EXECUTIVE SUMMARY The definition of small-scale industries has undergone significant changes over time. Initially, they were classified into two categories- 1) those using power with less than 50 employees and 2) those not using power with the employee strength being more than 50 but less than 100. However, now the capital resources invested on plant and machinery buildings are the primary criteria to differentiate between small-scale industries and the large and medium scale industries. There have been significant improvements in the structure of small scale industries over the period of time. The conventional small-scale industries differ from their present counterparts in many respects. The conventional units were highly labour intensive with old machineries and conventional techniques of production resulting in poor productivity rate whereas the modern small- scale units are much more productive with less manpower and more sophisticated equipments. Sikkim has a good resource base for Non Timber Forest Products (NTFP). The diverse altitude is idyllic for the cultivation of a variety of herbs which can be used in the manufacture of medicines, cosmetics and aromatic products. But, the absence of lucrative marketing network and the lack of appropriate processing facilities for manufacturing quality finished products have resulted in most of the products being 1
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EXECUTIVE SUMMARY
The definition of small-scale industries has undergone significant changes over time.
Initially, they were classified into two categories- 1) those using power with less than 50
employees and 2) those not using power with the employee strength being more than 50 but less
than 100. However, now the capital resources invested on plant and machinery buildings are the
primary criteria to differentiate between small-scale industries and the large and medium scale
industries. There have been significant improvements in the structure of small scale industries
over the period of time. The conventional small-scale industries differ from their present
counterparts in many respects. The conventional units were highly labour intensive with old
machineries and conventional techniques of production resulting in poor productivity rate
whereas the modern small-scale units are much more productive with less manpower and more
sophisticated equipments.
Sikkim has a good resource base for Non Timber Forest Products (NTFP). The diverse
altitude is idyllic for the cultivation of a variety of herbs which can be used in the manufacture of
medicines, cosmetics and aromatic products. But, the absence of lucrative marketing network
and the lack of appropriate processing facilities for manufacturing quality finished products have
resulted in most of the products being sold at uncompetitive prices to other state as raw material
for processing.
With the above facts in mind, I was encouraged to perform an exploratory study of the
available cottage and small scale industries, in any, in my village of Rungdung, Rhenock. During
my initial observations, I was unable to find any industries which followed the above criteria and
which can be called a Small Scale Industry. By further exploring the village, I came to know
about three industries which were present in my village.
The paper deals with exploring the operations in these identified small scale industries and how
they sustain themselves. Also, it will be focusing on the measures which can be taken up for the
expansion and growth of the sector.
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1. INTRODUCTION - Small Scale Industry and Indian Economy
The Small Scale Industry sector is an important segment of the Indian economy and accounts
for 95% of the industrial units, 40% of output of the manufacturing sector, 35% of the overall
exports and offers jobs to around 18 million people1. Small scale industry sector acts as a major
force in promoting the industrial growth and enhances the overall economic growth. It provides
opportunities for entrepreneurship, self employment and enterprise creation, thus, providing a
solution to the crisis of both unemployment and disguised unemployment. The growth rate
recorded by the Small Scale Industries sector has normally been higher than that of the industrial
sector as a whole. The Government of India has facilitated the small scale sector through
supportive policy measures since adoption of planned economy model. The basic policy support
for SSI sector has its route in the Industrial Policy Resolution of 1956. Further, the Industrial
Policy Statement, 1977, highlighted reservation of products. The reservation of economically
feasible Small Scale Industries began with a list of 47 items which was gradually increased to
numerous products. Currently, 811 items are on the reserved list. Other policy supports which
could be listed are - excise exemptions , traded under priority sector lending from banks and
financial institutions , marketing support through reservation of items for products from Small
Scale Industries sector for government purchases, providing infra structure facilities like sheds,
plots in industrial states, technological support, new management techniques, training and
entrepreneurship developments.SSI Sector plays a major role in India's present export
performance. 45%-50% of the Indian Exports is contributed by SSI Sector. Direct exports from
the SSI Sector account for nearly 35% of total exports. Besides direct exports, it is estimated that
small-scale industrial units contribute around 15% to exports indirectly. This takes place through
merchant exporters, trading houses and export houses. They may also be in the form of export
orders from large units or the production of parts and components for use for finished exportable
goods.
