Ambuja Cements’ profit takes a hit on HP unit strike

MUMBAI: The ongoing truckers’ strike at Ambuja Cements’ Himachal Pradesh plant is affecting the company’s profit margins due to additional costs arising from longer lead distance and externally procured clinker, the Holcim Group company said on Tuesday.

The agitation has forced India’s third-largest cement maker to stop production, from October 7, at these two plants that manufacture a combined 3 million tonnes of cement annually.

Transporters working for these units have refused to transport the goods and have demanded a steep rise in transport rates. According to the company, the hike demanded is way above the one agreed as per the cost adjustment formula which governs freight increases.

“These transporters have been discouraging use of other transporters as well...we have requested for security from the government at these two units as the situation can turn violent any moment,” said a company’s spokesperson.

Although production and despatches at the units were stopped, the company said it has not allowed cement despatched to be adversely affected as it is using existing stock and ramped up capacity at other units and sourced clinker from third parties.

However, the company warned of a fall in its profit margins owing to the strike and resulting higher costs. “...we cannot exclude that the impasse might continue and despatches of cement from both plants, i.e. at Suli and Rauri, will continue to suffer and only slowly to return to more normal levels when alternative arrangements are in place or when a settlement is reached,” the company said.