Internship Report on

“A Study on consumer satisfaction level towards Cycle

Pure Agarbattis in Mysore”

Submitted By:

NIKITHA.R

(USN: 4MX19MBA05)

Submitted to:

VISVESVARAYA TECHNOLOGICAL UNIVERSITY, BELAGAVI

In partial fulfilment of the requirements of the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

(SUBJECT CODE: 18MBAAOS307)

Under the Guidance of

INTERNAL GUIDE

MR. ABHILASH Y C

Assistant Professor

Department of MBA

Maharaja institute of technology, Mysore

 EXECUTIVE SUMMARY
The current value of agarbatti industry is placed at Rs 1800 crores and the rate
of growth is 20% on a year on year basis. India products 1 million tons of agarbatti sticks
annually. There is potential for the market to increase by another 30 crores by mechanization
of the splint making process and increasing the production. Women Producers in these
regions have been restricted to primary processing of bamboo Culms, i.e. producing silvers
(incense stick core), which is a very low value activity
(about 2% of the final value). This can give significantly higher returns to the family engaged
in these businesses and possibility of other business opens up with the increase in per capita
income.

The Part-A of the report contains an overview about the industry and the company
profile which includes the product mix, work flow, competitor’s information and future
prospects of the company. It also explains the McKinney’s 7s frame work with special
reference to organisation under study, the individual department study and SWOT analysis of
the organisation as a whole.

The Part-B of the report gives detail about the project undertaken. The project titled
“Consumer Satisfaction Level towards Cycle Pure Agarbattis” (A study conducted on behalf
of N.Ranga Rao & Sons, Mysore). The objectives of the study were to know Consumer
Satisfaction Level. To understand the needs and wants of consumers. To know the attributes
which are influenced to consumers. To know opinion towards Cycle Pure Agarbattis. The
primary data is collected from consumers through questionnaire. For survey the instrument
used was questionnaire, convenience sampling method was used to survey the consumers.

The study reveals that Cycle Pure Agarbattis are the market leader in Mysore. Most
of the consumers are happy with the product. The quality and fragrance are main attributes
which will attract the consumers. Only few consumers aware about premium agarbattis
therefore advertisement or awareness is required on premium agarbattis. Most selling brand
of Cycle Pure Agarbattis is 3 in 1 brand.
Chapter Title Page no
Executive Summary
1 INTRODUCTION

1.1 General Introduction

1.2 Industrial Background of the study
1.3 Origin of the Industry
1.4 Growth of the Industry
1.5 Present Status of the Industry
1.6 Leading Players
1.7 Future Prospectus of the Industry

2 COMPANY PROFILE

2.1 Background and Inception of the company

2.2 Nature of the business carried

2.3 Vision, Mission and Quality policy

2.4 Product/ Services Profiles

2.5 Area of Operation

2.6 Ownership Pattern

2.7 Competitors information

2.8 Infrastructural facilitates

2.9 Achievements / Award

2.10 Workflow Model

2.11 Future Growth

3 McKinsey’s 7S Model and Porters five force model

4 SWOT ANALYSIS

5 FINANCIAL STATEMENT

6 LEARNING EXPERIENCE

TABLE OF CONTENTS
 CHAPTER: 1

1. INDUSTRY PROFILE
1.1 General Introduction:
Agarbattis ( incense sticks) form part and parcel of the traditional Hindu practice
of offering prayers in temples and other places of worship, In modern days, perfumed sticks
are also used in houses and in other public places as air-fresheners and/or mosquito
repellents. The demand for agarbatti is increasing both in the domestic and export markets
because of the improvement in quality and increase in the types of products. India is the
largest producer of agarbattis in the world.

1.2 Industrial background of the study:

Industrial development in India has occurred mostly to meet increasing urban
consumer needs and to support the growth of the vital agriculture sector. The traditional
home based enterprises have also been simultaneously experiencing steady growth, primary
because of the influence of market forces and also because of multiplier effects. Cottage
industries have slowly changed to rural cottage or semi-urban micro-enterprises with limited
assistance from government. Agarbatti making is one such industry. It has responded well to
increased demand for its products both in rural and urban areas, mainly because of the
continued availability of cheap labour force dominated by women and children. At the same
time, greater advertising costs and quality improvement have pushed up the prices.

Agarbatti industry is gradually developing a wider base of the total domestic sales of
Rs 7.1 billion (approx. US$198 million) in 2018/19, south India accounted for 35%, west
30%, North 18% and East 17%. Almost two-thirds of consumption took place in rural areas
(61.23%). The poor (low-income group) purchases about 46% of the value of the agarbatti
compared with the higher income customers who buy 54%. However, categorizing purchases
into five income classes shows an inverse relationship between income and the purchase of
agarbatti. Existence of negative income and price elasticity may be in play. The factors
influencing purchasing decisions are: the quality, fragrance, brand name preference and cost.

Rising demand for the product and earning of hard currency has led the agarbatti
industry to orient itself increasingly towards exports. Total exports have increased by 266%,
from Rs 1.5 billion (approx. US$ 42 million) in 2008/09 to Rs 4 billion (approx. US$112
million) in 2009-10. More than 800 registered and 3000 unregistered units currently exist in
the country and only up to 10% of these, mostly in Karnataka, are engaged in export trade.

1.3 Origin of the industry:

The origin of using aromatic substances can be traced back to the Stone Age or
probably even before that. Let’s take a look at how incense has influenced cultures across the
world.

India is often considered the home of incense; it is eulogized in the Vedas, back in
the era 5000 B.C. The traditional well-known scents of ancient India were Jasmine, Rose,
Sandalwood, Champa, and Ceder & Musk. Ancient Sanskrit texts contain many beautiful
descriptions of festive occasions when incense was burned in the homes and streets. Fragrant
waters were sprayed on the through fares and scented flower garlands adorned and decorated
buildings and entrance ways. In fact, flowers, which have deep spiritual connotations in
Hindu philosophy, are among the chief sources of incense in India. Along with flowers:
incense sticks and dhoop are a part of the 16 essential offerings in the Hindu ritual-the others
being betel leaf, betel nut, camphor, cardamom, cloth, clove, divya (lamp),grain, naivedhyam
(a mix of nine offerings), sandalwood paste, sweets and water.