Non-traditional products account for more than 95% of the Small scale industry exports.
The small-scale sector has grown rapidly over the years. The growth rates during the various
plan periods have been very impressive. When the performance of this sector is viewed against
1 Annual Report 2008-2009, Ministry of Micro, Small and Medium Enterprises
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the growth in the manufacturing and the industry sector as a whole, it instils assurance in the
resilience of the small-scale industry sector.
2. OBJECTIVE
The main objectives of my study in exploring the small scale and cottage industries were:
1. To understand the working and process of available small scale industries in the
village.
2. To identify the role of small scale industries in livelihood opportunities for the local
people.
3. To explore the traditional knowledge base of the people and the way they deploy it
in the small scale industry
3. METHODS USED
To investigate the various processes carried out in the cottage industry, I employed both formal
and non-formal techniques. For the primary data collection:
Informal chats with locals
To locate and identify the industries in the area, I had to talk informally to local villagers
over cups of tea. The industries were not located exactly in the village, but a few
minutes’ walk near the village. Not a lot of people were aware of the existence of these
industries. Also, the industries were spaced far apart from each other; hence it was
difficult to find their exact locations.
Structured Interviews with industry owners
After identifying the industries, I conducted structured interviews with the proprietors of
the industries regarding the production, procurement and marketing process. These
interviews were conducted at the industry site for better understanding.
Semi Structured interviews with workers at the industries
To get a better insight of the accurate working of the industry, I conducted few semi
structured interviews with the workers of these industries.
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The secondary data regarding the industries was collected from the website of the Ministry of
Micro, Small and Medium Enterprises, Government of India. Apart from that, various research
papers were referred for data gathering, the list of which is furnished in the References.
4. FINDINGS OF STUDY - AVAILABLE INDUSTRIES AT RUNGDUNG
After initial investigation with the locals, I was able to identify three key industries in and
around Rungdung. These were:
1. Hritu Organic Tea
2. Bhumi Masale
3. NGOs Incense Sticks and Dhoop
Apart from these three major industries, there were three Self Help Groups which carried
out production processes, but not at a significantly commercial level.
4.1 Hritu Organic Tea
4.1.1 Overview
The industry was set up by Mr. Hemant Nirula, a retired policeman from Gangtok. He
was helped by his nephew Mr. Thakur Katera in the business. Mr. Nirula started the factory at
Rhenock Bazaar in the year 2009. Mr. Nirula owns 2 acre tea estate in Kalimpong, in the
Darjeeling district of West Bengal. As the tea industry in Darjeeling is very competitive and
getting license to produce tea is difficult to obtain, Mr. Nirula thought of two solutions which
curbed both his problems:
1. Shifting to Organic tea production, the market of which is still naïve and amateur
2. Producing tea in Sikkim as there are no licenses required in Sikkim.
But he is still unable to sell the in the market due to the lack of the license. He is eligible to sell
the tea only after –
a. Tea has been tested in the laboratory for the authenticity check of it being organic, and
b. The company receives a license from the Tea Board of India.
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What exactly is organic tea?
Organic variety of tea is tea produced by plants which are grown without the use of
chemical pesticides or fertilizers. The soil is enriched with natural compost and a layer of mulch
retains the moisture while providing extra nutrients as it breaks down. This growing method is
more labour-intensive but produces superior quality tea. It has a strong flavour and taste.
The advantages of Organic Tea are:
The organic tea contains antioxidants that provide many of the health benefits. Scientific
studies have shown that the antioxidants called polyphenols and catechins are found in
higher concentrations in good quality tea.
