Transcript
Speaker: Hi, I'm Dhruv Luthra, Managing Director of Luthra Group of Industries from India, Surat.
Speaker: Okay, Dhruv, welcome to the show. ah You operate in the circular economy, which sounds like quite a new age jargon. Can you demystify what is the circular economy? And within that, where do you operate? Or where does the Luthera Group operate?
Speaker: Yes, indeed, actually, it is a new age jargon. ah It is old wine in a new bottle. And when we talk about it, back in the day, it used to be called the three-hour concept, which is reduce, reuse, recycle.
Speaker: And today, what we are talking about is circular economy. ah To demystify it, I'll begin and go back into the history of Luther Group. ah We began with the waste minimization of resources used in the textile industry as a family business where we all had our humble beginnings was from textiles.
Speaker: So the idea... but What was the business in textiles? like The business in textiles was that we were doing job work, which is basically we were doing dyeing and printing for the Walmarts and the CN days of the world.
Speaker: And we used to basically color and print on cloth or man-made fiber for them. Okay. Okay. Like you would get raw denim and you would. put the color on it and make it ro whatever color they need it, just as an example. It's definitely the right example, just that there is no denim part now.
Speaker: ah The idea is that we are from we are based out of Surat, which is called the Manchester of the East. So Surat always had one focus and one focus only, which is man-made fiber.
Speaker: So instead of denim or a cotton natural based material, we had always done polyester, which is the high class material which was used at that point in time to have a bigger outreach, especially in a country like India, which was at that point in time in the early 80s, a developing nation.
Speaker: The idea was to have a cheap resource which would last you a lifetime. And that was why polyester and that is why man-made fiber. Okay, okay. Polyester is what you would see, for example, in a jacket or like in the sports apparel uses a lot of polyester, right? A lot of cold countries, people actually prefer polyester because this is better to keep the warmth inside and definitely sports attire.
Speaker: Okay, got it. Okay. So, and your father started the business? No, my grandfather started the business. He started off as a textile baron or as a person who was doing textiles.
Speaker: But his his beginnings were not exactly, the readiness was not never started. So Luther group typically started in 1955 when my grandfather started in textiles and he got these two old secondhand machines, which were to begin the weaving of cotton at that point in time and not man-made fiber.
Speaker: And he used to actually weave cotton into a cloth. And that's where he began with, that is where 1955 it all began. Moving forward, cut short to 25 years later, he had saved enough money to have his own setup or in that regard, how it is called a mill, right? Which is the big deal at that point in time that to to become a mill owner.
Speaker: And that's where he began with the idea. But by the time that he got done and completed with the making of the mill, he couldn't complete the roof. And he still any which way began and went ahead and took the first order purely because he said...
Speaker: If I've reached this far, I will make enough money to at least have a roof soon enough. But let me start production. And he was, he was um you know, very coyly called Bhaisad in Surat. And that is the reason the reference point was that he was somebody who believed in the concept of YOLO.
Speaker: So he would just go and say, it's fine. I need to do this. I need to get this done. And he would get it done any which way. So he wouldn't really listen to a no. And I don't think he had no in his dictionary.
Speaker: And dad ah joined him at the early age of 18. And because you know you need ah siblings to work, children to work, wife was working in the same company.
Speaker: So it was like a real family managed business with most of the employees being family members, but all of legal age. But that meant that dad basically had to go through the diploma and the the process of not being able to do a degree, even though he was a much, much, much brighter student than ever was.
Speaker: He is chose to do that. And that's where his learnings came from. Everything about on-ground training, right? So that is where he began. And all of these on ground trainings is what is, has led to work but where we are today.
Speaker: And in 1992, when India was opening up after, and you know, the whole idea of privatization was being opened up as an idea. Around the same time is when they realized that, you know, the Marks and Spencers and the C&As of the world are looking at vendor due diligences.
Speaker: And only the vendors which make the cut can actually supply to them. And it was a great initiative by companies like that. And that is the reason we decided and our dad decided to make shift and make the entire operations into an environment friendly, scalable, sustainable product based on the learnings which were given to us to be a successful and a great vendor to these big brands at that point in time.
Speaker: And so we learned at that point in time from all these experiences. And at that point in time, that is when dad understood that waste minimization and waste management itself can be a very big challenge.
Speaker: And if what we learned could be packaged into a service. It could really be a nice serviceable industry. And the TAM could be very high because India, there'll be more number of people like we live in a we lived in a time when people used to find it difficult to say that, okay, help me fill a passport form.
Speaker: And that used to be a service at that point in time in the 90s. I still have been told and I've experienced it myself. So now you can imagine this is a far bigger up challenge where you are talking about environmental management and services.
Speaker: So dad identified that from 94, he educated himself, studied where so studied and went ahead to live in the US for a couple of years, practiced on ground with people who were practicing the business and from waste minimization, learned the tactics of actually recycling the waste or understanding what are the complexities that goes along with the waste.
Speaker: And although India had first version of ah waste management rules of 1989, or hazardous waste management rules of 1989, they They were never really impactful and they never were implemented well.
Speaker: So in 1999, this business started and we started with the current ah business that we that has brought us to this. And from the mothership of textiles, we shifted to becoming waste management, which is landfill and incineration.
Speaker: So when you say you have reduced, you have reused, now you go into the idea of thinking that your waste is no more waste. It's the resource which is in the wrong place.
Speaker: And now this resource moves from point A, which is the person who was manufacturing some product and was left behind with something they think is waste. We would take that.
Speaker: shift to recycle, which is the third part of the 3R concept. And ultimately, that's where the whole circle completes itself. And you become a circular economy product where you start with reduce, you go to reuse, and you finally recycle.
Speaker: And now it is circular economy. Okay, fascinating. ah What is the ah waste product in the textile business ah since you started understanding waste management business?
Speaker: Let's start with the fact that you have dyeing and printing if we are looking at what we used to do. So when you dye and print, you have a color, and right? The color is the first product which the material has to go through.
Speaker: So it is what you call ah in any product, whether it is chemical, pharmaceuticals, or it is in dyeing and printing materials. It is called the mother liquor. The mother liquor is like the main, the content has to be very high and it has to be really important for the color to be actually dyed onto a cloth and the printing to take its true nature and true shades.
