The Rs 1,200-crore agarbatti industry is in for a shakeout with the entry of heavy weights such as ITC into the highly fragmented sector which currently have over 450 major players and 8,500 units in unorganised sector making about 50 billion incense sticks a year.
“The entry of ITC Ltd into agarbatti marketing has brought to the industry the much required quality benchmarks, quality audits, assured wages and market for the raw battis produced by families, self-help groups and social organisations. It has helped eliminate child labour, distress sales and exploitation by middlemen,” according to VM Rajasekharan, chief executive of agarbatti strategic business unit of ITC.
ITC has not altered the way the industry has been functioning but has only improved upon it.
It has not replaced or displaced any traditional manufacturing group or vendors, but has created new manufacturing bases, gave more business, better returns to the existing players, introduced better packaging and new fragrances.
Raw battis are also manufactured by organisations like SEVA in Bihar, and Asha (Association in Social Habilitation through Agarbathis) in Tamil Nadu. Auroville in Pondicherry and Art of Living Foundation in Bangalore are manufacturing for ITC. Khadi and Village Industries in Coimbatore also makes agarbathis under ITC supervision and quality parameters.
ITC will be starting Asha like initiatives in other centres soon, he said. Now ITC has nine vendors in different parts of the country from Tamil Nadu to Tripura. ITC vendor companies buy raw battis from local producers at prefixed prices, add fragrance and pack them and send to the market.
“At every stage of production, the ITC team ensures quality and implementation of social practices and norms,” Rajasekharan said.
He said ITC envisages a 30%-40% annual growth rate owing to the growing demand for its high quality innovative ‘Mangaldeep’ brand of products.