The 'Why Nots' of Tyre Recycling
Where do we stand as the Indian recycling industry compared to the European or western world?
I don’t know how many people out there actually know this, but about 37 percent of all tyres in the world are recycled in India. That means about almost one out of three end-of-life tyres in the world are recycled in India. This is a humongous number, which talks about our recycling strength. But the sad part is that most of our recyclers in India do not make decent revenue vis-à-vis most of the European or western recyclers. This is a sad truth but very true as of now.
Why are the Indian recyclers not making money?
If I had to boil it down to a few points, the first one would be a commercial reason, obviously. End-of-life tyres in Europe would cost as low as about USD 30 per tonne. And many times in Europe, it could also be free. End-of-life tyres in India cost about USD 225 per tonne. We are eight to ten times more expensive as a raw material for processors for recycling. One of the first figures that are outstandingly very imbalanced are our purchase prices. The selling price of the granules or end-products is by and large the same in Europe and India. Therefore, recyclers are always pushed towards the wall, and they work with very limited margins.
The second part connected to this is that we have very little to no government support at all; there are no specialised government policies, benefits or subsidies. In fact, we are still not regarded as a recycling industry. We are just taken as the tail end or the disposal arm of the supply chain yet.
The other challenge is the technical knowledge, the technical support and the mentorship required. The sector being relatively new, there is limited understanding of the technologies to be deployed and the right mix of equipment needed. The maintenance protocols have to be strictly followed, and so on. Recyclers have tried buying set plants from Europe or the US and cheaper equipment from the East, but this also has not worked all the time. The right mentorship, right guidance for buying the right equipment and structuring the right plants that fit in the ROI modules will be very valuable for the recycler to derive profits.
Could you explain the business models of tyre recyclers in India?
India must have begun recycling tyres much before the rest of the world started off. This is because, culturally, we are kind of an RRR (Reduce, Reuse and Recycle) economy. It was always about reusing as much as possible, repairing as much as possible and, of course, recycling in ways that the western world can even wonder today. It was a need to be frugal about everything. That is what we were taught while growing up. We have always been looking at how we can extend the life of a resource. We understood the value of scrap as resource before the other side of the globe.
However, over a period of time, the recycling industry did not modernise itself with all the right parameters and right support that are required. This is where we are still lacking. Today, this whole tyre recycling industry is at the mercy of hundreds and thousands of unscrupulous players in the marketplace, who may not be registered with the government agencies. The recycler has no other option but to also look at importing tyres to subsidise the high cost of part purchasing in India. That too is now regulated by an import policy for importing tyres, which is very difficult to get. Hence, all of this put together, the recycler today must balance himself/herself – from buying from everywhere possible to having frugal practices to paying the bank mortgages – and eventually survive the first five years. And then, maybe some people who can sustain and live will manage to make a profit. I would say that about 90 percent of recyclers are not able to make any money in the first five years of operation; they are just able to scrape through. And if the other 10 percent can make money, then it’s through other means than just the normal business. It saddens me to say that unless we take some drastic actions here, we will not be able to see the light of day.
What drastic actions do we need to take as an industry?
As an industry, we all will have to come together for the benefit of us all. The moment we all keep our vested interests in front and do not look at it collectively, nobody will benefit. We will have to be pragmatic and rational while structuring the right policy. The right policy according to me is the one which is easy to understand, easy to implement and benefits all stake holders, ensuring the national sustainability goals are met. Take the case of the EPR in the tyres.
It has just been rolled out, but everyone is running helter-skelter, and even the industry stalwarts do not think it is the right one in its present format. This is ground zero calling.
Besides, there is a dearth of successful models or stories to emulate in the recycling industry, especially to do with tyres. So people are left to trial and error. It’s like when you want to set up a plant of your own for recycling, you don’t have anyone to look up to. Nobody will want to share his real numbers or the structuring that helped him make it happen. Equipment manufacturers mostly refrain from getting into hardcore ROI numbers. They are not wrong, but a manufacturer is seldom going to talk about your profits – your profits are not going to be at the core of his whole sales pitch at all. The recyclers’ profits or return on investment sheets will change from region to region and from country to country, or even from continent to continent. Therefore, we need to take many factors under consideration before finalising the locations, end products and future demand for the end products that the recyclers plan to produce.
