Flood-ravaged businesses in Kerala stare at Rs 40,000 crore losses

Flood-ravaged businesses in Kerala stare at Rs 40,000 crore losses

Kerala's thriving tourism industry, that revolves around ayurvedic and medical tourism, its hill stations and backwater cruises, earns the state nearly Rs 35,000 crore a year.

Various businesses in Kerala have lost an estimated Rs 30,000 crore to Rs 40,000 crore from the direct and indirect damages resulting from the recent catastrophic floods and landslides in the state, claim industry sources.

"So far, our estimates are that direct losses alone in terms of capital investments and machinery are to the tune of Rs 20,000 crore. Another Rs 10,000 crore to Rs 20,000 crore is estimated to be the indirect losses, and with more information coming in from various sectors and units in the state, the extent and impact of damage is increasing day by day," Dr S Sajikumar, chairman, Kerala chapter of Confederation of Indian Industry (CII-Kerala) told Business Today.

In an interaction earlier in the day, Sajikumar said state's main businesses, travel and tourism industry have seen maximum damage as crucial destinations like the hill stations of Munnar and Wayanad and the backwaters of Aalappuzha and Ernakulum were badly hit due to the landslides and floods.

Kerala's thriving tourism industry, that revolves around ayurvedic and medical tourism, its hill stations and backwater cruises, earns the state nearly Rs 35,000 crore a year. The industry was growing at nearly 15 per cent every year. Travel and tourism sources estimate immediate losses to the tune of Rs 2,000 crore, including Rs 500 crore direct losses in infrastructure, as the fury of rain, rivers and mountains occurred during the peak season of Onam. They estimate one fourth of annual revenues may be wiped out during the current year, as numerous bookings have been cancelled. Losses to flood-hit Cochin International airport (CIAL), which re-opened only today after closure since August 15, are estimated at nearly Rs 250 crore.

Consumer durable sector in Kerala, which accounts for about 10 per cent of the national market with sales of Rs 3,000 crore a year and growing at 10-12 per cent every year, is another sector badly hit by floods during the peak Onam season. Industry sources say retail sales would be down by 40 per cent during the season, but may pick up later as lakhs of people have lost their electronic items and household goods in the floods.

Plantations in Kerala, known for spices like ginger, black pepper, cardamom, coffee, nutmeg, rubber and tea are estimated to have lost nearly Rs 900 crore to Rs 1000 crore due to landslides and heavy rains.

Industry sources said food processing units, timber and plywood, healthcare units, chemical industrial belts like the Eloor area near Aluva were also among the worst affected. According to sources, initial estimated losses to Plywood units in Perumbavur, located on the banks of Periyar river in Ernakulum district, would be Rs 250 crore. The region houses nearly 400 small and medium scale plywood units, mostly employing migrant population from North India.  Similarly, most of the rice mills in Kalady on the banks of Periyar river and Okkal near Kottayam on the banks of Manimala river were severely flooded, causing to losses of an estimated Rs 100-150 crore. The Kalady region alone has over 70 rice mills and more than half of them were submerged in water and mud, say sources.

Kerala, the eight largest economy in India with $110 billion in 2017, depends mainly on its services sector for contributing 63.1 per cent to the GDP, followed by industries with 25.6 per cent. Agriculture contributes only 11.3 per cent to the state economy. Going by the state government's initial estimates, which pegged overall losses at around Rs 20,000-Rs 22,000 crore, the floods have ravaged agriculture land of 46,000 hectares, affecting 2.8 lakh farmers in the state. Final data is being collated by various government departments, say sources.

Information Technology (IT) sector was the least affected as most of the IT hubs in the state like Technopark in Thiruvananthapuram and Kakkanad in Kochi were located beyond the flood-ravaged areas, says Saji Kumar. However, manpower losses are estimated at about Rs 4,000 crore, as a good percentage of the 45 lakh employees in various sectors could not go to work for the past three-four weeks.

The Kerala State Industrial Development Corporation (KSIDC) has called for a meeting today in Kochi with the bankers and industry to assess the damages and chalk out possible recovery and rehabilitation packages. Industry sources say the need of the hour to save the industries in Kerala would be to facilitate easy interest free loans up to Rs 10 lakhs, very low interest loans for units requiring Rs 10 lakhs to Rs 5 crore, suspension of loan repayment schedule for a few months without penalties, a six month or extended moratorium to pay mandatory GST charges, various subsidies from the Central government etc.