Feasibility Study for CBTC

Prepared By: Bedanga Bordoloi & Etali Sarmah

CBTC-BASIX

FEASIBILITY STUDY FOR ESTABLISHING

AGARBATTI MANUFACTURING UNITS IN

NORTH-EAST INDIA AND

DEVELOPING A COMPREHENSIVE

MARKETING STRATEGY FOR CBTC-

BASIX BRAND OF AGARBATTI

2  

Project Report

ON

FEASIBILITY STUDY FOR ESTABLISHING AGARBATTI MANUFACTURING UNITS IN

NORTH-EAST INDIA

AND

DEVELOPING A COMPREHENSIVE MARKETING STRATEGY FOR CBTC- BASIX

BRAND OF AGARBATTI

FOR

Cane and Bamboo Technology Centre (CBTC), Guwahati &

BASIX, Hyderabad

By

Mr. Bedanga Bordoloi & Ms Etali Sarmah

Post Graduate Programme in Agri-Business Management

National Institute of Agricultural Extension Management, Hyderabad

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CERTIFICATE

This is to certify that Mr Bedanga Bordoloi and Ms Etali Sarmah, bonafide students of Post

Graduate Programme in Agri-Business Management (2007-2009 batch), MANAGE,

Hyderabad worked as summer trainees in our organization from the period (May 30-June 30,

2008). They have successfully completed their project titled “Feasibility Study for

establishing Agarbatti manufacturing units in North-east India and developing a

comprehensive marketing strategy for CBTC- Basix brand of Agarbatti” under the guidance

of the authorities of our organization.

We wish them all success in future.

(Kamesh Salam)

Director

CBTC, Guwahati

(Vijay Mahajan)

Managing Director

BASIX, Hyderabad

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DECLARATION

This is to declare that, we, the student of Post Graduate Programme in Agri- Business

Management (2007-2009 batch), MANAGE, Hyderabad, have given original and authentic

data, information and maintained full confidentiality to the best of our knowledge in the

project report titled “Feasibility Study for establishing Agarbatti manufacturing units in

North-east India and developing a comprehensive marketing strategy for CBTC- Basix brand

of Agarbatti” and that, no part of this information has been used for any other assignment but

for the fulfillment of the requirements towards the completion of the said project.

Mr. Bedanga Bordoloi & Ms Etali Sarmah

PGPABM 2007-09

MANAGE, Hyderabad.

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Acknowledgement

We owe a great deal to MANAGE for laying the foundation for our study in the field of

Agri-business management. We would also like to express our earnest gratitude and thanks to

Mr Kamesh Salam, Director, CBTC, Guwahati for his encouragement and support. We are

thankful to Mr Vijay Mahajan, MD, BASIX, and Hyderabad for giving us the opportunity to

work with BASIX. We are also thankful to Mr Nipan Deka, General Manager, CBTC,

Guwahati for his support and kind blessings.

Our experience from this project has certainly broadened our knowledge arena by

introducing us to the practical problems that one faces in the field as the primary link

between an organization and its clients. It has also helped us to learn how to tackle problems

and also how to deal with different people, from different walks of life.

We earnestly thank M.D Salem Reza for his support, guidance and suggestions made at

different stages of the project which have helped us in successfully completing this project.

We are also thankful to Mr. P.D Rai and Mr. Pankaj Borah for their guidelines and

suggestions for developing a framework for this project.

We would also like to thank all the respondents, for the help they provided us.

Regards,

Mr. Bedanga Bordoloi & Ms.Etali Sarmah

PGPABM

National Institute of Agricultural Extension Management, Hyderabad

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Table of Contents

Sl. No Particulars Page

1 Executive Summary 9-12

2 Research Design and methodology 13-18

3 Introduction 19-29

7 Value chain of agarbatti industry in North India 30-39

8 Agarbatti Stick making business in Assam & Tripura 40-45

9 Problems faced by the Agarbatti Industry 46-51

10 Potential of Agarbatti industry in North East India 52-58

11 Tools and machines used in agarbatti stick making 59-61

12 Analysis of the labour cost in agarbatti making units 62-65

13 Competitor analysis 66-76

14 Consumer Research 77-83

15 CBTC-BASIX livelihood enhancement model 84-89

16 Business Strategies for CBTC-BASIX 90-105

17 Annexure I 106-107

18 Annexure II 108-109

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List of Tables

Table No.  Topic   Page No. 

1 Activity wise area covered for survey 16

2 Grades of Agarbatti sticks 26

3 Perfuming activity in Agarbatti making 28

4 Table: Percentage of total cost of production 32

5 Primary value chain activities 33

6 Support activities 34

7 Value of 1 truck Load of Bamboo at Agartala, Tripura (from Chakmaghat)

37

8 Transportation charges 38

9 Value of a pkt of Agarbatti at different levels of the value chain 39

10 Cost of machine used for Agarbatti (round type) stick making and their efficiencies:

59

11 Major Agarbatti manufacturing companies in India 73

12 Consumers preferences 80

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List of Figures

Figure No.  Title  Page No. 

1 Area Covered in Assam 17

2 Area covered in Tripura 17

3 Domestic sales of Agarbatti in different regions 22

4 P 4 model 29

5 Value chain of Agarbatti stick 32

6 Value chain of bamboo pole for stick making unit in Tinsukia 35

7 Value chain of Agarbatti sticks made in Tuidu, SW Tripura 36

8 Value chain of TRIBAC, Tripura 36

9 Mark-ups along the Value Chain of Agarbatti 39

10 Area under Bamboo (in ha) in North Eastern States 53

11 Bamboo stocks (in million tonnes) in North Eastern States 54

12 Mellocana Baccifera stock in North Eastern states 54

13 Relative income per month 64

14 Different purchase points for Agarbatti 78

15 Factors influencing purchase decision 79

16 Factors of dislike for a Agarbatti brand 81

17 Price satisfaction 82

18 Demand trend for Agarbatti 83

19 CBTC-BASIX Livelihood enhancement model 88

20 CBTC-BASIX Agarbatti Cooperative Model 89

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EXECUTIVE SUMMARY

"Small Opportunities are Often the Beginning of Great Enterprises."

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The current value of agarbatti industry is placed at Rs 1800 crores and the rate of growth is

20% on a year on year basis. North Eastern Region produces 1 million tonnes of agarbatti

sticks annually. There is potential for the market to increase by another 30 crores by

mechanization of the splint making process and increasing the production.Women producers

in these regions have been restricted to primary processing of bamboo culms, i.e. producing

slivers (incense stick core), which is a very low value activity (about 2% of the final value).

Intervention of CBTC-BASIX will help to encourage women entrepreneurs for taking up

rolling of the sticks with masala along with charcoal production. This can give significantly

higher returns to the family engaged in these businesses and possibility of other business

opens up with the increase in per capita income. Credit by BASIX should be facilitated for

investing in various tools and machineries that would improve product quality and quantity

(bamboo cutters, powder pulverisers, etc). Along with this credit linked insurance policy has

scope for introduction among these families.At present, unscented rolled sticks are transported

to the South of India, incurring high transportation costs and taxes and therefore establishing a

agarbatti stick making unit along perfuming /packaging unit and marketing it initially at the

local market before going for the national roll out will certainly prove to be successful.

The visit to the round type agarbatti stick making unit in Tinsukia revealed that these units

were facing serious competition from neighbouring countries .The owners of these units

have an apprehension about future supply of bamboo .There is no financial support for

bamboo plantation in the region and people are unaware of the prospects of bamboo in the

future.

As production is often home-based, individual women are often unable to attract traders.

Women that do sell to traders are unable to command high prices due to low volume and also

low quality. Improving volumes requires credit, which is currently not available to the women

participating in the business or to NGOs that sources and provides inputs. Currently, the

limited credit does not allow for purchase of larger volumes of inputs at lower prices in bulk.

Art of the available credit also gets locked up into sales credit to retailers and is not available

for enhancing production. Intervention of BASIX with its financial products will prove very

successful in this model. The CBTC-BASIX should establish collaborations with DFOs and

selected JFMCs in relevant forest divisions to test the development of a more formalized

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relationship between JFMCs and specific SHGs which provide the latter with guaranteed jigat

inputs. Focus on multiplying the M. macrantha tree and establishment of private planting of

the Jigat tree also needs to be taken up.

During the survey it was found that that charcoal is gathered from home kitchens where

firewood is used. This can be organized better. Charcoal needs of the sector can also be met

by bamboo partially or wholly. Small drum kilns that can be run by households using bamboo

culm parts (such as the nodes and extremes) that are not used in bamboo stick production and

which could help ensure adequate charcoal supply. If such charcoal production is inadequate,

then it should be sourced from the JFMCs too.Non-adherence to standards like separation and

breakage of masala from the core stick reduces access to higher-end markets and lowers the

confidence of major brand buyers. CBTC-BASIX should bring about coordination among

Production Clusters and access to processing machinery, i.e. bamboo cutting machines,

pulverisers and driers.

At present, the production of bamboo sticks has the lowest value added in the chain and lacks

quality control. This is largely due to current techniques employed such as, using a saw or a

dao (curved knife) for cutting the bamboo into cylinders. As a result, cylinders do not comply

with any standards. Thus, slivering bamboo into sticks from the cylinders results in

inconsistent length, which hinders the final product’s overall quality. The CBTC-BASIX

should set up a facility to produce standardized cylinders using a cross cutting machine. In

addition, women producers should be trained on how to polish bamboo sticks to add

value.Facilities for testing to ensure quality need to be put in place. Assessment methods

backed by independent laboratories that certify compliance to national standards should be

established by CBTC. Different jigat sources have various adhesive strength, which affects

the masala paste. This needs to be standardized and tested.Green bamboo is used to produce

the core sticks. Adequate drying of sticks and rolled batti is an issue that needs attention.

North East India has a long rainy season during which sticks and rolled batti need additional

drying. Households presently dry sticks using cooking stoves.

The recent gregarious flowering of Melocanna baccifera, the main bamboo used for stick

production, and the inadequate attention being paid to natural regeneration, should show up in

future scarcity of the resource closer to the villages. Villagers are taking the opportunity of the

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death of the growing bamboo to clear the land and convert it into agriculture. While in Tripura

bamboo is getting replaced by rubber, in Tinsukia it is being replaced by tea. Sensitization is

obviously the key so that they are able to comprehend how their present actions can

jeopardize their future. Nurseries for diverse species that have certain similar culm

characteristics – such as wall thickness, inter nodal length, etc. should be established – so that

one could substitute the other in case of acute need. Introduction of managed bamboo

plantations would follow as the next logical step in ensuring Bamboo resource security.

The Tripura government informally allows collection of jigat from the forest if it is used

locally for making masala and rolling batti as long as the masala is not sold outside Tripura.

However, there is the danger that the restrictions might be enforced, in which case this could

seriously affect local production as the women producers would then incur much higher costs.

From the consumer research that was done in the present study it revealed that users were

disappointed with agarbatti sticks which burnt out easily (24%), where the compound fell of

the sticks (9%), with their size, which was not uniform (32%) and fragrance, which was not

what the pack promised(35%). Production of premium agarbatti brands with an herbal touch

for international markets can be made as the export market for agarbatti is very appealing.

Production of Agarbatti for high, middle and low end segments of the local market is also

equally important. Producing mosquito repellent agarbatti and looking out for possible sale to

the government health department for schemes like the National Health Mission for malaria

control is a possible area for targeting.

13  

RESEARCH DESIGN AND METHODOLOGY

14  

Purpose of the study

1. To study the Agarbatti Industry in India and develop a cluster based approach for

Agarbatti stick production and its marketing.

2. To map the potential procurement points of Bamboo for establishing a viable Agarbatti

stick making industry in an appropriate part of North -east India.

3. Value Chain analysis of the Agarbatti Supply Chain.

4. Competitor Analysis of Agarbatti players in India.

5. Formulate a comprehensive pan India marketing strategy for BASIX-CBTC brand of in

the context it’s backward and forward linkage.

In order to fulfil the above objectives the following auxiliary studies were done:

• Assessment of the machines used in agarbatti industries as a part of the technical

assessment of tools and machines used in the production of bamboo sticks for use in

agarbatti (incense stick or joss stick) in North eastern states.

• Study the possibility of establishment of linkages with local and distant markets for

regular supply of agarbatti sticks and also thus its contribution to the overall poverty

reduction strategies for the rural poor in the target area

• Map the credit facilities available for the bamboo growers.

• Study the labor cost

• Study the role of middle man in Agarbatti Value chain.

• Identify the Transportation used for Agarbatti.

• Identify the Bamboo species commonly used for Agarbatti sticks.

• Track the bottleneck in imparting technology to bamboo growers.

• Study the herbal and non herbal based agarbatti business and find out ways to integrate

the herbal resources along with bamboo resources seeing the huge scope for herbal based

agarbatti manufacturing

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Methodology

Interview schedule was adopted for raw batti makers, scented Agarbatti makers, wholesalers,

companies, bamboo growers, farmers, and Exporters. The sample was selected in such a way

that all the Agarbatti trade channel members are covered comprehensively. The data and

information required for the study was collected from primary and secondary sources.

Primary data

Primary data was collected by conducting survey in the areas selected for study. The survey

was conducted with the help of four structured questionnaires. Different questionnaires were

formulated for the different components of the value chain, i.e. for bamboo growers, the raw

batti manufacturers, rolled Agarbatti manufacturers, traders, and the consumers.

The areas covered were Tinsukia and Guwahati Metropolitan District in Assam and

Kumarghat (North Tripura), Tuidu (South Tripura), Nalchar and Agartala (West Tripura) in

the state of Tripura. These areas were selected on the basis that they are the main centers of

Bamboo trading, Raw Agarbatti manufacturing and perfumed Agarbatti manufacturing.

Secondary data collection

Cane and Bamboo Technology Centre, Guwahati

Tripura Cane and Bamboo Development Centre, Agartala

INBAR, Beijing

CIBART, New Delhi

Forest Department, Tripura

Sampling frame: The sampling frame was selected on the basis that these are the people who

play main roles in marketing Agarbatti which included:

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The Agarbatti manufacturers and local packers

Traders

Agarbatti stick making unit (round)

Agarbatti stick making unit (square)

Consumers

Middleman/contractors

Perfuming Unit

Transporters

Sample size:

The sample size was 30 artisans rolling agarbatti, 30 agarbatti stick making artisans (square),

6 agarbatti stick making unit (round), 16 traders, 3 perfuming units, 10 packaging units, 5

brokers and 30 consumers in the state of Assam and Tripura.

Activity wise area covered:

Table 1: Activity wise area covered for survey

Area Activity covered

Tinsukia Raw Agarbatti (Round Type) making

unit, consumers

Guwahati Consumers

North Tripura Traders

West Tripura Artisans (Raw Stick makers),rolling

units

South Tripura Artisans (Raw Stick makers)

Areea of surve

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117 

18  

Sampling method:

1. Selection of area

The area is selected on the basis of the main handmade and machine made Agarbatti making

areas of North Eastern India. Tripura and Assam were selected because of their location and

easy availabity of bamboo, which makes them a very strategic point for the bamboo based

industry.

2. Selection of respondents

Both the large and the small players of the market were interviewed in the course of the

survey. The middleman/traders were also interviewed to get a proper idea of the size of the

market and the agarbatti value chain. Most of the respondents were in the agarbatti business

since 10 years, except for few.

Limitations

• Time period for each district to be covered was limited.

