Staying Ahead of Time

Chairman and Managing Director, Ion Exchange (India) Ltd
Some thirty years back, as the market was not that evolved due to lack of environmental consciousness, it took us almost twenty five to thirty meetings to convince our customer to buy a reverse osmosis system for waste water treatment," recalls Rajesh Sharma, Chairman and Managing Director, Ion Exchange(India) Limited. Mr. Sharma shares his experience of the evolution of water and waste water treatment market in the country. In a candid interview with Mittravinda Ranjan, he talks about his experience of four decades with Ion Exchange, which recently celebrated its golden jubilee of serving the water industry.

There was a time when water treatment was never considered as a critical aspect of running an industrial facility in India, but today the end users are much more sensitive towards the water challenge in the foreseeable future. Please share your experience of the evolution of market over the last four decades.
Early sixties was the dawn of industrialisation in India. Refineries, chemical and petrochemical manufacturing facilities, steel plants, power plants were mushrooming all over the country and there was significant demand for process water from these industries. This was also the time when, due to lesser awareness and lack of regulations on waste water discharge norms, waste water treatment was not really a core area of focus for the industry. Ion Exchange was ready with solutions for waste water treatment at that point of time but perhaps we were ahead of time for the Indian market .

By the eighties, industry had started becoming sensitive towards waste water treatment and this segment grew significantly towards the nineties. The last two decades, I would say, have witnessed the fastest growth of the waste water treatment market with the increase in corporate social responsibility coupled with stringent regulatory norms imposed by the pollution control boards at the state as well as central levels. However, the last decade has witnessed a fast growing demand for water and waste water solutions that have gone one step ahead, as there is more emphasis on recovery, recycle and reuse to conserve fresh water resources and minimise pollution.

How have the allied technologies sectors evolved with the changing market dynamics and how has Ion Exchange expanded the portfolio?
I am proud to say that Ion Exchange played a pioneering role in bringing water and waste water treatment solutions to the Indian market. In 1965 we pioneered the production of world-class ion exchange resins in India, we now export 40 per cent of total production to Europe and the USA. Later we set up facility for engineering and fabrication in Hosur to become a wholly integrated water solutions provider.

It has been our constant endeavour to bring new technologies to the Indian market. In 1978, we introduced reverse osmosis (RO) to the Indian market, which can now be seen in almost every household. If I can recall correctly, it took us almost twenty five to thirty meetings to sell the first industrial RO unit. Later, we went on to set up our own RO membrane manufacturing facility in Gujarat in 1987.

What are your thoughts on changing end user behaviour?
Willingness has certainly increased among the end users, which clearly reflects in the way the demand for water and waste water treatment solutions has increased. Customers are more open to embrace new technologies, although they are a bit expensive, but this is confined to mainly large and medium scale companies who have invested in setting up captive effluent treatment plants. Awareness levels are high even among small scale players but it is economically not feasible for them to set up individual effluent treatment plants but instead rely on the common effluent treatment plants (CETP) set up for industrial clusters to treat waste water.

These CETPs are designed to handle a certain quality of effluent; it gets upset due to sudden increases in plant load factor or high toxic chemicals discharged by industries. It is the responsibility of individual industries to ensure that permissible quality of effluent is sent to the CETP.

Often, one reads about industries flouting norms or CETPs not working at various places or industrial effluents or sewage being dumped in the fresh water bodies. These are issues that need serious attention.

Companies are setting up goals for sustainable development through a cleaner environment, reducing pollution, producing less waste by adopting advanced technologies and conserving the environment and many MNCs and major Indian groups have set up internal goals. This is the reason many companies are adopting recycling technologies.

Those who are more environmentally conscious are opting for zero liquid discharge (ZLD) technology though it is a bit expensive as zero waste means that waste at the end has to be thermally evaporated or by solar evaporation. We have done five projects so far, one outside India and the rest in India, and a couple more are currently under execution.

What are the key drivers for the changing trends in the industry ?
Increasing water scarcity and stringent regulatory norms on waste water discharge are compelling industries to find alternative sources of water to meet the growing water demand. Many industries are now being set up in the coastal areas due to water scarcity in land locked areas and these are relying on desalinated sea water as the resource to meet their requirements. Industries are now realising the need of adopting waste water treatment solutions as a value proposition; since the cost of fresh water supplies and cost of discharge of waste water when put together turn out to be more than the cost of recycled water, this justifies investment in waste water recycle.