Organic tea is also better for the tea farmer. Tea plants can live more than 100 years, and
organic farming methods allow the tea plants to remain healthy for the duration of their
lifespan. This means that the farmer has less expense in replacing tea plants.
Antioxidants protect the cells from a natural process called “oxidative stress”. Although
oxygen is vital for life, oxidation produces free radicals that damage human cells. This
damaging, physiological process works against the immune system and is also
responsible for ageing Antioxidants help our body eliminate these harmful free radicals.
In fact a decrease in the level of antioxidants is proportional to the increased risk from
cancer, heart attacks and umpteen other health disorders. In fact a new research shows
that antioxidants in tea may actually help fight cataract – one of the primary causes of
blindness globally.
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4.1.2 Flowchart of Tea Production
Figure 1: Flowchart of Tea Production
4.1.3 Inputs before Production
The raw material to be used for making the tea is grown in the tea estate owned by Mr.
Nirula himself. It has to be made sure that no artificial or chemical fertilizers and pesticides are
used during the process of growing of the plants. To increase the productivity and still maintain
the organic status of the tea, two major processes have to be performed:
Growth and development of the tea sapling into a mature plant takes nearly 5-6 years.
The tea leaves which are being used presently to make the tea are picked off the plants
which had been put in 2000.
For increasing the fertility of the soil, natural fertilizers made out of cow dung and tea
ash are used.
To protect the plants from any pest attacks, a natural pesticide is produced using two
plants – Haathibaug and Angeri. Both these plants are put into water and pressed until
the juice from them comes out and mixes with water. This mixture of water and plant
juice then acts like a natural pesticide and is sprayed in the fields.
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There have been times when the pests have been immune to the natural fertilizers used.
In that case, to maintain the organic status of the tea, tongs are used to pick the pests
from individual tea leaves. These pests are then burnt.
4.1.4 Procurement of Raw Materials
The raw materials required for the production is tea leaves. This method requires the
Picking and transport of the leaves from Kalimpong to Rhenock. The tea leaves are picked once
a week. Due to the low capacity of production, the leaves are brought to the factory in a
consignment of 15 kg each time. For transporting the raw materials, Mr. Nirula uses his private
vehicle.
Apart from tea leaves, the only form of raw material which is left and required is the packing
materials.
4.1.5 Processing
The processing phase consists of five processes:
Withering Rolling Fermenting Drying Grading
Each process is explained below:
4.1.5.1 Withering
Withering is the process in which the tea leaves are placed in a large container and blow
drying the tea leaves to make them dehydrate. The leaves lose water and become flat and
flaccid. The water content is lost and leaves contain 50 % moisture only. This process
takes about 7-8 hours.
4.1.5.2 Rolling
The withered tea leaves are put on a flat platform and rolled. The principal objective of
rolling is to undertake cell rupture so that progressive breakdown of cellular organelles
takes place. The process results in contact of cell sap leading to intermixing of chemical
constituents and enzymes in the presence of atmospheric oxygen to form the important
chemical constituents responsible for characteristics of tea. This is the advent of the
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fermentation process where oxidation begins. The Rolling is carried out on a table. The
process of rolling applies pressure and twist between leaves as well as between leaf and
surface of the equipment used for rolling. Resulting friction causes heat, which in excess
will hasten the chemical reactions to result in the formation of undesirable constituents
detrimental to the quality. The cell rupture in the small and tender shoots is completed
faster and chemical reactions set in earlier while the coarser leaves require a little more
time. Also the leaf, which has already undergone size reduction and twisting after some
amount of rolling, impedes twisting of larger leaf, which may extend the period of
rolling.
4.1.5.3 Fermenting
The rolled tea leaves are put in a plastic bag and left for fermentation. The process takes
around hours, but depends on the climatic conditions. In summers it takes 4 hours,
whereas in winters it can take up to 7 hours. The relative humidity also plays an
important role in this process. During this process, the leaves turn from green to
yellowish black.