Indeed, fragrance has played a dominant role in Hindu religious rituals since Vedic times
and is intimately linked to the havan or yagna i.e. the sacrificial fire. Offerings or oblations
consisting of aromatic and medicinal herbs, resins, barks, leaves, exudates (gums which flow
from trees) twigs, roots & seeds along with foodstuffs and ghee were offered to Agni, the god
of fire who, according to mythology, carried them to the celestials. This was done to appease
the gods for ushering in prosperity or avoiding disaster. The emanating fumes with their
unique aromatic properties purified the environment and had a vitalizing and invigorating
effect on individuals, besides acting as a natural disinfectant. They were said to ward off evil
spirits, alleviate anxiety and create an aura of tranquillity and help in experiencing the divine
presence. In fact fragrance is considered as a divine attribute and is said to manifest the
presence of gods as well as gratify them.

It is this dhoopa aradhana which has transformed over the ages, for convenience & practical
reasons, into the present day agarbattis. Agarbattis, also known as joss sticks, incense sticks
or prayer sticks, are today used in all temples and domestic offerings by millions all over the
world.

Burning of incense has been an integral part of all ancient civilizations. Fortunes were
spent on incense and trade routes established with incense in mind. Among the most
important ancient fragrances were Frankincense (Olibanum) and Myrrh, but the resins of
various other plants have also been collected and traded since 3000 B.C.

Gums and resins of aromatic trees were imported from Somalia in the Arabian
Peninsula to ancient Egypt to be used in religious ceremonies. The tomb of Tutankhamen in
the Valley of the Kings at Thebes was found to have huge quantities of perfumes, oils and
incense surrounding his mummy. For Egyptians, incense held a direct connection with the
dead. Each type of incense had a specific purpose and effect.

The Babylonians used incense extensively while offering prayers or divining oracles.
It was imported into Israel in the 5th century B.C. where special gold altars were erected for
it in the ancient Temple of Israel. According to one theory, it spread from there to Greece,
Rome and India.

The sophisticated Greeks appreciated aromatic sources such as the turpentine tree,
myrrh, frankincense and cinnamon. Enormous amounts of money were spent on these exotic
imports. These were burnt as oblation & for protection. More precious perfumes, incenses
and spices came as imports through Arabia along well established incense routes, to be
eagerly purchased by Mediterranean merchants to satisfy the increasing demands of the
European markets.

In Rome it was an important element in public and private sacrifices, especially in the
worship of the emperor. The Old and New Testament refer to the extremely powerful Resin Drop
Incense, whose recipes were given through voice or vision e.g. Moses was given recipes by the
creator during his encounters on the mount. It is well known that when Jesus was born, frankincense
and myrrh were presented to him along with gold by the three wise men of the East. Today Roman
Catholic as well as Protestant and the Eastern Orthodox Churches use incense at mass and in
many other rituals.

Native American Indians offered tobacco, sage, junipers, cedars and mugworts in
their rituals, as documented from their first encounter with Europeans in the 15th and early
16th centuries. Descendants of the Mayas & Aztecs offer copal, an aromatic resin even today
in their worship.

1.4 Growth of the industry:

The availability of incense sticks in the present form, to a large extent, has to be ascribed to
the enterprising nature of the Hindu community, mainly from the south India. It was they,
who started making use of bamboo stick as the core, and a gummy wood powder as the
binding medium to apply the mass to these sticks by hand-rolling process. They had an
intimate knowledge of perfumery materials like Civet, Musk, Saffron, Barneol, Cloves,
Cassia, Agar wood, Sandalwood, Gum, Benzoine, Halmaddi Etc., Dry flowers and roots like
Rose and Vettivert, leaves like Davana, Patchouli etc. besides attars of Rose, Sandal, Khus
and Hina which they used to produce excellent incense sticks of reputed qualities. One factor
which has remained constant where this industry is concerned has been the fact that each
individual manufactures considered his product to be unique and different. Each incense stick
has always been hand-rolled by the individual without in anyway using any mechanical
device in its manufacture. But today some companies are using machinery for manufacturing
of incense sticks.

India’s exports of Agarbattis to major countries:-

India’s exports of agarbattis in 2009-10, by 21.68 per cent when the same reached a level of
Rs. 247.42 crore over Rs. 203.33 crore in the previous year. Country-wise export trends
reveal that USA continues to be the largest market. There was a phenomenal growth of
39.54% to this market during the period-exports having touched a figure of Rs. 35.57 crore as
against Rs. 25.49 crore.
 1.5 Present status of the industry:

The State of Karnataka and especially the Mysore region is recognized as a pioneer in the
activity of agarbatti manufacturing. The region has a natural reserve of forest products
especially sandalwood, which provide for the base material used in production. Due to the
simple manufacturing process and a huge market potential, there are a large number of
producers existing in the market. This has led to a scattering of this activity throughout India.
At present, there are a number of small manufacturers, who produce cheap and low quality
agarbatti and this has created marketing problems for quality producers. Apart from the local
competitors, some MNCs too have entered the market. Besides, in view of WTO‟s free-trade
regime, doors shall soon open for international competitors like China, Pakistan, Sri Lanka
and Thailand etc... to flood the shelves.

1.6 Leading Players

TABLE: 1

Company Name Brands Variations Remarks

Hari Darshan Hari Darshan Export quality
Sevaashram Pvt,
Ltd. Delhi.
Shrinivas Nag Champa (Available in 15 Caters mostly the
Sugandhalaya Agarbatti gms,40gms, Domestic market
Bangalore 100grms,
250gms, 500gms,
1kg,and 8sticks
Square packing)
Aastha Long incense

Sandesh Agarbatti Gopala incense 8 Sticks Square Caters to the

Co. Packing Domestic markets
20 Sticks With nominal
Master gold Hexagonal Exports
Incense Packing
Shree Balaji Bharat Darshan Among the top 10 and
Industries Orissa Incense, most popular in eastern
 Spritual Guide, regions
Precious Chandan,
Jasmine,
Indian Spice &
Rose Pouch Series,
Sugandha Incense,
Sugandha Shringar

