Policy Focus On Sustainability To Drive Growth For Recycling Industry, Says Gravita India CEO

Gravita India expects a significant rise in its production capacity and return on capital in the next few years on the back of favourable government policies. 

Talking about the growth prospects for the recycling industry, Gravita India’s Chief Executive Officer and Whole Time Director Yogesh Malhotra told NDTV Profit that the sector has undergone changes in the past five to six years as consumers and companies are now more aware of sustainability.

“To some extent, the prospects of the recycling industry have changed. What has changed in the past 2-3 years in India is that the government is now focused on the rules and regulations aspect of these businesses as well,” Malhotra told NDTV Profit in a conversation.

“Policies and regulations are encouraging the recycling space overall. Not only are they encouraging recycling aspects of the business but they are also promoting the use of recycled content in products and packaging by consumers. So, there is a lot of change that has happened and we see a lot of growth that is to come in the recycling business,” the Gravita India CEO noted.

The new regulations have also increased the availability of domestic scrap used for recycling in India. This would help improve capacity utilisation, which will in turn improve the ROC, according to Malhotra.

 “These regulations will help us use scraps from the Indian market which would help us with better capacity utilisation. Currently, our capacity utilisation is around 60–65%, and with the availability of domestic scrap, it is going to increase to around 70–75% in the future. This would also improve the ROC in the future. Two to three years ago, our ROC was around 19–20%; now it's upwards of 25% in every quarter and will remain in the same range. We expect a minimum 25% ROC in any new business that we are going into,” Malhotra said.

Production for the company will also increase in the upcoming years due to the policies and establishment of other businesses. “The capacity increase from 300 MT to 500 MT will come from internal accruals of Rs 600 crore,” the Gravita India CEO revealed.

Gravita India plans to tap into the recycling of lithium-ion batteries, paper and steel in the future.

“We are expecting the lithium-ion battery recycling business to come up around next year. We are already in the process of building a plant in Mundra. The other businesses of paper and steel recycling will take a couple of years, so you can expect it in the next 2-3 years,” Malhotra added.

Regarding the growth of businesses, Malhotra said, “Lead businesses will grow at 18–20%. Other businesses in aluminium, plastic and rubber will grow at a much faster pace; we are expecting a minimum of 35–40% CAGR in the next few years. In the next three years, lead businesses will contribute 70% of revenue and the rest 30% will come from other businesses, including the new ones.”