Cluster Diagnostic Report Kannauj Attar & Essential Oil Cluster - (TCSP) Office of DC MSME, Ministry of MSME
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Cluster Diagnostic Report
Kannauj Attar & Essential Oil
Cluster
Technology Cluster Manager
Technology Centre Systems Program
(TCSP)
Office of DC MSME, Ministry of MSME
September 18, 2019
CONFIDENTIAL
Page
1
Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
Disclaimer
This Report has been prepared as per engagement contract reference 21/DCMSME/TCSP/
CON/TCM/ 2016/TR with The Development Commissioner, MSME, Ministry of MSME dated 03rd
December 2018 (the “Contract for Supplier Services”)
Nothing in this report constitutes a valuation or legal advice.
We have not verified the reliability or accuracy of any information obtained in the course of our work,
other than in the limited circumstances set out in the Services Contract.
This Report is for the benefit of The Development Commissioner, MSME, Ministry of MSME and
the other parties that we have agreed in writing to treat as parties to the Services Contract (together
“the Beneficiaries”).This Report has not been designed to be of benefit to anyone except The
Development Commissioner, MSME, Ministry of MSME / Beneficiaries. In preparing this Report
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Page 2
Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
Acknowledgement
We would like to express our sincere gratitude to MoMSME, o/o DCMSME and its officials for their
involvement and valuable inputs during the preparation of this report on diagnostic study for
Perfumery Cluster in Kannauj. We would like to express special thanks to Shri Ram Mohan Mishra,
IAS, (Additional Secretary and DC-MSME) for his proactive support and guidance to the team
during the entire process.
We would also like to express our gratitude to Shri Piyush Srivastava (ADC), Shri Virinder Sharma
(Director), Shri Sanjeev Chawla (Director), Shri R K Rai (Director), Dr. Sunil Kumar Newar (Deputy
Director, TCSP), Shri B.M Saxena (Assistant Director, TCSP) and TCSP PMU Team for extending
their support during the entire process.
We would also like to thank Shri S.V. Shukla, Director, FFDC, Kannauj and his team of TC officials
for their guidance and valuable inputs during this report.
Revision History
Version Issue Date Prepared by Reviewed by
1.0 01st July 2019 Ms. Shikha Sen Mr. K P Lal
Mr. Rituraj Sharma
1.1 15th July 2019 Mr. K P Lal,
Ms. Shikha Sen
22nd August Mr. Anshul Katyal Mr. K P Lal,
1.2
2019 Ms. Shikha Sen Mr. Rituraj Sharma
28th September
1.3 Mr. Rituraj Sharma Mr. S V Shukla
2019
11th September Mr. Anshul Katyal
2.0 Mr. Rituraj Sharma
2019 Ms. Shikha Sen
Page 3Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
Contents
1. Executive Summary 7
2. Introduction 8
3. Kannauj Attar and Essential Oil Industry 9
3.1 Manufacturing Process 10
4 Key Stakeholders and Institutional Framework 12
5 Approach and Methodology 14
6. Technology Centre – FFDC Overview 15
6.1 Production Process 16
6.2 Training Services 17
6.3 Design and Consultancy services 18
7. Overview of Kannauj Fragrance & Flavour Cluster 19
7.1 SWOT Analysis of Cluster 20
7.2 Cluster need assessment – Key Issues and Challenges 21
8. Recommendation 24
8.1 Training Division 24
8.2 Technology Upgradation 25
8.3 Process improvement 28
8.4 Other recommendation for cluster 29
8 Annexure 1: Detailed Listing of TC Challenges 31
8.1 Skills related Challenges 31
8.2 Standards for Attar Industry 31
8.3 Access to Technology 32
8.3 Poor Access to Information 32
8.4 Access to Market 33
8.5 Private Testing & Certification Facilities 33
8.6 Availability of Raw Materials 33
8.7 Limited Awareness about Environment, Health and Safety (EHS) 34
8.8 Regulatory Challenges 34
8.9 Solid Waste Management 34
10 Annexure 34
10.1Number of Stakeholders Contacted 34
10.2List of Stakeholders Contacted 35
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Cluster Diagnostic Kannauj
List of Figures
Figure 2.1: Flavor and Fragrance Industry Supply Chain: Key Stakeholders ................................. 9
Figure 3.1: Apparatus for Attar Manufacturing ............................................................................. 10
Figure 3.2: Field Distillation Unit .................................................................................................. 11
Figure 3.3: Steam Distillation Unit ............................................................................................... 12
Figure 5.1: Integrated approach for mapping TC services with cluster requirements ................... 14
Figure 6.1: Divisions in FFDC ...................................................................................................... 16
Figure 6.2: TC Revenue V/s Recovery Rate ................................................................................ 16
Figure 6.1 : Map of Kannauj ........................................................................................................ 19
List of Table
Table 2-1:Natural Raw Material Production – Indian Ranking (United Nations Data, 2017) ........... 9
Table 3-1: Cluster at glance ........................................................................................................ 10
Table 3-2: Attar Manufacturing Process ...................................................................................... 11
Table 4-1: Raw Materials and Sources ........................................................................................ 13
Table 4-2 : Types of Services provided by Private Testing Labs.................................................. 14
Table 6-1:Equipment utilization Rate ........................................................................................... 16
Table 6-2: Production Challeneges ............................................................................................. 17
Table 6-3: Laboratories in FFDC ................................................................................................. 18
Table 7-1: Attar Cluster Challenges ............................................................................................. 23
Table 7-2: Essential Oil Cluster Challenges................................................................................. 24
Table 8-1: Tentative Course Fee and Suggestive Technical Areas ............................................. 24
Table 8-2: Action plan for new trainings....................................................................................... 25
Table 8-3: Budget for New technology investment....................................................................... 28