NRR Group. Cycle Brand, Cycle 10 per cent of

Mysore Dhoop,Flute turnover from
Brand,Lia Brand, exports. Total
Naivedya, Rhythm turnover Is Rs 240 crore
dhoop, Wood,
Parampara,Yagna,
Eco,
Mecca Madina
ITC Ltd (Agarbatti Mangaldeep, Markets Khadi
Division) Spriha Bhandars in the
Ashageet, Yantra Country. Planning
and Madhur 100 To expand its
are sub-brands of Existing number
Mangaldeep Of retailers from
25,000 to two
Million across the
Country within a
Year. At present,
the company’s
25,000 retailers
Cater to
Maharashtra,
Tamilnadu.
Abyssinia Impex, Premium segment: Mostly exported.
Mumbai Ratnamala,Decent,
Empress, Cherish,
Super Sandal,
Relax,
Fascinating India,
Surprise,
Paramhans,
Success,Amber
Flora
Herbal segment
Eucalyptus, Balm
Mint, Patchouli,
Lemongrass, Pine,
Citronella, Juniper
Ramdev Food Vedam Incense Archanam, Mogra, Regional player
Products Stick Yagyam, Havan,
Pvt. Ltd Yogam, Dhoop,
Ahmadabad Poojanam Saffron,
Dhyanam Sandal,
Chintanam,
Kasturi,
Shantam, Rose,
Arpanam,
Camphor, and
Anusthanam
Nag champa

1.7 Future prospects of the industry:

Customs in incense manufacture have changed little over the centuries except in the
range of fragrances offered. In ancient times, only naturally fragrant resins or woods like
sandalwood and patchouli were used for incense. Modern fragrance production allows
virtually any scent to be duplicated, and fragrances are available now that couldn’t be offered
before. Examples include green tea, candy cane, blueberry, pumpkin pie, and gingerbread
incense.

The custom of use of incense is also likely to change in the future and in Western culture.
In India, two or three sticks of incense may be burned every day in a typical home, while, in
the United States, users of incense may only burn one stick a week. Incense-makers hope the
variety, effectiveness, and low cost of incense sticks will make them more popular than air
fresheners and room deodorizers made with artificial perfumes. Also, the popularity of
meditation and aromatherapy have spurred incense sales among clients who want their rare
moments of quiet and relaxation to be healing and beautifully scented.

It is true that a lot of work has to be done to save the industry. This industry has the
potential to retain its low and high-end markets and huge employment base with the help of
proper planning. With the eliminating of trade barriers, Global markets open up an ocean of
opportunities for the industry, especially considering the fact that apart from a few Asian
countries, the rest of the world is ignorant about the product. Even now about 20% of the
total production is exported.

There is a lack of manpower around the world to produce such a labour-oriented

product. “Eco-friendly” , “User-friendly”, “Handmade”, “Therapeutic”, these words can
serve as the banners to attract the western markets. The name of Mysore itself works as a
brand to catch the world‟s attention as a pioneer in agarbatti manufacturing and also as a
tourist center. Inputs in bio-technology, tissue culture and other R&D can ensure a positive
growth for the industry and create high-value added products that are required for export
markets, thus helping thousands of laborers to attain a better socio-economic status.
 CHAPTER: 2

2. COMPANY PROFILE
2.1 Background and inception of the company:

Sri. N. Ranga Rao faced many adversities right from a tender age, losing his father at the
age of six to severe health problems, resulting in setbacks in his professional life. But Sri.
Ranga was a man of courage, clarity, discipline and independent attitude; life's shortcomings
did not stop him from achieving his vision.

Sri. Ranga Rao is an excellent example of hard work and sustained interest. As a boy of
eleven, he began selling biscuits in his school. Another boy also began doing the same and
became a competitor. Immediately he gave peppermint free with a biscuit and his rival
vanished from the scene.

As years rolled by, he worked for a coffee estate in different cities. When he was in
Kodagu, he would visit Mysore city; he loved the city and thought of starting a business in
Mysore. Thus came about the birth of "Mysore Products and General Trading Company", in
1948 which produced soap nut powder, turmeric powder and agarbattis. Along with the birth
of a company was the birth of a tradition - a family enterprise offering the highest quality and
purity in all their products.

He chooses to focus on the simple & ubiquitous agarbatti, and embarked on a journey
that established the nondescript agarbatti on the commercial map of India.

His belief “Quality backed by values will pay” and his belief took him far and long
- the small cottage industry transformed into a global entity. N. Ranga Rao & Sons is now the
largest incense manufacturer which has created 5 popular brands - Cycle, Lia, Flute, and
Rhythm & Woods. Cycle Agarbattis is the market leader in India and is exported to over 60
countries.

The company, which started with incense, has grown to provide customers a complete
range of solutions in air care - from deodorants and room fresheners to aroma oils. The
growth has been crafted by total endurance, perseverance and commitment to rigid quality
standards, unceasing research, innovative packaging, and product innovation backed by his
motto

"Total customer satisfaction with value for money".

 The founder's guiding principles of integrity, quality, customer responsiveness,
financial discipline and importantly, honoring commitments and a genuine concern for social
causes is consistently reflected in NRRS values. Today the brand has support & patronage of
millions of households across India and world over.

NR Group:

The NR Group has always been ahead of its time, which translated to a series of
marketing, research, product, packaging & organizational innovations. As a result, the brand
evolved from an incense sticks producer to one that provides a complete range of solutions in
natural aroma products. An extensive range of fragrance products come under the brand -
from coils and cones to aromatic oils; room fresheners to reed diffuser sticks; fragranced
lifestyle products to botanical research and floral extracts.

Keeping with the new and yet preserving the traditional values has helped the group
grow extensively. The family enterprise is now seeing its third generation overseeing the
business as CEOs, most of who have returned to head the group companies after management
degrees from US universities. Over the last six decades, the group has diversified into 6
sectors and in each; it has carved a name for itself. The group companies have an independent
corporate set up managed by professionals with the third generation overseeing operations as
CEOs.

The NR Group of Companies:

N. Ranga Rao & Sons (Manufacturer of Cycle Pure agarbattis)

 Established in 1948, N.Ranga Rao & Sons is a pioneer and leader in the incense
industry for over 6 decades in
 Creativity of fragrances and packaging.
 Professional management and marketing, and now totally ERP integrated.
 Has a library of over 500 fragrances, all created and blended in a house.
 Consistently winning awards in various categories over the last few decades.
Rangsons Marketing Services Pvt. Ltd.

