Indian cities and towns are littered with debris from building construction sector raising air pollution to dangerous levels. Lakes in Indian cities are choking from construction debris. The solution to this mammoth problem, is not as difficult as it looks if a few measures are taken swiftly.
In a chat with Benedict Paramanand, Editor of SustainabilityNext, Masood Mallick, joint MD of Ramky Enviro (REEL), is bullish about gigantic possibilities C & D (construction and demolition) sector offers to the economy, employment and the environment. India is currently recycling only one percent of 300 odd million tonnes of waste from the building constructing sector.
Here are Mr. Mallick’s formula to unlock massive value:
- Extend incentives given to renewable energy sector to C & D. Make it mandatory for government projects to use at least 25% of its needs from recycled high quality products
- Introduce quality code for products produced from construction waste. This will ensure greater offtake by infrastructure and building construction companies and also retail home sector
- GST break for recycled waste products
- Enforce existing laws strictly especially on sand mining of river beds and incentivize use of M sand (sand from construction waste)
- Incentivize mobile recycling
The 25-year old REEL employs 20,000 people and notched up Rs. 3,000 crore of revenue in the last financial year. “We are a 25-year old start-up,” Mr. Mallick said excitedly. He is leading the company’s transition from a waste management company to offering a full suite of sustainability services. The company is already present in a few countries but wants to be a serious player in the emerging markets.
The C & D sector has only three serious players in India and has room for many more. But since this is a highly capital intensive sector that works at scale with low margins, it needs better governance and attractive government incentives if it is to tap the huge potential. “It’s getting better these days, but a lot still needs to be done,” he added.
REEL inaugurated its second C & D recycling plant in Hyderabad recently. It has plans to increase this number from 5 currently to 27 in the next few months. KKR picking up 60% stake in REEL two years ago ensures easier and cheaper access to capital. To Mr. Mallick, “The fact that when somebody like KKR, which is a mainstream hardcore investor, is with you, it is a huge vote of confidence for the whole sector. It’s been a two and a half year journey now, of this investment and we have been returning very strong financial returns with very strong financial growth. It gives them the confidence to invest more. Our results are showing the market that there is something in it. It’s not just an environmental play, it’s also an economic play.”
The role of cement companies is critical to the future of C & D recycling. Currently only three large cement companies use recycled material to add to their products. Since Indian waste has its own unique characteristics it needs indigenous technologies as well as imported technologies.
REEL has been working on a few innovations to mainstream C & D sector in India. Its first successful innovation was introducing a toll-free number in Noida. “It was highly successful,” Mr. Mallick said. He believes people inherently don’t pollute if there are easier ways for them to dispose waste.
Interestingly, mobile recycling as an idea is beginning to be promising. REEL has a pilot in mobile recycling facility in Tirupati. Mobile units are viable for large projects. REEL is exploring similar possibilities with large e-commerce companies.
To Mr. Mallick, the clincher for the positive future of the C&D sector is the fact that the quality of recycled products is beginning to exceed that of virgin material. But for customers to choose them, the sector leaders have to invest in education and awareness campaign. They also need to work on making high quality recycled products much cheaper than it is today. Current pricing difference is only about 10%. Perhaps the tipping point for this sector is at 20% cheaper than conventional products.
The ‘polluter pays’ principle, popular in the FMCG sector, needs to be introduced in C & D as well especially for medium and large projects. This policy could make recycled products even more attractive.
The good news is that C & D recycled products are now ready for use for non-structural purposes such as footpaths, walls and sub-base of roads. The potential is immense as India starts to build its smart cities and highways. If India starts using a mix of plastic and recycled construction waste for roads in a big way, most of Indian cities and towns could become cleaner without much effort.
To Mr. Mallick, progress in nano-technology is key to the C&D waste sector’s future. He said this is its holy grail. This technology will improve the quality of recycled waste products significantly giving a run for the virgin material business.
REEL expects to be more than a Rs. 10,000 crore company in five years. Its buoyant because ‘circular economy’ principle is beginning to be embedded in business strategies of organizations. India’s commitment at the 2015 Paris Agreement will need massive investment in clean and green infrastructure.
Waste to Wealth
While the whole world is excited with the ‘waste to wealth’ paradigm, Mr. Mallick has an interesting view. To him ‘waste to wealth’ signifies a mining mindset. Waste as a business opportunity should be approached with humility.
He said, “Somewhere ‘waste-to-wealth’ idea has a very exploitative nuance to it. You don’t go into it with a mindset to exploit, rather, we want to deal with it with folded hands. One has to look at it is a service. We have to approach recycling, resource recovery or any environmental service with folded hands, with our heads down, to say there’s a lot to learn, there’s a lot to do, and we are far away from where we need to be.”