Table 8-4: Action Plan for new technology and equipment .......................................................... 28
Table 8-5: Budget for process improvement ................................................................................ 29
Table 8-6: Action plan for process improvement and consulting services .................................... 29
Table 8-7: Action Plan for other cluster services ......................................................................... 31
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Cluster Diagnostic Kannauj
Abbreviations
BDS Business Development Services
CAGR Compound Annual Growth Rate
CCC Cluster Coordination Committee
CCRAS Central Council for Research in Ayurvedic Sciences
CFC Common Facility Centre
CIMAP Central Institute of Medicinal & Aromatic Plants
CIMPO Central Indian Medicinal Plants Organization
CSIR Council of Scientific and Industrial Research
EOAI Essential Oil Association of India
APAI Attars & Perfumers Association of India
FFAI Fragrance & Flavour Association of India
FFDC Fragrance & Flavour Development Centre
FMCG Fast-Moving Consumer Goods
GI Geographical Indication
IIM Indian Institute of Integrative Medicine
IIP Indian Institute of Packaging
ISO International Organization of Standards
ICEO International Congress of Essential Oils
MSME-DI Micro Small and Medium Enterprises - Development Institute
NABARD National Bank for Agriculture and Rural Development
NBRI The CSIR-National Botanical Research Institute
NCE New Chemical Entities
NSIC National Small Industries Corporation
ODOP One District One Product
SHG Self Help Groups
SME Small and Medium Enterprises
UPSIDC Uttar Pradesh State Industrial Development Corporation Ltd
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Cluster Diagnostic Kannauj
1. Executive Summary
Kannauj, known as India’s perfumery capital has traditional fame for attar which is a product of art
rather than science. Perfumes from Kannauj are sold in the domestic market and the international
markets such as UK, USA, Australia, UAE, Saudi Arabia, Iran, Iraq, Singapore, France, Oman and
Qatar. FFDC was set up in 1991 with the assistance from UN, central government and state
government to bring about a change in the fragrance cluster in Kannauj, It was established with the
purpose to serve the MSMEs and upgrade the skills of farmers in order to increase the yield of
aromatic crops, improve the production process, file trademarks/patents and train MSME
employees to increase efficiency and productivity.
As a part of the TCM project, a detailed analysis of FFDC, Kannauj and fragrance and flavor industry
was conducted to map TC infrastructure for production, training and consulting services to meet
cluster requirements. Apart from getting a detailed understanding of the technology center, an
extensive exercise was conducted to understand the prioritized product based clusters of Attar and
Essential Oil to map existing TC services with the cluster requirements and accordingly suggest
new opportunities of revenue generation for the TC
Through this report, a detailed analysis of the technology center was conducted which focused on
available infrastructure for production and testing, manufacturing process, manpower skill gap and
training programs. During the analysis it was observed that in the last five years, agro promotion
(cultivation of aromatic crops & primary distillation of EO), testing laboratory (sample analysis
service), skill development & training have contributed to the maximum revenue of FFDC while
other service offering have lagged behind. Some of the key observations during the study are as
below:
• FFDC can play a lead role in creating standardization of essential oils & attars and may
develop fuel efficient technology for distillation.
• Current capacity utilization is less than 50% in distillation/process unit.
• Analytical sample size per month or year has not reached optimum utilization level of Gas
Chromatography. A strategic approach is required to develop a business model to increase
revenue of TC through this vertical.
• FFDC should explore more in new sectors like aroma therapy & wellness and may undertake
development of natural fragrance. The end users of these sectors are based out of metro
cities, hence, extensive marketing approach is required to reach consumer base at these
cities.
• Quality analysis revenue model has potential for improvement.
• Fragrance & Flavour demo creation lab being small in size does have limited space for
training.
Recommendations have been provided in the areas of process improvement, technological
upgradation, new service offerings, and training programs as per the requirements of the cluster.
Apart from mentioning various TC level interventions for improving service offering for the cluster,
a number of luster level interventions have been mentioned that require ample support from other
government organizations like MSME DI and DIC for proper implementation.
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Cluster Diagnostic Kannauj
2. Introduction
Fragrances and Flavours (F&F) are significant constituents in food and cosmetics industry. They
consist of varied ingredients including absolutes, oleoresins, isolates, attar, essential oils, aroma
chemicals and special aroma ingredients. The developed countries have a mature flavor and
fragrance market that forms an integral part of the home & personal care and food & beverages
industries. Though India is at a nascent stage when it comes to penetration of flavor and fragrance
finished products, the F&F ingredient manufacturing market in India is quite mature. However,
increasing disposable income of the Indian masses and rural penetration of FMCG and F&B power
houses, two consumption driven sectors, are providing the much needed boost to flavor.
The global perfume market was valued around USD 39 billion in 2018, which is projected to touch
about USD 48 billion by 2024, growing at a CAGR of 3.6%. The rapid shift in the lifestyle choices
amongst the young generation has led to a steep increase in the demand for this industry. In
addition to the changing lifestyle, increase in disposable income and rapid urbanization has created
a high demand for the perfume Industry. Furthermore, several manufacturers offer high-quality
products at affordable prices, in order to target the urban market, which has catalyzed the growth
of the perfume industry across the globe. International players have taken several steps towards
product packaging, by initiating fragrances in rollerballs and distinct bottle sprays.
