The Chennai floods have had a devastating impact on small scale industrial units that supply mostly to auto makers like Hyundai, TVS and Ashok Leyland. Small and tiny sector businesses are estimated to have suffered over Rs 1000 crore damage to machinery and materials.
Muthusami C., President, TANSTIA, said “The units that have been largely affected are mostly that supplies to auto makers like Hyundai. TVS and Ashok Leyland. There is huge loss of man days and orders. The worst affected districts are Thiruvallur,Cuddalore, Villupuram, and Chennai”.
C. Babu, General Secretary of Tamil Nadu Small and Tiny Industries Association (TANSTIA) told SMEpost.com that “It will take at least 2 months to get back to the business of normality. Our Autocad machines and CMC machines have been damaged”.
Chennai has become a sort of large auto manufacturing hub with Ford, Nissan, Hyundai, Renault-Nissan, TVS and Ashok Leyland having their units there. All these companies have their plants in the Chennai and its vicinity. All the plants have been effected by the floods, causing production shut downs. Accordingly MSMEs were also likely to face liquidity problems from their main customers.
In addition, the MSMEs were also expected to face slippages in meeting export schedules, leading to loss of markets. Already, many of the MSMES were faced with adverse environment in Europe and East Asia, that are presently some of the large MSME customer base.
At the same time Muthusami added that the industries will also face a huge loss in the form of bank interest. Bank interest would need to be serviced even during periods of calamities. “Production is completely absent, but there is no respite from bank interest payment,” Babu said.
Machines have submerged in the last one month of rain. Genset are not working. The small and medium scale industrial units are also supplying electronic parts like computer cabins, boards, connecting wires, etc.
Muthusami added that Tamil Nadu’s MSME contributes to about 10 per cent of the total export from Tamil Nadu. They export machine tools, agri equipments and other auto spare parts.
He added that the challenge to MSME is sticking to their schedule as there is no work for the last one month.
Of late, MSME have also started to go online and are supplying retailers like Flipkart, Snapdeal and others. It remains to be seen how the devastating flood impacts on the ecommerce sector. Expectations are that the effects would identical to the 2011 Thailand flood had on global IT supply chain
Image Courtsey: ndtv
Sameer Ranjan Bakshi
