CHENNAI: Crippling floods in the city have caused large sections of its automobile hub to remain closed for the second day with an industry chamber having pegged the possible economic impact at a Rs 15,000 crore. According to Assocham, apart from the automobile industry, small and medium enterprises, engineering and IT/ITeS firms, textiles and tourism sectors have been badly hit by the flooding.
Automakers like Hyundai, Renault-Nissan, Ashok Leyland and Royal Enfield remained closed on Thursday and industry sources said things are likely to remain “at a standstill mode” till Saturday. What’s more Chennai is also a major auto parts hub. So, the floods could hobble production in automobile factories across the country, said industry experts. The seriousness of the situation can be gauged by the fact that top executives, like the CEO of Ashok Leyland, had to be evacuated and several companies said they were working to help out executives stuck in rain-ravaged areas.
Obviously companies with a manufacturing base in Chennai have been worst hit. The Ashok Leyland and Renault-Nissan plants remained closed for the second day on Thursday. The Hyundai factory is closed on Thursday and Friday and will only open on Saturday. Said Pawan Goenka, M&M group president (auto and farm sector): “We do not have a manufacturing base in Chennai but we have very large operations. We have announced a holiday for two-three days at Mahindra Research Valley. We have very expensive equipment in the R&D centre, but we have no idea of the extent of damage. Also starting tomorrow and day after, production will take a hit in all our plants across India if parts supply from Chennai-based auto parts suppliers does not normalize. Chennai is a large parts supply base and this will hit the entire automobile industry,” he added.
Others like Royal Enfield have already announced temporary closure of operations. “The unprecedented rainfall in Chennai has severely affected the city, including our employees, our manufacturing facilities and offices,” said a company statement. “The floods caused by the rain have also impacted logistics and our supply chain, resulting in disruption of our production. As a consequence, we have shut down our offices in the city and our plants in Thiruvottiyur and Oragadam since December 1.” The company has already lost production of 4,000 motorcycles in November due to the rains.
Ditto with Renault-Nissan India., which sent out an advisory on Thursday: “With the worsening weather conditions, we will be cancelling few shifts and will resume operations as soon as the conditions improve. To date, we have not incurred any damage to our plant, facilities or warehousing and we are following up with all local suppliers to confirm their status,” said a company spokesperson.
Even those that have managed to continue production are facing a logistics nightmare – they can’t transport the vehicles out of the factory premises. Companies which do not have a production base in Chennai, for example, are facing loss of sales and logistics bottleneck. Some like TVS, though not immediately impacted (their factories are in Hosur, Mysore and Nalagarh in TN, Karnataka and HP respectively) are pitching in with relief efforts. A TVS spokesman said: “There was a slight impact on our production in the month of November due to inclement weather in Chennai. We are watching the situation closely.”