Mahindra, MSTC eye $1.8 bn market from auto shredding plant joint venture

By: | Published: August 8, 2016 10:24 PM

State-run metal scrap trading firm MSTC today signed an agreement with Mahindra Intertrade, a part of the diversified Mahindra Group, for setting up an auto shredding and recycling plant in the country.

Mahindra Intertrade is part of Mahindra Partners Division of the USD 17.8 billion Mahindra Group, whole the mini-ratna public sector undertaking (PSU) is engaged in the export of ferrous scrap.(Reuters)Mahindra Intertrade is part of Mahindra Partners Division of the USD 17.8 billion Mahindra Group, whole the mini-ratna public sector undertaking (PSU) is engaged in the export of ferrous scrap.(Reuters)

State-run metal scrap trading firm MSTC today signed an agreement with Mahindra Intertrade, a part of the diversified Mahindra Group, for setting up an auto shredding and recycling plant in the country.

The idea behind the joint venture (JV) is to meet India’s annual scrap requirement of 5-6 million tonnes (MT), which at present is done through imports. The market is estimated to be in the range of USD 1.8 billion (about Rs 12,000 crore).

Speaking to reporters, MSTC CMD B B Singh said: “India’s demand for vehicles stood at 23.34 million in 2015. It brings to fore the issue relating to scrapping of end of life vehicles (ELVs) and when you consider all these points, this JV has immense potential for further growth.”

India imports around 5-6 MT of scrap every year, which again reiterates the need to set up a shredding plant in the country. The JV is starting with a single unit, but is also looking at a pan-India presence, he added.

At present, scrap is being imported at around USD 200-300 a tonne. Keeping in view India’s annual requirement, the market is in the range of USD 1.8 billion.

This first-of-its-kind in auto shredding facility will establish an automotive recycling capability for ELVs from collection, compaction, transportation, depollution, dismantling, shredding, recycling, and disposal, Mahindra Intertrade Managing Director Sumit Issar said.

“We will set up one plant now that is likely to come up in a location in Gujarat or Maharashtra. Its capacity will be about 1-1.5 lakh tonnes depending on the product mix. It will begin commercial production by March 2018,” he added.

On investments, Issar said: “It is a sizable one. We will start with one, but will later scale up to a lot of plants.”

When prodded further on expansion, the country has immense potential for growth in this space. The firm expects India’s scrap requirement to grow to as much as 15-20 MT in the next 5-10 years. A country like the US alone has 150-200 auto-shredding plants.

The JV agreement was inked in presence of Steel Minister Chaudhary Birender Singh and Steel Secretary Aruna Sharma.

Every tonne of new steel manufactured from scrap steel saves a substantial amount of iron ore, coal, electricity and limestone, Singh said.

Locally available scrap would help reduce the cost of production of secondary steel makers, while hi-tech shredding using better technology and machinery would help the country significantly reduce pollution, Issar said.

Mahindra Partners Managing Partner Zhooben Bhiwandiwala said the facility will transform the way automotive scrap is effectively recycled in a sustainable manner.

Scrapping old vehicles will help recover significant amounts of steel scrap, aluminium scrap, plastic and rubber.

Mahindra Intertrade is part of Mahindra Partners Division of the USD 17.8 billion Mahindra Group, whole the mini-ratna public sector undertaking (PSU) is engaged in the export of ferrous scrap.

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