THANGAM SAFETY MATCH WORKS - WILL IT

WORK?

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Case

217-0088-1

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This case was written by Alur Sivakumar (VIT University - Vellore Institute of Technology) and P Ganesan (VIT
University - Vellore Institute of Technology). It is intended to be used as the basis for class discussion rather than
to illustrate either effective or ineffective handling of a management situation. The case was compiled from
field research.
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 217-0088-1

Thangam Safety Match Works – Will it work?

In 1970, Swamy set up TMW as one of the oldest micro cast-iron foundries in
Ondipudur, Coimbatore District, Tamil Nadu State, India. TMW initially produced
machinery spares for several industries. These spares had demand from major industrial
clusters in Tamil Nadu. He concentrated on these clusters as they provided him with
steady demand & he experienced low risk in payment from buyers. His daughter

Authorised for educator review use only by P Ganesan, VIT University - Vellore Institute of Technology. Expiry date 21-Oct-2018
Thangam completed her post-graduation in mechanical engineering in 2010 and decided
to assist her father from June 2010. She accompanied her father in travelling to various
cluster cities (Exhibit 1) in Tamil Nadu for selling the spares.

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In December 2014, Thangam took over TMW’s business due to her father’s sudden
demise. She joined hands with her classmate Sumathi in establishing a spares selling
business targeting safety matches and rice milling machinery in Vellore district. Sumathi
was also keen on starting a safety match unit as her father was a wholesaler and
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distributor of safety matches (Wooden and Wax) both in domestic and export markets
(Exhibit 2). Wooden stick matches consisted of the ignition head, tinder and a handle and
were commonly used in households. The splints were treated with retardant such as
ammonium phosphate to prevent afterglow when the match is extinguished. These
matches were available in a wide range of boxes and splint sizes. Several major wooden
stick match manufacturers operated in and around Vellore, Gudiyattam (Safety matches
cluster, Tamil Nadu state, India) and nearby areas (Exhibit 3). Wax matches popular in
Europe had ignition head at the end of a short length of wax paper formed from paper or
cotton filaments. A few manufacturers produced wax matches in and around Vellore too
(Exhibit 4)

In September 2015, Thangam & Sumathi collected data from select firms manufacturing
matches already to understand about output, investment & production costs for wooden
(Exhibit 5 & 6) & wax (Exhibit 7 & 8) safety matches. They were now concerned on
what was the most efficient type of match to produce given a combination of labor and
capital inputs.

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EXHIBIT 1: Select Industrial Clusters

Product Location
Knitwear Tiruppur
Machine Tools & Wet Coimbatore
Grinding
Readymade Garments Salem, Erode, Madurai, Ambattur
Engineering Equipment Paramakudi,Coimbatore, Ranipet, Tiruchirappalli,
Perungudi, Ambattur, Hosur
Safety Matches Tirunelveli, Virdhunagar, Sattur, Srivilliputhur,

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Gudiyattam, Kalugumalai, Kovilpatti
Rice Mills Tiruvallur, Tiruvarur, Vellore, Viluppuram, Namakkal,
Perambalur, Kumbakonam, Coimbatore, Dharmapuri,
Erode, Kanchipuram, Madurai, Paduvayal, Alangulam,

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Cuddalore

Source: Discussion with Ms.Thangam.

Exhibit 2: Export of Safety Matches

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Year INR in (0.1 Million)

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2012-13 29,022.88
2013-14 26,376.73
2014-15 25,105.69
2015-16 26,621.85
2016-17 32,600.28

Source: Ministry of Commerce & Industry, GOI

Exhibit 3: Wooden Stick Match Manufacturers

(1) Dhanapal Match Works; (2) Mahesh Match Works; (3) Megala Match Works; (4)
Murali Match Works; (5) Muthumariamman Match; (6) Dhanalakshmi Match Works; (7)
G P Match Works; (8) Ganesh Kumar Match Works; (9) Maha Vishnu Matches Works;
(10) Gopi Match Works; (11) Mani Karthi Match Industry; (12) JS Industries; (13) Joker
Match Works; (14) Sai Sakthi and JS Industries, and (15) Madhavan Match Industries

Exhibit 4: Wax Match Manufacturers

1) Andal Match Works; (2) Vasan Match Works; (3) Nagappa Match Works; (4) Gokul
Match Industries; (5) Sai Sakthi & JS Industries; (6) Mohan Match Industries; (7) Surya
matches; (8) Bagvan Matches; (9) Makvin Matches; and (10) Koin Match Works.

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Exhibit 5: Output, Labour and Capital of Wooden Safety Matches

Firms Year 1 Year 2 Year 3

Output Workers Capital Output Workers Capital Output Workers Capital
1 196537 35423 6109 12939398 122015 6956487 2028399 60390 577890
2 268240 78664 10511 11044199 49896 3414583 16497271 313238 4591418
3 4367577 2614715 72925 7023142 26439 1687354 1880590 55027 1707578
4 2366939 753943 69921 3987348 44673 737651 1563013 39979 713971
5 2507300 1517114 45935 4101967 39121 888727 966582 355779 308672
6 3807110 1548557 95070 9831647 106715 1384463 1993657 56086 641539
7 502125 128924 12801 5037807 110308 1694175 11408302 130307 11712301
8 35090 8609 1374 1758908 19834 800933 2419995 67973 1353696
9 1989222 678280 22590 23183353 369196 8693486 1972532 88376 706005

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10 101288981 22890330 68430 5369656 87276 2416360 913170 23409 583272
Note: Output and Capital are measured in INR in 0.1 million. Labour in Numbers
Source : Data Collected from the firms, Annual Survey of Industries, and DIC

Exhibit 6: Output, Labour and Capital of Wax Safety Matches

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Year1 Year2 Year 3
Firms
Output Labour Capital Output Workers Capital Output Workers Capital
1 262724 8040 50803 120537 3105 63790 27151 1554 25070
2 1318343 1852 10923 156139 4297 26826 950724 11938 193596
3 48748 1270 35238 214640 5952 46417 159376 7212 23604
4 3720 100 229 2787969 68353 723256 1638062 11671 100147
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5 386841 4104 45695 1989445 32209 428977 14682 1165 1390

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6 2107 140 27 6677512 36998 2244111 660 94 410

7 4346 126 2491 576847 9715 206642 76201 4019 21721
8 696715 13698 138936 5660947 140432 2181754 176327 8352 26717
9 298714 6859 68178 89579 879 54653 48766 1786 6855
10 123002 3211 24926 59852 1847 6125 91028 552 54718
Note: Output and Capital are measured in INR in 0.1 million. Labour in Numbers
Source : Data Collected from the firms, Annual Survey of Industries, and DIC.