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India's biggest incense stick maker smells opportunity in puja items market

N Ranga Rao & Sons, maker of Cycle Pure Agarbathies, sells Rs 1,000 cr worth of incense sticks a year.

, ET Bureau|
Updated: Jan 12, 2020, 03.40 PM IST
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Arjun Ranga says the company will make customised puja kits that will have a regional appeal.
Prayers are the answer Arjun Ranga has been looking for.

The CEO of N Ranga Rao & Sons Pvt Ltd sees an opportunity to carve a legacy for himself through devotion — just like his grandfather N Ranga Rao did in 1948 by setting up a company to sell incense sticks. Today, the company sells Rs 1,000 crore worth of incense sticks a year across India.

Its flagship Cycle Pure Agarbathies is a pan-India brand in a Rs 7,000 crore market that is fragmented. After launching air fresheners, car fresheners and aromatherapy oils, N Ranga Rao & Sons is now trying its hand at another segment — worshipping and prayer ingredients.

The Mysuru-based company got a boost last year when Mumbai-based private equity fund Motilal Oswal PE invested an undisclosed amount in N Ranga Rao & Sons. Vishal Tulsyan, the managing director of the PE firm, says the prayer ingredients segment is worth Rs 15,000-Rs 20,000 crore a year.

He sees a compound annual growth rate of 25% for the company, which has a revenue target of Rs 2,500 crore before taking the family-owned company public. However, a timeline for listing has not been finalised yet.

Tulsyan says: “The business model is based on the company’s expertise with aromas, and their distribution strength. Therefore, it needs less capital and earns a good return on capital employed. As products are sold in advance to the distribution channel, the model is also cash rich.”

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This is the first diversification of the core business for the family. The company has already diversified into aromatherapy oils, atomisers and diffusion lamps under brand IRIS and functional perfumery products like room fresheners and car fresheners under brand LIA. The family has dabbled in areas such as electronics, defence and avionics and has sold the business that does contract manufacturing for the electronics industry. It also wants to invest in depression care.

Within the original business entity, however, the plan is to stick to the knitting which, as Tulsyan points out, is its expertise with aromas and the strength of its distribution channel. The credit for setting up and strengthening these pillars goes to Ranga Rao. When his father died in 1912, eight-year-old Ranga Rao realised that he would have to earn to pay his school fees. He would buy sweets from wholesalers and sell them in school for a small profit.

At one point, Ranga Rao wanted to learn typing but could not afford the fee. So he promised the teacher he would get six students enrolled in the course in lieu of his own fees. Ranga Rao would also take tuitions and read newspapers to senior citizens to earn extra.

He was later able to get a job at Cordite Factory in Aruvankadu, Tamil Nadu. But the entrepreneurial urge — a trait that he developed at a young age — made Ranga Rao quit his job and start the incense sticks business with just the Rs 50 he had.

Today, the company exports to 65 countries. In 2017-18, it reported sales of Rs 774 crore and profit before extraordinary item and tax of Rs 4.5 crore. The aroma and perfume lab of N Ranga Rao & Sons, set up in 1950, helps the company research and make perfumes inhouse.

Ranga Rao also built a strong distribution backbone so that he would not be at the mercy of the trade distributors who dominated the incense stick business.

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Arjun Ranga, Ranga Rao's grandson, says the company has decided to ride ahead on these two strengths while launching the 'puja samagri' or prayer ingredients business about a year ago. He and his cousin Kiran Ranga, both professionally trained perfumers, run the business today.

"This puja samagri market is vastly bigger than the agarbatti market and there are no organised players like us in this space," says Arjun Ranga. His rational for being bullish on this business is simple.

"Indians settle in various parts of the country and abroad for various reasons. But they still want to hold on to their pujas and traditions. They, especially the younger generation, do not often get the authentic ingredients used at pujas back home. So there is a huge market opening up around prayer."

Arjun Ranga says the company will make customised puja kits that will have a regional appeal. The products currently on offer include perfumed oils, ghee, lamps, camphor, turmeric, vermilion, sandal paste, cotton wicks and even cow dung cakes.

While the company is offering these products through its app Pure Puja and its website, it is not pushing the app anymore. Instead, it is moving to the progressive app format, which allows the website to act like an app when viewed from a phone.

They are also testing another product, a database of priests, in southern India so that customers can book the services of priests online. A web magazine on spirituality called soulveda. com is also in the test phase. There is some action on the aromas and perfumes vertical, too. N Ranga Rao & Sons is test marketing a deodorant that was launched two months ago.

Arjun Ranga recalls his visit to a market in Brazil's Sao Paulo, where he saw a shopkeeper telling a customer that a pleasing aroma will draw in business. He says people across the world have different reasons to buy incense sticks.

Ranga Rao lit the incense. His grandchildren have to keep it wafting.
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