Blessing in Disguise ?

 

 

Dear Shri Gadkariji,

Many thanks for your recent announcement re: VEHICLE SCRAPPAGE POLICY in Lok Sabha, when you said ,

“ The scrapping policy will lead to a new investment of around Rs 10,000 crore and create 35,000 jobs “

Quite likely you based your estimates on :

Ø  A vehicle scrap recycling plant having a capacity to process 1 lakh vehicles / year , could easily cost Rs 500 crore

Ø  Hence, 20 such plants could cost Rs 10,000 crore

My following analysis suggests that :

Ø  Instead of processing only 20 lakh ( 2 million ) vehicles per year, we have a business opportunity to process 200 lakh ( 20 million ) vehicles / year , requiring an investment of Rs 1 Lakh* crore

Ø  Employment potential could be 3 Milllion jobs

There is nothing “ disguising “ about your policy, although not everyone can/ will, see the “ not so apparent “ opportunity !

With regards,

Hemen Parekh  /  hcp@recruitguru.com  /  22 March 2021

=================================================

 

Context :

Scrappage policy ; Firms forge ahead to steel scrap   /  Business Line  /  22 Mar 2021

Extract :

It’s not only automobile companies that are looking to gain from the new scrappage policy; steel companies, including Tata Steel, JSW Steel and Liberty group, are also gearing up to produce more steel by recycling scrap.

Tata Steel has already set up a scrap-based steel plant with an annual capacity of 5 lakh tonnes at Rohtak in Haryana. The company sources scrap by procuring old vehicles……….

India spends around ₹24,500 crore a year on steel scrap imports to meet the shortfall in domestic supply.

Currently, India generates 25 million tonnes of steel scrap and imports about 6.5 mt a year.

Vehicle scrapping can generate about 70-75 per cent ferrous (steel) scrap, 6-8 per cent non-ferrous metal scrap, besides miscellaneous rubber and plastic scrap.

===================================================

Question ?

How many OLD vehicles will need to be scrapped in next 2 years ?

Answer :

Light Motor Vehicles

#   Older than 20 years…………………………………………. ……51  lakhs

#  Older than 15 years( but less than 20 years ).………34  lakhs 

     Medium and Heavy Commercial Vehicles

#  Older than 15 years without any valid FITNESS certificate…17  lakhs

===============================================

TOTAL…………………………………………………………………………102 lakh [ 10.2 million ]

         ( source :   Vehicle Scrapping Policy : Most Questions Answered  / 18 Mar

           2021 )

Although, only a few months back, Transport Ministry was talking of 28 million OLD vehicles to be scrapped

============================================================

Question ?

How much recycled Steel Scrap will these provide ? How much Foreign Exchange will that save ?

Answer :

Assuming ave. ( for LMV and Heavy ) of 1 ton per vehicle, these would give 10.2  million tons

Our current steel scrap import of 6.5  million ton costs us Rs 24,500 crore ( ie: approx. Rs 37,692 / ton )

So, 10.2 million ton ( recycled  from 10.2 million vehicles ) would save foreign exchange valued at :

Ø      Rs 37,692 x 10,200,000 Kgs = Rs 38,445 crore

------------------------------------------------------------------------------------

Question ?

How many Vehicle Scraping plants will be required to take care of these 10.2 million vehicles ?

Answer :

About 20 plants of the size of TATA STEEL plant ( 0.5 million tons / year )

Mahindra Accelo vehicle recycling plant has capacity to process 25,000 – 30,000 vehicles per year and it is in the process of scaling up to 1 lakh vehicles / year. It is also planning to set up 25 plants all around the country . Hence, in 2 years time, Mahindra Accelo may have a capacity to process 25 lakh ( 2.5 million ) vehicles / year

( sources :

Mahindra Accelo keen to prove its mettle in vehicle scrappage era  / 10 Feb 2021 )

Mahindra Accelo : Saluting a pioneer ……………………………………….[ 19 June 2018 ]

================================================

 

Question ?

What happens after the current population of OLD ( > 15 years ) 10.2 million vehicle gets scrapped / re-cycled ?