There exits an array of categories in the perfume market, out of which, female fragrances is ahead
of all the other categories internationally and accounts for majority of the market share. Under the
distribution channel, the market has further been segmented into departmental stores, online stores
and supermarkets, to name a few. At present, the specialty stores hold the largest share. One of
the most important factor is that the capital investment that is required for setting up a perfume
manufacturing plant is relatively low, for any given new entrant. Furthermore, other significant
factors that spur the demand for this segment are the rapid growth in urbanization, the population
as well as advertising, which is an essential component. E-Commerce, in particular, has rapidly
expanded at the global level and still holds an immense growth potential, especially in developing
regions. This is one of the most crucial tools that the cluster can utilize to expand the business in
the international market.
Global perfume & fragrance manufacturers have found opportunities in India accruing to an
estimated hike in demand of perfume & fragrance products, especially cosmetics and toiletries.
Globally, countries like Brazil, United States, France, Germany and Russia are the forefront players
of the perfume industry. At present, Brazil holds the majority of the global market share.
The fragrance & flavor market in India is dominated by 4 global players that control more than 2/3rd
market with remaining being occupied by around 1000 local Indian players. The growing demand
in the Indian market and increasing acceptance of Indian F&F ingredients has further helped in
making India a gateway to the South East Asian fragrance & flavor market. The key stakeholders
that make up the flavor and fragrance value chain are; raw material suppliers, base ingredient
manufacturers, blenders, and end consumer industries.
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Cluster Diagnostic Kannauj
Figure 2.1: Flavor and Fragrance Industry Supply Chain: Key Stakeholders
Being one of the largest producers for some of the key natural resources like mint, ginger, chilly
and pepper, spices, anise, fennel and coriander, lemongrass oil, nutmeg, mace and cardamom,
eucalyptus oil, India has a strong presence in the raw material and base ingredient export market.
Flavors and Fragrances are derived from these raw materials, both from natural as well as
synthetic sources. Essential oils are extracted from the process of distillation while aroma
chemicals are derived from petrochemical compounds or from different natural sources. Due to
the low bargaining power of natural resource suppliers in the country, ingredient manufacturers
relying on natural resources have an advantage of securing a consistent supply of raw materials
with seasonality and variation in yield being one of the major challenges. The situation is not same
for players relying on synthetic sources, with the market being occupied by only a few synthetic
suppliers.
Global Ranking
Ingredient India Production MT Geographical Presence
(production)
Mint 1 32,000 Uttar Pradesh, Haryana, Punjab
Ginger 1 703,000 Karnataka, Gujarat, North East
Chilly & Pepper 1 1,299,000 All over the country
Spices 1 1496,990 All over the country
Andhra Pradesh, Tamil Nadu,
Anise, Fennel
1 537,330 Karnataka, Rajasthan and
and Coriander
Madhya Pradesh
Lemon Grass Oil 1 1000 Western India
Nutmeg, Mace
3 18,070 Karnataka, Kerala, Tamil Nadu
and Cardamom
Eucalyptus Oil 3 1000 Kerala, Tamil Nadu
Table 2-1:Natural Raw Material Production – Indian Ranking (United Nations Data, 2017)
3. Kannauj Attar and Essential Oil Industry
Kannauj is globally known as the “perfume city of India” (also known as “Ittr Nagri”) popular for
manufacturing of attr oils. The city has been known for natural attars from ages even before the
Mughal Era. The estimated turnover of fragrance industry in Kannauj is expected to be around 400
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Cluster Diagnostic Kannauj
Cr1 out of which 20% is catered through exports. Kannauj possess huge potential as the industry is
directly linked with agriculture sector and is a hub for different crops like mint, pamarosa,
lemongrass, citronella, sughanmanthri, mehandi, etc. Several other plants and herbs are imported
from states such as Kerala, Rajasthan, Himachal Pradesh, Karnataka, Andhra Pradesh and North
Eastern States.
Rose water, various perfumes produced by using
rose, jasmine and other flowers, mehandi paste,
Principal Products Manufactured in the Cluster
body jells, ayurvedic medicines, other fragrances
and gulkand
No. of functional units in the clusters About 375 units
Turnover of the cluster Approx. 400 Cr.
Value of exports from the clusters Approx. 20%
Employment in cluster Approx.100,000 (Direct & Indirect)
Table 3-1: Cluster at glance
3.1 Manufacturing Process
3.1.1 Attar Manufacturing
Attar is manufactured by traditional method of “Deg and Bhapka” which is a kind of a hydro-
distillation method. The distillation apparatus is divided into three main parts i.e. Deg (Still), Bhapka
(Receiver), and Chonga (Condenser cum Connecting Pipe). The still and receiver are made up of
cooper which are connected by a bamboo which serves the purpose of condensation. The bamboo
is further wrapped by gunny bag to minimize the loss of heat through evaporation. The whole system
is fixed on a furnace and directly heated by wood for distillation.
Attar Manufacturing Process
1. Furnace made up of bricks
2. Deg (Still) with lid
3. Chonga
4. Bhapka (immersed in water)
5. Water tank
Figure 3.1: Apparatus for Attar Manufacturing
Phase-wise manufacturing procedure
Phase Activity Description
Preparation of In Deg plants material/flowers are submerged in water with the
Phase 1 equipment and requisite amount of water. The lid is then sealed with an
raw material amalgamation of cotton and clay.
1
Brief Industrial Report of Kannauj, MSME-DI Kanpur
Page 10Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
Bhapka is filled with base oil or carrier oil like sandalwood oil and
sealed with cotton cloths strips and earthen clay. This bhapka is
submerged in to small tank made up of bricks and concrete
Deg and Bhapka are connected with the help of Chonga and
sealed with cloth and earthen clay.
The Deg is heated on to the wood as well as cow dung cakes.
Cow dung cakes are required for monitoring the temperature.