Speaker: So as the continuous process, it's as a continuous process, you are talking about almost close to half a million meters of cloth being printed every day in a mill in in a span of about 20 hours of operation.
Speaker: So you would typically find that in this process, about every eight hour shift, you would typically find that the mother liquor has lost its potency. So now this is of no use to the industry.
Speaker: Same thing would apply to a chemical industry where they're making chemicals. Ultimately, once multiple batches have been made, the mother liquor loses its potency. So again, it becomes their waste. ah Similarly, when you have dyeing and then you have printing, printing is a sludgy material, so it's semi-solid in nature.
Speaker: bay So when it goes on to the manual press of the machine to take the print on top of the cloth, it again also loses the potency and this is a sludgy material. So instead of being liquid, this is more like semi-solid or almost like a thick viscous liquid.
Speaker: So these two things at the top of the mind, first things would become your hazardous waste, which are there. Moving forward, when you basically strap on the cloth onto the machine, so all the edges which have to be fine cut so that you have a fine fine a cut cloth, all those fine edges are now polyester, which are oil soap, because oil was on top of it. So now they have become flammable.
Speaker: So they're also hazardous. So all of these things which you would think, don't think twice about in and a day-to-day life is actually hazardous in nature and needs to be taken care of in the in an appropriate manner.
Speaker: OK, interesting. Do you still run the textile business? No. ah In 2019, we took a very conscious call that where our focus had shifted was to waste my waste management.
Speaker: And we were expanding with it and all over all over the country. Today, having 11 plants in the country. So ah back in the day, the whole idea of textiles was we were focused on the idea of start with a solution in your own backyard.
Speaker: So our house is here in Surat. So we live here and we work here. And that's why we had one industry. But sooner we realized that once you want to expand and you want to think of a larger scale expansion across the country, India may not be the answer.
Speaker: And sorry, Surat may not be the answer alone and your own backyard may not be the answer. So India had to be the answer and then we had to expand. But we were short of hands or short of people at that point in time.
Speaker: And all the focus shifted towards... waste management and hence textile somewhere took a back seat. And that's when we realized that, okay, it has taught us the basics and the principles of waste minimization, but it is high time that probably after about 52 years, we should think of an alternate option or shutting it down.
Speaker: And that's what we did, but we still took three years because we had to settle everybody. We had about 1400 employees back then, a blue and white collar combined in the textile mill alone. So all of them had to be found alternative jobs. We we continued for three more years.
Speaker: So the decision was made in 2016. And 2019, we finally shut shop. And we moved exclusively to becoming a wage management and a waste residing company. ah Could you not have sold that as a running business?
Speaker: ah you We could have, ah but then the whole idea was that, you know, when you're looking at textile in itself, right, the amount of effort and the amount of management bandwidth that was going on one particular element. Like today, we are 11 plants, right, with the scale of automation, with the scale of business that we have achieved because there's sheer volume and performance the business has reached volume of scale.
Speaker: So what has happened is we are about 1600 white collar people who are working for the organization today running 11 plants. So at the scale of which we could do one plant,
Speaker: we are now able to run 11. And that too, when I decided that we had to decide, or not I, it was a common decision between dad and I, but both of us decided mutually that it is time, is also because when you don't have your own focus, right, as ah management, I'm not saying just dad or i ah so it is not just the chairman or the managing director, it's a universal thing.
Speaker: All the brass, top brass of the organization has to be focused on a product for the product to prosper. So we didn't want to drag it just because something is there in our kitty. And we did not, neither wanted to push the aspect that, okay, because we are operating it, this is the only way we can do it.
Speaker: So we found better placements where people who are working for us and who would continue working in textiles got the opportunity to work in textiles and actually grow further more than they could have done with us because of the lack of focus that we had.
Speaker: So I don't want to mince words there. And as far as the other side goes, almost 25% of the people were absorbed by the waste management company. And now they are working with us today at different units across the country. And they are they are also happy because they choose to change their ah path from textiles into waste management.
Speaker: But ultimately, like to always say, chemistry never lies. So chemistry is chemistry. Yeah. Okay. Okay. Interesting. Okay. When did the waste management commercialization happen for you? So you started with waste management as a...
Speaker: ah as a way to get more orders in the textile business. Because if you want orders from MNC, you need to show them that you are sustainable, like an ESG rating.
Speaker: they put du So you need to show a good ESG rating. So that's how it started. But when did you commercialize it as ah service for others? So it started in 1999, where we became became the first private sector company to ah enter into waste management as a service.
Speaker: So the funny bit was that people thought that we were doing it as a social cause. And then we had to go and explain to people, no, this is a service now. This is business. And we will charge you real money to lift your weight and dispose it.
Speaker: Okay, okay. ah What did you start with? So we started with landfilling. And landfilling is typically creating a nice little dustbin scientifically created in a land which where you know that you are not going to disturb the groundwater.
Speaker: And that's where you create that and any waste which is inert in nature. It is hazardous in open air but inert in nature. That means it is not going to have instantaneous reaction to air and burn.
Speaker: Those are the kind of waste which goes into landfill. And a couple of years later, we realized that that is not going to be enough and for the country and for us. So our customers came back and said,
Speaker: yeah So you have to buy land to offer landfill waste service? I mean, you could you could ask for free land from the government. But as a business strategy or as a policy in the in the organization,
Speaker: We have never indulged in and doing any B2G business in a large manner and definitely not taking in line subsidies because why not we have chosen to remain B2B.
Speaker: We find it very much comfortable. If you're getting free land or are there strings attached? like It's not strings attached really, but I mean, I call the string which is only attached to it is that it gives access.
Speaker: And when you're creating something new, you want as much freedom as you want. So you don't want to be answerable, that I guess, because I cannot answer fully to my knowledge because that that is where I've always seen that I've heard from dad that he felt that it was too early for the concept because it was only seven years after privatization and opened up in India.
Speaker: And thereafter, when you to suddenly have a thought process of being ah waste management player 25 years ago was not going to be seen lightly. So he thought that why indulge with the government and why indulge with ah the the people who are going to in the future become the caretakers or the observers or the people who are going to monitor us.
