Known for its simple manufacturing process, low-cost raw materials, and less investment, Agarbatti Business is one of the profitable small scale businesses in India as well as several Asiatic nations. Today Agarbatti Making Business is one of the highly competitive niches in India and China, Both nations account for a major share in the global incense sticks industry. Although, the market is occupied with major brands, this business still has a lot of opportunities for new businesses.
In this article, you will learn How to Start Agarbatti Business through the following steps
- Business plan
- Manufacturing process
- Marketing Strategies
- Steps involved in Agarbatti Business Plan
- 1. Registering your Agarbatti Business
- 2. Licenses and Permits for Starting Agarbatti Business
- 3. Arranging Investment
- 4. Obtaining Loans and Financial Aid for Starting Business
- 5. Setting up an Agarbatti Manufacturing Unit
- 6. Buying Agarbatti Making Machine
- Agarbatti Manufacturing Process and Requirements
- Steps involved in Making 1 Kg of Agarbatti
- Agarbatti Making Business Opportunities
- Agarbatti Business Marketing Ideas
- Agarbatti Business Profit
Steps involved in Agarbatti Business Plan
A Business plan is like a detailed document where you will mention all the aspects of your business and how you are going to run it. Your Agarbatti Business plan should include details about working capital, total budget, details of raw materials and machines, your business strategy, marketing methods, and ways of investment.
1. Registering your Agarbatti Business
The registration process of Agarbatti Business depends upon the scale of manufacturing and investment capability. if your business comes under the MSME category, then you can register your business in an online portal called UdyogAadhar. Depending upon the type of organization you should register your business either as a sole proprietorship, LLC, a public or private company.
For the registration process to take place you need to have some basic things like an Aadhaar card, PAN card, and Bank account number.
2. Licenses and Permits for Starting Agarbatti Business
You need to have certain licenses and permits to set up Agarbatti Business, and they will vary depending upon the scale of your manufacturing process. Here are some common things you need to check.
- GST Registration
- Trade license
- Pollution certificate
- Udyam Registration
- ESI (if you have more than 10 employees)
- PF registration (If you have more than 20 employees)
- Factory license (if you are establishing a commercial large scale factory)
3. Arranging Investment
The investment required for the business depends upon your manufacturing capacity. If you are starting an Agarbatti business from home, then you require at least 2 Lakh rupees. However, if your requirement is of a larger size then, it can cost around 10-20 lakhs.
The major part of the business investment goes to the machines, raw materials, resources, maintenance, and setup of the unit.
4. Obtaining Loans and Financial Aid for Starting Business
One can get Loans for Agarbatti Business through banks, NBFC and Government schemes.
Getting a loan from banks for a newly starting business could be quite challenging, so, you can approach NBFC’s that provide a small amount of finance for your business. But, before you proceed make sure to check your CIBIL Score, EMI tenure, repayment options, and other details of the loan process.
In the process of applying loan you must prepare a detailed project report of your Agarbatti Business. There are also several government schemes such as MSME, KVIC, and MUDRA with which you can get a loan for your business, these schemes provide subsidies for your business basing on your eligibility
5. Setting up an Agarbatti Manufacturing Unit
The scale of the Agarbatti Manufacturing unit depends upon your production requirement. if you are producing at a small scale level then you can start the Agarbatti business from home itself.
If your requirement is high, then you need a dedicated manufacturing unit
Requirements for starting Agarbatti Manufacturing Unit from Home
To set up an Agarbatti manufacturing unit from home, you need a space of 100-150 sq. ft and single phase power supply of 240V.
This can easily accommodate one or two machines and small storage space for raw material. But one negative aspect of running from home is, you cannot accommodate more space for machines and storing raw materials. Plus, it creates so much dust in your surroundings.
Requirements for Medium to Large scale Agarbatti Manufacturing unit
If you want to produce Agarbatti’s at a larger scale then you need a dedicated manufacturing unit of 1000 sq. ft and a 2 phase power supply. This type of unit can accommodate 4-5 agarbatti making machines, a drying area, space for packing, storing raw materials, and a dedicated office room. The overall budget required to set up this type of unit will be 10-20 lakhs rupees.