Under the boiling process of the raw material, there is a need to
Heating and increase the pressure inside the Deg considerably. Given the
Phase 2 condensation pressure to further seal the Deg Komani is used to seal the head.
process
Steam generated in Deg passes to receiver through Chonga.
Attar is then obtained with the help of the condensation process
into the Base Material, i.e., the Sandal Wood oil. The Chonga is
the primary condenser tool.
Bhapka has the capacity to hold over 5-10 kg of the base
material. Bhapka's temperature is reduced inside a water tank for
obtaining Attar
Phase 3
Cooling process
After 4-5 hours when the required quantity of vapor are
condensed, then a wet cloth is rubbed all over the Bhapka to stall
the distillation process and is replaced by another Bhapka. The
Bhapka is then allowed to cool.
Once the temperature of the mixtures have lowered, this mixture
of water and oil is segregated by two possible methods: (a)
Directly from the Bhapka through a hole at the bottom (b) By
Phase 44 Separation pouring the mixture in an open trough.
Process
If the required concentration of attar is obtained, the final attar is
stored in leather bottles also known as Kuppi, made of buffalo
and camel leather. This process helps in removing the moisture
from the Attar.
Table 3-2: Attar Manufacturing Process
3.1.2 Essential Oil Manufacturing
Field Distillation Process: It is used for bulk of aromatic
crops like basil, mint, palmarosa, lemongrass, citronella
etc. In this method, distillation unit is divided into three
main parts i.e. still or tank made up by mild steel or
stainless still, condenser and receiver cum separator also
made up of stainless steel. The still is divided into two
parts i.e. false bottom perforated grid and actual bottom.
The perforated grid is settled on 1.6 to 1.8 feet or more
height from the actual bottom, the space between actual
and false bottom is filled by water. The material which is
to be distilled is loaded on the perforated grid for
Figure 3.2: Field Distillation Unit
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Cluster Diagnostic Kannauj
distillation. During the operation of unit water level should be
maintained at a specified level after every batch of
distillation.
Steam Distillation Process: In this process, essential oil
is obtained by passing steam through material which is to
be distilled. In this process, the steam is generated by boiler,
which is connected by a pipe to the still or tank. The
pressure of steam is controlled according to nature of plant
material which is being distilled. The tank/still, condenser
and receiver are made up of stainless steel. This process is
comparatively costlier than hydro and hydro steam
distillation. Basically this process is used for costly plant
materials like sandal wood, nagarmotha, vetiver, etc. Figure 3.3: Steam Distillation Unit
4 Key Stakeholders and Institutional Framework
Fragrance industry of Kannauj is very large and has a strong stakeholder and institutional
framework. Interconnection of stakeholders makes strong bonding within the stakeholders which
has helped in development of community as well as market for the manufacturers of attar and
essential oil.
Government Institutions: Government Institutions play a very important role in overall
development of the fragrance and flavour industry. These institutions play an important role in
influencing policy decisions and are responsible for execution and implementation of different
central and state schemes and initiatives for last mile delivery of different benefits. Some of the
major government institutions that have influence in Kannauj are:
• Micro, Small and Medium Enterprises - Development Institute (MSME-DI) - the Institute
strives to achieve its objective through a gamut of operations ranging from buyer-seller meets,
vendor development program as well as organizing awareness and modernization programs
• District Industries Centre (DIC) provides facility for UAM registration and operate One District
One Product (ODOP) scheme to promote the local industry.
• UP State Industrial Development Corporation Ltd. (UPSIDC) promotes industries by way
of developing industrial infrastructure in the State and facilitating allotment of land to industries.
• National Small Industries Corporation (NSIC) is the nodal agency under the Ministry of
MSME for Performance & Credit Rating, Single Point Registration, MSME Databank, National
SC-ST Hub, Raw Material Supply, Consultancy, Training, etc.
Raw Material Suppliers: In fragrance industry, manufacturers have their own raw material
suppliers due to high dependence on quality of raw material for achieving the required yield. Though
most of the manufacturers procure raw materially, some even procure from others parts of the
country such as Kerala, Tamil Nadu, Karnataka, Rajasthan, etc. For Deg and Bhapka, attar units
depend on local market but field distillation units (for essential oils) take help from FFDC and big
players for procurement. For storage purpose, some of the manufacturers have their own plastic
bottle manufacturing units and some of them buy from local vendors. Some of the raw materials
and their sources are mentioned below:
S. No Source for Procurement Raw Materials
1. Hathras and Aligarh (UP) Rose
2. Mathura (UP) Khus
3. Ganjam (Odisha) Kewada
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4. Raebareli (UP) Mariegold
5. Kannauj Heena
Table 4-1: Raw Materials and Sources
Financers, Wholesalers and Retailers: Most of the manufacturing units are self-funded, except
for buying raw materials, they opt for financing facilities from local banking institutions. For
wholesale purchases, buyers contact suppliers directly over phone and place their orders. For
retailing, Kannauj city market is pretty famous where different products are available as per the
customer needs. Even chemicals /synthetic raw materials are procured from local retail shops.
Industry Associations: Industry Associations play an important role in industrial development. It
also helps in close coordination of units with Government and other stakeholders. To increase the
knowledge and exchange of best practices, it occasionally organizes events and seminars at the
local and the national level. Also helps to promote advancement in the knowledge of science and
technology of essential oils and allied products. Important industry associations are:
• Attar and Perfumes Association, Kannauj (APA)
• Fragrances and Flavours Association of India, Mumbai (FFAI)
• Essential Oil Association of India, Noida (EOAI)
Business Development Service Providers: There are a number of business development
services providers in the city of Kannauj that support farmers and small manufacturers by providing
support on tax, accountancy and other similar services. Apart from these services providers, there
are a limited number of technical consulting service providers that support manufacturers in
providing technical support.