Speaker: So he kept arm-arm distance because in which way there is going to be a lot of indulgence and and not add one more aspect of taking free land and then being answerable.
Speaker: Got it. Got it. Got Okay. So, yeah. So, let's continue that journey. So, 99, you started with landfill. And then? And the clients came back and said that there are other kinds of waste which are not landfillable.
Speaker: So, why don't you take them as well? And then we had to learn. And what we learned was incineration. So, we brought the first incineration of the country with a canadian with the partnership with a Canadian company.
Speaker: And we started off with the entire idea of incineration in India. So we made the incinerator in India with Canadian tech because it it made sense to not import the entire product from Canada because high customs duty making that much more expensive, the servicing part.
Speaker: So we took the route that we actually took the royalty route paid the royalty to the Canadian tech company and then we made our own incinerator, which was the first of its kind, the first common incinerator in the country for hazardous waste.
Speaker: And that's where we provided these two services for the next six years, from 1999 to almost 2005. And to Surat-based companies?
Speaker: Only to Surat-based companies, maybe 50 kilometers radius from Surat. Because we thought we were doing a great job. you know We were doing 400 tons a month at that point in time. And we were through the roof as dad tells me.
Speaker: Because both the two people that there are two people who joined dad along with the same time. And so these are three people who started the organization together. So in today's startup jargon, you'd call them co-founders.
Speaker: Where one in front brought the money, one was the brain, one was the finance guy. And that's how it all began. And yes, that's where all three of them tell me that they were they were on the top of the world when they said that they were making money from 2003.
Speaker: Up until then, of course, it was a difficult time. But post-2003, they were making money and they were really happy about it. Okay. Okay. And and this so but these would be textile companies mostly? Like Surat mostly has text textile companies. Textile and chemical.
Speaker: yeah Okay. Got it. Okay. So 2005, then what was the next? Then 2005, they were basically writing through and going through the entire process that if it's not going to be and enough to be around Surat alone.
Speaker: So it is better that we move forward from Surat and we look at other territories in the market. So we went to Silvassa. Silvassa, which is... about 108 kilometers, about 110 kilometers from Surak.
Speaker: ah It's a union territory. They began their journey there. They added a new plant of their own in Silvassa where there are iron ore companies.
Speaker: There were companies which were doing outsourcing for beer bottling. And then there have been companies which are in the process of chemicals, essences, pesticides.
Speaker: All of these were housed there because being a union territory, it had a lot of tax breaks. So they were looking as a one-stop-stop solution. And they approached us that, you know, what you have what you've done in Surat, and they heard they must have heard of us because it is not too far away ah geographically.
Speaker: So they asked us and asked us to invest and that's what we did or dad did. And they decided to have one more company and they began their journey there with the same thing, landfill and integration.
Speaker: ah So interestingly there, they got to understand one more new thing because ah the client came up and said that they had a sludgy material, a material which was neither liquid nor solid.
Speaker: So now it is semi-solid. So the process had to be brought in that it had to be converted either into a complete liquid formulation or a solid formulation.
Speaker: So they decided to go the solid formulation. And that was the new technique which we learned, which was pure chemistry. And we named it solidification and stabilization.
Speaker: So S and S. So SS as a service became for all semi-solids, which is also S and S. So suddenly this is the biggest breakthrough that could have ever happened at that point in time because we didn't really know.
Speaker: But there was a lot of semi-solid waste going around India, which people just did not know what to do with because it was neither or So if it, you know, people knew what to do with solids, people knew what to do with liquid, but nobody knew what to do with semi-solids.
Speaker: And that was the biggest breakthrough. And then the journey never stopped. Then we got Haryana, followed by the state of Tamil Nadu, followed by Telangana, followed by MP. Then we went to Rajasthan, then we went to Orissa.
Speaker: So then it was just like, You know the ball kept rolling because people started approaching and saying that, okay, this problem is something which really needs solving. You have solved it. Come to us and help us solve it too.
Speaker: So this block, which you make as solid block, can directly go into landfill or can be also used as semi-construction material among fly ash bricks. So it was great.
Speaker: It just worked. How do you solidify the slurry? Solidify the study. so it's a, but it's an ultimate, like I said, it's chemistry. So what we came up with is a lot of recipes.
Speaker: So this is the beginning of where recycling actually was taking birth in the organization. What we realized is that you but when you basically combine and change the temperature setting by combination of two materials,
Speaker: the chemistry in itself starts acting up and solidifying the material. So what we started doing is say from ah kind ah waste from sector A, say automobile industry, a waste from sector B, say the chemical industry. industry We mix the waste together and add an additive.
Speaker: For example, an additive could be rice husk, right? Anything which which makes and thickens the product. And the chemical components within the two waste categories already are leading towards solidification just requires one binder.
Speaker: And we started using these binders as rice husk. It was sugarcane husk. It was carbon black. It was multiple things like that.
Speaker: So each recipe demanded a different kind of a binder. And that's where we realized that, great, now we have a product out of it, which is creating a solid material, which can and easily be... And the proprietary... yeah.
Speaker: The proprietary tech, huh? Yes. And then after that, the bigger proprietary tech became the recipes where we started making instead of... a brick, we started making fuel out of it, which started replacing coal, which is the business now.
Speaker: Wow. Wow. Fascinating. That was part one of my conversation with Drogh. I requested Drogh to give me a tour of his plant and help me understand nuts and bolts of how things happened.
Speaker: Let's take a look at that and I hope you stick around for part two after the tour. So now we are at the plant which is the newest baby which is being made.
Speaker: This is exactly where we started 11 years ago and which is called Panoly. It is 60 kilometers away from our hometown Surat. And if you can see this is what has now become of the place.
Speaker: It's 70% complete, this unit, and it has just started operations with the basics of it. I will walk you through the process so that it gives you more clarity on whatever we were discussing until now.
Speaker: The whole recipe-making process and the whole process of going through liquid and solids and semi-solids and how it... And then through all of these pipes and the distribution network which you see on top,
Speaker: it gets into multiple tanks across the board. And you see here, this is a very interesting wall to look at. when you see, these are all different measurements of different kinds of gases, which is being monitored live, so that we always know that there is nothing which is dangerously there, which is invisible to the eyesight, but it is not wrong going in the system.
