75 % - cheap quality Religious and social functions
Significant foreign exchange earner Unskilled women and children AGARBATTI AS A PRODUCT 1994 800 crore Export 200 crore Domestic 1000 crore 1800 crore 2009 Unorganised sector and highly fragmented Manufacturing Units 800 Registered 3000 Unregistered 400 Exporters THE MARKET 0 5 10 15 20 25 Rs. In billions Export Values 2005- 06 2006- 07 2007- 08 2056 2924 3509 Export in million tons Rs 7.1 billion 18 % 35% 17% 30%
25% to 80% raw material and 8 to 10% finished goods
Tax at different level for different states
De licensing SMEs
Agarbatti being declared as a Handicraft product which provides incentive as per the duty draw back rates 90% of workforce - women 20 % - organized sector (factory based )
80 % - unorganized ( home based ) Child labour 2% Raw Bamboo 8% Masala /Non-Scented Agarbatti 30% Perfumes 30% Packaging Material 20% Marketing 10% Miscellaneous 10% 60% 30% % of total cost Masala Non-masala Packaging & Marketing COST STRUCTURE Low involvement product
No brand loyalty
Purchases based on packaging and fragrance Low involvement product No brand loyalty Purchases based on packaging and fragrance Lower income group (< USD 700) 67% Rural 61% Urban 39% Highest income group (>USD 1570) 3% Import duty taxes on raw materials (25% to 90%) Raw material supply issues Lack of R&D support State-wise wages and labor laws Lack of Mktg & Advtg Distributor Mark up of 50-60% Entry of MNCs Bank loans not readily available for small scale industry Highly fragmented sector with 450 players
NR Groups CYCLE Brand Launched in 1948 Market leader in India with Current market share 8% Exports to 40 countries
First to offer 3-1 aggarbatti / premium aggarbatti Exclusive showroom in Mumbai Fragrance world Aggressive marketing campaign New brand LIA
ITC the second largest player
ITC signed a MoU with Orissa and Tripura govt. for sourcing raw materials
Establishing Perfume and Packaging centre for Mangaldeep brand
This tie up would provide employment for 10000 women
Market Share of almost 5%
CURRENT MARKET STRATEGY
Product segments
Favorable natural incense market Recent tie ups with Sify Events sponsorship in Andhra Spriha (Rs.20-25) Nivedan (Rs.10-20) Ashageet (Rs. 7.5/20 sticks COMMUNITY PARTICIPATION PROGRAM Started in 2004100% growth; annual turnover 300mn Tie up s with NGO Quality checks and improvement Leverages it core strengths EXPORT STRATEGIES
Tie up with Exim Bank for overseas promotions Position as lifestyle product in West Supply high quality to mega retailers LOC ties with Mega Singapore outlet
4% 7% 4% 15% 3.5% Andhra Pradesh Community Forest Management Rejuvenation of bamboo forests- 27,837 ha ( 110% of projected target) Bamboo Resource Management CFC have tie-ups with ITC (Chennai) Sankranthi, Ambika, Mustan and Jaya agarbatti industries. The transportation costs are borne by the company. Market Linkages Recyclable raw material Revenue generation by selling to paper mills Waste Management Effective Quality check Accurate payment according to bundle weight Supply Chain Management