How to turn waste to wealth: Let’s Recycle

Sandeep Patel smiles every time he sees the women in his workforce sporting new silver ornaments. And as his men workers take more holidays and come back refreshed, eager to take a stab afresh at sorting garbage, Sandeep knows he is on to something good.

“These are the signs that show they have enough cash flows, that money is no longer a problem for my workers. And the fact that I am responsible for it in a small way makes me extremely happy,” he says.

Sandeep is the founder of Nepra Resource Management Pvt Ltd, a waste management company headquartered in Ahmedabad that operates under the ‘Let’s Recycle’ brand.

He is an entrepreneur who is turning waste to wealth, not just for himself but also for his workers who happily scrounge through heaps of discarded trash at the Ahmedabad facility.

Gains from garbage

Sandeep knows there are gains to be made from garbage. The signs are palpable, he maintains, especially the last two years that have seen a shift towards recycling. With government initiatives such as the Swachh Bharat Abhiyan coupled with the push on solid waste management regulations, Sandeep says there is massive demand for organised waste management enterprises.

“There is pressure now on the whole ecosystem to manage air, water and solid waste. Companies, too, have high sustainability parameters. The opportunity is going to be crazy over the coming months,” he says, and is “building the necessary bandwidth”.

Touting the firm as being the only waste management organisation in India to have developed an Enterprise Resource Planning (ERP) system to track and monitor all activities, Sandeep says the aim is to divert 30,000 tonnes of waste from the landfill by 2020, up from 373 tonnes in 2012. This, he adds, can be achieved by expanding the footprint in other cities.

Nepra has built an organised dry waste supply chain that connects waste generators and collectors to recyclers. It has integrated over 1,800 waste pickers in Ahmedabad into the formal economy.

He prides himself on the fact that he has been partly responsible for formalising the Indian unregulated and unorganised waste management sector by sourcing waste from marginalised waste pickers and ensuring transparent prices.

The social impact

“Some workers who we employed at ₹6,000/month are today earning more than ₹1 lakh per month. All our initial training and knowledge has yielded rich dividends. I did not realise it at that time, but we were instrumental in helping several people from weaker sections of society get to a better place. We were impacting people positively,” he adds.

The social impact of the business was driven home when Aavishkaar, part of the Aavishkaar-Intellecap group, invested ₹3 crore. Till that point, Sandeep informs, the entire thing was just a business. “We then realised with our work we were bringing a lot of comfort to people’s lives. Our perspective to the business changed and we started tracking the social metric,” he adds.

Before he found his calling in waste, Sandeep dabbled in several businesses, for he likes challenges. “If there is an opportunity coming my way and I can partner, I seize it. Being a typical Gujarati, I am also very business-minded.”

Sandeep’s in-laws are into industrial waste handling, “making copper sulphate and zinc sulphate from industrial waste. They needed help in procuring more raw material. Most of the chemical trading facilities in Gujarat were doling out a lot of industrial waste,” he says. This ensured his pivot to handling waste.

Thus began another journey. It was 2006-07 and some 750 people were recruited, mostly children of textile workers in Ahmedabad. With the help of the Sharda Trust, which has the support of textile major Arvind Group, Sandeep began his tryst with garbage.

However, while researching on the value chain of recycling, he realised there was no transparency in the industry. In 2009-10, he exited from all his other businesses to focus on waste management.

“I diluted equity from three businesses and got around ₹1 crore. I roped in two of my friends and decided to move on to doing something bigger,” he adds.

The journey of Let’s Recycle

Let’s Recycle was born. L&T’s solar power project in Gujarat was among its big clients at the start. “They asked us to keep their site clean. They had a World Bank audit. With 10-12 trucks and 40-50 people, we cleaned all the cardboard and plastic waste, all the packaging material lying across their 30-40 acres,” remembers Sandeep.

As the project with L&T drew to an end, Sandeep realised he was fast running out of cash and would need institutional investors. He started the rounds.

“Out of the 70 VCs we approached, 68 said we don’t invest in this sector. Waste management was not an area of interest for them, while some PE firms said the ticket size (₹6 crore) was too small,” he recalls. In May 2012, a coffee and small discussion at Aavishkaar’s office in Mumbai set the ball rolling, leading to an initial investment of ₹3 crore.

The biggest learning

Sandeep’s journey has not been without learnings. A fire at the Ahmedabad plant almost turned his dreams to ashes. “Everything was lost. We had not taken any project insurance and that was the biggest learning. We had invested ₹40-50 lakh at the site and had stock of ₹25-30 lakh, a total exposure of ₹75 lakh. The entire thing went up in flames,” he recollects.

At that time Vineet Rai, Founder of Aavishkaar, provided much-needed succour. “He told us not to be disheartened and to focus on getting back on track. What was also reassuring was the support we got from our workers, who said they would not take any salary for 10 days. It was a moving gesture,” says Sandeep. That fire changed a lot of things. “Though we started full operations 15 days after the fire, I realised we needed to automate our plants. By 2015, we had put up new mechanised tools to ensure material movement and had a new plant to cater to optical sorting for polymers,” he adds.

Aavishkaar helped with another bridge round.

The company has had two major investments. “Last June, we got ₹44 crore – ₹35 crore from Asha Impact and ₹9 crore from HNIs. Earlier, we got ₹28 crore. From the first amount (₹28 crore), we did a topline of ₹60 crore. With the next round of ₹44 crore, we plan to expand to Indore, the cleanest city in India, and hope to have a 300-tonne plant operating next month,” says Sandeep.

Around ₹26 crore has been invested in capex in Indore, “where the quality of waste is cleaner,” and ₹10 crore as working capital.

The Indore collection model will be replicated at Jamnagar, where Sandeep and his team have bagged an order to pick up dry waste and process it. The unit will be set up over the next three months.

Rising headcount

More than expansion, Sandeep is glad he will be adding workers at each unit. The current lot of 250 employees will increase to swell to 350 with the Indore plant getting commissioned.

Plants in Jamnagar and Pune are next on the cards. “Before Diwali, we should have around 650 employees,” says Sandeep.

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