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Revolutionizing recycling of lithium-ion batteries | Batx Energies
22 Plays3 months ago
Have you ever wondered what happens to your smartphones and laptops and EV batteries after they hit their end of life or become faulty? Join us to discover how the passion and perseverance of two engineering students catalyzed the birth of India’s leading lithium-ion battery recycling startup, BatX Energies. Through innovative manufacturing processes and strategic initiatives, BatX Energies leads the industry in transforming old batteries into sustainable energy solutions. Tune in to explore their incredible journey and pioneering contributions to a cleaner, greener future.
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Transcript
Introduction to BatX Energies
00:00:00
Speaker
Hello, everyone. I am Vikrant, co-founder of BatX Energies. We are a recycling company and building something in terms of sustainability.
00:00:20
Speaker
So, Vikrant, help me understand the reason behind the birth of BatX. What made you become an entrepreneur and start Batics?
Vikrant's Background and Motivation
00:00:32
Speaker
I mean, the story of Batics started in college itself. I mean, now when we were doing engineering in the college, I mean, I and my co-founder Kush, we studied from Punjabi University, which is a hero group college. And luckily I was more passionate about the mechanical in engineering because from childhood I was loving the mechanical because of my background business.
00:00:52
Speaker
My home background business was into the food business. there We produced the ah unflavored chips from potatoes and selling it to the least, right? And they were doing the flavoring. So there was a lot of chemical processing, the oils, the boilers, right? So they have a very good sense of mechanical engineering. I always wanted to do a mechanical engineering. So I got an anime. How big is your family business? Like, is it like less than a hundred crore, more than a hundred crore? I mean, it's less than 100 crores definitely. I mean, it's a contract manufacturing from that. Okay. I mean, from the SME basically. Yeah, it's the SME. It's a small scale manufacturing.
00:01:30
Speaker
I mean from there got a sense of the mechanical things, ah right? Because I never wanted to go on the side of computer engineering, I never understood also. I mean I cannot do coding even today's date also, I cannot understand the coding and the virtual things. So theling the chat sign um the things the things which I can just touch.
Exploration of EVs and Battery Technology
00:01:48
Speaker
So I mean I wanted to go on that side and mechanical engineering was the best option to go on that side. So the story started from the college because ah College was very new, i and and it was started. So my co-founder was the very first batch from that college. because The college was founded in 2014. And then I was from the second batch, 2015. So he's one year senior for me. And there's a lot of opportunities there because there was no club. There was no and know a society which we were building as a college student. So in college time, I was having a dream that if I would start a club which will build the vehicles. I mean, there are a lot of competitions which happens.
00:02:26
Speaker
ah You build your vehicle, go to the you know different different colors competition in the racing track or something. So the good part which which we talk about changing movement was that in 2016, the Indian EV industry was changing from gasoline to EV industry. So there was an event which is called e-car. So e-car means you have to build small electric vehicles and you have to participate with but different teams. It's called a big event. So we started building that, we built the auto wheel club in the college. I was the president of the college in the auto club. And then we started from the scratch that how to build the vehicles. And while building the vehicles, I mean, we realized that we need a battery. I mean, I was not knowing that until that time, I was not knowing that what is VPM and battery exactly.
00:03:14
Speaker
So our team was, I mean, we and we found that there's a lithium ion battery, which will be used into the electric vehicle to do that competition. And then I asked with kish that because he is always on the management side, that side that I'm in that time also today also. And I was always in the technical side, building the vehicles, technology, and maybe the design part of it. I asked that I want a battery, Uh, which is maybe 40 kwh or these are the specifications and can you get it to me? So I said, okay, I, let me check. I will, I will get back to you maybe after two days. After two, three days, he came back to me and he's saying that, bro, this battery is not being there built in India. It is not available in India.
00:04:01
Speaker
So that was the point of time that how others are doing it. So we we then do a little bit more research and we found that this battery is imported from 100% battery that imported from different countries, especially China and Korea. Then we said how we will do an event and the battery was very expensive. Also, I mean the total budget of that vehicle was eight plaques and the battery cost was around 5.5 plaques. So we said we will not participate because it will not be possible because this is a challenge and then I mean the college we we we presented to the college that we we are going to purchase this battery and they supported they also imported the battery from Korea. After importing the battery from Korea the event is over and this one thing is being intrigued us that why if this battery is not being built into India of what is the thing that which we don't have and even the whole India don't manufacture it.
00:04:54
Speaker
That was the turning point of shifting ourselves, especially even in the speed, maybe not in recycling, but at least we got into the each amount of batteries, that why these batteries are being there, what are the materials which we use, what are the reasons behind that batteries are not being manufactured in India. And then we approached the professors, that said, we want to build a battery in India. That is our main project which we want to do. So they are like, you can't do this project because we don't have infrastructure, we don't have, you know, the technology, we don't have even the literature and kind of, you know, experience for the faculties also, which we can train you on the lithium batteries. So I and Utkar themselves started studying about the batteries. And the battery which we have imported, we actually tiered the battery. So after second semester, I mean, I was in second year of my college, it's fourth semester. So this is the holidays of two months.
00:05:48
Speaker
So we actually, we didn't go to whom. We said we will decide in the college and we we will hear that battery and we will check that what they have used in the battery. So, I mean, that battery was definitely a, you know, a flammable battery, we were not knowing all the safety, but we tiered the battery, we take out the cells and the components of the battery. And then we said that there is something which is called literate cell, which is like a pencil cell. And multiple pencil cells are being used in that battery, along with that some electronic circuit. said There is nothing in the body. There are some pencils and they are assembled together. What is the point? So then we started that, okay, I mean, this is something which we can do something about it. The college has been over and then we again started from the college. College, because this is a hero group college, so hero has built a very high-end lab inside the college for the research of hero motorcycles.
00:06:46
Speaker
And later, there are initiatives to Jaipur where the lab is being there, which is called ah it is called CMD la it it's so nano materialial and our resource laboratory. laboratory where a lot of PSG holders and a lot of research engineer engineers are working on a practical sciences, not on to the only only the theoretical. I got very amazed about that laboratory and started working with three professors. And slowly, slowly, I mean, I asked one professor, there was a professor called Sanvitra Burman. And I'm here, so maybe some other. So there are four or five professors I collected. I started working with them. I said that I want to build, a set I worked maybe two years in that laboratory, learned each and everything, whatever the lab is having.
00:07:27
Speaker
the scanning electron microscopy, the Raman spectroscopy, XRD, and different things. These are very high-end equipments where you need PhD holders to run that system. Actually, if you want to see a nano material of very small that you cannot see with the naked eyes, there are certain machines, there are certain equipments where you can see that. So then I got an understanding that ah in eight semester in my college, you know what you have to do for internship for six months. So I took that, I will build the cells in in in the college. I mean, we have taken the project. There are three professors who are mentoring that system to build ourselves. And then we realized that we don't have our materials like cobalt, lithium, and nickel. So these three are the primary materials to build any cell. So we ordered from China, because 90% of the materials are sold by China, and China only produces these materials.
00:08:20
Speaker
It took six months, seven months, the pieces are the symmetra is yet to over. So we were, I mean, I wasn't having an idea. Let's break the old cells and I will take out the materials from that. And then I will do my product because that was something where we were, we were talking about the project because we don't have a materials. So I asked because that again, that I want to sell. So he brought some sales that, okay, this is where we will be leading. So we brought the laptops. the pencil cells you use in the laptop battery. We teared it off and then we started research about how to get out the material from this. And then after research of around five months more, we realized that this is a very big tool.
00:09:02
Speaker
And we were not knowing about the market at that point of time. It's only about the enthusiasm about completing the project, solving a problem. We were known never, I mean, we have never thought about building a company at that particular time. It was just
Forming BatX Energies
00:09:15
Speaker
a project. It was just a problem solving. I mean, ah I was having one more company in the college time, which is called Batty in India Private Limited. So my co-founder was professor itself. So, we were running some money from there and then, you know, utilizing into the projects. And then we realized that, okay, what we can do is the battery which we appeared at, we said that we will bring out the cells from China. We will assemble it here. We will put our electronics against all the batteries.
00:09:47
Speaker
So after stepping out of college, I mean, it was, I mean, the last day or maybe the four days back. So Loham, I mean, so there's some connect I was not having. I mean, accident day I got a call that, ah do you want to like join a Loham? I said, okay. Next day I packed the bag. And Loham, for people who don't know what is Loham, Loham is, I think setting up but India's first lithium ion battery manufacturing plant, or they have already set up, like it's a pipeline. Yes, yeah I mean, they are ah into the lithium and battery manufacturing and recycling. And I mean, you can say that when I joined, there were only few mine post four to five people. And it was just starting of the era in the country.
00:10:30
Speaker
I mean, no one was expert about this field, no one knows about what is being done into this startup. And just we were like talking about that there is recycling or there's the literate battery manufacturing, which will will be happening in India. And we started building, you know, from the scratch, doing the research. And in college time, I mean, we were already doing a startup while in Kush, are already building the batteries, we sold from batteries when we were in college. assembling the battery, then selling it to the market. So we were having a sense of the system, but then we realized that you cannot do a business if you don't have experience. And we were very good about the battery and you need to understand about the compliance areas, regulations, ah you can say the technology, the commercialization, the unit economy, the prototyping out will be done and what is the market fit.