• Many traders did not reveal their exact transactions. Questions were framed indirectly to

get the data.

Statistical analysis

The data was analyzed by using MS-Excel software. The data is presented in terms of tables,

percentages and graphs.

Important personnel consulted

1. TRIBAC, Agartala

2. Jayanti Domestic Products, Agartala

3. Supplier of Agarbatti machines, Tinsukia

4. Owners of Stick making units

5. Department of Forests, Agartala

19  

INTRODUCTION

20  

This feasibility study is the first phase of a multi-phase venture to facilitate the pro-poor

development of Agarbatti Industry. This phase aims at accessing the potential social and

economic impact of the industry and identifies the immediate priorities for the development of

subsequent phases for establishing agarbatti manufacturing units in North East India.

Agarbatti (Incense sticks or scented batti) is commonly known as “Dhoopbatti”. Agarbatti

have been used long since in religious prayers and at the household level, as a room freshener.

The journey of agarbatti manufacture which began from Thanjavur region of Tamil Nadu in

South India has gradually spreads to other parts of the neighbouring states. This sector has

tremendous potential and is capable of creating livelihood opportunities in the rural pockets,

especially for the women. It is a cottage industry, as a result of which large-scale rural

employment can be created to generate self employment and increase standard of living

among the rural communities .Agarbatti is a booming market in India and is estimated at

Rs.2000 cores in India(on the basis of conservative estimate of 20% year on year basis growth

of the industry). It has been observed that due to increase in the numbers of nuclear family

system in India its demand is coming up. In addition to this since agarbatti is a consumable

good, and with the increase in population its demand will always move northwards.

As per the market survey conducted by the National Council of Applied Economic Research

(1990), the total quantity of agarbatti produced in the country in 1990 was, 147 billion, valued

at around Rs.7 billion. The production and market size of the sector is increasing

tremendously in India and abroad. The consumers are highly concentrated among the rural

pockets (61%) in India (INBAR-1992).

In modern days, perfumed sticks are also used in houses and in other public places as air-

fresheners and/or mosquito repellents. The demand for agarbatti is increasing both in the

domestic and export markets because of the improvement in quality and increase in the types

of products. India is the largest producer of Agarbatti in the world. Dhup an aromatic powder

or paste is burnt in Indian homes as a fragrant fumigant and is reputed to possess insecticidal

and antiseptic properties. Agarbatti also known, as Udubattis similar to joss sticks are a

development of Dhup .Agarbattis are obtainable in different colours and with different

perfumes. The burning time; of an agarbatti varies from 15 minutes to 3 hours according to

21  

quality and size. Agarbatti is also obtainable in other forms such as dashang (sickly paste or

powder) deep cones and Dhup, tablets etc.).

About 75% of the Agarbatti manufactured are of cheap quality containing only charcoal

powder or low quality sandal wood powder with a mixture of 50% of “wood gun” powder.

Cheap perfumes are used to give them a top note. In superior varieties, essential oils, purified

resins, natural fixatives like amber, musk and civet are used along with synthetic aromatics.

Absolutes are use in the costlier types. The main agarbatti marketing centres are situated in

Mysore and Bangalore in India. It can be taken up in rural areas without any difficulty. It

requires only low technology for manufacturing the agarbattis. Besides providing employment

to unskilled women and children, in recent years, agarbatti has increasingly become a

significant foreign exchange earner for the country. Under the liberal economic policies of the

Government, the agarbatti industry has potential to expand its global market.

Agarbatti Industry has responded well to increased demand for its products both in rural and

urban areas, mainly because of the continued availability of cheap labour force dominated by

women and children. At the same time, greater advertising costs and quality improvement

have pushed up the prices. Agarbatti industry is gradually developing a wider base. Of the

total domestic sales of Rs 7.1 billion (approx. US$ 198 million) , South India accounted for

35%, West 30%, North 18% and East 17%.

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23  

• In India, the industry is estimated to provide income to 0.5 million people, most of

whom are contract or sub-contract labourers employed by small-scale processing

enterprises.

• Although not stable throughout the year, the daily income of an Agarbatti worker

often exceeds the minimum daily wage earned by an agricultural worker.

• The annual consumer spend in agarbatti is Rs 1,000 crore, with the organised players

(numbering just 7 or 8) accounting for 25 per cent.

• The industry, in fact, is better known as the ‘pavement industry’ since most of the non-

masala agarbatti sticks are processed on pavements and roads in front of homes.

• The sandalwood fragrance is the most preferred throughout the country

Market potential of agarbatti:

India is the world’s largest producer of incense sticks (agarbatti). In 2003, an estimate by the

Planning Commission of India valued the annual domestic market for incense sticks at

US$400 million, with a yearly growth rate of 20% annually. Agarbatti is used for both

religious purposes as well as home fragrance purposes. In addition to this large domestic

market, the international demand for incense sticks too is growing rapidly. From 2001 to

2003, India’s agarbatti export grew from US$36 million to US$44 million. Besides the Asian

community shops, a number of fair trade shops and retailers in Australia, Europe and North

America now stock extensive lines of incense sticks, with India operating as a major supplier.

In addition to regular perfumed incense sticks, there is a great potential for products such as

herbal incense sticks, air-fresheners, aromatherapy incense, mosquito repellents, etc. In

Africa, for example, mosquito-repellent incense sticks have a popular market.

Agarbatti is almost used by all communities in India, Sri Lanka, Burma and by Indians

residing abroad. According to an estimate, the combined value of internal and commercial

uses of bamboo in the world is about Rs 50,000 crores annually. This is supposed to be

around Rs 100,000 crores by 2015. More than half of the world’s consumption of bamboo is

in China. China’s export of bamboo products is close to Rs 10,000 crores. As against this,

India’s size of the domestic bamboo economy is estimated at Rs 2043 crores by the Planning

24  

Commission. The Market potential is, however, estimated at Rs 4463 crores, which could

grow to Rs. 26,000 crores by 2015.

As on today about 90 foreign countries are using agarbatti. Rising demand for the products

and earning of hard currency has led the Agarbatti industry to orient itself increasingly

towards exports. Total exports have increased by 266%, from Rs 1.5 billion (approx. US$ 42

million) in 1989-90 to Rs 4 billion (approx. US$ ll2 million) in 1993-94. More than

800registered and 3000 unregistered units currently exist in the country and only up to 10% of

these are engaged in export.

Characteristics of the agarbatti industry:

The Agarbatti industry in India operates in the informal sector. The enterprises are located

both in rural and urban areas. The labour force engaged is largely unorganized, although some

workers, especially those working for large establishments and particularly in Bangalore,

receive some of the social security benefits enjoyed by their counterparts in organized private

undertakings. Manufacturing is done on a piece-meal basis, with individual families being

contracted to assemble Agarbatti sticks being the most common mode.

In India, Agarbatti production is a major artisanal sector. There are more than 10,000

units operating in the sector, with unregistered units outnumbering the registered ones. These

units spread across rural and semi-urban households, providing employment opportunities to

nearly 800,000 household based women workers (and their children). The industry thus leads

to home-based income generating opportunities for very large numbers of women. In addition

to these women, a further, 4-5 million people are employed in other segments of the sector.

The majority of these people are contract and sub-contract workers employed by small-scale

processing enterprises. In total, women constitute 90% of the workforce, with approximately

80% working as home based family labour. Agarbatti production uses traditional skills and

renewable resources largely obtained from forests. While production requires simple

technologies and low capital investments, the agarbatti industry is highly labour intensive. In

this lies the attractiveness of the agarbatti sector for rural poverty alleviation since a large

number of people can benefitted.

25  

Raw Materials & Production Process:

Primary raw materials used for Agarbatti include bamboo, jigat (adhesive powder made from

the bark of Maclilus macrantha tree) and non-commercial wood for charcoal. The production

process of Agarbatti essentially entails four stages:

(1) Production of bamboo sticks for the central core of the Agarbatti

(2) Production and preparation of charcoal and jigat powder

(3) Preparation of incense paste (masala) and its application onto the core to produce the batti

and

(4) Scenting, or application of perfume, to produce the Agarbatti, followed by packaging.

The value addition at the first stage is very low. The last step has the highest value addition

and is usually conducted by companies that own the brand. The formula of perfume mix for

each brand is proprietary and a trade secret, similar to most high value perfumes and

colognes. The first and third processes, which involve the production of non-perfumed

incense sticks (called batti), are usually contracted out to home-based workers. However,

companies often retain a few in-house rollers for quality control and for higher quality

product. Charcoal production is done through simple kilns in rural areas. While some jigat is

produced within India, a considerable amount is imported, mostly from South East Asia,

predominantly from Indonesia and Thailand.

a. Production of Bamboo Sticks:

Bamboo sticks used for Agarbatti are of two types-round and square .Round sticks are

machine made while square sticks are handmade. The industry uses Jati and Muli species of

bamboo .There are different grades of bamboo sticks used for Agarbatti manufacturing. The

most common four grades includes-

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Table 2: Grades of Agarbatti sticks

1. Super Medium Bamboo sticks (S.M): Consist of more than 6000 sticks /kg.

2. Medium Bamboo sticks (M.B): Should have more than 5000 sticks/kg.

3. Fine Bamboo sticks (F.M): Should have more than 7000 sticks/kg.

4. Special Bamboo sticks (SPL): Should have 4200-4500 sticks /kg.

Length and thickness of the sticks:

The most common grades of sticks produced in these units include sticks of length 8,9,10

inches. Besides these sticks, sticks of other lengths are also produced, but at most the length

of the sticks produced in these units is 20 inches. While the thickness of sticks varies across

different ranges- 1-25 inches, 1.5 inches,2, 2.2, 2.5, 3, 5 inches. The North-eastern States have

pioneered in the production of raw bamboo sticks due to the abundance of bamboos in these

areas .The State of Tripura along with Assam is contributing 80% of total requirement of raw

bamboo sticks for hand rolled Agarbatti .The assorted Agarbatti are made in rural pockets of

north eastern states as a house hold activity. Four grades of bamboo sticks are made as per the

market demand with different rates, lengths and thicknesses. The required raw materials

(bamboos) are collected from the adjoining forest or local market. The raw sticks come to the

local hat (Market) on a weekly basis .The agents collect the sticks as per rates and

specifications. The collective bargaining is very poor among the rural artisans, due to the lack

of federation or unity among them. After collecting the sticks, the individual agents supply

them to the dealer. The dealers grade the sticks and finally dispatch them to their respective

destinations i.e. Bangalore, Gaya, Hyderabad, Kolkata, etc.

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b. Hand rolling of battis or Masala Sticks:

Hand rolling of battis is the second stage of agarbatti manufacture. Producing hand rolled

non-scented battis bamboo sticks, charcoal (wood /bamboo), jigat and narua powder is

required. The” jigat” acts as an adhesive to bind the charcoal with the sticks. Jigat is obtained

from the bark of a tree, Maclilus makarantha commonly known as Chang peechala, Mandai

awaal, jeelseem and Basra bukhui. These trees are found in the North-eastern region. The

community SHG members and JFMCs trained people on scientific extraction of bark and

processing for dust, in order to increase additional income for the groups and individuals. The

‘jigat’ and charcoal dust are mixed thoroughly and rolled onto the raw sticks and are called

“non-scented battis or masala battis” which are then sun dried and sent to the market.

c. Scenting, Packaging & Marketing:

The masala battis or non-scented battis are dipped in a variety of perfumes and then packed

with the respective brand names for sale in the market. Sometimes, the marketing is being

done by a separate agency as per their market reach in each specific region or country. The

North-eastern States have ample capacity to set-up Agarbatti enterprises at the community

level in rural pockets. This enterprise is capable of creating rural employment and sustainable

livelihood opportunity among the community people. The following are the ingredients that

are normally used for perfuming 1 kg of rolled agarbatti sticks.

Fibra batti:

1. Sandal-200gm

2. Jigat-200gm

3. Charcoal-300gm

4. Honey-400gm

5. Rogir-200gm

6. Oil-200gm

28  

Apart of the above the following are found in a typical perfuming unit of an agarbatti

unit.

(a) Gangam

(b) Vaneline

(c) Citric acid

(d) Tonalizeo BS

(e) Babul powder

Table 3: Perfuming activity in Agarbatti making

1 kg count=1400-1800 sticks

1 agarbatti stick absorbs 0.3 ml perfume

1 kg Agarbatti (i.e. around 1400-1800 sticks) consumes 480ml perfume

1 litre solution can be used for 2400-2700 stick

1 litre solution =3.44 kg sticks (in certain cases)

1 kg absorbs=290 ml

.

Focus of the present study

The present study is an attempt to highlight the several dimensions to scale-up the

community-led Agarbatti enterprises in the region .Such community-led Agarbatti enterprises

create rural employment and livelihood generation in a sustainable manner with the active

participation of people both at the public and private level. This approach is known as the

Peoples, Private and Public Partnership (P4) approach. A demand –based production system

can help to set-up the agarbatti industry as a community enterprise on a sustainable basis. The

need of the hour is a proper design in order to implement the program in a sustainable way.

Such a design has been developed and is referred to as the “People, Private, and Public

Partnership approach” or the P4 approach. By adopting the P4 approach, the agarbatti

29  

enterprise development activities can be implemented in the planned manner, on a sustainable

basis with the active community participation.

The P4 approach aims at achieving its goals through:

a. Intensive Motivation Campaign (IMC)

b. Capacity Building

c. Resource Development

d. Financial Opportunities

e. Community Business Development Plan

f. Monitoring & Evaluation

The forward and backward linkages could be done through different partners at the

community level.

Fig 4: P4 Model

People 

    SHGs 

    SHGs 

Market Linkages Training

Community based 

Agarbatti 

Finance

& Technology

   PUBLIC 

PRIVATE 

NGOs 

30  

VALUE CHAIN ANALYSIS OF THE AGARBATTI

INDUSTRY IN INDIA

31  

Value chain analysis is needed in the Agarbatti industry because of the following reasons:

1. In Agarbatti industry, transportation cost is increasing.

2. Credit facility is not adequate.

3. 3-12% rejection of the sticks procured from North Eastern States by companies of Andhra

Pradesh and in Bangalore.

4. Off season on rainy season affects the availability of raw materials.

5. Transit Permit and Royalty has to be withdrawn

6. 4% tax on manufactured has to be withdrawn

7. Anti dumping investigation needed for the import from Vietnam and Taiwan is increasing

completion.

8. Harvesting technology of jigat has to extend to villagers and JFM families.

The value chain of raw bamboo sticks, masala battis, scented battis, packaging and

marketing have been projected as given in the next page.

The

foll

e value chai

lows. The c

Tab

Sl. No P

01. R

02. M

03. P

04. P

05. M

06. M

T

in of hand-r

cost at the h

Fig 5: Va

ble 4: Perc

Particulars

Raw Bambo

Masala batti

Perfumes

Packaging M

Marketing

Miscellaneo

Total

rolled agarb

hands of the

alue chain

centage of t

oo Sticks

is/ Non-scen

Materials

ous

batti, as prod

e consumer

RawSt

Masalascente

Perfu

PaMate

Mark

Misc

Agarm

of Agarbat

otal cost of

nted battis

duced in a ty

r is about R

w Bamboo ticks(2%)

a battis/ Non‐d battis  (8%)

umes (30%)

ackaging erials (30%)

keting (20%)

cellaneous (10%)

rbatti in the market

tti stick

f productio

% of

2%

8%

30%

30%

20%

10%

100

ypical unit

Rs 0.50 per

on

the total

in North Ea

stick, depe

3

ast India is a

nding on th

32 

as

he

33  

brand and size, and could go up to Rs 0.75 per stick based on the number of stakeholders in

the value chain. The basic ingredients cost just around Rs 0.004 because:

1. The bamboo is available at almost no cost, as it is free for tribal processors, and

2. All primary value-adding activities – cross cutting, cleaning, slicing and slivering – are

done at one point.

