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  1. Chennai floods wash out Rs 1700 crore of MSME business

Chennai floods wash out Rs 1700 crore of MSME business

Of the estimated Rs 15,000 crore losses due to the recent devastating floods in Chennai, coastal Tamil Nadu and the neighbouring Puducherry, MSMEs bore the maximum brunt of about Rs 1,700 crore, says a report.

By: | Published: December 27, 2015 4:32 PM

Of the estimated Rs 15,000 crore losses due to the recent devastating floods in Chennai, coastal Tamil Nadu and the neighbouring Puducherry, MSMEs bore the maximum brunt of about Rs 1,700 crore, says a report.

On a most conservative side, MSME sector has lost nearly Rs 1,700 crore to the calamity in just two peak weeks of the flooding,” SMERA Ratings lead economist Karan Mehrishi told PTI.

This is a very conservative estimate and the actual financial losses in terms of lost opportunities and job losses could be much higher, he added.

Various analysts have pegged the overall loss to the industries in the region at over Rs 15,000 crore from the month-long floods which had even forced the airport and the railways to shut operations for nearly a week.

City-based SMERA Ratings is a joint initiative of Sidbi and some state-run banks, and the private sector financial advisor Dun & Bradstreet Information Services India.

He also said that this Rs 1,700 crore projected loss is only from the manufacturing side and if services are included, the damages could be much higher.

“The impact of the floods has serious ramifications on not only the local economy but also national economy as the Chennai metropolitan region’s manufacturing economy is worth Rs 1,51,800 crore or around 3 per cent of the national GDP, Mehrishi said.

The loss figure has been arrived at after calculating the weekly loss in lost businesses for the micro and small industrial sector, which bore the brunt of the killer floods at nearly Rs 840 crore, he added.

This makes the annual size of the Chennai metropolitan region’s MSME manufacturing GDP at around Rs 21,500 crore.

According to SMERA analysis, seven major MSME categories of industry and industrial services in the region, were hit the most due to the floods.

The leather sector bore the maximum losses with estimated damages of over Rs 380 crore, followed by gold and jewellery sector at Rs 237 crore, auto components at Rs 105 crore, printing sector at Rs 37.50 crore, Mehrishi said.

The next in line of losses is the plastics sector which is estimated to have lost Rs 35 crore, followed by IT related services at over Rs 33 crore, garments at Rs 10 crore and pharmaceuticals (ayurveda & siddha) at Rs 1.25 crore.

There are an estimated 36,000 MSMEs registered in the Chennai region and the agency has analysed a sample size of nearly 20,000.

Among the large contributors, auto components and related businesses contribute 28 per cent to the region’s economy.

It can be recalled that a slew of automakers like BMW, Ford, Nissan, Renault, Royal Enfield, Hyundai, Ashok Leyland, among others, have given Chennai the moniker of Detroit of the East.

IT and related services come second with a contribution of 17 per cent, gold about 8 per cent, leather at 6.4 per cent, printing at 4.2 per cent and garments at 3.27 per cent, respectively.

On individual loss of the city’s citizens, the per capita loss stood at nearly Rs 2,530 in terms of potential income loss with every week foregone.

The foregone income is nearly 2 per cent of potential per capita income of the region, Mehrishi said.

On a national scale, the losses incurred by Chennai’s industrial sector can potentially shave off 0.07 per cent from the national industrial gross value added (GVA), he added.

The nearly month-long unseasonal rains marooned the industrial belts of Chennai, mostly Kancheepuram and Tiruvallore, in November and December.

The Chennai region houses 36,869 factories and employs 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,” said a TANSTIA official.

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