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C O V E R S T O R Y What The Quake Means For Gujarat Inc. Big companies may have escaped the wrath of the quake that struck Gujarat on January 26, but small businesses have been hit hard. And the infrastructure of one of the most industrialised states is now in shambles. The extent of the damage could be as high as Rs 30,000 crore. By Brian Carvalho, Ranju Sarkar, & Abir Pal
January 30: Deputy Customs Commissioner Singh is standing outside what used to be his office at Kandla Port. It still is, except the building has acquired a tilt of 15 degrees now. The port has suffered some damage (See Kandla Dispatch 1), and with labourers fleeing, Singh doesn't expect work to start for at least a month. A thousand-odd kilometres away, in Delhi, the Federation of Indian Export Organisations is putting out a release highlighting the fact that Gujarat accounts for 17 per cent of Indian exports and that two-thirds of exports from the state were shipped out from Kandla.
Business, in a state obsessed with it, took the back seat in the first week after the earthquake. Attendance at offices and factories was low as people strove to put their lives back together. Large businesses didn't escape-Reliance had to close down Jamnagar refinery for eight hours; the IFFCO plant at Kandla suffered damage; and all three of Pepsi's bottling plants at Bharuch, Naroda, and Rajkot had to be shut down-but they got off lightly compared to small and medium-sized enterprises. And the industrial infrastructure Gujarat had nurtured over the eighties and nineties-roads, ports, industrial parks, telecom and power networks-took a few hits. No one's putting numbers to the value of residential and industrial-infrastructure destroyed, but estimates run in excess of Rs 30,000 crore. Fear is now the key. A day after our encounter with Desai, Sameer Shah, a dealer in synthetic chemicals, is explaining how the destruction of his residence is going to set his business back by some way. The door of the office is kept open, just in case... Suddenly brother Suneer, who's sitting at his side, gets up. ''Did you feel it? Did you feel it,'' he asks, with a slight quiver in his voice. We didn't. But neither did we feel what one million in Gujarat did on January 26-when the earth behaved like a trampoline, and a seesaw. ''First, the floor moved up and down, and then sideways. Then I saw cracks appearing to my left, and then to my right,'' recollects S.K. Bhan, an executive with a pharma company, who stays-not for the moment, though-on the eighth floor of a high-rise building. Five days after the quake, Bhan and 250 others from his colony are huddled in a makeshift camp a few 100 metres from the building. Nobody's willing to go back home, not yet. ''When I reach the eighth floor, my knees wobble,'' says Bhan, still visibly shaken.
That's why Bhan hasn't been going to work. He's got to put his house in order first. And he's not the only one. All over Ahmedabad-the city that lives and breathes business, right from the textiles trader sitting in Maskati Market to the CEO ensconced in the chambers of his corporate headquarters on the ninth floor-the offices, factories, and the markets (textiles, edible oil) aren't bustling like they otherwise do. Let's get one thing straight: industry in Ahmedabad hasn't been hit directly. Sunil R. Parekh, Senior Director of the Confederation of Indian Industry, says that 45 industrial associations and 16 large corporations (outside of Kutch) have informed him that ''the damage is negligible''. More than large industry, though, it is the ubiquitous small-time Gujarati trader who is being hit the most. And in many cases, the damage isn't direct. Example: The textile dealers in the Panchkuva market are sitting idle, something they're not used to doing. ''Earlier I would get at least 10 enquiries a day. Now, I don't get a single one. My sales turnover this year will be just Rs 20 lakh, just half of what it was last year,'' laments Pankajbhai, who leaves for home early these days-at 5 pm instead of 8. Many entrepreneurs have no home to go to. And it's the rebuilding of a new one that's going to tell on the business. ''We've been badly hit, as many of our customers were from the Kutch region. If they're affected, we are too,'' says Sameer Shah of Sameer Chemicals (quoted earlier). His house, worth Rs 9 lakh, is in shambles, and he will need at least Rs 5 lakh to build another one. That may not sound like much, but it is when some Rs 40 lakh of outstandings won't come in. ''We can't contact our customers, who might have shifted,'' shrugs brother Suneer, holding a bunch of cheques worth Rs 10 lakh. Then there's Bipin J. Suratwalla. Not only has he lost his house, his textile machinery unit too has been damaged. But Suratwalla hasn't been able to visit his factory yet. He's trying to recover what he can from the ruins of what was his house.
But there's no falling rubble, there are no widening cracks. What is there is panic. The Gujarat chief minister's announcement of a 48-hour red-alert two days after the quake didn't help. ''The objective of the cm's message was to keep people away from damaged buildings. But there was a miscommunication, and people interpreted it to mean that another major tremor was likely,'' says Naishadh Parikh, Managing Director at Amtrex Hitachi. Four days after the quake, attendance at Parikh's ninth floor office and manufacturing facilities is barely 50 per cent. No one wants to climb up there. No one was willing to go up to the Reserve Bank's fourth floor, too. And that's why the city's banking system wasn't up and running five days after the 26th. Withdrawals were happening at most branches, but cheques weren't being cleared. Reason: the RBI's clearing house is on the fourth floor. And although trading is on at the stock exchange, volumes are 40 per cent lower. Indeed, the biggest crisis in Ahmedabad today is that of confidence. With seven-eight shocks still being felt every day, people aren't yet ready to go to work, resume their businesses...get on with it. Worse, thousands have fled the city. Ratanprakash Gupta, President of the Gujarat Chamber of Commerce & Industry, estimates that 50 per cent of the state's labour has left. ''Nearly 80 per cent of the workers in the hotel industry, who hail from districts in Rajasthan, have gone back,'' he says. The industrial associations have put some numbers to these faces. The losses-estimated at Rs 175 crore per day-are largely in the smaller-scale sectors, like retailing, distribution, chemicals, and textiles. Gupta of the Gujarat Chamber pegs the loss in the entire state at Rs 550 crore per day, with the Kutch district accounting for Rs 100 crore. Mention Bhuj or any other place in the region and what first comes to mind are the lives lost. The region's thriving handicrafts and salt industries have been paralysed. The reconstruction efforts are under way, but what needs to be restored first, as Amtrex's Parikh points out, is confidence. ''If that doesn't happen, the people's fear will be reinforced, which will set us back,'' he says. The Gujaratis, for their part, are a resilient lot. Crisis isn't a new word for them. Only last year, the state was hit by a cyclone. Then came a flood,followed by a drought, and now this. ''Community and institutional help is outstanding. Recovery will be fast,'' adds Parikh. The first step toward recovery will happen when people are confident enough to go back home, and then to work. But that could take at least another fortnight, what with after-shocks expected in the state for 30 days after the 26th. What's more, more structural engineers are needed to certify that buildings are safe to inhabit. And if that doesn't happen fast enough, as the executive director of the city's stock exchange points out: ''It's fear itself that will kill us.'' |
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January 29: Rajiv Desai,
Executive Director of the Ahmedabad Stock Exchange, is trying to convince
us that the ''fear psychosis'' is over, and that the financial capital of
Gujarat is ''getting back to normal''. Suddenly, the door of his office is
flung open, and three employees rush in. ''Sir, sir, we felt it, let's
rush out,'' they clamour, excitedly. Desai refuses to budge, but there's
an air of resignation about him.