Skilling Institutes: Fragrance and Flavour Development Center (FFDC) is multi skill training
center that provides different short and long term training courses at Kannauj and other locations.
Apart from FFDC Kannauj other institutions are as follows:-
• National Botanical Research Institute (NBRI) is amongst one of the research institutes of the
council of Scientific and Industrial Research, New Delhi. Provides information regarding plants
and cultivation methods.
• Central Institute of Medical & Aromatic Plants- CIMAP is equipped with state-of-the-art
multidisciplinary laboratories, ultra-modern instrumentation facilities and scientific expertise in
agriculture, genetics and plant breeding, molecular taxonomy, molecular and structural biology,
plant biotechnology, biochemistry, microbiology, bio energy and chemical sciences, apart from
development of herbal products.
• Central Council of Research in Ayurveda and Sidha: It is an apex body in India for
undertaking, coordinating, formulating, developing and promoting research on scientific lines in
Ayurveda Sciences.
• IIIM as an International Center of Excellence for natural products chemistry, chemical biology,
pharmacology and bi-technology to discover new chemical entities (NCEs) as drugs for unmet
medical needs and provide scientific rationale and validity to various Indian systems of
medicine.
• Indian Institute of Packaging: The institute is an autonomous body working under the
administrative control of the Ministry of Commerce. The institute aims to make India a focal
point for contemporary developments in art, science, technology and engineering, with
respect to the field of packaging.
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Quality and Testing Service providers: There are 4 private laboratories which provide testing
facilities to MSMEs in MSMEs. They charge low fees and provide quick facility which helps MSMEs
in marketing of attar and essential oils. Few services provided by private laboratories are as follows:
Services Provided by
S.No. Type of Analysis
Private Laboratories
1 Optical Rotation ✓
2 Specific Gravity ✓
3 Refractive Index ✓
4 Solubility ✓
5 Acid Value ✓
6 Ester Value ✓
7 GLC with major peak identification ✓
Detection of Poly-Ethylene Glycol by TLC only for
8 ✓
Sandal wood
9 GC-MS ✓
Table 4-2 : Types of Services provided by Private Testing Labs
5 Approach and Methodology
A multi-tier approach was followed to cover all the details of the technology center and the cluster.
As a part of this process, Technology Cluster Manager (TCM) team: Cluster Manager, Mr. Sanjeev
Chaudhary and Support Consultant, Ms. Shikha Sen conducted desk review and in-person industry
consultations for preparation of diagnostic study report (DSR) under the guidance of Cluster
Development Expert. During the process of preparation of cluster diagnostic study, following steps
were followed by the team to ensure that a successful study was undertaken.
Technology and Process Analysis Training Assessment
• Identify gaps in existing • Assess the existing training
machines and technology in courses, faculty members,
the TC placements and map them with
• Assess the manufacturing cluster requirements
process for complete various • Map and assess TC processes to
job works for design, development and
delivery of trainings
Cluster Requirements
Consulting and Testing
• Identify key challenges in the Assessment
cluster and map them with TC • Assess the testing facilities and
offerings consulting services at FFDC Kannauj
• Identify new technology, training • Identify new services/revenue
and other programs that can be opportunities that can be taken up
taken up by the TC to improve its FFDC as per cluster requirements
positioning in the cluster
Figure 5.1: Integrated approach for mapping TC services with cluster requirements
Tier 1 – Gap Analysis of the Technology Center
Step 1: Review of the Technology Center annual reports, training brochure and market
insight reports.
A secondary research was carried out to understand about the technology center and industry.
Fragrance and Flavor experts conducted detailed discussion with the faculties and head of the
departments of FFDC to get their input. Also review the available literatures and feedbacks about
the TC.
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Cluster Diagnostic Kannauj
Step 2: Processing Unit and Training Floor Visits
The Team visited all the processing plants, laboratories, farms and divisions of TC to understand
the availability of physical infrastructure and working trend for the present services. These visits
helped the experts to analyze TC’s position and standing in technology and manufacturing process
with respect to the global best practices and upcoming technologies. Apart from these, qualitative
and quantitative assessment was conducted to understand the other requirements of TC such as
new infrastructure, staff skill set, SoPs for testing methods and new product, data management,
status of equipment’s and infrastructure, curriculum development process, methods of training
delivery, etc.
Tier 2 – Analysis of the clusters
Step 1: Desk Review of the Fragrance and Flavor footwear Industry
Extensive primary and secondary research was conducted during desk review of the fragrance and
flavor industry by the cluster team under the guidance of the cluster development expert. One to
one interaction was conducted with stakeholders such manufacturers, buyers, sellers, government
officials etc. to understand Kannauj industry ecosystem and identify their requirements which can
help in overall growth of industry globally. During interaction, the dependency of industry on TC has
also been taken in account for further opportunities.
Step 2: Stakeholder Identification and Industry consultations
To understand the business requirements, issues and challenges of the Kannauj industry and to
map it with the TCs, stakeholder consultation with 40+ major cluster actors was conducted by the
cluster team. The main focus of stakeholder consultation was to identify key challenges faced by
the manufacturers and to suggest key interventions. As a part of these consultations, inputs were
sought in terms of marketing, financing, manufacturing and training requirements across the value
chain.
Tier 3: Analysis and Recommendations
Inputs and feedback received from the stakeholders were analyzed and discussed with TC
representatives by the Support Consultant and the Cluster Development Expert and to recommend
interventions for the identified challenges in all the clusters.