00:11:22
Speaker
oh That is something which you are not knowing completely. And the good part is our college was having very good ah courses, not only the technical half of the courses was from the like entrepreneurship, innovation and entrepreneurship, right? ah CRSP, critical reasoning, thinking and analysis. um You can say the courses, which still in negotiation personally is still, I remember the course's name. I mean, in my mechanical engineering business understanding. So I was more understanding about these things also irrespective of the technology. In college time, we've been around a lot of vehicles. At Loham, what was your role? What were you hired for? This was like a campus placement.
00:12:05
Speaker
I mean, it was not a campus placement. It was like, you just have to certain and call and join the network. And I joined on the and at that point of there was no position. I mean, because there is only four or five people, you have to do everything. if You have to find out what scale when you joined, ah how big was it? It was very small, it was like a small home, factory was like a small you know home. And they were focused on recycling lithium ion batteries. That time the focus was around the the battery manufacture because recycling was too far from that. Okay, okay. But today I think they are largely known as a recycler, right? That's the bigger business. Recycling and refining company. Recycling and? Refining, refining company.
00:12:54
Speaker
Gotcha. What is refined? So you're saying that when you recycle a battery, you extract some material and then you refine it. One example, refining is something we don't have a virgin material in our country like nickel. So these materials are found in our crust, like ore. And these materials are available with very specific country like Indonesia, Chile, Australia. So India don't have the refining capabilities also. For example, if we import the ore, so from ore you have a like a mud, right? And from in the mud you have nickel also, you have cobalt also, you have some impurities. So I mean, that is something which is now the companies are building in India where they' are they're building the capabilities of refining of these material so that we can bring out the, you know, ore that much from different countries and we can refine the quality material here and we can utilize into the vatals.
00:13:47
Speaker
That's how the supply chain is made. Okay. So, so today, Loham does these two things. They refine all, so they import or refine it and then they sell it to, ah let's say maybe a log nine would be their customer. or I mean, you're not log nine, maybe the long giants. I don't know. I mean, but it's, it's a big industry where this material ah commodity, because it's the commodity product, right? It's international commodity product. Okay. It's linked with LMA and metal exchange or maybe the past market. Okay. Okay. Okay. so I mean, I worked with one year. The other line of business ah for them today is recycling a battery. what What happens when you recycle a battery? I mean,
00:14:26
Speaker
then you recycle the batteries. So there are a lot of minerals inside the battery. So you can say like ah this is the gold which is being utilized into the batteries. Like nickel, lithium, cobalt, manganese, copper, aluminum. okay So these are metals and then these three metals are the precious materials. This is called, ah you know, the critical materials. The supply is not much in the world and they're limited. not a basically Rare Rare earth are very different I mean from after critical it comes rare earth.
00:15:00
Speaker
like neodymium, molybdenum, parsodium, titanium. I mean, the material which are used in your, ah you can say exhaust pipe. I mean, EV motors. ah yeah he wo thoses ah There are some other things also where these machines are like magnets. Only one or two companies are having the supply chain of that. So that's why in the country we are still not manufacturing EV motors. They are still importing those motors. Okay, okay, okay. And what kind of batteries are recycled? Like a laptop battery is also recycled, foreign laptop, or is it like EV batteries, like vehicle batteries? I mean, any kind of battery. I mean, it should refer to the lithium-ion battery. I mean, in your... But what is commercially viable? Your headphones also have that. Is that commercially viable to recycle a headphone? Yes, absolutely. I mean, we are mixing everything together. Any lithium-ion battery, for example, in your phone, you carry seven grams of cobalt.
00:15:58
Speaker
with you, you carry around 2 grams of lithium carbonate with you, you carry around 3.5 grams of nickel with you. That means, you can imagine, not only that, I am not only talking about EVs, that we are talking on mobile phones and laptop, that means the photo electronics market. Without energy storage, I mean without lithium and battery, the portable device is not possible. So, I mean you can understand the scale and the material which is hidden inside the batteries. So, once we import these batteries the company like us understand that this is a asset which is lying down in the country.
00:16:34
Speaker
There's a lot of minerals, which is called urban mining. So basically, this recycling wheel referred to the urban mining. The mining from the urban area is actually in the form of phones or the batteries and then recycling it up. So these materials are very costly. They are not available in India. So our job is to extract these materials from it and then supply it to the internet manufacturers so that the cost of EVs can be reduced down. I mean, the electrical system. which Okay. Okay. so So coming back to Loham, what did you do there? You spent a year there. What did you do in that one year? I spent a year. I, I worked a little bit into themselves, the documentation side, little work on the technology building side. It will work on, you can say ah a factory building side because we have taken that factory and you have to have that but particular time And then this is about the new machinery that depends how to build a team. I mean, they have hire some people build a good team. I mean, a leadership understanding the commercialization. So there is a term called techno commercial person.
00:17:37
Speaker
So in today's day, especially in deep tech startups, you need to be a techno commercial person. So I understand about these things, the ecosystem of this industry, the market about these things. I mean, how would the system works from scratch to building something prototyping. I mean, the idea starts from, I joined the lawman and there was the ideation. Then ideation, there's a concept phase. After concept, there's a prototyping. After prototyping, you of building a startup. So that I learned, the co-founder of that company was really, really a good mentor. He taught a lot of things.
00:18:16
Speaker
ah in different, different periods because that person is from Stanford, Howard, from IIT Kanpur and worked 10 years in US. So the mindset which we are having out is something which is vicious like a very optimistic, I mean, optimistic or cost-effective and very patient. I mean, that time I was thinking that, ah what is being happening in this? I don't think Nick, how we will, but he was then in so much of perseverance. I mean, that is something which I learned or that you need to be very much confident about what you are doing. ah Just think, I mean, don't take place in a single day, it takes a lot of time. And there were a lot of hurdles, I learned from them. I mean, and still, I respect, he has given him a chance to work there, to understand that, you know, or ah the market and how to build a startup.
00:19:08
Speaker
So what did you start off ah when you decided to start on your own? but Like what was the business plan? i didn't know You can say that i because already we in the while we left the college. ah We were running a small company and then we realized that we have to first join a company as a CSR division and a hero group itself. So he was looking after the CSR program. So he was up the management side, how to handle team, investments, everything. and Then we thought that we will work one year and then we will come back. and i It was a day that we exactly worked for one year, I exactly worked for one year. and Then we joined hands, we said that, okay, we will build the matrix.
00:19:54
Speaker
And because the recycling was something where you need to do a research. So we thought that maybe we will build the money to a completely bootstrap at that particular time. And and and our company started, I mean, I passed out in 2019. I worked in Loham in 2019-2020. We just turned our company 7 July 2020. And after that, building the batteries, selling it to the E-Rickshah, the two-wheelers, and the money which we were saving, we were putting it to the R&D for the recycling extraction material. So, we were incubated in Munjal University itself for that lab. So, we were having access of that lab, and our employees, I mean, we were having to employ them, because there were four people, and living in the college also.
00:20:39
Speaker
in in the same college. So from hospitals, we were working. And in completely one year from 2020 to 2021, we worked completely out of the our college. And we have taken a small factor nearby our college where we we were but building the batteries. So that's how two domains were running parallelly at that particular time. One was building the batteries at outside the college, which we were in a small factory. And second was the research in the laboratory, which was running to extract these materials from the batteries. And because it's a very, very deep science, it's a very, very ah you can see complex process to develop it.
00:21:16
Speaker
because it's a material refining. Material refining, you don't have infrastructure, you don't have people, you don't have ah the understanding of the material. So that was the
Challenges in Battery Recycling
00:21:27
Speaker
little tough challenge for that that particular time. um You wanted to be a battery manufacturer when you started off. What was the business plan when you started? I mean, the business plan was the recycling, but to support that, the battery manufacturing was a good option. I mean, ah to actually, at that time, we are trying to do both things. Okay. when In the business model, there I mean, by doing the business, we were thought that we will learn the battery business also, and we will recycle it because it is interlinked together.
00:21:59
Speaker
right What you extract from recycling can be the raw material for battery manufacturing. And what part was that? We were telling to the e-rickshaw manufacturer on the seller, will we selling them but they will take your battery back with some value. So recycling also makes sense because for your customers, then you are offering the resale option or buyback option to your customers. Okay. Okay. Okay. Interesting. But ah nobody has done this, right? yeah People are either recyclers or they're battery manufacturers. Why is that? Is it a very hard problem to do both?
00:22:35
Speaker
Needs a lot of capital or what? I mean, that time, I mean, this was just a new, I mean, recycling was a very new, I mean, no one was doing it, that recycling business can be done in India, especially in detail on battery, recycling. Battery manufacture, there are a lot of people who are manufacturing. I mean, it's called assembly, it's not manufacturing. I mean, there were around 20 to 25 companies in Delhi itself, which were doing the same things. But our part was like, we were not bringing out new stuff from China. the batteries which were coming from laptops we were getting we were segregating the boot cells from those crap cells and building the batteries. So we were not using news batteries that was the difference ah ah in our company and maybe the other company.
00:23:18
Speaker
So, I mean, we were collecting a lot of batteries from narrow place because it's a good help for you repairing work and everything. There is some place in Bangalore also we were collecting the batteries and then we were getting these batteries inside the factory dismantling this out manually. getting heat cells out, testing it up, and then segregating good cells, building a new batteries. I mean, that was something which we were doing because recycling, I mean, before 2016, all batteries were exported to China. So they were the manufacturers also, and they were the recyclers also.
