dpr neha fnl

August 12, 2017 | Author: Naina Verma | Category: Incense, Labour Economics, Taxes, Competition, Retail
Share Embed Donate

Short Description

Download dpr neha fnl...



Submitted for evaluation At The Faculty of Management Studies Mody Institute of Technology & Science, Laxmangarh (Sikar) (Deemed university u/s 3 of the UGC Act, 1956)


NEHA VERMA Enrollment No.:- 080050 MBA- Semester IV


“To Whom It May Concern”

This is to certify that the comprehensive project report on “AGARBATTI INDUSTRY” is a bonafide work carried out by me. The matter embodied in the comprehensive project report has not been submitted earlier for award of any degree or diploma to the best of my knowledge and belief.

Signature of the Promoter Name of the Promoter Date

FACULTY GUIDE’S CERTIFICATE “To Whom It May Concern” This is to certify that the Comprehensive project report on “AGARBATTI INDUSTRY” submitted by Neha Verma is a bonafide work carried out by her, under my guidance. The matter embodies in this comprehensive project report has not been submitted earlier for award of any degree or diploma to the best of my knowledge and belief.

Signature of the Promoter

Signature of the guide

Name of the Promoter

Name of Faculty Guide



I would like to express my deepest gratitude to all the people, who have helped me in the successful completion of the detailed project report. I pay my heartiest thanks to Mr. Vishal Vyas, faculty FMS for his focused guidance and strong support, without which I would not have been able to accomplish the project successfully. It is indeed my pleasure and privilege to thank all the manufacturers, dealers and the retailers for helping me in revealing me the facts and figures about the Agarbatti Industry. I also extend my thanks to them for helping me in doing the market survey and filling in the true details in the questionnaires. I am thankful to my Dean, Mr. Saroj Dutta and also owe sincere gratitude towards him for giving me a chance to exploit my ability under his able guidance. Last but not the least; I extend my special thanks to all mighty and my parents for this great success.

EXECUTIVE SUMMARY It has been a good learning experience to do the detailed project reports on setting up of the Agarbatti industry in the RIICO industrial area, Jaipur as a part of my MBA program. The study has been made an attempt to gain better understanding about how actually the manufacturing plant is set up. Under this, at first I generated the product idea of Agarbatti Industry. The main objective of the project is to the study the feasibility analysis of the Agarbatti Industry. Then the market analysis was done through the survey in form of questionnaires and interviews of the, wholesalers and retailers. After this the demand analysis was done by using the statistical techniques. With this the demand estimation, the technical analysis was done. After completing the technical analysis, the financial analysis was done to check the financial feasibility of the project. On the whole it was a wonderful experience & a great learning opportunity. The complete project added to my theoretical knowledge.


1.) Firm And Promoters 2.) Industry Scenario 3.) Introduction 4.) PORTER’S Five Force 5.) SWOT Analysis of AGARBATTI INDUSTRY 6.) Market Analysis a. Geographical Area b. Objective of the survey c. Methodology Adopted d. Interpretations of questionnaire for wholesalers e. Interpretations of questionnaire for retailers 7.)

Demand Analysis a. Demand Estimation b. Supply Estimation c. Demand-Supply Gap Estimation d. Marketing channel e. Marketing Strategies

8.) Technical Analysis a. Manufacturing Process b. Process Flow Diagram c. Selection of location d. Plant and Machinery Required e. Raw Material Required f. Manpower Requirement 10.) Financial Analysis a. Cost of the project & Means of Finance b. Basic Assumptions underlying Financial Projections 11.) Bibliography

PROMOTER’S IDEA The idea of Agarbatti Manufacturing is my own and reasons for choosing this are as follows 1. The growth rate of this industry is high i.e. 10%. 2. Consumption of Agarbatti is more. 3. New entrants can easily establish themselves in the market because the % of unorganised sector is high. Thus, taking all of the above factors into account the idea of Agarbatti Manufacturing industry was generated.

FIRM AND PROMOTERS Firm:The firm will be a proprietorship firm and will function from Jaipur under the concerned person’s name.

