Heavy rain and flooding in Chennai had an adverse effect on the stock exchanges, as shares of companies with operations in the city saw a decline.
Automobile and IT companies including TVS Motor and Infosys have suffered a major disruption to their operations in Chennai due to incessant rain.
Amid rising concern over its operations being hit by heavy rain in Chennai, shares of two-wheeler manufacturer TVS Motor plunged nearly 5% on Wednesday on the Bombay Stock Exchange (BSE), while the benchmark indices traded marginally lower.
"Incessant rain for the past three weeks in Chennai have had an adverse effect on the company's production during the period. The company's suffered sales loss of approximately 15,000 units due to inclement weather," said TVS Motor in a statement to the BSE.
Similarly, stocks prices of commercial-vehicle-maker Ashok Leyland have fallen more than 4% in the past three trading sessions due to excessive rain in Chennai. Its plant at Ennore on the outskirts of Chennai contributes to 40% of its overall production, NDTV Profit reported.
Shares of IT firms, which have many offices in Chennai, have also witnessed a decline. The sectoral BSE IT index fell about 1% compared to the just 0.2% decline the benchmark index.
While the shares of India's second-largest IT firm Infosys traded 1.5% lower, TCS shares erased all losses to trade flat.
"As a precautionary measure for the safety of our employees due to flooding at the Infosys campuses in Chennai, we have closed our offices today. To ensure client commitments are met, we are managing work from other locations," said Infosys.
Cement and oil-refining companies have also been adversely impacted by the heavy downpour in Chennai. Cement-manufacturer India Cements saw its share prices slump around 4%, while Chennai Petroleum Corp shares traded nearly 2% lower.
Chennai Petroleum Corp, a subsidiary of Indian Oil Corp, said it could suspend operations in one of its three refining units located in Tamil Nadu.
AUTOMOBILE FIRMS
Among automobile firms, Hyundai, Ford and Renault have temporarily suspended operations at their plants.
"We have suspended three shifts, one last night and two shifts for today, at our plant due to the rain," a Hyundai Motor India Ltd official said, reports PTI. Resumption of operations will depend on the emerging situation, according to the official.
Hyundai's Chennai plant has a capacity to produce around 6.8 lakh vehicles annually.
Ford India has also suspended operations at its Chennai plant.
"Continued heavy rains in Chennai have resulted in significant flooding in the area with many roads impassable. For the safety of our employees, we have halted production at our Chennai assembly and engine plants on Wednesday, December 2," a company spokesperson said in a statement.
Ford's Chennai plant has a capacity to produce 3.4 lakh engines and 2 lakh cars annually.
Renault India has also said operations at its Chennai plant have been suspended for a day on Wednesday. The Renault-Nissan Alliance plant in Chennai has a capacity to roll out up to 4.8 lakh vehicles per year.
"Today we are not operating at the plant. The safety of our employees is paramount. We are monitoring the situation closely and resumption of operations will depend entirely on the weather improving," Renault India operations country CEO and managing director Sumit Sawhney said, according to PTI.
Meanwhile, rain fury in Chennai and other parts of Tamil Nadu are likely to cause a financial loss in excess of Rs 15,000 crore, said industry body Associated Chambers of Commerce and Industry of India (Assocham).
It urged the Modi government to immediately announce an appropriate relief and rehabilitation package for the industry in Tamil Nadu. The chamber said that small and medium enterprises, automobile and engineering industries, textiles and tourism have been badly affected.