00:23:54
Speaker
So after 2016, China banned to accept any kind of scrap in the other country, all the certain reasons because of the political or maybe their regulations. Then this whole, you know, the volume of these batteries is increasing day by day because there is no company which was taking them back from any other country. And that we've done a market research and we found this scrap is huge. Only the challenge is the collection.
00:24:22
Speaker
So supply chain is just called backward supply chain. I mean, that is something which was a really a tough thing, because in India, still in two today's day, 80% of the scrap market is being organized by the unorganized sector, the kawari wallas, crappers. It's not ah any box which is being put on something, they will put only in the box. Even events you throw your phone, you don't know where your battery is going, right? I mean, customers don't know where the battery is going. Even if any sense of that person don't know where these batteries need to be,
00:24:53
Speaker
you know, are used for. So that means that was the condition of the country. But today, it's also it not much more organized, but we're trying to make ah it more organized so that this material can be sourced from different different places easily. So that's something which was a challenge in the start. When did you realize that doing both is not ah the way to build it ah manufacturing and recycling, because you've decided to focus on recycling at some point of time. I want to understand that decision making, which led to that focus. And I mean, it's good that you're focusing. and I think as a small company, you should be focused on a narrow problem. ah But what, but what was the decision making behind that? So, I mean, it is a very funny story. I mean, it's not our decision. So you were running a company and now we got exhausted with the money.
00:25:47
Speaker
because it is a complex oriented business, right? You need a lot of capital for equipments to run the unit. It's not a virtual thing, right? You should have a factory, you have people. So after around one year- And even your working capital requirement would be high, right? Because you have to be a friend to the suppliers of- Exactly. I mean, once we will complete our business, one I will explain that how working capital is very important in this business. So what did after one year, we were exhausted, we were not having any money. So, I mean, we got some workers was having some connect with the hero group itself. So, he connected to one of the person who is holding the hero Munjal's family in investment form. So, we got one meeting with them that, okay, now let's do a meeting for, we want to listen. now So, it was the first pitch which we were trying to give to someone that, okay, we we understand at that point of what is the pitch. We are not knowing what is a good pitch or how how to present that whole idea.
00:26:45
Speaker
So we were there in Delhi, Hiro Munjar family office, which is called Servant Partners. And Akshay Munjar is handling that whole domain. And we started giving the presentation that he said, what the business you are doing. We said that we are building the battery, then we are doing the recycling. We thought that it's a good thing that he will think about, OK, you are doing good business because you are in two domains. He listened the whole story. And he said that your founders are good. but you have to choose one, otherwise go just right now you just leave.
00:27:21
Speaker
yeah And there's not an option of thinking about anything because you have to give the answer at the end. So he actually, uh, You know, he was having some idea because he was having good experience in the company because he he had given a lot of, you know, investments. So he was adding idea that recycling has a big perspective. So he said that, see, according to me, recycling is the good opportunity in the future, but I am living on you. You have to choose one and tell me now. This sounds like a Shark Tank episode.
00:28:03
Speaker
So I had, we said, so at that point, that was the time where you are like, just give me the money, whatever you will tell me we will do. At that time, I had that, so i because but discuss we said, okay, let's get the money. And then we will look what we'll have to do, whatever you will say we will do it, just get the funding, you know, in the company. And that was the time and we got, we said, okay, yes, whatever you are telling, we will do it. And this is the business model. This is the you know ah the working capital sheet, which we will be utilizing. this is a utiliz utilized year And we have made some very basic, you know, a presentation of punch utilization, the market size and everything.
00:28:52
Speaker
So he was having very good belief on the other side. He said, okay, you are young and I'm seeing a lot of potential, so I'm betting on you.
Investor Influence and Business Strategy
00:29:01
Speaker
So we got the first funding of 2.5 close in the first stage. That was a turning point for us because if that was not happening at that time or we were like, okay, we will not get the funding because the first step is very, very high. I mean, to cross that first step, and you will not believe we have given around ah around 100 or 200 pitches.
00:29:28
Speaker
Each and every person, the local state guy, you know, the lala guy, the angel investors, I mean, every person who whom anyone is saying that, okay, explain your idea we were trying to explain. So then we got an idea about that, okay, this is not going to work. I mean, you need some good connect. So I mean, before this funding, there's a funny story that There is one person, this is called GK Sunna. I mean, GK Sunna is living in Gurgaon. He was an ex-pepsico head in Ireland. So one guy has given the reference of us. So we have, so he said that, okay, it got up middle. I mean, just you just met him. So we were like, okay, we will meet him. So we were like, we were running all the funds. Okay, we will meet if he's saying this. So very first meeting, we had a meeting up around half an hour.
00:30:20
Speaker
And at the same time, he has taken out the cheque and he returned a cheque of 50 lakhs. Well, at that time, there was no factories, there was no team, there was nothing. Only we were the two people that even we were not having the presentation, we were just only telling the ideas. So this was the 15 lakhs was the first funding we have, you know, in form of. And then after that, in this round, I mean, you will not believe our professors have also put money in our town. And Akshay Munjal also came in this round only. Yes. In that same round, ah professors professor one of the professors put in his own money. And there are some other small, small individuals which has left this round. And then there are around 11 to 12, you know, initial investors who invested, our total check size was 2.5 crores. But the valuation was 5.5 crores, which was pretty money.
00:31:17
Speaker
So that was the ah valuation, which we did on the first round. Okay. Okay. Okay. Interesting. oh So then what, like once you, and you know, very quickly helped me understand the. investors calculation for battery recycling as a business model, because the investor would have mentally got some calculations, especially someone like Akshay Munjal that in a battery recycling business, this is your input cost. and This is what it costs you to convert and then you sell and this is the margin that you're left with. So at scale, it is a good business. So I will invest both investor mindset car aga for battery recycling business. I mean, the investor mindset, what two things, one is the margin, the good margin, and second is the
00:32:00
Speaker
How do you understand the margin profile? What is the margin profile? At that time, the battery cost was around 30 rupees. And the processing cost was around maybe 30 to 35 rupees again. And we were able to sell the machine with 200 rupees. Wow. Okay. That was the time when the margin was very high because the price was not. But today, the market has changed to around 35%. Okay. Okay. Okay. That's a massive margin. Okay. ah Understood. Take it. So you were saying there were two two reasons for investors. One is margin profile. What's the other?
00:32:41
Speaker
Second was was the scale of the business. I mean, everyone knows because of the EVs. The total addressable market is i very large. The market size, which is which was around, one um and at that point of time, the market size was around $3.4 billion. dollars And the total addressable market was around $300 million. And then the serviceable market was very small. It is below $100 million. It is because that ah market was very huge. Battery are lying down everywhere. But how you will get the batteries to a factory? So what is the business which you can do actually? that is That was the main question mark because a collection of these batteries from the whole country is a real challenging task. And so that time, ah
00:33:34
Speaker
collecting that whole volume, and getting out of the factory with good logistics, and there is a lot of collection partners you will be needing, then good logistics, good safety standards, and then good processing also, you will be involved to do that. So I mean, the investors, good point was that, and even what they have done is because our benchmarking companies was very, very, very, it was ah it it was a billion dollar company. So there's two companies at that particular time. One was the life cycle, which is based out of South America, North America in Canada. Okay, in Canada, this company called life cycle, which rich, I mean, the company run, there's an Indian guy who runs the company and the company listed in next video in just three years of operation.
00:34:15
Speaker
in the same business. Second company, which is ah called Redwood Materials. So this company was is founded by the Tesla co-founder, which is called JV Strouvel. So actually the cool Tesla co-founder was JV Strouvel and then Elon Musk invested into that company and then become co-founder. So that co-founder has into this business and they has got a $1.2 billion dollars of you know loan from the US government. into the same business because everyone wants this much heated. This is like a new fuel. This is called a new gasoline.
00:34:54
Speaker
So you have to preserve it. So government's part is to preserve these materials in the country because ultimately you are importing these materials once you are paying for it, right? There is a foreign reserve which is going up to import the batteries. So now they believe that this material lying on your country. It should not go out again. So the America um and the US is already having the policies, the battery recycling, I mean, lithium and battery recycling is one of the major aspects, this physically in their budget. So I mean, okay that benchmarking was a bit issue. Second is, there was no competitor. So we were the early, you know, advantage. You had like low hub as a competitor. Plus, I think there's this company called Atero.
00:35:44
Speaker
So, see at that time, everyone was on the research, no one has come to the commercialization, right? but i as right Ataro is into the, before they were into the e-waste recycling, the electronics, your laptop, and mobile phone, and then they have shifted towards one domain, which is lithium recycling also. But before 2021 or 2022, no one was onto the commercial scale. yeah Okay, okay, okay. So, for example, if you have certain batteries with you, if you have one ton of battery, if you say that you can, no one will take that battery. So, everyone was into the pilot scale or in the the research scale. So, I mean, that was, like you can say, there's a no player which is into the competition landscape. so Okay, okay, interesting. So, how did you scale up supply? So, from what I understand, this business is
00:36:40
Speaker
not a business where you have to fight for demand. ah demand here You have to fight for supply. Am I right with that? Yes. I mean, before that, we we need to understand that ah building the capacities is not that much easy. I mean, ah once we stepped out from the college, ah we opened the first factory, which was around 20,000 square feet. So to open your this but this kind of factory, it comes under. This is actually after the fundraise or before fundraise? 20,000 square feet. It was after the fundraise. Okay.
