How floods broke the backbone of plywood factories, rice mills in Kerala

How floods broke the backbone of plywood factories, rice mills in Kerala

The flood-impact to the plywood business in Perumbavoor, which has, over decades, supported a strong timber-based economy, comes on the heels of the adverse effects of the implementation of the Goods and Services Tax (GST) and the ban on high-value currency notes in 2016.

How floods broke the backbone of plywood factories, rice mills in Kerala
A worker at Chaithanya Plywoods in Perumbavoor town carrying waste after the floods ravaged the factory. (Express photo by Nirmal Harindran)

When the turbulent flood waters of the Periyar were gushing into the factory of Chaithanya Plywoods in Perumbavoor in the early morning hours of August 15, Sadath, the 26-year-old partner of the family-owned firm, was on a business trip to China. When his panic-stricken family informed him of the seriousness of the floods over phone, he switched on his laptop to examine the factory’s condition through the CCTV cameras installed at the facility. What he saw horrified him.

“When you see the water-current, you’d feel as if this is it. This is the end. Jeevitham munnottu ini illa ennu vare thonni poyi (I thought there’s nothing to look forward to life anymore),” said Sadath, who joined his father’s business after passing out of high school.

Within hours, the power at the factory blacked out and so did Sadath’s vision of the enterprise he worked hard to build. Without wasting any more time, he hurriedly booked tickets to reach home.

Last week, Sadath stood inside his factory, seemingly lost in thought, as a dozen workers milled around him, meticulously cleaning small equipment and machinery. The floodwaters, by now, have completely receded from the plywood factory, but has left behind its worst excesses. At least half a dozen major equipment like peeling machines and sensor-embedded debarking machines sat in disrepair. The water, believed to have risen up to a height of 15 ft, had drowned all machinery, rendering them useless. Around Sadath, thousands of finished plywood sheets and sheets of imported face veneer (which are glued on both sides of plywood) have begun to sprout moulds and mushrooms. In one corner of the factory, a large heap of plywood waste sits, waiting for clearance from local government officials to be cleared away.


“We had 85 tonnes of plywood right here which was to be shipped to clients in Chennai and Bengaluru. Much of the material has flowed away, the rest are still here, but all of it is useless. The stock was worth Rs 1.75 cr and if you add the machinery which has to be repaired, our losses would stand at Rs 2 crore,” said Sadath.

There has been major impact to stocks and machinery at many plywood factories in Perumbavoor. (Express photo by Nirmal Harindran)

Chaitanya Plywoods, that Sadath’s family helms, is one of the critically-affected plywood factories in Perumbavoor, an industrial hub 40 kilometres off Kochi in Kerala. The town, a nerve centre of migrant labour, is considered a major hub for plywood trade with nearly 450 small and medium-size establishments in a 10-km radius, shipping large consignments of furniture-grade plywood and wood veneer to all parts of the country. Till about four years ago, over 60% of the plywood manufactured in Perumbavoor used to be exported to markets in Dubai, Qatar and Sri Lanka. But today, owing to heavy competition with cheaper Chinese-made plywood, officials say exports have nose-dived to less than 20%. Until the floods came, around 200 truck-loads of plywood and face veneer used to be shipped daily from Perumbavoor.

The livelihoods of thousands of inter-state workers, supervisors, mechanics, drivers, carpenters and timber suppliers, based in and around Perumbavoor depend on the plywood trade, making it a major cog in the state’s industrial setup. The floods this year have showered untold damage on the plywood business forcing many entrepreneurs like Sadath to line up in front of banks and insurance firms.

“At least 400 factories deal in plywood trade in Perumbavoor and nearby areas alone, out of which 70 of them have suffered damages of 80 per cent. These are people who had never expected in the wildest of their dreams that the water would rise so high. Many of them are facing losses in excess of Rs 1.5 cr, mainly due to huge stocks of costly, imported face veneer,” said Babu Saidali, state secretary of the Sawmill Owners and Plywood Manufacturing Owners Association.

Lining up before bank officials and insurance companies is what most plywood factory owners are doing right now. (Express photo by Nirmal Harindran)

“When some of our factories have fire accidents, our association provides funds from within to help them. But we are talking of 70 factory owners here. We have limitations. We have sent a resolution to the Chief Minister’s Office and plan to hold talks with Industries Minister E P Jayarajan. We are expecting government help,” he added.

The plywood industry, which depends heavily on migrant labour, has had to contend with shortage of manpower as well, after the floods. Thousands of migrant workers from Assam Odisha, West Bengal and Uttar Pradesh, who form the crux of the labour, have moved out of Perumbavoor, either returning to their home-towns or shifting to wherever they would find work. Factory owners are counting on them to return once the situation improves.

The flood-impact to the plywood business in Perumbavoor, which has, over decades, supported a strong timber-based economy, comes on the heels of the adverse effects of the implementation of the Goods and Services Tax (GST) and the ban on high-value currency notes in 2016.

“Our factory had to completely suspend operations for almost 1.5 months after demonetisation. Then came GST with higher tax cuts. Just as we were recovering from that, the floods came. Now, we are at the mercy of insurance companies. All our stocks are insured, but we have to wait and see how much they will cover,” said Sadath.

The monetary losses today have shaken his family, the 26-year-old admits, but not to the extent of dampening their hopes of recovery. “We are all taking tablets for blood pressure,” he said, with a smile. “My father is getting old and I am the eldest child. I behave as if nothing has happened. They are living with the hope that I would go out there and get some bank loan. Let that belief remain.”

