AGARBATTI BUSINESS

Sustainable Livelihood & Community Development

Bengaluru, December 2011

ITC - Corporate Social Responsibility

ITC believes that an effective growth strategy for our nation must address the needs of rural India, home to 75% of our people

ITC Country Before Corporation

Livelihood to over 5 Mn people Globally recognised e-Choupal initiative

Choupal Saagar -Rural hypermarts

Social and farm forestry ->1,19,000 hectares

Carbon, Water and Waste recycling Positive

Created sustainable livelihoods for 39,000 rural women Supplementary education provided to over 2,80,000 children

Publications

ITCs Sustainability Report

Reporting Application Level A+ The highest level

Eight CDM Projects already registered

First Forestry CDM Project in India & 2nd in the world

ITCs e-Choupal Solution

Customised Extension Services Weather Information

Price Discovery
Market Access at Farm Gate
Connectivity through Lead Farmer 6500 e-Choupals cover around 40,000 villages benefiting 4 million farmers

ITC Businesses

FMCG

Hotels

Paper & Packaging

Agri Business

Information Technology

FMCG Incense Sticks & Safety Matches

Agarbatti Industry Overview

Hand crafted by cottage industries and NGOs in India
India Market Size- T/O of Rs 3345 Cr - 105 Bn sticks
Bamboo : 40,000 mts/annum Rawbatti : 70,000 mts/annum

Growing at 15% p.a Exports- Rs 325 Cr

Use of Incense
India Worship Overseas - Ambience creation

- Aroma Therapy
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Agarbatti Industry
Highly Fragmented Industry MARKET
Highly Fragmented 200 players with 400 brands Industry dominated by Local Players Top five players account for 50% of represented industry

PRODUCTS
Top five pack / price combinations account for only 25% of the industry Large number of fragrances are marketed

About ITCs Agarbatti Business

Mangaldeep was launched in 2004 and currently is the No. 2 National brand in the country
Monthly sales of over 500 Mn sticks Mangaldeep has 35 SKUs at various price points

The business provides livelihood to over 10,000 people

The business partners with 17 small and medium enterprises to bring out the best of their entrepreneurial skills and facilitate in raising their process and quality standards

Delivering on Triple Bottom Line

Economic
Mangaldeep-No 2 Brand Impressive Growth Depth in Distribution Brand Building

Environmental
Livelihood for > 10,000 people Exemption- Excise Duty & VAT 6/17- ISO-9000 certified Vendors

Social
Training programs
Munger, Agartala, TN, Karnataka, AP

MOU with Ministry of Govt of Orissa,Tripura etc

Case Study: ITC Limited and the Agarbatti Industry

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 IFAT-International Fair Trade Association, Head quartered in Netherlands

Network of organisations that work to improve the livelihoods and well-being of disadvantaged producers Members-Producers, co-operatives or associations, exporters, importers, retailers

Cottage Industries-Pondicherry-Recieved membership approval

Great Advantage for Exports to US and Europe

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ITC Incense Business Value Chain

Bamboo Charcoal Jiggat

Raw Batti rolling

NGOs

Perfuming SSIs Packaging

Marketing & Distribution

ITC Ltd
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IT Enabled Quality Statistics

17 Vendor locations
Data By E Mail to centralized location
1. 2. 3. 4. Process control data Absorption of Fragrance Physical attributes data Finished goods clearance data

17 Vendor locations

Feedback report to the vendor

1. 2. 3. 4.

Data Analysis

Process Capability Likely defects above and below specs Six Sigma metrics for all parameters combined Warning messages & Corrective actions
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Marketing Approach
Developing brand preference

1.

Superior fragrance experience (Conforms to IFRA norms) Consistently superior product experience Inputs for Priority Markets Attractive & differentiated packaging Consumer Promos Brand Health Tracking & Research
A superior fragrance development and selection procedure

Leveraging existing Nation wide distribution of ITC

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Marketing Initiatives

Marketing Initiatives

Blessings From

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ITCs Strengths
Nation-wide distribution2 million

outlets
Chandigarh New Delhi

Brand building- Indias two largest brands

Munger

Kolkata Agartala

Supply chain management and training module

Hyderabad Bangalore Pondicherry Coimbatore Krishnagiri

Extensive R&D for product

development. Meeting Consumer needs through Research
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17 Distributed Manufacturing Locations

NGOs - Strengths
Understanding the social milieu in rural India Ability to interact with rural women and win

their trust
Wide reach into Indias rural heartland

Managerial skills to implement and monitor a

commercial project
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Synergies Combine
Brand Building Quality are Opportunities

"Small Often the Reach NGO ITC Beginning of Great Sales Enterprises."
Employment

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Raw Incense NGO Based Supply Chain

Order Raw Material Supply Finished Goods Brought Back

ITC Ltd / Vendors

NGO
Supplies

Women in Different Villages Spread over and of more than 100 Sq. Km

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Agarbatti Manufacturing Process

Hand Rolling Process

ASHA
Assistance in Social Habilitation through Agarbatti
Start up support provided by ITC

Training to workers
Use of IT infrastructure to monitor the progress Prices bench marked to competition-No subsidies

Over 3000 women trained in rolling of incense sticks

Initiatives by NGOs-SEWA,AOL,ORMAS etc

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Operation Harvest
Bamboo is a integral part of the Incense Stick
Indias bamboo growing regions are segregated from the rest of the country because of lack of infrastructure and extreme poverty ITC is working with Forest Dept. in South India and North East in a unique sourcing programme

ITC facilitates in training the tribals to produce bamboo sticks for incense
Helps move the tribals up the value chain Guaranteed buyer and payments

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MOU Signing with Govt of Orissa

Rolling of Incense sticks across Orissa

Availablity of Bamboo sticks

Impart training and Facilitate procurement of raw incense Rural employment opportunity to 3000 women

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ISO-9001-2000 Agartala

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Endorsements

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The Context and Agenda

Identify a Product that has Mass Consumption Develop /Involve NGOs & SHGs for manufacture Seek assistance from Govt/Agencies Provide inputs to produce Quality Goods

Scaling up Plans to be defined clearly

Tie up with a corporate for Marketing/Distribution Review Progress periodically

Transforming Lives and Landscapes Ensuring a Sustainable Future