00:37:12
Speaker
oh ah There was a first condition which was like you need a red zone area. So there are certain areas defined like green zone where you cannot set up the factory then the orange zone where you can only set up the factory which don't have any emissions or any hazardousness right. And there is a red zone. So which where you can do some chemical activities. So we were in Gurgaon at that particular time, but we were thinking about where we have to go. So we have to get out the whole list that and in in the country, what are the, I mean nearby Haryana because the choice of Haryana, Reisman and UP. And we belong to the UP, so we were more comfortable about in in the UP and you know state because we were like feeling, ah you can say that, okay, we can have certain connections in the politics to have some gratification or something. That was the idea.
00:38:05
Speaker
um I mean, there was only two or three choices. ah One was the Vivadi, which is in Raztan. It comes under the red zone. Second, in Gajaba, which comes under the red zone. Third is, in Sikhandrawa, the one industrial area. and Next, to Greta Nohira. So we have to choose from these three locations that which place we have to go. And then we, according to the, you know, we, we roamed around a month. It goes with the car. We actually, given each and every street of these locations, how that is being there, what is that, how what kind of area is being there, how people are, is the people level, it is being there or not. And then we selected the Sikandaravad industrial area, which is next to Greater Noida, which comes under Bulan shed jurisdiction. We selected a 20,000 square feet, a built factory, which is already shed is being there. And then we invested around
00:39:00
Speaker
1.5 crores in the out of the 2.5 crores. And we built our whole plant ourselves. We designed the plant ah so i mean just to have a broad process. Battery recycling is having two processes. One is the mechanical processing that means once you bring out the battery, this battery contains lot of charge because once you throw the battery, it may be charge condition. So, we cannot process these batteries in the charge state. You have to discharge the battery and then utilize the charge from these batteries before going to the recycle.
00:39:34
Speaker
So the first phase is we have the mechanism where we dip this battery into a solution, a large tank.
Technical Insights into Battery Recycling
00:39:40
Speaker
And then we put these batteries for 24 hours or more than hours to discharge into a liquid media. And then we take out the batteries and then we put into the mechanical processing line. That means you crush the battery, you you you you you know dismantle the battery, and there's a crusher which is like mixer. And I mean mixer or you can say a there's a blitz, right? like give of the minds
00:40:06
Speaker
it spreads it and okay It's called shredding, it's called you know ah ah crushing, it's called milling, it's called air smoke suppressors around 10 to 11 processes where the bacteria have to pass through. So this is called physical processing. That means actually you are not using any chemicals. By doing physical machines, you are separating your materials like cathode and anode materials. So cathode and anode materials are like mix ah mixed of lithium, cobalt, nickel, manganese. So what does it mean cathode and anode? When this battery is being built, so you you use lithium, nickel and cobalt, right? But these are not in individual form.
00:40:48
Speaker
This is like you mix these materials together you know in a compound form which is called cathode material. So, for any battery to work you have three things one is anode, one is cathode and in between you have a separator. So once it's like a sheet of metal, which can, and that sheet is a mix. It's a compound. I mean, its it's not cheap. That's what I mean. It's like you have a copper film, a small, everything's cheap. And then you meet that material with some liquid, like, you know, ah to make a viscous. And then you quote that sheet with that material, which is called capital. Okay. Okay. so And then you lower it into a cell phone. And what is that?
00:41:32
Speaker
So I noticed like exactly the same thing, but there's no mineral, there's only graphite coated onto the aluminium foil. So the aluminium foil, you coat the graphite, then separator and then this cathode and then you roll it into a form. And what is a separator? Separator is a liquid video? No, separator is ah is ah a polyethylene film. I mean, it's a plastic, which only allows lithium to pass or no other thing will pass from the plastic. Only lithium ion will transform the plastic. So once you put your phone on charging, so do you know what happens? No. So when you put your phone on charging, billions of ions come out from cathode that travel through the separator and they sit into the anode position. So you have a lot of billions of chairs and you have billions of people.
00:42:26
Speaker
The anode is getting magnetized and attracting the lithium because of the charge which is coming in. Something like that. Yeah, you can say like that. I mean, it's like when you, the electricity, there's a potential, right? So because of the potential difference, the ion excites because of the ions. So you can understand you have billions of chairs and billions of people. So when you put phone on charging, the billions of people are trying to stick and occupy the chairs. nothing any nice and venue vens but and When you discharge the battery, when you use your phone, again those people who are sitting, they're going back to the other side. And that happens every time, every time the people say, so why battery heating is takes place? So you will see that ah billions of people are colliding each other to occupy the same place.
00:43:11
Speaker
Some are leaving, some are coming and they collide with each other. Exactly, exactly, they collide with each other. I can say that is called the heating effect. I mean that's the simple fun of utilizing it and I mean once we will have time I will also tell you that how lithium ion cells have been started, who has started and is it accidentally the cell has been you know, innovated or came into the market because Sony introduced you. So I mean, later on, we will you have some... Tell us now only, this is interesting. I want to hear it now. Okay. So in 1990, you have seen the tape recorders, which we are having small films, right? yeah no Yes. yes so The old cassette tapes.
00:43:56
Speaker
whole gase tap So, the companies which we were having a lot of investments in those old cassette tapes and they were having like Korean company was the Sony was the first company to launch that right. And what happened in 1993, 1994? ah but new htd is hard and i The is the CD disk, I mean the CD ROM was introduced. Yeah, the storage media changed. Yeah, I changed. So these companies were having large up a lot of investments, a lot of keep it, a lot of infrastructure is being made, what they will do with that. So, I mean, this company Sony has
00:44:39
Speaker
one of the guys from Sony thought that I mean the cell manufacturing as a lithium ion cell can also manufacture in the same way where the film is being manufactured right. They you can they he thought that I can use these machines to make something like which is called lithium ion battery because there also coating is required in a film and that also the coating has been required in a film. i So that was a very interesting turnaround time in 1992, and then into 1990, then into 2001, it became commercialized ah in terms of the portable electronics. So that was the turning point for the Sony kind of companies. What they did is they transformed their old companies which were manufacturing these tapes into the cell manufacturing. And that was the need because of the need
00:45:35
Speaker
And this accidentally this battery has been, you know, starting to the commercialize because the error that was going and the error has been coming and there have been things together.
00:45:47
Speaker
okay That's how the start of, you know, the nuclear bomb started. I mean, i I heard the story from one of the Korean guys, because I was in Korea, he was telling me that company is 40 years old. So he was telling, because that person is around maybe 85, he was telling the story because he had seen that. And he told a lot of things that how they commercialized companies, and how they shaped the whatever electronic industry, especially the mobile phones. So coming back to the recycling process, ah you shred and what happens then? It becomes like a powdery substance or what how finely is it shredded? Yeah. So in that plant, you crush the battery to small, small pieces, okay which is called shredding. And you have some hammer milling and some other operations.
00:46:37
Speaker
So you get out the outer material by doing a viral separation. So it's a scene. You see the very tiny material below 16S. This is called cathode and iron material mixed together. This is called black mass. So it is termed as a black mass, but it is looking like a black color, black powder. So I'm slowly slowly used to term as a black mass. And now this black mass has become a commodity product with the name of the black mass. Okay. okay So, one product is your black mask that is the cathode and material mix this is called black powder and remaining is your packaging material like casing of the battery, the copper, aluminum and steel at a different place.
00:47:18
Speaker
And then second step is the chemical process. Then you take that whole powder into a chemical process, and you do some chemical processing, mixing with some chemicals like leaching, like solvent extraction, doing some electrochemical processes, doing some hydrometallurgical processes. It's a long process containing 157 processes. So the process time is around 20 to 24 hours. When you put your black mass, that me material into the chemical plant, it takes 20 hours to extract that material at the end state, like lithium, cobalt, and nickel. I mean, that's the complicated process, which we have one as the mechanical processing and one as the hydro-metallic processing.
00:48:00
Speaker
ah This black mass also includes aluminum PVC and all of them? No, no. So, we consider aluminum, copper and PVC as an imperial tale to the black mass. And how do you separate them from the black mass? So, one example, once you shut the battery, you cut the battery like scissors, this is called shredder. After shredder, this battery goes to a special type, special design of crusher, which only scratched out, scratched that material, which has been coated before. It will not actually tear up that, crush that whole material, otherwise the whole material is released. And then you use air flow mechanism, which is called density separation, where you you you you, because of the low pressure, you get out your plastic and everything with the air flow.
00:48:46
Speaker
Okay. The powder is heavy, right. So, it is separate blasting in the first stage. Second stage, you see about your black mass. That means, on a very fine mess, very fine, a very fine sieve. It is like the sieve size will be around equal to your home sieve, right, where you have, you are sieving your floor. So that is exactly 3D matter which is being used in a larger machines. And then third process is where you have you are segregating your copper and aluminum also using density separation separation because this I mean density separation. separation So you use your density separation model using eddy current separator or different technologies being used to separate these materials way else. So we sell that. How does density separation have just a little bit if you can talk on it? So density suppression is like, uh, have you seen that in your old homes, you have some food kind of thing you're doing like this, and then lighter materials comes to the boundary of that, right? yes ah Yes. Because the lighter materials, so there is a difference between, uh, density, copper and aluminum. Copper is more heavy than aluminum. Right. So once you, you're pressing some, once you're putting some pressure and making your material vibrate it,
00:49:59
Speaker
Now what you do with the Giohona that the first... It's the same process but now it is happening into the machine. The wheat from the test. Yes, yes, yes. So you are you're segregating the chef from the, you know, the wheat, right? It's exactly the same process but now converted into the machines. So you can say the aluminum is like chef and copper is like wheat. so because of doing that mechanism and UK stuff in that material. So we sell that copper, aluminum and plastic in a local ah market. and started this of Before we were not having the chemical plant because the research was not completed. So we were exporting this black material which we call black mass. So in the year one, we exported around, ah you can say around 250 to 300 metric tons of the black mass from our country.
