Charged Up
WHAT BEGAN AS AN ACCIDENT HAS MADE NILE ONE OF THE LEADERS IN LEAD RECYCLING. IT INTENDS TO BUILD AN EDGE IN THIS GROWING MARKET.
What began as an accident has made Nile one of the leaders in lead recycling. It intends to build an edge in this growing market
When Navabharat Industrial Linings and Equipment Ltd was incorporated in 1984, the promoter could not have foreseen a change of name or a drastic business pivot. “Nile is not an acronym [of Navabharat],” says Vuyyuru Ramesh, the 69-year-old Chairman and Managing Director. “The name is registered with the Registrar of Companies. Our customers called us Nile as it was convenient and we changed the name to Nile Ltd in 1995.” In the beginning, Nile made glass-lined equipment for the pharma industry. “It is a highly specialised area and we were the second in India to do so,” says Ramesh sitting in his Hyderabad office. He is not alone. V. Sandeep, his 34-year-old son with a hands-on approach, is always there to help.
Nile in its current avatar, as a prominent recycler of lead, speaks volumes about Ramesh and his way of working. A keen business sense, a strong risk appetite and a rare determination to start a second innings and do something different would sum up the man. He puts it down to an “accidental beginning” although the recycling division was set up years before the glass-lining business was sold to the French firm De Dietrich in 2012.
The Big Leap
Before foraying into lead recycling, Ramesh spotted an opportunity for serious players as the government back then was clamping down on fly-by-night lead recyclers. But the rest was sheer chance, he insists. “We came across an Israeli firm that offered us the technology. It did not work out, but we felt that since we had got our feet wet, we should start working in that field.”
Both recycled and imported lead is used to manufacture all kinds of lead-
acid storage batteries used in automotive and other segments.
Nile set up a 3,000 TPA ( tonnes per annum) lead recycling plant near Hyderabad in 1999, but there was no customer commitment at the time. The company had its first breakthrough in 2004, when Amara Raja Batteries, one of India’s largest automotive and industrial battery manufacturers, decided to source its recycled lead. Nile took another leap of faith and came up with a 20,000 TPA facility in Tirupati in 2009. Today, the company has a total installed capacity of 82,000 TPA and caters to leading companies such as Amara Raja ( its biggest customer), Hyderabad Batteries and NED Energy. It also exports to Singapore, Saudi Arabia and the UAE.
Nile has invested in new technologies and focussed on process innovations. For instance, it has imported automatic battery-breaking machines with material separation system and an oxy-fuel system to ensure cleaner smelting and effective pollution control. The company has also cemented its business relations with both vendors and customers. Sandeep, who is working as an Executive Director, says about half a dozen suppliers have been with them for nearly a decade. Many of them are from the Middle East and supply a variety of raw materials such as remelted lead ingots, drained lead acid battery scrap and battery plates.
A top supplier of recycled lead, Nile has expertise in lead alloys, which accounts for 40-50 per cent of total sales and gives it an edge, says Sandeep. “We have zero customer rejection since we started operations.”
Nile’s biggest customer concurs. According to Jayadev Galla, Vice Chairman and Managing Director at Amara Raja, his company “has been getting a fairly good volume of recycled lead from Nile and it is a dependable supplier”.
Growth, Hurdles
Nile will now focus on forward integration and various lead compounds such as red and yellow lead. “While red lead is used to make tubular batteries and rustproof primer paints, yellow lead is for the PVC industry and ceramic manufacturing,” explains Sandeep.
He calls it a commodity business at the end of the day, with waferthin margins, as lead prices have been volatile over the past few years. Even then, Nile’s total income has been growing at a CAGR of 27.5 per cent over the past three years. Its stock prices more than doubled during the period.
“We are a zero- long- term- debt company. We only have some working capital requirements,” points out Ramesh. “If lead prices remain steady, we expect to double our turnover in five years.”
The key challenges lie elsewhere, say the promoters, in the form of lead imports and competition from the huge unorganised sector. “My guess is that it is as big as the organised sector, which is about 400,000 TPA. Add to that lead imports from duty- free countries, mostly from East Asian nations, and you get the picture,” says Ramesh. But what about the impact if India adopts an electric-vehicle-only policy by 2030 as declared by the current government? Sandeep is undaunted as he sees a rising demand for storage batteries in the renewable energy space, which will be a new growth driver for the company. ~
GROWTH DRIVERS Long- standing relationships it has built with major customers, vendors and suppliers, coupled with constant modernisation, resulting in operational efficiencies CORE STRENGTHS Process innovation capabilities, undivided focus on key business, in- house capabilities in making lead alloys rather than being confined to pure lead, backed by the ability to scale up, and the financial strength to withstand price volatility FUTURE PLANS Forward integration and getting into compounds of lead such as red lead, yellow lead and oxides. CHALLENGES Huge unorganised sector and imports. The unorganised sector could be as huge as the organised one, estimated to be 400,000 TPA. GOAL If product prices do not change much, it hopes to double its turnover in five years