Agarbatti Manufacturing Essay

AGARBATTI MANUFACTURING PRODUCT OFFERED The burning incense in religious and social functions has been practised in India, since early times. Dhup an aromatic powder or paste is burnt in Indian homes as a Fragrant fumigant and is reputed to possess insecticidal and antiseptic properties. Agarbatiis also known as dubattis similar to joss sticks are a development of dhup. Agarbattis are obtainable in different colours and with different perfumes. The burning time of agarbatti varies from 15 minutes to 3 hours depending on quality and size.

Majority of agarbattis manufactured are of cheap quality containing only charcoal poweder, low quality sandal wood powder with wood gum powder. Agarbatti industry is labour intensive cottage type of traditional activity in India. The main 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 agarbatties. 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).

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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. This sector has tremendous potential and is capable of creating livelihood opportunities in the rural/ semi urban pockets, especially for the women. It is a cottage industry, as a result of which large-scale employment can be created to generate self employment and increase standard of living. BENEFIT OR VALUE PROPOSITION:

Locally made low cost incense sticks with long lasting strong fragrance. These incense sticks would add a soothing effect to the surroundings. MARKET SIZE ESTIMATION: Agarbattis are used by many communities in India daily for performing puja. Agarbattis are also used in some of the foreign countries. Hence, it has good-demand. This industry can be set up with less investment in small areas. 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%.

Almost two-third of consumption takes place in rural areas (66. 66). The poor (low income group) purchase about 46% of the value of the agarbatti compared to the higher income customers who buy 54% of total agarbatti used. jajpur district population| 1622868| population growth rate average | 1. 17%| 2010 population estimate| 1801976| estimated market [email protected]%| 180198| Fgures according to 2001 census. | Assuming 10% adoption rate by population of jajpur district. MANUFACTURING PROCESS: Charcoal powder, white chip powder, jiget powder, sandle powder are mixed using water and dough is made.

Dough is rolled on bamboo sticks normally. Raw agarbattis can be perfumed either by dipping in perfumed or by spraying the perfumes on the raw agarbattis. MACHINES TOOLS OR TECHNOLOGY REQUIRED TO START A BUSINESS: * Wooden planks for rolling * Weighing balance * Hand sieves * Plastic trays * Wooden racks * Plastic buckets * Plastic mugs * Steel, blending vessels PRODUCTION CAPACITY PER ANNUM Capacity – 145000 packets Cost per packet – Rs 2 COMPETITION: Local incense sticks are available in the local market but there is no manufacturing unit in that place. B.

SWARUP INCENSE (P) LTD is one such competitor having manufacturing plant in Sonepur district. MARKET ENTRY STRATEGY: Price kept is Rs 2 per packet of 40 incense sticks which is quite low. The price penetration strategy would be used . The product would be sold in kirana shops in jajpur district. Direct home delivery for nearby areas can be used. For distribution, tie-up with local dealers can be used to sell the product in nearby areas. SCALE OF THE PROJECT: A unit of agarbatti would require 3 persons . This unit can be scaled up easily with minimum increase in fixed cost.

To scale up, there would be significant increase in working capital which is the major cost component with minor increase in fixed cost. FINANCIALS : INVESTMENT REQUIRED: (All amounts in Rs and quantity in Kgs) CAPITAL INVESTMENT | | | | | S. No| Description | amount | | | | 1| Preliminary and preoperative expenses| 5000| | | | 2| fixed capital| 5300| | | | 3| Working capital (for 2 months)| 43750| | | | | Total Project Cost| 54050| | | | | | | | | | FIXED CAPITAL | | | | | Machinery and equipment | | | | | S. No| Description | quantity| amount | | | 1| Wooden planks for rolling | 5| 750| | | | Weighing balance| 1| 1000| | | 3| Hand sieves| 10| 300| | | 4| Plastic trays| 5| 500| | | 5| Wooden racks| 3| 1500| | | 6| Plastic buckets| 4| 200| | | 7| Plastic mugs| 5| 50| | | 8| Steel, blending vessels |  | 1000| | | | Total |  | 5300| | | | | | | | | WORKING CAPITAL| | | | | Salaries and wages (per month)| | | | | S. No| Description | quantity| amount | | | 1| Supervisor/ enterprenuer| 1| 2000| | | 2| Skilled labours| 2| 3000| | | | Total |  | 5000| | | | | | | | | Raw materials (per month)| | | | | S. No| Description | quantity| amount (Rs)| | | | Charcoal powder| 70| 700| | | 2| Charcoal powder| 70| 2100| | | 3| white chip powder| 30| 1050| | | 4| sandle powder| 20| 1200| | | 5| sticks| 75| 1125| | | 6| perfumes| 20| 7000| | | 7| Packaging material| 1| 1000| | | | Total|  | 14175| | | | | | | | | Utilities per month| | | | | S. No| Description | amount | | | | 1| power| 300| | | | 2| water | 300| | | | | Total| 600| | | | | | | | | | Other expenses | | | | | S. No| Description | amount | | | | 1| postage and statinary expenses| 200| | | | 2| transportation expenses| 300| | | | 3| advertisement expenses| 500| | | | | miscellaneous expenses| 100| | | | | Total| 1100| | | | | | | | | | Total working capital per month| | | | | S. No. | Description| amount | | | | 1| salaries and wages| 5000| | | | 2| raw materials| 14175| | | | 3| utilities| 600| | | | 4| other expenses | 1100| | | | | Total| 20875| | | | | | | | | | Cost of production per annum| | | | | S. No. | Description| amount| | | | 1| total working capital| 250500| | | | 2| depriciation @15%| 795| | | | | total| 251295| | | | | | | | | | Turnover per year| | | | | S. No. | Description| unit| quantity| rate (Rs. | amonut| 1| agarbatti packets of 40 each| packets| 145000| 2| 290000|  | total|  |  |  | 290000| | | | | | | Profit analysis and ratios| | | | | 1| net profit| 38705| | | | 2| percent of profit on sales| 13%| | | | 3| percent of ROI| 72%| | | | | | | | | | Sources : NSIC (national small scale industries) project files : Agarbathi manufacturing http://www. 123orissa. com/exploreorissa/distinfo/jajpur. asp http://www. indianyellowpages. com/company/B-Swarup-Incense-P-Ltd/ http://mastec. nic. in/Dhuk_making. htm http://www. caneandbamboo. org/pdf/news_update/agarbati%20study%20basix. pdf

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