Speaker: So most of it is connected directly to the SAP ERP. So we are completely a connected solution. I'll take you through now, moving forward, to how the rest of the plant looks like and what we do there.
Speaker: So we'll move from here to the solid section. So there happens to be an outgoing truck which is going out with the ready product, which is the replacement of coal.
Speaker: So we can get to see it there. you can see the truck right here. So in India, all trucks which are colored blue, only they are used and these are dedicated trucks.
Speaker: It has to specifically say hazardous waste. And there we go, these are huge jumbo bags, each one is one ton each. And that's what exactly goes into the idea of making it live and making it possible for it to be shipped out let's see if this bag is still yes it is there we go that's the final much material which gets shipped and utilized as a replacement of fold-out redundant inductive
Speaker: further up uh these mixing pits which is there
Speaker: We'll give some space to the top lift because they are the ones in charge with the large machines.
Speaker: and explore So this is where the loading of the material happens into these large kits, which you can see on the top. Now I will take you to the back side of the same aspects so that you can see the actual material where it would enter from. Typically it would enter from here. Behind the shutter are closed doors, which is the patented part where we have an entire void partition where the solid and the semi-solid mixes into a larger mix and gets created into a solid fuel, which you just saw in a powder farm.
Speaker: I'll take you back out, Ra.
Speaker: This particular waste I'll have to look at, but look from the looks of it, it looks like it is sludgy. um It is most likely it would have come from an effluent reference line. okay Because that's usually the most common one which I've seen observed.
Speaker: So as you see, the waste would come in drums like this.
Speaker: they And these are the pellets which are there. So now, interestingly, if you see, All along these years, we used to use these kind of wooden pallets. And now we are changing to complete pallets which are made out of metal.
Speaker: And we will be the first of the companies in the world who actually introduce ASRS, which is Automatic Storage and Retrieval System and Hazardous Space Management. And that's what we are doing.
Speaker: and just taking you walking you through now to the back, like I said, so that we can see it. Usually it is not the best but a looking process because we ultimately do manage waste.
Speaker: So you see that you don't we don't look very, very beautiful, but we have tried our best to keep things tidy as much as possible. Keeping in mind that we are a waste management company.
Speaker: So we are at the back.
Speaker: I'll show you this part. You can have a look. This is the compactor unit. Okay. And on top was the place where it is being loaded. And I'll just ask them, yeah, okay. We are opening it now.
Speaker: What is the compactor unit compacting? Compactor unit is doing exactly what we discussed. but Mixing two kinds of waste or three kinds of waste of different industries and mixing them into one homogeneous material.
Speaker: So this is the insights where you see, because we we deal with hazardous materials.
Speaker: So one of the key elements is to keep everybody secure. And that is what we have done. So we have created this entire thing where if you just tilt the camera on the top, do you see right on top?
Speaker: There is a person right there who is supposed to be sitting from there operating looking into this thing. The pit is completely cemented, so if any there is ah ever any kind of reaction of two or three things mixing up, which normally doesn't happen, but in case if it is, then you get to contain the fire or sparks within a chamber. but This is the JCV.
Speaker: Oh, it is moving now. I didn't know that they're actually active. I was just showing it to you, but great. It's a good shot. It's it's a fun thing. So this is interesting. You get to see I can't go too close. It's not allowed.
Speaker: But this is the white. This is the coal substitute? This white thing? the substitute. But the white one is not a coal substitute. The white white one is actually gypsum.
Speaker: Okay. it's It's come in from a supplier whose gypsum waste is coming. So we are mixing the gypsum as a binder now. OK.
Speaker: I mean, yeah I have very rarely seen anything white come across when it comes in waste. So this is the which you can identify just by the looks of it. Yeah.
Speaker: Yeah. This is the thing. So this is the compactor unit. And you can see the gentleman who's doing it, operating it from there. We move further. What else happens? Waste can come in all shapes and sizes.
Speaker: You've seen the jumbo bags. You've seen the drums. You've seen things which have happened over a period of time. So we have to keep them tidy, as I said. So when I say RM area, you see here, is typically what it means is raw material area.
Speaker: So we don't like to call it raw waste. We don't like to call it waste. We like to call it raw material, just like any other manufacturing unit. Very nice. Moving further from here, we will move out to the sunlight, to the bright parts of the plant again, which is the opposite end of the plant.
Speaker: So this unit had a very unique history that and this was there all all the time when we began our journey. But when we began our journey and we opened our first plant, we really could not come up with the money to actually buy such a huge plot.
Speaker: So our mindset was 1000 tons of waste is what we want to achieve because previously i I'd heard all along everybody doing great things of 400, 500 tons a month and being happy with it.
Speaker: So I had put myself as a tall target that I'd double it to 1000 tons a month. And I'm happy to tell you that now I do about 1,000 tons, 1,100 tons is what we do every day.
Speaker: And are still not happy with it. 1,100 tons from this one plant or all plants combined? In case of recycling, just these two plants, Panoly 1 and Panoly 2 in Vujra.
Speaker: Wow. Amazing. We started as a different thing. So this is now the last part which is which basically helps us also do a lot of, saves us a lot of help in increasing our calific value.
Speaker: And the calific value is increased here by removing the moisture. So these are the setup which we have, which is the dryer setup. So we dry the material so that the lower the moisture, the better it is that you are ultimately getting a better caloric value as an output.
Speaker: And calorific value, we are talking of calorific value because we are talking of a fuel source here. Like it's a coal substitute. So therefore, calorific value is an important metric because that determines how useful it is for whoever is buying it.
Speaker: right So in our case, because we are dealing with hazardous waste typically, so in India what happens is that you are allowed to use it only in three different industries, cement, followed by steel, followed by power.
Speaker: So that is what has happened. We have already cracked the cement market and almost ah i mean all people in the country use our fuel. But it's a slow and steady process. We started off with a 2% dent in the market where coal and petco imports were substituted with the coal or Eka coal, like we call it, produced by us.
Speaker: So furthermore now, eventually we have almost reached about after 17%
Speaker: Up to 17% in the last nine years. So now the replacement is about 17% to 18% in each of these industries of cement. And this year, we are going to start with implementing the same in steel industries so that more people can actually get together.