Location:-RIICO Jaipur.

Promoter:Decision for entrepreneurship is always promoted by 5 major reasons. They are:-

Personal Characteristics

Personal Environment

Personal Goals Decision to Behave Entrepreneurially

Business Environment


Moreover, it is a Idea/Innovation that leads towards Entrepreneurship i.e.; idea comes first and entrepreneurship follows afterwards.

INDUSTRY SCENARIO Industrial development in India has occurred mostly to meet increasing urban consumer needs and to support the growth of the vital agricultural sector. The traditional home based enterprises have also been simultaneously experiencing steady growth, primarily because of the influence of market forces and also because of multiplier effects. Cottage industries have slowly changed to rural cottage or semiurban micro-enterprises with limited assistance from government. Agarbatti making is one such industry. It 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.

INTRODUCTION Agarbatti (incense sticks) form part and parcel of the traditional Hindu practice of offering prayers in temples and other places of worship. 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.

 History The origin of agarbatti-making as a cottage industry can be traced to Thanjavur region of TamilNadu from where it spread to the neighbouring state of Karnataka, which currently is the largest producer in India, and to a lesser extent to Andhra Pradesh, Gujarat and Bihar. 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.

 INDIAN SCENARIO Agarbatti industry is gradually developing a wider base. Of the total domestic sales of Rs 7.1 billion (approx. US$ 198 million) in 1989/90, South India accounted for 35%, West 30%, North 18% and East 17%. Almost two-thirds of consumption took place in rural areas (61.23%). The poor (low-income group) purchases about 46% of the value

of the agarbatti compared with the higher income customers who buy 54%. However, categorizing purchases into five income classes shows an inverse relationship between income and the purchase of agarbatti. The factors influencing purchasing decisions are: the quality, brand name preference and cost. 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 800 registered and 3000 unregistered units currently exist in the country and only up to 10% of these, mostly in Karnataka, are engaged in export trade.

 CHARACTERISTICS 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.

 RAW MATERIALS AND SOURCES The major raw materials used in the agarbatti industry are: Bamboo sticks •

wood charcoal

processed perfumes

jigat powder (an adhesive-like substance made from powdered bark of the Maclilus makarantha tree)

These are collected through contract labour system, which is widespread in the unorganized sector and leads to wide differences in wages because of the differences in minimum wage that exist among different states. Moreover, since families are contracted and agarbatti workers in these families are mostly women, some child labour input occurs, mainly to assist the family business.

Bamboo is the preferred species for making sticks, but timber from several other species are used as substitute. In 1989-90, the preparation of the sticks alone involved about 30 million workdays. "Rolling" the sticks to glue on the incense paste and incorporate charcoal powder (the end-product of rolling is "non-masala" sticks) also employs a large labour force. The raw materials - sticks, paste and charcoal - are provided by entrepreneurs and the rolling is done largely at home. Rolled sticks are purchased in units of 1000. Addition of the incense, to make "masala" agarbatties is usually done in factories owned by microenterprises. The ratio of labour is approximately 80% home based to 20% factory based. Home based labourers are linked to factories through local business units. Finished agarbattis are packed in paper or cardboard tubes. Usually paper from printing presses or cardboard is supplied to labourers under tie-up arrangements to produce the requisite packaging. Previously, bamboo required for making the sticks was available from the Western Ghats. Currently, most of it comes from North-East India. MacliIus makarantha, the source for Jigat is rapidly decreasing in South India (where main manufacturing sites of agarbattis are located) and is increasingly being obtained from the northern states such as Uttar Pradesh. Charcoal is largely from Prosopis juliflora, which mostly comes from Tamil Nadu. The cost of these basic ingredients and the labour to produce the raw agarbattis accounts for only 10% of the cost of finished agarbattis. Three times that cost represents the perfumery ingredients of which two-thirds are imported. The various blending and individual ingredients are generally treated as "trade secrets".