You spoke about the return- on-investment profitability and the guidance. How will your company help recyclers to set up profitable plants?
As an organisation and as per our philosophy, we have always believed in doing whatever we felt good inside our hearts. We have had the guts to say no to businesses. We have put plants across the globe in about three to four continents now. Thus, we have seen equipment from all manufacturers, by and large.
We have also seen what the challenges and opportunities are on every continent. Besides this, we have always been asking the question, ‘Why not?’ Why shouldn’t there be a policy that is going to be conducive to recyclers? Why shouldn’t the start-up programme in India have a special division and special funds earmarked for pathbreaking work in the field of recycling? Why not have equipment that will do everything together? Everything is about ‘why not?’. Once you ask questions, you will find the right answers. When you want to structure a right solution, you also need to first ask questions. But at the same time, you also need to have people or organisations or solution providers available.
I have strongly felt the need for an engineering, procurement and construction (EPC) for a long time. Unfortunately, in the tyre recycling industry, there are very few EPC companies. EPC companies are more solution- oriented. That means, for them, the customer’s profitability is at the core when they’re designing the plant. So they are brand- agnostic, country-agnostic and technology-agnostic. It doesn’t matter where the equipment comes from. What matters is the whole project integrating together in the right fashion, and that, as a result, matching in best value for the customer. People need to consult an EPC company if they really want to put up a large plant and be profitable.
Could you please explain Indo Green 2.0 to us?
Over the course of the last many years, we have asked ourselves what the next decade is going to be for us. That is where we talked about Indo Green 2.0. What we found out is that ‘Why not?’ stands to be our whole underlying philosophy for everything that we do at Indo Green Enviro. We now want to take it to the next level.
In fact, in our quest to find gems in the recycling equipment or technologies, we scouted across the world. We finally discovered a phenomenally amazing equipment in Turkey. We worked with our Turkish technology partners and co-developed
them together for many years. We improvised and tested them extensively across Europe. We then had a few installations in the Indian subcontinent as well for the last three years and tried to push it to its limits. The results that the machine threw out were amazing.
We felt that the time is right for starting the manufacturing of those equipment that are specialised and going to be pathbreaking. We are now introducing the first equipment from the range – the ‘Crossover Rasper’. It is a shredder, a rasper and a granulator, all in one. This machine can have full tyres made as small as a 10 mm material in a single machine. Howzatt!!!
I have sometimes seen recyclers having to shut shop for six or seven months because there was no market, no demand, imports had become cheaper etc. In that case, this machine will be able to help. We have tested it extensively on aluminium, plastics, wood, electronic waste, cable recycling etc. Hence, tomorrow, a recycler will be able to take care of all kinds of materials in one machine.
In fact, we have a few other machines lined up in the same sphere that we want to bring in simultaneously over a period of time. In our Pune facility, we are going to have a machine where all the recyclers can get their material, put it through all the tests and let the machine speak for itself. They will be delighted with the results.
Last but not least, what has been very close to our hearts is the ROI. While designing this machine, although we wanted to have it as per European standards, we also looked at the value story. When we compared the value story with the equipment available outside, the ROI for this machine could be 12 months vis-a-vis about 36 to 48 months for other machines available outside in the marketplace.
Along with that, we have worked on a higher warranty. We could possibly be one of the very few equipment manufacturers right now who are going to offer 24 months of warranty for a machine, plus more sets of spares as a part of standard. This is because the recycler needs to just focus on getting the machine manufacturing done in the right fashion, getting the product output done and not focus on or bother about the warranties and other parts of it to be taken care of. With these kinds of machines and our thought process, the recyclers are sure to be more profitable than ever before.
Why not!!!