6. Technology Centre – FFDC Overview
Fragrance and Flavour Development Centre, Kannauj (FFDC) is the only Government Institute for
Fragrances and Flavours in India which was established by the Ministry of Micro, Small & Medium
Enterprises in 1991 and was duly supported by the Government of UP in respect of land & building
infrastructure. UNIDO provided all technological inputs (equipment, technical experts and training).
The main objective is to serve, sustain and upgrade the status of farmers cultivating aromatic crops
and the industrial sector engaged in distillation of aromatic oils and its value addition. FFDC has a
mandate to make them competitive in domestic and global market.
FFDC aims to serve as an interface between essential oil producers, Fragrance & Flavor producers
and the R&D institutions. It also serves in the field of agro & chemical technology and quality
assessment. The objective of FFDC is to serve, sustain and upgrade the status of farmers and
industry engaged in the aromatic crop cultivation and its processing. It is helping the industry in
adoption of agronomical practices and guidance on post-harvest technology, storage, packaging,
sampling and marketing of products. It provides testing and quality control services for the raw
materials and products through its laboratory. FFDC has two extension centres at Kanpur and
Behrampur, Odisha.
Page 15Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
FFDC broadly offers diversified set of services to industry and farmers. The services offered can
be categorized into three service training and consultancy, processing & production and quality
testing & certification.
Divisions Activities
Provides training in long term and short term training to enhance
Training
skills for Aroma industry
Agro-Technology and Supply of seeds, consultancy to the farmers at their field, Kisan
extension services Mela, Production and oil sales.
Provides extraction technology for production of different class of
Process Technology
fragrance material and value addition services
Fragrance and Flavor
All types of fragrance and blending formulation are created.
Development
Bio Tech and Tissue This division works on tissue culture, molecular biology and
Culture microbial technology of aromatic plants
Quality Assessment and Undertakes different tests for fragrant material like oleoresin,
Certification absolutes as per BIS standards and certified by NABL.
Consultancy Provides suggestion and solutions for all type of divisions
Figure 6.1: Divisions in FFDC
6.1 Production Process
TC Revenue (INR lakh) and Recovery Rate FFDC has an inbuilt facility for
production of aroma raw material,
432.32 426.68 essential oil, value addition of
404.67
essential oil and production of
370.18
335.18 herbal extracts. Available
266.67 essential oil processing unit is
based on out- dated technology
with in-consistent operational
108.66 96.5 97.13
99.56 108.01 101.32 activities. Some of the other non-
functional units are Boiler,
Thermic Fluid Heater and Cooling
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Tower. These machines can be
Revenue
made functional by upgrading
Figure 6.2: TC Revenue V/s Recovery Rate
some parts and by undertaking
regular maintenance. The present capacity utilization of infrastructure is as below:
S.No. Units Probable days of utilization/year Utilization (%)
1. Solvent extraction unit 150 30%
2. Steam Distillation Unit 150 40%
3. Fractionation Unit 150 45%
4. Reaction unit 150 45%
5. Lab. Scale Units (Job
150 40%
work/R& D)
Table 6-1:Equipment utilization Rate
The current production processes at FFDC have been categorized into the following areas and an
analysis of each production process is represented below:
Page 16Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
Process Key Challenges
• FDUs have to be upgraded with better condensation system to
Production of Essential avoid escaping of low boiling components, especially in summer.
Oils Also, direct steam sparging should be done instead of ‘batti’ &
water distillation method.
• FFDC has two units for fractionation with 250 litre capacity. Both
the units have outdated reflux ratio divider, which are also faulty to
operate.
• The purity of the distillate depends on the level of high-vacuum,
Production of value consistent heating medium, separation of the components in the
added isolates/aroma column supported by the reflux ratio divider.
essential oils • At large, all these controls are defective and these units are no
more useful for commercial production. The thermic fluid heater is
also non-operational.
• The reaction unit vessel is good, however, there is a need to
validate the condenser and pipelines.
• The process plant in this section is currently not utilized mainly
due to operational difficulty due to the outdated design.
• There is an immediate need to replace 20 years old pipelines and
electrical system. The steam boiler does not produce ‘dry steam’
but delivers only ‘super-heated water’ technically due to high
Production of Herbal moisture, hence, this cannot cater to the specific production
Extracts and Allied
requirements.
Products
• While floral concrete can be produced, there is no facility for
‘concrete’ to ‘absolute’ conversion. Spray drier is an important
equipment for final drying of herbal extracts, however the same is
missing. Instant boiler is not operational and steam distillation unit
needs complete overhaul.
Table 6-2: Production Challeneges
6.2 Training Services
FFDC has a developed training facilities with training programs on all aspects of essential oils,
fragrances & flavours. It imparts training from FFDC as well as outside the campus. The center has
launched a series of workshop-cum-training on aromatherapy, essential oils & aroma-chemicals to
promote production & uses of pure essential oils and related products. The training center is well
equipped with audio visual aids for conducting training programs with a sitting capacity of 45
trainees. In order to provide residential courses, it has trainee hostel for boys & girls as well as
international trainee hostel.
FFDC faculty members have been trained by international experts and it also has 194 faculties
under the National Network of FFDC. The training division has organized trainings for government
officials of MSME and at international level for countries such as Sri Lanka, Rwanda, and Egypt.
Apart from training facilities, FFDC also provides consultancy services in the areas such as
designing & installation of field distillation units, cultivation of aromatic crops, technical knowhow,
designing and setting-up of laboratory/industrial units, project report preparation, development of
fragrances & flavour, development of products using fragrances & flavours
Page 17Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
6.3 Design and Consultancy services
Testing Lab as a service: The major service areas are testing, analyzing of aroma raw material.
