Agarbatti industry is facing price war issue.

Agarbatti manufacturers are struggling with sustainability. Rising inflation, constrained pricing, overheads, unavailability of raw materials and their exponential costs are adversely impacting midsize manufacturers. Worst of all… Monopolistic competition is killing the spirit of incense and the fragrance industry. Speaking to Sugandh India, Lal Chand Purswani said “, Despite being in the agarbatti business for over three decades I’m struggling. There seems no way out.” Detailing his struggles, he informed “, I’m part of such an industry that is fluid in all aspects, be it; production, pricing, packing, marketing, distribution and manpower. This makes it all the more challenging for a manufacturer to introduce new products and see his business grow.” Lal Chand Purswani owns Vidhan Fragrance. A Jaipur-based agarbatti manufacturing company. Feeling sympathetic towards the harsh reality… the condition of fellow manufacturers he commented “, a consensus among all the stakeholders of this industry is a must. We are not organised. We are not, by-laws regulated. Nobody follows norms. That’s the worst part.” Continuing further he remarked “, This industry has a lot of potential. We rank among the top exporters and yet, this industry is under total breakdown. This industry needs strict guidelines and good policy from the Centre and the state as well.”

Before Vidhan came into existence Lal Chand Purswani’s familywas into soap manufacturing. The company was established in 1989. The reason to get into the agarbatti business was simple. This business at that time was not cost-hungry. The production was manual. Today it’s a different story. In three decades, the company’s sales network has spanned; Maharashtra, Madhya Pradesh, Chhattisgarh, Gujarat, Bihar, Odisha, Haryana and Punjab besides its home state of Rajasthan. The company recently deployed distributors in UP. They make all kinds of incense products like; dhoop, agarbatti, dry sticks, cones, sambrani, jot batti, havansamagri and kapoor. Over 150 different types of products are sold under the banner of Vidhan Fragrance. Online sales provide a much-needed boost to overall sales. LakshyaPuraswani, son of Mr Purswanilook after production, marketing and sales. KishorePuraswani, brother of Lalchand jiand his son Sahil Purswani said that he has been in the company for around 5 years and takes care of production and marketing.

Recalling those times when Lal Chand Purswani was fresh in the agarbatti business, he said “, This industry was run by a handful of business houses. Even till the end of the 20th. Century, running an agarbatti business was manageable. South Indian brands especially from Mysore and Bangalore ruled the roost. Today it is Indore. Agarbatti manufacturing has grown rapidly in cities like; Ahmedabad, Mumbai, Nagpur, Surat, Delhi and Chandigarh. In Rajasthan, it is Jaipur and Ajmer. The raw material purchase comes mainly from Indore and Bangalore.” Adding further he remarked “, Ahmedabad being a major producer of incense-based products has lesser visibility in Rajasthan.” He reiterated that customers today want quality at a budget price. “Our business runs on quality, marketing and relations,” remarked Mr Purswani. Vidhan Fragrances has a good presence in Jaipur and supplies across the state through around one hundred distributors. Sugandh India wanted to know about his business outside Rajasthan. Commenting on this he said, “Traditional dhoop was less in demand in my home state a decade and a half ago; so we routed out our incense products in neighbouring states.”

Commenting on the nature of his business Mr Purswani remarked “, Only three to four products survive in a chain of hundreds. Every manufacturer has to deal with this reality. Inflation is another unavoidable challenge that we all deal; on an everyday basis.” Continuing further he said “, Before a new launch, MRP is tested across all competitive products in that segment. This is irrespective of the manufacturing cost and overheads. Since quality cannot be compromised, trade-off becomes a necessity. Packaging is changed from box packing to the zipper. Weight and material per packet are less than usual. Just imagine, a packet of agarbatti  costing50₹ is sold for 25₹ to 30₹: just to stay in the game.” He said… this trend has sparked borrowing. “We have to gift discounts to dealers, distributors and suppliers. The shopkeeper demands schemes and so do the customers,” remarked Mr Purswani quite grudgingly. This is what he meant by the industry breaking down.

Those suffering in the agarbatti business are mid-size manufacturers; remarked Kishore Purswani, brother ofLalchand ji. Local agarbatti manufacturers know their limits. They operate within a district or region. They don’t go beyond their home state. I, as a mid-size manufacturer, don’t have to worry about competing with them. The real problem is with big-time cash-rich companies. They start the price war. Big distributors work for big manufacturers. They move their products by default. It is people like us, who have to come up with schemes and discounts for all in the chain despite making quality incense products. Even shopkeepers demand schemes from us. Mr Purswani said that state-level organisations are not able to do enough to protect the rights of mid-size companies. He appealed that all members have to sit together and chalk out a plan to find a resolution to immediate issues affecting this industry.

On the question regarding fragrance trends, Kishore bhai said that in Rajasthan, Rose, Mogra, Sandal are most popular. Oudh is also gaining popularity. New generation prefers French and Fine fragrances. The trend of bambooless has impacted agarbatti.

Lakshya Purswani, son of Lal Chand Purswani said, “Today, everything we relate to per se manufacturing is a problem be it;  production, labour, sales and marketing. Raw materials are in heavy shortage due to excessive demands and it is costly. We are in a dichotomy of situations. Where costs of raw materials have doubled in the last two years, the selling price of incense products has come down. We cannot increase the MPR on the retail side either. This has led to a gap. We have to borrow money from the lenders to survive in the market. Selling products to other states is a costly affair due to high freight. High-quality premium incense seems a solution now for compensating for our losses. Premium products have a good margin to take care of other expenses.”

He added, “We have stronghold in local market but there is an issue, the shopkeepers release the payments of big FMCG companies first. We get paid later. The reason being that agarbatti is a non-essential product.

Talking about youths as customers SahilPurswani, son of Kishore bhaisaid “, They hardly use dhoop and agarbatti. Worshipping depends on one’s faith. However, youths today do not shy away from paying premium price and so we are making premium products for them.We also sell our products through Amazon and Flipkart for the youth.”

Lakshya said—Super market companies likeDmarthave become a challenge as well. For example, a dry stick that is sold for Rs. 10 by a shopkeeper is sold for Rs. 5 at D Mart. This disturbs the market and pricing.

In the end sharing his future plans, Lakshya said that they wish to establish Vidhan as a pan-India brand with more and better quality products.