• PRODUCTION AND CONSUMPTION PATTERNS A market survey by the National Council of Applied Economic Research (NCAER) put the total quantity of agarbatti produced in the country at 147 billion sticks, valued at around Rs. 7 billion (US$ 196 million) (NCAER 1990). The distribution of the consumption is skewed in favour of the lower income group, which earns less than Rs 25,000 (US$ 700) per year but consumes a little over two-thirds of the production.

The highest income group, with above Rs, 56,000 (US$1,570) of annual income, purchases only 3% of the production.

• COST STRUCTURE 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 agarbattis 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 agarbattis. 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.

• EMPLOYMENT SPECTRUM Agarbatti manufacturing is classified as a small-scale industry. Although there are bureaucratic hurdles that investors have to go through - such, as the procedures for getting licenses and tax benefits - the low capital requirement and simple technology that characterize this industry make it easy to establish units in rural or semi-urban areas. It is a highly labour-intensive industry and is estimated to be directly engaging about 500,000 people, mostly women and children.

The packaging and processing are particularly suitable to women and unemployed in both rural and urban areas since these provide opportunities for labourers seeking selfemployment 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.

• MAJOR PROBLEMS FACED BY THE INDUSTRY Demand for agarbatti sticks is continuously increasing both in domestic and export sectors. With the gradual abolition of license and permit systems under the new economic liberalization policy of the state and central governments, the future prospect for growth and diversification of the industry looks bright. According to a rough estimate, the US market alone is worth $200 million. The problems and constraints faced by the industry are related to the following: 1.

Raw materials

2. Institutional and policy aspects 3. Advertising and marketing costs 1. RAW MATERIAL Raw materials are getting scarce and distances involved in transportation are increasing, thus raising the total cost of production. Currently, bamboo comes mostly from North-East India and as a result, the wholesale and retail prices of bamboo culms are rising. Similarly jigat and charcoal are becoming scantier, and hence costlier, as traditional and local sources are fast drying up. 2. INSTITUTIONAL AND POLICY ASPECTS •

Policy issues

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 telling in the case of perfumes, which are imported. •

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. •

Child labour

The issue of child labour in the industry needs to be firmly addressed. 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. 3. ADVERTISING AND MARKETING COSTS 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.

PORTER’S FIVE-FORCE MODEL  Rivalry among major competitors Numerous competitors: The competition is very high in the industry and many balanced competitors are present in the industry. Because of which the industry concentration ratio is low. The major players are: • Cycle brand Mangaldeep Z-black • Parnami Joie • Danim Price war is there among the competitors to attract customers. They market their products, give emphasis on advertising, details of all the existing products are available on their sites on internet even the details of upcoming products are also there. Among the above given competitors Some brand is the leading one due to following reasons: •

High level of creativity

Stringent quality control

In-house blending

Continuous research and development

Exceptional goodwill generated among trade

Consistent emphasis on relationship building

Ethical practices

Industry growth:

The industry growth is high even the multinational companies are turning towards this business seeing the demand of product (agarbattis) in domestic and international market. As an example ITC forayed into agarbatti business. •

Storage costs:

The product once produced is not difficult to store. The storage cost is not high as the product is not vulnerable. •

Switching cost:

There is no or very low switching cost which makes the competition more intense.

 Bargaining power of suppliers •

The natural materials are used in agarbatti making. There are numerous suppliers of these raw materials so if the supplier charge high prices company can switch over to other suppliers so the bargaining power of suppliers is low.

Importance of industry: agarbatti industry is very important or can say main customer for the suppliers of these raw materials.

The companies purchase the raw materials in bulk which increases the importance of buyers as for these suppliers this industry is the main customer of their raw materials.

The purchase of these raw materials represents the significant fraction of the buyer’s cost as they are the main constituents of incense stick(agarbatti). So the buyer’s are price sensitive.

These raw materials are undifferentiated and can be purchased easily from other suppliers.

The buyers generally have the full information about demand, actual market prices and suppliers cost. This make the buyer(agarbatti industry) to ensure that it get the raw material in most favorable prices.

This clearly shows that the bargaining power of suppliers is low.

