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Chennai floods hit 10,000 production units hit, nearly 50,000 lose jobs

Chennai floods hit 10,000 production units hit, nearly 50,000 lose jobs
Highlights

Home to a large number of multi-national corporations (MNCs), which include global auto giants, Tamil Nadu received investment commitments to the tune of well above Rs 2 lakh crore in 2015 but unprecedented rains towards the year-end brought its industry to a screeching halt.

Home to a large number of multi-national corporations (MNCs), which include global auto giants, Tamil Nadu received investment commitments to the tune of well above Rs 2 lakh crore in 2015 but unprecedented rains towards the year-end brought its industry to a screeching halt.


The record rainfall threw the operations completely out of gear for MNCs as well as that of numerous service and parts suppliers to these biggies in the industrial belt of Chennai, Kancheepuram and Tiruvallore. Chennai, along with some of its adjoining areas, has often been called 'India's Detroit' with several automotive giants having set up their plants here.

The focus has now shifted to put the business back in order in the state, which houses 36,869 factories employing some 16 lakh people.

As per the estimates of the Tamil Nadu Small and Tiny Industries Association (TANSTIA), nearly 50,000 jobs were lost due to the rains as areas remained marooned for days and many left for their native districts.

"Chennai is the hub for micro, small and medium enterprises. Some 10,000 units have suffered losses and about 50,000 people have lost their jobs due to the floods," a TANSTIA official said.

The deluge has prompted the industry to approach the Ministry of Micro, Small, Medium Enterprises to waive loans of up to Rs 5 lakh and excise duty and service tax for one year.

The year also saw the state government pulling off a feat of sorts by organising its maiden Global Investors Meet (GIM) in September.

The event was earlier planned to be held on May 23-24, but finally kicked off on September 9 and saw several global marquee companies pledging their support.

Chief Minister J Jayalalithaa announced that the state attracted investments of Rs 2.42 lakh crore as against the target of Rs 1 lakh crore and the government signed 98 memorandum of understanding (MoUs) during the event.

As the year moved nearer to its end, heavy floods however took a big toll on the companies present in the region, including A-listers such as Eicher Motors' Royal Enfield, US-based Ford's India unit and domestic IT behemoths like Wipro and TCS.

Royal Enfield lost production of 4,000 motorcycles in November, a company spokesperson said. Ford also had to suspend operations. However, both of them have managed to resume operations after a brief halt in production.

The scale of damage has been so much that Wipro and TCS have formally announced that they expect a hit to their third-quarter revenues and operating margins.

Wipro kept its operations at select facilities in abeyance and special arrangements were made to accommodate its employees. TCS too said its operations took a heavy pounding across facilities.

According to analysts, the rainfall and the consequent damage may have cast their long shadow on the industry, which has "slowed down". Their woes got compounded further after cargo movement to ports and airports were severely hit.

"It (floods and rainfall) has slowed down the industry growth after the Global Investors Meet. Many factories have suspended operations while cargo was lying idle as the port and airport were closed," said M Rafeeque Ahmed, President, Federation of Indian Exports Organisation.

The Ambattur Industrial Estate too was "largely affected" as many factories were submerged.

"We resumed operations after rainfall in November last week. But following the second spell of rains in December, 1,400 companies have been seriously damaged," said V Raju, President, Ambattur Industries Estate Manufacturers' Association.

"There was water all over the Estate and most of the plants were flooded. We expect a minimum of Rs 1,000 crore loss due to the floods," he said.

On the post-flood scenario, Raju said, "We can start operations in installments. But the issue is employees have left for their home towns."

The Association has sought intervention of Chief Minister Jayalalithaa, Union Commerce Minister Nirmala Sitharaman and Micro, Small and Medium Enterprises Minister Kalraj Mishra.
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