Imagine a business model made from trash: Pondy Oxides and Chemicals Ltd (POCL), a company that converts lead, aluminium and copper scrap into metal products and alloys. The company recycles over 140,000 tonnes of metal waste annually, and its smelters produce lead, lead alloys and other non-ferrous metals.
In addition to meeting strong domestic demand, the product is also exported to countries such as Japan, Korea, Thailand, and West Asia.
Founded in 1995, the Chennai-headquartered recycler is expanding and diversifying its operations to achieve its target of 20 percent compound annual growth rate (CAGR) in revenue, profitability and return on invested capital (ROCE) by 2030.
With governments mandating the use of recycled materials in manufacturing processes to conserve natural resources and reduce energy consumption and emissions, companies are committing to gradually increase their recycled inputs, which is driving business for recyclers like POCL.
Added value
POCL started as an oxides and chemicals company and diversified into PVC additives and metals business. The company started manufacturing lead acid batteries as part of its forward integration strategy. However, the company decided not to remain in the sector producing both raw materials and finished products for the same industry. After selling its battery manufacturing business to Amco Batteries, POCL expanded into lead business. The company is the first Indian lead smelter to be listed on the London Metal Exchange.
Pondy Oxides and Chemicals
“Recycling will continue to be our focus,” says POCL Managing Director Ashish Bansal, “but we are looking to expand beyond producing recycled material to creating value-added products from it, leveraging the entire value chain.”
The company is raising around Rs 1,330 crore to expand and diversify its existing verticals, of which the first Rs 760 crore will be earmarked for capacity expansion.
A wealth of used batteries
POCL has four recycling segments – lead, plastic, copper and aluminium. The lead segment, with lead acid and other battery manufacturers as its main customers, accounts for around 85% of revenue and grew to Rs 1,524 crore in FY24 from Rs 1,472 crore in FY23 (net profit fell to Rs 4,000 crore from Rs 4,900 crore). Exports account for around 56% of sales and the company has emerged as India’s largest exporter of lead products.
The global lead-acid battery market is growing at a CAGR of 6-7%, with the Asia Pacific region dominating the market, especially since India has emerged as a major global manufacturing hub for automobiles.
As more countries adopt circular and sustainable models, the demand for reliable energy storage solutions such as lead-acid batteries will grow, creating more opportunities for companies like POCL to recover valuable materials from used batteries and reintegrate them into the production cycle.
POCL is expanding its lead production capacity from 132,000 tonnes per annum to 204,000 tonnes per annum in two phases, which is expected to improve operational efficiency and profitability. “Our new plant will feature advanced technology, high degree of automation and improved compliance, differentiating us from companies adopting older technologies,” Bansal said.
Niche Plastics
POCL set up a wholly owned subsidiary, POCL Future Tech Private Ltd, last year for its plastics division. With production stabilising, the subsidiary has been signed up as a supplier to OEMs (original equipment manufacturers). “We are working closely with OEMs to develop specific grades of plastics for niche applications, which will be a major growth driver for the company,” he said.
The company’s plastic recycling business currently handles PPCP (polypropylene copolymer), ABS (acrylonitrile butadiene styrene) and nylon materials, with plans to expand to HDPE (high density polyethylene), LDPE (low density polyethylene) and polycarbonate in the future. Besides furniture manufacturers, the company aims to supply recycled plastic materials to sectors such as automobiles, home appliances, batteries, paints and electronics. The company earned revenue of Rs 200 crore from this business last year and is targeting Rs 1,000 crore this fiscal. It also plans to double its manufacturing capacity to 24,000 tonnes within 12 to 18 months.
In the copper unit, POCL recycles industrial cables and related products and is also exploring upcycling opportunities. “Though the copper unit is not a major part of our business, it has huge potential,” says Bansal. The aluminium unit, launched last year, has an annual capacity of 12,000 tonnes and primarily supplies to the automotive industry.
POCL is currently planning its fifth vertical – lithium-ion batteries. Initial R&D on mechanical processes has been completed and focus is now on the hydrometallurgical aspects. POCL aims to launch this vertical by 2026-2027 and expects to have a significant amount of lithium-ion battery scrap generated by then.
A few months ago, rating agency Crisil had reaffirmed its ‘A-/Stable’ rating on POCL’s long-term bank facilities, highlighting its strong business model supported by established relationships with key customers, a diversified sourcing and supply base, moderate barriers to entry and established manufacturing capabilities.
Source strength
POCL’s major strength is its extensive procurement network, where it sources lead, plastic, copper and aluminium scrap through long-term agreements with over 270 suppliers across over 70 countries. “Currently, 20 per cent of our procurement is from the domestic market but we aim to increase this to 40 per cent following strict implementation of government norms such as BWMR,” he said. [Battery Waste Management Rules] and EPR [extended producer responsibility]” says Bansal.
In the South, POCL covers four to five states from its plants in Tamil Nadu and Andhra Pradesh.
To capture future opportunities, the company has acquired 123 acres of land in Mundra, Gujarat to set up a factory close to the local port for its import-export business, besides catering to the domestic market in the region.
“This is a strategic expansion. There is also the possibility of bringing in international joint venture partners and new technology products for our expansion in Gujarat,” Bansal said.
