As part of its strategy to reduce operating costs, Adani Ports has started talks with the workers unions at the strategic Port of Haifa in Israel, which it acquired last year, to trim staff through a voluntary separation scheme.
The manpower cost accounts for 80 per cent of the operating costs in Haifa Port, which explains the reasoning behind the talks with union.
“We are right now in the midst of negotiations with the unions to reduce some of the manpower over there to go through a voluntary retirement scheme,” Karan Adani, CEO, APSEZ said after declaring the company’s first quarter financial results for FY24 on 8 August.
“We are confident that we will be able to settle with the unions by this December. Once done, we will see good growth, improvement in margins from then onwards,” he said without elaborating on the margin improvements the company hopes to achieve through the job cuts. “It all depends on how we are able to negotiate with the unions,” he pointed out.
A consortium of Adani Ports and Special Economic Zone Ltd (APSEZ) and Israel’s Gadot Group had acquired Haifa Port from the Israel government, for $1.18 billion in 2022.
As per the terms set by the Israeli government, the Adani-Gadot consortium secured the rights to buy 100 per cent equity of Haifa Port Company Ltd (HPC), which operates the port. While, Adani Group holds 70 per cent stake in the consortium, its Israeli partner Gadot has the remaining 30 per cent.
On-going Integration
The Adani Group officially took over the Israeli port in January this year at a ceremony attended by Prime Minister Benjamin Netanyahu and other top Israeli officials.
However, the Adani group is still working on the integrating the port into its operational network and has appointed a new CEO along with a new board to oversee the integration procedure.
As a demonstration of its commitment, the ports-to-energy conglomerate appointed Ron Malka, former envoy of Israel to India, as the Executive Chairman of the Haifa Port Company Ltd (HPC) in April 2022.
The appointment of Malka who served as the Ambassador of Israel to India from 2018 to 2021, is aimed at expediting the transition.
Located towards the north of Israel, the port of Haifa is close to the city of Haifa, the third largest city in Israel and about 90 km away from Tel Aviv, the key commercial city of Israel.
It handles nearly half of Israel’s container cargo, is also the country’s principal port for passenger traffic and cruise ships.
The Haifa Port deal has helped APSEZ’s expand its footprint into the European port sector, which includes the lucrative Mediterranean region.
Israel expects that the Adani Group’s major entry into the country will lead to more Indian investments, especially in the fields of renewable energy and defence.