4.1.5.4 Drying
The fermented leaves are then put in a hot dryer, which is a closed compartment with a
heater inside blowing out hot air. The leaves are placed on a sieve so that the smaller
particles get filtered immediately. The main objectives of drying are:
To arrest enzyme reaction as well as oxidation,
To remove moisture from the leaf particles and to produce a stable product with
good keeping quality.
The outcome of the process is black collared leaves of tea which is the finished product
for the process.
4.1.5.5 Grading
In this process, the output of drying is placed on sieves of various size holes. Tea ranges
in size from that of a speck of dust to a leaf approximately 4 cm long and 1cm wide. Each
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sieve has a grading involved with it. The finest sieve is supposed to be of the lowest
grade. Whole Leaf Grades are the largest sizes produced and depending on the actual
grade within the section may range from a long and wiry stem, 1 cm to 2 cm in length, to
a round and knobby twisted leaf similar in size and shape to that of a small garden pea.
The dust falling through the finest sieve is used again as manure in the farms.
4.1.6 Packaging
The tea is packaged in an airtight polythene bag and placed in a cardboard box. The quantity of
each box is 100 Gms. The box is procured from Siliguri at the cost of Rs 3.6 per box. The box
contains the name, registration number and the contact of the producers. Packing is done
manually using adhesives.
4.1.7 Input Output Analysis
Inputs include-
Labour cost
Employed 7 workers - 3 at the factory and 4 at the tea estate. The salaries paid are Rs
1500 per month for the factory workers and Rs 1200 per month + shelter for the workers
at the field. The sum total comes out to be Rs 9,300 per month on labour.
Raw Material
The cost of raw material can be calculated as the sum of the cost of manure and natural
pesticide. As cow dung is freely available, it has no significant cost. Also, the
Haathibaug and Angeri plants are grown wildly, therefore, again they can be obtained for
free.
Transport Cost
The transport cost comes out to be approximately Rs 600 per round trip.
Production Cost
Apart for the labour, the production cost would include the electricity and maintenance
cost.
Packaging Cost
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The packet cost is Rs 3.6 for every 100 gm box, accounting to Rs 36 per kg of tea. Apart
from that, the polythene covers would also cost a minimal amount. We can assume the
packing expenditure with Polythene bags to be Rs 40 per kilogram.
Table 1: Input details
Sr No. Input Quantity Monetary Value
1. Tea leaves 225 kg Rs 1,000
2. Labour 7 Rs 9,300
3. Approximate cost of fertilizer 100 kg Rs 1000
Output produces:
For every 4.5 kg of tea leaves, 1 kg of tea is produced. In one cycle, a total of 1.5 kg of tea leaves
are processed, hence producing 0.3 kg of tea. In one month, the amount of tea produced is 50
kgs. The cost of tea in the market is Rs 1000 per kg. Hence, analyzing the input – output
expenditure and revenue per month, we will get:
Table 2: Output Details
Sr No. Output Quantity Monetary Value
1. Processed Tea 50 kg Rs 50,000
2. Tea Ash 5 Rs 100
4.1.7 Marketing
As described earlier, presently the company is not able to sell its produce commercially due to
the unavailability of license to sell. Therefore, for the time being they cater to only order based
production. They have applied for a license and will soon be receiving one. They have sent a few
samples to contacts which they have formed over an exporter’s website called
www.exportersindia.com. But the unawareness about the products and the utility of organic yield
is acting as an inhibitor for their business. People prefer buying the inorganic alternative of tea,
which would cost Rs 150 per kg, as compared to the Hritu Organic tea at Rs 1,000 per kg. The
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company does not have a local market, but has customers from Gangtok who get the product on
order basis. They have also sent samples to tea traders in New Delhi and Gujarat.
