Agarbatti Making Business is definitely one of the most lucrative businesses under Small Scale Industry (SSI). This business can be started even with low investment and minimum raw materials, especially in rural areas. Agarbattis have always been considered as sacred products that have aided and contributed to religious activities like praying and worshipping, as well as for purposes like meditation, yoga, relaxing, etc.
Steps to Start Agarbatti Manufacturing Business
1. Creating a Business Plan
Writing a business plan is an essential task before starting any business. A business plan describes the nature of the business and further helps in getting funding from financial institutions, subsidies from Government, business loans, term loans, or working capital loans from private and public sector banks or NBFCs.
Business plan should consist of the following components that include background and nature of business, total budget, working capital investment, details of purchased equipment and machinery, information of raw materials or products, existing staff or new employees details, marketing or advertising strategies, loan details (if any), business credit report, details of property/premises/area to be used for business purpose, etc.
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2. Getting Business Registered with Registrar of Companies
To make the Agarbatti business legal, a business owner needs to register his/her business as a company, firm, or manufacturing unit. Business owners need to determine his/her business structure on which Agarbatti business shall operate and function. Agarbatti Making Business can be registered with the Registrar of Companies (ROC) under Section 609 of the Company Act, as a privatelimited or public limited company, sole proprietorship, partnership firm, limited liability partnership, etc.
3. Applying for Licenses
The license required to start an aggarbatti business shall vary from state to state, therefore business owners are required to read the rules and regulations directed, as per the respective state or the state in which the new business is to be started. Below mentioned is a list of licenses required to start an aggarbatti business:
Company Registration: The foremost step to start an aggarbatti business is to get a company registered under ROC.
EPF Registration: EPF registration is required if the firm, company, or manufacturing unit has more than 20 employees.
ESI Registration: Employee State Insurance (ESI) registration is required if the staff strength of the firm is more than 10 employees.
Factory License: In case business owners are planning to set up a commercial large-scale manufacturing unit, then the Factory License and NOC are required.
GST Registration: It is a mandatory registration required for every business holder, as obtaining a GST number for goods and services is mandatory.
Pollution Certificate: It is one of the most important certificates to be obtained from The State Pollution Control Board, as it conducts a site survey and if convinced, shall grant permission to start a business.
SSI Registration: Obtaining Small Scale Industries Registration is compulsory even if the firm or manufacturing unit does not come under SSI.
Trade License: To perform any type of trade in India, business owners or traders are required to possess Trade Licenses from local authorities. Trade License registration and validity vary from state to state.
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4. Arranging Capital Investment
Agarbatti business can be started with low to medium investment with limited to basic raw materials. The initial investment required to start an aggarbatti business is approximately Rs. 10 lakh to Rs. 40 lakh. Minimum workers required to start an aggarbatti-making business shall be 8-10 which include production manager, semi-skilled laborers, delivery boys, accountants, clerks, etc. as per business requirements.
5. Purchasing Machinery/Equipment
The average cost of the machinery used at the initial stages of business shall range from Rs. 1 lakh to Rs. 5 lakh. Machinery/Equipment used to manufacture aggarbattis are comparatively bigger and require spacious areas or factory sheds to be kept. Machinery or equipment should be kept away from residential localities to avoid objections or complaints.
6. Buying Raw Materials used for Agarbatti Manufacturing
Raw materials required to be used in making aggarbattis are largely available with numerous aggarbatti manufacturing units, suppliers of raw materials, and wholesale markets. Sticks used to make agarbattis are largely imported, however, these sticks can also be manufactured by using sticks making machines. List of raw materials used to make incense sticks are as follows:
- Bamboo sticks
- Aromatic chemicals
- Essential oils (Sandalwood)
- Gelatin papers
- White chips
- Packing materials
- Other ingredients like Colour powder that includes Charcol, Crude, Jikit, and Nargis powder
7. Finding places to sell the product
The best places to sell agarbattis are near holy places, temples, churches, and markets including local bazaars, grocery stores, retail shops, wholesalers, etc. Business owners can also sell agarbattis at various e-commerce platforms and websites, online.
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About Indian Agarbatti Industry
Indian Agarbatti Industry is one of the most vivacious cottage industries that employ around 20 lakh people across the nation. The Indian Agarbatti Industry exported its products to countries worldwide with staggering revenue that was close to Rs. 1000 crore in the financial year 2018-19. * India’s Agarbatti Export Industry has shown an upward spike at a Compound Annual Growth Rate (CAGR) of 15% and is expected to cross Rs. 12,000 crore mark in next 5 years. Whereas, India’s domestic industry’s demand for agarbattis has increased up to Rs 7,000 crore with the help of states, including Uttar Pradesh, West Bengal, Maharashtra, Tamil Nadu, and Karnataka.
*Source: Economic Times