The crackers caught fire and exploded due to friction, they said.
Sathyavani (40) and Pachchaiyammal (60), who were injured seriously, were rushed to the Sivakasi government hospital, where the former succumbed to her injuries, Deputy Superintendent of Police, T Kumar said.
One Karuppaiah, an owner of the unit, has been taken into custody for questioning and police are searching for another person who has absconded.