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cement: Adani Cement Plant Closure: CEO proposes solution to resolve Himachal impasse with truck unions

The chief executive of Adani Cement has written to Himachal Pradesh authorities proposing a solution to the impasse between the company and transport unions that led to the closure of two cement plants for over a month now.

The company has proposed that over the coming three years no new trucks be deployed with it and the existing fleet be reduced to 550 trucks as required instead of the 3,311 vehicles at present. This will increase the running of a truck on average to 50,000 kilometres over this period from the estimated 25,000 kilometres at present, reducing the fixed cost per kilometre.

Adani Cement has also sought autonomy over deciding routes and cargo capacity, which it claims are presently being dictated by trucking unions.

The Adani Group shut the ACC Cement plant at Barmana and the Ambuja Cement facility at Darlaghat in the state last month following a dispute with truck unions over freight charges.

“We were forced to close our operations after the transport unions adopted an unworkable position on the freight rate and distribution model,” Ajay Kapur, the CEO of Adani Cement said in the letter addressed to RD Nazeem, the principal secretary for transport in Himachal Pradesh and the chairman of the permanent standing committee. ET has seen a copy of the letter.

The unions charged a tariff of about Rs 11 per tonne of cement per kilometre, but the Adani group sought to cut this to half at Rs 6, as per media reports.
Adani Cement declined to comment on ET’s queries.

“Since the freight rate is controlled by the unions, they have artificially kept it at a very high level,” Kapur said in his letter. “The opportunity to make quick profits has led to oversupply of trucks thus creating a huge imbalance between demand and supply.”

The Adani Cement executive further said that trucks in Himachal Pradesh travel just a fourth of the national average of 100,000 kilometres and this inefficiency is inflating the freight rates. Moreover, the unions also prevent companies from operating their own fleets, restricting the creation of a free market.

“These unions not only decide the rates and deployment of trucks but also whose material should be transported and even the destination for each truck,” he wrote.

The closure of plants has affected 10,000-15,000 people indirectly dependent on them, including truck operators, drivers, cleaners and people working at roadside eateries and vehicle repair garages, state transport secretary RD Nazeem told media earlier.

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