Due to this factor, the production has been kept to a low level. If there will be an increased
demand in the market, the production can increase. A SWOT Analysis of the company:
Table 3: SWOT Analysis of Hritu Organic Tea
Strength Weakness
• High demand in international markets
• Low competition in the specific product
• Low Awareness about Organic foods
• High cost and competition by Inorganic
produce
• Lack of technical knowhow
• Low local market demand
• Air tight packing
Opportunities Threats
• Tea plantations in Sikkim
• Export Markets
• Competition by inorganic products
• Pest attacks
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4.1.8 Approximated Financial Statements
Profit and Loss Account
Table 4: Approximate Profit and Loss Account for Hritu Organic Tea
Particulars Amount (in Rs) Particulars Amount (in Rs)
Wages and Salaries 1,11,600 Gross Profit 5,76,000
Electricity Expenses 5,400
Transport Cost 30,000
Packaging Cost 24,000
Depreciation 6,000
Net Profit 3,99,000
TOTAL 5,76,000 TOTAL 5,76,000
The balance sheet could be created due to lack of accounting data with the organization.
4.1.9 Reflections
This industry has a good scope of becoming a major organic tea producing company in the near
future. Some of the main observations and reflections which I had were:
They were not too keen on the getting the license and were constantly procrastinating the
process, even though they could’ve got the license by now. This is in fact due to the low
sale which they have in the local markets.
The company has a good scope in the international market due to the increased demand
of organic food stuff and edibles.
They can diversify their industry by also venturing into the commercial production of the
natural pesticides which they use in their own fields.
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4.2 Bhumi Masale
4.2.1 Overview
This industry was started in the year 2000 as a production venture by a SHG called Nari Jagruti
Manch, a group of 10 Lepcha ladies. The SHG was helped by the Sikkim Rural Development
Agency (SRDA) to set up a small mill for the production of Masale by taking the local produce
from the farmers. The members of the SHG were very enthused by the idea, but no one had
thought about the other expenditures which were due in the course of action, the major
expenditure being setting up a 3-Phase electricity line for the working of the mill. Apart from
this, the SHG had to keep a worker for the physical work. They saw that most of their savings of
the kitty were going into financing the industry and none was left for giving out loans. Apart
from this, there were some issues with the SHG, because of which the SHG members decided to
split. The mill provided by SRDA was acquired by Mrs. Roma Lepcha, one of the members of
the SHG and a small individual unit was setup in her homestead.
4.2.2 Products
The factory produces majorly 5 kinds of Masale, all for consumption. These include:
i. Chilli Powder
ii. Haldi (Turmeric) Powder
iii. Meat Masala
iv. Ginger Powder
v. Mix Vegetable Masala
The Masale are sold in packets of 50 gms each, with their cost varying from Rs 15 to Rs 27 per
packet, depending upon the kind of masala.
4.2.3 Capital Investment
The major capital which was invested in the factory was under the following heads:
3-Phase line : Rs 42,000
Fitting and Fixtures : Rs 2,000
Furniture of the factory: Rs 2,000
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Weight Balance: Rs 1,000
As the factory is at the homestead, there was no expenditure on land or building. The factory
functions in the basement of the house.
4.2.4 Raw Material
For the various masale which are produced in the factory, the raw material requirement differs
for each. The specifications of the raw materials for each masala are listed below:
Table 5: Ingredient Details of Products
Sr No. Masala Ingredients
1 Chilli Powder Dried red chillies
2 Haldi Powder Dried Haldi pieces
3 Meat Masala Dried Chilli, Coriander, Cumin Seeds, Pepper, Mustard,
This particular facility present in Rungdung is essentially a production plant for an NGO
headquartered at Gangtok. The NGO – Gagan Beli Gram Vikas Sangh is a Non profit
organization working in the field on vocational education and rural livelihood promotion. The
president of the NGO is Mr. Akash Lama, who is also the resource person for this production
facility present in Rungdung. Mr. Lama is a resident of Gangtok, but is presently residing in
Rungdung to supervise the working of the production plant.