Speaker: So this is, like I said, that the part which is because the site is still under the construction. So this is where we walked from. So this is where the ASRS section is. So you see that ASRS is full-fledged reality.
Speaker: It's going to be 12 floors high. It's right now, this is the space which is being made. So then all all the robotics will come into play so that there's even less human interaction.
Speaker: And like you can see when i when you asked me the question previously, that we are managing so much and there is so little amount of human manpower which is required so that is taken care of.
Speaker: and their health are better because I don't think that you know it is wise that there should be so much of constant interaction of humans and hazardous waste, but it's an inevitable thing to happen, so we can't keep it away.
Speaker: Yeah, so with that, I think pretty much we end the tour. We are creating our own water source storage for rainwater harvesting, which we do at every plant, so this is the same thing which is being constructed right in front of us.
Speaker: And our plants typically are supposed to be open from all four ends because, like I said, that you are always prone to fire situation.
Speaker: This green color is ours. So because we manage the hazardous waste and we are the green company, so green goes with us. So that's that. And that's your tour. Okay. Amazing. Thank you so much.
Speaker: Dhruv, I want to understand the how and why of... expanding into other areas? So, Akshay, like we discussed earlier, that ah we have v wanted to expand beyond the cityscapes of Surat and beyond our comfort zones.
Speaker: So, we already did that by going 100 kilometers away. And then we started realizing that as we want to grow, we will have to put and bring in the concepts of supply chain into the place.
Speaker: And that's what we started doing. First, we went ahead and grew and grew and grew by adding Haryana as the third site, then Tamil Nadu as a state, the fourth site, then we added one for Thalangana.
Speaker: And then it has just become from there, it this has just been state after state after state in India, where we kept on adding the entire size and becoming one large entity managing waste management in India.
Speaker: So at the end of the day, when if you if you may ask, the logic comes out from supply chain led to the idea that logistics played a very big role because it is the largest expense in our playbook.
Speaker: And to cater to the customer in the right manner at the right cost and not to burden the customer by saying that we are going to do one large plant in India. it always made sense to have a hub and spoke model where a lot of customers who are even in remote areas, who are even in distant areas, do not feel the pinch or the of the cost.
Speaker: And that's exactly what we did. And that's how we could expand. And today we are in 11 locations. And except for the east where east of India, where we don't receive waste from, but we do send waste ah product or rather Eka-Kol there as ah as an output.
Speaker: But everything else, everywhere else we do receive from and we process that in 11 locations in India. Okay. um ah Can you give me like a top three inputs you receive and top three outputs that you are selling?
Speaker: and like, you know, top three things which are coming in and top three things which are going out. The easier thing to talk about would be the output because from hazardous waste, there is three outputs only.
Speaker: There is Ekha 10, Ekha Khol 20, Ekha Khol 30. So 10 is up to 1000 kilocalories, 20 up to 2000 kilocalories, 30 is up to 3000 kilocalories. twenty years up to two thousand kilogaries thirty is up to three thousand kilocadies From the non-hazardous side, the municipal side, when we receive waste, that waste is converted into a fuel which is today better than Indian coal, right?
Speaker: It is 10% cheaper than Indian coal and for for my client. And it is Eka coal 40, which is up to 4,000 kilocalories. And in fact, we guarantee to a customer that if it is not 3,800 kilocalories delivered, then you can you can charge this for the differential.
Speaker: okay So that's on the product side. The receiving side would be a very complicated question to answer. i mean, although, because I can't really pick the top ones because there are so many at this at a similar mark because it's seasonal.
Speaker: See, we have an array of 7,000 customers. When you talk about 7,000 customers, which are consistent. Customer means supplier of... The guys who are suppliers of waste or rather the waste generators, the polluters who are consistent, who are sending me waste at least once a month and consistently for the past five years.
Speaker: So the scale is such that I can only tell you the top three sectors. who are very, very consistent, rather than so telling you the waste type. So the sectoral analysis would be distributed between chemical number one, pharma number two, and automotive as number three.
Speaker: These sectors are the most consistent. And in this order, they get they give me the waste. So anybody who is in the chemical business would definitely be our client. Same as for pharma, same as for auto.
Speaker: So let's continue the journey. So you started this expansion around 2009-10 timeframe, I guess. yeah Tell me the journey since then. The 9-10 journey expansion train was first in terms of number of places. And then finally, we ventured into the business that we were just talking about, conversion from waste to fuel.
Speaker: So that all began in 2013. It took shape as the first plant ah near the plant which we saw today, which is and the in the making right now after 25 years. The first plant is exactly about 100 meters from that plant which we saw today.
Speaker: So largely when we talk about it, the journey has been, like I said, during the tour that and we were happy to do 1000 tons a month and now we do 1000 tons a day, but we're still not happy.
Speaker: And we know there's a, you know, there's a, there's a long way to go and not happy because, you know, I'll be very, very blunt about it. I mean, be very honest about it. The mindset is not about money. It did begin with money and I'll not i'll not mince words there.
Speaker: Money is always the focus. have to first make a living out of the thing. So I can't say that, you know, I'll not take care of 1500 people today working for me and their livelihoods. But at the same time, the intent has changed because back in the day, we used to basically want to grow.
Speaker: grow and see from where we have come from, what are the roots, and we wanted to prove a point. We had the hunger of proving a point in terms of money. Today, the hunger is there.
Speaker: The modus of hunger has changed. Today, the satiation can only happen if and when realize that the import of coal into India is reduced by a significant percentage, not just the 18-20% which we have been able to achieve in the last 10 years.
Speaker: The intent is to reduce it considerably and then to reduce the same in terms of the money going out, the foreign exchange going out of the country and we'll be more than happy to do it. From a turnover perspective, how have you evolved? Like 2010, what kind of top line were you doing and what are you doing today? 2010, our top line would have been, I think, safely to say, maybe 20 crores.
Speaker: Okay. And today, closing closing closing this year, we would close it just upwards of 400 crores. Wow. Okay. That's a massive, massive growth.
Speaker: This is all on the back of that ah waste, like like getting waste, giving coal? Yeah. Just the first part. So it was basically, it is all on the back of ah the waste to an m energy part or the waste to fuel part.