6. Buying Agarbatti Making Machine
Agarbatti making machines are available in automatic and semi-automatic grades. Most manufacturers prefer automatic machines over semi-automatic as the rate difference between them is minimum.
You can also prepare Agarbatti in the manual process too these types of machines are called pedal machines. But this process is time-consuming, and the output will be very low when compared to other processes.
An automatic Agarbatti making machine price ranges from 65,000 to 150,000 rupees and can produce up to 10-15 kg agarbatti per hour.
Most of the well-known Agarbatti machine manufacturers are located in Gujarat and Coimbatore. So, if you were planning to purchase a machine choose from one of these areas. Also, keep in mind, Agarbatti machines were prone to common breakdowns in the middle of the operation. So, it is advisable that go with a supplier who can provide a service technician within less time.
In addition to that, once you purchase the machine make sure to schedule maintenance periodically to prevent damage to pistons and bearings. Also, get in touch with Agarbatti machine repair centers around you so that you can approach them for minor repairs when a service technician is not available.
Agarbatti Manufacturing Process and Requirements
One of the key opportunities for Agarbatti Manufacturing is, it requires less manpower and investment. In fact, a manual Agarbatti manufacturing process can be started from home itself with an investment of 2 Lakhs rupees.
Let us now look into the list of items, that were required to start a small to medium scale Agarbatti making unit capable of producing 20,000 sticks per month.
|Material||Quantity||Price of Material|
|Premix powder||25 Kgs.||15-20 Rupees per Kg|
|Bamboo sticks||Approx. 8-10 Kgs||100 – 120 Rupees per Kg|
|Drying machine||1||16,000 to 20,000 rupees|
|Agarbatti Making Machine||2||80,000 to 1.25 Lakhs /- per item|
|Packing materials||5 Kgs.||1 – 2.5 per piece|
|Essential oils or perfumes||2-5 liters||300 – 400 per liter|
|Normal Sealing machine||2||5000 – 10000 per piece|
|Common equipment’s (Vessels, stand, rack, weighing balance, jars, rolling sticks, spatula, etc.,)||Approx., 50,000 rupees|
|Office furniture (Optional)||20,000 /-|
Steps involved in Making 1 Kg of Agarbatti
To get a simple idea about the manufacturing process, let us assume the manufacturing process of 1 kg Agarbatti.
- Prepare a pre-mix powder of 3:2:1 ratio, in this case we are making a 1 kg quantity hence we need to take 600 grams charcoal powder, 200 grams wood powder and 100 grams gum powder.
- Then, this premix powder is added to an incense powder mixing machine for about 20 minutes. The mixing machine finely mixes the powder such that it can be finally made into a mold.
- Later, the premix powder and the bamboo sticks were loaded into the Agarbatti making machine
- That’s it just turn on the machine and it starts making Agarbatti sticks instantly.
- Once the premix powder is coming to an end, you can turn-off the machine
- Now the incense sticks needs to be completely dried with out any water or moisture, you can do this either by an Agarbatti dryer machine or put them under direct sun light.
- Later depending upon your choice apply essential oil or perfume to the incense sticks and once again air dry them
- In the final step, make them into a dedicated bunch and then pack and sell
Agarbatti Making Business Opportunities
Today, Agarbatti’s or incense sticks were used throughout the world for several aspects like religious ceremonies, mediation, and Holistic therapies. Their utilization was high in Countries like India, China, and Thailand. These countries were also the largest manufacturers as well as exporters of incense sticks in the world
Among several nations, India holds a prominent role in exporting Agarbatti’s to major countries like the USA, UK, Brazil, and UAE. The exports value of the India Agarbatti market was worth 90.64 USD million.
Following reasons account for a positive business opportunities in Agarbatti business
- Increased globalization created more opportunities to export Agarbatti’s to several nations. This had increased a substantial amount of Agarbatti manufacturing units
- Cheap and readily available raw materials and simple making process made this business a simple one to start where the manufacture can do everything without extra man power
- Availability of online shopping created an easy way to sell incense sticks which directly created more business opportunities
- Growing population led to more space for cultural activities, which increased more number of religious sites and occasions. Thus, creating more business opportunities for selling incense sticks
- Additionally, the ability to manufacture wide varieties of Agarbatti’s as per occasion, business need, and with competitive pricing created golden opportunity in Agarbatti business.
