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Group 7B INDIAN INCENSE INDUSTRY

Indian Incense Industry

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Page 1: Indian Incense Industry

Group 7B

INDIAN INCENSE INDUSTRY

Page 2: Indian Incense Industry

75 % - cheap quality Religious and social functions

Significant foreign exchange earner Unskilled women and children

AGARBATTI AS A PRODUCT

Page 3: Indian Incense Industry

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

Page 4: Indian Incense Industry

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%

Page 5: Indian Incense Industry

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

Page 6: Indian Incense Industry

LABOUR DISTRIBUTION

90% of workforce - women 20 % - organized sector (factory based )

80 % - unorganized ( home based )

Child labour

Page 7: Indian Incense Industry

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

Page 8: Indian Incense Industry

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%

Page 9: Indian Incense Industry

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

Page 10: Indian Incense 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’

Page 11: Indian Incense Industry

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%

Page 12: Indian Incense Industry

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

Page 13: Indian Incense Industry

EXPORT MARKETs IN %

4%

7%

4%

15%

3.5%

Page 14: Indian Incense Industry

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

Page 15: Indian Incense Industry

Thank you