3 Year 4 Year 5

Page 15: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Raw Materials- Saw Dust ***

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

Quantity in

Kg/Annum

Amount in

Lac/Annum

0.144 4.0 0.144 4.4 0.144 4.84 0.144 5.324 0.144 5.8564

17546 0.70 18424 0.81 19345 0.94 20312 1.08 21328 1.25

M/C

No

Year 1 Year 2 Year 3 Year 4 Year 5

Page 16: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Cost of Plant & Machineries ***

Quantity Rate in INR Amount Life Span Method Year 1 Year 4 Remarks

1 Manufacturing Machine 10 89250 892500 7 WDM 8.93

2 Vertical Racks for drying 150 270 40500 7 WDM 0.41

3 Quality Appliances 1 13599 13599 7 WDM 0.14 9.47

4 Safety Appliances 1 9000 9000 5 WDM 0.09

5 Blending Machine 1 41790 41790 5 WDM 0.42

6 Sieving Machine 1 41790 41790 5 SLM 0.42 0.93

7 Weighing Scale -200Kg 1 9450 9450 3 SLM 0.09 0.11

8 Weighing Scale -15Kg 1 4725 4725 3 SLM 0.05 0.06

9 Desktop 1 36000 36000 3 SLM 0.36 0.43

10 Laptop 1 27000 27000 3 SLM 0.27 0.32

11 Printer 1 9000 9000 3 SLM 0.09 0.11

12 Music System 1 12000 12000 3 SLM 0.12 0.14

13 Table 1 4500 4500 3 SLM 0.05 0.05

14 Chairs 1 900 900 3 SLM 0.01 0.01 1.04

11.43 1.24 12.67

Sl.

No.Item Descreption

Page 17: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** P&M Depreciation & Rental Property Cost ***

Item Descreption Area SqFt Rate PSF Rent PM Year 1 Year 2 Year 3 Year 4 Year 5

1 Main Factory Unit 250 20.000 5000 60000 66000 72600 79860 87846

2 Agarbatti Drying Space 500 5.000 2500 30000 33000 36300 39930 43923

3 Packaging & Stacking 312.5 20.000 6250 75000 82500 90750 99825 109808

4 Office Space 120 20.000 2400 28800 31680 34848 38333 42166

5 Oparations 150 20.000 3000 36000 39600 43560 47916 52708

19150 2.30 2.53 2.78 3.06 3.36Rent Deposit 2.5 Lakhs

Total Amount in Lakhs

Sl.

No.

Life Span Amount Rate Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

1 7 Years 9.47 18.00% 1.704 1.397 1.146 0.939 0.770 0.632 0.518

2 5 Years 0.93 20.00% 0.185 0.148 0.119 0.095 0.076

3 3 Years 1.04 33.33% 0.345 0.345 0.345

4 3 Years 1.24 33.33% 0.414 0.414 0.414

in Lakhs 12.67 2.23 1.89 1.61 1.45 1.26 1.05 0.52

Sl.

No.

Page 18: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Cost of Manpower ***

Nos Monthly Pay Year 1 Year 2 Year 3 Year 4 Year 5 Remarks

1 Operation Manager 1 10500 126000 138600 152460 167706 184477

2 Main Mfg M/c 10 6023 722779.2 795057 874563 962019 1058221

3 Blending Machine4 Sieving Machine5 Weighing Scale6 Weighing Scale7 Desktop8 Laptop9 Printer

10 Music System11 Packing & Stacking 2 6500 156000 171600 188760 207636 228400

12 Loading & Unloading 1 6000 72000 79200 87120 95832 105415

13 Office Boy 1 5500 66000 72600 79860 87846 96631

15 Misc labour 10 500 60000 66000 72600 79860 87846

27 1.16 13.90 15.29 16.82 18.50 20.35

129373.2 142310.521 8100 97200 106920 117612

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No.Item Descreption

Operator 1 7500 90000 99000 108900 119790 131769

Page 19: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Cost of Power, Water, Telephone ***

Hrs/Day Power Units Year 1 Year 2 Year 3 Year 4 Year 5 Remarks

1 Main Mfg M/c 6 390 35100 36855 38698 40633 42664

2 Blending Machine 2 5.2 468 491 516 542 569

3 Sieving Machine 2 5.2 468 491 516 542 569

4 Weighing Scale 6 3.12 280.8 295 310 325 341

5 Weighing Scale 6 6.24 561.6 590 619 650 683

6 Desktop 12 6.24 561.6 590 619 650 683

7 Laptop 8 2.08 187.2 197 206 217 228

8 Printer 1 1.3 117 123 129 135 142

9 Music System 12 3.12 280.8 295 310 325 341

10 60 Wat CFL 10 15.6 1404 1474 1548 1625 1707

11 Ceiling Fans 12 31.2 2808 2948 3096 3251 3413

12 AC 12 78 7020 7371 7740 8127 8533

0.49 0.52 0.54 0.57 0.60

13 Water - Drinking in Liters 67.5 1755 5265 5528 5805 6095 6400

15 Water - Production - Ltr 936 24336 6084 6388 6708 7043 7395

0.11 0.12 0.13 0.13 0.14

16 telephone, Internet 1000 12000 12600 13230 13892 14586

15 Printing Stationary, Courier 2700 2835 2977 3126 3282

0.15 0.15 0.16 0.17 0.18

17 Transportation Weightage Rate/Kg

Ahmedabad(Guja ra t) 70% 3.00 255528 268304 281720 295806 310596

Mumbai (Maharashtra ) 10% 1.50 18252 19165 20123 21129 22185

Banga lore(Karnataka ) 20% 4.00 97344 102211 107322 112688 118322

3.71 3.90 4.09 4.30 4.51

Total for Power

Total for Water

Total for Telephone & Printing

Total for Transport

Sl.

No.Item Descreption

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Mitigation Stategy for Challenges***

Challenges Description Mitigation

Overproduction Manual production in unorganised sector & household industries

Assurance of uniform quality in mechanised production

Dumping Large-scale cheaper imports from China

Diversify into new fragrances and cheaper production

Competition Organised sector players such as ITC, Mysore Agarbatties, Gujarat factories etc.

Bulk supply of sandal sticks to organised players

Technologic Obsolescence

New electronic dispensers & chemical fragrance generators may capture the market

Traditional values associated with devotional products

Fire Hazard Chances of fire during production & operation

Fire protection measures / insurance to be provided

Page 21: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Cashflow Statement ***

Page 22: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Cost of Capital ***

Page 23: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…*** Ratios ***

Page 25: Raw Agarbatti Business Module (Incense Industry)

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… The Incense of India Raw Agarbatti Industry –Business

Module…