After making headlines for the acquisition of two prized cement companies from Holcim, Adani Group companies ACC and Ambuja Cement have suspended operations in Himachal Pradesh due to soaring transportation cost.

Both companies had been negotiating with transport unions to bring down costs as it has to transport both raw material and finished goods.

In a letter written to transport union, Ambuja Cement’s unit at Darlaghat said the plants are under severe pressure to reduce cost of operations to sustain themselves in the market.

‘Unviable’

“In the current market scenario, due to high transportation cost we are finding it difficult to compete in the market. If this continues our plants will become unviable,” it added.

In response to businesline query, Adani Cement, in a statement, said “Our plants at Gagal and Darlaghat have been incurring losses for quite some time now with no signs of improvement due to stiff resistance from transportation unions ignoring the larger cause of employment generation and contribution to the State’s revenue.

Exorbitant freight rates

Due to the adamant stand of the truck unions demanding exorbitant freight rates, way higher than the prevailing market rates, the company was compelled to shut down both plants with effect from December 15, as this has made the plants unviable, it added.

“The freight rate in our plant areas in Himachal Pradesh is exorbitantly higher than the market rate. We have requested truck owners to reduce the existing prevailing freight to ₹6 per tonne per km in line with the recommendations of the Permanent Committee Report constituted by HP Government,” it said.

Loss to state exchequer

“We deeply condemn the insensitiveness of these transporters and regret the impact on over 9,000 people and various community development initiatives around the Darlaghat region, with an estimated revenue loss of around ₹2.26 crore per day to the state exchequer,” said the statement. 

Closure of the plants may lead to shortage of cement as Ambuja Cement plant at Darlaghat produces 2 million tonnes (mt) per annum. The Barmana plant also produces 3,000 mt cement per day.

Cement from the Barmana ACC plant, which has the capacity to produce 15,000 tonnes cement and clinker daily, is supplied across HP, Punjab and Haryana through trucks.