Diwali brings lamps, sweets, new clothes, a shine to the home and of course firecrackers. Firecrackers are a mysterious industry in India.
We all know that they are manufactured only at Sivakasi in Tamil Nadu and sold under several brand names with Standard Fireworks being the most popular. Sivakasi has 720+ firecracker units with 200 of them being big units. They are a Rs. 2000 cr industry employing over 3 lakh people. The aspect of child labour is whole separate discussion.
What is intriguing is the pricing strategy. No one in India has ever bought a box of anything, be it sparklers or flowerpots or bombs, at Maximum Retail Price (MRP). The price on the box reads almost like a joke. A box of flowerpots for Rs. 1250 as per MRP and you will be actually billed about Rs. 350-400 on a scrap piece of paper. No real bill. If you have paid the MRP on any firecracker, you have been terribly ripped off.
Then there is further arbitrage between Karnataka and Tamil Nadu. So it’s very common for folks in Bengaluru to drive down to Hosur (an hour’s drive, just across the border) and pickup crackers at an even larger discount. If the stalls in the city give you about 65% off the MRP, at Hosur you will easily get 80% off.
There was even an enterprising attempt at hyperlocal delivery of firecrackers this year – app for home delivery! Their offer of 80% off MRP really doesn’t sound like a killer deal but maybe home delivery appeals to some if safety in transit is taken care of.
And for once I am not getting much help from Google…
why this fantasy MRP?
why such crazy discounting?
how much does the dealer make? how much profit reaches the Sivakasi factory?
if your MRP is higher, don’t you end up paying more taxes? is this industry even taxed?
why not just print the price you want to sell at or atleast a more realistic price?
any other product with such crazy markups?
Would love to get some answers… so please the comments with your thoughts.
In the meanwhile, look what I found! Must buy one next year!