 Bargaining power of buyers In an organized sector the companies provide profit margins to their retailers these margins are according to their cost of production some provide more margin and some players provide less margin but this also differentiate their quality. For example Cycle brand gives less margin to their retailers but they don’t compromise on quality which differentiate their product and makes loyal customers. In this industry there is no bargaining power of buyers.

 Threat of substitutes The substitutes of agarbatti are: 1- Dhoop, it is a very strong substitute of incense stick. In man temples dhoop is used instead of agarbatti. Dhoop is also not a very costly product it prices more or less same as agarbatti. So it is easy for it to replace agarbatti.

2- Air freshners, Room deodorizers, Coils, Magical charcoal tablets, Aroma candles. As incense sticks are also used to fresh the air in rooms and other places, to avoid mosquitoes at home etc for such purposes these substitutes can be used but they are not very strong substitute of incense stick(agarbatti) because in worship and prayers only agarbatti is used.

 Threat of new entrants It is a small scale industry, low investment is required, suppliers of raw materials are easily accessible. There is no or very low switching cost. There is a product differentiation in organized sector which forms only 20% of the industry and rest is unorganized sector in which there no differentiation of the product they are more or less similar. The firms which are registered and work at some average level are taxable otherwise the small players in the industry are non-taxable which makes the new entrants easier to enter. National and Multinational companies are also seeing the opportunities in the industry as the demand of agarbattis are increasing in domestic and international market.

The Future Customs in incense manufacture have changed little over the centuries except in the range of fragrances offered. In ancient times, only naturally fragrant resins or woods like sandalwood and patchouli were used for incense. Modern fragrance production allows virtually any scent to be duplicated, and fragrances are available now that couldn't be offered before. Examples include green tea, candy cane, blueberry, pumpkin pie, and gingerbread incense. The custom of use of incense is also likely to change in the future and in Western culture. In India, two or three sticks of incense may be burned every day in a typical home, while, in the United States, users of incense may only burn one stick a week.

Incense-makers hope the variety, effectiveness, and low cost of incense sticks will make them more popular than air fresheners and room deodorizers made with artificial perfumes. Also, the popularity of meditation and aromatherapy have spurred incense sales among clients who want their rare moments of quiet and relaxation to be healing and beautifully scented.

SWOT Analysis of Agarbatti Industry STRENGTHS •

Large & growing domestic Agarbatti market

Up to date research on New Fragrance

Low cost of raw material both wood and non-wood


Small industry structure

Low level of internalization of the industry


Enormous domestic market potential

Low labor costs which allows cost effective sorting of imported mixed

waste •

Export potential


Decline in quality due to environmental pressures

Short term planning for raw material

MARKET ANALYSIS Geographical Area Geographical area is Jaipur and Sikar as the product is to be launched in the RIICO, Jaipur.

Objectives of Survey: • Demand analysis. • Demand estimation. • Forecasting demand. • Competitor’s details.

Source of Information Collection: Primary (Market Survey) Methodology Adopted 1.

Defining target population- Randomly almost all types of retailers and wholeseller are covered.

2. Selecting the sample •

Convenience sampling

Considering the nature of all retailers in targeted belt as same of those covered for survey in Jaipur and Sikar survey is done.

3. Sample Size: 50-Retailer , 11- wholesellers.


Research Tool: Questionnaire has been used as the research tool for the study.In all two questionnaires are prepared. One for the retailers and another for wholesalers. Developed questionnaire has both open and close ended questions . Language used in the questionnaire is very simple and no jargons are used. Questions are framed considering the need of information as previously mention included.’


Q1: What is the ratio of sales? a) Branded b) Unbranded

M a r k e t Pa tte r n



B ra n d e d U n b ra n d e d


Unbranded player cover the large % of market. There is a less % of Branded player in the market. Unbranded and local player cover the 64% market. So in this industry local manufactures are the key player.

Q2: How much quantity you sell? a) Monthly b) Weekly Interpretation: After doing the market survey we found that they sold 80,000/ - packets Monthly. Means they sold approx 5-6 kg .