4.3.2 Products
The facility majorly produces two forms of products, which again have their categories. The
products produced are:
1. NGO’s Incense Stick
i. NGO Incense Dhoop
ii. Organic Incense Dhoop
iii. Rhododendron Dhoop
2. NGO’s Havan Saamagri
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The dhoop is sold in two sizes packets, where the packet sizes various according to the
number of sticks in the packet. The Havan Saamagri is sold in two sizes again, with the sizes
varying by the quantity of saamagri contained in it.
4.3.3 Capital Investment
The facility is basically a large hall built on the land of Mr. Akash Lama. This facility was
planned to be placed here strategically because- a) The land belonged to Mr. Lama and b) It is
well connected by road with Gangtok and other major cities of Sikkim. Also, another factor in
locating the industry in this part might be the proximity to Siliguri, which is a major market of
North East India. The investment put into the setting up of the facility includes:
Building cost : Rs 55,000
Land: Owned by Mr Lama. The price of land in this part of Sikkim (as per the Panchayat
officials) is somewhere around Rs 8 lakh per acre. This facility was built on a land of
1500 feet2 . Thus, the approximate value of the land is Rs 25,000 to Rs 30,000.
Three Phase Line: This was provided free of charge by the Government of Sikkim as a
subsidy to the NGO.
Milling Machine: This machine was provided to the NGO as a subsidy by the Department
of Commerce and Industries, Sikkim.
There has been a lump sum investment in the raw materials required for the industry to
produce. The investment is worth Rs 7 lakh.
The mechanical tools and apparatus within the facility are worth Rs 8,000.
4.3.4 Raw Materials
The major raw materials required for the production of the dhoop and havan saamagri are as
follows:
Malagiri Tree bark
The malagiri tree has a scented bark which is used as the base material for the
production of dhoop sticks. It is widely found in the hills of North Sikkim where the
climatic conditions are more drastic and temperatures are quite low.
Juniper leaves
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Juniper is an upright spreading shrub with red-brown, papery bark and juvenile foliage
only, consisting of whorls of three sharply pointed, dark green to blue-green leaves that
have a single white stripe on the inner surface. Juniper is a bitter, aromatic herb that has
antiseptic and diuretic properties, improving digestion, stimulating the uterus and
reducing inflammation. This is used to enhance the aromatic property of the dhoop. The
smaller pieces of juniper and malagiri bark are also used to form the havan saamagri.
Phampak or Phamsey
This is a yellow coloured fruit which is commonly found in the forest areas of Sikkim.
This fruit is a double layered fruit with yellow shell and a white coloured seed. The
outside of the fruit is dried and used for consumption. The inner seed of the fruit is used
for making the glue which is the bonding agent of the dhoop stick.
Rhododendron flower
A wide variety of rhododendron species are used o produce the desired fragrance of
dhoop sticks. But this is limited to only a few months of production and that too in a
smaller quantity. This is not the main stay of the business.
Artifical Chemical Scents
These scents are used as substitutes for the original materials. They are chemicals which
can be used in smaller quantities to have a better fragrance. But, they are volatile and
need to be kept in closed containers.
Miscellaneous materials
There are other materials which are used in smaller but proportionate quantities in a
measure of 10 kgs of malagiri to produce the desired aroma. Some of the major ones are
listed below:
o Kesar or Saffron
o Camphor (to increase the flammability)
o Jatte (or Sikkim Sandalwood)
o White Sandalwood
o Gokul stone powder
o Red Sandalwood
o Rudak- creeper plant
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These raw materials also have some or the other property which makes them an
indispensible part of the composition. For instance, Jatte is supposed to be a cleaner of polluted
air. Also, the rudak is believed to attract the tiger in the jungles. Hence, other insects, such as
mosquitoes repel the scent of this creeper.