Speaker: That is what we have taken care of. And that is where we are seeing the success. ah You've diversified also into other areas, right? So those are not part of the same entity or like... yeah No, the entity... sort So the Lutra family or the group is divided into three business verticals.
Speaker: Vertical number one is what we have been talking about all along, which is the environment vertical, which takes care of hazardous waste and the domestic waste of cities. ah the The second vertical is related to wastewater management.
Speaker: It is again in the same space of industrial wastewater management. We don't do domestic as yet. Eventually, once we we once we create our mark in the industrial space as much as we think that we should, then we will think.
Speaker: So what we did was we brought the technologies of wastewater management to India, very much similar to what you see in Singapore. where there is something called new water made with GE water, who is also our partner in crime in India, in doing the same thing.
Speaker: So we made our own distribution network. And today we are managing up to roughly about 275 million liters per day in the same way that we started with waste, 75 kilometers within the outskirts of Surat.
Speaker: So it is not going too much beyond. what What do you do here? Like you receive water from what sources? Exactly the same logic as we discussed earlier in waste management. I take dirty water, just that here it is pipelined.
Speaker: So it is a connected load. The customers are, so again, the same. The start point happened that to happen from textiles. So the textile guys who are basically doing... cotton or denim manufacturing, they have dyes, the blue dyes, the black dyes, the yellow dyes, whatever the colors they use, they need to have a safe disposal for the same.
Speaker: That's exactly what we are basically giving them. We are making sure that the water that they send that comes out, comes to us, we clean the water and then we supply clean water back to them.
Speaker: And so we charge them for servicing first to receive dirty water. Distribution is free for ah free because it is our own pipelines right now. And we wanted it to expand further so we can afford to give distribution for free right now.
Speaker: they And then followed by the idea of water which is delivered, it is delivered at a price, not at a premium, but at a price which surprises enough to clean the water and to save us ah money some money to continuously operate this without without making any compromises.
Speaker: That is wastewater management. And the third vertical... A book for wastewater would be similar, like start expanding, getting closer to... ifs It's 100% the same. It's not no different.
Speaker: It's just that it is wastewater and it is not solid waste. And how much turnover does the water business... Currently, it would be about close to 200 crores. I mean, pretty fast, like considering that you have been doing wastewater... The waste management business for such a long time and water has become 200 crore in a fairly short time. There are...
Speaker: Because water picked up very quickly in the recent years because people actually addressed and understood that water is an important resource. And waste has not gotten that importance across the board.
Speaker: The day that that happens, it's everything's going to change. Is this also to do with the government regulations that maybe ah you need to take care of your wastewater? Is there some regulation around that? Or is this purely out of the desire to have better esg ah It's a combination, but largely it is to do with the compliance part and also the scarcity part.
Speaker: A lot of industries have been facing the crunch because the government also brought in compliance of ZLD, which is called zero liter discharge. That means you should be using your own water.
Speaker: again and again as long as possible which is ah to become the ESG country that we want to go as a goal in terms of circular economy and also because when you don't have water or access to water you can't move an industry overnight right so you would rather invest into the investment into the recycling bit and that's exactly where what happened scarcity was the boss. it it It created a need and that's where we came in and we supplied the water and people are happy.
Speaker: And that's exactly why we could actually build what we built in 25 years or rather 15 years in waste financement of solid waste.
Speaker: We could do the same in less than a decade. Okay. ah So scarcity means essentially there is a ah there is a business case for doing this because scarcity means you will pay more for water.
Speaker: Whereas if you recycle your water, you'll save some money. Like there would be that business case. 100%. 100%. Because scarcity also comes from groundwater. When you keep on doing, depending on groundwater, you are going to, do you know, how will you replenish it?
Speaker: So hence, there are government regulations against it. Similarly, for businesses, it makes sense that when they buy industrial water from us, it has to be cheaper or equal to the price of what they would buy price buy water From other sources across the, in the market.
Speaker: Okay. In fact, we have realized in Gujarat, we are about, almost about close to 8% cheaper. But in all of this aspect, one of the key elements, which let me bring it to your notice, ah the environment business has a much better return on investment. And in this case, the return on investment is not good.
Speaker: The turnover may seem big because it is big. But it is easier to get the turnover. but but But the money that you save at the end of it is less than 15%. So it's more like an annuity business when you talk about water.
Speaker: But we were, as ah as a family and as a group, we were always committed to the idea that you can't do you can't go the half a mile and then not complete the circle. So we did the both the parts. that We finished the solid waste management part and we entered into liquid waste water management in India.
Speaker: So the the reason for the lower margin in water business is because you need to price it lower than price of water from the market. and Absolutely. you Because you're competing with the fresh resource, right? And it is not like that it is the end of the world where water is not going to be available.
Speaker: But we are just pre prepping for the future where if and when water is ah is a far more scarce resource, we are we are equipped with it. And that's where the manufacturing doesn't stop because water is in a sense in every manufacturing.
Speaker: You tell me the sector and if um somebody says that I don't need water, I would probably question them thrice. and What is wrong with you? Have you not seen it? every Everything requires water. So there's a high impact of commodity prices on ah recycling, right? So if yeah if coal prices were to fall suddenly, then probably the incentive for people to recycle their waste and yeah what margin you get from selling coal would also get impacted similarly. Yeah.
Speaker: In fact, in fact yeah our sales go down when coal becomes cheaper. But in reality, you have to understand that all of these things we are talking about, which we are competing with are natural resources.
Speaker: Natural resources, i mean, they can, for a short span, they can be cheaper as compared to the day ah day before or or yesterday as as as you remember. But it it never goes down.
Speaker: Right. It's short term availability, but long term, inevitably, it will i mean go up. ah Akshay, to be very honest, when when I joined and or rather I started working with my grandfather, and my father, ah my grandfather said one thing, don't be a businessman, be an industrialist. Remember, industries are made over for generations and you continue putting in the efforts. Some days are highs and some days are low.
Speaker: Businessmen count whatever they make every day and then take it back home. If you want to count your stars, thank your stars, become the industrialist that you are. And if you want to just count the money in your bank, become a businessman.
