By T Murrali
The rains since November that battered Chennai, the automotive hub of the country, culminated in a catstrophic deluge on December 2, 2015; it inundated slums, housing colonies, life-style apartments, bungalows, premises of hospitals, educational institutions, Information Technology enterprises, national and multinational automotive manufacturers and small-scale autoparts companiesand a host of others. The floods, after a prolonged rain spell in the fourth most-populous metropolis in the country,shattered all industrial and services sector activities and human life.
Debates are still going on whether the deluge was the result of bountiful of rains, more than 50 cm in a day, or due to human mismanagement and want of adequate and timely intervention of the decision-makers and the government machinery. The deluge affected every segment of industry and traumatised people of all classes. The deluge dismissed the divide between the rich and the poor. All of them were at the mercy of the elements or rescue teams for a few days.Many drowned, thousands lost houses, household items, and everybody in the city and suburbs had some sort of losses and unforgettable and harrowing experiences.
The transport system – rail, road and air – came to a halt. The Chennai airport,which normally handled about 350 aircraft daily,had to suspend operations for four days as its runways and tarmac were flooded. As an interim arrangement the Airports Authority of India made use of the air strip of the Naval Base in Arkonam, about 65 km south-west of Chennai.
The private jet owners such as TVS Motor Company, Sun Television Network, Joy Jets, Kalyan Jewellers, Garuda and Jet Airways were the worst hit. Some of their aircraft were pushed aside by the floods damaging the fuselage and avionics. According to reports the damage is estimated at Rs 200 crore.
This correspondent scheduled to return to Chennai after attending Automechanika Shanghai on December 4, was stranded in Hong Kong airport for about 20 hours. The circuitous return trip finally reached Bengaluru and the onward journey to Chennaihad to be by bus.
Roads bore the brunt of the deluge and impacted the road transport. As tens of thousands of two-wheelers and thousands of cars and small commercial vehicles were submerged in the floods,people had to depend entirely on the public transport. With no modes of transport available for the city commuters,the government operated the Metropolitan Transport Corporation busesin all possible areas free of cost for four days from December 5. While this amounted to a loss of about Rs6 crore to the exchequer, the majorexpenditure was on maintenance. The local trains, except the MRTS and Metro Rail,also cancelled service as the tracks were inundated and water overflew many bridges across the rivers Adyar and Coovam.
Some of the big IT companies managed the situation by shifting teams of employees to Bengaluru to continue the operations for their overseas customers.
The telecom companies lost about Rs 300 crore due to flooding of the ground units of telecom towers. The Tamil Nadu Electricity Board incurred about Rs 450-crore loss as flood waters submerged the sub-stations and allied control units.
Automotive Companies At A Loss
Among the segments that reported huge losseswas the automotive industry, which lost production, materials and sales resulting in an estimated loss of Rs 2,500 crore. According to the Society of Indian Automobile Manufacturers (SIAM), the Chennai auto industry had to take a production hit of around 15 percent especially by the major automakers like BMW, Ford,Renault-Nissan and Hyundai. Hyundai Motor India’s facility in Sriperumbudur makes 680,000 units a year, while Ford India’s facility makes 3.4 lakh engines and two lakh vehicles annually.The BMW’s Chennai plant makes around 14,000 cars a year.
Ashok Leyland and Daimler India Commercial Vehicle were also forced to shut down production. Ashok Leyland’s mother plant at Ennore, which accounts for over one-third of the company’s total production, had to stall operations. TVS Motor said in a statement that the company suffered sales loss of approximately 15,000 units due to inclement weather. Royal Enfield had a production loss of 11,200 motorcycles due to heavy rains and floods. The new plant of Yamaha was also shut.
Though some of the vehicle manufacturing plants were not directly affected by floods, they faced problems due to other issues related to the supply chain of parts and components, and delivery of finished vehicles. According to the Director General of SIAM, Vishnu Mathur, “December sales would be substantially impacted as production has taken a hit. It would at least take a month for the automakers to regain their proper production levels.”
Some of the two-wheeler companies including TVS, Bajaj, Mahindra and Honda organised free check-up and service. Similarly a few third-party multi-brand service centres for cars, including MyTVS, organised special camps. Theyoffered to tow and repair the flood-hit cars at reduced rates.
MyTVSmobilised more than 100 service engineers from its other outlets in Tamil Nadu to support the service network in Chennai. G SrinivasaRaghavan, Executive Director, TVS Automobile Solutions, (TASL) said, “Customers are looking for end-to-end services like, towing, check-up, expert advice, quality service, insurance, etc. Therefore, we, at TASL, have created a WAR room to attend to our customers on a day-to-day basis. We are working closely with insurance companies to enable them to process the settlements faster. Our entire service network in the City, with more than 75 bays, is fully geared to the task of providing quality service. Through our roadside assistance business, we have arranged 15 dedicated towing vehicles for our OEM customers”.
Natural calamities have disrupted the automotive industry across the world and in Asia more recently. For instance, the 2011 earthquake and tsunami in Japan hit car production while the floods in Thailand the same year inundated several automotive companies. In addition to affecting the domestic market, theirimpact had a cascading effect on markets across the globe. Similarly the recent floods in Chennai will have its impact in India’s export markets also.
Tamil Nadu accounts for close to 20 per cent of the total turnover of the Indian auto components industry and is a significant contributor to the State’s economy. The State is also home to the highest number of SMEs in the country, especially in the auto components sector which employs over six lakh people directly or indirectly. The tyre manufacturers such as MRF, JK and Apollo were affected. According to the people in the know, the mother plant of MRF in Thiruvottiyur was inundated affecting the machines, especially in the off-the-road tyre building section.
Arvind Balaji, President, Automotive Component Manufacturers Association of India (ACMA) said, “In the wake of this unforeseen calamity, there is an urgent need to announce a relief and rehabilitation package for the industry and its employees, especially for the SME segment. The industry must be facilitated to start its operations immediately so that the livelihood of thousands of employees is not further affected.”
The apex body representing the Indian auto component Industry has urged the Government of Tamil Nadu and the Government of India to undertake immediate relief and rehabilitation measures for the severely impacted industry in Tamil Nadu. Some of the recommendations made by ACMA to the Government of Tamil Nadu include immediate installation of water pumps in industrial estates that are flooded, providing uninterrupted power supply to the industry, arranging for generator sets to industries where these have been damaged, setting up of ESI health camps for employees and their families, deferring of sales tax by six months and waiver of electricity tax for four months.
ACMA has also requested to release long-term soft loans from banks to buy essential industrial equipment, expedite settlement of insurance claims, defer customs duty, service tax and excise duty for six months and to extend 100 per cent depreciation on damaged capital equipment.
An unexpected advantage of the floods, in spite of all its inconveniences, was that several households had a rare experience of togetherness. Having been confined indoors for a few days without power, communication network and internet, people could interact with their own family members. Such communications had become rare and far between after the onslaught of television and mobile phones with their diversity of diversions. Deluge dismissed the divide within the family also.