4.3.5 Procurement
The base materials of the dhoop, i.e. Malagiri tree bark and Juniper are brought in trucks
from the forests of North Sikkim near Lachen. They are found in abundance and hence can easily
be availed within the state. Phampak or Phamsey grows wildly in the forests. It can procured
from there. Other materials such as artificial scents are bought from traders in Siliguri. The
minor scent powders - Gokul and Rudak are procured from Himachal Pradesh and the
Sandalwood from Karnataka.
The Sikkim Government has provided the license of procuring the Malagiri and Juniper
from North Sikkim. Hence, as an inventory, they have purchased raw material worth 7 lakh. The
material is kept in the facility.
4.3.6 Production
The production of the dhoop is a four phase process:
Figure 3: Production Process Flowchart
Grinding
This process involved the preparation of the base material for making the dhoop sticks.
The base material or Malagiri tree bark is broken into smaller pieces, mixed with Juniper
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Grinding Mixing and Kneading Shaping Drying
leaves and put into a mill. The mill outputs the powdered form of the Malagiri and
juniper mixture.
Mixing and Kneading
The powder of Malagiri and juniper is then mixed with a variety of materials in specified
proportions to create particular flavours. Also, camphor is mixed with the mixture to
increase the burning capacity of the mixture. This creates the final mixture which forms
the masala to be put on the stick.
After the mixture is created, it is kneaded into together into thick paste using water and
Phamphak juice. The phampak juice has bonding properties and makes the materials stay
together in the form of a hard semi solid paste.
Shaping
After the kneading is done and a semi solid paste structure is produces, the paste is
converted into very thin rope like structures, which are the wet forms of the dhoop sticks.
Unlike the agarbatti which we get in the markets, this dhoop is not pasted on a bamboo
stick, rather it is placed on a long tray to dry.
Drying
The drying process takes around 3 days for the dhoop sticks to dry and harden into the
desired shape and size. But, they are very fragile and break into pieces if pressure is
applied.
After drying, the products are wrapped in gelatine sheets and placed in cartons in packs of 20
sticks and 40 sticks each. The waste products of the milling process and broken pieces of dhoop
sticks are used as inputs for the havan saamagri.
4.3.7 Marketing
As this facility is only a production plant, it does not market the output itself. It acts as a
resource for the NGO which performs the functions of marketing and selling the products.
Usually, the NGO provides these dhoop sticks to all the major shops in the tourist areas, as
tourists are attracted towards local products. You can easily find the green boxes of these dhoop
sticks in shops near the tourist areas in Gangtok.
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The USP of the product is that it can be used by any community and for any purpose.
Also, they have diversified the market to various specialized products, such as- Organic Dhoop,
Buddhist Dhoop or Rhododendron Dhoop. Some of their major buyers are the monasteries of
Gompas of Sikkim. The Rhododendron dhoop is extensively purchased by the Gompas during its
blooming seasons. The additional motivating factor for a customer is the fact that the
organization is an NGO and gives 2 % of the profits in charity. This is clearly stated on the
cartons of the dhoop.
4.3.8 Input Output Analysis
We can break up the input cost into the following heads per packet of dhoop:
Table 10: Input Value chain analysis for Incense Sticks
Sr No. Input Quantity Monetary Value
1. Malagiri 50 gms Rs 1.5
2. Juniper 10 gms Rs 0.5
3. Other materials 100 gms Rs 4
4. Packing cost 1 Rs 1
TOTAL 1 box Rs 7
Apart from the various material costs given in the table above, the facility employees 11
labourers for the production work at a wage rate of:
o Male : Rs 103 per day
o Female : Rs 80 per day
Also, the facility has a three phase electricity supply for running of the mill. But the cost
for the electricity is paid by the Department of Commerce and Industries, Government of
Sikkim.
4.3.9 Financial Statements
Profit and Loss Account
As we do not have data of the amount of sales for the past fiscal year, it is not possible to
calculate the gross profit for the whole year. Also, as it was only the production unit, there was
no record of the forecasted figures for the remaining year. They only worked on supply and
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demand figures. Therefore, we will assume the sale of 1 box and calculate the gross profit for the
sale of one box.