FFDC has four GC (Gas Chromatography) & one GCMS (Gas Chromatography Mass Spectra)
instrument to do regular chemical and sample analysis. Testing Lab at FFDC is good enough for
aromatic oils, with updated equipment and skilled personnel. Similar lab, which is operationally
sustainable is required for Herbal Extracts too, with the main addition of HPLC (High Performance
Liquid Chromatography) analyzer (with Photo Diode Array Detector), Atomic Absorption Spectra
(for trace metal analysis) and Flash Chromatography. All division (essential oils, oleo resins, herbal
extracts, and formulated fragrances) can share common testing lab for efficient deployment of
skilled staff. This ‘instruments lab’ will also support product development section (Pilot Plant).
Design and development services: Currently FFDC serves maximum 10 Clients per year on
fragrance & flavor development. Approximately 20-25 new creations are developed per year as per
consultancy requirement. As a specialized service offering floral waste utilization project for UP
Government has been setup at Vrindavan.
Consulting: FFDC provides consultancy services in the various areas such as designing &
installation of field distillation units, cultivation of aromatic crops, designing and setting-up of
laboratory/industries, project report preparation, development of fragrances & flavour, development
of products using fragrances & flavours
Fragrance & Flavour Development Division: The division undertakes creation of fragrances &
flavour for all kinds of products and application of fragrance & flavour in end products including
the aromatherapy blends. They also provide consultancy services, undertake research and study
for extraction of new materials from natural sources in order to develop new fragrances/flavours.
The size of the fragrance lab is too small, multiple tasks are not available at a time. The division is
equipped with three laboratories:
Laboratory Facilities available
▪ Around 200 fragrant raw materials, like natural
Fragrance Laboratory essential oils, isolates, resinoids and aroma-chemicals
▪ Equipment and apparatus for fragrance creation.
▪ Around 300 flavour grade chemicals, natural essential
Flavour Laboratory oils, oleoresins and isolates
▪ Equipment & apparatus for creating flavours.
▪ Equipped with homogeniser, stirrer, sieve, shaker,
pulveriser, agarbatti/dhoopbatti manufacturing machine
Application Development
▪ The laboratory is also equipped with soxhlet and
Laboratory
clevenger apparatus for extraction of oil and concrete
from aroma bearing materials.
Table 6-3: Laboratories in FFDC
Strengths Weakness Opportunities Threats
Only govt. institution Locational Potential to Digital / On-line
serving in the niche Disadvantage, become a SCENT training.
field of Fragrance & Out dated Technology HUB. Not recognized
Flavor with NABL technology, HUB will cater as Regulatory
accredited Lab Lack of critical F&F body.
facility. functioning Development, Continuous
infrastructure Innovation, change in
Page 18Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
Strengths Weakness Opportunities Threats
Huge Land bank Lack of exposure to Process process
with access to latest trends in Engineering and technology and
multiple Govt. Fragrance & Quality for both F&F trends.
Technical Centers Flavour. domestic and Non- availability
across India Poor revenue International of Skilled Man
model. Market. power for both
Most of the courses Potential to short & long
are certified become a term.
regulatory body in Rapid climate
. near term by change impact
regulating un- on essential oil.
organized sector No Industrial
as driving force to Cluster is
ensure complete depending on
Safety & Quality FFDC.
in Process and Major
Product. dependence on
Advanced training single source
institute in ASIA (MCX) for
for Fragrance & analytical
Flavour sample
Development revenue.
7. Overview of Kannauj Fragrance & Flavour Cluster
Kannauj district is located in the Kanpur division and its north border touches the Farrukhabad
district. The total geographical area of Kannauj is 3129.2 sq.km. Kannauj being one of the biggest
Flavour and Fragrance cluster in the region produces attar and essential oils such as rose, jasmine,
marigold, saffron, mehndi, ayurveda medicine, gulkand & other fragrances. Most of these units are
traditional attar units, fairly old with less efficient process and technology in terms of yields
(essential oil), fuel efficiency, operation cycle time and quality consistency.
Kannauj is the hub for attar and essential oils manufacturers. Around 375 units for attar and
essential oils are located in Kannauj in Makarandnagar Industrial Area and Mini Industrial Estate at
Chhibramau. For detailed survey of cluster requirements, two product based clusters have been
selected in Kannauj: Attar cluster and Essential oils cluster Attar is the major product in Kannauj
that contributes around 57% of total cluster
revenue whereas, essential oil stands at 43 %.
Units in Kannauj also produce incense stick that is
manufactured using the waste that is left once the
attar and essential oils are manufactured - thus
giving the industry a tag similar to Zero Waste
Industry. Majority of the firms (59%) are
proprietorship, 31% are partnerships and
remaining 10 % are Pvt. Ltd.
Figure 7.1 : Map of Kannauj
Page 19Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
Attar Manufacturing Cluster
Attar manufacturing cluster comprises of about 250 micro, small and medium enterprises. During
interactions, it has been observed that all units are using traditional methods and have limited focus
on sophisticated production systems. In most of the units, bio fuel is used for heating purpose which
can be substituted by a more environmentally efficient gas based system. The production
output/batch size depends on the size of the order which is produced in batches of 5 to 10 kg. Attar
industry is highly dependent on the usage in pan masala and tobacco based products which
contributes to more than 90% of total revenue of Attar Manufacturing units. Attar manufacturing
units mostly procure raw materials locally.
Essential Oil Manufacturing Cluster
In Kannauj, there are about 125 essential oil manufacturing units that are involved in manufacturing
through natural and synthetic based raw materials. Essential Oil manufacturers also manufacture
edible oil of cloves, cardamom, saffron, etc. 50% of the units procure raw material locally and
remaining procure it from other states. Most of the manufacturers use primitive technologies to
produce essential oils. The waste remains after extraction of oil are used in making agarbatti, hawan
samgri and dhoop batti. Usage of waste material requires proper waste management system to
reuse this material economically and generating additional revenue.
