Project Fragrance
Confidential Information Summary: sale of an established incense and fragrance products exporter in South India
Adviser: CA Dhiraj Ostwal, Transaction Advisory
01 Executive Summary
Project Fragrance is the proposed sale of an established manufacturer and exporter of incense and fragrance products, based in South India and serving distributors across the Middle East, Africa, Asia and Europe. The founders intend to retire and are seeking an acquirer for the business.
The business belongs to a group whose origins date to the 1960s. The operating business was established in the mid-1990s. Products are made by one entity and sold internationally by a second entity under common control; the export entity buys finished goods and ships them to overseas distributors. The perimeter of the transaction across these entities, and the treatment of land, stock and the working-capital facility, will be defined during the process.
At a glance
- Sector
- Incense, bakhoor and fragrance products; export-led
- Location
- South India
- Structure
- Partnership firms under common control
- Categories
- Eight product categories (management statement)
- Sites
- Two owned production sites at industrial areas (management statement)
- Reason for sale
- Founder retirement (management statement)
02 Investment Highlights
The points below are those that the available documents support. Where a point rests on a management statement, it is labelled as such.
Multi-year export record
Audited net sales of the export entity grew from ₹9.44 cr in FY23 to ₹25.43 cr in FY25. The business has exported since the mid-1990s and reports shipments to 28+ countries.
Bakhoor and incense for Gulf demand
In the FY24 product-costing model, incense sticks, dhoop and bakhoor account for about 56%, 29% and 15% of revenue respectively. Management describes bakhoor as a tailored niche for Islamic and Arabic markets.
Owned production sites
Management states that two production sites at industrial areas are owned. Audited land is carried at ₹1.74 cr and buildings at ₹1.44 cr (written-down value, FY25). Whether the sites are bought or leased by an acquirer is open.
Spare capacity (management statement)
Management reports use of about 10–12% of a 50-container-per-month capacity, with surplus land. A buyer would verify this independently.
Domestic and export rights, with proprietary products
Management states that the sale includes the right to sell under the transferred brands in both export and Indian markets, with no retained competing right, and that 12 trademarks and proprietary fragrance formulas are included. A schedule of marks and owners will be provided in diligence.
03 Business Overview
The business makes and sells fragrance products used in worship, home and gifting, with exports as the core channel. It reports a portfolio of eight categories, although revenue is concentrated in three.
Incense sticks and dhoop
Premium, long-burning and masala incense sticks, plus thick and regular dhoop sticks and cones. These were about 85% of FY24 revenue in the costing model.
Bakhoor and resins
Tablet-tin and bar formats for Islamic and Arabic markets, and traditional resins such as loban and sambrani. Bakhoor was about 15% of FY24 model revenue.
Perfume oils, attars, room fresheners
Alcohol-free attars, perfume oils and room fresheners are part of the range. They recorded no revenue in the FY24 costing sample.
Infrastructure (audited, FY25 written-down value)
The table lists the asset blocks carried in the export entity's audited balance sheet.
| Asset block | ₹ lakh |
|---|---|
| Land (two industrial-area plots) | 174.26 |
| Buildings | 144.27 |
| Plant and equipment | 68.01 |
| Furniture and fittings | 0.67 |
| Net fixed assets | 387.21 |
The workforce is reported at 140+ permanent and contract employees (management statement, group level). The business holds ISO 9001 certification and MSME registration, and reports 12 export awards.
04 Market & Opportunity
The target sits between raw-material and fragrance inputs and overseas distributors who sell to households, places of worship and hospitality users. It makes the product; the distributor carries local market access.
Cultural and ritual use
Incense and bakhoor are used in personal and communal rituals across Hindu, Buddhist and Islamic traditions, which supports repeat purchase.
Gifting and premium
Management points to attars and bakhoor as gifting products in Middle Eastern markets.
Home and commercial ambience
Room fresheners and incense are used in homes, hotels and offices.
Untapped geographies
Management identifies the USA, UK, Australia, Africa and Latin America as markets with room to grow.
Third-party market estimates cited by management
- Global incense sticks market
- US$1.2 bn (2023) to US$2.5 bn (2030), CAGR 8.19%
- Spiritual and devotional products
- US$3.7 bn (2023) to US$6.5 bn (2031), CAGR 8.3%
These estimates are quoted from management's material. The underlying sources will be supplied to interested parties.
05 Business Model & Economics
One entity makes the products and a second entity buys finished goods and exports them to overseas distributors. The export entity therefore earns a trading margin, plus government export incentives and foreign-exchange effects.
Export sales
Container-based shipments to overseas distributors. The FY24 model shows 36.3 containers shipped at about ₹45.9 lakh revenue per container.
Export incentives
Duty drawback and licence-based schemes support the income of the export entity and depend on prevailing government policy.
Domestic sales
Small until recently. Management states that Indian-market rights are included in the sale.
