ITC to enhance import substitution in agarbatties; to work with bamboo-growing farmers

Abhishek Law Kolkata | Updated on July 15, 2020 Published on July 14, 2020

Ravi Rayavaram, CEO, Matches and Agarbatti SBU, ITC ltd

Diversified conglomerate ITC Ltd, as a part of ramping up production of its Mangaldeep brand of agarbattis (incense sticks), is working with farmers on growing bamboo plantations in North-Eastern state of Tripura.

The intervention will see localisation of value chain and ramp up of domestic manufacture of raw materials. It will help ITC bring down own imports in the segment to nil over a15-18 month period. As part of its localisation strategy, the company is working with farmers in Tripura for over four years now.

Ravi Rayavaram, CEO, Matches and Agarbatti SBU, said that ITC aggressively promoted import substitution.

For years, while the bulk of agarbatti manufacturers relied on cheaper imported raw agarbattis, ITC sourced locally through small scale manufacturers. The company procures 100 per cent of its raw agarbatti requirement from domestic manufacturers.

“The bamboo variety for agarbatti stick making takes 4-5 years before the poles are ready to be harvested. We are targetting to stop imports of bamboo sticks for our entire requirement over the next 15-18 months,” he told BusinessLine.

Incense sticks have almost 90 per cent penetration in India with an approximate market size of ₹7,200 crore. ‘Mangaldeep’ and ‘Cycle’ are two most popular brands with a national presence.

Despite such a huge market, raw agarbattis (bamboo sticks coated with agarbatti masala) or non-incensed sticks in the country were imported primarily from China and Vietnam. Bamboo sticks used to make agarbattis are still imported.

India put raw battis under the “restricted list” in October 2019 to discourage imports. Data says imports grew from ₹31 crore in 2009 to ₹546 crore in 2019, (due to reduction of import duty in 2011). More recently, import duty on bamboo sticks for agarbatti making has been increased to 25 per cent to encourage domestic manufacturing.

The agarbatti sticks are made from a specific species of bamboo, unique to the North-East. Lack of widespread availability of plant type, absence of machinery and low import duty saw local manufacturers and traders import round bamboo sticks. Around ₹300 crore worth of such sticks were imported last fiscal, said sources.

Rising Demand

Meanwhile, the demand is increasing and sales of Mangaldeep in June 2020 are up when compared to a year-ago-period. Recoveries have also been faster with supply chains coming back on track. There is also a salience for more “value for money packs”.

“A lot of the recovery will also depend on how lockdowns play out across major cities and states. As more States or cities go for lockdowns, there will be an impact on supply chains. However, the impact of these new lockdowns on supply chain will be localised and less severe than ones we saw in March and April,” he added.

ITC has also tied up with temples and has launched unique range of ‘Mangaldeep Temple’ agarbatti variants dedicated to famous shrines, apart from introducing other region specific offerings.

It has also launched premium products like ‘Mangaldeep low smoke’ agarbattis and gift packs.

Online sales is being ramped up; while scope of the Mangaldeep mobile app is expanded to include puja hymns, slokas, Puja food recipes, live Pujas. The app is being launch internationally too.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on July 14, 2020
This article is closed for comments.
Please Email the Editor