Bamboo stick making is viable only when the bamboo poles are harvested free

from the forest. Rolling incense paste (masala) onto the stick adds significant value .The next

value addition step is perfuming and then packaging, at the end of which a stick costs about

Rs 0.30 (about US$0.01), including a profit margin of 20%. Beyond this point, the value

addition is largely expensive incurred for activities such as marketing, transportation and

sales.

Table 5 Primary value chain activities

Primary Activity

Description

Inbound logistics

The bamboo is brought to the factories through trucks, prior to which bamboo is brought by river or dragged from interior places either manually or through elephants.

Operations

Raw bamboo is transformed into agarbatti sticks in two forms-Round stick(Most common in Tinsukia which is machine made) & Square stick(Hand made)

Outbound logistics

The sticks are sent to distant places by trucks and mostly by train.

Marketing and sales

The manufacturing units sell the sticks directly to traders in Bangalore, Delhi & Kolkata or to traders in Tinsukia itself who in turn sell it.

Service Samples are sent to buyers in different states and according to their requirements production is carried out.

34  

Table 6: Support activities

Secondary

Activity

Description

Procurement Bamboo is procured either as pole or in the form of sticks. Some units

bring split bamboo.

HRM Both men and women are involved in stick making units. women does

finer job like sorting

Technology

Development

Machines used for making rolled sticks are both local and imported from

Taiwan, China, etc. While in some cases the machines are local made, but

the cutters are imported.

Infrastructure Machines are housed in semi-concrete floor

Value chain of one bamboo pole to stick making units in Tinsukia

A stick making unit in Tinsukia procures bamboo at the rate of Rs. 40-45 depending on the

availability. The farmer in the village earns only about Rs. 10-15 per bamboo pole. The major

part of the cost increase is partly due to two reasons-intervening of the middle men and high

cost of transportation.

Val

Ea

the

vill

rick

on

fam

plan

Acc

ther

Fig

lue chain o

ach stake ho

traders. Th

lage directl

kshaw for w

weekly bas

milies norma

ntations ea

cording to t

re are about

g 6: Value c

of Agarbatt

older earns a

hey normal

ly to the sub

which they h

is. The loca

ally source

sily availab

them also 4

t 7-8 traders

Cost of 1 bam

the vill

Rs.1

chain of bam

ti sticks in T

around 25-5

lly sell at th

b-contractor

have to pay

al markets a

the bambo

ble in the r

4 kg sticks

s who norm

mboo  pole at

lage level

10‐15

C

( 3‐4 )mid

mboo pole

Tripura:

50 paise pro

he nearest

r and get aro

y Rs. 20 per

are generall

oo from thei

region. The

can be prod

mally buy the

t

Cost of

ddleman / po

Rs.15

Cost of

for stick m

ofit/kg stick

market plac

ound Rs. 7.5

r 40 kg. Thi

ly operation

ir own bam

ere are a to

duced from

e Agarbatti

ole

f  Trasportat

Rs.8‐10

making unit

k according

ce which is

5/kg. Norm

is amount o

nal on Thurs

mboo garden

otal of 27 f

m one bamb

sticks.

Cost of 1 ba

stick m

Rs.4

ion/pole

t in Tinsuki

g to the artis

s almost 2k

mally they ta

of Agarbatti

sday and Su

n and mostl

families in

oo. In the T

amboo  pole a

aking unit

40‐45

3

ia

sans and als

km from th

ke 40 kg in

i stick is sen

unday. Thes

ly from wil

this villag

Tuidu bazaa

t 

35 

so

his

a

nt

se

ld

e.

ar

Fig

Fig

g7: Value ch

g8: Value ch

hain of Aga

hain of TR

arbatti stic

RIBAC, Trip

cks made in

pura

n Tuidu, Am

mpi block i

in South we

3

est Tripura

36 

a

37  

Table 7: Value of 1 truck Load of Bamboo at Agartala, Tripura (from Chakmaghat)

Expenses Rate For 3500 poles For 3000 poles

Lifting at

Chakmaghat

Rs 13 per 100 poles 455 390

Binding the pole Rs 13 per 100 poles 455 390

Loading on to the

truck

420 420

Unloading from

truck

400 400

Rent of truck 2350 2350

Drivers charge 300 300

Forest tax (official) Rs 303 per 1000

poles

1060 909

Facilitation charges Variable 175 175

Buying of Bamboo Rs 380 per 100 poles 13300 11400

Total value of 1

truck

18915 16734

38  

Table 8: Transportation charges for 1 truck load of Bamboo from TUIDU to

AGARTALA

Items Rate for 1000 bamboo

(Amount in Rs.)

Official

IT Rs 38

Sales tax Rs 5

Vat Rs 10

Forest Tax(Masul) Rs 250

Total official charges Rs 303/1000 bamboo pole

Unofficial charges

Transit Pass Rs 100

At Forest gate (A) Gamaibari Rs 100

(B) Champaknagar Rs 100

(C) Khayerpur Rs 75

Total Unofficial Charges Rs 275

Miscellaneous

Transportation cost Rs 2200

Loading charge for 1 truck Rs 600

Unloading Rs 300

Driver charges Rs 300

Labour Rs 500

Total Miscellaneous Rs 3900

Grand total Rs. 4478

Fig

Tab

val

Ent

Rur

Ma

Ma

(aft

Wh

Ret

Con

gure 9: Mar

ble 9: Valu

ue chain

tity

ral artisan

anufacturer

anufacturer

ter marketin

holesaler

tailer

nsumer

2.2

rk-ups alon

ue of an R

ng cost)

38

ng the Valu

Rs 5 pkt of

ue Chain of

Agarbatti

53

f Agarbatti

with 20 st

Value in R

Rs 0.11

Rs1.91

Rs 2.66

Rs 3.5

Rs 4

Rs 5

70

i

ticks at dif

Rupees

80

fferent leve

1

3

els along th

100

39 

he

40  

STUDY ON THE AGARBATTI STICK MAKING

BUSINESS OF ASSAM & TRIPURA

41  

Agarbatti stick making business of Tinsukia:

Agarbatti stick making is an important business in Tinsukia district of Assam. Of the two

kinds of sticks used for Agarbatti-round and square, Tinsukia is the centre for manufacture of

round machine made sticks. Square sticks are also manufactured in the district, but in small

scale. The industry uses Jati species of bamboo which are procured from adjoining areas.

These sticks are supplied to the Agarbatti manufacturing units at Bangalore, Kolkata and

Delhi. There are 4-5 bamboos selling retail outlets in Tinsukia. Unit consumption of bamboo

in Tinsukia is approximately 1000 bamboo/ day. While monthly consumption of bamboo in

Tinsukia is approximately 25,000 bamboo poles / day.

Mode and form of bamboo transportation

Bamboo is transported from its source to these industries by various modes.

1. The cheapest source of transportation is by river Brahmaputra which involves almost

zero transportation charges. In this system bamboo is tied together at its procurement

point in Sadiya and this takes the form of a raft which is sailed across the river and is

collected at Guijan ghat near Tinsukia. This distance of approximately 45 kilometres is

covered in almost 8-10 hours depending upon the speed of the waves.

2. Bamboo is brought to Tinsukia by the suppliers by truck either as bamboo poles

or after cutting them into smaller pieces. The capacity of one truck carrying bamboo

poles is about 400-500 bamboo poles depending on the size of the poles.

3. Bamboo slivers are also supplied from the nearby villages through auto rickshaws.

4. In the interior places dragging is done both manually and by elephants.

Availability status of bamboo in the region and major constraints:

Currently though bamboo is available in the nearby places, people are not coming up with

new plantations. According to a local bamboo supplier if now no new bamboo plantation is

encouraged in the coming years the available plantation can feed the exiting industries in the

region only up to a maximum period of five years. Currently there are still many people in the

villages who have bamboo baris up to 40 bighas.

42  

Major constraints faced by the stick making units in Tinsukia

There is no financial support for bamboo plantation in the region and people are unaware of

the prospects of bamboo in the future. Contract farming if encouraged can be successful in the

region. People nowadays are not interested in growing bamboo in the Tinsukia region. Huge

amount of bamboo areas has already been brought under tea plantation and much more are

being planned to be brought under it. The main reason behind this is 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.

Potentiality for bamboo plantation in the Tinsukia region

But according to the bamboo suppliers of Tinsukia, bamboo has greater potential than tea. So,

considering the likely demand-supply gap in the near future they themselves are taking

initiative to take up plantation on their own and also is encouraging contract farming of

bamboo. They see great prospects in this industry, but the greatest problem for them right now

is that due to lack of awareness among people in the villages about the potential of bamboo as

a prosperity crop people are giving up plantation of bamboo. Awareness generation at this

stage is of utmost necessity at this hour.

43  

1. Tea rate is dependent on international market

2. For plantation of tea on one bigha land cost of plantation comes to near about Rs.

10000, whereas plantation of one bigha land for bamboo involves only about Rs3500.

3. Production of bamboo is more profitable than bamboo as it involves almost no

maintenance and input cost once it is planted. While tea needs pruning and addition of

agricultural inputs which involves huge cost along with labour both

4. Both bamboo and tea starts giving yield third year onwards and reaches maturity

after 25 years

5. From one bamboo sapling almost 500 bamboos can be obtain at the time of maturity,

nearly2-3 bamboo can be cut from each plant every year.

TUIDU, South-west Tripura

Main source of income in many of the villages in Tripura is through Agarbatti stick making.

There are many areas where Jhum cultivation is still followed. People in these areas cultivate

paddy for their own consumption and mainly grow vegetables like–small chilli, brinjal and

beans and fruits like pineapple. In some cases the entire village comprising of 30-50 families

are into Agarbatti stick making. If the entire family works on a full time basis then 10-15 kg

sticks @ Rs 7/kg can be produced which gives an income of Rs. 70-105/day/family. Part time

activity generates 3kg/day/family The species of bamboo used for Agarbatti stick making in

the region are-Wamlik (Average weight 10 kg), Wanal (Average weight 10 kg) and muli

known as watia in the local language. If the average weight of the bamboo is 12 kg then the

Agarbatti sticks produced from these species is 4kg.In villages like Palku in Tuidu, Ampi

block in South west Tripura a family works for 2-3 hours daily for Agarbatti stick making.

They normally work in the evening time from 7p.m to 11 p.m. A family of three people can

produce 5kg sticks per day. According to these families the prices of Agarbatti sticks has been

increased by the trades/subcontractors themselves at Tuidu market. According to the families

the major problem faced by them is that they want to produce more but cannot due to lack of

machineries and they do not have any financial support to purchase machineries. There are

collection centres of the contractors at Tuidu market.

44  

Procurement points of bamboo in Tinsukia district of Assam

Main bamboo procuring areas for Tinsukia region include-Sadia, Philobari, Pengari,

Kathalguri, Longton, Hasok, Kakapathar ,Dirok ,Sonpura, Chabua, Hatiali,etc. The cheapest

source of transportation is by river Brahmaputra which involves almost zero transportation

charges. In this system bamboo is tied together at its procurement point in Sadia and this takes

the form of a raft which is sailed across the river and is collected at Guijan ghat near Tinsukia.

Moreover some amount of bamboo is also procured from the adjoining Arunachal Pradesh.

Procurement of bamboo in Tripura

Chakmaghat is a point on the banks of the Khowai River which is around 5km from

Teliamara and around 55km from Agartala. Here bamboo is lifted from the river on to the

trucks that move to Agartala. These bamboos are brought from faraway places like

Ganganagar, Jalsara, Jigalsarai, and Munasara which are area around 60-80 km. from

Chakamaghat. The tribal villagers make rafts of bamboo of around 200 bamboo poles per raft

and are being paid on delivery in Chakmaghat only on Thursdays per week. Normally it takes

around three days to bring these bamboos from those faraway places to Chakmaghat. Price of

procurement at Chakmaghat is Rs.350 -380 per 100 poles for small diameter bamboo and this

price varies upto Rs 500 per 100 sticks. According to the contractor in the truck they sell the

bamboo procured from Chakmaghat @Rs.7/stick.

Activities at Kumarghat, Tripura

There are two Trader’s Associations in Kumarghat and these associations have links with the

fisheries association of Andhra Pradesh whose trucks come for supply. The empty trucks are

loaded with Agarbatti sticks (raw) and send to Bangalore which keeps the cost of

transportation lower. Some of these traders also have depots in Bangalore. There are large

numbers of collection centres of Agarbatti sticks in Kumarghat.

Currently, traders in North-eastern India, buy bamboo sticks from individual rural household

producers who are paid according to the number of kilos of sticks produced. They grade the

sticks based on count (number of sticks in a one kilo bundle), pack into gunny bags, and truck

45  

them to large Agarbatti producing companies in distant urban centres (mainly Bangalore and

Mysore in southern India, but increasingly locations in other states as well). Most traders also

act as financiers. All payments are made in cash and informally outside the banking system.

The present study revealed that home-based workers producing bamboo sticks receive a little

over 2% of the final retail value. In comparison, batti rolling is more value-adding job and

accounts for nearly 10% of the overall value addition. Elements of brand differentiation –

which include perfuming, packaging and advertising – account in equal share for 60% of the

total costs. Another 30% is spent by manufacturers on transportation, marketing, dealer

margins, etc. Since household producers convert round bamboo into sticks, or roll batti, they

derive the least value because their participation in higher value adding activities is negligible.

Incense sticks value chains in North East India are best understood when analyzed within a

national context. North East India´s incense sticks industry meets consumer demands for both

national and international markets. It remains a major supplier of bamboo sticks. While in the

past, Tripura supplied 90% of all bamboo sticks used, a considerable amount of stick

production is now taking place in other states who have understood the opportunity and its

significance. Furthermore, the Agarbatti industry is growing rapidly and expanding to other

parts of the country at the cost of North East India. If this trend is to continue, the impact

could be severe on countless poor rural women of North Eastern States (and men, who

participate in the making of sticks, though not in the rolling). As a response to this situation,

INBAR developed a community-based bamboo Agarbatti production programme, which was

implemented by TRIBAC in Tripura. Similar programme can be initiated by CBTC in

partnership with MFIs like BASIX to cover the credit needs of the rural artisans involved in

Rawbatti making or rolling of Agarbatti.

46  

PROBLEMS FACED BY AGARBATTI INDUSTRY:

47  

1. Policy and Regulatory Framework

Although North eastern States’ share in the national market for bamboo sticks is decreasing,

the actual market is growing at the rate of 20% per year. The export market is mainly run by

large national companies, based predominantly in the south of India. Although, North eastern

sticks are competitive on a production centre basis, this cost advantage is largely negated by

high transportation costs. Given that over 30,000 poor women producers in North East depend

on the national market, this is a critical issue that needs to be addressed. Furthermore, these

women are dependent on the incense stick market as their only source of income.

At present, production in North East relies on masala imported mainly from Kolkata traders,

even though all the input resources are available within the region. This is expensive.