Agarbatti Business Marketing Ideas
As we all know Agarbatti Business is a competitive market there can be a lot of sellers each having their own USP and Marketing strategies, here are some of the marketing ideas popular in Agarbatti business field
In order to secure more clients in your initial period, providing a competitive margin rate for dealers is regarder best tactic. In addition, if the dealer can continue to make business with you after a period of time you can offer a 2-3% commission.
A branded logo and packing plays a key role in successful Agarbatti marketing. Your agarbatti packaging should be in a way such that it should tell what it was made up of and how it is different from the rest of the brands.
Although most of the agarbatti’s were made up of charcoal and synthetic essential oils in today’s market, there has been a great demand for 100% natural Agarbatti’s that were free from charcoal and made up with natural fragrance ingredients. Though this type of incense sticks are costlier to manufacture, they offer greater ROI because the market is small and pricing is high for this type of products.
In addition to selling agarbatti’s to retail stores and other vendors, you should also focus on selling your products online, which caters to a larger audience.
Participate in small business exhibitions and trade fair shows where you can set up a small stall. This type of events helps you to secure business with new retailers and customers
Try Promoting your Agarbatti’ with small social media influencers on Youtube, Instagram, and Facebook, this acts as an effective and economically marketing strategy.
Agarbatti Business Profit
Agarbatti business profit depends upon two major factors, Quality of the product and strong marketing. If you can supply quality incense sticks from the initial stages of the business and secure at least 100 clients within the first year of starting your business and then, if you were able to make a repeat business with 90% of them in the next years also, then you can make a reasonable profit in this business.
To get an idea, let us now look into a Profit estimation in the Agarbatti Business unit that runs on an automatic machine for 25 days
|Agarbatti Business Profit analysis|
|Fully Automatic Machine||1,25,000/-|
|Other equipment for manufacturing process||20,000/-|
|One time Investment Total||1,45,000/-|
|Monthly Investment (25 working Days out of 30)|
|Pre-mix material 30 kg/per day * 25 days * 20 rupees per Kg (total 750 Kgs Premix)||15,000/-|
|Sticks ( 1 kg powder serves for 300 grams sticks) then 750 kgs of pre-mix serves for 225 Kgs of Sticks * 90 rupees ( 1 kg of stick)||20,250/-|
|Perfume 5 liters bottle * 300 rupees per liter||1500/-|
|Packing material (with printed label boxes)||1500/-|
|Workers ( 2)(5000/-)||10,000/-|
|Rent for Building||4,500/-|
|Monthly Expenses for Making 1000 Kg of sticks||62,250|
|Profit Margin after selling Agarbatti in Market|
|Making cost for 100 incense sticks packet||6.00|
|Average price of 100 sticks packet in market||35 /-|
|Profit on each 100 sticks packet||29 /-|
|Total value for 1 Kg packet (10 packets)||350 /-|
|Average price for making 1 Kg sticks||90/-|
|Total Value of 1 Kg Agarbatti Packet Manufactured||350 – 90 = 260|
|One Month Profit (1000 kgs * 250 minimum price)||2,50,000|
|Leaving 10% Margin for selling to retailers||2,25,000|
|After Monthly expenses||1,62,750 (2,25,000 – 62,250)|
|Consider only 75% of sales were done in a month||122,062.5 (round off to 1,22,000)|
|Interest amount to be paid for Loans||35,000|
|Marketing expenses (10%) + Miscellaneous expenses (5%) total 15%||18,309|
|Total Amount of deductions||53,309|
|Final Monthly Profit of selling 1000 kg Agarbatti||68,691/- (122,000 – 53309)|
So, if we take a look we can expect a minimum 60,000/- profit per month on selling Agarbatti which is more than an average income getting for an employee working at a private company.