 Established in 1993.
 Independent professional organization marketing Cycle Brand Agarbattis and the
developing fragrance Domain products of NR Group.
 Has a network of a large number of distributors and field force across all states in
India, enabling excellent after sales service.
 Conducts consumer and market research regularly to understand their perception and
requirements.

NR Foundation (Non –Profit Charitable Trust)

 Ranga Rao Memorial School for Disabled (Estd. 1988), the first residential school for
visually challenged girls in Karnataka.
 Project Prerepana focuses on promotion of health and education of women and
children in selected slums of Mysore. Through the learning centres, 103 dropouts in
the age group of 3 to 16 years have been groomed and brought back into mainstream
education.
 Cycle Scholarship program wherein financial assistance is given annually to about
600 students in Mysore and Hyderabad.
 Ranga Jnana Vinimaya Kendra and centre for intellectual debate and discussion. It is
an informal interface between those who know and those who want to know.

NESSO – Natural and Essential Oils Pvt. Ltd. (Mfr. & Marketer of essential Oil and Floral
Extracts)

 Established in 1979.
 Global market share leader in Indian floral extracts.
 Has 7 extraction facilities strategically located near cultivation clusters in South India
with capacity to process 12tons of fresh flowers daily.
 Over 24000 ha of green tea plantation.
 Continuous research on standardization of herbal extracts, Ayurvedic formulation
and phytochemicals.
 Delivers fresh, natural and quality floral concretes and absolutes to flavour and
fragrance houses, cosmetic and nutraceutical companies across the globe.
RIPPLE Fragrances Pvt. Ltd. (Mfr. & Marketer of personal & Air care Lifestyle Products)

 Established in 2005.
 The spatial fragrance division of the NR Group.
 Is strongly entrenched in the Indian air care market with its brands Lia and IRIS.
 Lia range of do-good air care products consists of room fresheners and car
fresheners.
 IRIS is pioneering the home fragrances market in India through novel delivery
systems and exciting fragrances.
 IRIS product range includes Reed Diffusers, Fragrance Vapourizers, Potpourri
Fragrant Stones, Speciality Incense, Pillow Mister and Aroma Candles.
 Present in the personal care space to with DNA brand of Deodorants and Perfumes.

Rangsons Electronics Pvt. Ltd. (Total Electronic Manufacturing Services)

 Established in 1993.
 Certified for ISO 9001: 2008. ISO 13485: 2003, ISO 14001: 2004 & OHSAS
18001:2007 and is an early adopter of RoHS regulations.
 The first ENS enterprise in India to be certified for as 9100 – the quality standard
uniquely required by the aerospace industry.
 Preferred partner for the High Mix-High Tech Electronics OEMs by providing
complete solutions required to transform ideas into successful products and services.
 Provides solutions in the field of medical systems, defence, industrial networking and
telecommunication.
 REPL has received supplier awards from L&T, GE Medical Systems & Wipro
technologies.

N Ranga Rao & Sons Exports. The ambassador of Indian aroma traditions; this company
successfully exports incense and related products to more than 50 countries in Asia, Africa,
Europe, Latin America, the Middle East, Far East and North America. N Ranga Rao & Sons
Exports tops this achievement with a large number of prestigious awards for excellence in
international business to its credit as well as a winning streak with the Government of India
Export award in the incense category.
2.2 Nature of the business:

The best of raw materials are sourced directly from the Asian sub-continent. None of these
are issued for production until they pass very stringent quality control tests.

NR Group has the strongest R&D setup in the entire agarbatti industry. Years of rigorous
research have given us distinction in fragrance creation, and known to have set trends in
creating different forms of incense and packaging.

NR Group's core competence - the nurtured art of creating new fragrances is a family secret
that has been handed down through generations, safeguarding the purity and original quality
of the incense.

Adding to the company's strength is the fact that all fragrances are made or blended in-house
and all processes are developed in-house, ensuring that there are no collaborations. All
statutory requirements under labour, forest, commercial and pollution control laws are
applicable to this industry, which is recognized by the Government as a handicraft industry.
This safeguards the interests of the production workforce and the environment.

A professionally managed company, N. Ranga Rao & Sons introduced modern practices
such as Vendor Development Initiatives, Quality Management and HRD as early as 1960.

Cycle agarbatti gives full and part time employment to many tribal hamlets and also to more
than 3000 families in India. Cycle products are totally eco-friendly - no CFCs are released
during production, no animal products used and no animal testing is involved

2.3 Vision, Mission and Quality policy:

Vision Statement:

Satisfaction of consumer needs and wants through systematic and regular customer services.

Mission Statement:

To enhance the wealth generating capability of the enterprise in a globalizing

environment, delivering superior and sustainable to consumers.

Quality policies:
  The customer is the sole focus of the business.
 Company constantly Endeavour towards customer satisfaction by delivering
products and services of the best value and quality
 Company strives to honours our commitments, implied, to both, our internal and
external customer.
 Company stress on integrity, transparency and consistency in all our dealings.
 Company always strives to have a trusting, mutually beneficial and long-lasting
relationship with our business associates.
 Company seeks to maintain a warm, positive and friendly work.
 Company empowers people at appropriate level to achieve their goal.
 Company recognizes and reward merit and performance.

2.4 Products & Service profile:

Cycle brand

Cycle

Traditional yet contemporary; Cycle Agarbatti is a timeless classic. This

series contains fragrances that have stood the test of time to remain
hugely popular over the decades.

All in 1

An inspired and innovative combination pack perfect for gifting! It has a

collection of creative fragrances which have been popular and successful
for decades. This collection of amazing aroma makes a good gift on any
special occasion.
Natya Kesari
A sweet fragrance. A sublime fragrance. A classic fragrance. Only
incense with such qualities can hold its own with the passage of time.
And it has done so with aplomb. There are very few fragrances that can
match up to its power. Light it and you too will get swayed by its waft.

Bansuri
The clear, uncluttered minds that are charmed by the simple things in life
will love this series of fragrances that stand out for the simplicity and
clarity in their notes. Bansuri produce an exhilarating fragrance that
tantalizes the senses and moves the soul.

