Financial Daily from THE HINDU group of publications
Friday, Aug 05, 2005
Industry & Economy
Bhiwandi floods hit textile companies hard
Silk and woollen goods damaged in floods in a Bhiwandi godown. Some of the fabric will be sent for reprocessing and sold at throwaway prices in Mumbai's Crawford Market. - Shashi Ashiwal
Bhiwandi , Aug. 4
LAST week's floods in Bhiwandi, a transhipment hub that is growing in popularity because of its proximity to Mumbai, have inflicted huge losses to local godowns.
While the losses are huge across all industries, the textile industry perhaps had stocks worth about Rs 1,000 crore in Bhiwandi. According to local people, the swelling of the neighbouring Kamveri river, slow release of dam water from nearby dams and the inability of this huge body of water to empty itself into the Arabian Sea forced water levels to rise in several places by almost 9-10 feet.
In both the Arihant Compounds, old and new, water levels in most godowns rose to 5 feet, despite the godown itself being built about four feet above road level.
According to Mr Cyrus Guzder, Chairman and Managing Director, AFL, the losses, though still being assessed, were extensive because Bhiwandi had become an important transport, transhipment and warehousing hub.
Companies used Bhiwandi for stocking their goods as it was a short distance from Mumbai and out of the Octroi limit and was Mumbai's conduit to West India, he said. The textile and handloom industry also stocked huge quantities of goods in Bhiwandi. Most of the stocks have been damaged. Estimates have been placed at about Rs 500 crore to Rs 1,000 crore.
According to Mr Aloke Banerjee, Head, Domestic Business, Bombay Dyeing, the company has a godown at the Arihant Compound. He said that the current situation "represents a financial loss for us... damages will run into multiple crores (of rupees)."
He said that for the textile industry, a realistic assessment of the damage would be 2.5 times the loss assessed. Most textile players would need to factor in the loss of sales for a month and the time it would take to get operations moving smoothly into the final cost or damage of the flooding.
Similarly, Raymond Apparel has one-lakh sq ft in godown space in Bhiwandi's Arihant Compound.
It has six warehouses in the compound and stocks all its brands Park Avenue, Parx, Manzoni, accessories and raw materials such as fabric there.
It also stores files and tools at the compound.
However, damages are still being assessed, though losses are considered to be extensive. According to a source, the company's retail operations could suffer because its goods are directly transported to retail outlets countrywide from Bhiwandi.
Another unit, Mahajan Silk Mill, stored mainly silk and polyester viscose suiting material at the godown that was inundated.
About 3.75 lakh metres of silk were damaged, most of them bound for domestic and international buyers.
Only about 10 per cent of the stocks could be saved from the rainwater and expected damages were to the tune of Rs 2.5 crore.
The company has sent roughly 30 per cent of its damaged stock for reprocessing. This is aimed at saving the fabric, if it cannot be salvaged it will be sold at a tenth of its original price.
Most representatives of companies at the compound estimated it would take a month for things to get back to normal again.
Interestingly, a number of people have indicated that they may look for godown space on higher ground, even though they all admit that the rains had been unnaturally heavy.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2005, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line