Despite having regulations in place, we keep reading stories about industries flouting norms or CETPs not working at various places or industrial effluents or sewage being dumped in the fresh water bodies. What is the exact picture of pollution today in the country in your opinion ?
If you look at the overall picture, there has been significant change in end user mind sets, as a result of which the market has significantly evolved and can broadly be categorised into two groups. First, it is the large and medium scales who have invested in setting up their own capacities and the second is the small scale players who independently cannot install and run effluent treatment plants (ETPs). The government has set up CETP with the aim to treat the waste water generated by multiple small scale industries to a basic level. This is later transferred for final treatment before being discharged into the environment. As I mentioned earlier, these CETPs are designed to handle a certain amount of load and chemicals, which get upset due to sudden increase in plant load factor or chemicals that it is not intended to handle. It may be difficult to draw an exact picture, but by and large industries are trying to treat the waste although exceptions exist.

One of the major factors in the industries flouting the norms is the high cost of running the ETP facility. In my opinion, industries must be mandated to pay for effluent treatment costs just as they pay for other utilities such as power.

Talk about the overseas projects IonExchange has been working on and how is it to work on projects in other countries vis--vis India?
Ion Exchange has been involved in project exports for almost three decades and exports accounts for around 25 percent of our revenue at present. We have diverse geographic presence across South East Asia, Middle East and South Africa where we have set up our offices. Each of these markets is unique and has their own set of challenges.

In South East Asia, we are present in Thailand, Malaysia and Indonesia which are similar to the Indian market to a certain extent yet different as they are more progressive and sensitive towards water issues. Middle East is a tough market as the customers are very particular about high quality standards and they believe in investing in high end technologies. In Africa, South Africa is much more westernised. The rest of Africa has similar conditions like us. They want cost effective solutions which meet their requirements.

Municipal sewage waste (MSW) treatment is one of the most discussed in various forums but there is hardly any work done in that space in India, while in other countries like Singapore they are recovering water from sewage water and reusing water for various purposes. What kinds of opportunities exist in this space in a country like ours?
Municipal sewage waste treatment market is huge in our country. It may be difficult to give particular numbers as far as sewage waste generation is concerned, but as per our internal estimates, only ten percent of waste in rural areas and thirty percent of waste in urban areas is treated.

Singapore is another great examplewhich is highly water stressed but they have chalked a clear cut road map tosecure water supplies and have built the infrastructure to support the demand for the next 100 years. There, they have been blending treated sewage water with fresh water which they call New Water, but in India we have a mind-set and so this approach may not work in our country. Such steps can reduce the use of fresh water by almost 60-70 percent and simultaneously reduce the stress on fresh water resources.

Ganga Rejuvenation is just one example of sewage treatment before it is discharged into the river. The plan was chalked out almost 25 years back and partly implemented. But the river has remained polluted because of underdesign of plants and improper operation and maintenance.

What are the critical deciding factors for success of projects in this space?
These projects entail huge investments and require proper operation and maintenance post implementation. Type of waste and the plant load are critical factors at the design stage which requires the segregation of municipal waste from industrial waste before the waste enters the recycling and recovery units. Urban planners are taking care of these issues now but in many old cities, where small cottage industries are present, harmful chemicals are discharged into the common municipal stream that upsets the sewage treatment programme. One such example is Dharavi in Mumbai, home to many leather processing and manufacturing units.

Traditionally, urban planners have been looking at integrated treatment plants; however I feel that having decentralised plants would make more sense. Each large colony should have an individual treatment plant instead of transporting the effluent across the city to a common place for treatment or a set of small colonies can have a common recovery and recycle unit. In fact, if such units are close to the agricultural land, water can be treated for removal of pathogens and used in agriculture as well.

We have been propagating the idea of setting up water recovery units in big societies in urban areas to recover and treat waste water which can be used for purposes other than in the kitchen, like it is done in the Middle East .

