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INCENSE STICK INTRODUCTION Incense sticks, colloquially called "Dhup" or "Agarbattt are used in most Indian households, and in substantial quantities in temples, and religious functions. Incense sticks are available in different fragrance. Production of incense sticks is a labour intensive process. MARKET POTENTIAL The total population of the north-eastern region is 365 lakhs. Considering an average family size of 5, the number of households is estimated at 73 lakhs. Assuming that 15% of the households would use incense sticks and taking an average requirement of 5 packets per household per year, the demand potential for incense sticks is estimated at 54.75 lakh packets per year. Besides, there is a substantial demand for incense sticks in temples and religious functions. The total demand for incense sticks would thus be anywhere upto 105 lakh packets per year. There are several small units around Hpjai in Assam which have been set up with the assistance from the Khadi and Village Industries Commission (KVIC). There are a few registered units under DICC, Kamrup. The value of output of these unite is about Rs. 25 lakhs per year, which would correspond to about 12.5 lakh packets per year. However, bulk of the supply of incense sticks comes from outside, namely, Kamataka and Tamil Nadu. Assuming that new units can get a 20% market share, the demand potential for such units is estimated at 8 lakh packets per year. Considering the capacity of a typical tiny unit as 2 lakh packets per year, there is scope for about 4 new units. TARGET PRODUCTION A typical unit, it is envisaged, would produce 198,000 incense stick packets per year on the following basis: Production targe : 100 packets per hour Production rate : 75 packets per fwur Working hours per day : 8 (One shift) Daily production : 600 Packets Working Days : 300 Days Annual Production : 1,98,000 packets. ' RAW MATERIALS The major raw materials are charcoal powder, Gigaty (a herb), white chips, sandalwood powder, bamboo sticks, camphor, perfume and Diethylpthalate. Agar oil is a material which is used by manufacturers of costly agarbatti. Use of agar oil is not envisaged since it is proposed to manufacture tow cost incense socks for mass consumption In north-eastern region. The annual requirement of raw materials is as under Charcoal Powder 118BKg Gigaty 990 Kg White chips 396 Kg Sandal wood powder 198 Kg Bamboo sticks 1188 Kg Kuppam dust 398 Kg Perfume 308 Kg Diethylpthalate 924 Kg Packing materials- Paper carton 1,98,000Nos. Wrapping paper 1,98,000 Nos. Inner paper bags 1,98,000 Nos. PROCESS The main process steps are: a) Mixing the ingredient in proper proportion and preparing a pasts. b) Applying paste to bamboo sticks and rolling on wooden planks manually. c) Drying of raw sticks d) Packing in bundles

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EQUIPMENT The major equipment required are: i) Wooden Planks 16 Nos. ii) Balance 1 No. iii) Hand sieves 3 Nos. iv) Plastic trays (20 Ltr. capacity) 2 Nos. v) Wooden racks 2 Nos. vi) Plastic bucket (50 ltr. capacity) 1 No. vii) Dipping trays (Aluminium) 8 Nos. viii) Plastic Mugs 4 Nos. INFRASTRUCTURE The major infrastructural requirement are: Shed : 500sq.ft. Water : 1000 ltr. per day LOCATION The suggested locations are: Assam : Dhubri, Bongaigaon, Hojai, Nalbari, Nagaon Manipur : Imphal, Thoubal Tripura : Agartala, Dharmanagar Sikkim : Bakhim, chunthaow, Lachurg, Yumthang, Tashiding TOTAL CAPITAL REQUIREMENT The total capital requirement including fixed capital and working capital is estimated at Rs.2.16 lakhs. Of this, the project cost comprising fixed capital and margin money on working caital is Rs. 1.36 lakhs as follows. A. (Rs.in lakh) Fixed Capital: Land and Building On rent Machinery 0.50 Miscellaneous fixed assets 0.15 Preliminary and pre-operative expenses 0.05

Total (A) 0.70 B. Working Capital:

Raw materials & packing Materials

1 month 0.34

Finished goods 7 days 0.21 Working expenses 1 month 0.39 Receivables 15 days 0.52 Total (B) 1.46