Q3: Does co. provide any promotional scheme? a) Gifts b) Commission c) Discount d) Other Company Trend


9% 9%






Interpretation: The co. offers the discount scheme to wholeseller mostly, then they offer the commission to wholeseller.

Q4: What margin you get (in %) ---------Margin 1. Branded 2. Unbranded Interpretation: After doing the market survey we found that the wholeseller get the 10-20% margin on branded agarbatti and 8-5% margin on local agarbatti. Q5: Do you get any credit facility from manufacturer? a) Yes b) No Credit facility Yes




Interpretation: After doing the market survey we found that the maximum manufacturer give the credit facility to wholeseller of 7 days.

Q6: How often you order the stock? a )Monthly b )Weekely 9%

Monthly W eelky


Interpretation The wholeseller ordered the stock monthly to manufacturer in bulk.


Q1: From which sources you purchase? a) Manufacturer b) Whole seller c) Distributor

Sources of Purchase 14% 30%

56% Manufacturer



Interpretation Out of 50 retailers 56% said that they purchase agarbatti from whole seller 30% told that they purchase from Manufacturer and only 14% said they purchase from distributors. Mean wholeseller plays the main role. This shows that maximum retailers prefer to buy stock directly from the wholesalers .

Q2: From which place did you get the supply of agarbatti? a) From Rajasthan b) Out of Rajasthan

supply Out of Rajasthan

From rajasthan



Interpretation In Jaipur and Sikar market the 62% supply of agarbatti is out of Rajasthan and 38% market is covered by the manufacturer outside the Rajasthan. This shows that maximum supply is done , out of Rajasthan.

Q3: Do you receive any credit facility from manufacturer or wholeseller? Credit Facility 7 days

15 days

30 days

5% 20%


Interpretation 75% retailers got the credit facility of 7 days, and 20% found the credit facility of 15 days and 5% retailer 30 days. This shows that retailers get the credit facility of 7 days.

Q4: What promotion schemes are offered to you? a) Commission b) Gifts c) Discount Schemes offered



Comision Gifts Discount


Interpretation Most of the retailers get the discount schemes from the wholeseller side and only 10%get the gifts, like pen stationary and 18% get the commission.

Q5: How frequently you order a) Weekly b) Monthly stock order Weekly




Interpretation: The retailer ordered the stock from the wholesaler, weekly as per the demand they purchased the stock .

Q6: What is the most preferred price range? a) Rs 5-10 b) Rs 10-15 c) Rs 15-20 d) more than 20 Price Preferred

4% 16%

24% Rs 5-10 Rs10-15 Rs 15-20 Rs 20 and above


Interpretation: The most preferred price range is Rs 10-15,56% customer prefer the range between 10- 15.

Q7: What do customer look for while purchasing agarbatti? a) Price b) Brand c) Fragrance d) Packaging

20 18 16 14 12 10 8 6 4 2 0 Series1



Pack aging






Interpretation As the survey conducted , I have asked the retailer to rate the customers look most while purchasing agarbatti from them. So 20 retailer ranked 1st to

fragrance , 12 retailers ranked 2nd to brand , and 9 retailer ranked the 3rd both price and packaging. \

Q8: Customer purchase agarbatti? a) Monthly b) Weekly

Purchasing Pattern


Monthly Weekly



Customer purchases the agarbatti from the retailer on monthly basis only 20% customer purchase the agarbatti on weekly basis. This shows customer like to purchase agarbatti monthly.

Q9: What margin you get? a) On Branded b) On Unbranded Interpretation From the survey it was found that retailers get the 5-6% margin in branded agarbatti and 10-20% margin in unbranded agarbatti.

Q10: Which fragrance of agarbatti is preferred most? a) Rose b) Chandan c) Kevara

d) Others P R EFFER ED FR AGR AN C E 6% 2%

Rose Chandan


K evara 60%


Interpretation Most of the retailer preferred rose agarbatti .it is most preferred by the customers, the ratio is 60%.Then they purchase chandan agarbatti. Only 6%customer not think about the fragrance at the purchasing time.