Three in One
One of our time-tested, best-selling combo pack which has 3 different
fragrances in 1 pack:
1. Serene (Lily) The delicate, subtle fragrance of lily creates a serene
ambience. Let its gentle soothing and sedating qualities calm your heart
and emotions and lull you into a state of peace.
2. Yugantar (Fancy) A sweet, fruity creation whose aroma lingers on
long after it is burnt, yet is enticing enough to leave you yearning for
more. The fruity experience rejuvenates you completely, as much as
eating a vitamin packed basket full of fruits would.

3. Jagrane (Intimate) This utterly sweet smelling fragrance with its

bouquet of green and coniferous undertones creates a cozy atmosphere
and awakens your senses to the new aura surrounding you.
Surprise: As the name suggests, this is the unexpected delight of the
pack. You are surprised with a different fragrance every time, which
could range from the sweet smelling to the woodsy.
Moods
This emotion transforming incense is sharp, sweet and very, very
distinctive. Just a whiff of it is enough to put you in a different frame of
mind with its mood altering qualities. Now you know why it's called
Moods.

Lia
For the youthful you, for those seeking novelty, for those ready for
adventure and game for the new & unknown – Lia is always new, always
surprises you.
Lia has a range of fragrances to suit your mood and style.

Woods

The best in nature is captured for you in this premium incense. Woods
incense has natural oils and resins that have been treasured down the
ages for their aromatic and medicinal qualities. With its deep woody
smell, it connects you to nature instantly. Purity unmatched by any other
incense.

2.5 Area of Operations- Global/National/Regional

Cycle Agarbattis is the market leader in India and is exported to over 60 countries.

The ambassador of Indian aroma traditions; this company successfully exports incense
and related products to more than 60 countries in Asia, Africa, Europe, Latin America, the
Middle East, Far East and North America.

N Ranga Rao & Sons Exports tops this achievement with a large number of prestigious
awards for excellence in international business to its credit as well as a winning streak with
the Government of India Export Award in the incense category.

The NR Group is vertically integrated in the fragrance domain. NR Group is one of the
few marketing companies in India that create and blend the perfumes.
2.6 Ownership pattern:
A family enterprise offering the highest quality and purity in all their products started
by Sri Ranga Rao. The family enterprise is now seeing its third generation overseeing the
business as CEOs, most of who have returned to head the group companies after management
degrees from US universities.

2.7 Competitors Information:

ITC- Mangaldeep:

As part of ITC's business strategy of creating multiple drivers of growth in the FMCG
sector, the Company commenced marketing Agarbattis (Incense Sticks) sourced from small
scale and cottage units in 2003. This Business leverages the core strengths of ITC in nation-
wide distribution and marketing, brand building, supply chain management, manufacture of
high quality paperboards and the creation of innovative packaging solutions to offer Indian
consumers high quality Agarbattis. With its participation in the business, ITC aims to
enhance the competitiveness of the small and medium scale sectors through its
complementary R&D based product development and strengths in trade marketing and
distribution.

Mangaldeep Agarbattis are available in a wide range of fragrances like Rose, Jasmine,
Bouquet, Sandalwood, Madhur, Durbar, Anushri and Mogra. New launches include
Fragrance of Temple, Champa and Tarangini in an attractive pouch format.

The pouch format of packaging is increasingly becoming popular. Mangaldeep has

launched three variants – Champa, Tarangini & Malligai in the pouch format catering to
various market needs. The products have received encouraging response from consumers.

VASU Agarbattis:

VASU Agarbattis journey into the world of agarbattis started way back in 1984, with just
3 products, in Mysore. Regarded as the cultural capital of Karnataka (India), the city of
magnificent palaces and royal grandeur, the birth place of incense, is well known for its
passion for fragrances, sandal, and handicrafts.

Little wonder that the agarbattis made here are known the world over.
Today, with over 30 brands which have won numerous accolades, VASU Agarbattis in the
various segments are sold in over 200,000 outlets and across the globe.

The organizational vision, and a strong ethos in business practice, is ably managed by its
three partners, R.Krishna, R. Venkatesh and R. Mohan. Who are very much a part of the
mission to create innovative systems, tools and programs giving its managers a conducive
environment for learning, and, its staff motivation to develop and consolidate its position in
the market.

The team is also well geared into the future, with a clear focus to expand its base of brands,
both nationally and internationally, while keeping updated on the latest technology and being
part of the industry development with a strong R&D team.

Moksh Agarbattis:

Company started operations in the year 1996, in Bangalore, India. Moksh is one of the
largest manufacturer and exporter of finest quality of Indian traditional flora agarbatti and
incense sticks selling it all over the world across 50 countries. Moksh‟s unique fragrances
have been extremely appreciated, with the nature-inspired products gaining huge popularity.
Many of the popular incenses and Agarbatti fragrances in India have come from Moksh‟s
Agarbatti, including the largest selling Swarna Champa brand. They use R&D experts to add
new fragrances to our portfolio by innovating newer fragrances. The incense sticks, Agarbatti
brand includes Swarna Champa, Rose Incense, Jasmine Incense, gold sandal, Swarna mallika,
Nag Champa Incense, Sandalwood Incense, and Herbal etc.

2.8 Infrastructural faculties:

It is well equipped with fully finished office with meeting halls, training rooms to
workers are provided with good working conditions like proper ventilation facility, drinking
water facility, good pantry and air conditioners. The equipments are also arranged that the
work flows smoothly and according to the requirements of the job.

 As such infrastructure facilities are good.

 An own premise is located in the heart of the Mysore city.
 Separate building for all diversified companies.
 Well-planned five-storied building is being used.
 Transportation facility is provided by the company to the employees.
  The ERP system is adopted in the organization.

2.9 Achievements / Awards

 Par Excellence Awards (2009 & 2010) at the “National Convention on Quality
Concepts”
 4 awards in Advertising for Media Strategy, Radio Jingles and Innovation.
 9 Chemexcil awards,
 6 Visvesvaraya Industrial Trade Centre awards for excellence in exports.
 Niryat awards from the Federation of Indian Export Organizations.
 Merit awards from the Handicrafts Council at State and National levels.

NR Group wins Quality Circle’s par Excellence Award:

Mysore, 4th January 2010: NR Group, the manufacturer of India's leading agarbattis
brand 'Cycle Pure Agarbattis', has won Par Excellence awards at the National Convention for
Quality Concepts 2010, held in Vishakhapatnam recently. The awards were given for Quality
projects on power conservation and packaging printing undertaken by NR Group employees
for improving efficiency within the organization.