Answer :

It will take ( may be ) 4 years for TATA ( 5 lakh vehicles ) + Mahindra Accelo ( 25 lakh vehicles ) , totaling 30 lakh vehicles / year capacity to become fully operational

By that time, our total Vehicle Population will reach 300 million. So, we can expect some 3 million (10 % ) to become eligible for scrapping, each year – keeping all these plants busy , round the clock

Apart from these “Local “ vehicles , other countries of the world, are currently scrapping some 30 million vehicles each year

( source :   Car Grave-Yard of World ?    /    14 Feb 2018 )

Currently, total number of ( mostly ICE ) vehicles world-wide is estimated at around 1.5 billion ( 1,500 million ) and growing at the rate of about 100 million / year , and expected to reach 2.8 billion by 2036

During the course of last year ( 2020 ), most developed countries of the world ( USA-UK – EU – Russia – Japan – China etc ) have announced complete switch-over to EV , by 2035

That would require scrapping ( possibly ) 2 billion ( 2,000 million )  ICE vehicles in the next 15 years

 

THAT IS, MORE THAN 133 MILLION VEHICLES NEEDING TO BE SCRAPPED EACH YEAR !

===================================================

 

Question ?

Does this not present a huge  “ VEHICLE SCRAPPING BUSINESS OPPORTUNITY “ for India ?

Answer :

You bet !  It is an unprecedented business opportunity which we MUST exploit as explained in my following e-mail to Cabinet Ministers :

Ø     Car Grave-Yard of World ?  ………………………………[ 14 Feb 2018 ]

================================================

Question ?

Did you follow this up with the Policy Makers ?

Answer :

Yes.  I sent an e-mail reminder as follows :

Ø     Alang : Junkyard ? Scrapyard ? SaveYard ? ………..[ 12 Dec 2020 ]

================================================

 

Question ?

IS THERE ANY POSITIVE RESPONSE TO YOUR SUGGESTIONS ?

 

Answer :

Indeed !

Government has recently announced its policy as mentioned in following news report :

Alang set to become the junkyard of old vehicles, too  {  Business Line – 12 Dec 2020 }

Extract :

Ø   Alang, where ships finally call to be broken up, may soon become the hub for scrapping old vehicles, too. The government is weighing a plan to dismantle and recycle end-of-life vehicles at this port town in Gujarat’s Bhavnagar district.

Ø    An inter-ministerial panel exploring the possibility of junking vehicles at Alang, following a presentation made to Prime Minister Narendra Modi for drafting a scrapping policy, has finalised its report, multiple government officials said.

Ø    The government’s policy managers feel the plan would maximise Alang’s recycling potential and help use the cheap scrap steel extracted as an input for the manufacturing sector, the sources said

Ø    The move comes as steelmakers such as Tata Steel and the Liberty Group are looking to enter the scrap recycling segment. Tata Steel has already set up a recycling plant in Rohtak, Haryana

Ø    The Ship Recycling Industries Association (SRIA) has backed the plan as this can double the steel scrap output to 5 million light displacement tonnage (LDT) from the present 2 million LDT.

Ø    The association has made two suggestions to overcome the limitation of the small size of ship recycling plots.

“Every plot holder should be allotted a backyard plot of 10,000 sq metres at nominal cost on a 99-year lease,” said an SRIA official

“If the backyard plot is allotted, we will set up shredders and other equipment  for recycling of vehicles at our own cost,” he said

Ø    Second, the association wants the recycling yards to be converted into an autonomous body under the National Authority for Recycling of Ships set up by the Shipping Ministry. This will solve the problem of multiple agencies operating at Alang which delays finalisation of issues relating to the industry, the SRIA official said.

   

Ø    The Central Pollution Control Board issued guidelines in April 2019 for environmentally sound management of collection, dismantling and shredding end-of-life vehicles

===================================================

CC :

Shri Nitin Gadkariji {  Transport Minister / nitin.gadkari@nic.in / email@nitingadkari.org }

Shri Mansukh Mandaviya { Shipping Minister / minister-shipping@gov.in  }

Dr Sanjeev Ranjan { Secretary – Shipping / secyship@nic.in }

lam.darius@mahindra.com

dharwadkar.shubhada@mahindra.com

 

===================================================

 Related Reading :

Informal Scrapyards to be integrated with Registered ones   

Extract :

According to the National Green Tribunal, by the end of 2025, the number of vehicles which are 15 years or older is likely to reach over 21 million.

“We are seeing how we can integrate these centres with the e-auction process of MSTC (Metal Scrap Trading Corporation),” the official said. “Another option could be that the authorised centres could go on a collection drive from these smaller, informal scrapping units,” the official added.