The first table shows the FY24 revenue mix from management's product-costing model, which is not audited.
| Category (FY24 model) | Revenue ₹ lakh | Share | Model margin on revenue |
|---|---|---|---|
| Incense sticks | 934.53 | 56.3% | 22.7% |
| Dhoop | 482.24 | 29.0% | 51.6% |
| Bakhoor | 244.23 | 14.7% | 29.0% |
| Total | 1,660.99 | 100% |
The second table shows the FY25 audited income lines that sit alongside product sales.
| FY25 audited, export entity | ₹ lakh |
|---|---|
| Net sales (revenue from operations) | 2,543.27 |
| Duty drawback (other income) | 90.05 |
| Licence-scheme sales (within net sales) | 28.85 |
| Total other income, including foreign-exchange gains of 45.93 | 143.86 |
Orders are shipped by container, and the customers are overseas distributors rather than end consumers. Management reports advance payments on bookings and about 95% on-time delivery; both are statements that will be supported with records in diligence. A confirmed order book has not yet been provided.
06 Competitive Positioning
Customers can source incense and bakhoor from other Indian exporters and from Gulf-based makers. The target competes through range, formulation know-how and long-standing distributor relationships.
What management states
A broad range (450+ SKUs and 250+ fragrances reported), proprietary formulas, 12 trademarks, and a bakhoor line tailored to Gulf tastes.
What the records show
About 14 product lines were active in the FY24 sample, with the five largest contributing about 82% of revenue. Revenue has grown over three audited years.
07 Financial Snapshot
The table below presents the export entity's audited results for FY23 to FY25, with FY26 as reported by management pending the audited statements. Reported EBITDA here includes other income and export incentives.
| ₹ lakh | FY23 Audited | FY24 Audited | FY25 Audited | FY26 Mgmt, unaudited |
|---|---|---|---|---|
| Net sales | 944.09 | 1,666.03 | 2,543.27 | 1,287.87 |
| Growth | n/a | 76.5% | 52.7% | (49.4%) |
| Profit before partners' remuneration and tax | 39.09 | 61.69 | 47.11 | 50.85 |
| Add: depreciation | 21.12 | 21.36 | 28.11 | 28.10 |
| Add: interest | 21.49 | 19.00 | 10.82 | 10.19 |
| Reported EBITDA | 81.70 | 102.05 | 86.04 | 89.14 |
| EBITDA margin on operating revenue | 8.4% | 5.9% | 3.3% | 6.7% |
| Partners' remuneration | 12.00 | 12.00 | 12.00 | 24.00 |
Balance sheet, 31 March 2025 (audited, ₹ lakh)
- Partners' capital
- 150.72
- Borrowings (packing credit)
- 100.00
- Net fixed assets
- 387.21
- Trade receivables
- 396.40
- Trade payables
- 687.54
- Total assets
- 942.23
What the numbers show
• Sales rose about 2.7 times between FY23 and FY25.
• Reported EBITDA stayed in a narrow range of ₹82–102 lakh.
• FY26 net sales are reported lower than FY25.
• Borrowings are working-capital packing credit, which management expects to close on handover.
08 Management & Organisation
The business is led by two partners. Both are expected to step back at closing, so continuity of product knowledge and customer relationships is a central question.
| Role | Responsibility (management statement) | Experience |
|---|---|---|
| Founder and managing partner | Fragrance development and strategy | 35+ years in perfumery |
| Partner | Operations, cost efficiency and quality control | Long-standing association with the business |
The partnership firms are governed by their partners, with profit shares of 40% and 60%. Management describes the business as running with supervision rather than daily promoter involvement. It reports a workforce of 140+ across permanent and contract staff.
09 M&A Proposition
The owners are offering 100% of the business, on the grounds of the founder's retirement. The legal structure and the treatment of land and working capital remain to be agreed.
What is on offer
The operating business, including trademarks, proprietary formulas, product know-how, production machinery and domestic and export selling rights. Manufacturing real estate may be bought or leased, at the buyer's choice. Management indicates a sale of the entities, a sale of assets or a conversion as possible structures.
Buyer profile
Likely to suit a fragrance, home-care or consumer-products group seeking export reach, or an incense or bakhoor business seeking capacity and Gulf distribution.
₹25.4 cr
FY25 audited net sales of the export entity.
10–12%
Reported capacity utilisation (management statement).
28+
Countries exported to (management statement).
Value creation
A buyer can pursue growth on existing capacity, add sales effort in geographies where the business is thinly represented, and push the premium categories that earned little revenue in the FY24 sample. Each of these is an opportunity rather than an evidenced result.
Price expectations, structure, consideration mechanics and transition terms will be discussed with qualified parties after an NDA.
10 Risks & Mitigants
The table sets out what a buyer is likely to ask and what is known today. Several items are open and will be addressed in diligence.
11 Process
The adviser will manage a confidential process with interested parties through to signing.
Express interest
Confirm interest and buyer profile to the adviser.
Sign NDA
Receive the detailed information memorandum.
Diligence
Review the data room and meet management.
Offer and close
Submit a proposal and agree definitive terms.
Disclaimer. This summary is confidential and is provided for preliminary information only. It does not constitute an offer or invitation to buy or sell any securities or business. Statements marked as management statements have not been independently verified. Projections and valuations are not included. Recipients must make their own assessment, and neither the adviser nor the owners accept liability for its use. By reading it, recipients agree to keep its contents confidential.