Indian waste management takes a market facing step
Anand Krishnamurthy
Co-founder & Partner @ Envint | Sustainability, Climate Action, ESG
By the time I write this article, India’s first IPO in the waste management sector, Antony Waste Handling Cell Limited, is subscribed less than 50%, with a few more hours remaining for the process to close. The waste and water sectors have been far removed from the markets with only a handful of listed companies. The challenge of building a viable business with significant dependency on municipalities is too daunting for even the most optimistic of entrepreneurs. While Ramky Enviro Engineers gained dominance in the waste market and sold 60% of its stake to KKR for $530 mn last year, the space is littered (no pun intended) with failures and stalled projects, especially on the waste-to-energy front. The big question is therefore, will Antony set the trend for more IPOs in this space, or will this continue the way is always been?
There are a few trends in waste management that could lead to expansion of existing business or creation of altogether new business models in the space.
- More mixed waste: India’s per-capita waste generation is 1/10th – 1/4th of developed nations, depending on the rural-urban divide. However, the combination of high population and increasing density of urban areas makes India a high volume market that is only set to grow strongly with higher incomes. Waste composition is also currently significantly organic (more than 51%), that can be dealt with effective segregation and composting at both local and centralized facilities. Higher incomes also leads to more consumption of convenience goods involving more packaging, eventually leading to a waste composition more in line with developed markets.
- Improved value recovery: The current value recovery systems involve thousands of small-scale recyclers working closely with waste aggregators, who in-turn rely on the informal ragpicker network. While this system has been in place for many years, it will not suffice to handle the volumes and complexity of waste that get generated in the future. There will be more need for technology interventions for better segregation and improved labour and environmental compliance during value recovery.
- Regulatory pressure on generators: 2016 saw a flurry of rules on waste management with much-needed updates and focus on individual waste categories such as municipal solid waste, plastic waste, construction & demolition waste, etc. An active National Green Tribunal combined with sound understanding and implementation of the 2016 rules is bound to lead to a scenario which leads to more responsibility on waste generators for waste management. In both municipal and private domains, this will lead to innovations in service provision and delivery.
The first waste management company to list in the USA is aptly named Waste Management Inc (WM). Listed in 1972, the company’s revenue in 2019 was more than $15 billion and it has market cap of ~$50 billion. Operating across the value chain, WM offers waste collection, disposal, recycling services and is also a renewable energy generator.
It is unfair to compare current Indian companies with listed companies in developed markets, but the future for waste management in India will involve more private companies and many more listings than seen in the past.
NBFC & Banking expert, Non Executive Board member, CEO Mentor, Specialist for Turnaround, Family Businesses, IPO planning, Infrastructure, Energy & Policy reform
4 年Its nice to see that you draw attention to the Antony Waste IPO. The issue was withdrawn in view of extremely volatile market which went past its extended period. Had that not happened quite probably it would gone thru comfortably. I think investors are generally vary where a govt agency is the sole buyer - so all infrastructure projects & services suffer to that extent....Munish Aggarwal Ajay Garg
Impact, Innovation, Plastics and Water
4 年Dear Anand, A very informative article highlighting the opportunities that still lies and the challenges around it. In my opinion while the quality of contracts (especially on performance parameters) remains very poor, one of the challenges in municipal waste domain is also lack of control on waste characteristics. This makes even best of technology fail.? The key lies in how one can formalize the informal nature of this sector to control waste quality/ quantity and customize the existing bouquet of technologies to this end. Small scale models, IT intervention and focusing more on EPR combined with a healthy optimism are some of the measures that I feel may help.
Microalgae-based effluent treatment - Technology and end-to-end Process provider
4 年In our Indian market, where compliance is very much restricted to the industries, businesses that rely upon B2C models may take time to take-off. On the other hand, small to medium scale industries are finding it increasingly difficult to meet and comply with the environmental restrictions imposed on them. Here lies an opportunity for waste-management firms: cater to the industrial, corporate, residential & services sector offering off-take, on-site & integrated waste management services. Smart segregation, multi-feed & multi-product services and other customer-compliance enhancing and customer value creating approaches are needed for success in this field.
Sustainability practitioner | Social sector advocate | Writer
4 年This is a very informative article and touches upon a subject typically swept away !? watching to see how this evolves.? I personally belive local solutions are best for waste management and unless this is under a franchisee model mainly for technologies, this may not go the listing way.. what do you think?? I see many apartments shy away from in house management because of the O&M issues, is there a business model here??
Creating Ecologically Sustainable and Economically Viable Waste Management Solutions for a Circular Economy || Edmund Hillary Fellow
4 年This is all theory. Practically, very little will be achieved in this space. Why? Because legislation is essentially toothless; there are no penalties for non-compliance and no recourse to the legal system to enforce it. Municipalities are plagued with mismanagement and corruption. Further, even the formal tendering process often is just an information gathering exercise on behalf one of any number of govt agencies. Some of the world's biggest waste management and treatment companies have decided to exit the market, Veolia being one of them.