Circular economy. How Pondy Oxides mines metals from scrap

Imagine a business model made out of trash — that’s Pondy Oxides and Chemicals Ltd (POCL), a company that converts lead, aluminium, and copper scrap into metal products and alloys. Recycling over 140,000 tonnes of metal waste annually, its smelters produce lead, lead alloys, and other non-ferrous metals. 

Besides catering to strong domestic demand, the products are exported to countries such as Japan, South Korea, Thailand, and the West Asian region. 

Incorporated in 1995, the Chennai-headquartered recycler is expanding and diversifying to meet its target of 20 per cent compound annual growth rate (CAGR) in revenue, profitability, and return on capital employed (ROCE) by 2030. 

With the government mandating use of recycled materials in manufacturing processes to help conserve natural resources and cut energy consumption and emissions, companies are pledging to gradually increase recycled inputs. This, in turn, is driving the business of recyclers like POCL. 

Value addition

Starting off as an oxides and chemicals company, POCL diversified into the PVC additives and metal business. It began manufacturing lead-acid batteries as part of a forward integration strategy. However, it decided against remaining in a sector where it produced both raw materials and finished products for the same industry. After selling the battery manufacturing business to Amco Batteries, POCL expanded its lead operations. It is the first Indian lead smelter to be listed on the London Metal Exchange. 

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Pondy Oxides and Chemicals Ltd

“Going forward, our focus will remain on recycling,” says Ashish Bansal, Managing Director of POCL. “However, we aim to extend our efforts from producing recycled materials to creating value-added products from those materials, tapping into the complete value chain.” 

To expand existing verticals and diversify, it has raised about ₹133 crore funding, of which the first tranche of ₹76 crore would go towards capacity expansion. 

Wealth in used batteries

POCL has four recycling verticals — lead, plastics, copper, and aluminium. Catering primarily to lead-acid and other battery manufacturers, the lead vertical brings in about 85 per cent of revenue, which increased to ₹1,524 crore in FY24 from ₹1,472 crore in FY23 (net profit dipped to ₹40 crore from ₹49 crore). Exports make up about 56 per cent of the topline; the company has emerged as the country’s largest exporter of lead products. 

With 6-7 per cent CAGR, the global lead-acid battery market is dominated by the Asia Pacific region, especially after India’s emergence as a key global manufacturing hub for automobiles. 

As more countries adopt circular and sustainable models, the demand for reliable energy storage solutions like lead-acid batteries will increase, opening up 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 in two phases, and this is expected to enhance its operational efficiencies and margins. “Our new plant will feature advanced technology, higher automation, and improved compliance, differentiating us from companies using conventional technologies,” Bansal says. 

Niche plastics 

For its plastics vertical, POCL established a 100 per cent subsidiary, POCL Future Tech Private Ltd, last year. With stabilised production, the subsidiary has been empanelled as a supplier to original equipment manufacturers (OEMs). “We are working closely with some OEMs to develop specific grades of plastics for niche applications, which will drive significant growth for us,” he says. 

The company’s plastics recycling business currently works with PPCP (polypropylene copolymer), ABS (acrylonitrile butadiene styrene), and nylon material, with plans to add HDPE (high-density polyethylene), LDPE (low-density polyethylene), and polycarbonates to the mix. Beyond furniture manufacturers, it aims to supply recycled plastic material to the automotive, appliances, battery, paint, and electronics sectors, among others. Clocking ₹20 crore revenue from this business last year, it targets ₹100 crore this fiscal year. Additionally it plans to double the manufacturing capacity to 24,000 tonnes in 12-18 months. 

In the copper vertical, POCL recycles industrial cables and associated products, and is exploring upcycling opportunities too. “Though not a major part of our business, the copper vertical holds strong potential,” says Bansal. The aluminium vertical, launched last year, has a capacity of 12,000 tonnes per annum, mostly supplying to the automotive industry. 

POCL now plans a fifth vertical — lithium-ion batteries. Initial R&D has been completed for the mechanical process, and the focus is now on the hydrometallurgy aspect. POCL aims to launch the vertical by 2026-27, anticipating significant volumes of lithium-ion battery scrap by then. 

A few months ago, rating agency Crisil reaffirmed its ‘A-/Stable’ rating for POCL’s long-term bank facilities, highlighting the strong business model that is supported by well-established relationships with key customers, a diversified procurement and supply base, moderate entry barriers, and established manufacturing capabilities. 

Strength at source

A major strength of POCL is its extensive procurement network, sourcing lead, plastics, copper, and aluminium scrap through long-term agreements with over 270 suppliers across 70 countries. “Currently, 20 per cent of our procurement is from the domestic market, and we aim to increase this to 40 per cent following the strict implementation of government norms like BWMR [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 tap future opportunities, it has bought 123 acres in Mundra, Gujarat, to set up factories closer to the local port for its import and export business, apart from catering to domestic markets in the region. 

“It’s a strategic expansion... we may have some international JV partner or a newer technology product for the Gujarat expansion,” says Bansal.