New Delhi: India’s capital generates 7,000 tonnes of waste every day. Entrepreneurs are hoping that they can convert some of that into gold. Five companies are bidding to process 1,000 tonnes of the waste. According to the financial details provided by one bidder, the company will earn a revenue of Rs 21 crore in the first year on an initial investment of Rs50 crore.
“Today, garbage means money,” says Amiya Kumar Sahu, founder of the National Solid Waste Association of India, a not-for-profit organisation operating in the field of waste disposal. “The government spends a lot of money in cleaning, collecting and routing garbage to dumps around the city,” he adds, giving the example of Mumbai that spends Rs1,000 crore a year and employs around 44,000 people to deal with garbage.
One of the companies bidding for the Delhi project is Ramky Group, a Hyderabad-based company that has made its fortune by managing waste. It manages waste in seven cities, and plans to invest Rs400 crore in the business over the next few years, according to its managing director Ayodhya Rami Reddy. Ramky ended 2005-06 with Rs600 crore in revenue.
The Union government passed a law in 2000 making the local administration of cities responsible for collecting, segregating, and scientifically disposing garbage. Six years on, few cities, such as Bangalore and Hyderabad, have done that. Most of them, like Delhi, are looking for companies like Ramky that have the technical skills to deal with rubbish.
They have also been trying to understand how they can put their waste to productive use. The Delhi government, for instance, has asked IL&FS Ecosmart, a firm that offers environment management solutions, to study the feasibility of compost plants that will convert waste to fertlizer, and waste-to-energy projects.
“There is a sustainable business model in this (waste management),” says Mahesh Babu, the chief executive officer of IL&FS Ecosmart which has already identified two fertilizer companies that would be interested in marketing the compost.
Ramky’s Reddy believes so, although he admits that there is no money in the business just yet. “Our revenue comes from a fee charged from municipal authorities, converting waste to compost, and generating power from waste,” adds B. Padmaja, Ramky’s chief executive officer.
Local administrations pay the companies between Rs400 and Rs1,500 per tonne of waste handled. Delhi employs 49,000 workers, 800 trucks and 26 bulldozers to do this.
Apart from the fees, the bidder who wins the contract for managing part of Delhi’s waste will get to run a treatment plant that can process 1,000 tonnes of garbage a day on an 150-acre piece of land.
It will get the land for the plant on lease from the local administration for 20 years at a concessional rate.