Perumbavoor, a town 40 kilometres off Kochi, has been prominent for its timber-based allied industry. (Express photo by Nirmal Harindran)

Paddy of the poor

Eight kilometres from Chaithanya Plywood factory sits the huge 5-acre compound of the GM Agro Mills, one of the biggest in the area. The factory procures nearly 200 truck loads of paddy every month from nearby districts which then undergo an extensive process of cleaning, de-husking, polishing, grading and sorting to be packed into large sacks of rice. These sacks then get shipped off across the entire length and breadth of Kerala to private retail outlets and government-owned ration shops.

Along with the plywood trade in Perumbavoor, the floods this monsoon have equally broken the backbone of the rice mills in the area, resulting in massive losses. The town and its surrounding areas of Kalady and Kanjoor have provided hospitable climate for rice mills over the years. From availability of water to open grain markets to a steady supply of cheap, migrant labour, a slew of factors have contributed to the region hosting dozens of rice mills which have pleasantly recorded good profits as well.

But today, many of the rice mills like GM Agro Mills are in a bad state.

A worker scanning the hundreds of rice sacks damaged by the floods at GM Agro Mills. (Express photo by Nirmal Harindran)

Narayana Kurup, general manager of the GM Agro Mills, is busy in his office these days, shooting off letters to the Food Corporation of India, insurance companies and bank officials. Inside the asbestos-roofed rice mill, a tall staircase leads to Kurup’s tiny office, at least 25 ft high, but when one looks down below, the devastation of rice mills like this one is clearly evident. Hundreds of sacks, filled with thousands of kilograms of rice, lie splayed across the entire breadth of the factory. The pungent smell of rotting rice fills the factory, making it difficult for anyone to stand for more than five minutes.

“This is about 60 truck loads of rice which was meant to reach the people of Konni and Udumbanchola before Onam festival through stores of SupplyCo. It’s all wasted. And the foul smell makes it impossible for us to work here,” says Kurup.

Owners of rice mills want government authorities to clear the shifting of the damaged stocks as soon as possible. (Express photo by Nirmal Harindran)

SupplyCo is the Kerala State Civil Supplies Corporation founded in 1974 with the objective of regulating prices of essential commodities in the state and making them available to all sections of the society. Today, with more than 1500 retail outlets, SupplyCo is an essential component of the open market between the suppliers and the consumers.

According to Kurup, the sudden flooding of the factory on the intervening night of August 14-15, exacerbated by the release of water from dams like Idamalayar and Mullaperiyar into the Periyar river, made it impossible for them to shift all their stocks to a safer location. “The water was rising very fast and its current is unimaginable. Even a trained swimmer cannot survive in this water. We tried to shift as much as we could,” he said.

“Our preliminary internal estimate suggests losses of up to Rs 12 crores including Rs 2.4 crores for the SupplyCo stock. Parts of our machinery like storage tanks, boilers, dryers and motors have all been damaged. A 11kV transformer of the state electricity board that powers the factory also went under water,” he added.

GM Agro Mills is one of the major enterprises which has suffered losses running into several crores. (Express photo by Nirmal Harindran)

Varky Peter, secretary of the Kalady-based Kerala Rice Millers Association, said the immediate step the government needs to take is to pass orders to clear and dump the damaged stocks from all factory premises. “As each day passes, it is becoming difficult for us to keep the damaged rice. Storing the damaged rice further will lead to spread of diseases,” he said, over the phone.

“Around 30 of the 70 agro mills in and around Kalady have been affected by the floods. Each factory has given us their estimates which point to a total of Rs 160 crore losses,” he added.

Most of the stocks at GM Agro Mills in Koovapady was meant to be shipped to SupplyCo depots in Konni and Udumbanchola. (Express photo by Nirmal Harindran)

The rice mill industry in and around Kalady processes and ships about 2000 tonnes of rice a day, 95% of which is the brown-coloured ‘matta’ variety. Paddy is also procured from areas in Karnataka and Tamil Nadu. Peter says a large section of the population in Kerala, which used to earlier eat ‘matta’ rice has now shifted to the ‘white rice’ that comes mostly from markets in Andhra Pradesh. “People are very cautious about artificial colouring of matta rice which is not true at all. Earlier, over 75% people in Kerala used to consume ‘matta’ rice which has crashed to just about 25-30% now,” he says.

The Association in a statement pleaded to the state government to announce a special financial package for the rice millers so that the industry can get back on its feet as soon as possible. Many of the mill owners are already burdened with heavy loans and interests, it said, adding that it would be cruel to impose more financial constraints on them. “At one time in Kerala, there used to be 2500 rice mills. Now, only about 150 exist. We watch with profound worry how these few remaining rice mills will survive this great calamity,” it said.

Paulson VO, the owner of Kalyan Rice Mill near Manjapra, is another aggrieved businessman. At his facility, water that rose till 18 ft height drowned its offices, boilers, transformer, generator and sorting machines. It also ravaged nearly 250 tonnes of processed and packaged rice, leading to estimated losses of nearly Rs 7 crore for Paulson.

“We have to start from scratch again. I’m 52 now and therefore that’s going to be very difficult. Energy is less,” he says.

“I believe the government has a responsibility to help people like us. I happen to think the government was at fault somewhere. This was a man-made disaster,” he adds.


Back at the GM Agro Mills, Lakshmanan, a native of Coimbatore in Tamil Nadu who has been working with the factory for the last five years, is yet to come to terms with the damage to the produce. “My heart beats fast every time I look at these sacks of rice. Poor people were supposed to be fed with this rice. Instead, it’s rotting away. This is a lesson for us that we should never play with nature. We are bound to lose,” he says.