The demand for incense sticks has not decreased with COVID-19 and its subsequent lockdown, stated Arjun Ranga, Managing Director, NR Group, whose company sells Rs 1,000 crore worth of incense sticks. Adding to it is the arrival of the festive season when there is mass consumption of agarbathies.
While the demand side is intact, the supply side due to restrictions and lockdowns is playing a spoilsport. In a conversation with FPJ's Jescilia Karayamparambil, Ranga explained how his company is coping up with the demand and supply mismatch.
Given below is edited excerpts:
What is this association with the Assam government in the case of procuring processed bamboo sticks?
In the north-east, there is a nodal agency which initiated this association. In this case, local entrepreneurs will supply us with processed bamboo (stick) which can be used in incense sticks (agarbathies). The bamboo that is grown in the wild will be harvested by around 1,000 tribal farmers and supplied to these local entrepreneurs.
In this initiative, we have come on board as an assured customer of processed bamboo.
To address the challenge of quality and management of these units, we have developed a technical team, developed in-house, who will integrate with the processing units to support the initiative.
Sooner these processing units start functioning, faster will tribal communities be able to harvest and sell bamboos to these units.
Would that mean your import of sticks for the agarbathies will drop?
In the long-term, this association will help reduce imports of processed bamboo sticks. In this association with the state government, we are providing our technical know-how and local expertise to integrate and create processes and capabilities.
Has there been any dampening effect on demand for incense sticks due to COVID-19?
In April, we had zero sales as agarbathi was not considered as an essential product. Once the government permitted operations, we have been able to address some level of demand. But there has been a gap created (in demand and supply), however, we are catching up with it.
The demand is there, but it is the supply chain that is hit. For our category, demand has not contracted.
What is Cycle Agarbathies’ position in the case of the stock?
We are in a hand-to-mouth situation. We do not have enough supplies yet, as we are maintaining social distancing norms in our facilities. Luckily, we are not dependent on migrant labour, thus, we do not have a shortage of labour. Adding to all this is the usual business challenges like the arrival of monsoon which prolongs the drying of agarbathies. Such constraints exist.
Did COVID-19-induced lockdown hit the production cycle for the year?
The mass consumption for the stick increases from July to September. As we are a labour-intensive sector, we ramp up our production from March to May, to fulfil the demand that will rise in July and onwards. Due to monsoon, many labourers also go back to their fields. So, we ideally build up our capacities from March to June, but now we have to see on a daily basis how to meet the demand.
There is a lot of emphasis on being self-reliant (Atma Nirbhar Bharat). How do you view this concept?
There is a misconception around this concept — Atma Nirbhar Bharat. It is not about reducing imports but it is more about creating a world-class, competent product in the country.
Cycle Agarbathies are exported to around 65 countries around the globe. India has 80 per cent market share in agarbathies. Many countries tried to compete in this space, but no one could capture the fragrance as we do. This is mainly because of the Indian tradition. For instance, while we procure lavender from France, there is no manufacturer there who can produce high-quality lavender-scented incense sticks like Cycle Agarbathies.
Raw material procurement should not be confused with finished products import into the country. For some raw material, India is dependent on other countries. If some resources are unavailable in the country, then you have to scout it from elsewhere.
At this time of crisis, what is your view on economic revival?
India is a resilient country. I am optimistic that there is a light at the end of the tunnel. After all this is over, we will be stronger. We need to believe it and back each other and do whatever we can for our communities. This can be supporting migrants, tribal families, medical teams and others.
What is progress in your hand sanitiser business?
In April, we launched an Ayurvedic hand sanitiser (under the brand ‘Healing Touch’) due to the shortage of sanitiser. As part of our CSR, we gave away 10,000 sanitiser units.
Last month, NR Group launched disinfectant spray and vegetable wash under the brand Healing Touch.
Due to logistics issues, the launch is slow. But we are trying to make the brand ‘Healing Touch’ available across the country through our distribution network.
Do you have any investment plans?
We will not invest in any new businesses. But we would like to leverage our distribution network. During this time, we would not be looking at investing too much. The investments will only be for product development and product extension.