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Agarbatti project

Agarbatti Making Business – Introduction

Agarbatti is an Indian Hindi terminology which is otherwise popularly known worldwide as ‘Incense Sticks’ and as the name itself suggests, they are thin bamboo sticks of about 8” to 12” length coated with paste of fragrance of natural ingredients extracts of scented flowers or majorly forest yield.  Agarbattis have huge potential as a manufacturing business because its demand is at all time high and go even higher during festivals.  More than 90 countries use Agarbattis and India is the sole producer of these Incense Sticks that caters to the demands of all countries worldwide.  Now, how to start agarbatti business from home?  I shall today walk you through the baby steps right from Stage-I of manufacturing Agarbattis till making profit margins out of it as well marketing it and finding a fair market share in India as well as export markets.

Choose Right Area In Agarbatti Business

Choosing right area in this business mean that this business has lots of other sub-category where you can make profits. For example, you can produce raw agarbatti(without scent) and sell them in market. Profit margin in raw agarbatti is around Rs10 per Kg. This profit margin is actual data in north India and it may vary in southern part of India. Rs10/Kg of profit is very attractive because one high speed automatic machine can produce 100Kg of raw agarbatti in 10 hours. If you have 10 machines running for 10hrs a day then you are making very good profit.

Profit from 1 machine in 1 day = 100kg X 10 = Rs 1000/-

Profit from 1 machine in 1 month = 1000X30 = Rs 30,000/-

If you take weekend off then Rs 25,000 is total profit from one machine only (Raw agarbatti without scent). Scented agarbatti has more profit and in north India it is around Rs20 – Rs25 per Kg.

Bamboo Sticks – Agarbatti Business Sub-Category

Bamboo sticks is the backbone of agarbatti business and the only country who produces bamboo sticks are China and Vietnam. If you have good budget then you can import bamboo sticks from China. Complete cost of importing one container of bamboo sticks from china is around 20lakh rupees and it takes 40 days to reach India. One container contains 25 tons of bamboo sticks. Selling price of bamboo sticks in Indian market is Rs110 – Rs125 per Kg.

25ton = 25000 KG so cost per KG = Rs 80 and selling price in India is = Rs110(minimum)

Profit per kg = 110 – 80 = Rs30 So profit in 25000 kg is 25000X30 = 750000(7 Lac 50 thousands). As you can see that the profit in importing bamboo sticks from china is very high and you can make 750000 in 40 days because import takes 40 days to reach India. Also, Bamboo sticks sells like crazy and you do not need to worry about the market. You can directly supply the sticks to your clients from Kolkata port.

Agarbatti Material Supplier – Business Sub-Category

Apart from bamboo sticks, you can also become supplier of various materials used in agarbatti making like Jigat powder, charcoal powder, gum powder, scents, etc.

So, basically there are three sub-category in this business:-

1. Raw Agarbatti production and Scented Agarbatti production
2. Bamboo sticks supplier
3. Material supplier

Conceive the Agarbatti Manufacturing Business Plan:

The very first step in any business will be to conceive the idea and what I mean by conceiving the idea is to form the whole virtual picture in your mind before even you start to speak about it.  The whole business plan should be ready with foolproof accuracy right from starting the business and making a decent turnover which is the core reason why you started this business.  Agarbatti manufacturing business is a highly potential and profitable business if you are willing to learn the ropes quickly and not to miss out the fact that it can be as small as a Cottage Industry hence you can find plenty of people around the country, especially women making Agarbattis at home.  This simply means that competition can be neck tight and you need to device a solid manufacturing process with the right raw materials and machineries as per demand and quality of your Agarbattis.

Before You Put Your First Foot Ahead in Agarbatti Manufacturing:

Now, that you have done your homework well and know for sure the raw materials, machineries, space, manpower, demand for your Agarbatti is going to be.  Basically, Agarbatti manufacturing business is either a Cottage Industry or Small Scale Industry (SSI) and hence you need to register with your Registrar of Companies (ROC) according to your company size and this follows other business procedures like obtaining a Value Added Tax (VAT) registration, Business PAN, Trademark registration (to protect your brand name and avoid cheap imitations or fake products which is dangerous for your market share).

Implementation & Sourcing Stage of Agarbatti Manufacturing:

So, you have just completed the legal provisions of starting a Agarbatti Manufacturing Unit and its time to start the implementation stage which has to be vigorous because delay at this stage is going to cost you since you have made investments and you need to see returns, the sooner the better. Every element in Agarbatti Manufacturing process need to be perfect and in tune to your business plan.  For example, if you have sourced a huge demand and obtained lavish order then you definitely need to go for a High Speed Automatic Agarbatti Manufacturing machine instead of a manual one that has a production capacity of less than half of the former.   Next comes the raw materials which is very crucial and this includes the composition of mixture drying procedure and packaging.

The Machinery for Agarbatti Manufacturing:

Agarbattis can be produced or manufactured either with the help of machineries or with hands, the difference being a cottage industry and an SSI.  If your plan is to go slow and take one step a time and grow slowly then go for the handmade ones which beyond doubt is a labor intensive manufacturing process and the output is going to be less than one fourth that of a machine production. One staff can make 15kg of agarbatti in one day manually without machine, and the same staff will produce 100Kg per day with the help of automatic machine.

