According to a paper published in Nature, a leading international science journal, over the next 12 years South Asia, and specifically India, will be the fastest growing region for generating waste. Increasing urbanisation, a growing middle class population and adoption of high-consumption lifestyle, says a Worldwatch Institute report 2012, has led to this spike. To handle the waste problem, the Government of India passed the Municipal Solid Wastes (Management and Handling) Rules, 2000 under the Environment Protection Act of 1986. More than a decade has passed since these rules were enforced yet muncipalities have not been able to implement proper waste disposal systems in the country. Over the past decade or so, though, a bevy of companies have spotted the opportunity in different kinds of waste—such as municipal solid waste (consisting of household waste, construction and demolition debris, sanitation residue, and waste from streets), and e-waste (mostly electronics). Here we take a look at these companies that are trying to pull India out of its trash trouble. 

Trash to treasure
The Municipal Solid Wastes (Management and Handling) Rules, 2000 mandate all municipal authorities in India to implement improved systems of solid waste management for proper waste disposal. The rules don’t entitle municipalities to collect waste from the source—the residential complexes, the commercial buildings and others. So, the muncipalities collect waste from the city dumphouses and then move all the trash to the landfills, which are usually on the periphery of the cities. This puts the responsibility of collecting waste and taking it to dumphouses on the residents. To do that, a lot of them get into an informal contract with the waste pickers to take the garbage to these secondary dumpsites. Those who can’t get waste picker services, do it themselves or throw the garbage out on the streets.

It’s this puzzling rule of not collecting trash from the households that Amit Mittal, founder of the Rs935-crore engineering and infrastructure company A2Z Group, attributes as the main reason for India’s filthy cities. Mittal’s rendezvous with waste began in 2005 while his company was managing facilities for the Indian Railways in Kanpur. Railway authorities asked A2Z to handle its waste disposal too. That request got him thinking—could waste management be an exciting new vertical for him? As Mittal set out to figure out the industry’s commercial viability, he discovered the many, many flaws that needed to be fixed.

First, he realised that the few waste management players that were operational would concentrate on only one or two aspects of the waste management cycle. They would do either of the two—transport waste or process it. No one specialised in an end-to-end solution for waste management.

After studying the market for two years, A2Z developed their integrated solid waste management model, and did its first pilot study in Kanpur in 2008. The first step was to collect the waste directly from houses. Mittal says, “collection of waste directly from households would solve many problems at once. It helped in keeping streets clean and eased the tedious process of waste segregation for the rag pickers. Since segragation was done at source, the rag pickers didn’t have to climb mounds of trash at the landfills that reek of methane.”

For collecting the waste, each residence paid A2Z a monthly payment of 30-50 and commercial complexes paid 100. A2Z forwarded the entire collection corpus to the city’s municipality. In return, A2Z got a fixed monthly sum for their services from the municipality.

The model Mittal developed at A2Z is also being studied by Massachusetts Institute of Technology as a case study for integrated waste management in developing countries.

This improved the economic margins for the municipality because A2Z charged them less than the amount collected. That way, the municipality made a cash surplus which reduced the amount of money spent by the government on waste management. Apart from the service fee from municipality, A2Z also made money from selling the derivatives of waste—compost (made from organic waste), Refuse Derived Fuel (RDF) (made from plastic, rubber and other combustible items), and recycled tiles and bricks (made from construction debris).

They also got the waste pickers from the informal sector to work for them. Employing them wasn’t easy, says Mittal. Rag pickers have their own associations and they maintain their loyalty to them. Any new company is treated with suspicion on account of the fact that they might take away all the waste, especially recyclables—rag pickers’ main source of income. To convince them, his company had to send a team of five people to educate rag pickers about the financial and health benefits of joining the organised sector. It took them six months to establish trust with them. Eventually they did become a part of his company. Within a year, they had 300 waste pickers working for them. This model ensured all entities involved make profits —the operator company, the government and the rag pickers.

Since that pilot in 2008, A2Z has grown to manage 8,000 tonnes of waste per day for 21 muncipalities across different Indian cities. Now, they work with more than 5,000 ragpickers. Mittal says their model is also being studied by Massachusetts Institute of Technology as a case study for integrated waste management in developing countries.