Table 11: Income Statement for one box
Particulars Amount (in Rs)
Sale of box Rs 20
Less: Cost of Goods Sold (Rs 7)
Gross Profit Rs 13
Transport Cost* Rs 2
Cost of Labour per box* Rs 3
Net Profit Rs 82
It is not possible to draw the balance sheet as we do not have any details about the
financial data of the company. The available data has been tried and put into analytical format.
4.3.10 Analysis
Table 12: SWOT Analysis for NGO Incense Sticks
Strength Weakness
• High demand in national and
international markets
• Rhododendron
• Proximity to major consumers
• Diverse products
• Help from the Government
• Unavailability of raw materials locally
• Expensive raw materials
• Transport
• Use of weighing balance
Opportunities Threats
2 This information was provided by the supervisor at the production plant. This information could not be falsified as there was lack of proper recording of sales figures.*The information has been assumed based on the information received from the industry.
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• Export Markets
• Target consumers- tourists
• No insurance
• Cost
• Natural Calamity
4.3.11 Reflections
The first impression of the industry was more of a storage unit than a processing one due to the
amount of raw material kept in just one room. Some of the key reflections and observations
which need mention are:
The industry does not have insurance policy. The amount of raw material kept in the
factory is enormous amount of inventory to be maintained without a backup plan. Also,
the inventory is highly flammable and can cause damage of man and material.
Another noticeable point was that the female workers were paid lesser wages than the
male workers. This was new from the point of view of Sikkimese society where there is
hardly any discrimination on the basis of sex.
The processing was efficient and almost 40 packets were produced in one day, which is a
profit of Rs 320 on one single day.
Recommendations
There is a wide scope of incorporating a social model into this structure. Such models can be
utilized for employment generation for the handicapped people. As the work does not require
much labour and can be set up with a small amount of investment, it looks like a feasible option
for a sustainable source of livelihood. On similar lines, we can work on other industries where
such models can be incorporated.
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3. CONCLUSION
Cottage and Small scale industries provide an alternative opportunity than agriculture for the
people of the village to take part in the main scale economy of the country as a whole. My
personal reflections of all the industries as a whole can be summarized in the following points:
There is a high capacity of untapped resources in the village which can be utilized in a
much better way than left idle. These resources can be used in a productive way to
generate revenue for individuals, or the community as a whole.
What are lacking is the marketing facilities and mechanisms in the region. If there can be
a common society initiated in the village, which can take up the responsibility to ensure
proper rates of supply to the market and linkages to the various market entry points, the
condition of the poor marketing systems can also be improved. The main problems
which can be notices are:
Poor infrastructure facilities
Lack of technological up gradation, hence the competition kills the market of the
traditionally produced goods.
Lack of institutional credit facilities
There is a strong need of research and development in the various fields in which the
small scale industries operate. The expert analysis of the processes followed should be
considered before production.
The lack of skilled personnel also poses a question of optimum production of available
natural resources by not so efficient human resources, leading to sub-quality produce.
The cottage industries provide a good source of sustainable livelihoods for the villagers.
There is not a lot of investment in setting up a small unit and the returns can be
maximized by application of the above two points.
There is a good scope for the application of the P4 approach – People, Public, Private
Partnership3. There is a scope for formation of similar industry clusters in the area giving
it more visibility and a proper market channel.
3 Jenner V.G, “Agarbattis: A sustainable Bamboo Cluster Based Rural Enterprise Development in North Eastern region of India through P4 Approach”
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There is a strong necessity of better financing organizations in this area. There is good
scope for the interventions of microfinance institutions as there is a lack of money
supply. People are ready to spend, but there are no institutions to get to.
REFERENCES
Jenner V.G, “Agarbattis: A sustainable Bamboo Cluster Based Rural Enterprise
Development in North Eastern region of India through P4 Approach”