The Hindu Business Line : Small match units facing stiff competition from corporates

IMPROVED quality standards and introduction of better business practices have been brought into many semi-mechanised and fully handmade safety match units in Tamil Nadu, throwing up new equations in the tussle going on between big and small in this traditionally cottage-driven sector.

Product quality has vastly improved, and the units now seem confident of taking on competition, if and when, from safety matches coming in from neighbouring countries, including Pakistan.

Industry sources say that matches made in the South Asia region are mostly machine-made and would provide tough competition for the Indian handmade units.

Employment in the area has grown, and the earning potential of the workers, mainly women, in the match units of Sivakasi, Kovilpatti and Srivilliputhur has improved. But this has also caused heartburn in certain pockets of the area, where complaints of big feeding on the small are being made, perceiving a serious threat to the really tiny match units which now operate in pathetic conditions.

Entry of companies such as ITC, with sufficient marketing experience in FMCG products for 100 per cent outsourcing of safety matches, is welcomed by the serious players in both semi-mechanised and handmade segments in Sivakaksi and Kovilpatti. ITC, on its part, is willing to source from the tiny units, provided they are serious about adhering to certain quality standards.

The company now sources from over 40 units, some 50 per cent of these in the handmade segment, and many of these units, after supplying to ITC, are also marketing the product under their own brand name in different national markets.

The cottage units comprising the `D' class segment, said to number around 4,000, are languishing because of poor quality and low price realisation, and in the firm clutches of some unscrupulous traders.

According to match industry sources, quality has been a major casualty in many of these units, which are allegedly forced to sell to the ubiquitous trader, who in turn market the product in the volume-driven national markets. And the name of the game here is counterfeiting, sources point out. The recognised matchbox brands of organised players are duplicated at many of these units and sold through dubious trading channels, sources point out.

According to Mr J. Devadoss, Joint Secretary, South India Match Manufacturers Association, Kovilpatti, the traders have a stranglehold on the cottage sector, which turns out these match boxes of indifferent quality day in and day out in poor working conditions. Pointing out that there was no illegal matchmaking industry in Tamil Nadu, as such, he said the cottage sector should be freed from the clutches of the trade, and brought back into the cooperative fold under Government supervision.

Mr Palani Kumar, General Secretary of the All India Federation of Cottage Matches Manufacturers Association, told Business Line in Sathur recently that the Government needs to come out with a clear policy clarification on where the cottage matches units or actually stood today. Asked if the entry of organised players in the Sivakasi, Kovilpatti areas purely for outsourcing purposes was improving the living conditions of people in and around, he replied in the negative.

The small units are not getting a fair price, and the large players are responsible for this, he pointed out. Asked if the SSI units would be able to market the poorly produced matchboxes on their own, he said it was possible.

Asked to comment on Mr Kumar's charge that ITC was sourcing from certain illegal match units, Mr Devadoss said if this was true, law would have moved in by now, and shut down all those units which were making high quality products for both ITC, and also for their own requirements.

Informed industry sources clarified that the tiny segment now offers a price of Rs 120-160 per bundle of 600 matchboxes to secondary wholesale dealers at 50 paise for the consumer for the average quality product.

In the case of say a player such as ITC, offering quality matches, it ranged between Rs 190 and Rs 225 per bundle to wholesale dealers, subject of course to seasonal variations. It is the wholesale/retail trade which pushes the product with the help of various incentive schemes from time to time, sources said.