Speaker: And then at hence I chose to become an industrialist just like the way family legacy has been. Hence, these cyclical thing never stopped us from anything in in making that effort.
Speaker: And what's the third? So waste, water, and you said there were three parts of the business, the Lutra family. So waste water would comprise today of, give or take, 20% of our time, because pretty much a straightforward business, like I said, it's a connected road business.
Speaker: So in terms of large amount of time, even out of 20%, I would say 80% of that 20% would be going into business development. When I say business development, I'm just baking breaking down into smaller pieces that um we have to expand to newer territories also, just like how we did in in wastetro is in solid waste.
Speaker: So we have to do the same for wastewater. But in wastewater, what we need to do is we need to identify the areas where today they're already feeling feeling or facing the water crunch.
Speaker: So unlike very solid waste management, where we went closer to the client, where we went closer to the manufacturers, in this case, we will go and attack and go and invest in the places where the customers are feeling that they're getting less and less industrial industrial water available for their industrial use.
Speaker: Okay. So you said Lutra family has three businesses. What is the third? And the third business is the infrastructure bit. The infrastructure bit is a combination of real estate and infrastructure projects.
Speaker: The first project that we did and we diversified started in 2007, where we created an an industrial park, the first of its kind in India under the scheme of integrated textile parks in India.
Speaker: And where 44 industrial units came together. And that's also where we made our first wastewater management project. And where the wastewater management of 100 million liters per day is happening even till date.
Speaker: We take in 100 million liters per day and we are processing about 80 million liters per day and we are sending it out, but basically selling it out as industrial water.
Speaker: How we could do that is by making one-stop-stop solution of an infrastructure park or an area which is defined for only investments in textiles. So the customer comes to us.
Speaker: We make sure that they get a land, they get area, they get a clean space to work with and they go out there. They don't have to worry about any permissions. They don't have to worry about their water problems, their waste waste problems.
Speaker: We take care of all of that by investing within the park also along with them. ah cemented roads, the best of amenities, everything came into came in together.
Speaker: And we did that, the first one in 2006, second one followed by 2009. Then we the third one in 2000. These are about 300 kilometers from Surat.
Speaker: So all within 300 kilometers. So just so i mean up to Bombay or towards the other end of Amdabar. Surat is right in the middle. So two ends is Amdabar and Bombay.
Speaker: This is a rented income that they pay or you build and sell and you charge the services? We build and sell and then we just charge maintenance services. so So instead of making societies, we still maintain them.
Speaker: And we made whatever money you had to be made as initial sales only. Because the intent is they are ah they are my customers for the other two verticals. Yes. So I wouldn't want to be that mean person who is trying to get the most out of my customer everywhere.
Speaker: we We said this is better to just keep it to the minimum and did that for the infrastructure bit. Additionally, for the and in the infrastructure space, ah we went ahead and worked on, we are currently building of almost a 380 bed hospital in Surat.
Speaker: which is a multi super speciality hospital, which is being built under the same specialty wing of infrastructure. why hospital, if you may ask, it is because yeah during COVID, we realized that, I mean, dad realized to be very honest, that there is dearth of need of the right kind of medical care facilities, which are minimum in the state of Gujarat.
Speaker: And being from Surat, why can't we do that? So we decided to step into the space. And that's what we are building. We are building a world-class space, which is going to be almost close to half a million square feet of space ah dedicated to medical and healthcare in Surat.
Speaker: And yeah, that's the aim in the infrastructure space, and which is now expanding further in the near future. If I was to feel free to share with is infrastructure is only taking about 10% or less than 10% of our time.
Speaker: It's purely more of a passion-based project, which we which we take up. so And how much revenue does it do? Bare minimum. I mean, it is in in revenue stream, it wouldn't make more than 20, 30 crore piece of part every year, but it's fine.
Speaker: We don't want to focus on the idea of taking money or making money out of everything. So hence, we've kept it there. Okay. Okay. i mean So other than the three of these verticals, we have created a foundation which is the Luthra Foundation.
Speaker: It has been in existence since my grandfather's time. It was earlier known as the Luthra Public Trust. And where we basically channel all our CSR activities through the Luthra Foundation.
Speaker: And where we have done ah very clear cut focus since the beginning of time since the beginning of the trust itself. The foundation has a focus on education. and followed by that we are looking at today, the idea of focusing and adding more than education to also add and medical and health services, but ah know you know in a way where we are able to deliver ah meaningful services in and around wherever we have the plants to today.
Speaker: So instead of saying that we are going to do it all over India, we have focused on maybe 30, 40, 50 kilometers radius of within our circuit where we can basically monitor what we have built and not just give money and forget about it.
Speaker: So that's the approach which we took. And that's where the foundation is working. And roughly we spend about almost close to 10 crores every year on on these foundations expenses every year.
Speaker: And this has been our spend for over a decade now. So we have been able to give back to the society in a stable way and not feel that you know you're only taking and not giving. You're also planning for an IPO, right? That is for which business?
Speaker: Only the environment business, the waste management business of hazardous waste and the recycling business of municipal waste. Not the water business. No, the water business is a young baby right now. And it is not even there. i mean, if if I go to see, I think india India has been, you know, ah golden goose again in that position where the stock market has been giving a lot to people and it did give a lot last year before this year's correction last week, which started off.
Speaker: So we are not going in to, you know, Get something out of this great situation that money is falling. Wow, we should also make some make some make some in the process.
Speaker: We are going there out there for growth capital. The intent is to get money to build more. Right. There are about 80 cities in the country today, which have more than 4 million tons each of domestic waste lying for over a decade or more.
Speaker: These are the places where we need to make a change. This is the places where we need to invest. To be able to create and cater to such a large order book in a large country like India, I need that growth capital within the organization.
Speaker: And that's the reason I wanted to go for an IPO. It was never about getting a valuation for whatever money we'll make. Whatever we raise is fine. As long as it is in the company that is going for growth.
Speaker: What does the... ah if it you know So if, say, you're making 400 crores in the waste business, ah what is the split of that revenue? How much of it is from sale of coal? How much of it is from what you are charging the polluters to take their to take the waste off their hands? Are there any other sources of revenue also besides these two?