Scope and opportunities for players from the private sector in waste -water treatment industry
For example in France, the water industry was completely privatised a hundred years back and has the highest compliance levels. If you ask me, why do we need to have water filters at home? Should it not be the responsibility of the authorities to ensure continuous water supplies with the highest quality for its people?

In India, the Government has been outsourcing the operation and maintenance of water and waste water treatment plants to private sector companies for a short term of around five years. This needs to change! Private players can of course play a major role in this segment in terms of investments but it will happen only if there are assured returns on investments in the business . Though regulations are in place, proper incentive schemes promising reasonable return on investments would certainly attract private players for investments.

Huge subsidies affect the top and bottom lines of companies and no one is ready to invest. For instance, the government offers subsidised water and in many cities the cost of treatment is more than cost at which water is sold to the customer, which makes the project unviable. This is one of the reasons why despite the availability of expertise, private players are not inclined towards investing.

The water challenge can be met only through the concerted efforts of government agencies and private players. The best possible approach would be through the PPP mode but the implementation is crucial. There is immense scope as the investment required in water and wastewater treatment is close to USD 100 billion and the PPP model can actually go a long way in addressing the issue.

Unfortunately, one does not get to hear stories of success of PPP model in India. What would be the critical success factors for implementation of this model?
Worldwide if you see, there are many success stories where the PPP model and privatisation have been made to work in the best interest of the stakeholders and society. France, as I said, privatised the sector a hundred years back to overcome the challenge and has one of the best water infrastructures.

The key for the success of the PPP model is that the ultimate cost must be borne by the end user. Unless the Government is ready to increase the tariff and until the private sector gets good ROI, the PPP model will not work. Another important factor to make it more successful would be involving the community/stakeholders directly in the project by making them a part of the SPV to maintain transparency in the whole process so they are a part of entire decision making process. This is actually the practice followed everywhere outside India and has worked well for the success of the PPP model in France, which completely privatised the water sector. Thailand is another example where Mitsui is running the drinking water project; in Manila such water projects are also running successfully as people are ready to pay. In fact, we are pursuing one project in Manila, where despite it being a small country people are paying for the water.

The investment required in water and wastewater treatment is close to USD 100 billion; it cannot happen overnight and has to happen progressively. No one company can do it and it has to be a concerted effort based on a master plan as implementation is a major challenge.

What are your thoughts on future Market dynamics of water sector ?
Growth opportunities are tremendous. The industry has been growing at almost 10-12 percent. In fact, the bottled water industry is growing at almost 25 percent. Consumer industry is growing at 20-25 per cent. There is a huge gap between the demand and supply and the gap keeps widening. Our population is growing, rapid industrialisation has created compelling demand for water, and so has the demand for agricultural needs which is currently at around 70 -75 percent.

Demand for everything is increasing. Water, which is the key raw material for almost everything shows an increase in demand. You need water for process, drinking, human consumption, agriculture. But the issue is depleting fresh water resources.

The entry barrier to water management is very low. Since this is technology based, one does not need huge investments unlike major manufacturing industries that are highly capital intensive. So, many small players come into existence, offer cheaper equipment, which may or may not perform to optimum level and then finally within 5-6 years those players are out of the market. This is the process that has been going on for a long time.

The two basic things that need to be taken care of are conservation of fresh water resources and optimising the use of fresh water through maximum recycling of water; and the second is to make efforts to increase the percolation of water into aquifers through watershed development.

Water recycle and desalination will be the key growth drivers in the next 10 years because of water scarcity. This is where the industry is going to grow .

Please share the future plans and roadmap for the growth of Ion Exchange.
In terms of Ion Exchange, besides being part of India's growth story, we are increasing our focus on the international market. We intend to strengthen our base in all those countries where we have set ourselves up over the last 20 years. We intend to leverage this and increase revenues from exports which are currently at 25 per cent and take this to 50 percent over the next 5 years.

We are continuously on a look-out for technology either through association with global companies or by developing our own processes. We are looking at technologies which will use less energy and chemicals and are more environmentally friendly. Technology might treat waste water - but if more sludge is created - then one form of waste does get reduced but another form of waste is generated. The goal though is to look for sustainable technologies which require lesser energy and a smaller water footprint.