Incense Sticks

Home Technology Project Profiles Agriculture & Food Processing Incense Sticks

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 5in-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 SSI provisional registration Sanction of financial supports etc Installation of machinery and power connection Trial run and production 01 month 1-2 months 2-5 months 6-8 months 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 Installed capacity Optimum capacity utilization Working days Manpower 27,00,000 packets 40,00,000 lakh packets 70% 300 35

Financial Aspects Fixed Capital Land & Building Amount (Rs. lakh)
Particulars
Land 300 m 2 Built up area 150 m 2 Total cost of land and building

Amount
01.20 12.00 13.20

Machinery and Equipment Amount (Rs. lakh)

Description
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 Erection & electrification of machinery @10% cost Office furniture & fixtures, computer Total 00.06 00.64 01.30

Amount
00.60

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
Factory Manager-cum-entrepreneur Sales Representative Office Assistant- cum- Storekeeper Delivery Van Boy Skilled workers Unskilled workers

No.
1 2 2 2 4 25

Salary Per month

8,000 5,000 4,500 4,000 3,500 2,800

Amount
00.96 00.60 01.08 00.96 00.84 08.40 12.84

Perquisites @15 % Total 35

01.54 14.38

Raw Material including packaging materials Amount (Rs. lakh)

Particulars
Charcoal Powder Gigatu White chips powder Sandalwood powder Bamboo sticks Kuppam dust Perfumes Diluents Paper cartons Wrapping paper

Qty (t)
16.00 13.00 01.80 03.00 15.00 05.40 04.20 13.00 30 lakh 30 lakh

Amount
01.26 02.30 00.50 01.50 03.30 03.10 30.00 11.00 30.00 09.00

Inner Paper bags Total

30 lakh 35

05.40

Utilities Amount (Rs. lakh)

Particulars
Power Water Total

Amount (Rs. lakh)

00.46 00.04 00.50

Other Contingent Expenses Amount (Rs. lakh)

Particulars
Repairs and maintenance @10% Consumables & spares, others Transport & travel Publicity, postage, telephone Insurance @1% Total

Amount
00.48 01.82 00.30 00.70 00.13 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) Working capital (Refer 9.3) Total 15.00 26.00 41.00

Financial Analysis

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

Recurring expenses (Refer 9.2.5) Depreciation on building @ 5% Depreciation on machinery @10% Depreciation on furniture @ 20% Interest on Capital Investment @ 12% Total 104.00 000.70 000.07 000.13 005.10 110.00

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

Item
Agarbatti packets

Qty
27 lakh

Rate (Rs.)
5.00

Amount
135.00

Net Profit per year

= Sales - Cost of production = 135110 = Rs. 25 lakh

Net Profit Ratio

Net profit --------------------Sales X 100

25 --------------125 = 20 %

100

Rate of Return on Investment

Net profit -----------------------Capital Investment X 100

25 -------------

100

41 = 61 %

Annual Fixed Cost Amount (Rs. lakh)

All depreciations Interest 40% of salary, wages, utility, contingency Insurance Total 00.90 05.10 07.16 00.13 13.29

Break even Point

Annual Fixed Cost --------------------------------Annual Fixed Cost + Profit X 100

13.29X -----------------13.29+ 25 = 34.7 %

100

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 information

Information TIMEIS E-mail: timeis@ficci.com Manager Project