Sivakasi firework units declare shutdown as cracker sale ban dries up working capital

Hindustan Times, Chennai | By
Dec 23, 2017 09:47 PM IST

Manufacturers say dealers have stopped paying them advance after a petition seeking a countrywide ban on sale of firecrackers was filed in the Supreme Court

Sivakasi, India’s fireworks manufacturing hub, is facing a bust as an attempt to clean up country’s toxic air choked the working capital of hundreds of units in the Tamil Nadu town.

Fireworks in front of a Sivakasi factory.(AP file Photo)
Fireworks in front of a Sivakasi factory.(AP file Photo)

The town, which earned the sobriquet kutti Japan (mini Japan) for its manufacturing activities, produces 85 per cent of the country’s firecrackers, providing livelihood to an estimated over eight lakh people.

Tamil Nadu Fireworks and Amorces Manufacturers Association (TANFAMA) said no dealer is paying advances after a petition was filed in the Supreme Court seeking a countrywide ban on firecrackers sale, striking a body blow to the industry that depends on advance payments for working capital.

Faced with the crisis, the TANFAMA declared an indefinite shut down of fireworks manufacturing units from December 26. A decision to this effect was taken at a meeting on Friday night as “things have gone from bad to worse.”

The trade practice here for the past 80 years is that the dealers, mostly from northern states, send advance payments after Diwali which meets 90% of the working capital requirement of the 820 odd units based in the town, located around 480 km from Chennai. The remaining 10% is met from own funds and bank loans.

TANFAMA secretary K Mariappan told HT that in view of the pending petition in the top court, the dealers have stopped making advance payments fearing an “adverse” judgment, making it impossible for the manufacturers to run their businesses.

Already many dealers in Delhi NCR, Punjab, Haryana and Chandigarh had gone bankrupt due to the pre-Diwali ban on cracker sale, he claimed.

To chalk out its future course of action, the TANFAMA is hosting a meeting of All India Federation of Fireworks Associations on December 28 in Sivakasi where fireworks manufacturers, transporters, dealers, sales agents, raw material suppliers and labour union representatives have been invited to evolve a common approach to fight for their survival.

“We people in Sivakasi are tired of fighting … look forward to you for your help and support ... in having a historical win against the enemies of Diwali and Fireworks,” the TANFAMA’s invitation to AIFA members reads.

“We are tired and cannot fight the battle on our own,” Mariappan told HT adding “now we are mobilising all the interconnected industries representatives to join hands.”

Mariappan said they were expecting a favourable decision from the Supreme Court, but after the apex court in early December sought the opinion from the Centre and state governments for a ban on sale of firecrackers across India, those connected with the fireworks manufacturing and sales became little more apprehensive.

What about environmental concerns?

Mariappan dismissed such apprehension, citing that even long after Diwali, the national capital was engulfed in smog created by atmospheric pollutants.

“The livelihood question of over 8 lakh people depends on our winning the fight against the enemies of Diwali,” Mariappan said. He punctured the environmental damage issue by highlighting the fact that long after Diwali, Delhi was engulfed in smog.

Asserting that the fireworks industry had utmost respect and confidence in the Supreme Court, the association prayed for an early judgment in the case.

“Any delay in judgement, even if it’s favourable, will not help the industry or save the livelihood of eight lakh people,” the TANFAMA said in a press statement on Saturday.

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    KV Lakshmana is the Tamil Nadu bureau chief of Hindustan Times. He covers social, economic and political changes in the state and neighbourhood.

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