Agrabatti making is a profitable business. And with some small equipment and machines, you can start an Agarbatti-making business even at home. Here we put a detailed guide on how to start an incense stick-making business. Also, the article includes the total project cost, machinery, sample formula, raw materials, and production process.
Asia Pacific region is the largest producer and consumer of incense. It is a traditional product. People burn Agarbatti for religious purposes. It is an essential item in every household, temple, etc.
However, there is another big market for this product. Different types of fragrances are very popular for refreshing the home, spa, resort, etc. Additionally, the demand for this product is increasing globally.
Any individual can start this business with a small capital investment. However, you must put some startup capital into procuring machines, ingredients, and for marketing purposes.
10 Steps Guide to Start Agarbatti Making Business
Step 1. Market Research
First of all, do some market research. Identify, what type of incense sticks are popular right now. Additionally, determine your business size according to the capital you have.
India is one of the largest incense stick-producing countries. The product has both domestic and international demand. Karnataka leads the first place in producing Agarbatti. South Indian territory accounts for 35% of the domestic market share. While West India accounts for 30%, North India for 18% & East India for 17% respectively.
Apart from domestic consumption, the country fulfils more than half of the world’s incense stick requirements. Some of the major agarbatti importing countries are the USA, the UK, Latin America, Egypt, UAE, and Nigeria.
There several major brands are playing in the market. However, still, there are gaps for small and medium-scale manufacturers. Some of the most popular Indian agarbatti brands are Cycle, Moksh, Mangaldeep, Zed Black, Patanjali, etc.
Step 2. Prepare the Project Report
You can find a lot of sample project profiles if you Google it. However, it is important to prepare a customized project report according to your specific demand. And definitely, you must ask a professional to prepare the report for you.
In preparing the project report, you will need to provide some crucial information. First of all, you have to determine the space for the unit and the cost. Secondly, you have to provide the machinery details with the quotation. And finally, the other costs like labour wages, raw material costs, utility bills, etc.
Step 3. Finance for Agarbatti Business
Initiating an incense stick-making business requires upfront startup investment. Apart from the fixed cost, you need to procure the raw materials for a certain period without getting any revenue back. You will get a financial calculation about how must investment you need from the project report.
You can go for the entire project finance or the working capital loan. For the project loan, the bank will ask for the owner’s contribution. However, as the machinery cost is not much, it’s better to start the business with your capital. First, introduce your Agarbatti brand in the market and then expand it. If you need to, then apply for a loan for your Agarbatti business.
Step 4. Agarbatti Business Registration & License
Check the local laws and tax liabilities for this business. Apart from the traditional proprietorship or partnership formation, you will need to register your business with ROC.
Apply for the Trade License and MSME Udyog Aadhaar registration online. You need a GST number for tax filing. If you initiate a unit with more than 10 employees, then you need to check the PF AND ESI Act. Finally, check the requirement of NOC from your state’s Pollution Control Board office.
Step 5. Setup the Agarbatti Making Unit
The specific requirement of space depends on the production output and how many machines you want to install. However, a 1000 Sq Ft covered area is perfect for a small-scale operation. Ensure that the space has sufficient water supply and electrical connections.
If you don’t have your own space for the unit operation, it is better to go with a rental option. It will reduce the project cost and, hence, help in increasing the ROI.
After finalizing the space, draw a floor plan. You need to do electrification according to the location of the machines. An effective floor plan helps in reducing costs and thus helps in increasing profits. As an example, you must install the machines near the raw material storage area. On the other hand, you must determine the space for the finished goods storage area near the packaging section and exit gate.
Step 6. Agarbatti Making Machine with Price
In the agarbatti business, the right machinery selection plays a very crucial role. There are three different types of machines available in the market. These are manual, semi-automatic and fully automatic.
A manual pedal type machine is cheap and it doesn’t demand any electricity consumption. However, the production output is very low. Hence, it is unfit for brand operation. The manual machine costs about Rs 10000 onwards.
The semi-automatic machines are perfect for startup entrepreneurs. A semi-automatic unit means all the machines are automatic but not integrated. It runs on electricity. Additionally, you will get a better production output from this machine. However, one person needs to constantly feed the machine with bamboo sticks. The semi-automatic unit costs Rs 5 Lakh onwards
The fully automatic systems are perfect for large-scale operation. It produces the highest quantity of agarbatti per hour. Additionally, you don’t need to feed the machine with sticks. Hence, you can install these machines for the expansion. The fully-automatic machine costs Rs 8 Lakh onwards.
The machine cost depends on the HP, the material quality, and the efficiency level. Before placing the final order, you must check the price from the different suppliers. Try to buy a machine from a nearby supplier. It will help you in getting mechanical assistance from that company in the future.
In the initial days, it is better to start the project with the semi-automatic agarbatti-making machine. A complete agarbatti-making unit consists of a mixer, grinder, incense sticks-making machine, drying machine and packaging unit. You may also need a weighing balance, wooden tables, and some other equipment and hand tools.
Step 7. Agarbatti Making Formula
First of all, you can procure the raw mix for making incense sticks. However, it reduces the overall profitability of the unit. You need to prepare a customized formula according to the taste of your target demographics. A basic formula is listed below:
- White chips 40%
- Gigatu 20%
- Charcoal 20%
- Aromatic chemical
- Essential oil and other ingredients 20%
Step 8. Agarbatti Making Process
First of all, procure the raw materials according to the fragrance you want to produce. Mix the charcoal powder, Gigatu, White chips, etc. according to the formula. Mix with water to have a semi-solid paste. Take this composition on a wooden plank. Apply to sticks by rolling with hands or in an automatic incense sticks-making machine.
Then raw sticks are dipped in suitable perfumery compound diluted with white oil or other solvents like diethyl phthalate (D.E.P.) and dried and packed. You must provide moisture-proof packing with a hard cardboard outer packing. In India, different fragrances in one packet style are very popular.
Step 9. Raw Materials
Generally, raw materials are easily available in the Asia Pacific region. The agarbatti industry depends heavily on forest products for raw materials. Agarbatti manufacturing
involves no typical or sophisticated chemicals and raw materials.
Some of the most important ingredients are charcoal powder, sticky powder such as Jigat, Sal resin, Guggul (gum/resin of Commiphora Mukul), Nargis powder, raw bamboo sticks, water, various variety of oils, aromatic essence, flower essence, sandalwood oil, rose petals, natural and chemical aromatic ingredients, sawdust thick paper, gelatin paper, scissor, waste paper, various colour powder, etc. Also, you need packaging consumables for packing.
Step 10. Where To Sell Agarbatti?
Sell your product locally first. In our country, retail distribution is the best way to run a business. Broadly, channel distribution involves recruiting distributors and retailers for secondary sales. Currently, supermarkets, malls, shopping centres, and app-based retailers are good options for market penetration.
Additionally, you can sell from online marketplaces like Amazon. Crafts fairs are the best places to sell this type of product. You can also set up a small online store of your own.
TV advertising plays an important role in the Indian consumer market. You must put some effort into the brand establishment and product promotion. A strong distribution channel assures the long-term success of the agarbatti-making business.
Rupak is the founder of MUVSI. He is a small business consultant by profession. His mission is to make people know how to make money and understand personal finance for a better living.