00:50:47
Speaker
So how much do you earn per ton? At that time, button the pricing was $10 per kg. So you can say $10,000 per ton. We were shipping 20 tons of containers, one container and one shipping. And you will not believe we have learned everything. on My team, I mean, our people are so energetic, so passionate that we were not knowing that how to export the machine. even if you're not knowing what how this board works.
00:51:19
Speaker
So we were having intern when they figured out very good way they maintain the resource. And I mean, they've done a very wonderful job as a pressure oh handling everything by the how the export will work, what is the certification and licensing. You will be needing to export the material because there is no HSN code which has been built of this material. This material is very new. right So very first year, with the eight months of operation, I mean in 2021, I guess we got the first funding. In March, we closed the balance sheet of 24 crores with EBITDA positive of 2%. So, you can relate that how our team has worked. I mean, it looks so simple, but
00:52:04
Speaker
You have to really work around 18, 19 hours to build your factories, to run the operation. There are a lot of problems in terms of safety, the fire, the regulations. And even once your sourcing of the material is very important and then logically giving the loss, for example, my materials from Chennai, it might take that that metal can catch fire in between. So to take care of the full SOP. I mean, our team is 90% people are more young, below 30. ah I mean there more is an energy because you will not find the experienced person because there is no industry which are being evolved. So have to train them, they will learn into this ecosystem. And in our company, the good thing is that we have not made a culture of nine to five job.
00:52:52
Speaker
um I learned from Japan that the outcome is very important rather than the time outcome, right? Because one time one place we were having the R&D, second in the production, third is the testing machinery because this material testing unit also we have ah to run to know what is being contained in these materials. ah For example, and to when we started the company, even any of the company was not knowing that ah What is the material inside the battery? For example, do you know what is the lithium percentage in your phone? You don't know. You just only know this is a 5000 mAh of battery and it will give you the backup of 8 hours.
Supply Chain and Market Dynamics
00:53:30
Speaker
Same is happening to the company also. Even maybe the Samsung, Nokia, they don't know what is the percentage of cobalt and composition.
00:53:38
Speaker
So, for me it is very difficult to know you have variety of batteries, variety of sizes, variety of cell form factors, variety of geometry, variety of oh chemical composition. I mean under lithium and batteries, lithium cobalt oxide, lithium nickel oxide. So, in simple terms you can understand the companies are mixing this cobalt, nickel and lithium in their own chemistry. In some batteries, you will get 30 percent cobalt, 10 percent nickel, 5 percent lithium. In some other company or some other food model, you will get reverse. The nickel is 30 percent, the cobalt is only 5 percent, the nickel maybe 3 percent. And you are going to earn the, you are going to earn the money not with the battery volume. You are going to earn the material which is there inside the batteries, which is very hidden. And that material looks like a black color kind of coal.
00:54:31
Speaker
So you need to understand that testing is very important. So then we set up a very good testing unit inside the f facility ah where we were doing the testing. So we have done around 2.5 to 3 lakhs of batteries that what battery contains what we have a data that Nokia but phone, which was that you know launched in maybe 2000. We know what is the cold content now. well We have a full spectrum and then what we done is we we we got a good team of supply chain we mapped on the map that in from Jammu Kashmir every state what is the volume of battery which has been what is the volume of phone which has been lost which has been sold what is the volume of vehicle which has been sold and then we mapped the pin that where where are the maximum scrap line down and that's where you have to work very closely as a deploying a team because you don't have your money to just invest into the supply chain putting other people over there.
00:55:23
Speaker
Right? I mean, that was a very good activity, which we have done. How do you deploy your team for sourcing? Is it like one team goes from one state to another state or you deploy people for each state? I mean, in the starting, ah we were the only people going every state, just talking to the scrapers, actually, because maximum of the mo material lying down the scrapers. And because you cannot pick your material by your own, you have to utilize the scrappers to, you know, expose the material. So there's a value chain here also. Like one is you have that local Kavadiwala who's going around in the cycle and connecting, then he sends it to a local shop. Then that shop further sends it to someone bigger, right? Like an aggregator. So there's a long chain. I mean, there is a very long chain. So once the Kavadiwala picks the battery in any, you know, landfill or any house.
00:56:14
Speaker
that person will go to the local shop where they have a small shop or the scrap. so even So he will collect iron also, he will collect glass also, he will collect aluminium also, he will collect battery also together. So that shop what we will do is we will segregate the batteries alone and then he will sell the batteries to an aggregator in the state. and I mean which will only collecting the batteries and then that battery comes to Delhi and Delhi there are big scrappers coming out so they have a very long chain so if you want to source the material I have to talk to that big scrapper that that will he will not give material to me why it is because that is it no it's not about small it's about oh there is one community
00:57:05
Speaker
which runs this whole business. So they're interconnected by relationships or maybe, you know, that's a long 30, 40 years business which they are doing. So they have a very good hold on this. And I cannot go everywhere. And so because he knows that today I'm going to throw the metal with him, but tomorrow I will be law because you don't know dont know me personally. So you want to connect all with the chain with him. Right. And, uh, You will, I mean, there's one fact, which is something like the whole country's crap comes to Delhi. Oh, wow. Okay. the You're talking about yes any scrap. Any scrap except plastic. I mean, value is kind of like copper, aluminum, iron, steel, or some other materials. It's a plastic state. Can't you just buy it from the Delhi aggregators?
00:57:56
Speaker
That's where I mean, see now what happened, we started buying with the daily aggregators and they started increasing the pricing. Initially the battery pricing was 30 rupees in proton 20, the pricing was 405 rupees. or gri your back Okay. So then we realized that because the market is too small at the moment, you need to control them. And to control them, you need to cut the supply chain.
00:58:24
Speaker
And you have to put some money on supply chain, you know, that is called market acquisition cost, CAC. Right. So that is something we thought that let's build our collection partners every state and make them ah funded. They will have in the advancement. So what we were doing is we were giving that sub-advance per to everyone. ah that ah you collect material with us. So, now get they got some books. One example if I ask you a question that why a guy in outside this ah liquor shop getting up this you know ah the glass bottles, then there should be some motivation. Who has created that motivation to leave that bottle from there? So, this is a very strong ah supply chain understanding.
00:59:16
Speaker
You cannot work from the ground. You have to use the same supply chain. The same guy who is lifting the bottles will lift the battery too. But you have to give them motivation. And motivation is the money that you have to give to them. So when money is floating for some material, they will understand this material is valuable and you have to pick it up. Initially, they were like, okay, there is no value, why should I care? So once you make the material valuable, um the supplies can automatically start working. on You don't have to do anything. I mean, automatically, because you're moving the middle man, you could offer a better price to the state. aator So so and um twenty of the less pricing, you can store the material, 20% less pricing with that. Second is you can control the feed. Also the quality also is getting it over there. I mean, and second, you can also include the volume because
01:00:09
Speaker
Here I have to depend on these aggregators to run my plant. So I need a a very large network to store the material and to run my plant smoothly because most of the waste management companies I believe the major backbone is the supply chain. The plant is not the backbone. Technology is not the backbone which we need now. We realize that plant once you are built it will need a constant feed. So that means the backbone and the strength of the company is the supply chain network, which is called Backboard Supply Chain. So you've heard of this company called Recycle, where this is R-E-C-Y-K-A-L. I know, I know, I know. them We take the batteries from them. So Recycle is a digital aggregator? like they are Yes, they collect the batteries digitally, I mean. So that is there are two terms. One is called Producer Responsible Organization, ERO.
01:01:05
Speaker
Second is called, you can say, the reverse logistic channel partners. So the company like VCT, if you heard about VCT, I mean, if you have the company like, you can say Thambhav Karu. I have heard of this. The company is like... These are producers responsible, PRO, what you say. So what they do is, They have a collection very strong collection partners and the logistic companies. So, they will collect for you that is for you. They actually they are collecting plastic also from your homes and they made this whole system more organized right. They will get everything and they have a way around that the segregation will happen and then they have a segregated material in a very organized way.
01:01:56
Speaker
Okay. But, but their last mile will still be the Kamadiwala. Yes, yes. So, I mean, the Kamadiwala also, I mean, but the Kamadiwala, he's selling the material. From there, they work out. Right. Got it. Okay. Okay. Okay. Okay. We are tied up with them ah to collect these batteries from pan-India. And why they call it ERO, producer responsible organization. What does that mean? with It's a VR term. Have you heard about the term called EPR, Extended Producer Responsibility? It's a very common term now. It's a government mandate that if you are creating waste then you have to collect it. Yes, yes, yes. So, in battery also it is being enforced now.
01:02:38
Speaker
okay so now Samsung has an obligation, ah there's a government mandate that Samsung has an obligation that if Samsung is selling 1,000,000 mobile phones in a year, then it has to collect batteries or the waste that would have been generated by selling 1,000,000 mobile phones in a year as their collection obligation, recycling obligation. yeah okay So now... So Samsung would work with these PROs to achieve their target. Because Samsung cannot choose the material, right? You should know that Samsung cannot choose the material because you will not go everywhere and well, my phone is being lying down, right? So they need these channel partners to collect their stuff. And then that material comes to recycle. So we issue a certificate which is called a recycling certificate.
