SAFETY MATCH BOX INDUSTRY
[EIRI/EDPR/1724] J.C. 553
INTRODUCTION
The origin of the safety match industry in India goes back to the beginning of this century. Around 1910 immigrant Japanese families who settled in Calcutta began making matches with simple hand- and power-operated machines. Local people soon learned the necessary skills and a number of small match factories sprang up in and around Calcutta.
These small match factories could not meet the total requirements of the country however, and India began to import matches from Sweden and Japan. During the First World War, when Swedish matches could not be imported, the Indian market was fed mainly by imported matches from Japan and by the locally made ones which followed the Japanese pattern introduced in Calcutta.
After the war, factories in Calcutta were unable to compete with imports, and handmade match production shifted to southern India, especially in the Ramanathapuram and Tirunelveli districts of Tamil Nadu State. This shift was due to the pioneering efforts of P. Iya Nadar and A. Shanmuga Nadar who went to Calcutta to learn the process from Purna Chandra Ray, a local businessman, who had learned the trade in Germany. The Nadars set up a number of manual match production units in extremely poor regions of Tamil Nadu, where a combination of the dry climate, cheap labour and availability of raw materials from nearby Kerala created ideal conditions for match production. The first sulphur match that would bum when brought into contact with a rough surface was produced in South India in 1923, and the first safety match, in the form we know today, in 1932.
Mechanization came to the Indian match industry in 1924 when M/s Wimco, Ltd. (Wimco), started operations in 1924 as a unit of the multinational Swedish Match Company. Wimco is still the only representative of the large scale sector in wooden match manufacturing and is the only fully mechanized match factory in the country.
During the past three decades, the Indian match industry grew especially rapidly. Government policies protected Indian matches by placing protective tariffs on imported products and specifically favored the expansion of the handmade, small-scale sector through the use of differential excise taxes. There are now 12,000 units in the small-scale, non-mechanized sector, of which 75% to 90% are situated in Southern India.
Wooden match production in India is split into three sectoral categories: the mechanized large-scale sector; the handmade small-scale sector; and the cottage sector. 82% of total match production is in the handmade small-scale (67%) and cottage (15%) sectors, where technology has remained relatively simple. These two non-mechanized sectors of the match industry are distinguished primarily by output size. Officially, the cottage industry in match making is defined as any manual production unit producing less than 75,000 cases of match boxes per year.
The industry as a whole directly employs an estimated 250,000 people, with only 6,000 of these in the mechanized sector. The cottage sector, which involves totally manual operations and produces less than 75 million match sticks per year and is often household-based, accounts for about 50,000 workers. Thus, small-scale, factory-based match production units employ by far the largest number of people (195,000 workers) involved in the match sector.
As is the case with many FBSSEs the production of wooden matches is highly suited to handmade, household-based production. For every 6 workers employed in the mechanized sector, 22 can be employed in the non-mechanized sector. Men, women, children, the elderly and partially handicapped persons can all be employed. Match making by hand is labour-intensive. It requires low levels of technology and relatively small capital investments. A number of operations in the production process can be easily undertaken at home. These factors clearly demonstrate the significant socio-economic value of small-scale match production. Recognizing this, Indian government policies have consistently favored the handmade sector. All future expansion of the match industry is reserved for this sector, with particular emphasis on the cottage sector.
Only one unit represents the mechanized sector, namely M/s Wimco Ltd. Wimco contributes about 18% of current match production with five factories situated in Ambarnath (near Bombay, Maharashtra), Bareilly (Uttar Pradesh), Calcutta (West Bengal), Dhubri (Assam) and Madras (Tamil Nadu).
The strongholds of the small-scale, non-mechanized sector are in the Ramanathapuram and Tirunelveli districts of Tamil Nadu in South India, where 67% of India’s matches are produced. These districts are in a very dry, unirrigated area where the rural population has traditionally been extremely poor. The cottage sector, responsible for the remaining 15% of match production is distributed all over the country in small production units, although a large proportion of these are also in South India.
The veneering and splint industry in the adjoining state of Kerala is an important ancillary industry, providing nearly 90% of the wood used in Tamil Nadu. In Kerala there is a tradition of practicing farm forestry on home gardens and around plantations. Farm forestry is now being promoted by the State Forest Department.
The following case study describes the development of the match industry in southern India over the last several decades. In particular it highlights the effects of concerted government efforts to encourage the small-scale sector. The study also points out some important issues and constraints including a chronic shortage of raw materials which many FBSSEs face the world over.
Firsthand and secondary data for the study were drawn from various sources in the states of Kerala, Tamil Nadu, Andhra Pradesh and Karnataka. Various commissions and institutes involved not only in match making but also in the cottage, small and medium industry sectors were consulted. Interviews of several entrepreneurs in the non-mechanized or unorganized sector provided further information on small-scale match enterprises. Data from Wimco, one of the oldest wood processing and professionally managed private sector enterprises in India, contributed much of the information used in the analysis of the organized sector.
COST ESTIMATION
Plant Capacity 50,000 Match Box/Day
Land & Building (300 sq.mt.) Rs. 28.00 Lac
Plant & Machinery Rs. 2.67 Lac
Working Capital for 2 Months Rs. 8.85 Lac
Total Capital Investment Rs. 42.53 Lac
Rate of Return 64%
Break Even Point 40%
CONTENTS
INTRODUCTION
THE PRODUCTION PROCESS
RAW MATRIALS
PROPERTIES
B.I.S. SPECIFICATIONS
MARKET SURVEY
PRESENT MANUFACTURERS/EXPORTERS OF MATCH BOXES
KINDS OF MATCHES
PROCESS
QUALITY ASSURANCE IS OUR PAST, PRESENT & FUTURE
PROCESS DESCRIPTION FOR THIS PROJECT
SCALE AND PROCESS
THE MANUFACTURING PROCESS
PRINCIPLES OF PLANT LAYOUT
PLANT LOCATION FACTORS
EXPLANATION OF TERMS USED IN THE PROJECT REPORT
PROJECT IMPLEMENTATION SCHEDULES
MANUFACTURERS/SUPPLIERS OF PLANT & MACHINERY
MANUFACTURERS/SUPPLIERS OF RAW MATRIALS
APPENDIX – A:
01. PLANT ECONOMICS
02. LAND & BUILDING
03. PLANT AND MACHINERY
04. OTHER FIXED ASSESTS
05. FIXED CAPITAL
06. RAW MATERIAL
07. SALARY AND WAGES
08. UTILITIES AND OVERHEADS
09. TOTAL WORKING CAPITAL
10. TOTAL CAPITAL INVESTMENT
11. COST OF PRODUCTION
12. TURN OVER/ANNUM
13. BREAK EVEN POINT
14. RESOURCES FOR FINANCE
15. INSTALMENT PAYABLE IN 5 YEARS
16. DEPRECIATION CHART FOR 5 YEARS
17. PROFIT ANALYSIS FOR 5 YEARS
18. PROJECTED BALANCE SHEET FOR (5 YEARS)