The first team undertook a project on power conservation, aimed at reducing power
wastage by analysing the different areas where wastage was occurring. An awareness
campaign was taken up internally, due to which the team successfully managed to reduce
wastage. The larger impact was formed in the attitude of the employees.

The second team, from the exports division of NR Group, focused on reducing the cost
and time for printing variant names on packaging. By setting up the printing process in-
house, the time for dispatching the final products was considerably reduced.

Mr. Arjun Ranga, Managing Partner, NR Group, said, “We are very proud of our
employees and their achievements. NR Group employees, by forming quality circles or
groups, are encouraged to participate in various forums and competitions on the quality front.
As a company, we have understood the need to be highly quality-focused. Quality control
systems give both internal and external audiences the belief that the organization, its products
& services can be trusted.”
 NR Group has consistently won Quality awards over the past two years from Quality
Circle Forum of India and the Government of India. The awards won by the company include
- Par Excellence Award from Quality Circle Forum of India (CCQC 2009), Excellence award
from Quality Circle Forum of India (NCQC 2009), Chemexcil for Exports from the
Government of India and Excellence in Exports from the Government of Karnataka, among
others.

2.10 Work flow model (end to end):

Production process: (Figure: 1)

Raw material

Finished bamboo sticks

Sorting of stocks

Preparation of paste

Coloring (if required)

Rolling batties

Blending & Perfuming

Drying

Packing

Dispatch

Cluster actors: (Figure:2)

Forest department raw material supply

R/M Suppliers
 Testing

Stick maker Stick sorter Agarbatti roller

Forest dept. Sorting of agarbattis

Govt policies, Support inst,
Bamboo supply
Financial inst, Market

Packaging Packaging section Agarbatti perfumer

Advantage- hand rolled,

Perfume industry
Eco-friendly perfumes

Dealers
Transporter Customers
Agents/retailers

Cost & aesthetics

MNC’s global competition, Mechanization,

Technology, Infrastructure, HR, etc.

2.11 Future growth and prospects for the company:

Cycle Pure agarbattis are the market leader in the Indian Market but now other brands
are coming to market and Major revenue is getting from exports and company wants to
strong their brand in Indian market. Introducing innovations and being perceived as the best
agarbatti product provider in the country; and having ability to respond to the ever-changing
demand of the consumers.
 CHAPTER: 3

MCKINSEY’S 7S FRAME WORK WITH SPECIAL

REFERENCE TO ORGANISATION
3.1 McKinsey’s 7S model:

The 7s Framework of McKinsey is a management model that describes 7 factors to organize

a company in a holistic and effective way. Together these factors determine the way in which
a corporation operates.

There are 7 basic dimensions, which represent the core of managerial activities. These
are the “levellers”, which executes use to influence complex and large organizations.
Obviously, there was a concerted effort on the part of the originators of the model to coin the
managerial variables with words beginning with the letter S. So as to increase the
communications power of the model.

Figure: 3 Source: McKinsey 7-S Framework, from the book ‘In search of Excellence’ by
Thomas J Peters and Robert H Waterman

Application of 7s Model:

1. Structure:

The organization chart and accompanying baggage that show who reports to whom
and how tasks are both divided and integrated.
 Since N .Ranga Rao & Sons is a private ltd company. The structure of the organisation
is democratic. Major decision however is taken is at top-level management of the company.

Organization Chart: (Figure: 4)

Area sales Manager

Sales Executive

Sales of Territory

Territory

Sales Representative

2. System:

Formulation of agarbatti (incense stick) is an ancient art. The finest ingredients

are blended in exact proportions so that the same unique fragrance bouquet is obtained every
time. Traditionally handmade, the batties are rolled by hand under strict supervision.

Quality always has been an integral part of our organization in all processes during
product realization. Quality checks are done at material inward, in process and finished goods
stages through statistically designed sampling plans. Quality checks at vendor premises daily,
is our norm for out-sourced processes.

Our AWARENESS on the importance of quality and introduction of FORMAL methods for
quality control and improvement has been an evolutionary development over 6 decades.

Systems based on ISO 9001: 2008 has been implemented, to provide guidelines for the
formation of Quality Management System.

3. Style:
 Style is one which top managers can use to bring about organization change. The aspects of
business most emphasized by members of the top management tend to be given more attention by
people down in organization. Reporting relationship may also convey the style of the
organization.

The reasons to support this are as follows:

 Whenever important decision are to be made, the whole staff is allowed to

participative in the decision making where by suggestions are sought and if found
appropriate are accepted and implemented.
 In N.Ranga Rao & Sons instead of „Boss-Subordinate‟ relationship among the
employees of the organization, superior acts as a guide and facilitator for his
subordinates.
 The top management always encourages changes in the organization provided they
happen to be always ready to cope with different situation.

4. Staff:

Presently there are about 6 in NR Group. Employees are the functional unit of any
organization. The company contributes to the prosperity of the society as whole by providing
equal opportunities to all. The company provides training to get gainful, high performance
employees. 1500 plus employees are working under N.R.Group in all over India.

5. Skill:

The qualified personnel with required skills and competency are recruited and selected for
the required designation. For example: for recruiting and selecting the manpower required by
the Marketing department the criteria would be MBA (Marketing) and who have the
capabilities and competencies to handle the functioning of work smoothly.

6. Strategy:

The strategies being adopted by the company:

"FRAGRANCE WORLD”, THE EXCLUSIVE RETAIL SHOWROOM:

Fragrance World‟, the exclusive retail showroom of the Mysore based NR Group located on
Dhanwantri road in Mysore city.

 Advertisement in a traditional and devotional way like (Bhagawah hai, Devaru

eddare )
 Sponsoring Third umpire ship in International cricket matches
 Building bus stands in the Mysore city with colorful background of Cycle pure
agarbattis posters

7. Shared values:

The common feeling among the people in the N.Ranga Rao & Sons is that they are meeting
the demands of the customers and fulfilling the expectations in the form of productions and
its variability. The employee also have belief that they are giving at the best possible price to
milk they procure from farmers. Value of NR Group:

 Honesty
 Discipline
 Transparency
 Cleanliness
 Total quality
 Self-reliance
 Co-operative free politics
 Respecting others opinions, emotions, thoughts, and feelings.
 PORTER’S FIVE-FORCE MODEL

 Rivalry among major competitors

Numerous competitors:
The competition is very high in the industry and many balanced competitors are present in
the industry. Because of which the industry concentration ratio is low.