MARKETING CHANNEL Most producers do not sell their goods directly to the final users; between them stands a set of intermediaries performing a variety of functions. These intermediaries constitute a marketing channel. The marketing channels just not only serve the markets but they also make markets. A new firm typically starts as a local operation selling in a limited market, using existing intermediaries. Thus, the channel system evolves in response to local opportunities and conditions.

Currently, the existing marketing channel of the Agarbatti manufactures is as follows:-




End User


In order to differentiate the product and capture the existing market and to develop strong customer base, some strategic marketing plan is necessary to be designed and implemented. Various strategies that will be used being a new entrant are:•

Steady supply with timely delivery and good quality would be one of the strategic strength of the marketing plan.

Discount scheme will be offered to the customer like “12 ka 13”.

I would like to capture the large no. of wholeseller , retailer becaue they are the main intermediatiory.

Bulk discounts will also be given to the distributors on ordering the bulk order.

Various gifts like calendars, pens, folders, diaries and other utility gifts can be given to the wholesaler on their anniversaries, birthdays and other occasions.

DEMAND ANALYSIS After conducting the market survey in the form of questionnaire and interview of the wholeseller, Retailers, the next step is to estimate the effective demand in the past and the present. As per the dealer’s survey, the demand of the agarbatti in Jaipur and Sikar is as follows:Total demand in Jaipur is


Total demand in Sikar is


Total demand

653199 Kg per month 102066 Kg per month 755265 Kg per month

The demand has been calculated on the basis of population of Jaipur and Sikar. The urban Population of jaipur is 2592067 and Sikar is 472538 From this population the below poverty line was deducted and on the basis of middle and upper middle class the monthly family consumption of Jaipur and sikar is 180 gm was estimated depending upon the family size of jaipur(6) and Sikar is (7) Total Demand of Agarbatti is 755265 kg per yr.

SUPPLY ESTIMATION: The supply has been estimated on the basis of responses of 50 retailers. And the total no. of retailers estimated in Sikar is 650 and Jaipur is 2350. The total supply of agarbatti is 139968 kg per yr. Total Supply: 139968 kg per year


Therefore the supply of Agarbatti is 139968 kg per yr from the retailer Survey . So this demand-supply gap is: = 755265 kg per yr – 139968 kg per yr = 615297 kg per yr There is a large gap between demand and supply and there are many local manufacturer In jaipur there are approx 30 local manufacturer in jaipur and approx 10 manufacturer in sikar . The % of each manufacturer is less. Hence the proposed manufacturing unit would have the installed capacity of 14000 kg per year and production capacity of 6152 kg per year.

TECHNICAL ANALYSIS OF AGARBATTI MANUFACTURING The manufacturing process of agarbatti Manufacturing is as follows: All the ingredients in powder form are mixed well in the proper proportion with water to a semi solid paste. This paste is applied to bamboo sticks and rolled on wooden-planks with hands uniformly. The raw sticks are then dried and packed in suitable bundles. For manufacture of perfumed agarbattis the concentrated perfume is diluted first with white oil or diethyl phthalate (Generally 1:3) and raw agarbattis are dipped suitably in dipping trays. The perfumed batties are packed immediately in butter paper bags or polypropylene bags and finally in printed cartons. Proportion for making 1 kg incense stick

A. charcoal Powder


B. Jiget Powder

500 gm

C. Bamboo Stick

300 gm

D. Perfume


FLOW CHART OF MANUFACTURING PROCESS OF AGARBATTI Charcoal powder + Jiget Powder mixed with water Semi solid paste rolled on bamboo Stick Keep masala sticks for dry Dip masala stick into White oil Dip these stick into perfume Kept dipped stick to soak incense

Perfumed agarbatti obtained Packaging Transport

SELECTION OF LOCATION The location of my project that I am going to select is in Rajasthan in Jaipur. And the site will be in outskirts of Jaipur there is an industrial area the name is RIICO industrial area in this place 35 plots are vacant and the rate of the plot is 1300/-per sq.mt. . That’s why I’ll choose 139.4sq.mt. According to my plant capacity.