01:03:24
Speaker
okay And that certificate is provided to Samsung, which Samsung can use for their compliance. yeah okay okay Because of that enforceability, which came in 2022 for batteries also, now this sector has become a very pace, because you have to make a gotten mandate, more phones come near the gotten mandate. So now it's their responsibility also, they are describing this stuff. So that would reduce your cost, because Samsung will also be bearing some of the costs. Absolutely, absolutely. Like for the PRO, there are two sources of income. One is selling the material to you, and second is selling a certificate to Samsung. So to Samsung, they will not send the certificate. The certificate will be issued by us to Samsung directly.
01:04:08
Speaker
I said this piano is enabling Samsung to meet the compliance requirements. So they would charge something from Samsung. Exactly. They will charge. between i mean okay okay that's all they And they will learn from you ah purely from the material sales. Are these very profitable businesses, these pianos? ah Not really, I mean, because ah there's a lot of documentation, and a lot of things to maintain. So, I mean, you can say it's an average, not less, not more, it's on an average, ah you know, margin as they have, and you have to really work hard to, you know, have a good connection with the company, good regulations, you need to have the regulations, everything. So, I mean, that's kind of a CSL program.
01:04:52
Speaker
Yeah. Right. Yeah. Yeah. Yeah. Okay. Understood. Okay. Okay. So the other you said is reverse logistics organizations. Yeah. What does that mean? So first thing is that once you buy anything, so the the thing is being ah transported by truck from the factory and then it looks to the device small, then there's the last month, ra right? But here it's a reverse. I mean, there's a product which is being used. So it will be picked with the small vehicles. then go for the larger vehicle, the larger vehicle, which is exactly the reverse in the power case. That's why it's just got reverse logic. The logic is working in the reverse form.
01:05:30
Speaker
to read the material from small, small organization to make like 15, then eight, then maybe two, then one. So that's how the material is being supplied. Is this a ah ah business of picking up scrap from businesses, like a company scrapping their old laptops, or is it also from individuals? Like if I trade in my old phone to buy a new phone, then that old phone which I've traded in. I mean, that is something which has been done by Cashify. Cashify is doing the same thing, right? um You take the phone so we have a maybe, for example, the recyclers can make a, you know, what we call partnership with these cash flow finance companies. And we source the material with the cash flow maybe they have their own replacement or something they will do because we need a battery.
01:06:17
Speaker
Right. Okay. So who do these reverse logistics companies work with? Like, who do they collect from? Do they collect from offices? Depending centers? Okay. ah These materials are also being there in service centers. ah for ESS. These batteries are also collected from telecom sector, which they use into the telecom towers. I mean, if you see the utilization, it's a portable electronics, mobile home laptop, then power storage, is power banks, telecom sector, EVs. And now the batteries are also started into the home inverter applications. So now it's a right for your batteries. Lithium ion batteries are used for inverters? No, yeah, it's started.
01:07:01
Speaker
Okay. Okay. Okay. Okay. interesting Interesting. Okay. Okay. Understood. And these reverse logistics businesses, do they provide the working capital? Like will they pay the seller upfront or they just product logistics and you're responsible for the working capital? be a responsible for the working capital. I mean, we are the ones which are responsible for floating the money, because okay you have to initiate the whole thing. So I have to pay upfront, but when I sell the material, my payment is coming in next 45 days. So the working capital cycle is around 45 to 60 days. So that's a challenge because that's a working capital ah a game. I mean, if you want to do more revenue, more profits, you should have a very good working capital from the platform.
01:07:45
Speaker
but and buying back way That is something which is still we are solving using the we are now got some lines from some bands which are big check size. um They are also getting some debt to just utilize into the working capital cycle. We got some LCs also to export our machine. here ah So now our thought process is that... LC is a letter of credit, which is basically but against export you get. It's like an invoice discounting. Yeah, it's an invoice discount. So there's some margin and in that margin you give that small margin to someone else and they run that. will Give you the money up front. Okay. Okay. Okay. Understood. Have you raised a venture debt?
01:08:27
Speaker
Yeah. I mean, uh, not that are really high. I mean, we have only raised, uh, maybe five crores more than that. We have read that from the exhibit. Okay. Because you are exporting, right? Is that the cheapest source of debt for you? or Yes. Yes. Absolutely. Absolutely. so Okay. I mean, 30, 35% cheaper than the venture. Okay. okay Yeah venture debt must be the costliest and bank debt could be somewhere in the middle I guess. yeah yeah I mean it depends on your margin and I mean the cash in bank because the cash in bank the equity money ah versus your debt defines your
01:09:10
Speaker
we're all Because we don't have, ah initially we don't have hard assets, right? They're only having soft assets like equity or shares, right? but is So I mean, that also affects your interest rates because it ultimately needs security. i I mean, there are a lot of things we have now, our own plan, so we have our hardware assets also, top assets also, some of the future assets also, which we can have, you know, a blessing which we can do. I mean, now we believe that this business is only for the working capital issue. If you can solve working capital, I mean, you can scale as huge as you can. I mean, equity money is for scaling it up, putting in the capital cost, which will ultimately also increase your assets.
01:09:56
Speaker
And working capital lines, once you will work more closely with the banks, I mean, they will increase the lines for you and because you're in the export, so they have a guarantee of the machinery or the export. I mean, you will believe that Exim Bank has also put equity money in the company. Oh, wow. Okay. ah Amazing. ah so So you started by exporting Blackmass. What do you export now? Now we are exporting nickel, cobalt, manganese, lithium for our country. So we have we have three new factories now.
01:10:33
Speaker
One is where you have black mass production, which is 20,000 square feet. Second factory is one lakh square feet, which is about five to six times per year from the initial factory where we are building a chemical plant, a large chemical plant, which the capacity will be around, ah you can say 2,000 metric tons of black mass processing refining every year. And then third factory is for the power electronics. So we are now entering into the power electronics again. We were talking about electronics. I mean, building the batteries. Okay. Okay. And what, what is the form factor? You're building batteries for like large size batteries or mobile? ESS energy source packs. I mean, it it will be the replacement of the charging stations, replacement of gensets. So you have a large genset. I mean, you can replace it. Use case. ah Yes, yes. so application The applications show the energy.
01:11:30
Speaker
will not be there into the EVs or maybe those batteries because why we have to open that because in that the major problem is once you receive the batteries from 4 wheelers or bus or 2 wheelers there are lot of batteries or cells which are good condition. So, why to recycle those batteries if they can still run for 3 to 4 years more. right. So, our idea is to build these batteries again by taking the good cells out, the bad cells will go for the recycling and we will utilize these cells and the battery energy to 24 years where we have some you know a revenue generation from that and the value of the material will be same but like what today tomorrow also.
01:12:14
Speaker
not right there's no okay okay okay very interesting These batteries you are manufacturing, you are selling like energy as a service kind of a deal. Energy as a service. So what does that mean? ah So you can say that I cannot sell these batteries because ah ultimately I want to be your owner of the battery because I need to take the batteries back also. You want to own the asset. Yes, absolutely. Second is which is very important that because these batteries are being already utilized so I cannot claim my exact warranty.
01:12:49
Speaker
Yes. And right because I don't know where the battery is coming from, how they have utilized it. So, then in the technology what we have built, we can make an approximation that 300 cycles, 400 cycles the battery can go more, but exactly when the battery fail you don't know. So, if it will be owning by earth, there will be no problem of service sectors. I don't need to have a service I know problem because service will be a very big issue.
01:13:16
Speaker
right And because of the service, um we don't want to take that a problem with us. Right. Secondly, we don't want to play as a battery manufacturing brand.
01:13:33
Speaker
Okay. Okay. You like. You create a they go the way there is, say, cloud, where there is a rack of servers in a data set. So if you do something something like that. yes yeah so can say like you know You have a very big self-like thing, and then you put a lot of batteries at the data centers, which you have seen on Lendy1. And then you connect each one, and that battery is connected to servers also. when we have a trackage from here that how much energy we are releasing or how that is performing, what is the state of the health of the battery, and when the battery will come to the end of life. So, from our from our our sentiments, we know every data about the battery. So, there is asset finances because today the major problem is if you buy an electric car,
01:14:24
Speaker
and you are giving a insurance also, you are taking the insurance of the car, right? But the insurance companies, if you have hit that car to anyone, I mean, if the battery is being, so 60% or 50% cost is of the battery. Yes. So it becomes a very problematic thing for the insurance companies is that what will be the value I will get from the battery when I was done. Because ultimately, I'm giving the insurance for maybe 1.5 lakh rupees or maybe 80,000 rupees for a normal average car. So ah what will be my recovery value? because only one part contains 50% of the cost of the whole car. For example, Tata Nixxon battery costs around 4.5 lakhs rupees. So until unless there will not be a good processor where I can say that, okay, I will take your battery with 1.5 to tail 2 lakhs back and I will give you the new battery.
01:15:16
Speaker
So that can be only possible by doing recycling or utilizing the battery into the second life. So this battery manufacturing, there is a term called second life battery manufacturing. There is a first life, there is a second life, there is a recycle. So second life batteries are basically where you're taking the cells from existing batteries and the ones which are still good. you are reassembling them into ah a battery and these are deployed on client location. Like if there is a solar energy yes so that's a plant, then whatever is the location of the solar energy energy energy plant, you'll deploy it there and then you will charge them ah like a monthly fees based on how many watts of storage, something like that. We will charge per unit.