The major players are:

 Cycle brand
 Mangaldeep
 Z-black
 Parnami
 Joie
 Danim

Price war is there among the competitors to attract customers. They market their products,
give emphasis on advertising, details of all the existing products are available on their sites on
internet even the details of upcoming products are also there.

Among the above given competitors Some brand is the leading one due to following
reasons:

 High level of creativity

  Stringent quality control
 In-house blending
 Continuous research and development
 Exceptional goodwill generated among trade
 Consistent emphasis on relationship building
 Ethical practices

 Industry growth:
The industry growth is high even the multinational companies are turning towards
this business seeing the demand of product (agarbattis) in domestic and international
market. As an example ITC forayed into agarbatti business.

 Storage costs:
The product once produced is not difficult to store. The storage cost is not high as the
product is not vulnerable.

 Switching cost:
There is no or very low switching cost which makes the competition more intense.

 Bargaining power of suppliers

 The natural materials are used in agarbatti making. There are numerous suppliers of
these raw materials so if the supplier charges high prices company can switch over to
other suppliers so the bargaining power of suppliers is low.
 Importance of industry: agarbatti industry is very important or can say main customer
for the suppliers of these raw materials.
 The companies purchase the raw materials in bulk which increases the importance of
buyers as for these suppliers this industry is the main customer of their raw materials.
 The purchase of these raw materials represents the significant fraction of the buyer’s
cost as they are the main constituents of incense stick(agarbatti). So the buyers are
price sensitive.
 These raw materials are undifferentiated and can be purchased easily from other
suppliers.

The buyers generally have the full information about demand, actual market prices and
suppliers cost. This make the buyer(agarbatti industry) to ensure that it get the raw material in
most favourable prices.

This clearly shows that the bargaining power of suppliers is low.

 Bargaining power of buyers

 In an organized sector the companies provide profit margins to their retailers these
margins are according to their cost of production some provide more margin and some
players provide less margin but this also differentiate their quality.

For example Cycle brand gives less margin to their retailers but they don’t compromise on
quality which differentiate their product and makes loyal customers.

In this industry there is no bargaining power of buyers.

 Threat of substitutes
The substitutes of agarbatti are:

 Dhoop, it is a very strong substitute of incense stick. In man temples dhoop is used
instead of agarbatti. Dhoop is also not a very costly product it prices more or less
same as agarbatti. So it is easy for it to replace agarbatti.
 Air fresheners, Room deodorizers, Coils, Magical charcoal tablets, Aroma candles.

As incense sticks are also used to fresh the air in rooms and other places, to avoid
mosquitoes at home etc. for such purposes these substitutes can be used but they are not very
strong substitute of incense stick(agarbatti) because in worship and prayers only agarbatti is
used.

 Threat of new entrants

It is a small scale industry, low investment is required, suppliers of raw materials are easily
accessible. There is no or very low switching cost.

There is a product differentiation in organized sector which forms only 20% of the industry
and rest is unorganized sector in which there no differentiation of the product they are more
or less similar.

The firms which are registered and work at some average level are taxable otherwise the
small players in the industry are non-taxable which makes the new entrants easier to enter.

National and Multinational companies are also seeing the opportunities in the industry as the
demand of agarbattis are increasing in domestic and international market.
 CHAPTER: 4

SWOT ANALYSIS
 SWOT analysis is a strategic planning method used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a business venture. It involves specifying
the objective of the business venture and identifying the internal and external factors that are
favourable and unfavourable to achieving that objective. A SWOT analysis must first start
with defining a desired end state or objective. A SWOT analysis may be incorporated into the
strategic planning model.

* Strengths: Attributes of the person or company that is helpful to achieving the objective(s).

* Weaknesses: Attributes of the person or company that is harmful to achieving the

objective(s).

* Opportunities: External conditions those are helpful to achieving the objective(s).

* Threats: External conditions which could do damage to the objective(s). Identification of

SWOTs is essential because subsequent steps in the process of planning for achievement of
the selected objective may be derived from the SWOT
 STRENGTHS WEAKNESSES

 Art of perfuming is well accustomed.  Decrease in raw material

 Large labour base
 Exposure to Export markets
 No power requirement
 Aids to poverty elevating program
 Has a huge potential to generate
Employment
 Recognized under the handicraft sector
 Supports many allied activity of handicraft
(Bamboo splitting, Paper tube making etc.)
 Support of Government departments, NGOs
availability
 Lack of mutual trust
 Customer awareness is very low
amongst low-end producers.
 Finance is not liberal since industry
involves large working capital.
 Lack of innovations and
experimenting skills to explore the
new users & uses
 No progress in R&D
 Laws, acts etc.
 Poor living condition at bottom of
the network

OPPORTUNITIES THREATS

 Large export market potential.  Global competition.

 Scope for innovations and R&D  Unethical practices at local level.
 Domestic market expanding  Forest based raw material supply
 Machine milled, hand rolled batties are becoming scarce
having a competitive edge over machine  Mechanization.
made agarbattis
 Free trade regime can provide better raw
materials for better price
 CHAPTER: 5

ANALYSIS OF FINANCIAL STATEMENT

 Financial Statement of Cycle Pure Agarbatti:

Profit & Loss A/C of Cycle Pure Agarbatti

Profit & Loss - CYCLE PURE

Mar'20 Mar'19 Mar'18 Mar'17 Mar'16
AGARBATTI.Rs (in Crores)

INCOME:

Sales Turnover 167.5 138.21 125.36 119.22 115.67

Excise Duty 0 0 0 0 0

NET SALES 167.5 138.21 125.36 119.22 115.67

Other Income 0.9604 2.8216 1.5901 2.2617 1.4404

TOTAL INCOME 168.46 141.03 126.95 121.48 117.11

EXPENDITURE:

Manufacturing Expenses 0 0 0.77 0.45 8.93

Material Consumed 132.64 102.83 110.91 71.43 52.99

Personal Expenses 6 5.13 4.39 3.91 4.45

Selling Expenses 0 0 1.17 1.76 0

Administrative Expenses 15.52 18.66 13.57 29.68 36.51

Expenses Capitalised 0 0 0 0 0

Provisions Made 0 0 0 0 0

TOTAL EXPENDITURE 154.16 126.62 130.8 107.23 102.89

Operating Profit 13.34 11.58 -5.44 11.99 12.79

EBITDA 14.3 14.41 -3.85 14.26 14.23

Depreciation 3.02 3.85 5.03 3.49 3.24

Other Write-offs 0 0 0 0 0

EBIT 11.28 10.56 -8.88 10.77 10.98

Interest 7.63 6.99 8.48 8.51 8.97

EBT 3.65 3.56 -17.36 2.26 2.02

Taxes -0.62 -6.68 0.47 0.72 0.67

Profit and Loss for the Year 4.26 10.25 -17.82 1.54 1.35
Non Recurring Items 0 0 63 0.06 0

Other Non-Cash Adjustments 0 0 0 0 0

Other Adjustments 0 0 -63 -0.06 0

REPORTED PAT 4.26 10.25 -17.82 1.54 1.35

KEY ITEMS

Preference Dividend 0 0 0 0 0

Equity Dividend 0 0 0 0 0

Equity Dividend (%) 0 0 0 0 0

Shares in Issue (Lakhs) 171.77 171.77 171.77 171.77 171.77

EPS - Annualised (Rs) 2.48 5.97 -10.38 0.9 0.79

Balances Sheet of Cycle Pure Agarbatti

Balance Sheet - CYCLE PURE AGARBATTI

Rs (in Crores)

Particulars Mar'20 Mar'19 Mar'18 Mar'17 Mar'16

Liabilities          

Share Capital 17.18 17.18 17.18 17.13 17.15

Reserves & Surplus 80.01 75.74 68.04 20.14 19

Net Worth 97.18 92.92 85.21 37.27 36.15

Secured Loan 65.87 66.87 76.52 57.71 57.61

Unsecured Loan 0 0 0 0 3.21

TOTAL LIABILITIES 163.06 159.79 161.73 94.98 96.97

Assets

Gross Block 126.4 129.33 175.24 83.33 73.61

(-) Acc. Depreciation 0 0 43.41 38.08 35.53

Net Block 126.4 129.33 131.83 45.25 38.09

Capital Work in Progress 0 0 0 0 9.75

Investments 6.6 6.12 5.68 5.27 0.01

Inventories 13.55 3.3 1.94 19.18 21.41

Sundry Debtors 21.03 14.24 12.44 8.48 7.45

Cash and Bank 3.36 2.79 6.99 1.06 0.46

Loans and Advances 33.39 38.4 42.8 34.78 34.02

Total Current Assets 71.34 58.72 64.18 63.5 63.34

Current Liabilities 41.27 34.38 39.92 17.77 12.19

Provisions 0 0 0.04 1.26 2.02

Total Current Liabilities 41.27 34.38 39.96 19.03 14.21

NET CURRENT ASSETS 30.06 24.34 24.22 44.47 49.12

Misc. Expenses 0 0 0 0 0

TOTAL ASSETS(A+B+C+D+E) 163.06 159.79 161.73 94.98 96.97

Ratio Analysis of Cycle Pure Agarbatti

KEY FINANCIAL RATIOS OF 20-Mar 19-Mar 18-Mar 17-Mar 16-Mar
CYCLE PURE AGARBATTI (in Rs.
Cr.)
PER SHARE RATIOS          
Basic EPS (Rs.) 2.48 5.97 -10.38 0.9 0.79
Diluted EPS (Rs.) 2.48 5.97 -10.38 0.9 0.79
Cash EPS (Rs.) 4.24 8.21 -7.45 2.93 2.68
Book Value [ExclRevalReserve]/Share 56.58 54.09 49.61 21.76 21.09
(Rs.)
Book Value [InclRevalReserve]/Share 56.58 54.09 49.61 21.76 21.09
(Rs.)
Dividend / Share(Rs.) 0 0 0 0 0
Revenue from Operations/Share (Rs.) 97.51 80.46 72.98 69.6 67.53
PBDIT/Share (Rs.) 8.33 8.39 -2.24 8.32 8.31
PBIT/Share (Rs.) 6.57 6.15 -5.17 6.29 6.41
PBT/Share (Rs.) 2.12 2.07 -10.1 1.32 1.18
Net Profit/Share (Rs.) 2.48 5.97 -10.38 0.9 0.79
PROFITABILITY RATIOS          
PBDIT Margin (%) 8.53 10.42 -3.07 11.95 12.3
PBIT Margin (%) 6.73 7.63 -7.08 9.03 9.49
PBT Margin (%) 2.17 2.57 -13.84 1.89 1.74
Net Profit Margin (%) 2.54 7.41 -14.21 1.29 1.16
Return on Net worth / Equity (%) 4.38 11.02 -20.91 4.13 3.74
Return on Capital Employed (%) 5.94 5.71 -4.76 19.73 2.32
Return on Assets (%) 2.08 5.27 -8.83 1.35 1.21
Total Debt/Equity (X) 0.68 0.72 0.9 1.55 1.68
Asset Turnover Ratio (%) 81.97 71.17 62.15 104.56 104.04
LIQUIDITY RATIOS          
Current Ratio (X) 3.48 4.03 2.55 0.66 0.92
Quick Ratio (X) 2.56 3.68 2.43 0.33 0.52
Inventory Turnover Ratio (X) 12.36 41.92 64.52 6.22 5.4
Dividend Payout Ratio (NP) (%) 0 0 0 0 0
Dividend Payout Ratio (CP) (%) 0 0 0 0 0
Earnings Retention Ratio (%) 0 0 0 0 0
Cash Earnings Retention Ratio (%) 0 0 0 0 0
VALUATION RATIOS          
Enterprise Value (Cr.) 69.38 0 0 0 0
EV/Net Operating Revenue (X) 0.41 0 0 0 0
EV/EBITDA (X) 4.85 0 0 0 0
Market Cap/Net Operating Revenue (X) 0.04 0 0 0 0
Retention Ratios (%) 0 0 0 0 0
Price/BV (X) 0.07 0 0 0 0
Price/Net Operating Revenue 0.04 0 0 0 0
Earnings Yield 0.62 0 0 0 0