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Mohan Padmanabhan

Encouraged by the consumer response to its safety matches in the domestic market, the company has already started exports to the US and West Africa.

Kolkata , Oct. 13

ITC's safety matches business based on 100 per cent outsourcing from the small scale and cottage sectors, which has just completed two years of operation, is positioning itself to catch up with the market leader by March 2005.

The company now produces 180 million matchboxes per month, accounting for a market share of around 9 per cent. The front-runner in this segment, with its own manufacturing facilities, is ahead with a production of around 250 million matchboxes per month and a market share of 12 per cent.

The organised Indian safety matches industry's turnover at the moment, according to informed sources, is around Rs 800 crore.Close to 50 per cent of this is still in the hands of the handmade cottage sector, located almost entirely in Tamil Nadu, in the Sivakasi, Sathur, Gudiatham belts. The total consumer spend is said to be around Rs 1250 crore.

The sourcing by ITC is done from both handmade and semi-mechanised units, which are developing adequate capacities now to maintain steady supplies. According to sources, the total market size in volume terms is now around 24 billion boxes per annum (2 billion boxes per month).

Talking to Business Line here recently, Mr R. Srinivasan, Member, Corporate Management Committee of ITC and CEO of the Printing & Packaging Department, who is also overseeing the new businesses of matches, incense sticks and greeting cards, said the SBU (strategic business unit) was hopeful of striking a sizeable increase in outsourcing by March 2005. Encouraged by the consumer response to its safety matches in the domestic market, particularly `Aim' (in the 50-paise segment), the company has already started exports to the US and West Africa.

Visibly superior product quality, coupled with a rapid market roll-out has given ITC a growing market share, with Aim emerging as the single largest selling matches brand in the country, Mr Srinivasan said.Pointing out that ITC continues to support the competitiveness of the small scale and cottage sectors through induction of appropriate technology and best practices, Mr Rajeev Gopal, CEO of the Matches SBU, said during 2003-04, 44 upgraded small scale industry (SSI) units in the Sivakasi belt supplied high quality safety matches to the company. "We will continue to support the SSIs to become more competitive in an open environment, especially under the new WTO regime, and when more and more free trade agreements (FTAs) in the region come into play."

He said Pakistan (which has gone fully mechanised), if allowed to enter the Indian market (under a SAARC Preferential Trade Agreement accord) with cost-competitive matches, would pose a major threat to the domestic players. He said the freight advantage they may enjoy while tapping the north Indian market, was a matter of serious concern for the local players. The 50-paise space occupies 90 per cent of the market size.

Asked on the single largest plus for units in the cottage sector, following ITC's entry into the sector, Mr Srinivasan said, "We have successfully introduced fair practices, ethical standards, and above all, fire safety and quality in production of safety matches." Confirming this, the converters of ITC brand matches in the Sivakasi and Srivilliputhur areas told Business Line that the partnership with ITC was resulting in more jobs and more income for people of the totally dry belt, while bringing more prosperity to the region.

Says Mr G.Nagarajan of The President Match Co in Sivakasi: "Besides an assured market, which is steadily growing, we are also now exposed to improved quality systems, which are producing a better working environment for the village folk, particularly the women."

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