Land size for my project.

1. LAND A piece of land 139.4 sq m


at Riico Industrial Area @Rs 1300 per sq. m. -------------Total

1,81,226 --------------

2. BUILDING [ 139.4sq feet @ 301per sq m. ]



Size of the room Production room


Packaging Room


= 35 sq meter

Store room


= 25sq meter




= 73.4sq mtr.

= 6sq meter 139.4 sq m


3. PLANT & MACHINERY S.No. Description Weighing balance 10 1. kg. Capacity 2. Hand sieves 100 mesh Wooden Racks 8’ x 6’ 3. x 2’ Plastic trays 20 lit. 4. Capacity Aluminum trays for 5. dipping Buckets for incense 6. mixing Total



2 No.


6 No.


9 No.


20 No.


2 No.


9 No.



No. of working day in a year


No. of shifts in a day

360 1


No. of working hours in a shift



Employee Potentials



Wastage of raw material



Raw Material Charcoal Powder Jiget Powder Bamboo Sticks Perfumes Total

Weight in gm. 300gm. 400 gm. 300 gm. 400 ml.

Cost in per kg 30/10/22/200/-

Yearly Production = 6152* 100 = Rs. 615200/-

POWER CONSUMPTION Monthly consumption is 500 unit Therefore, yearly consumptions is.6000 unit Commercial price for each unit is Rs 6 Fixed charges is 600(every month it will be included in the bill)

Cost of 1 kg 9.00 4.00 6.6 80.00 Rs-100 per Kg

So, the yearly amount for electricity is Rs. 36000






WAGE/SALARY ( per month in Rs.) 10000




Other Administrative Expenses Stationary Expenses




Yearly Expense = 13500*12 = Rs.162000/SALARY & WAGES Particulars


Unskilled worker


Monthly Salary (Rs.) 2400

Total Monthly salary (Rs.) 12000

Yearly salary (Rs) 144000

Women for Rolling agarbatti (Machine Operator)

































Rolling Chair











Legal Environment Licence is required in two basic perspectives: Manufacturing licence( payable amount: Rs. 5000) Procedure: STEP 1: Application STEP 2: Officer Will come for survey STEP 3: Cheking the various parameters STEP 4: Confirmation & licence Sales licence( payable amount: Rs. 2000) Process: STEP 1: Filling up the application STEP 2: Submitting the application to sales tax department STEP 3: Receiving the licence


COST OF THE PROJECT Particulars Land Building Plant & Machinery Miscellaneous Fixed Assets Preliminary Expenses

Rs.(in lakhs) 181226 42000 14350 15660 9698

Preoperative expenses 16164 Contingency Margin WC Margin Total

16164 28023 323285

MEANS OF FINANCE Particulars Promoter’s Capital 107762 Long/Medium Term loan from Banks Total

215523 323285

ASSUMPTIONS UNDERLYING FINANCIAL PROJECTIONS The profitability and other projections may be prepared on the basis of following assumptions:1.) The company would work for 360 days per year on a 1 shift basis. . 2.) The expected capacity utilization will be 44% in first year, 48% in the second year, and 53% for the third year and so on. 3.)

The Sales realization will be Rs 2307000 in the first Year and this will increase depending upon the increase in production per year

4.) The term loan will be repaid in 14 equal half-yearly installments, with the first installment due at the end of the second operating year. 5.)

The bank finance for working capital will cost 12% interest rate.


The depreciation rates for company law purposes are as follows:Building

:- 3.34%

Plant and Machinery

:- 8%

Miscellaneous Fixed assets

:- 5%

12.) The depreciation rates for the income tax purposes are as follows, under the written down value method:Building

:- 10%

Plant and Machinery and

:- 33.33%

Miscellaneous Fixed assets 13.) The income tax rate applicable is 35%.

BIBLIOGRAPHY Books referred  Chandra





Financing, Implementation and Review, New Delhi, Tata McGraw-Hill Publishing Company Limited, Sixth Edition 2006. Websites referred






View more...


Copyright ©2017 KUPDF Inc.