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HS CODE : 33074100
Group No-15
Case Study -16
Yusuf Shaikh 92 Avinash Patil 73 Shyam Yadar 110 Vijay Dhadwal-17 Akshay Polekar 79 Hitesh Patel - 72
Price Points
Others Rs. 2 6% 10%
East 17%
Rs. 5 18%
South 35%
North 18%
Rs. 10 45%
West 30%
Argentina & Brazil, also countries like Egypt, UAE, Nigeria & Srilanka Pie chart for Export more than 10 Cr INR ($ 1.66 Million)
USA U ARAB EMTS MALAYSIA EGYPT A RP NEPAL VENEZUELA AUSTRALIA PANAMA REPUBLIC NIGERIA SRI LANKA DSR UK CHILE BRAZIL SOUTH AFRICA ETHIOPIA MAURITIUS
SUDAN
SAUDI ARAB SPAIN
NETHERLAND
CHINA P RP
INR in Cr.
20102011 48.56 21.58 20.75 29.36 12.79 8.97 15.09 12.18 5.24 8.59 7.18 9.80 7.70 7.92 2.39 7.28 5.30 4.83 4.45 4.20 8.35 383.09 20112012 51.91 25.45 17.11 23.98 15.42 14.84 15.01 12.56 11.04 14.27 12.47 10.46 10.44 9.41 2.35 8.11 7.66 6.01 7.00 8.45 9.70 429.97 20122013 61.91 33.44 28.76 21.32 20.11 18.21 17.88 16.13 14.57 13.82 13.77 13.68 10.91 10.90 10.67 10.07 9.87 9.49 9.11 8.84 8.80 526.52 % Growth over last 7 Years 81.96 156.86 57.21 80.49 88.88 71.47 74.62 88.24 251.73 -5.69 123.08 78.63 57.63 86.21 954.41 89.98 190.49 76.25 60.12 1993.63 47.59 81.51
HS CODE : 33074100
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60.00
50.00
USA NIGERIA
40.00
INR (Cr.)
30.00
UK EGYPT A RP
BRAZIL
20.00 SOUTH AFRICA AUSTRALIA 10.00 PANAMA REPUBLIC
0.00
Year
HS CODE : 33074100
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600.00
500.00
400.00
INR (Cr.)
300.00
200.00
100.00
0.00
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013
Year
HS CODE : 33074100
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exports, most of them are in Karnataka Small units numbering 10,000 operates in different parts of country. Providing employment to over 12 Lakh people 60% are Unorganized Many agarbatti manufactures are local players with limited resources. They cannot counter big companies. Eg. MNC like ITC & Cycle
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ITC MANGALDEEP 8%
UNBRANDED 60%
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4 5
Ratnamala, Decent, Empress, Cherish , Super Sandal, Relax, Fascinating India, Surprise, Paramhans, Success, Amber Flora Abyssinia Impex Flora Herbal segment segmentEucalyptus, Balmmint, Patchouli,Lemongrass, Pine,Citronella, Juniper Mangaldeep , Spriha & many export brands Abyssinia Impex
6 7
100%
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Raw Batti predominantly imported from Vietnam. ITC is one of the first to begin indigenization by providing necessary tools and training. ITC has direct arrangements with International Fragrance houses for its perfume requirements
Packaging materials supplied by ITC and external sources
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Manufacturing Process
Basic raw material: Bamboo, wood charcoal, processed perfumes, Jiggat powder
Buy raw material Mix in proportion Roll & perfume
Dry
Packaging
Raw material Bamboo Wood charcoal Processed perfume Agarbatti requires Stick Adhesive paste known as Jiggat is made from powdered barks of Machilus macrantha (commonly know as Golum) Charcoal Powder Series of natural products in various combinations to provide fragrance Bamboo Sandal wood powder Perfumes Diluents like DEP
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Bamboo Scenario
A 40% increase in demand for Bamboo & 25% in charcoal is also
predicted. Supply issues with respect to these are also not addressed. Industry already source splints bamboo far away from north east India. The diversion of upland areas from bamboo to Tea plantation. The main reasons for conversion of bamboo areas into tea include:
1. Transportation of bamboo is difficult due to its length 2. Lack of awareness among the local people about the potentiality of bamboo and
they do not see any bright prospects in the future. 3. As the tea factories are coming up locally and ready infrastructure is available in the region, They feel that there is more security in taking up tea plantation. 4. No knowledge of government support available for bamboo plantation 5. Producers of bamboo do not know whom to sale their produce. 6. Backward and forward linkages are not clear to the people.
