Sigachi blast exposes recurring safety failures and worker deaths in Indian factories

Sigachi blast

A devastating blast at Sigachi Industries' manufacturing unit in Pashamylaram, Telangana, which resulted in 40 fatalities and injured more than 33 people, has exposed serious gaps in industrial safety in India. Most of the deceased were migrant workers from Bihar, Jharkhand, Odisha, West Bengal, and Uttar Pradesh.

While the investigation into the June 30 blast is underway, the company said on Wednesday that it was not a reactor explosion. Preliminary reports suggest that the blast may have been caused by a massive temperature build-up reaching 700-800 degrees Celsius inside a spray dryer during the production of Microcrystalline Cellulose (MCC). Victims' families have alleged that the company ignored repeated warnings about unsafe and outdated machinery, prioritising cost-cutting over employee safety.

The Telangana government registered a case of culpable homicide against Sigachi Industries' management. It has formed a five-member investigation committee and demanded compensation for the victims. The Labour, Employment, Training & Factories (LET&F) department will also investigate the employment of unskilled workers in hazardous operations.

Sigachi said the Telangana plant operations are temporarily suspended for approximately 90 days, and the company is committed to an ex gratia compensation of Rs 1 crore to the families of the deceased, with full medical and rehabilitation support for the injured.

Shares of Sigachi have tanked 23 percent since the blast on June 30. Sigachi shares were down 7.34 percent on BSE to close at Rs 42.69 on Wednesday.

Recurring accidents

The tragedy underscores a recurring and alarming theme of industrial accidents and deaths across various sectors, and more so in the chemical and construction industries in India, prompting renewed calls for stricter enforcement and monitoring of safety standards.

Based on government data, on average, three workers die each day in Indian factories due to inadequate safety measures. Between 2017 and 2022, India reported an average of 1,109 deaths and over 4,000 injuries in registered factories each year. Experts believe the actual number of fatalities is higher than reported, as many incidents in informal sectors and unregistered factories go unrecorded.

Common causes include falls, being struck by objects, equipment malfunctions, and exposure to hazardous materials. The consequences extend beyond fatalities to permanent disabilities and long-term psychological trauma for workers and their families.

Dr Viranchi Shah, President of the pharmaceutical body Indian Drug Manufacturing Association (IDMA), said, "Sigachi Industries is not a pharmaceutical company, but an excipient manufacturer. We take safety seriously, we are doing our best to sensitise our members on the need for safety".

He highlighted IDMA's efforts to bring together industry experts to discuss best practices in engineering and safety.

Dharmesh Shah, Chairman of BDR Pharma, acknowledges the inherent risks in running chemical or API plants. He pointed to machine or equipment failures, utility failures, and human error as common issues. Sometimes impurities in raw materials due to improper handling also pose a threat, he said.

He also stressed the importance of continuous training for operators and workers on standard operating procedures (SOPs) related to safety, fire-fighting drills, and ensuring accountability from top to bottom within an organisation.

"When an incident happens, the focus should be on investigation and finding out the root cause. A lot of times, the entire exercise goes towards scapegoating the entrepreneur," Shah said.

"No entrepreneur would ever want to be in such a situation, where there is a huge loss of reputation, severe blow to business operations and financials," Shah added.

An operations head of an MNC chemical company, who didn't want to be named, said there are pressures of meeting production deadlines, and low tolerance towards downtime related to scheduled maintenance, or fully addressing equipment issues when they crop up.

"We spend a lot of time and energy on training of staff, we train our vendors, drivers of truck fleets who transport raw materials, we are dealing in chemicals. It's like sitting on a bomb without a fuse," he said.

Leading excipient maker

Sigachi is one of the largest producers of MCC, a highly processed powder excipient derived from wood pulp or other plant fibres used as a binder, disintegrant, or filler in tablets and capsules. MCC helps hold pills together, ensures they break apart correctly in the body to release the medicine, and adds bulk. It also has applications in food, beverages, and cosmetics.

The company, founded in 1989, has been growing revenues at a 29 percent CAGR in the last five years, led by a stable MCC market globally. The company is diversifying from the low-margin commodity product like MCC to other high-margin active pharmaceutical ingredients and intermediates. In addition to its Telangana facility, Sigachi operates two plants in Jhagadia and Dahej, Gujarat.