MORE MACHINES = MORE PROFITS

• Semi – Automatic Agarbatti producing machines
• Fully Automatic Agarbatti producing machines

Price of a semi automatic manufacturing machine could be around INR 1 lakh and that of a high speed one could be up to INR 2 Lakh/- or more depending upon the technology and quality.

Semi-Automatic machines are slightly less efficient as compared to the fully automatic ones on the basis of labor requirement and production capacity but are less expensive and might require less maintenance.  This type of agarbatti manufacturing machine is the largest selling since it is one way to reduce cost while keeping production at pace.

The manual agarbatti manufacturing unit is labor intensive with low production capacity and lowest maintenance cost, ideal for start-ups or trial plans.  In the long run these machines might have to be replaced because the very core purpose of any business is growth and increasing production and turnover.  Hence, before zeroing on with a manual machine we need to go deep into our long term vision and business mission.

Raw Materials for Manufacturing Agarbattis:

I have good news on this front because raw materials for manufacturing agarbattis is easily available in India and is inexpensive hence, you don’t have to invest a fortune on it and worry. Bamboo sticks are usually high in demand in India because of import issue.

The following raw materials are required for manufacturing Agarbattis;

• Sticky powder (Gum Powder)
• Charcoal powder
• Raw bamboo sticks
• Nargis powder
• Different kinds of aroma oils
• Water
• Essence of aromatic flowers from the woods
• Essences of Aroma
• Rose petals
• Oil of Sandalwood
• Aromatic ingredients both natural as well as chemical
• Gelatin papers
• Saw dust
• Crude paper
• Scissors
• Packing materials which is crucial since it should be able to lock the fragrance.
• Different color powder.

FOR RAW AGARBATTI PRODUCTION, YOU ONLY NEED BAMBOO STICKS, JIGAT POWDER, CHARCOAL POWDER AND GUM POWDER

As I mentioned earlier, raw materials are easily available with your local merchant and even from online stores which should be quite inexpensive and worthwhile.

The Process of Manufacturing Agarbattis:

The entire process of manufacturing is very easy all you need to have is coal powder, sticky powder, dough, thin sticks and scents. By mixing coal powder and sticky powder in equal proportion in water then you need to roll the stick in mixed content and should be exposed to sun for few minutes until they dry up. Make sure you are not going to keep it under hot than recommended time. You can use wide varieties of scents to make different Agarbatti. Different people have different penchant to different scents so it is good that you manufacture Agarbatti with various scents available in the market. If you want to survive in the market then you must come up with innovative.

Just in case yours is a start-up or you are new to this line, take professional help from those who have dirtied their hands in this business for long. This is crucial because it not only about manufacturing and delivering but about marketing and growing your market share or to be precise, inventing markets for your Agarbatti brand. This is going to suck a lot because this is where your entrepreneurial skills will be deployed and you need to be damn good at it or you would be out of this business. One thing is common for all business whether you produce planes for British Airways or make Agarbattis and it is ‘Innovation’ which has to be incorporated as a daily routine and not ‘as and when required’.

The manufacturing process for Agarbattis is not complex or not Rocket Science, basically a paste of most of the raw materials is coated over a thin bamboo stick, treated with aroma or scent, dried and finally packed in airtight packages.  We have machines and ‘know hows’ for this hence, you need little to worry except that you keep your research on because as mentioned earlier in this article, competition is going to squeeze your neck to suffocation. It is at this stage that you are going to need tons of smartness because you can cut on costs while satisfying the customer by understanding the needs and what the end consumer is looking for.  While there are prominent brands in India like ITC’s Mangaldeep Agarbattis which have their own market share and no other brand has been able to overtake it.

What is the Kind of Margins we are looking at?

Agarbatti manufacturing business has huge potential and is without doubt a highly profitable business and we can expect to make a decent to unbelievable profits or margins and this could be even more when we plan to export because Indian Agarbattis are in great demand in more than 90 countries worldwide.  India is the only country which makes Agarbattis and this business is one of those businesses that can be started with minimal investment hence the risk factor is too low or in fact is well tolerable even for first timers.  For a fully automatic plant you won’t have to invest more than INR 10 Lakh and we are good to go smiling all the way to the bank.

Agarbatti producing business stands on two major pillars; marketing and innovation.  We need to continually improve upon our process leading to minimizing cost while improving on quality of agarbattis whether it is the scent, aroma, fragrance, durability or shelf life.  One thing is assured; you will not be making a blunder by investing in an agarbatti manufacturing unit because there is huge market potential as well demand in local as well as international markets especially during festivals in India.  During festivals the demand for agarbattis raises several manifolds as compared to other seasons.  The best part of the story is that India has plenty of festivals at every single month of the year.

YOU CAN START THIS BUSINESS IN LESS THAN RS 10 LAKH OF INITIAL INVESTMENT

Packaging

Try to be unique when it comes to be packing your agarbattis because people first see the packing box before they buy agarbattis when they find packing attractive then they will make an attempt to buy it. This business needs hard work too to gain profits since this business needs less investment you don’t have to worry about loss. With dedication it’s easy to excel in this risk free business. As long as you make good agarbatti you can make profits. Setting up this business does not need taking loan from bank for financier. If you have 7 – 8 lakh then you can start with 3 machines at the beginning.

This machine reduces man power to a greater extent. With one time investment in this machine you can reduce man power moreover you can make more Agarbatti in day than you usually do manually. Plan this business carefully and do it with hard work and you can make a good amount of money in short period of time. Feel free to ask any questions you have.

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