Speaker: No, there only two sources of revenue and the sources of revenue is split 80-20. ah Currently, the product sales is a 20% shareholder of the revenue that we make and 80% of the revenue comes from the services that we charge for and we provide the customers.
Speaker: okay Eventually, this advice as is going to prevail. That's what I wanted to understand. Like 20% seems really low. Yeah, because we took our own sweet time to create the recipes to basically come up with the excellent product where the quality is matching to what my customer always wants.
Speaker: Today, after so many years, we have been able to distribute. So if you ask me, we only came up with the concept and the clarity of Ekakol 10, 20, 30, maybe about three and a half, four years ago, where the business actually took him a mature turn.
Speaker: So it was after six years of operation that we learned that what is the most critical element that you can bring to the table yes delivering quality and a promise of quality every single time.
Speaker: So the customer, you know, actually then compares that, okay, no, this is pet coke. This is also, this is also fuel. Earlier, we were never accounted for as fuel. Today, cement industry counts us as a fuel, not as an alternate fuel.
Speaker: We are energy company. So that change and that drift has reached this place because you'd be amazed that when we began, used to actually pay the customers to use our fuel.
Speaker: oh Okay. Okay. So today what is called as customer acquisition cost, we are we are very well aware of it. We used to do free logistics, pre-fuel and used to pay the customer on top of it.
Speaker: So right now you're saying that you're leaving money on the table when it comes to yeah ah the coal that is being produced, which eventually you will... be able to recover better ah value of that coal that you're producing today.
Speaker: yeah And therefore, that split of 20% will go up. will Will increase. And also, because we will we are we are planning to change the entire market, that now that we have been able to deliver on our promise, on delivering truck after truck, right? Tons after tons of Eka coal, we are able to figure out that now whatever the customized product that any of the three industries, cement, steel, or power needs, we will be able to deliver.
Speaker: That's the reason I told you that this year we'll be actually expanding now for the first time and delivering into steel the fuel which we are making out of hazardous waste. And as far as domestic waste is concerned,
Speaker: Today, domestic waste is again a very young part or literally a seedling in ah in the mix of Enviro. So that is where the growth capital will bring in the money. Today, if you ask me out of the 400 crores, what is the contribution of that?
Speaker: Then it is less than 10 crores in totality in terms of even turnover. Because it's just been 10 months, 11 months that it has been in existence. What do you mean? Domestic waste is municipal waste of municipal waste.
Speaker: Ah, household waste. Okay. Okay. Got it. And that obviously is a much bigger a waste category than... Okay. And how much do you plan to raise from the IPO?
Speaker: What I believe I've been told is anywhere between 1200 to 1500 is what we can raise. okay Okay. Market decides the rest. Market decides.
Speaker: Yes. It is never the focus on money as I write. So it is a little bit less money or more money is not going to make or break the bank. We are a cash rich company. We were a cash rich company. So that is not the focus. and The focus is to be able to have that growth capital in the bank and go very quick and double down on our speed in terms of how we are operating.
Speaker: And what ballpark valuation will you raise at? and So somewhere between eight and a half K to nine and a half K is what I've been given as almost a guarantee.
Speaker: ah This is after leaving some other, some, something on the table. This is the aftermath of leaving all everything on the table for investors to grow along with us and discounting.
Speaker: This should be still possible between eight and a half to nine and a half. Amazing. I want to clarify something. Maybe I got that wrong. You said 400 crore is the turnover of the waste business? The turnover.
Speaker: The turnover. Okay. The PAT would be anywhere around close to 110, 125. Wow. Okay. Like 25 plus percentage PAT. That's amazing.
Speaker: So let me end with this. You know, what's your advice to entrepreneurs who want to do something in the circular economy? What are some opportunities which you see operating in this space that these are white spaces where you can build a business or you know any any advice you have for future entrepreneurs?
Speaker: Actually, honestly, I don't do advices very well because I don't i don't even think that I'm there yet. But I can definitely share one thing for sure, which happened with me. And that's the same thing I'll share with everybody.
Speaker: That this space, it has so much to do. There's so many things which are missing. You look at the idea of e-waste, right? Before e-waste, there is a logistical part of managing e-waste.
Speaker: There is a point of distribution which has to be thought of. There is a scrap management in that category. Similarly, when we talk about oil recycling, there is so much of distribution networks which have to be created across the country.
Speaker: We have to formalize the Kabadi structure in the country. and today We have to still remember that we used to be a country of people who used to reuse and without inhibition. We have to now think of trainers and and people who are equipped with those that entire jargon, right even if it means selling those jargons.
Speaker: They should be able to, that there are so many avenues of growth and avenues of creating businesses for everyone. So I do not see that this is an industry which should even be thought of that we should leave this industry hanging. It is it has so much to offer.
Speaker: So all future entrepreneurs should just think of waste management, not a dirty business. but instead a business which is going to be lasting and it has always thrived ups and downs because the variety of businesses at any given point in time, not the whole market ever goes down.
Speaker: What goes down is sectors, but waste management is a must for everybody. So hence, it also gives in and gives back a lot of employment case, a use case for ah sustained business creation and value creation among all.
Speaker: And that's exactly what happened to me, why I stayed back. I stayed back with the thought process. I always thought that probably, you know, like a young 21, 22 year old when I joined, I was amazed that waste stinks.
Speaker: Waste is not nice. And all of that things, they just vanished when you when when I started started realizing that I'm at least in such a lucky space that in this business, you are at least not fighting for existence.
Speaker: And hence the advice, if ah if it was supposed to be an advice to all the young ones out there, the young entrepreneurs want to come in, please join us. We want to work harder and bigger.
Speaker: And this cannot be one company's motto or our our our destiny. We can't do it alone. We have to do it with multiple people. And we would love the fact that if more people can join this, because over the years I've only been missing, it's like, you I, any which I have just one sibling,
Speaker: And i always felt that, you know, i needed more and more number of people to join this family and make this into a larger, more community-based effort. And I'd be happy to help in any way and come along with anybody.
Speaker: oh i mean, small, big, every idea counts. And we should just not stop or inhibit anybody. And that's that's that. That's my two cents.
Speaker: Thank you so much for your time, Dhruv. It was a real pleasure. Pleasure.
