Firecrackers industry expects less business this Diwali

Hyderabad, Oct 20 (INN): Greater environmental awareness, rising prices of firecrackers and constant cracker free Diwali campaigns have severely hit demand for firecrackers which is likely to drop by about 35 to 40 per cent during this year, according to a just concluded survey of apex industry body ASSOCHAM.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) interacted with about 250 fire cracker manufacturers in Sivakasi in Tamil Nadu and about 500 fireworks' dealers, traders, shopkeepers and retailers at Ahmedabad, Bangalore, Chandigarh, Chennai, Delhi, Hyderabad, Kolkata, Lucknow, Mumbai and Pune at various wholesale and retail markets between September and October 15 to gauge the mood in the domestic firecracker industry.

Abnormal increase in fuel prices, increased road freight, escalating raw material (sulphur, potassium nitrate and waste paper) prices due to shortage, rising wages and lack of skilled labour, other miscellaneous levies and recent bomb blasts in the country are certain key reasons cited by majority of respondents that might lead to a slump in profits of firecracker industry this festive season, highlights the ASSOCHAM survey.

'Due to escalating fuel prices the road freight rates have also gone up along with other operational costs. Besides, prices of tyres, lubricants and the wages of the drivers have also increased significantly and all these issues are going to impact margins of the firecracker industry,' said ASSOCHAM Secretary General DS Rawat while releasing the findings of the survey.

'A considerable increase of about 30 to 50 per cent in the cost of crackers (across all range) since last year is expected this Diwali,' said Rawat. 'But Diwali is known for lighting and fireworks, people are not going to call off their celebrations barely because of price rise but are surely going to cut their budget for firecrackers considerably thereby dampening the festive mood.'

The domestic firecracker industry which according to an ASSOCHAM estimate is about Rs 1,200 crore has been in the doldrums for past couple of years. Sivakasi is home to over 9,500 firecracker factories and produce almost 100 per cent of total fireworks output in India. The fireworks industry employs about 1.5 lakh people including the organised and unorganised sector.

Nearly 55 per cent of firecracker manufacturers and wholesalers in Sivakasi said there has been a drop of about 15 per cent in orders from northern states which consume over 75 per cent of total fireworks production.

Majority of firecracker manufactures in Sivakasi said cost of producing crackers have gone up by about 25 to 30 per cent this year due to rising labour wages and skyrocketing prices of raw material.

About 35 per cent of these said they have stepped up production of smokeless firecrackers to lure buyers as they emanate variety of colours and light and contain more herbs, less-smoke emitting chemicals and are less noisy.

Increase in number of illegal firecracker units in and around Sivakasi is also denting the prospects of the industry and are doing a brisk business thriving on cheaper cost price of their product, said most of the respondents.

Nearly 65 per cent of traders, retailers at Hyderabad's Begum Bazar, Sanath Nagar and Malakpet said business has been real slow and profits have only dipped since 2008-09 and resultantly they are not even able to recover the cost of investment incurred.

Majority of these said rising environmental awareness, competition and restrictions of the local administration and fire department are largely responsible for this gradual slump in the fireworks' industry.

Over half of the respondents said since last two years their profit margins have trimmed by over 35 per cent and have been suffering bad losses.

Almost all the fireworks' traders interviewed said they are also informing the customers about the details of decibel level and manufacturing date considering people have started realising ill-effects of crackers on the environment.

About 2,500 temporary stalls, shops come up in the city every year to sell firecrackers cashing in on the Diwali jubiliance. For most of these shopkeepers selling firecrackers is a traditional profitable business and they go slow on their usual business or profession to make a windfall during the annual festival.