Business appraisal of incense sticks: A case study of Lakshmi trading and services, Nagpur

Abstract

This research project provides a comprehensive appraisal of the incense sticks production business, focusing on Lakshmi Trading and Services, Nagpur, an enterprise established in 2020 by Mrs. Falguni Prasad Pimprikar. The study analyzes various aspects of the company's operations, including the production process, cost structures, and critical factors affecting productivity and profitability. Key findings reveal that the total capital investment in the project amounted to Rs. 10.81 lakhs, with machinery comprising the largest share (62.59%), followed by building rent (22.19%). Fixed costs totaled Rs. 11.09 lakhs, with machinery depreciation accounting for 44.11% of the total, while building depreciation constituted 21.62%. The study estimates the variable costs of production at Rs. 33.83 lakhs, primarily driven by the cost of raw materials (83.86%) and casual labours (12.76%). The total cost incurred by the producer was Rs. 44.93 lakhs, while the gross return from production was Rs. 50.10 lakhs, resulting in net returns of Rs. 5.16 lakhs. The break-even point was determined to be 18,761.58 units in physical terms and Rs. 34.18 lakhs in monetary terms. Marketing expenses were Rs. 1.82 lakhs, with transportation being the largest component (75.23%) followed by packaging (24.76%). Key challenges identified include difficulties in securing initial capital for infrastructure and growing competition in the market. The findings emphasize the need for strategic innovation and adaptability to sustain growth and profitability in the incense stick industry.