Essential Oils include a large class of volatile odoriferous oils of vegetable origin that give plants
their characteristic odour and often other properties. These are obtained from various parts of the
plants (as flowers, leaves, bark, seeds, fruits etc.) by steam distillation, expression, or extraction
and are usually mixtures of compounds (as aldehydes, esters, Alcohols, ketones etc.), and are used
often in fragrances, flavors, and pharmaceutical preparations. Essential oils often vary in
specifications of their content and odour profile as they are influenced by geo-climatic conditions
and variety of planting materials.
7.1 SWOT Analysis of Cluster
Strengths Opportunities
Kannauj has GI tag
Raw Material
Slow entry of competitors
Easy availability of raw material
Increase in outreach training programs
Infrastructure
and Government funded skill
Good rail and road connectivity with
development programs can create
different major markets like Kanpur and
professionally trained manpower
Delhi. Good transportation ecosystem
Technology
and connectivity with National Highways
Adoption of improved process &
Technology
technology, equipment
Presence of unique product which is
Undertaking R&D for process &
manufactured in Kannauj only
technology improvements
Availability of National level institute in the
Access to Market
form of FFDC, Kannauj
Demand in global market is very high.
Access to Market
Ease of accessing market local, national
and international
Good possibilities of exports as already
there is good amount of export from the
cluster
Weaknesses Threats
Page 20Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
Limited awareness of importance of GI tag
Government schemes and initiatives to
promote the local industry
Ban on use of base material of sandalwood
in North India – no alternate material
available, mainly using chemical
combination for the same, therefore, Sudden policy changes resulting in to
products are losing their niche tag decline in demand, i.e. ban on gutka
Poor collective efficiency of the firm due to products
non-cooperation and absence of joint Low cost from competing countries like
actions China.
Poor use of government schemes and Changes in Policy especially on the use
finance resulting into limited expansion of the of energy and environment perspective
business Many big firms moving from the cluster
Absence of quality standards in the cluster due to limited scope for expansion, poor
No social capital in the cluster due infrastructure and non-availability of
therefore, no joint actions necessary inputs especially essential
oil.
Workforce Access to Market
99% workforce is unskilled Other countries market is globally very
Technology strong like Bulgaria, Grass etc.
Limited awareness about advanced No diversification in market
manufacturing technologies
Limited awareness about EHS compliances
and norms
Access to Market
Only depend on pan masala industry
Absence of retail market
7.2 Cluster need assessment – Key Issues and Challenges
The focus of the cluster diagnostic report is on identifying the key challenges across Fragrance &
Flavour value chain. For this purpose, the team conducted one to one discussion and interaction
with different stakeholders including MSMEs, technical experts, associations, financial institutions
and business development service providers. Based on the interactions with Industry units across
clusters it was observed that challenges faced by different types of units are different. The
challenges identified in these clusters were mapped with TC offerings and accordingly potential
areas of improvements in the TC were identified to increase collaboration between the TC and
cluster
Attar Cluster
Cluster Description of the Cluster TC Offerings that TC service offerings –Cluster
Challenges Challenge can mitigate applicability
cluster
challenges
▪ Most of the workers are not
formally trained – About
90% of the units have
employed unskilled
▪ There is a requirement for
workforce Yes
Up skilling of advanced courses on
▪ No formal capacity building (Activities to be
workforce equipment handling in the
initiatives have been taken offered)
cluster.
at the cluster level
▪ Limited training offerings in
productivity enhancement &
quality control
Page 21Technology Cluster Manager: TCSP
Cluster Diagnostic Kannauj
Cluster Description of the Cluster TC Offerings that TC service offerings –Cluster
Challenges Challenge can mitigate applicability
cluster
challenges
▪ No BIS quality standards
exist for Attar
▪ TC can support the local
Yes industry in development of
Standards for ▪ Low export orders or repeat
(Activities to be standards for Attar Industry
Attar Industry orders due to limited focus
on quality and adherence
offered) ▪ FFDC is member of BIS and
to International Standards can ask for assistance.
▪ As FFDC is the only institute
in the region providing
practical and theoretical
exposure on new
technologies, it is essential
for FFDC to adopt new
technologies. The existing
▪ Outdated technologies and
Yes equipment in FFDC is
Access to conventional production
(Activities to be outdated and require
Technology techniques are used for
offered) upgradation
preparing Attar
▪ Limited machinery in FFDC
for innovation in Attar
manufacturing
▪ Upgradation of man power
skill is required for creating
new formulation and
maintenance of machines.
▪ FFDC conducts periodic
▪ Limited awareness about
activities to create awareness
Government Schemes &
about different government
Initiatives Yes
Access to offerings
▪ No compendium like (Activities to be
Information ▪ FFDC is also planning to set
Directory of Manufacturers’ offered)
up an ED cell for supporting
and Business Development
units in getting required
Services
support from the cluster
▪ Dependence on ▪ Exhibition has been
wholesalers and traders for planned in coming month
reaching to new markets by FFDC .
▪ High competition due to low ▪ To increase the awareness
level of product about packaging a
differentiation. workshop was conducted
▪ Direct export orders are by FFDC.
limited ▪ Other aspect are not
▪ Inadequate Marketing applicable on TC.
Promotion and Industry Yes
Access to
Interactions (Activities to be
Market
▪ No Buyers-Seller Meets, offered)
and Participation in Trade
Fairs
▪ No export development
programs
▪ Limited interventions in
packaging
▪ High competition from
Synthetic manufacturers for
supply for base ingredients
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