By R. Chandrasekaran
SIVAKASI: At least on one autumn night each year, a mid-sized industrial town in southern Tamil Nadu owns the Indian skies. Nearly all firecrackers that dazzle the firmament across the length and breadth of the country on the Diwali night come from Sivakasi, the country’s pyrotechnic capital, located more than 500 kilometers to the south of Chennai.
As much as 90 percent of all firecrackers made in India are produced in Sivakasi, which is also a leader in the printing industry and match manufacturing. It is the town’s industriousness that prompted India’s first Prime Minister Jawaharlal Nehru to call it a “mini Japan.”
Sivakasi’s bustling fireworks hub offers direct employment to close to 100,000 people. Another 150,000 find indirect employment in and around the town.
Currently, there are 564 firecrackers manufacturing units in Sivakasi, S.S. Vijayakumar, president of the Tamil Nadu Fireworks and Amorces Manufacturers’ Association (TANFAMA), told Global India Newswire. The figure excludes illegal and unlicensed units.
Fireworks are also made in West Bengal and Kerala. But what separates Sivakasi firms from fireworks makers in those two states are the scale and the range of pyrotechnic products made in this town.
Manufacturers here make an array of products. The different categories of fireworks they make include “crackers,” which produce resounding noise, “sparkers” that are accompanied by brilliant light works, “rockets” that lift off in a whirling motion, and “fancy and display” fireworks, which merge all aspects of sound, light and motion.
The local industry sources say it is the huge amount of money invested in research and development year after year by leading manufacturers and suppliers of crackers and fireworks based in Sivakasi, such as Standard Fire Works, Sony Fireworks and Kaleeswari Fireworks, which gives the town such a monopoly in fireworks market.
The region’s semi-arid tropical monsoon climate, with its high mean temperature and low humidity, also offers excellent conditions for the industry to thrive. Running dry for majority of the year, Sivakasi gets bulk of its rainfall from the North-East monsoon, which runs from mid-October till December. By the time the monsoon sets in, the fireworks products would have already been dispatched to various destinations.
Another advantage Sivakasi-based manufacturers have is most of the raw materials are locally available, except potassium nitrite, which is procured from Uttar Pradesh and Punjab.
With all the conditions favoring the industry, it has been able to maintain decent growth rate. “We never had any recession effect and the growth has been constant,” says Vijayakumar, who add that the industry is growing at 15 percent in terms of price and 10 percent in volume.
Besides cornering practically the entire domestic market, Sivakasi firms have also been able to garner a 5 percent share of the global fireworks export market.
The leading exporter is Standard Fireworks, the number one firecrackers maker in the country.
Last year, the company made inroads into the U.S. market, for the first time, by breaking the near Chinese monopoly there. The company also exports to the U.K., Germany, Belgium, Holland, Spain, Canada, Middle East, South Africa and Sri Lanka markets.
Standard Fireworks Chairman N.R.K.R. Ravindran says his firm was able to sustain growth and maintain its number one status through innovations.
The company, which makes more than 500 varieties of fireworks, has 37 factories and employs about 8,000.
“We are estimating a turnover Rs 2.13 billion for the current year,” Ravindran says.
Standard Fireworks, started in 1942 as a partnership between three companies, Standard Matches, Pioneer and Bell Group, today has presence in China, the world’s leading fireworks market.
Its Chinese subsidy, Standard Fireworks (China) Ltd, was launched in 2002, by joining hands with China’s Liuyang Phoenix Fireworks Ltd. “Fifty-one percent of the share is with us, 49 per cent is with them,” Ravindran says.
He says both Standard Fireworks and the industry are on a firm growth path and will do well as long as they continue to invest in research and development, especially in aerial fireworks, which are in vogue these days.
Moving away from noise-polluting crackers and atom bombs, most leading manufacturers are now focusing on “aerial shells” that do not attract many government strictures. The aerial fireworks and other new products are promoted throughout the year in temple festivals and other celebratory events. Most of these displays, eye-catching and mesmerizing, last anywhere between 10 minutes to one hour.
Despite having such dominance in the domestic market, Sivakasi firms face a lot hurdles.
Internationally, they are having a tough time competing with Chinese manufacturers, whose products are more wide-ranging and have greater variety. There is also a mismatch in scale.
The Chinese are the most dominant players in the $30 billion global fireworks market.
The Sivakasi manufacturers say they aim to introduce newer machineries, tools and equipment that would allow them assured quality and consistency, in order to complete in the global market with the Chinese and new entrants such as Taiwan and South Korea.
Vijayakumar says Sivakasi companies also face major infrastructure roadblocks in boosting exports. “We don’t export in large scale for want of berth of ports and licensed warehouses at prominent ports in India,” he says.
The low profit margin is another obstacle in the way of scaling. According to the Tamil Nadu Fireworks and Amorces Manufacturers’ Association, due to the heavy overheads, the industry’s profit margin is no more than 6 percent to 7 percent.
Trained workmen demand more and attrition rate is higher for those personnel, Vijayakumar says. The industry also pays as much as four months’ bonus overall to its workmen, he adds.
Breaking down the cost, he says salary alone accounts for 30 percent of it, while chemicals represent 27 percent to 28 percent and packaging and shipping expenses represent 35 percent.
The industry also had to ward off Chinese competition in the domestic market. Much to its chagrin, the Union government had earlier considered importing fireworks from China as part of liberalizing trade, but abandoned the move following representations from the industry.
The rise of illegal manufacturing is another threat that the industry faces. Because of its hazardous nature, it is under constant scrutiny through such laws and regulations as the Explosives Act 1984, Explosives Rule 1983, the Arms Act 1959 and Rule 1962.
With the mushrooming of illegal and unlicensed units that flout the government’s safety norms, the industry is under even greater scrutiny. And fireworks manufacturers complain that the state government is turning a blind eye towards the unlicensed firms.
The industry also faces public relations problems because of accidents and employment of child laborers.
Last year, 14 people died in accidents, down from 23 in 2009. Experts say most accidents occur when factories handle “more than the prescribed limit of chemical composition.” The industry claims that it was able to bring down the death toll significantly. In 2005, 2006 and 2007, it was 28, 39 and 38 respectively.
The fireworks industry claims, with an accident rate is much below 1 percent, it has a better record than many other industries.
Also dogging the industry are the allegations of the use of child labor. But Vijayakumar says Sivakasi’s fireworks manufacturers have come clean on the issue.
One way the industry has tried to enhance its image is by doing charity works.
Over the years, several fireworks firms have got involved in social work by starting schools and colleges to provide education to the workers’ children. Leading firms such as Standard Fireworks, Kaleeswari and National Fireworks have all set up such colleges.
“We are running three matriculation schools, one Tamil medium school, one engineering college and one arts college for women,” Ravidran, chairman of the Standard Fireworks, says. “We have also donated a hospital to the government [to improve the quality of life] and health care of the people.” (Global India Newswire)