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TUESDAY, 01 DECEMBER 2009 00:00 ASWATHI MURALIDHARAN OPPORTUNITIES - ENERGY & ENVIRONMENT
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Poor Best Waste paper is not waste after all. It is a flourishing business that is now attracting big players
Be it newspapers, magazines, bills, memos, diaries or notebooks, they all land with the scrap dealer after being used. But what happens after that? Well, after that the waste paper changes several hands before reaching the recycling mills. The paper is then deinked, made into pulp and again into paper, before it reaches the market as recycled paper. In this story, DARE tracks down the route that waste paper takes before reaching the paper recycling mills, which could be a lucrative business opportunity. The industry landscape The operating capacity of the Indian pulp and paper industry has been estimated to be 8.5 million tons by the Indian Agro and Recycling Paper Mills Association (IARPMA). Paper mills can be broadly divided into three typeswoodpulp-based mills, agro-residue-based mills (non-wood-based segment) and waste-paper-based mills. According to the IARPMA, waste-paper-based mills account for almost one third of the industry at approximately 40 percent, whereas the wood-based mills account for 29 percent and the agro-residue-based mills comprise 31 percent of the total industry pie. Despite the fact that more than one third of the industry is dependent on waste paper, waste paper recovery is very low. In fact, according to available figures, only 2 million tons of the paper finally finds its way to the recycle mills. This means that nearly 6.5 million tons of paper reaches landfills and is lost forever.
It has been estimated that the recovery rate of paper in India is only 26 percent, compared to Thailands 45 percent, Chinas 38 percent, and Germanys 80 percent. This is mainly due to low awareness among people as well as the unorganized nature of the business. In India, waste paper collection is mainly done by rag pickers and kabariwallahs (scrap dealers), who collect waste in a crude manner. This makes India highly dependent on waste paper imports from countries like Canada, the USA, the European Union and Middle East. Within India, waste paper is mostly collected from the western region that comprises 39 percent, followed by northern region at 28 percent, southern region at 23 percent and eastern region at just 10 percent. The business model As mentioned above, waste paper collection in India is very low compared to other countries, and whatever paper is collected passes through several hands before reaching the paper mill. Briefly, it passes through three middle men the scrap dealer, the local area dealer and the wholesalerbefore it is converted back to reusable paper. Nitin Goel of GreenOBin, an organized player in this sector says, A street raddiwala cannot directly go and sell to the recycler due to the limitation on the collection amount. Any paper mill based on waste paper as their raw material has got a daily requirements in tons and the street raddiwala cannot cater the same daily. The cost escalation during this process is twice the amount when compared from a street scrap dealer to the paper recycler.
The first link to the chain starts with the scrap dealer, also known as the kabariwallah, who collects waste from homes. The scrap dealers major cost heads are a cycle, a weighing scale and some sacks. This dealer collects all kinds of waste from homes like old newspapers, magazines, loose paper, old bottles, metal waste, and so on. He does a basic level segregation and sells his goods to the local dealer. In terms of paper waste, newspapers are what hold the key to his profits because of large quantity compared to magazines, old books and loose paper. A scrap dealer tells us that these days a number of households generally get at least two papers and moreover, the weight of the newspaper is also more because a number of add-on supplement papers and content. He buys the newspaper at approximately Rs 5.50 per kg from the households and sells it to the local dealer at Rs 7, whereas magazines go at approximately a rupee less because of the glossy paper used. Ultimately, his profits depend on his negotiating skillsthe better his negotiating power the more profit he earns. After collecting all the waste, the scrap dealer sells his goods to the local area dealer. The major cost heads of this local area dealer is space to store different kinds of waste, a weighing scale, and manpower to segregate the waste. This local dealer has several scrap dealers working for him. For example, Mohammad Irfan, a local area scrap dealer in Delhi, has 25 scrap dealers working for him. These scrap dealers sell all their waste, be it paper, bottles, or metal, at the end of each day. After collecting the waste from the dealers, another level of basic segregation happens at this level. In case of newspaper waste, each newspaper has to be straightened, sorted and bundled neatly before it can be sold further. These dealers work with different wholesalersthere are separate wholesalers for different kinds of waste. In the case of newspaper waste, he buys it from the scrap dealer at Rs 7 (the current rate) and sells it to the wholesaler at approximately Rs 7.20 (a ballpark figure). This is when the transportation is taken care of by the wholesaler. This price fluctuates and depends on the demand and supply of paper in the market.
The wholesaler, on the other hand, is a larger player who has several dealers working under him. Transportation from the dealer to the godown as well as from the godown to the paper recycling mills is generally his responsibility. The mill price at which he sells to the paper mills is also highly fluctuating. As the quantity of paper re-collected is fairly low, a major part of their waste paper supply comes from imports. The price at which paper is imported, which in turn is dependent on paper availability at that point of time, has a direct impact on the price of waste paper in the domestic market.
Since this link or segment of waste paper chain is highly dependent on transportation, another major factor impacting this trade is the price of oil. Roughly estimating, this price comes out to be approximately Rs 8 per kg (a ballpark figure). These wholesalers are also directly in touch with several media companies, publishing houses, printing presses, etc, whose paper waste is considered to be good in quality compared to the others that passes through several hands. This waste fetches a higher price for these wholesalers in the market. For example, Cybermedia, which sells its paper waste twice or thrice a year, sells approximately 6,000-7,000 kg of waste in a singly deal. So, for these wholesalers this kind of a deal becomes much more profitable. Organized waste paper collection Given the huge demand for waste paper in India, several companies have started to enter this space. Business conglomerate ITC was one of the first to tap this segment with its Wealth out of Waste (WOW) program. Under the program, ITC collects waste from households, segregates waste paper and sends it to its paper mills for recycling. For this purpose, ITC provides households with two paper bagsone for wet waste and the other for dry waste. Jogarao Bhamidipati, Vice President, Commercial of ITCs Paperboards & Specialty Papers Division (PSPD) explains, Waste paper bought from households and commercial areas at Rs 4 per kg, would reach the sorting facility, where it gets sorted into different grades and gets baled. Here the costs could be Rs 1.5 to 2 per kg. Baled material gets sold to mills at an average price of Rs 8 per kg. According to market sources, ITC collects 400 tons of dry waste per month and is expected to hit 2,000 tons a month in the next six months.
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Dearv All, Hello!! We are dealing with waste paper recycling programm since last fifteen years and have been able to designed the complete efficient and cost effective system for waste paper recycling at various scales, which are suitable for schools, colleges, universities, community organisation, corporates, PSUs and at individuals level. Any body want into this bussiness and program ,we can assist in the terms of supplying the quality paper recyclin equipments, technology ,training in paper making and commissioning etc. Thanks !!! K P BIKAL ADVISOR (TECHNICAL) GREEN TECHNOLOGIES INDIA MOBILE-91-9818052767
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