The Match Box Industry

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An Overview
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 Major Players In The Market
Today.
• Vishwa Group of Concerns.

• Swarna Match Factory.

• Thangavel Match

Industries.
• The Venus Candle Works.

• Maxwell Inc.

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“Each time you strike a match,
you contribute to the turnover, but
not to the profits of the Indian
match industry”.

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 Match Box Industry
• The industry produces 90 million bundles a
year
• Each bundle has 600 matchboxes and
each box has between 40 and 50 sticks.
• The Rs 3,000 crore industry, which
employs around 300,000 people, is
expected to end 2007-08 with losses of
Rs90 crore, up from the Rs55 crore it lost
last year(AICMI)

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• Tamil Nadu accounts for almost 75% of the
production of matches
• The industry here seems to be at
crossroads, with many firms diversifying
into other industries such as textiles,
fireworks and printing.
• One reason for the state of the industry
has to do with a tax exemption that
encourages people to sell machine-made
matches as hand-made ones.
Hand-made matches are completely
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• To benefit from this, many mechanized
match factories make the matches and
pass them on to units where they are
packed by hand.
• These matches are passed off as hand-
made matches.
• Units that still make matches by hand
cannot increase prices because there is no
way they can compete with mechanized
units that evade taxes.
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 According to G. Adipathy,
secretary of AICMI and
partner of Ayyan Group

“The central excise department

isn’t taking adequate steps to
curb these practices from tax-
evading match units. Organized
evasion has become the norm in
this industry”.

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 Light Facts of the Industry
• Mechanized matchbox making units
that are tax-compliant make losses
and some companies that didn’t
think it necessary to diversify are
suffering now.
• Match Box makers are trying to enter
new fields but are suffering as their
match making units are making
losses and they do not sufficient
capital to invest.
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 The Industry Today

• Per capita consumption of matches in

India increased steadily from 2.45 sticks
per capita in 1970 to 4.25 in 1985.
• There are wide fluctuations in the annual
growth rate in the consumption of
matches varying from as low as 3%
(before 1970) to as high as 28% (from
1977 to 1983).

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 What are the Reasons for an
Increase in the Matchbox
Sales?
• The rising levels of income in relation to
which prices of matches have shown
remarkable stability over the years,
growing urbanization, swelling numbers of
smokers, and changes in fuel consumption
patterns indicate that the future rate of
growth could be higher than the 6% as
supported by past trends.
• Consumption of matches in 1977 was
1,965,138 cases (one case = 7,200 boxes).

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• The requirement for matches in 1990
was 4,191,663 cases.
• The current estimate for the year will
be around 9,221,658 cases.
• It will be up to the three major
players of the match industry: The
Mechanized Sector(The Small-Scale,
Hand-Made)Middle Level Sector and
the Cottage Sector meet these
demands.
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 The Mechanized Sector
• Wimco has pioneered the manufacture of
chlorates, paper, pulp, glue, and now, the
raising of fast growing poplars, required
for the manufacture of quality matches,
thereby eliminating much of their
dependence on imported raw materials.
• Government policy has, over the last three
decades, placed a ceiling on Wimco’s
capacity at 695,000 cases.

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 Contd…
• Their market share has gradually
fallen to 18% in 1984 although they
pay 60% more in excise taxes than
the middle level handmade sector.
• Although highly automated, Wimco
operations continue to be fairly labour-
intensive and it is argued that they are far
more wage-intensive than either of the
handmade sectors.
• Workers earnings in the mechanized
sector at Wimco average about Rs 35 per
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 The “Match Kings” of the
Handmade Sector
• Within this sector a ‘middle level’ of small-
scale match production units has emerged
as the dominant production center in the
country.
• Located in Tamil Nadu state this middle
level is the product of the first factories
begun here by the Nadar family.
• This sector accounts for 67% of the match
market and it continues to be dominated
by 18 closely related families, often
referred to as the “Match Kings of South
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 The Handmade Sector
• The handmade, middle sector is presently
confident that the entire requirement of
safety matches for the nation can be met
by them in the near future.
• Since the development of a major
fireworks industry in the Sivakasi region,
labour is presently not as easily available
as it once was.
• Moreover 30% of these middle level
factories now use cardboard boxes, so
these are actually semi-mechanized
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 The Cottage Industry
• They may be household-based but are
often more efficient in their use of a wide
variety of materials, produce less wastage
and distribute benefits to a deeper labour
pool.
• Officially cottage industries are those
using manual production methods that
produce less than 75,000 cases of
matches per year.
• Sixty percent of these are in South India.
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 The Khadi and Village
Industries Commission
• The KVIC cottage match industry program
emphasizes technical, financial and
marketing assistance.
• But the KVIC turned out to have a lot of
shortfalls.
• KVIC is presently engaged in reorganizing
and restructuring its cottage match
activity before embarking upon any more
substantial programmes.

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 Some of the important
components of the new
program included:
• Research, development and training
programs, with technical extension centers
to be established in six locations
nationwide coordinating training
programs;
• Creating an infrastructure for distribution
of raw material and for marketing finished
matches;
• Product diversification to include “fancy”
matches;
Development of appropriate technologies
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 Issues and Constraints
• Shortages of raw materials,
particularly match quality soft woods,
but also chemicals, match wax and
wax paper;
• Geographical distribution of the
industry in one region and resulting
labour shortages;
• The monopoly of the 18 “Match
Kings”;
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• Exploitation of women and child
• The failure of the cottage sector;
• The introduction of new technology
in the hand made sector;
• And the unique problems of the
veneer and splint making industry.

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 MATCHBOX INDUSTRY IN
TAMILNADU
• The matchbox industry of Sivakasi in Tamil
Nadu is witnessing one of its worst periods
now.
• Tobacco giant ITC Ltd., which entered the
market almost two years ago is posing
serious threat to the traditional market
players.
• ITC, with its strong distribution network
throughout the country, had in its first
eight months reached the target where it
sold over 9 crore matchboxes a month.
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• The matchbox industry is predominantly
located in the southern districts of Tamil
Nadu and supplies matchboxes to the
entire country.
• To promote this industry, government has
exempted the product from both the
excise and the sales tax.

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 Tamil Nadu matchbox
industry demands 8 percent
duty cut
• The government should reduce the Cenvat
to save the industry.
• potassium chloride, red sulphur, paper,
board and wax - jumped manifold in the
recent past but not the retail price of
matchboxes.
• Sulphur price has gone up from Rs.17 per
kg to Rs.32 per kg in a matter of four
months. Potassium Chloride is now at
Rs.40 per kg, up from Rs.28 a year ago.
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• For the past several years, the industry
has not been able to increase the
matchbox prices. It remains fixed at fifty
paisa owing to unhealthy and illegal
competition.
• Large match industry manufacturers paid
Cenvat at 12 percent while hand-made
units were totally tax-exempt. This leads
to huge tax evasion by large as well as
small units.

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• Out of the 90 million bundles (each bundle
consists of 600 matchboxes) per year.
• Less than 18 million bundles are made by
small units that are tax-exempt.
• According to industry players, the
government can bring down the Cenvat to
four percent so that the cost difference
between the organized and law-abiding
units and the small units could be lowered.
• Other option is to abolish the Cenvat and
levy one percent cess across the industry.
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 The Main Competition To
Indian Exporters
• Indian exporters were facing stiff
competition from:-
• Pakistan
• Africa
• South America.

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 Few Well Known Smaller
Match Boxes In the Market
•Speed
•Cap

•Ship

•Agni

•Parachute

•Chavi

•Toran

•Vip

•Umbrella

•Rose Gulab

•Doller

•Lion Matches

•Bittoo

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