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Governments role:
Bamboo Development Agency (BDA) Mizoram
ROUND AGARBATTI STICK PRODUCTION UNITS: With the increasing demand for round agarbatti stick in the country, BDA has come up with the idea of setting up round agarbatti stick unit in the state for which Lunglei, Haulawng and Saiha was chosen and fund from BAFFACOS (Bamboo Flowering Famine and Combat Scheme) was utilized for the purpose. At present all the above units are doing fairly well and the finish product of Haulawng and Lunglei unit are being sold to ITC Chennai through CBTC. Tripura Bamboo Mission (TBM) The State Government has launched the Tripura Bamboo Mission (TBM) in the year 2007, under PPP framework, for integrated development of the Sector. The catalytic role played by TBM has resulted in the turnover of Bamboo Sector in the State increasing three-fold in 3 years. Value addition is taking place in Agarbatti sector, new handicraft products have been designed and launched, marketing of products has been organised. 60% of the requirement of the entire country for bamboo sticks for Agarbatti-making is met from the State. Incense sticks / Agarbattis - An Handicraft Industry Recognizing the unique nature of the units engaged in the manufacture of this product and acknowledging that incense sticks / agarbathis is a specialty product, the Ministry of Commerce, Government of India, accorded the status of "Handicraft Industry - Hand made typically Indian" to this industry in 1983.
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A 50% increase in the demand for Jiggat powder is expected. However, Jigat is obtained from the bark of a tree, Maclilus makaranthacommonly known as Chang peechala , Mandaiawaal, jeelseem and Basra bukhui. These trees are found in the North-eastern region. Absence of targeted programs to augment Maclilus makarantha has jeopardized future of this cottage industry. While some jigat is produced within India, a considerable amount were imported, mostly from South East Asia, predominantly from Indonesia and Thailand.
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Perfume Scenario
Perfumes cost involved 30%, as 66% it is imported. NR group which is well known with its brand Cycle agarbatti
is innovating for new fragrances along with foreign brands to fulfill requirement of Overseas customers. So that the margins can be extended. Also other exporting brands are innovating for a new fragrances like Ratnamala, Decent, Empress, Cherish , SuperSandal, Relax, Fascinating India, Surprise, Paramhans, Success, Amber Flora by Abyssinia Impex LTD.
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Conditions of workers:
Home base workers engaged in agarbatti making in Bangalore live and
work near factories. Agarbattis are rolled on the pavements and lanes around home in urban slums. The task is extremely arduous and repetitive. Karnataka is only state under purview of Factories Act and which consequently has to pay wages in line with minimum wages for home workers and has to provide factory based workers with social security.
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Sr. No. State 1 Karnatka 2 Gujarat Andhra 3 Pradesh 4 Bihar 5 Tamil Nadu
Wages with Wages for Family of productivity of avg. 2 Family Wages Per 4000 Sticks & 9-10 wages/person/month Members working 1000 Sticks hrs a day (28 working days) Fulltime 45 34 39 35 38 180 136 156 140 152 5040 3808 4368 3920 4256 10080 7616 8736 7840 8512
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Agarbathis Art of perfuming is well accustomed Large labour base, Has a huge potential to generate employment, specially women employment & hence will help for women empowerment through a women employmnet Reputed supporting institutions present. No electric power requirement
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Cont.
WEAKNESS
Less Promotion as compared to other Items Least automation ( Automation is in bamboo cutting only ) Finance is not liberal since industry involves large working capital. Sluggish progress in R&D No level playing among the states in respect of raw material supply, implementation of various laws, acts etc. Unethical practices prevailing which may hamper export market Child labour in the industry could impact on their health and educational status which may hamper export market Export procedures tedious. Other than 100% Export Oriented Units, Exports is loss-making activity. Addition of unskilled & untrained labour due to migration impacting quality of Hand roll agarbatties.
Cont.
OPPORTUNITIES
Large export market potential. Scope for innovations and R&D Domestic market expanding
Free trade regime can provide better raw materials for better price
THREATS
Global competition from China, Vietnam , Taiwan Unethical practices at local level. Forest based raw material supply becoming scarce Increase in unemployment. Mechanisation Import of Machinary from China
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P 4 Approach
P-1: People mean the rural community in an identified cluster. The
demand should come from the community themselves for setting up the agarbatti enterprises. Packages of capacity building plan will help to facilitate the community. program by providing logistic, financial and infrastructural aid to the entrepreneurs in order to maintain of rules and regulations in turn creating a stable environment. may also be partner in the sector. These agencies will facilitate marketing and capacity building. They can also provide services to the community enterprise of the sector. the partners finally end up in a common platform for the development of the agarbatti sector, each partners provide their support in their area of specialization.
P-2: Public, the government agency will play an active role in the
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P-4 Model
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References
Department Of Commerce ITC portal Wikipedia www.moneycontrol.com DGCI&S
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Questions
1) 2)
3) 4)
5)
How the investment in R&D by private players like ITC & NR group, will help to tackle unsustainable growth of the industry? Would industry be able to maintain balance between Automation & Cottage Industry ( Hand Made Product) to avoid unemployment in Industry? Would industry dynamics help in Empowering rural women employee with reasonable return for their work? How government will help to tackle, disparity in wages, which is resulting shifting of labour force? Would industry with recent automation & innovation in RM (specially in perfume & packaging) be able to earn reasonable FOREX for India?
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Questions by Yusuf
1) Why Agarbatti manufacturing should remain as
cottage industry?
2) How can this industry be use to empower
like unsustainable growth of the industry? 4) What measure can be taken by MNCs to develop new aromas.
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