01:15:58
Speaker
like which regard storage Like the storage capacity, like if the capacity is 100 units, we will charge that. So we'll charge the 100 unit into some unit cost. So there's a good riddance model which is coming up, which is called selling up the energy at peak time. ah yeah Yes, yes, yes, load balancing. For example, what is happening today, in solar, once you generate the energy, they only get around 2.5 rupees per unit. In today's time, the realization. ah That's why the problem is that the solar company is not ending much. This is called nitmetric. You are sending that. For example, at daytime, the load is less. The grid load is less. But at evening time, everyone will try to charge their car because you have seen that once we came home, they put the phone on charging. Everyone sits like same mindset. So at same time, the people will come from EVs. Once the EV volume will be high and they'll put e every EV with the charging. So there will be unbalancing in the grid.
01:16:56
Speaker
which is happening now also and that means you will see that today also the the companies are in our homes we have a different tariff charges in your home when the electricity is calculated it is not on the fixed rate you will see when you receive the bill in that bill it is retained at the evening time the charge is more The data on the target list. This is implemented, is it? I was not aware. This is already been there from last 10 years. Dynamic pricing is there. Everyone, no one is trying to see the bill. Everyone's just, okay, this is the bill I need to sell, but this is the mechanism, that's how they follow. The big companies, I mean, which are utilizing maximum energy. This is for residential. Residential also. Okay, interesting.
01:17:39
Speaker
So for a solar power plant, if they are able to sell at a time when they're not generating, which means like ah evening hours, they're not generating energy, but if they have enough in the storage to sell at that time, they get paid a higher amount per unit. Yes, so it's a very good business also. Profitability. So if they can add one rupee per unit also, it's like 1.5 rupees at that particular time. But it's still a little challenge in terms of different different states. They take some royalty on that transport. For example, my solar is being planted in Rajasthan. I want to transport the electricity to Delhi. So I have to give some charges to Rajasthan government. So I mean, that is being i'm in the policy. I mean, this needs to be implemented that how that whole
01:18:18
Speaker
ah Common grid systems will work using solar to transport the energy. For example, if I my i have generate some electricity, i want to so it I can take to anywhere else with some certain discount. It is like so my perspective is in this, after 10 years like Tesla Powerwall, if you heard about Tesla Powerwall. So from the second
Global Influence and Market Competition
01:18:43
Speaker
life, every home will have the Powerwall. and there will be a data center. So we know what person is using, what percentage of energy, what is being stored. So for example, 10,000 homes is having sewing battery, I know what home is using, what kind of, so I will sell that energy from your inverter itself, from your battery itself to anywhere else.
01:19:03
Speaker
Wow. Amazing. So that's a feature thing which i mean new distributed cloud. Yeah, distributed cloud. Amazing. Amazing. Very exciting. So you closed 20 CR in your first year, right? 24 crores. So this last financial year we just ended 31st March. How much did you close? I mean, just we are not, I mean, it it is, it is somewhere around 50 crores, but certainly I can not reveal the good number because it's still the balance sheet has to come. The provision has been made. So this year, the yeah edge of rough estimate. So you roughly has like 50, 55, something like that. and this will better each This year, the business is a little bit streamlined because last year ah we were not knowing that how materials markets works.
01:19:55
Speaker
So there is a big on ah you know ah learning and segment which is on the market side. So these materials like Lipsium, Nickel and Cobalt are ah international commodity prices and where we sell the materials, these are being sold based on international commodity pricing, which is called spot pricing. Like London metal exchange is one of the domain, second is fast markets. So these markets, based on these markets, you pay the pricing. So, from last year the pricing of the cobalt was one example 65 dollars to where the cost the pricing is around 24 dollars.
01:20:29
Speaker
Why is that? why Why is the price falling? I thought this Ukraine war, all of this is causing yeah if shortage. as yeah The price is going up. I mean, it it is down the narrative of which we are hearing is that there is inflation because of ah geopolitical tensions. So there is inflation and price rise. Why isn't that true for these commodity metals? I mean, lithium also it is dropped from, you can say $70 to $17. Why is that? but Why is it dropping? the nickel cobalt lithium these three materials neodymium also these four materials it will take 90% processing and hold of these materials is controlled by China in today's field so what China did is one example 80% of the world's lithium content content Chile Argentina and Australia ah but the mining is being done by Chinese company in those it is happening in these countries
01:21:29
Speaker
Okay. One example, the cobalt is majorly found in Africa, which is called Congo. Okay. But the mining is being done by Chinese companies. Exactly same as nickel is found in Indonesia, but the mining companies are being in Chinese companies. So Chinese companies are maintaining the supply and demand. They control the pricing. And I think and China must be the biggest buyer also, right? Because all manufacturing happens in China, like smartphones that all are made there. So they must be the biggest buyer as well. I mean, to tell you the number, there is only one company in China that produces 24 to 30% of battery for the whole world. One company, not only China.
01:22:21
Speaker
is say So, in today's date, 84% of batteries is being built in China and they have exported to the whole world. I am talking about the whole world. US is very far from this. Europe is like they are also in a niche stage. oh the Asian countries like us or the nearby countries also to the state stage. China has very, very visionary company on the country, which they have seen 10 years back. So they know that they've lost the war in gasoline and fossil fuels. So they got a new game of ethium because ethium is a new fuel.
01:23:02
Speaker
So they have grabbed everything, everything whatever would be possible in this world. Every country, they have the mining companies to explore the material, and they have the best technology also. For example, we found the lithium in Japan, Kashmir. But you know there's no Indian company which can mine the material from that with the lower cost. I mean, the costing should be based on commodity pricing. For example, if I'm getting the material in 100 rupees from China, I will get from China. I i will extract the material in 150 rupees here. yeah know it's Right. right yeah So when you have working with the minerals or the commodity materials, the commercialization is playing a very big impact into this. The unit economy, the cost effectiveness, that is something which which which is very important. For example, in today's day, we take out the titanium from the country, send it to the China, and then if I need to send it to the bank.
01:24:00
Speaker
So our country today's debt is lacking in mineral refining. Very few companies that are into the mineral refining are hardly three or four in the country. And that's where we are lacking about the minerals in terms of refining. So are you saying that China is flooding the market and reducing the prices? Yes. So what happened? Because of the increasing pricing last year, there was a bust of the pricing. Pricing had reached to, I mean, 100% more than the last five years. So what China did, I mean, there's a company in China called C8 here, they asked that I will not purchase any lithium beyond this pricing. And secondly,
01:24:45
Speaker
The 17 new mines have been opened in this recent last five to six years. So mine takes around six to eight years to develop themselves. So was the so that mine has been also opened. So there are a lot of supply of materials being there, but demand has not been there. Second ah problem is that the demand of EV has been reduced down in recent two years. if you see the Korea and other countries. The pace and the CAGR of the battery which were projected to scale, that will not happen at that scale. I mean, India, it's much, much more better because the adoption of two wheeler, three wheelers is happening very rapidly. um But in other countries, from last one year, of the sales of EVs has been reduced down at some particular rate.
01:25:39
Speaker
not on that there There were some early adopters who adopted and now it is not going mainstream. Only those early adopters are using EVs. Whereas in in India, there is a P&L reason. You will be more profitable if you do your last-mile delivery through EVs. So that is driving EV adoption, the last-mile delivery market in India. yeah a perfect I mean, in China, I have seen the maximum amount of emission in every 10 car. I have seen seven cars is electric, seven car is electric. And they have, for example, ah in terms of
01:26:17
Speaker
The cost, I mean, in 12 to 30 lakhs, you will get the EV car in China. But if you want to go, the gasoline car, it will cost you more than 20 lakhs. So they have made that provision and incentivize that thing that's a lot more to it. That's why good they have their own technologies also like Volvo, MNC, VYD. I mean, the giant of the world. is being there um you know Tesla is also big there in China. They have their own plants. so I read recently that BYD meet Tesla in terms of sales. yeah yeah yeah so just da yeah that I want to kind of understand what's the roadmap for Batics. You
Future Plans and Expansion
01:27:01
Speaker
must have got some internal milestones for the next couple of years. What are they?
01:27:07
Speaker
I mean, today's scale is like, know we raise the first funding, then we raise the second round, this is the third round, which did just recently of around 5-6 million dollars as a equity, and then around 5 million dollars as a debt also. We have built two plants now. we I mean, one plant of 2,200 tons per year of defining capacity is just we are building it, which will come by August. ah I mean, our target is by 2026. We want to build the capacities of 10,000 metric tons of battery processing every year. In 2030, we are planning to scale it up 50,000 metric tons of battery cycling everywhere. That's the but's a pipeline we have set to next seven to eight years till around 22, 30 to 30 degrees. Along with that, we will also want to enter into the battery materials.
01:27:59
Speaker
ah For example, we have our own lithium, we have our own cobalt, we have our own nickel, we are already extracting. Today's day, there is no manufacturing company in India which manufactures the cell in India. They all report, so there is no consumption of the material. Log9 is planning to manufacture. But not of the largest scale. Small scale, right. So, ah there is also I want to tell you the process of cell building. So, once you extract the material like lithium covered nickel manganese. So, there is a company called CAM manufacturer which is called cathode exchange material. So, this material will go to the CAM companies which will again processes into the battery gate material which is called cathode and then the cathode will go to the cell manufacturing company. So, even log 9 has to purchase the material from CAM companies.