Currently, poor women producers have access to bamboo and jigat resources through the

NGOs at no cost since they work on a labour rate basis. While the sourcing of jigat from

forests is allowed informally, there is the danger that the restrictions might be enforced, in

which case this could seriously affect local production as the women producers would then

incur much higher costs.

In addition, the taxation regime also reduces market competitiveness. For example, taxes on

manufacturing establishments are arbitrary, government does not realize the fragility of the

value chain and the effect even small levies can have on competitiveness and therefore on the

livelihoods of countless women. Women producers and small manufacturers are frequently

harassed and penalized by the authorities. Sales tax on agarbatti of 8% (in Karnataka the rate

was 10% until recently) .The taxes on raw materials such as bamboo, charcoal, jigat and

aromas - which range between 25-90% .Taxes on manufacturing establishments are arbitrary,

and small manufacturers are frequently harassed and penalized by the authorities. Taxation is

done on an ad hoc basis: not only is there a sales tax on the finished product, but most of the

raw materials are also taxed. The burden of taxation is more in the case of perfumes which are

imported. The absence of acceptable industrial rules also causes problems. For example,

except for Karnataka, no other state has brought Agarbatti manufacturing under the purview

of the Factories Act. The Agarbatti industry is still facing long delays in obtaining

government permission to start a production unit (average time taken is 3-4 months).

48  

Apart from different rates of taxation, varied labour law requirements and sales tax across

states creates many anomalies. For instance, Karnataka is the only state where the agarbatti

industry falls under the purview of the Factories Act, which consequently has to pay wages

for the workers in line with minimum wage requirements. In Karnataka, both factory and

home based workers are paid as per the stipulations of the Factories Act. Factory based

workers are also provided with social security coverage. While in other states, this sector does

not fall under the purview of any legislation and is simply deemed an informal sector.

Moreover, poor statistics impede policy support. As previously mentioned, there are more

than 10,000 units operating in the sector, with unregistered units outnumbering the registered

ones. As the industry is predominantly home based, local and national government have

minimal trade and tax revenue data. Due to these factors, the industry continues to be largely

informal, making it difficult to develop effective policies, which can protect women

producers.

Up-scaling and replication – both vertical and horizontal – and product diversification that

would inevitably follow, have to be based on solid, verified market data. Such data is also

important to persuade government to provide support. For example, due to lack of data, many

agarbatti products are incorrectly labelled. Therefore, the origin of production is often

inaccurate. This can seriously impede the ability of local women producers to develop a brand

image.

Batti rolling micro enterprises remain an attractive source of income for rural women despite

low value addition and low incomes derived from rolling. Besides being able to work from

their homes, these women receive stable and regular incomes once a week in cash. As the

market grows, women may receive higher incomes which can provide for household security.

There are few alternative off-farm income options; agriculture produces low returns and

unsteady income.

2. Labour shortage

Shortage of labour, specifically shortage of workers with experience in the industry, is

hampering further development of the agarbatti industry towards improved quality and export

growth. Karnataka is a case in point. Large-scale emergence of the garment sector in major

49  

urban areas such as Bangalore has created a major shift of the traditional labour force to the

garment industry, forcing the agarbathi industry to operate with inexperienced workers. This

has led to some manufacturers shifting their operations to neighbouring states such as Andhra

Pradesh and Tamil Nadu.

3. Credit constraints

Agarbatti making units, although categorized under the Small Industry Act, do not easily

qualify for subsidized or regular bank loans owing to various reasons. One of the commonest

reasons is the laxity of bank officials which causes considerable delay in sanctioning loans to

set up a small enterprise. Another reason is the difficulty that small manufacturers face in

furnishing collateral that would satisfy the bank officials.

4. Advertising and Marketing Cost

Agarbatti producers are getting lower returns on their investment owing to their complete

dependence on middlemen and wholesalers for marketing. Often 60-70% of the total cost can

be due to transportation, marketing and advertising, and retailers are completely at the mercy

of agents and wholesalers. Continuously increasing transport costs are especially cutting into

profit margins. Means of controlling such costs are lacking because of the non-existence of

cooperatives or an effective association of the Agarbatti manufacturers. In India, Agarbatti,

despite recent increases in exports, is still an industry that caters predominantly to the

domestic market. However, because of its ‘green’ label, non-polluting method of processing

and, above all, the use of indigenous technology, the incense sticks can be promoted to gain

international markets

5. Scale of Operation

The scale of operation can be a major problem to small-scale manufacturers. Larger

manufacturers with better access to credit and raw materials, as well as better rapport with tax

officials, easily beat the smaller units in competition. The larger units are also partially

mechanized, creating better saleable products. Additionally, they sell their products through

nationwide networks of distributors, thus reducing the cost of marketing and transportation.

50  

As a result, small producers are either producing low-quality products or are closing down

their operations altogether. Some units that survive are doing so by catering to the ‘niche’

markets

6. Research and Development Support

The Agarbatti industry is one of the few private sector industries that lack R & D support to

address the quality, range of products and other problems faced by the Agarbatti sector.

7. Entry of MNCs:

The entry of multinational and large companies into the Agarbatti industry, which has largely

remained unorganised, has put pressure on many small and medium Agarbatti manufacturers.

While many manufacturers have stopped making Agarbatti, some others have taken to selling

the products of big companies. After liberalisation many MNCs have ventured into this sector.

The declining margins in their traditional products such as soaps and detergents and the near

stagnant growth of these products over the last few years have forced multinationals and

others diversify into Agarbatti making. The low cost of entry into the industry has also lured

the big companies to build Agarbatti brands. The result has been that the small and medium

players have been affected due to the huge spending by the big companies on brand building,

distribution and trade schemes.

In fact, many of the agarbatti manufacturers, a few, are regional players with limited resources

who cannot counter the big companies.

One of the prime reasons for the MNCs to enter this sector was that

(I) The Agarbatti industry has been growing at an average rate of 10 per cent annum,

whereas the growth in consumer durables was either stagnant or growth.

(II) Agarbatti is a fast-moving product with a good shelf life. The demand has been growing

by around 20 per cent in northern, eastern and western States.

(III) The demand for Agarbatti and other products had gone up worldwide with increasing

awareness on Indian spirituality and growing popularity of aroma therapy, especially

among the youth. India's Agarbatti exports touched Rs. 300 crores.

51  

(IV) The product was being exported to West Asia, Africa, Europe and Southeast Asia.

China was emerging as a big market as well as a competitor.

Traditional Agarbatti manufacturers could compete with the big players if the quality of the

product was good. In fact, he said, many companies that entered the market had withdrawn

from it as they were unable to ensure quality.

In the light of small and medium companies being affected by the trade practices of bigger

companies, a regulatory body or a mechanism to prevent unfair trade practices as well as

trade schemes should be set up. Otherwise, there could be monopoly at a later stage.

8. Competition in stick making from neighbouring countries

The round stick making units in Tinsukia are facing serious competition from neighbouring

countries like Vietnam , Taiwan, China ,etc which are also into round stick making. Because

of cheaper sticks that these countries are able to supply to vendors in Bangalore, the stick

making units in Tinsukia are not getting good price. According to an estimate if there would

have been no competition from the neighbouring countries the industries in Tinsukia could

have even fetched a price of up to Rs. 80/kg, and for which they are only getting Rs. 35-45/kg

52  

POTENTIAL OF THE INDUSTRY IN

NORTH –EAST INDIA

53  

As per conservative estimate around 160 lakhs prospective consumers are having of scented

Agarbatti in North Eastern States. It has also been estimated that Rs.50 crores turn over are

taking place per annum on Agarbatti marketing activities in the region. The existing brand of

Agarbattis is coming from Kolkata, Bangalore etc. Presently, in the region there is no as such

prospective local entrepreneur to meet-out the existing demand and supply. In the region, an

enabling environment has already been created on hand rolled agarbatti through active

participation of local community (Self Help Groups, Joint Forest Management Committee

etc) to enhance their skills and knowledge on production process. It is the right time to

develop a local brand and marketing the product should help the community and micro

entrepreneur to get the competitive price and more value-addition in the state. Moreover, an

environment should develop for the local entrepreneur to set-up the industry and able to

provide an incremental vale on rolling batti to the community producers groups.

Figure 10: Area under Bamboo (in ha) in North Eastern States

459000

821300

369200310200

921000

75800 93900

Arunachal Pradesh

Assam Manipur Meghalaya Mizoram Nagaland Tripura

Area under bamboo(ha)Area under bamboo(ha)

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55  

Tripura (with financial assistance from PD-DRDA South. Similar units should be set-up under

the frame work of cluster development initiative of respective state Bamboo Mission.

North East India has the natural resources needed for Agarbatti production. This could be

used to its advantage and much more of value derived than that from only bamboo stick

production. Natural resources grow in abundance, although in some areas these are in short

supply. Initiatives in this regards has already been taken by TRIBAC in Tripura.TRIBAC

introduced the rolling of incense sticks. Initially, TRIBAC used to buy masala from outside

the state, but has incrementally introduced charcoal and jigat production within the state. Both

are key ingredients of masala. Still much of the masala remains a bought-out item since

simple facilities like milling units to powder charcoal and jigat are not in place. Decentralized

facilities are needed closer to growing locations. One innovation was the replacement of wood

charcoal by bamboo charcoal since bamboo is more sustainable than trees. This model of

TRIBAC can very well be replicated by CBTC-BASIX.

There is tremendous potential for the Agarbatti production and marketing business to flourish

in North-east India. The major reason behind this is easy and sustainable supply of raw

materials in the sector with easy availability of labour.

Entrepreneurship development

Several clusters of artisans/ micro-entrepreneurs have developed in the North Eastern region.

The most important are in the Lower Brahmaputra valley (Nalbari, Barpeta and Nagaon), in

Upper Assam (Lakhimpur), in the Barak valley (Silchar, Karimganj), in Tripura (Agartala),

Arunachal (Pasighat) and in Meghalaya (Shillong). They cater to urban markets within the

region, and to the extent that they can, outside the region as well. Some have benefited from

support from the KVIC, and from the DC (H). This has been in the form of loans and grants

from the KVIC/ KVIBs, and assistance for marketing from the DC (H). In the larger towns,

notably Guwahati, Silchar and Agartala, some units have graduated in scale and complexity to

micro-enterprise. They produce furniture, household and decorative items which are marketed

through exhibition sales and direct contact with retailers. Interestingly, many of these units,

particularly in the Brahmaputra valley, are owned and operated by women entrepreneurs.

56  

Sustainable Inputs Supply

About 50 percent of India’s bamboo resources are in the North Eastern States. There are 63

species of 20 genera in the region. This is 50 percent of India’s species and 87 percent genera.

Besides these, there are 11 exotic varieties. However as compared to China and Taiwan,

India’s productivity is one fourth to one fifth. India has a long way to go on scientific

cultivation of bamboo.

Because of NMBA initiatives a number of bamboo based factory have come up in Assam.

There are a number of agarbatti sticks manufacturing units in the cottage industry sector

already established, more are coming. The bamboo resources of the North East should

hopefully bring happiness and an environmental protection to its people and land. As per the

statistics of the Khadi and village Industries of Assam, (2002-2003) the total number of centre

working under Agarbatti type of industry is 14 with total employment of 202 and total annual

production of 93,270 Kgs and with a total value of Rs 20.52 Lakhs. Raising of production of

rolled batti should need the setting up of supply chains of inputs especially of jigat and

charcoal (in addition to bamboo sticks that are already produced in large numbers in North-

eastern states). North-eastern states producers are advantaged in that all needed resources for

making rolled battis are locally available within the state.

The government informally allows collection of jigat from the forest if it is used locally for

making masala and rolling batti as long as the masala is not sold outside Tripura. However,

jigat is produced from the bark of M. macrantha, and with common property resources, there

is danger of over-harvesting or ringing of the tree trunk which can kill the tree. Removal of

the bark needs to be done scientifically and the harvest should not exceed production.

Most of the natural Jigat trees occur in the forest which is under the jurisdiction of the forest

department. The forest divisions are administered by a Divisional Forest Officer (DFO). Most

forest divisions have organized the forest community into Joint Forest Management

Committees (JFMC) which are given access to and control of a specified forest area from

which they can collect natural resources on a sustainable basis. The CBTC-BASIX should

57  

establish collaborations with DFOs and selected JFMCs in relevant forest divisions to test the

development of a more formalized relationship between JFMCs and specific SHGs or

community production hubs which provide the latter with guaranteed jigat inputs. In return,

the regular demand from the CECs would hopefully provide an incentive to the JFMCs to

manage their forest more sustainably.

For Guaranteed supply of Jigat:

Substitute for Jigat for agarbatti industry has been identified by institution like ICFRE. They

have found that substitute can be found from Cassia tora seeds .Various organisations and

Institutes were engaged for sometime on finding a substitute for Jigat, Finally the search has

borne fruits and the Forest Research Institute has been able to find a substitute for 'Jigat'

which is not at all related with any forest product, but otherwise also economically

competitive and abundantly available. The substitute developed is an agro-based biopolymer

(93-95%). Laboratory trials with the substitute indicate that the new binder is better than Jigat.

The technology for the manufacture of the substitute is simple and can easily be translated to

industrial production. It is hoped that in the near future after the transfer of technology,

impending threat for the survival of Machilus macrantha / Litsea Chinensis and pressure on

natural forests shall be overcome. This can also prove to be a good substitute for Jigat

particularly in those states where there is a restriction for jigat harvesting and trading.

Charcoal needs of the sector can be met by bamboo partially or wholly. Small drum kilns that

can be run by households using bamboo culm parts (such as the nodes and extremes) that are

not used in bamboo stick production and which could help ensure adequate charcoal supply.

A very interesting aspect is that charcoal is also gathered from home kitchens where firewood

is used. This should be organized better, and the collected charcoal or that produced in drum

kilns, ground into powder, and used in the masala. If such charcoal production is inadequate,

then it should be sourced from the JFMCs too.

The recent gregarious flowering of Melocanna baccifera, the main bamboo used for stick

production, and the inadequate attention being paid to natural regeneration, should show up in

future scarcity of the resource closer to the villages. Villagers are taking the opportunity of the

death of the growing bamboo to clear the land and convert it into agriculture. Sensitization is

58  

obviously the key so that they are able to comprehend how their present actions can

jeopardize their future. This activity should be carried out in parallel with other funding, along

with which, nurseries for diverse species that have certain similar culm characteristics – such

as wall thickness, inter nodal length, etc. should be established – so that one could substitute

the other in case of acute need. Introduction of managed bamboo plantations would follow as

the next logical step in ensuring Bamboo resource security.

Another parallel activity should focus on multiplying the M. macrantha tree and establishment

of private planting of the Jigat tree.

Quality and Standards

Input materials, such as bamboo sticks, jigat and charcoal (which are combined to produce

masala paste), and rolled batti all suffer from inconsistent or low quality. These quality issues

need to be addressed individually, since lower/inconsistent quality of inputs results in a poorer

quality product. This leads to greater rejection rates and lower prices for rural producers.

Non-adherence to standards also reduces access to higher-end markets and lowers the

confidence of major brand buyers. Other issues that need resolution include separation and

breakage of masala from the core stick. CBTC-BASIX should introduce strategies to improve

quality and standards such as, improving coordination among Production Clusters and access

to processing machinery, i.e. bamboo cutting machines, pulverisers and driers.