Total (A) + (B) 2.16

Note: Working capital may be financed as :

Bank Finance ... Rs.0.80 lakh Margin Money ... Rs.0.66 lakh Rs.1.46 lakh

MEANS OF FINANCE Promoter's Contribution (25%) .. Rs. 0.48 lakh Term Loan (75%) ... Rs. 0.88 lakh

Rs. 1.36 lakhs

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OPERATING EXPENSES The annual operating expenses are estimated at Rs. 10.49 lakhs as given below: (Rs.in lakhs) 1. Raw materials (refer annexure) 2.14 2. Packing materials 1.99 3. Utilities 0.06 4. Wages & Salaries 4.50 5. Rent 0.18 6. Other overheads 0.15 7. Selling expenses @ 10% on annual sales 1.19 8. Interest on term loan 0.11 7. Interest on Bank Finance for Working Capital 0.12 8. Depreciation 0.05 10.49 SALES REALISATION The average market price of cheaper varieties of incense sticks is around Rs.6 to Rs.8 per packet. Considering the margin for distributors/retailers, an ex-factory setting price of Rs.6.00 per packet has been considered. Based on this, the annual safes realization works out to Rs.11.88 lakhs. PROFITABILITY Based on the sales realization of Rs. 11.88 lakhs and the operating expenses of Rs. 10.49 lakhs, the profit at rated capacity utilization would be Rs. 1.39 lakhs per year. This works out to be return on investment of 64%. The unit will break even at about 55% of the targetted annual production. HIGHLIGHTS The major highlights of the project are as follows: Total Capital Requirement Rs. 2.16 Lakhs Promoter's contribution Rs. 0.48 Lakhs Annual Sales realization Rs.11.88 Lakhs Annual operating expenses Rs.10.49. Lakhs Annual profit (pre-tax) Rs. 1.39 Lakhs Pre-tax return on safes 12% Break-Even Point 55 % No. of persons employed 20%

RAW MATERIAL SUPPLIERS Sandal wood powder, Kuppam dust, White Chips: 1. M/s. Ravi Flour Mills & Industries,

339 Bapuji Nagar, Mysore Road, Bangalore – 26 2. M/s. Ram Chandra Pulverisers & Industries, IV Main Road,

New Tharagupet, Bangalore – 2

3. M/s. Shakti Flour Mills, Swantantra Building, R.K. Puram, Bangalore –9

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Perfumes: Packing Materials 1. M/s.. Pushpa Perfumery Products, 1. M/s. Lakshmi Paper Industries 138 Akkiper Main Road, 38, Town, Rly. Station Road Bangalore – 2 Salem Tamil Nadu 2. M/s. Goodwill Agencies, 2. M/s. The Paper Products Ltd Keshav Niwas, 60, Chinthamani St. 24,1 Main Road, Chennai -1 P.B. No.9715, Gandhinagar,

Bangalore-560 009 3. M/s. Bharani Agencies, 3. M/s. R.K. Paper Industries P.B. No. 9505, C -18, Ambattur Industrial Estate,

Gandhinagar, Chennai – 56 Bangalore - 560 009

ANNEXURE

RAW MATERIALS & PACKING MATERIALS

Hems Quantity Rate (Rs./Kg)

Total Amount (Rs. in lakhs)

A. Raw Materials: Charcoal powder

1188 Kg. 8.00 0.95

Gigaty 990 Kg. 15.00 0.15 White chips 396 Kg 9.00 0.04 Sandalwood powder 198 Kg 50.00 0.10 Bamboo Sticks 1188 Kg 13.00 0.15 Kuppam dust 396 Kg 6.00 0.02 Perfume 308 Kg 60.00 0.18 Diethylpthalate 924 Kg 60.00 0.55 Total (A) 2.14 B.Packing Materials: Paper carton

1,98,000 0.60 1.19

Wrapping paper 1,98,000 0.25 0.50 Inner paper bags 1,98,000 0.15 0.30 Total (B) 1.99 Total (A) + (B) 4.13