01:28:52
Speaker
Okay, so you want to be the can company also. We want to become a can company and we want to place ourselves into a supply chain of battery and materials from our India supply chain of the battery materials because ultimately we will import even we will build the cells in India we have to import the material. So according to our estimation, 50,000 tons of recycling you want to do, does India produce that amount of batteries or this will include imports also? So today, um yeah, definitely it will include some import, maybe 20% not more than that. so Today, I mean, India, according to the NITI IOG report, if you would go for the recent NITI IOG report, 50,000 tons of waste we are generating every month, every year already.
01:29:40
Speaker
Okay. Battery waste you are saying, which you can. So today, I mean today our capacity of the consumption of battery is around 30 to 15 gigawatt hour. In 2013, this capat is capacity is going to increase five times. Right. Yeah. Yeah. Because lithium is the new oil. So absolutely. Exactly. So now I want to tell you some facts and figures. So today, I mean the value in one kg of battery is around 800 to 1000 rupees. So you can multiply by 50,000 into 1000, which will become a kg into 1000. Right. Okay. Okay. That will be the revenue we should be at that particular time. Also in today's date, that value of material has been lying down in the lunch fields. You can also say like like that.
01:30:39
Speaker
Right. So, I mean, ah it's a very big number. Yes. is It is around 5,000, 5,000 crews. two Today's date, the material is lying down. It is not being explored in a form of this crap. Tell me something right now. How much of your revenue is from exports? 100%. So why not supply in India? Oh, you're saying there is no battery manufacturer in India. so can and travel ah so now this has started i mean we have building So ministry of highway industry has given a grant of 6 pros to build a good ecosystem and a laboratory to research on nanometries, especially on a battery. okay ah That is the one thing. Second thing is government is also supporting in a lot of other ways in terms of collaborating with good organizations like CSIR, IT daily we are in panel and IT daily we are in panel and in drive.
01:31:34
Speaker
We are a panel in FITT, which is for the startup. I mean, we are also doing research in IT Delhi. We are also doing research in Munjali University using handsome PhD holders. So nanomaterials and the battery field, the research is happening in the Munjali University laboratory, CM laboratory. Power electronics research is being happening in collaboration with IT Delhi. I mean, you will see that our charging station is also installed in IT Delhi. which is just purely off-grid. I mean, you can charge a vehicle just by solar. So, solar is charging my old batteries and from old batteries, you can charge your vehicle. Yeah, okay okay. Your energy cloud is deployed there, basically. I mean, ah my perspective is, if you want to really build big research, commercialization, infrastructure, regulations, government policy, have to run parallely.
01:32:31
Speaker
I mean, you cannot run with the L own systems. You have to take all these things together and then like standard pollution control board should, I mean, they have already launched a good policies and, you know, uh, the bad management rules are like EPR and some other, other more dropping they are doing. Yeah. Tell me something, like say an Exide, which is like a very large battery company. Uh, why doesn't it start doing lithium ion batteries? So there, I mean, you can say that like exciting of, uh, I mean, Amaraja, right? Okay, they are the same group, okay. The same group, I mean, and Log9, I don't know, I mean Log9 is... Log9 is their portfolio company, they've invested in Log9. Okay, okay, okay. The problem is today, if for example, big companies want to come into the lithium and material industry, well, they have margin, they don't have a margin. The margin is in the assembly, there's no margin. You don't have materials, you don't have a cam.
01:33:27
Speaker
So you will only have an option of assembling, which small players can also do, which they are doing, especially small startups, they are doing manufacturing the batteries. Okay. There's no margin here. Okay.
Lessons Learned by Young Founders
01:33:38
Speaker
Okay. Okay. Interesting. Interesting. Okay. That's the, that's the major problem. Okay. ah My last question to you is around, You know, you are both like young founders, you both started in your twenties. What were the things that you wish you knew before starting out? You know, as young founders, what are your top learnings? And these are things which I will advise to other young founders, mistakes we made that you should avoid. I mean, the first thing is that you should avoid that is something, the ah the where whatever the dobi you are choosing.
01:34:16
Speaker
okay whatever the field, because the major problem that you think that I will do, I want to do these things. You need to also see the things with different personal perspective. That is very much important. I mean, the major problem which I did, I mean, I i did a lot of things that way I would not listen, I said okay, I'm what I'm thinking to right in it You need to put yourself in other perspective always and think about them. That's true. I think especially, you know, in terms of being able to look at your business from the lens of an investor is very, very hard for you. Exactly. Exactly. Why true? Second is always be practical. Don't be surprised.
01:35:06
Speaker
Very, very practical. I mean, the life which we think is very different and when you're going to go for the execution is very different. I mean, there should be a very less gap into these two things.
01:35:20
Speaker
oh For example, what I did is I thought that I will build the cells, right? Accidentally, I learned another thing. But for example, I was not un knowing about how it would be built. It's just technology-enthusiastic. business and technology in this just is a very different thing. Right. You've been grounded in your commercialization basically. I mean, you cannot build the things which you want. You have to make the things which people want. You can build rockets. general no No one needs it. Why are you were building it?
01:35:54
Speaker
yeah i so like yeah yeah yeah I'm giving in your phone, I'm giving a lot of features and courses like no one is able to afford. no one really got to pun Despite you have made a lot of hard work. So let's for starters, make it very simple from my perspective, whatever you're trying to do, I mean, whatever trying to have an idea, just be a practical and focus on execution.
01:36:23
Speaker
Execution, execution and execution. That is something which I believe. And at last I want to say that ah if you really believe in yourself, just keep doing things. Something will happen automatically. That is something which I'm saying, my little experience which I've done before, I never thought about building a large startup. Being there, I mean today we are landing around 50 crores of valuation. Uh, I never thought about, you know, uh, that, uh, we, we will be in the society space only. We would think can be there. So you can understand startups, not about the company. That is a mindset. right You have to get into that mindset so that you will be having a lot of perseverance. Otherwise you will not be having a perseverance. You will be like a frustrated every time. Hmm.
01:37:15
Speaker
So if you're trying to give three years without any profit, without any outcome, and you're having a mindset in three years, I just only want to explore. I mean, tell only to the startup. I mean, it's a learning. I i have gone through the startup. I thought that, OK, if I will not get anything also, then it's OK. I will have a learning. Not much expectation. But give you 100% what is, but then it becomes your passion. Once you become passionate, you will work, you will not feel that I am working, you will feel that I am enjoying my own things. We too, I mean, I could enjoy the startup rather than a work.
01:37:59
Speaker
So we will not believe this business is just so global. I mean, we travel, I mean, most, a lot of countries. And with the government program, we travel to Paris with the government program, Korea with the government program, Singapore Pope's son, Thati and Thati, we were the part of Pope Thati and Thati last year. We were in Singapore and in Korea, I mean, you will see that there's good news about ourselves especially in Korea. Wow, nice. So, because 100% exports have been there, I mean, daily you will see some Korean guys, Japanese guys, you know, visiting our facility. So, I mean, they have chosen that business where we don't believe this business, they really enjoy the things. Daily you have a new hustle. I mean, I cannot sit in my home on Sundays.
01:38:47
Speaker
it's a very yeah cleverform for me I have to learn even now that how to get it on the Sundays. I'm guessing you're probably not married yet. So you have that like absolutely so I passed out in 2019. yeah yeah yeah yeah yeah And the second thing is that, I mean, the difference of Once you run the startup, first you believe that I will get the money and everything. will take But after some time, when you will may when we become mature about the company, the responsibilities, ah because the major thing which I have a problem is that I have a lot of responsibility in the people. I have 100 plus people in the company which is working. So that is intriguing us to work more and more. i have Because they I have a responsibility of these 100 families.
01:39:36
Speaker
Yeah, they are relying on you. they're like they and They have actually oh trusted blindly when I was having nothing. So it's my time to give everything to them. And in my company, there's a very good freedom. I mean, it's a cultured company. We have made a culture in the starting. It's a product. I mean, it's not about nine to five. You do your job and get outcome. And that's it. that was evaluateated like that are You have a free hand, but you are not like, Only do these things. If you have new ideas, we'll do a review, waiting, setting everyone there. it's like ah It's like a new era of running our companies. Definitely it will affect your all the initial margin because ah you will like your only work, do the production. But later on, because this is a new field, you will see that a lot of potential in company are valuable things people will give. So for example, we don't be deal with any of the consultants.
01:40:32
Speaker
We don't have any consultants in technology. We just won't have consultants in the other side. In regulations, we do everything ourselves. So in the company, the employee should not feel that I have to go home by five. So if the company time is six, people will think they will start packing the bag at five as they're waiting for the time when I will have to leave. If any employee is thinking like that, that means there is a problem. People, trust me, people also enjoy the company. If you have a good system, they don't want to go home. Yes, yes, yes. Absolutely. Yeah. And especially if you have a very young workforce. Exactly. You do a lot of things. I mean, technology guys like technology, you talk about technology, give them something which they liked about. I mean, they will love them. They are my R&D team in the starting. They were saying that I will work maybe I will work in the night shift also without would any compassion.
01:41:27
Speaker
Today's day, we didn't make any comparison of, you know, you do this thing. they It's still about doing everything. I mean, my strength is batex and the team. The first thing is technology and so the market and everything. was busy Amazing. Thank you so much for your time, Vikrant. It was a real pleasure. Thank you. Thank you so much.