Research and Development

The incense industry lacks significant research and development support for both existing and

new products, despite the sector´s high potential to increase incomes and generate

employment opportunities for the rural poor. Facilities for testing to ensure quality need to be

put in place, and assessment methods backed by independent national laboratories that certify

compliance to national standards. For instance, different jigat sources have various adhesive

strength, which affects the masala paste. This needs to be standardized and tested.

Green bamboo is used to produce the core sticks. Adequate drying of sticks and rolled batti is

an issue that needs attention. North East India has a long rainy season during which sticks and

rolled batti need additional drying. Households presently dry sticks using cooking stove .

59  

TOOLS AND MACHINERIES USED

FOR STICK MAKING

60  

Tools used for stick making in the villages are:

The tools that are most commonly used in the villages of both Tripura and Assam include:

1. Bothi da

2. Saw

Measuring board

For sorting and grading the sticks based on their lengths the collection centres use a

measuring board with different lengths marked on it. The measuring board used for measuring

the length of sticks is divided into the following divisions-7.5, 8, 8.5,9 and 9.5 inches

Study of the machines under use in the Project areas:

The machines most commonly used in a stick making unit includes

1. Cross-cutting machines,

2. Slivering and

3. Stick-making tools/machines

4. Pulveriser

5. Charcoal Making Kiln

The machines and tools analysed show variation in prices and efficiency. The analyses show

that the simple hand tools usually perform just as good as the expensive engine-driven

machines. The latter ones have several problems in handling the material efficiently without

jamming. A couple of prototypes showed promise and could be the subjects for further study

and improvement. The machines used for bamboo stick(raw stick making) particularly the

61  

Polishing ones that were introduced in Tripura had not been of great success as the bamboo

of North Eastern region gets bent as the tensile strength is less

Table 10: Cost of machine used for Agarbatti (round type) stick making and their

efficiencies:

Cost of machine Capacity of the machine

Rs.2-3 lakhs 25-30kg of sticks/8hours

Rs. 5-6 lakhs 50 kg of sticks/8 hours

10 lakhs

14 lakhs(Imported)

100kg of sticks/8 hours

500kg of sticks/ 8 hours

62  

ANALYSIS OF THE LABOUR COST

IN AGARBATTI MANUFACTURING UNITS

63  

Agarbatti production is a labour-intensive activity, offering high employment opportunities

for rural communities. Growth in production is directly proportional to the number of people

involved in production. Rural women producers who roll batti in North eastern states work

part-time and produce much less; a producer would roll around 2 kg of batti in a day, while

working at their own pace and during their spare time from household work. These women

choose to remain part-time producers. Being subsistence oriented, cash income is essential for

these women to buy sugar, salt, medicines and other supplies that are needed for daily life but

which they cannot produce themselves. This has its own benefit - the preference for part-time

employment opens up opportunities for twice the number of women as would be otherwise

possible, were they to operate full-time. Despite the growing demand, availability of trained

workers for batti rolling is a constraint. Discussions with major agarbatti companies revealed

that the industry has a large capacity to absorb more production, but primary production –

bamboo sticks and rolled batti – is inadequate. As the labour intensiveness of the industry

prevents companies from having agarbatti workers on its rolls, they have to source rolled

batti from existing unorganized household-level production. The limitations of this operation

thus affect the industry in general. A system to train enough people to roll good quality batti,

and to organize and manage that production aspect has been indicated by the companies as a

much needed intervention. CBTC as the technology and knowledge transfer agents can come

into play at this role.

There are two stages involved in the production of Agarbatti. One stage involves the

production of non-perfumed (non-masala) Agarbatti, and the second entails the production of

perfumed (masala) Agarbatti. The costs of production can also be disaggregated by these two

stages as labour costs are significantly different in these two stages. Non-perfumed agarbatti

are generally produced at home through the family contract system and take up to 80% of the

total labour required; its share in the total production cost, however, is about 10% in preparing

raw agarbatti .The addition of perfumes is carried out in factories and takes about 20% of the

total workdays required for the production and, along with packaging, accounts for about 60%

of the production cost. Another 20% of the cost is incurred in marketing.

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65  

Pradesh and North India have set up agarbatti businesses than the local people. Workers are

also increasingly coming from the adjoining states to replace the traditional labour from Tamil

Nadu and Karnataka. Traditional labourers – Muslim women - are gradually shifting to the

more lucrative garment industries. The packaging and processing are particularly suitable to

women and unemployed in both rural and urban areas since these provide opportunities for

labourers seeking self-employment and piece-meal work. While adult labourers earn Rs 70 -

l00/day, children earn Rs 30 to 50/day depending on the time spent and their efficiency. There

is no requirement for electrical power in the industry which considerably reduces work-

related hazards and dependency on erratic power supplies. A large number of children work

full- or part-time in the industry to supplement their family’s income. International opinion

and norms strongly discourage international trade in products manufactured using child

labour. At present, statistics are not available as to the part-time input by children versus any

exploitative situation which may exist in the industry

66  

COMPETITOR ANALYSIS

67  

Agarbatti is a highly fragmented sector which currently has over 450 major players and 8,500

units in unorganised sector making about 50 billion incense sticks a year.

Market leaders

1. Bangalore-based NRR (owner of the Cycle brand), with some 1,800 million sticks per

annum, have a very strong market presence in the `3-in-one' market segment.

2. ITC’s Mangaldeep now sells around 1,200 million sticks per annum.

3. The annual consumer spend in agarbatti is Rs 1,000 crore, with the organised players

(numbering just 7 or 8) accounting for 25 per cent.

Major players in Agarbatti industry:

ITC:

ITC's unique Agarbatti community participation programme:

ITC is in the process of working with NGOs to roll out unperfumed agarbatti. These products

are sourced by the company's vendors who add the fragrance to the incense sticks, package

the sticks and supply the finished product to the agarbatti business. This initiative helps impart

agarbatti-rolling skills to rural women, with a buyback assurance. This, therefore, provides

invaluable livelihood opportunities to rural women. The agarbatti project with the 'Art of

Living' establishment in Bangalore has particularly taken off very well.

The quality systems and vendor management policies

The quality systems are broadly divided into two parts.

Quality checks: This is done by ITC's vendors based on set parameters developed in

accordance with consumer needs.

Quality monitoring: Samples that are drawn from the market are checked at a central

location and evaluated every month, vis-à-vis competition.

68  

ITC's incense sticks business, launched as part of its strategic initiative to create multiple

drivers of growth in the FMCG sector, leverages the core strengths of ITC in marketing and

distribution, brand building, supply chain management and paperboard & packaging to offer

Indian consumers high-quality agarbattis. It has already launched brands like 'Spriha' and

'Mangaldeep' across a range of fragrances like rose, jasmine, bouquet, sandalwood, madhur,

sambrani and nagchampa. Packaged quite attractively, these brands appeal to a cross-section

of consumers at various price segments. These agarbattis are available in 'fragrance-locked'

packets. 'Fragrance-locking' is a unique concept of packaging which helps to retain the

fragrance for a longer period. ITC Ltd's Agarbatti SBU (Strategic Business Unit), sourcing

agarbattis from the cottage sector, has started working with the Andhra Pradesh forest

department on a quality improvement programme for hand-cut bamboo, a critical input for

ramping up volumes in the highly unorganised agarbatti business. ITC is participating in a

bamboo development project launched by the Tripura Government, and has also launched a

vendor development programme in Agartala, under which some 10 million sticks are being

sourced per month. The company, marketing battis under the "Mangaldeep" brand through its

five lakhs retail outlets in the country, has doubled volumes from 50 million sticks per month

last year to 100 million sticks now. ITC has eyed the bamboo potential in Andhra Pradesh was

around 25 tonnes per month, and some 1-2 tonnes of bamboo per month were being lifted for

making agarbattis. The 2006-07 targets for Tripura were 15 tonnes per month up from 2-3

tonnes in November the previous year. ITC has successfully blended corporate social

responsibility with business objectives through this 100 per cent outsourcing from the cottage

sector. Many new fragrances (or a combination) based on regional preferences are now in the

pipeline. Mangaldeep Agarbattis, according to him, now enjoys eight vendors on a national

basis, out of who three (all based in Bangalore) are ISO-9000 certified. The company now

sources all its requirements through tie-ups with Sankranti, Ananth and Jayanti Domestic

Products (all from Bangalore), Cottage Industries of Aurobindo Ashram, Pondicherry, Prayer

Dhoop Agarbattis (New Delhi), Swastik Industries (Chandigarh), Jayanti Products (Agartala)

and Khadi and Village Industries Commission (KVIC) (mainly Coimbatore). At present,

ITC’s agarbathi brand competes with regional brands such as ‘Cycle’, ‘Padmini’ and ‘Vasu’.

To gain an edge over competitors, ITC has agarbattis catering to all the three segments. The

‘Spriha’ range, targeted at the top-end of the market, is priced at Rs 20 for 20 sticks in

69  

nagachampa and gugool fragrance. Spriha is made by the Aurobindo Ashram in Pondicherry.

The company has also launched ‘Nivedan’, made by small-scale companies in Bangalore,

targeted at the middle-end of the market priced at Rs 10 for 20 sticks in sandalwood

fragrance. The lower-end ‘Ashageet’ agarbatti in jasmine and rose fragrance is priced at Rs 4

for 10 sticks and Rs 7.50 for 20 sticks. The KVIC-ITC "Mangaldeep" agarbatti project as

which acts as linkages with the cottage sector under the Rural Employment Guarantee

Programme (REGP) of the Union Government,.Avarampalayam Sarvodaya Sangh in

Coimbatore had been identified as the nodal agency to supply and monitor the agarbatti

manufacturing activities of the other identified Directly Aided Institutions and small REGP

units of KVIC which supply to ITC. The Agarbatti business recorded an impressive 28%

growth in revenues, primarily driven by increasing consumer franchise for the ‘Mangaldeep’

brand combined with improved distribution reach. ‘Mangaldeep’ is already the second largest

national brand in the industry, riding on the success of two key sub-brands, namely ‘Madhur

100’ and ‘Yantra’. ‘Yantra’, launched last year, has received wide consumer acceptance on

the strength of its unique fragrance and is expected to become a national drive brand.

Functioning of the ITC franchisee facility (Jayanti Domestic Products) at Agartala,

Tripura:

Jayanti Domestic Products have two Agarbatti productions unit in Tripura- one at RK Nagar

industrial estate at Bodhjung Nagar, in West Tripura and the other at Laduchowani. The

franchisee procures perfumes from a Chennai based company called IAF and sources Jigat

from Kolkata. The unit has the following facilities-

1. Collection of rolled Agarbatti

2. Perfuming of rolled Agarbatti

3. Packaging of perfumed Agarbatti

Jayanti Domestics Products accepts the rolled agarbatti from its regular suppliers and also

from some women entrepreneurs directly according to the guidelines and parameters set by

the ITC Company. 180 lakhs sticks are produced per month .The company has identified

about ten parameters for maintaining its quality standard .The most critical ones being along

with their tolerance limit include-

70  

1. Exposed bamboo

2. Burning consistency

3. Thickness

4. Length consistency

5. Tip diameter

6. Straightness

7. Split bamboo

8. Tip length

The company sources rolled Agarbatti from approximately 30-35 villages in Tripura. The

company has given around ten parameters out of which few are critical for acceptation of the

rolled sticks. Generally the percentage of rejection is approximately 12-13%.The rejection

percentage is higher during the rainy season. There are two methods of rolling of Agarbatti-

Hand rolled and Dust rolled. Dust rolled Agarbatti is specific to ITC company where people

from ITC come and train the artisans to carry out dust rolling .Generally hand rolling of

agarbatti gives an output of 3-4kg /day/person while Dust rolling can give an output of around

15kg/ day/person .The productivity is increased up to five times by this method. Citing

constraints in sourcing of key raw materials like jigat powder (the binder for battis), which is

made from debarked (from trees) material and charcoal, the management in Jayanti says that

some 10 tonnes of jigat and 40 tonnes of charcoal per month are required now for current

level of manufacturing. Sticks are sourced internally, as Tripura accounts for over 60 per cent

of bamboo forests in the country.

This unit produces two grades of Mangaldeep Agarbatti

1. MD-10 with 10 sticks and green tip –Madhuri is the perfume used for MD 10 and is

somewhat cheap. It is procured from IFF, Chennai

71  

2. MD-100 with 100 sticks and orange tip- Adaita is the perfume brought from IFF, Chennai

and is relatively costly than Madhuri.

Colouring stick tips: There are two mechanisms of colouring the stick tips

1. Colouring the tip before rolling.

2. Colouring the tip after rolling and then keep it upturned for drying before carrying out

perfuming operation.

The unit uses a sealing machine for packaging. It carries out packaging of MD-10 @ Rs. 2

and MD-100 @ Rs.15.The normal target that is set for the SHGs supplying rolled Agarbatti to

Jayanti Domestic Product was 800cfb per month (1cfb contains 900 sticks).

NR Group’s Cycle brand:

The philosophy behind it brand is “Quality backed by values”. Its flagship brand; Cycle is the

market leader in India and is exported to over 40 countries. It was the first to offer 3

fragrances in one pack, first to introduce premium Agarbatti, first to have more than thousand

consumer panels.R Foundation the charity wing of N.R.Group has been supporting several

social activities like Ranga Rao Memorial School for the Disabled ,Ranga Gnana Vinimaya

Kendra and Project Prerepana.Fragrance World is, the exclusive retail showroom of the

Mysore based NR Group located on Dhanwantri road in Mumbai to evaluate customer

preferences and usage patterns, to understand customer requirements and create customer

contact programs. It is one of its kind showrooms that have all fragrance products. With the

feedback received, they are able to create superior products and focus more towards creating

such products.

Reckitt's Haze:

This brand was introduced in the year 2000 in the markets of Tamil Nadu and Maharashtra,

followed by Karnataka and Andhra Pradesh. The key deliverable in its incense is its

fragrance. Haze is currently available in four variants -- sandalwood, jasmine, bouquet and

fresh wave, apart from a 4-in-1 pack. The brand is also available in aerosol spray and

72  

fragrance block formats. Available at Rs 11 for a pack of 20 sticks, Haze agarbattis are

significantly higher priced in comparison to unorganised sector brands. Reckitt officials

attributed the premiumness of the brand to a distinct value-for-money proposition. Haze

agarbatti sticks, for example, come packed in resealable zip lock pouches to prevent leakage

of the fragrance. The sticks are claimed to have a burning capacity that lasts longer than

brands sold through the unorganised sector. The Haze sticks comprise the natural ingredient,

Ganga water, claim company officials. The advertising for Haze is being done by McCann-

Erickson. The advertising proposition is tailored around the `lingering feeling of freshness

that lasts through the day.

UJAS branded Agarbatti:

Udyogini is working with urban slum dwellers in Saharanpur District of UP. The project was

initiated at the end of 2004 with the support of ITC Ltd., a leading corporate. Beginning with

just 150 women in 2004, today, in Saharanpur, Udyogini is working with more than 600

women residing in the slum areas in the city. The women are organized into 60 women

enterprise groups and are involved in major microenterprise activities. They are also involved

in savings and lending operations within the group. Udyogini's work in Saharanpur is focused

around two principal microenterprises, Chunari (“Mata ki Chunaries” and “Dulhan

Chunaries”) and production of agarbattis (incense sticks).At present women working on

chunaries and agarbatti are home-based. In order to regularize production with up to the mark

quality and timely delivery along with inculcating a sense of ownership in women, Udyogini

is in the process of establishing a production and business centre to be run and managed by

the women. The Agarbatti business was initiated on a buy back arrangement with ITC for first

quality agarbattis. Second quality agarbattis are branded as UJAS and sold in the local market.

