The biggest order the town had seen
In 2011 the Tamil Nadu government announced free two-litre wet grinders for ration-card holders. The state’s civil supplies corporation gave contracts to 12 makers, 10 of them from Coimbatore, for more than 1.85 crore grinders. Tiny units grouped into a consortium to bid, and invested in new capacity.
Boom, and the cracks it showed
While the scheme ran, the micro-unit industry reported turnover of about ₹2,800 crore a year. The rush also exposed weak links: polished granite and electric motors ran short, and motors had to be imported from China.
When the orders stopped
The scheme wound down in 2015. Most households now had a grinder, and makers were left with capacity built for an order that would not come again: machines, sheds and loans sized for a peak.
The way out was Coimbatore’s old habit: reuse the core skill. A motor that turns a grinder can turn a pump or a mixer. By 2022 the district’s signature product under the national one-district-one-product scheme had widened from wet grinders to motor pumps and other appliances.
Capacity built for a peak is a cost long after the peak has gone.
Points for a finance reader
- Do not size your fixed costs for one order. A one-time government order is not a market. Use rented or flexible capacity where you can.
- Idle capacity is a cost to show, not hide. CAS-2 and CAS-3 keep the cost of unused capacity out of product cost, so you can see it.
- Reuse the core skill. The motor, not the grinder, was the real skill. It moved into pumps and appliances.