Yet, A2Z Group, which clocked up an impressive CAGR of 100.69 per cent in the 2004-2013 period, hasn’t struck gold (read, it’s not making money) in its Rs100-crore waste management vertical. Mittal points out the dominant cause for this. A major chunk of their revenue in waste management comes from selling the derivatives of waste—the compost, RDF and the recycled tiles. But, the government doesn’t give the waste management company any subsidies, grants or even attractive tariff rates to sell these derivatives. For instance, the combustible part of the waste is turned to energy or a combustible fuel like methane. To process this, A2Z had got commissioned to built its first waste to energy plant in 2012 in Kanpur. Now, they have four power plants, one in Kanpur and three in Punjab. But, the government hasn’t fixed an attractive power tariff (rate at which government buys power) for waste to energy plants. The current tariff is approx Rs5.5 per unit which makes it very difficult for operators of waste to energy plants to make profit.

Till the government doesn’t take waste management seriously as an industry, the going for companies like A2Z is going to be uphill.

Another by-product generated from waste is compost which is used as a fertiliser in agriculture. There is a clear cut directive from the government to the fertiliser industry to buy and sell compost along with chemical fertilizers. Since it is not made mandatory by the government, fertiliser companies do not buy compost or give a good rate for it. Hence, companies like A2Z do not get the right price from selling compost. Mittal says till the government doesn’t take waste management seriously as an industry, the going for companies like his is going to be uphill.

It’s why companies such as Waste Ventures India, the Indian operating company of the US-based social enterprise Waste Capital Partners, isn’t waiting for the government to fix its policy. They understood the government’s lack of support from their first integrated solid waste management project with the Osmanabad municipality in southern Maharashtra in January 2011. Twenty-six tonnes of garbage was generated each day and all of it was dumped in open landfills. Much of it wasn’t even collected. Waste Ventures India had hired 110 waste pickers that were part of the waste cooperative. They would collect waste from households and properly dispose it. But, after three months they stopped their work because the municipal leadership was unwilling to release any payment because they refused to bribe them.

So, Waste Ventures India had to find a strategy to work around the unfavourable environment. Parag Gupta, founder of Waste Ventures, says,“After the Osmanabad incident in 2011, Waste Ventures started working on non-payment contracts with the muncipalities in India. As per the new model, the muncipalities would provide Waste Ventures with facilities to compost organic waste which comprises of 70-80 per cent of municipal solid waste. In return, Waste Ventures India helps the municipality optimise its collection and collection staff schedules and then operates the compost plant. Waste Ventures incentives are aligned towards environmental processing because if they do not compost the organic waste, they cannot make their operations financially self-sufficient. That way, the municipality receives environmental processing of waste at no cost and the district has a fully integrated solid waste management process in place.

Parag Gupta knew he had to develop a model in India wherein no financial transaction with the government bodies was required.

Waste Ventures implemented this model in Miryalaguda in Andhra Pradesh at the end of 2013. The project has been named second best municipal waste management project in Andhra Pradesh and third overall across India (for cities under population of four lakhs). The earnings of the waste pickers who processed the organic waste increased by two to three times over their prior wages. Also, more than 70 per cent of the waste was getting environmentally processed. Also, this model helped in selling compost directly to farmers as most of the sheds were located at the outskirts of the city. According to Fertiliser Association of India, only 0.5 per cent need for soil conditioners is met in India. No wonder, as Gupta informs, they were 400 per cent oversubscribed for compost in Andhra Pradesh.“What investors and commercial markets hate most is uncertainity and risk. This model mitigates risk. One earns from what is recycled and sold. However, our profit margins are lower because we are a social enterprise. But, this model is financially sustainable which others can follow and make profit,” Gupta believes.

But, the real win of the model, Gupta says proudly, is that it improved the waste pickers’ sanitation, work environment, earnings and health all at once. In fact, Waste Ventures was selected by World Wildlife Fund in December 2011 as one of the “50 Green Game Changers” in the world. The journey isn't easy, but for entrepreneurs like Gupta and Mittal,it's part of what attracts them to this space in the first place.