Shree Balaji Industries has established itself among the top ten incense brands in India and

the most popular brand of Orissa. They have a in-house quality system which is being

monitored continuously by quality control department. Every incense stick has to pass

through intense testing before being packed. Incense sticks are regularly inspected by quality

controllers until they are packed. The basis which makes services provided by us unique lies

in our approach where attention is paid to each and every possible aspect.

73  

Table 11: Major Agarbatti manufacturing companies in India

Company name Brands Variations Remarks

Hari Darshan Sevashram

pvt. Ltd,Delhi

Hari Darshan Export quality

Shrinivas

Sugandhlaya,Bangalore

Nag Champa

Agarbatti

(Available in

15 Gms, 40

Gms, 100

Gms, 250

Gms, 500

Gms, 1 kg,

and 8 Sticks

Square

packing)

Caters mostly the

domestic market

Aastha Long incense

Geet Govind Incense

sticks

(20 Gms)

Natural Incense sticks (20 Gms and

50 Gms)

Nag Champa Long

Hexagonal (5

sticks

Packing)

Sandesh Agarbatti Co. Gopala incense 8 Sticks

Square

Packing

Caters to the

domestic markets

with nominal

export. Master gold incense 20 Sticks

Hexagonal

Packing

74  

Ratnamala incense 10 Sticks

Long

Hexagonal

Tulsi Sandal wood Super 6 Gift

Box

Super Sandal Super 6 Gift

Box

Shanthinikethan Incense Cones

Acharya Supreme tubes

Sri Sai Flora incense

Shree Balaji

Indistries,Orissa

Bharat Darshan incense,

Spritual Guide, Precious

Chandan, Jasmine, Indian

Spice & Rose Pouch

series, Sugandha Incense,

Sugandha Shringar,

Rolex Rose, Maxi

Agarbatti

Among the top 10

and most popular

in eastern regions

NRR Group Parampara, touted as

premium dhoop, priced at

Rs 15.

10 per cent of

turnover from

exports .Total

turnover is

Rs 240 crore

Medini ,Dharti

ITC Ltd (Agarbatti

Division)

Mangaldeep , Spriha Markets Khadi

Bhandars in the

country .Planning

to expand its

existing number

of retailers from

25,000 to two

Ashageet (low end

segment )

Yantra and Madhur 100

are sub-brands of

Mangaldeep

75  

million across the

country within a

year. At present,

the company’s

25,000 retailers

cater to

Maharashtra,

Tamil Nadu, and

Bangalore

Abyssinia Impex ,Mumbai Premium segment : Mostly exported.

Ratnamala, Decent,

Empress, Cherish , Super

Sandal, Relax,

Fascinating India,

Surprise, Paramhans,

Success, Amber Flora

Herbal segment

Eucalyptus, Balm

mint, Patchouli,

Lemongrass, Pine,

Citronella, Juniper

Ramdev Food Products

Pvt. Ltd. , Ahmedabad

Vedam Incense Stick Archanam

– Mogra,

Yagyam –

Havan,

Yogam –

Dhoop,

Poojanam –

Regional player

76  

Saffron,

Dhyanam –

Sandal,

Chintanam –

Kasturi,

Shantam –

Rose,

Arpanam –

Camphor, and

Anusthanam–

Nag Champa

Shankar Perfumery Works,

Bangalore

Sona Chandi Agarbatti

Cinnamon Incense

Agarbatti

US$5 Million -

US$10 Million

77  

CONSUMER RESEARCH

Con

com

cus

the

aga

con

diff

disl

Fig

Out

to p

aga

Aga

com

pro

nsumer rese

mpany an op

stomers to t

urban area

arbatti, few

nsumers reg

ferent store

like of a bra

g 14: Percen

t of 60 con

purchase ag

arbatti from

arbatti from

mpany shou

oduct produc

earch is an

pportunity t

their brand

s of the pre

of the fin

garding the

s and shops

and, etc.

ntage of mo

sumers surv

garbatti from

m retail cha

m shops nea

uld target th

ced. Supply

Retail 24

n essential p

to provide c

and the com

esent study

ndings are

eir tastes an

s, factors in

onthly cons

veyed in Ti

m the mom

ins and on

ar the temp

he mom and

y of Agarba

chains4%

Te

Purch

part of mar

customer sa

mpany as a

area gave u

as follows.

nd preferen

nfluencing p

sumption f

insukia and

and pop sto

nly 11% pre

ple generally

d pop store

atti should b

emple Shops11%

hase points

rket research

atisfaction in

whole. Co

us a brief ou

. A numbe

nces, prefer

purchase de

from differe

Guwahati,

ores, 24 % o

efer to purc

y increases

s for the sa

be increased

M

s for Agar

h particular

n the long ru

nsumer of

utline about

r of questi

rence for m

ecision of a

ent purcha

65% of the

of the consu

chase from

at the time

ale of the m

d in the tem

Mom & Pop sto65%

rbatti

rly because

un and mak

agarbatti in

t the deman

ions were a

monthly pu

agarbatti, pa

ase points

e total cons

umers prefer

m temple sh

e of some p

maximum am

mple stores p

ores

7

e it gives th

ke them loya

nterviewed i

nd patterns o

asked to th

urchase from

arameters fo

umers prefe

r to purchas

hops. Sale o

puja. So, th

mount of th

prior to som

78 

he

al

in

of

he

m

or

fer

se

of

he

he

me

79  

puja and auspicious occasions like New year, regional festivals, etc and those days when

footsteps in the temple increases.

Before product development, manufacture, branding packaging and launch in the market, the

following factors should be taken into account. The parameters that are given most

importance while making purchase decision by the consumers includes-fragrance, availability,

shop keepers influence, brand preference, packaging, advertisement, freebies, quality,

quantity and price .Out of 60 consumers surveyed in Tinsukia and Guwahati, 47 % of the total

consumers purchase agarbatti giving maximum preference to the fragrance, 13% of the

consumers give importance to availability, 10% people purchase agarbatti based on

shopkeepers influence. Besides this consumers gave different weightages to different factors

as shown in the figure above.

Fragrance47%

Availability13%

Price6%

Quality6%

Quantity6%

brand preference4%

Freebies1%

advertisement2%

Shoopkeeper influence10%

packaging5%

Fig 15:Factors influencing purchase decision

80  

Table 12: Consumers preferences

Statement % of respondents

Prefer to buy an Agarbatti which you had

tried earlier

15

Prefer to try out a new fragrance of

Agarbatti

25

Prefer to buy the least cost Agarbatti with

good fragrance.

17

Ready to pay premium price for herbal

Agarbatti

4

Prefer Agarbatti having good fragrance and

mosquito repellent property

25

Prefer to buy Agarbatti as a room freshner 14

From the above it can very well be seen that the demand for multi-purpose agarbatti is there

and therefore CBTC-BASIX should look for marketing multipurpose agarbatti.

The

pro

fact

sho

Thi

e most disli

omised, non

tors are ver

ould ensure

is can be do

Fra

iked parame

n-uniform st

ry well kep

that the abo

one by inten

agrance not s promised

35%

Fig 16

eters as high

ticks, masal

pt in mind

ove factors f

nsive quality

6:Cause of di

hlighted by

la falling of

by all the

for dislike d

y check befo

Non ust3

islike for a p

different co

ff the sticks

leading pla

doesn’t char

ore launch o

uniform ticks32%

articular bra

onsumers in

s easily, bur

ayers and th

racterize in

of its brand.

Burn

and of Agarb

nclude- frag

rn out easily

herefore CB

their brand

.

nt out easily24%

Compounfell off 9%

batti

8

grance not a

y, etc. Thes

BTC-BASIX

d of agarbatt

nds 

81 

as

se

X

ti.

Dem

arti

The

the

Raw

uns

incr

dem

mand of Ag

isan and trad

e village art

authors th

wbatti. Alm

satisfied.Ho

reased Re 1

mand had al

garbatti stick

ders in Assa

tisans who

hat whether

most 82% o

owever,the r

1 /Kg of aga

lso increase

Agarb

ks and price

am and Trip

were maki

they were

of the respo

respondents

arbatti stick

d .

Not Satisfi18%

Fig 17

batti stick m

e satisfactio

pura include

ng raw batt

satisfied w

ondent resp

s mentioned

k compared

ied

7:Price sat

maker’s opi

on as perceiv

es the follow

ti in the vil

with the pri

onded in th

d that they w

to the prev

Satis82

isfaction

inion

ved by the l

wing results

llages of Tr

ice that we

he positive

were happy

vious year a

sfied2%

local stick m

s.

ripura were

ere being p

while only

because th

and this was

8

making unit

enquired b

paid for the

y 16 % wer

e traders ha

s because th

82 

s

by

eir

re

ad

he

The

for

ther

resp

e responden

agarbatti. M

refore a pr

ponse.

nts of the pr

Most of the

reliminary d

has 

Fig 18:De

resent surve

ese respond

demand tre

decreased13%

has rem

emand tre

ey were als

dents were

end estimate

main stagnant6%

end for Ag

so asked abo

in the busi

e can be v

t

garbatti sti

out their pe

iness since

very well in

has incre81%

icks over t

erception of

more than

nferred from

eased%

the last 5 y

8

f the deman

5 years an

m the abov

years

83 

nd

nd

ve

84  

CBTC-BASIX LIVELIHOOD ENHANCEMENT

MODEL

85  

CBTC-BASIX Livelihood Enhancement Model

The proposed CBTC-BASIX model seeks to increase the economic benefits derived by poor

rural women producers from the incense (agarbatti) value chain within the context of a

sustainable resource base.It will also help in establishing an institutional framework for

women rural producers to increase production volumes, thus increasing their final share of

retail revenue from the market. Areas of focus include:

1. Train more women producers:

The CBTC-BASIX duo should develop and validate practices to build the capacity of women

producers to increase production volumes. To increase production capacity, the value chain’s

workforce should be expanded by incorporating new poor rural women producers into

different steps in the value chain. New women producers should be trained in techniques on

slivering bamboo, hand rolling, colouring, perfuming, scenting and packaging.

2. Develop a rural marketing network based on community production hubs:

This activity should formalize existing links between CEC entrepreneurs and CBTC-BASIX.

In addition, the number of CECs should also be expanded to include new women participants.

Initially, the CECs should act as suppliers to CBTC-BASIX, which should operate as the

main marketing center. In the future, it is anticipated that successful CECs should expand and

develop their own marketing networks. This CEC expansion should be supported by the

project. Eventually, this should result in a number of villages servicing multiple marketing

networks, thus increasing livelihood opportunities.

3. Develop a model for contractualisation:

CBTC-BASIX should develop contracts between itself and producer partners.

86  

To organise and enable poor rural women to sustainably produce and/or procure processed

bamboo, jiggat , charcoal and other inputs in the required quantities CBTC-BASIX can adopt

the following strategies.

Develop JFMC input supply chains and rolled agarbatti producers; training on

sustainable harvesting:

To increase outputs and long term production, availability of bamboo and other natural

resource inputs, such as charcoal powder and jigat, must be secured. In order to achieve this

goal, activities should mainly focus around strengthening the relationship between Joint

Forest Management Committees (JFMCs) and women producers, as well as, community

capacity building. Input supply chains with JFMCs for supply of jigat and charcoal powder

should be established to procure the necessary inputs for agarbatti production. Main activities

should include developing a new processing infrastructure with JFMCs which enable small

producers to access charcoal and jigat. This should involve establishing processing facilities

and distribution networks.

Develop a model for charcoal production units within JFMCs and household level:

Model drum charcoal production units should be set up and linked with CECs and individual

households. The existing system of collecting the charcoal produced during home-cooking

using firewood should be studied and organised better since it provides an economic

opportunity for poor rural women without additional investment. The study should include the

possible provision of firewood supplies, the use of split bamboo as firewood, and the local

development of firewood resources.

This model can be worked out properly and bamboo can be sustainably used in the Agarbatti

industry to:

• Establish sustainable organizations of the poor and networked them for continuing

economic activities.

• Diversify sources of household income, particularly for women and the landless.

• Increase control and access over means of production and produce by the communities

• Improve capacities of local governance institutions and community-based groups.

87  

• Increase the participation of people in local governance institutions’ activities and

resource mobilization.

• Improve cash flow and cash income availability through establishing market linkages

and market-driven production.

• Launch advocacy efforts and develop pressure groups that promote the formulation of

policies, which benefit the livelihoods of the rural poor

88  

Fig 19: CBTC-BASIX LIVELIHOOD ENHANCEMENT MODEL

Rural women rollers 

Joint Forest Management 

Committee (JFMC), under the supervision 

of the DFO

Jigat Bark Harvesters belonging to JFMC 

TRADERS 

All India agarbatti market 

CBTC‐BASIX marketing      wing 

Primary processors 

producing slivers and sticks 

North East Agarbatti market 

Productions Cluster of SHG.Each SHG consist of around 10 women rollers who are also able to sliver bamboo and prepare own 

masala. 

Charcoal Powder collected by women from household ash 

produced from fires or Drum kilns distributed 

Individual bamboo collectors and private 

growers.  

SOUTH INDIA Cos engaged in perfuming, 

packaging etc 

89  

Fig: 20: CBTC-BASIX AGARBATTI COOPERATIVE MODEL

AGARBATTI

INSURANCE

DIVIDEND

ON

SHARE

VILLAGE AGARBATTI COOPERATIVE SOCIETIES 

MARKET 

BONUS

OTHER BUSINESS SUPPORT

SALES REVENUE

     AGARBATTI 

DISTRICT AGARBATTI UNION 

INPUT SUPPORT

FOR AGARBATTI

MFG

ADDITIONAL PRICE

DIFFERENCES

SALES REVENUE 

                                     MEMBER PRODUCERS 

MONEYMONEY 

STATE AGARBATTI FEDERATION 

90  

BUSINESS STRATEGIES FOR CBTC-BASIX

91  

CBTC-BASICs should work in an integrated way on the following aspects -

Identifying the target group:

The project should primarily target poor home-based rural women producers living below the

poverty line. A minimum of 2000 poor rural women should be targeted in a state. The

following criterias should be considered for selecting women beneficiary:

1. They should live within the project area,

2. They should live below the poverty line,

3. They should have expressed willingness to enter the programme.

Important roles that can be played by CBTC-BASIX includes

Improving credit needs of women entrepreneurs

Traditionally, women producers have been restricted to primary processing of bamboo culms,

i.e. producing slivers (incense stick core), which is a very low value activity (about 2% of the

final value). Intervention of some NGOs is required to encourage women entrepreneurs for

taking up rolling of the sticks with masala. This can give them significantly higher returns.

Credit should also be facilitated for investing in various tools that would improve product

quality and quantity (bamboo cutters, powder pulverisers, etc).

In addition, as production is often home-based, individual women are often unable to attract

traders. Women that do sell to traders are unable to command high prices due to low volume

and also low quality .Furthermore, the overall low volume of production prevents private

companies from establishing their scenting, packaging and branding operations in North East.

