This is certainly unfortunate, but I don't think it will fall under EC261 compensation rules for a number of reasons. BA will probably argue that the decision to go the night before was yours alone, since it was prepared to get you there with the (tight) morning connection. Therefore, the change of departure time becomes irrelevant for the sake of hotel, dogs, holiday, etc. Unfortunate, yes, but I suspect that's the position BA will take.

What's potentially interesting, and what you may wish to consider, is whether the later arrival time into Chennai falls under the delayed compensation rules of EC261 (I suspect it does). Here is becomes a question of when the airline informed you (apparently they didn't) so you may wish to fly a claim for a late arrival (€600).

I see you've double posted this in the BA forum, I'll ask a moderator to merge them.