Download - Indian Incense Industry
Group 7B
INDIAN INCENSE INDUSTRY
75 % - cheap quality Religious and social functions
Significant foreign exchange earner Unskilled women and children
AGARBATTI AS A PRODUCT
1994
800 crore
Export
200 crore
Domestic
1000 crore
1800 crore
2009
Unorganised sector and highly fragmented
Manufacturing Units800
Registered3000
Unregistered
400 Exporters
THE MARKET
1989
-90
1993
-94
2003
-04
2004
-05
2005
-060
5
10
15
20
25
Column1
Export Values
2005-06
2006-07
2007-08
2056 2924 3509
Export in million tons
Rs 7.1 billion
18 %
35%
17%30%
TAX STRUCTURE
•25% to 80% raw material and 8 to 10% finished goods
•Tax at different level for different states
•De licensing SME’s
•Agarbatti being declared as a Handicraft product which provides incentive as per the duty draw back rates
LABOUR DISTRIBUTION
90% of workforce - women 20 % - organized sector (factory based )
80 % - unorganized ( home based )
Child labour
2% • Raw Bamboo
8%• Masala /Non-Scented
Agarbatti
30%
• Perfumes
30%
• Packaging Material
20%
• Marketing
10%
• Miscellaneous
10%
60%
30%
% of total costMasalaNon-masalaPackaging & Marketing
COST STRUCTURE
CONSUMPTION PATTERNS
Low involvement product
No brand loyalty
Purchases based on packaging and fragrance
Low involvement productNo brand loyaltyPurchases based on packaging and fragrance
Lower income group (< USD 700) 67%
Rural 61%
Ur-ban 39%
Highest income group (>USD 1570) 3%
BARRIERS TO GROWTH Import duty taxes on raw materials(25% to 90%)
Raw material supply issues
Lack of R&D support
State-wise wages and labor laws
Lack of Mktg & Advtg
Distributor Mark up of 50-60% Entry of MNCs
Bank loans not readily available for small scale industry
CURRENT MARKET PLAYERSHighly fragmented sector with 450 players
NR Group’s CYCLE Brand Launched in 1948 Market leader in India with Current market share 8% Exports to 40 countries
First to offer 3-1 aggarbatti / premium aggarbatti Exclusive showroom in Mumbai “ Fragrance world” Aggressive marketing campaign New brand ‘LIA’
CURRENT MARKET PLAYERSITC the second largest player
• ITC signed a MoU with Orissa and Tripura govt. for sourcing raw materials
• Establishing Perfume and Packaging centre for Mangaldeep brand
• This tie up would provide employment for 10000 women
• Market Share of almost 5%
ITC’S STRATEGY CURRENT MARKET STRATEGY• Product segments
• Favorable natural incense market
• Recent tie ups with Sify
• Events sponsorship in Andhra
Spriha (Rs.20-25)
Nivedan (Rs.10-20)
Ashageet (Rs. 7.5/20 sticks
COMMUNITY PARTICIPATION PROGRAM Started in 2004100% growth; annual turnover 300mn• Tie up s with NGO• Quality checks and improvement• Leverages it core strengths EXPORT STRATEGIES• Tie up with Exim Bank for
overseas promotions• Position as lifestyle product in
West• Supply high quality to mega
retailers• LOC ties with Mega Singapore
outlet
EXPORT MARKETs IN %
4%
7%
4%
15%
3.5%
Regional InitiativesMarket Linkages
• Andhra Pradesh Community Forest Management
• Rejuvenation of bamboo forests- 27,837 ha ( 110% of projected target)
Bamboo Resource
Management• CFC have tie-ups with ITC (Chennai)
Sankranthi, Ambika, Mustan and Jaya agarbatti industries.
• The transportation costs are borne by the company.
Market Linkages
• Recyclable raw material• Revenue generation by selling to paper mills
Waste Management
• Effective Quality check• Accurate payment according to bundle weight
Supply Chain Management
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