If you are interested in setting up a small-scale enterprise, the agarbatti business is one of the most rewarding industries. In a diverse country like India, which is home to several religious sects and cultures, the demand for Agarbatti has always been on the rise. Better known as incense sticks, agarbattis are utilised in almost every religious place. They are lit in households, commercial offices, retail outlets and are even used in beauty spas.
Agarbattis are even used to perform special offerings, some of which include auspicious occasions like a new home and starting a new business. They are common at almost all places where religious practices are performed. These incense sticks are said to purify the ambience and clear the air of all negativity. They are available in various fragrances and sizes and make for wonderful gift items. The agarbatti industry in India is one of the most vibrant cottage industries and is known to employ almost 20 lakh Indians. The export revenues from this industry have touched almost ₹1000 crores in the last few years. As per industry reports, this is expected to extend beyond ₹12,000 crores in the next couple of years.
Did you know?
India is the largest exporter of agarbattis (incense sticks) globally, and it exports to more than 150 countries.
Processes Involved in Setting up an Agarbatti Business
Like every other business, big or small, there are numerous factors you have to consider before you start an agarbatti business. These include market research, finance on hand, competitor’s market, target clients, the various permissions and licences, investments, loan facility, premises, equipment, and profit calculation. However, the most important is a good business plan that helps you understand when you could make break-even and start making profits. Let us understand the details of each:
Chart Out a Meaningful Business Plan
Before you embark upon aspects like premises, etc., you must have a perfect plan about how you will run the business's operations. Note the total investments you will have to make compared to the finances you hold. It will give you an idea of whether you will be required to take a loan or not. You must have clarity on the variety of agarbattis you intend to make. It will help you make appropriate machinery choices as most agarbatti businesses are automated today.
Undertake in-depth research of the geographical territory you plan to set up your business in. Make a note of the commercial viability of the area. Your research should include a survey of the demand in that area and the existing competition. Create a meaningful brand name that spells out the uniqueness of your agarbattis.
Permissions & Licences
Some of the licences required include:
- GST registration
- Factory licence
- Pollution Certificate
- Trade licence or Small Scale registration licence
- Employee State Insurance (ESI) registration is required if you intend to employ more than ten staff members
- You will have to obtain the requisite permissions from the local authorities and, if required, from the State Government.
You will have to get your business registered as per legal requirements, i.e. you will have to define your business structure. You will have to specify whether it will be a partnership type of business or will you be the sole owner and proprietor. The other options are limited liability partnership (LLP) and private limited company (PLC).
Understanding everything about agarbatti making raw material will depend on the kind of agarbattis you plan to make, the size, fragrances, and other details. The small-sized ones, also called Dhoop agarbattis, will require a different machine than the regular sticks. Some of the most common agarbatti materials required are:
- Sticks made of bamboo
- Chemicals with an aromatic fragrance
- Different types of essential oils
- Various types of pleasant perfumes
- Jigat (sticky ingredient required for manufacturing agarbattis)
- Different types of powders like Joss and Nargis
- Specific white chips for agarbatti making
The total amount of investments will depend entirely on the scale of your business. If you wish to experiment on a small scale at the start, you will require an investment of at least ₹5 lakhs. If you have made estimates of large-scale manufacturing, you will require at least ₹1 crore.
If you plan to start this from your home, you will still require a large space to store your raw materials and equipment. If you intend to rent a place, you must ensure the location is accessible for dealers and distributors to visit you and vice versa. You will be required to select a place away from residential colonies as residents may object to the machinery noise or raw materials odours.
Choosing the right type of agarbatti making machines will depend on the scale of your business. You can choose between totally automated or semi-automated machines. You must familiarise yourself with the different properties of such machines and understand the features in detail before you purchase them.
If the funds on hand do not suffice as per your business plans, you can apply for loans. The Khadi and Village Industries Commission offers a 25% subsidy for purchasing the said machines. You can seek advice from your chartered accountant or Bank to understand the interest rates, repayment schedules, loan application formalities and the upper limit of the loans.
A good number of skilled and unskilled labour is necessary for every industry, and the agarbatti business is no exception. In the early stages of the business, you can employ 3-4 individuals to train them in the operations of the machinery, the deliverables, packaging and all other important functions. Once your business starts expanding, you will have to employ more labour to smooth the increased manufacturing activity.
This article gives you an idea about the agarbatti industry and the various aspects of setting up an agarbatti business. You can start on a very small scale with handmade agarbattis if you have the requisite knowledge and skills. A small-scale manufacturing unit will necessitate using machines and involve more labour. You will have to decide on these factors according to the growth and expansion of your business.
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