The premises of the unit was used for storage purposes and crackers were being packed into gift boxes when the mishap occurred.
Two of the deceased were identified as A Indian (18) and A Chennammal (34). The body of the third person was charred beyond recognition.
"We found traces of sulphur on the spot. It is not known if the place was also used for making crackers," V Ramasamy, Tiruvannamalai Divisional Officer, Fire and Rescue Services told PTI.
All the injured were admitted to hospital and condition of four of them were serious. The cause of the explosion is being investigated, he said.