Currently, rural households buy raw Agarbatti sticks and rolling is done in North -East,

shipped to South India for scenting, packaging of established brands, and then shipped back

and sold in Tripura as a much higher price. If this reverse transportation can be stopped by

carrying out the perfuming, packaging and branding in North-east India itself this can turn out

92  

to be even profitable venture. At present, unscented rolled sticks are transported to the South

India, incurring high transportation costs and taxes.

Improving volumes requires credit, which is currently not available to the women

participating in the business or to NGOs as well as self-help groups that sources and provides

inputs. Currently, the limited credit from grants or private funds does not allow for purchase

of larger volumes of inputs at lower prices in bulk. Part of the available credit also gets locked

up into sales credit to retailers and is not available for enhancing production. Intervention of

BASIX with its financial products will prove very successful in this model. Developing the

means for providing rural enterprises with greater access to financial services and working

credit should be the key.

Formation of community production hubs

CBTC –BASIX should facilitate the association of women producers into Self Help Groups

(SHGs). These groups should be are recognized by the government and banks, with the latter

providing opportunities for financing. Extension and technological agents like CBTC should

come into this business and with the training and “esteemed” status they had as extension

agents and experience in organization and coordination, they should join hands with different

SHGs. Such alliances can lead to the creation of the Community Production Hubs (CPHs),

with some entrepreneurial producers becoming entrepreneurs and coordinating a hub of

home-based microenterprises. These CPHs will be free to supply to CBTC-BASIX or directly

to other buyers or even the market. However, on supply to CBTC-BASIX, they will

experience low risks and they will receive transparent and timely payments. In addition,

increasing profits from greater value addition activities will enable CBTC-BASIX to increase

payment rates on each kilo of rolled batti.

Institutionalizing and formalizing the systems:

Most bamboo stick production is done through an informal contract system, with individual

producers supplying to individual traders. This gave traders “control” over their clutch of

unorganized bamboo stick producers. Traders also formed a cartel that maintained low

remuneration to workers. There are two such associations of traders in Kumarghat, Tripura.

93  

CBTC-BASIX can change this; it can provide formality in the system like has been done by

TRIBAC. TRIBAC has put in place a large number of village extension agents sourced from

the very villages they serviced on the principle that peer pressure from the village would push

them to perform. It provided them training in batti rolling and they in turn organized training

in villages supported by TRIBAC specialists. It enabled women to work in TRIBAC premises

if they wished and be linked to it directly. It encouraged them to undertake home-based

production. CBTC with its vast resource of finance, technical manpower, and expertise in

bamboo products in collaboration with BASIX which has a long experience in livelihood

sector and meeting credit need can be the befitting answer to the question of rural poverty

prevalent in north eastern States.

To establish institutional mechanisms to facilitate access to credit by poor rural women

producers the following points can be taken into account:

1. Use the setup of microfinance institution (MFI) :

The Small Industries Development Bank of India (SIDBI) can be approached for facilitating

sufficient credit needs of the MFI besides some grants for capacity building. The MFI should

initially provide funding through CBTC-BASIX to most Community production hubs. As it

gains experience, lending should be broadened to include other units in the agarbatti sector.

2. Training and handholding of Community production centres to access, utilise and repay

credit:

Training should be provided to all eligible Community production hubs on accessing, utilising

and repaying credit. Regular analysis should be conducted to determine the cash needs of the

Community production hubs.

94  

Critical Issues and Upgrading Strategies which should be covered in CBTC-BASIX

business model

Competition in Urban/Export Markets and Transportation Costs

The introduction and popularization of the higher value-added rolled battis by CBTC-BASIX

will prove to be useful, given that the volumes of this intermediate product have been rising

rapidly. Yet, much potential income is lost due to the high transportation cost that is

traditionally done by road, using trucks with a loading capacity of around 10 tons. This has an

intrinsic advantage in that a truck could go directly from a consolidator in North East India to

a major manufacturer of finished agarbattis in South India. The move from bamboo sticks

supply to rolled batti supply has a shipping packaging issue that need to be addressed.

Currently, shipping of bamboo sticks is done in jute gunny sacks. Bundles of sticks are loaded

into the sacks that are stitched and loaded in the truck. Handling is rough; sacks are thrown.

While this does not affect bamboo sticks, rolled battis suffer breakage of the dried masala

rolled on to the stick and/or its separation from the bamboo stick on which it is rolled on to.

An alternative transportation option is to ship rolled battis by train (after resolving the

packaging issue). However, the volume of the covered railway wagons is quite large. If

CBTC-BASIX sources the agarbatti from Tripura then a depot is needed in Guwahati to

consolidate shipments brought by truck from Tripura. This should also enable accessing the

market-place in Guwahati from where smaller agents source their supplies.

A third possibility is to enter into scenting accompanied by high end packaging and branding.

At present, rural producers have limited knowledge and experience of modern business

practices and marketing strategies. Therefore, their products often fail to meet the

requirements of high-end national and international markets, which have higher quality and

quantity standards than those of traditional local markets. While production of scented

agarbattis for the local market should be initiated in a small way with local brands by CBTC-

BASIX, development of packaging and brand building has to be pursued and upgraded to

cater to the requirements of higher end urban and even export markets.

95  

Many micro and small enterprises involved in agarbatti making are being squeezed out of the

market, especially in South India. One major reason for this is the lack of a formal marketing

system, including market and institutional support to enable rural producers to develop direct

market linkages with regional and national suppliers. Proper and timely market information is

not available to rural producers and they have no financial means to conduct market surveys

to identify consumer preferences. A for-profit marketing company needs to be established to

overcome constraints due to operational and financial constraints of the non-profit nature of

different NGOs working in this sector. This should be able to access higher lines of credit

available to SMEs, and also set up and manage the proposed Guwahati depot and later

distribution depots closer to major buyers and markets. The higher credit availability and end-

to-end depots should enable moving from FOB to CIF which should enable a greater share of

value added derived from financing.

To organise and enable poor rural women to sustainably produce and/or procure processed

bamboo, jigat and charcoal inputs in required quantities

1. Develop more CPHs (entreprenuership development, empowerment): The number of

production clusters should be raised by increasing the number of Community Production

Hubs (CPHs). In order to achieve this, promising and enterprising primary producers should

be given business training and provided handholding services and access to inputs and credit.

2. Develop depots with Community Prodcution Hubs (CPH) for inputs distribution and

collection of rolled incense sticks with payment system:

Depots for the hand-rolled incense sticks should be created at the CPHs to ensure efficient

collection and distribution.

3. Map local resources through PRA /PEEL methods for utilization of alternative raw

materials in agarbatti:

To support resource base development activities, participatory experience and experience

through learning (PEEL) methods should be employed to assess the use of alternative raw

materials in conjunction with currently used inputs, charcoal powder and jigat, to reduce

96  

pressure on the existing resource base. The local availability of these alternative raw materials

and/or substitutes should be mapped and their quality assessed.

4. Develop a model for private plantations of jiggat and bamboo:

Rural producers should be trained on how to cultivate and harvest bamboo using sustainable

methods. This should also include training communities to use sustainable tree bark

harvesting techniques. Importantly, the project should focus on developing a model for

ensuring a long term sustainable resource base for jigat, which is largely supplied from

outside of North eastern states, by establishing private plantations in the region itself.

5. Develop JFMC input supply chains and rolled agarbatti producers; training on sustainable

harvesting:

To increase outputs and long term production, availability of bamboo and other natural

resource inputs, such as charcoal powder and jigat, must be secured. The project should

devise management and control mechanisms to ensure rural women producers independently

and sustainably produce and, or, procure processed bamboo, jiggat and charcoal inputs in

required quantities within the context of environmentally sustainable practices. In order to

achieve this goal, activities should mainly focus around strengthening the relationship

between Joint Forest Management Committees (JFMCs) and women producers, as well as,

community capacity building. Input supply chains with JFMCs for supply of jigat and

charcoal powder should be established to procure the necessary inputs for agarbatti

production. Main activities should include developing a new processing infrastructure with

JFMCs which enable small producers to access charcoal and jigat. This should involve

establishing processing facilities and distribution networks.

6. Develop a model for charcoal production units within JFMCs and household level: Model

drum charcoal production units should be set up and linked with CPHs and individual

households. The existing system of collecting the charcoal produced during home-cooking

using firewood should be studied and organised better since it provides an economic

opportunity for poor rural women without additional investment. The study should include the

possible provision of firewood supplies, the use of split bamboo as firewood, and the local

development of firewood resources.

97  

Marketing strategies and institutional linkages:

To develop marketing strategies and establish institutional arrangements including marketing

linkages with major private buyers, improve retail and shipping packaging, and

enhance/develop brand identities, for deriving greater market share in local, regional and

national markets outside North Eastern Region the following points can be considered by

CBTC-BASIX.

1. Set up for-profit marketing company: A for-profit company should be established. This

should access larger credit lines from its parent company BASIX. The technological

intervention and extension wing acan be very well be controlled by CBTC.

2. Develop a marketing strategy:A marketing strategy should be developed backed by market

surveys. In order to expand the market reach and access of rural small producers of agarbatti,

the project should conduct market studies to identify the changing trends and consumer

preferences. The market study should include activities, such as surveys and questionnaires.

Other data should be obtained from review of previous agarbatti marketing literature. The

project should also monitor changes in both the national and international agarbatti markets.

Based on this input, CBTC-BASIX staff should provide rural small producers with market

intelligence services. This should enable rural communities to adopt production and

marketing strategies, which best reflect current market trends.

3. Establish market distribution depot: A consolidation cum distribution depot should be

established in Guwahati, Assam. As experience is gained, such depots should also be

established close to major buyers such as Bangalore and Mysore which should take place at

the same time as movement from FOB to CIF.

4. Establish contractual linkages with private companies/fairtrade shops:Draft contracts

should be developed and put in place between Production Clusters and private companies

(buyers), and CBTC-BASIX marketing company and private companies (buyers). The

marketing company should also develop model contracts with fairtrade shops.

98  

5. Mapping of competing value chains; based on comparative advantages, develop

competitive strategies:This should be done in tandem with the marketing study/strategy

development, and should be periodically monitored and updated.

6. Develop shipping packaging (as compared to current gunny bags used): Appropriate

packaging for shipping should be developed for long-distance transportation of rolled

agarbatties that reduces or eliminates damage to the masala.

7. Enhance and develop brand identity: The brand identity and awareness can be developed

with inputs from different brand development firms and assistance from INBAR’s Global

Marketing Initiative (GMI) if CBTC-BASIX can approach for the same.

8. Study alternative transportation means, determine steps to be taken:

A comparative financial analysis of various transportation means, including location of

logistical arrangements such as depots etc should be undertaken. In particular, rail transport

should be focussed on. Given that a metre-guage railway is operating from Kumarghat in

northern Tripura, but transhipment to the broad-guage railway should be needed at Silchar or

Guwahati in Assam, evaluation of the logistic plan and shipping packaging should be made to

arrive at the most competitive arrangement. A trucking system that transports from collection

centres/CECs/TRIBAC Gandhigram to the metre-guage railhead or even directly to the broad-

guage railhead with an initial investment in hiring/owning one dedicated truck and later more

as needed should also be evaluated.

The raw materials for the unit should be procured from the Self Help Groups/Joint Forest

Management Committee/ Producer groups. The packaging and scenting materials should be

collected from Kolkata. We believe that there are sufficient immediate opportunities for the

establishment of Agarbatti manufacturing clusters in Assam and Tripura and at the North East

Regional level in order to establish and flourish the National Bamboo Mission in its entirety.

The whole of Tripura and Assam, we recommend that the initial implementation be

completed on a more pragmatic, project–by-project basis with a strong provincial focus.

Initially, this work should be co-ordinated through the district wise programme and local

partners.

99  

A distinct state programme should be established when the scale and momentum warrants it.

To reduce complexity and management bottlenecks, the core programme should not seek to

manage the funding and delivery of all the activities needed, but act in a co-ordination and

facilitation role between donors, governments and other sector participants. At both a regional

and state level, some activities should be managed and funded through the core programme,

while others should be implemented by other organisations that are broadly aligned to the

overall framework for the development of the sector.

Future Perspective of the CBTC-BASIX Agarbatti producer:

The incentives of the CBTC-BASIX Model also helps return an increased productivity from

the producers. The same aspect of the human nature of acquiring more wealth and thus a

stable future being the primary motivating factor for our producers to deliver optimum

productivity. The sense of pride as the makers of a top global brand of agarbatti adds on to

their motivation. Producers will be aware that optimum productivity along with consistent

quality should result in more business and thus a bigger Producers Fund. As a result, our

producers will produce consistent quality at optimum productivity, with a very good work

culture.

Business strategies of the CBTC-BASIX brand of agarbatti:

As far as the end consumer is concerned, CBTC-BASIX incense sticks should offer an

excellent deal in terms of value for money and quality of fragrance. Each agarbatti should

burn for at least 30-35 minutes and quality tested after meeting specified parameters set to

fulfil customer’s need. All the price gaps available in the market should be filled up. Agarbatti

are low involvement products whose purchases are often impulsive. A customer makes

purchase of agarbatti based on attributes like-impressive packaging, fragrance, availability or

price.

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For a brand to be successful four things are important:

Product: The product should have all the attributes that are considered to be of worth to the

consumer.

Price: Value based pricing can be used. Continuous customer value analysis of the product

will help us to determine the relative worth of our brand or product in relation to the

competitors and thus help us price the product according to the value perceived by the

customer. All the price gaps available in the market should be filled up. In this case the

strategy followed by ITC can be adopted. Agarbatti packets of various price ranges should be

made available so that it can cater to the markets of all the three consumer segments- high,

medium and low. There should also be a premium end product developed exclusively for the

export markets and big retail chains.

Place: The product should be made readily available right from the kirana stores to the big

malls and retail chains.

Promotion: Launching the product initially in a big way will help in brand awareness

generation. The impact of the brand launch through advertisement should be such that the

customers are able to recollect the brand at any point of time when he goes to purchase

agarbatti. The CBTC-BASIX can tie-up with Sify/Yahoo/Gmail to sell its agarbattis online.

More than selling online, the idea should be to reach the web subscriber base and announce its

arrival.

Segmentation of brands:

The company can segment its market into three major parts:

1. Production of premium agarbatti brands with an herbal touch for international markets.

This can attract those segments of people who are interested in social well being through

community based approach for sustainable development in the developing countries.

2. Production of Agarbatti for high, middle and low end segments of the society.

3. Producing mosquito repellent agarbatti and look out for possible sale to the government

schemes such as the National Health Mission for malaria control.

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Since the price of Agarbatti is less, there is little scope for brand loyalty for this type of

product .Under product come product attributes and benefits. We have to see whether the

product is satisfying consumer’s requirements. If this is not done then the product features

need to be modified to suit the consumer’s requirements. Having done so will help us to at

least fulfil the consumer’s need if not the loyalty. Providing consistent quality to the consumer

is the trick of trade in Agarbatti business. Price include whether the price fixed for the product

is according to perceived price by the customer or it is more or less. If the difference is large

then this has to be reduced. In our case since, most of the consumers of Agarbatti (around

62%) are small and marginal so price plays an important role in determining purchase

behaviour. Place focuses on availability of the product. Whether the product is available

conveniently to the customers or not is also a concern that needs to be taken into

consideration.. The CBTC-BAISIX can very well be marketed in big trade fairs initially and

among the community of its partner producers. Promotion is also known as communication

means communication of features of the product to the would-be-customers. The brand has to

acquire mind space of consumer of Agarbatti. The brand awareness can be increased by

organising or promoting consumer panels where the benefits of using the particular brand will

be discussed. The main contact point of the consumer of Agarbatti with the company is the

retail stores. The dealers or retailers should push the product more by telling its features to the

consumer of Agarbatti. The consumer of Agarbatti meeting can be best in this case, since

large number of people can be addressed by these. In these meetings consumer of Agarbatti

should be given pamphlets where the details of the product corporate social responsibility

initiative should be highlighted and how the consumers can be a partner to this social

marketing. Besides, these should focus the CBTC-BASIX Agarbattis benefits over the other

products. Since there also exists bulk purchasers the product should also be available to them

in large containers and the size of each individual packet should be increased as there are

chances of packets being stolen during transit from factory to place of sale.

