Raw Agarbatti Business Module (Incense Industry) , MSME project

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… The Incense of India Raw Agarbatti Industry –Business Module…
Presentation 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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… 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

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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

4. AGARBATTI MAKING : MANUAL TO MECHANISED

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… The Incense of India Raw Agarbatti Industry –Business Module…
*** Introduction ***

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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 universe
Vision:
Create sustainable Micro Sector Enterprise
in the niche market.
Mission:
Uplift lifestyle of urban & rural residents and create employment with
Women empowerment.

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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.

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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

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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%
Quantityin
Kg/Day
Quantityin
Kg/Annum
Quantityin
Kg/Day
Quantityin
Kg/Annum
Quantityin
Kg/Day
Quantityin
Kg/Annum
Quantityin
Kg/Day
Quantityin
Kg/Annum
Quantityin
Kg/Day
Quantityin
Kg/Annum
Avg. 468 121680 491 127764 516 134152 542 140860 569 147903
Year2 Year3 Year4 Year5Year1M/C
No

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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)
Quantityin
Kg/Annum
Amountin
Lac/Annum
Quantityin
Kg/Annum
Amountin
Lac/Annum
Quantityin
Kg/Annum
Amountin
Lac/Annum
Quantityin
Kg/Annum
Amountin
Lac/Annum
Quantityin
Kg/Annum
Amountin
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

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… The Incense of India Raw Agarbatti Industry –Business Module…
*** Raw Material Pricing ***
 India- Price Sensitive Country
Item consumpti
on
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

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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

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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

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… The Incense of India Raw Agarbatti Industry –Business Module…
*** Raw Materials- Charcoal ***
Quantity in
Kg/Annum
Amountin
Lac/Annum
Quantity in
Kg/Annum
Amountin
Lac/Annum
Quantity in
Kg/Annum
Amountin
Lac/Annum
Quantity in
Kg/Annum
Amountin
Lac/Annum
Quantity in
Kg/Annum
Amountin
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

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… The Incense of India Raw Agarbatti Industry –Business Module…
*** Raw Materials- Saw Dust ***
Quantity in
Kg/Annum
Amountin
Lac/Annum
Quantity in
Kg/Annum
Amountin
Lac/Annum
Quantity in
Kg/Annum
Amountin
Lac/Annum
Quantity in
Kg/Annum
Amountin
Lac/Annum
Quantity in
Kg/Annum
Amountin
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

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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

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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 3.36
Rent 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.

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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 Machine
4 Sieving Machine
5 Weighing Scale
6 Weighing Scale
7 Desktop
8 Laptop
9 Printer
10 Music System
11 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
Sl.
No.
Item Descreption
Operator 1 7500 90000 99000 108900 119790 131769

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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(Gujarat) 70% 3.00 255528 268304 281720 295806 310596
Mumbai(Maharashtra) 10% 1.50 18252 19165 20123 21129 22185
Bangalore(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

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… The Incense of India Raw Agarbatti Industry –Business Module…
*** Cashflow Statement ***

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… The Incense of India Raw Agarbatti Industry –Business Module…
*** Cost of Capital ***

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… The Incense of India Raw Agarbatti Industry –Business Module…
*** Ratios ***

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… The Incense of India Raw Agarbatti Industry –Business Module…
*** References ***
http://en.wikipedia.org/wiki/Incense_of_India
http://iii.gov.in/images/stories/RTP2012/4_Industry_Innovation_Cluster.p
df
http://articles.economictimes.indiatimes.com/2013-08-
17/news/41420898_1_bamboo-labour-shortage-raw-material
http://www.tribac.in/images/Publication/Agarbatti%20Jenner%20selim
%20Article.pdf

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… The Incense of India Raw Agarbatti Industry –Business Module…