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Avro India Announces Significant Plastic Recycling Capacity Expansion with New Machines
Team Finance Saathi
31/Jan/2025
What's covered under the Article:
- Avro India successfully installs a plastic recycling extruder, increasing capacity from 500 MT to 750 MT per month, with a second machine set for commissioning soon.
- The company expects financial benefits from Q1 FY26 with improved gross margins due to in-house production of recycled plastic granules.
- Avro India has secured 30% of its plastic waste needs through corporate partnerships, lowering procurement costs and enhancing profitability.
Avro India Limited has announced a significant expansion in its plastic recycling capacity. The company has installed one of the two plastic recycling extruder machines as part of its ongoing growth strategy, which is expected to be commissioned in the first week of February 2025. This initiative will increase Avro India's capacity from 500 MT to 750 MT per month, with the second machine slated for commissioning later this month, bringing the total capacity to 1,000 MT per month.
This capacity expansion is part of the company’s commitment to sustainability and improving operational efficiency. The new machines feature cutting-edge technology, which not only ensures reduced power consumption and lower waste generation, but also enhances efficiency and throughput. The new capacity is expected to generate significant financial benefits starting from Q1 of FY26, especially in terms of improved gross margins driven by the internal consumption of recycled plastic granules.
Additionally, the company has made substantial strides in its efforts to streamline its plastic waste supply chain. Avro India has secured 30% of its plastic waste requirements through direct corporate partnerships. This reduces its reliance on traditional scrap dealers, formalizes the procurement process, and is expected to lead to a 30-40% reduction in plastic waste procurement costs, thus benefiting the company’s bottom line.
Avro India’s sustainability initiatives go beyond just capacity expansion. The company has also applied for Extended Producer Responsibility (EPR) certification, which, once obtained, will allow for better corporate engagement and higher volumes, further driving cost efficiencies. The company is also exploring potential partnerships with Material Recovery Facilities (MRFs) to further strengthen its recycling capabilities.
Financial and Operational Details:
- Existing Capacity: 500 MT per month
- Current Capacity Utilization: 350 MT per month
- Proposed Capacity Addition: 500 MT per month
- Timeline for Capacity Addition: January and February 2025
- Investment Required: ₹2.7 Crores (approx.)
- Mode of Financing: Funds raised through a preferential issue
- Rationale for Expansion: The additional capacity will allow Avro India to produce its own plastic granules for use in manufacturing plastic furniture, thereby reducing the cost of raw materials.
The company’s ongoing commitment to sustainability and cost management is evident in its efforts to upgrade its infrastructure and streamline operations. These expansions will not only help Avro India meet growing demand but will also improve overall profitability through increased self-sufficiency in plastic material sourcing.
The Upcoming IPOs in this week and coming weeks are Chamunda Electricals.
The Current active IPO are Malpani Pipes And Fittings and Dr. Agarwal's Health Care.