No strategy will work unless there is proper communication. Unless it is done, product cannot

be made popular. The need of the hour is to organize consumer of Agarbatti meetings to

promote the product effectively. The other ways of increasing brand awareness are

advertising. The media which can be used are newspaper and radio. The ads should make

consumer of Agarbatti aware about the benefits of the product. Initially, the consumer of

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Agarbatti should be given some free trial to use the product after which feedback should be

generated to further refine it. CBTC-BASIX model prioritizes a baser aspect of human nature

(acquiring wealth) while incorporating a finer aspect of human nature (charity). The success

of this business depends upon the co-operation and sincerity of the trading partners.

In the case of Agarbatti the brand push dominates the pull. Most of the consumer of Agarbatti

make sub contracted decisions. They follow the advice of the retailer. The company should

instruct the dealers/retailer to inform consumer of Agarbatti about the special features of the

product. Some consumer of Agarbatti are hesitant to use the product, they should be

convinced to give product a trial which will surely lead to brand acceptability. The Agarbatti

have experience attribute. It means we cannot determine the quality of an Agarbatti packet

unless we use it. When we experience the performance of the product then only we are

satisfied or unsatisfied with the product. The satisfaction result in continuous use of the

product and gradually credence develops and the user becomes loyal customer of the product.

We have to develop this credence. All the efforts should be directed towards this only. If this

credence is broken in the future then we have to again bring the customer to the attribute level

i.e. the benefits of the product. It is continuous process.

Tie- up with Exim Bank for promotion of agarbattis in the overseas markets:

CBTC-BASIX can tie up with Exim Bank for providing export marketing services to leverage

the Bank’s overseas presence to promote agarbatti with buyers, importers and distributors

abroad. The Bank can:

(a) Help locate business partners for CBTC-BASIX brand of Agarbatti

(b) ldentify customers for CBTC-BASIX products directly or through its associates and

initiate negotiations with them while CBTC-BASIX will finalise the deal and ensure

supplies and deliveries.

The Export Marketing Service offered by Exim Bank can supplement CBTC-BASIX’s efforts

to expand export markets. CBTC-BASIX partnership with Exim Bank will help make quality

agarbattis available to consumers in other parts of the world. In the process, the cottage and

small sectors which make the agarbattis for CBTC-BASIX be greatly benefited.

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Herbal bio-pesticide and mosquito repellent Agarbatti:

The Central Institute of Medicinal and Aromatic Plants, Lucknow, has already developed a

herbal formulation for repelling mosquitoes and providing fragrance at the same time. The

formulation can be directly used without any mixture in the preparation of agarbattis,

dhoopbattis, lotion, spray and floor emulsion. The Government has already chalked out a

strategy to commercialize these products for mass production and consumption

Geneva-based International Fragrance Association (IFRA) has put out a negative list of as

many as 30 chemicals, which should not be used in any sort of fragrance, and the CBTC-

BASIX should strictly following this code. This is necessary, especially if we have to look at

agarbatti exports seriously, as international buyers are sticklers for such norms.

The proposed model on the incense stick value chain has the potential to play a pivotal role in

benefiting large numbers of poor rural women and enabling them to derive a larger value

share, while ensuring that this large sector with an extensive production system does so in an

environmentally benign manner. The main benefits to women producers should include,

increasing production volumes, sustainable production of inputs, improving quality and

conforming to standards, and developing an enabling policy environment.

The model would also upgrade activities of women currently working in the CBTC-BASIX

model. For example, women slivering bamboo should also be trained to prepare masala paste,

thus increasing their annual income. Furthermore, women outside the CBTC-BASIX model,

or those who are currently unemployed, should also be provided with training in value adding

activities, such as Agarbatti rolling. These new women should increase the production

volume.

CBTC-BASIX should gradually established marketing linkages with companies operating in

the North Eastern States. However, a significant amount of CBTC-BASIX sales should be

targeted by backward marketing into local producer communities. Links to companies and

markets should be promoted through developing higher quality and standards of production,

104  

along with higher volumes. Bamboo sliver dimensions should be standardized, and improved

masala developed.

Contract models developed should help formalize the sector. The mobile phone network

should help coordinate production, logistics and enhance sales by improving market

knowledge and coordinated transportation of raw materials and goods. In addition, the project

should develop community enterprise clusters, which should enhance production and

competitiveness.

Sensory Branding:

Sensory branding can be applied to any of the business - service or FMCG sector particularly

agarbatti. The different senses that can be used in FMCG are:

1. Sound: Here we can quote an example by Martin Lindstorm of Coke. According to him,

whenever a user opens the website of Coca Cola - a sound of Fizz while opening coke should

be there. With that as these days people go to hypermarkets and buy in bulk, so they spend lot

of time there. So the experience out there is important. And the right music there can really

help. Also these big FMCG giants occupy one section for their respective projects. So they

can utilize the space.

2. Sight: There are different dimensions here. First is the packaging which is normally said the

5th P of marketing. You know after HLL getting a tough competition from Regional players

in India, because of packaging, started focusing a lot in this area. Looks definitely matter.

Other thing is retail displays/ merchandising. If the products are placed at the eye level, there

is a high chance of consumers to buy them.

3. Smell: As mentioned in point 1, with music, aroma of different products according to the

company or the product categories can also be introduced. Then in case of Agarbattis, soaps,

perfumes, deodorant, toothpaste, smell plays a major role.

4. Taste: It is more of a product attribute and is considered to be a tangible. Obviously Nestle

Maggi Noodles should taste which will force buyers to refill their empty stock next time they

visit retail.

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5. Touch: There are some products like class books like ITC's Classmate for which the quality

of the paper is very important.

BASIX-CBTC should always keep in mind some of the above while branding its agarbatti.

Other Recommendations

1. The agarbatti workers of North eastern states should be covered under a piece-rate

Minimum Wage Legislation, which should be implemented throughout the region.

2. A census of agarbatti workers should be carried out and each worker should be given an

identity card because they are neither registered nor counted anywhere at present.

3. They should be covered by the Provident Fund Act. They should get privilege leave and a

bonus every year.

4. They should get the facilities of social security schemes like insurance, maternity benefit,

scholarship, housing, crèches, dispensaries etc.

5 A cess should be charged on agarbatti and from that cess fund, workers’ welfare schemes

should be provided. The management of this fund should be administered by a Tripartite

Board involving workers’ representations.

6. Since their home is their work place, they should be provided with loans and subsidies to

improve their housing.

7. They should be provided with better working tools including gloves, aprons and masks.

8. There should be special educational schemes to reduce child labour within the agarbatti

industry.

Annexure I

Case study on TRIBAC, Agartala

Tripura Bamboo and Cane Development Centre (TRIBAC) is an autonomous, community-

based non-profit organization conceptualized and initiated by INBAR( International

Network for Bamboo and Rattan), which has given special emphasis on increasing

Livelihood Opportunities and Socio-Economic Development using Bamboo through a

Community-based Industrial Approach. TRIBAC is working in Tripura to promote Cluster

based sustainable Micro, Small and Medium Enterprise Development.TRIBAC has also

initiated to produce own branded hand rolled scented agarbatti through developing SHG

marketing capacity. At Gandhigram Crafts Processing Centre, the finished scented agarbatti

is prepared and marketed locally under the brand names of Neermahal, Rangamati and

Longtrai. TRIBAC is also producing mosquito herbal batti through community SHGs

members.

TRIBAC has focused on micro finance need of the artisans and MSE as working capital.

Keeping in view this need the TRIBAC suggests that:

a. Micro Finance Institute has to be invited for facilitating the artisans like

BANDHAN, which is a Kolkata based MFI.

b. SRIMA Grameen Bank could be promoted.

c. NABARD & RGVN can also support the funding to any agency.

  107

Table 13: Income per month for the different TRIBAC Clusters

S.No. Activity Income (Rs.) P.M. Remarks

01. Bamboo Agarbatti Sticks

Production

Rs. 1200.00 to

1500.00

Maximum women involvement

and without any initial

investment requirement. 100%

buy back market guarantee and

365 days employment.

02. Hand Rolled Agarbatti

Production

Rs. 750.00 to

Rs.1200.00

Maximum women involvement

and without any initial

investment requirement. 100%

buy back market guarantee and

365 days employment.

03. Production of Bamboo

Charcoal

Rs. 1500.00 to

Rs.2000.00

Male also involved

04. Perfuming & Packaging

of Branded Agarbatti

Rs.3500.00 to

Rs.4000.00

Women are involved in piece-

meal basis.

The annual production at TRIBAC in 2002 was estimated at 60 billion sticks. With a CAGR

of 20%, production now could be expected to be around 100 billion sticks. A kilo of rolled

batti can have from 2000-4000 sticks.

In-store Advertising in supermarkets/hypermarkets: In store advertising can be done by

including ads on shopping cards, cart straps, aisles and shelves as well as promotion options

as in-store demonstration and life sampling.

Annexure II

ADDRESSES OF RAW MATERIALS SUPPLIERS:

1 M/s Ravi Flour Mills & Industries 339 Bapujinagar,Mysore Road,

Bangalore – 2

2 M/s H.P. Nanjudiah Setty & Sons 62 Gundopath Street, Bangalore – 53

3 M/s Ramachandra Pulverisers &

Industries

IV Main Road, New Tharagpupet

Bagalore-2 4.

4 M/s Shakti Flour Mills Swantantra Building,R.K.

Puram,Bangalore – 9

5 Shri Venkateswara & Co. No.11,Thulasi Thota

Road,Bangalore–53

6 Lakshmi Grinding Mills Mysore Road, Bangalore – 26

7 Mastan Khan & Sons 14 Pension on MohallaI Cross

Mysore Road, Bangalore – 18

8 G. Anand Rama Setty & Sons 242 Sulthanpet, Bangalore.

9 M/s Mahalakshmi Flour Mills

T-64 Gundopanth

St.Bangalore – 53

109  

PERFUME SUPPLIERS:

1 Pushpa Perfumery Products 138 Akkipet Main Road, Bangalore – 2

2 Lala Banara Dass Khattri Kannauj (UP)

3 Saibaba Sugandh Bhandar 53 Sultapet,Bangalore – 53

4 Goodshould Agencies Keshav Nivas,24 I Main Road,P.B. No. 9715

Gandhinagar,Bangalore – 560 009

5 Naresh Trading Co. 36 K.V. Temple Street, Bangalore – 53

6 The Easter Essence Emporium 204 Nagarthpet ,Bangalore – 2

7 Aromatic Agencies 36 K.V. Temple Street, Bangalore.

8 G.M. Ahuja & Co. 15-Old Kasai Road, Behind Raja Market, Bangalore– 2

9 M/s Bharani Agencies P.B. 9506,Gandh Nagar,Bangalore – 9

10 Mascheijer Aromatics (India) Pvt. L I Floor,Haji Market,OK Road, Bangalore – 2

11 Aromatic (India) Pvt. Ltd. 38 Link road, Bangalore – 3

PACKING (PAPER, POLYTHENE COVERS, POLYTHENE /LITHO PRINTING)

1   M/s Lakshmi Paper Industries 33-Town Rly.Station Road, Salem – 1, Tamil nadu.

2 The Paper Products Limited 60 Chinthamani Street ,Madras – 1

3    R.K. Paper Industries C-18 Ambattur Industrial Estate, Madras – 58

4   The National Litho Press P.B. No. 30 Railway Feeder Road

Sivakasi (India)

5    The Orient Litho Press P.B. No. 17 Shivakasi.

110  

References:

Padmanabhan. Mohan, (2006). ITC agarbatti unit working with AP on hand-cut bamboo,

Bussinessline

Damodaran. A, Bamboo Technology Mission: The shoot of the matter is..., Business Line,

2002, May 31

AIAMA (All India Agarbatti Manufacturers Association (AIAMA). 1992. Paper presented

at the International Seminar on Forest-based Raw Materials: Trends in Packaging,

Marketing and Perfumery. AIAMA, Bangalore, India.

INBAR (International Network for Bamboo and Rattan). 1994. Constraints to Production of

Bamboo and Rattan. Report of a Consultation held from 9 to 13 May 1994, Bangalore, India.

INBAR Technical Report No. 5. INBAR, New Delhi. 245p.

NCAER (National Council of Applied Economic Research). 1990. Agarbattis: Market and

Marketing - a Survey of Households. NCAER, New Delhi, (mimeograph).

Rajendran, S; Hanumappa, H.G. 1992. NGOs in Boosting Social Forestry: a Case Study of

Tamil Nadu. Kurukshetra, August 1992. Pp13-15. New Delhi, India.

Madhab J, The Green Gold: Under Exploited Wealth of the North East India

Planning Commission: National Mission on Bamboo Technology and Trade Development

(2003)

National Mission on Bamboo Applications. Various documents.

Cane & Bamboo News, Quality bulletin of CBTC. Vol. I. No. 4

111  

Acknowledgements

The study was jointly funded by Cane and Bamboo Technology Centre, Guwahati and BASIX,

Hyderabad. This study has involved contributions from several organisations. The experience

and insights provided by the contributors have enabled the study to cover a broad range of

issues. Organisations that have contributed to the Study include:

• International Network for Bamboo and Rattan (INBAR), Beijing, China

• Tripura Cane and Bamboo development Centre (TRIBAC), Agartala

• Jayanti Domestic Products (ITC Ltd Franchisee), Agartala

•Tripura Bamboo Sticks Traders Association, Kumarghat

• PCCF, Forest Department, Govt of Tripura

• Cane and Bamboo Technology Centre, Guwahati

• BASIX, Hyderabad

• Swaranga Agrotech Pvt. Ltd., Industrial Estate, Borguri, Tinsukia

• M/S Anjani Industries, Bhimpara Road, Nau- Pukhuri, Tinsukia

• Bon Jobi Associates, Industrial Estate, Borguri, Tinsukia

• Tirupati Cottage Industries, Nau- Pukhuri, Tinsukia

• Gaolia Bamboo Products, Hijubari, Tinsukia

112  

Comments and suggestions

This report is distributed internally as part of a process of wider consultation. During this

process, the findings and implications of the study should be discussed with key stakeholders

through a series of meetings and individual discussions. A final version of the report should be

published in 31st July, 2008, including comments and feedback from the consultation process.

All recipients of this report are invited to provide comments and feedback and to contact us to

discuss any issues raised or areas of particular interest for the future.

Please contact:

Bedanga Bordoloi and Etali Sarmah

PGPABM II year

S 63 and S 29,

Hostel 2,

National Institute of Agricultural Extension Management (MANAGE),

Hyderabad -500030,

Andhra Pradesh

Phone: 040-24016702-09 Ext: 507

Mobile: 09392458468

Email: [email protected], [email protected]