.

ITC: Enduring Value

Media Centre


ITC, Ashram join hands for ‘fragrance mapping’ 15 Aug 2003

The Hindu Business Line

Kolkata Aug. 14

IS it possible to enrich oneself without impoverishing another in business? Analysing the question of value of production, The Mother of Sri Aurobindo Ashram, Pondicherry, had explained that if production was truly an acquisition for the general human wealth, it then increases the wealth, and does not make a hole in someone else's pocket.

The cottage industries unit of Sri Aurobindo Udyog Trust (of Sri Aurobindo Ashram), which makes handicraft items ranging from handmade paper, pottery and batik to agarbattis today generates meaningful wealth, not only for sustaining the various welfare activities of the ashram but also to provide succour by way of jobs to the needy rural population in and around Pondicherry.

The cottage unit, which has been making hand-rolled incense sticks since 1949, has now tied up with the agarbatti division of ITC Ltd, under which it is rolling out high quality agarbattis in large quantities for the company to fragrance its path all the way into Indian households. This has led to upscaling of operations at the cottage unit, including part mechanisation, and has brought more cheer to the hundreds of rural women employed to hand roll the agarbattis.

According to Mr V. M. Rajasekharan, CEO of the Agarbatti SBU of ITC, the two have joined hands to take up "fragrance mapping" of the highly unorganised market through "Spriha" - the aspiration. And for Mr Manob Tagore, Manager of Cottage, the tie-up has opened up a whole new vista of more ideas, more fragrances. In short, a win-win situation for both. The Ashram's current capacity is 3 lakh packs (of 20 each) a month, which can be scaled up to 5 lakh packs.

Mr Tagore told Business Line in Pondicherry recently that contrary to initial fears, the Udyog Trust approved the deal straightaway, as it would help cottage to become more professional in its approach, particularly with regard to large volume export of incense sticks. Some 2 lakh packs (of 20 each) of Spriha dipped battis (natural incense sticks) are produced every month for ITC exclusively.

The ITC-Ashram marketing tie-up is now all set to convert the ubiquitous Agarbatti into a branded OTC product. On an average, women now earn some Rs 1,500 per month, and their numbers are growing steadily, says Mr Manob.

ITC now sources bulk of its current requirements of agarbattis from the two large Bangalore units of Sankranti and Ananth. Says Mr Rajasekharan: "Our aim is to capture some 10 per cent of the consumer spend of Rs 1,000 crore by the end of next financial year, that is, 2004-05." The company is also examining options such as gift packs, which will contain other aromatic products besides agarbattis. While the entire sourcing is done from the south, the company is already examining the proposal of appointing vendors for East, North and West.

Having launched operations in February, the requirements have since been scaled up, as the first objective is to reach the product to every corner of the country, before the brand-building exercise is taken up for that market niche. Asked why not machine-made battis, as massive volumes could be generated for an all-India launch in a cost-effective manner, Mr Rajasekharan says such battis may look sleek, but fragrances cannot be captured in the same way as when the battis are made by hand. The trueness of fragrance comes only through traditional methods, he insists.

All the three Agarbatti brands of Spriha, Nivedan and Ashageet would be positioned in different segments, and special occasions such as the forthcoming Ganapati festival in Maharashtra and the Durga Puja celebrations in Bengal during early October may witness high profile brand launches of Spriha by ITC.

He said even though the Ashram never went fully commercial with its incense sticks, as the in-house requirements (of both members and devotees around the world) have been quite substantial, quality has never been compromised, and the product from day one has been made from a mix of natural ingredients, and in a traditional manner. Spriha bears testimony to this, he pointed out.

According to Mr Rajasekharan, the high quality `Spriha' brand, priced at Re 1 per stick, is made at the Ashram in the "forgotten way," and this was the hallmark of the arrangement. Spriha and the other brands have only natural ingredients, and harmful chemicals are a strict no-no, he points out. He said the Geneva-based International Fragrance Association (IFRA) has put out a negative list of as many as 30 chemicals, which should not be used in any sort of fragrance, and the company was strictly following this code. This is necessary, especially if we have to look at agarbatti exports seriously, as international buyers are sticklers for such norms.

The company now uses fragrances such as rose, jasmine, sandal and bouquet for its dipped battis, and the masala battis under the Spriha name are available in Sambrani and Nagchampa fragrances. The plan is to add three more new fragrances in the next 3 months.

Based on a proven outsourcing model, and backed by in-house facilities, the agarbatti SBU of ITC has now tied up successfully with institutions such as the Aurobindo Ashram and Vyakti Vikas Kendra of Sri Sri Ravi Shankar (Art of Living) to tap the huge unorganised Indian agarbatti market. Only some 5 per cent of this market is dominated by players such as N. R. Ranga Rao & Sons of Mysore (Cycle brand), and Shankranti or Ananth Agarbattis (known for its Rose and Jasmine varieties) of Bangalore .

While the company's established marketing network will take care of the distribution, the key to this business, the packaging is being done through in-house material (paper and board) at three levels of primary (fragrance transparent), secondary and tertiary outer box (fragrance opaque), to capture the fragrance for longer shelf life.

© ITC Limited