Finnfund

All around the world people are using more PET plastic drinking bottles but there are major challenges associated with recycling. Traditional mechanical methods for recycling these polyester bottles have difficulty adequately removing contaminants from feedstocks, especially pigments used in manufacturing coloured PET bottles. Despite mechanical recyclers using large quantities of water and energy, inherent process limitations relegates them to making less demanding, lower-value products.

Coloured bottles are often exported from Europe to the Far East, where they are chipped and used as fillers of various kinds. Incinerating the bottles causes major damage to the environment and human health.

An Indian company, Polygenta Technologies, has begun applying a break-through ReNEW manufacturing process to more thoroughly remove contaminants and colour pigment from bottle feedstock and produce high-quality, high-value polyester filament yarn.   

The ReNEW Process is fundamentally different from incumbent technologies insofar it breaks the bottles down chemically in a controlled, environmentally compatible process, so that contaminants can then be removed with time-tested filtration technologies. This is critical because manufacturing polyester is technically challenging due to its high sensitivity to trace contaminants, excessive exposure to high temperatures, etc. Bottle tops, labels, dust, moisture, glues, and any other fluids must be carefully separated. The Polygenta plant near Nasik in Maharashtra state near Mumbai is the first of its type in the world.

Building the foundation

In 2008, Polygenta bought an Indian Polyester Company that was in receivership and proceeded to invest in the complete revamping and expansion of the company’s dormant polyester plant.

In conventional polyester plants, petroleum-based feedstock is used to make polymer resin, which is spun into a raw yarn filament and then refined into a texturized polyester yarn. Various kinds of textiles are woven from this yarn. Thicker yarns can be used for soft travel cases, sleeping bags, umbrellas, curtains, carpets, and furnishings while thin yarns are mostly used for clothing.

Polygenta’s plant equipment can produce yarns of various diameters and weights, which provides more commercial flexibility. The plant is also configured to make a polymer from a blend of recycled bottle feedstock and conventional petrochemical feedstock. The Nasik plant also demonstrates how the ReNEW process can be fitted to existing conventional plants to make them more sustainable. The company intends to specialise in supplying sustainable yarns, a market segment where there is limited competition and a strong outlook for demand growth.

The company’s equity investors consist of international investment companies, Indian investors, and management. One of the owners is Dr Simon West, an Australian who developed and patented the new manufacturing technology, and is the senior process consultant to the project.

Significant environmental impact

Polygenta plans to proliferate this technology and also may consider eventually licensing its technology to other polyester textile manufacturers around the world. The ReNEW Process will have important environmental effects.  Yarn made using recycled materials is environmentally friendly.  Furthermore, Polygenta believes its equipment use less water and the production is more energy-efficient than that of leading competitors.

New uses for European bottles too

The plant’s annual production capacity is 30,000 tonnes of polyester yarn. It employs about 470 people and also provides jobs in ancillary activities, such as the collection and transport of plastic bottles.

Some of the bottles are imported from Europe, where few ways have been found for re-using coloured plastic. In India, a high percentage of all plastic bottles used are recycled; for example they are collected from garbage dumps. Most of the plastic used by Polygenta comes from nearby areas.

The demand for polyester has increased in the past few years. Not only are prices competitive but new polyester yarns are more versatile and user-friendly than before. It is better suited for sportswear than cotton and its durability makes it ideal for car seats, furniture upholstery, and so on.

Growing demand for polyester

Indian demand for polyester is expected to increase over the next few years as the standard of living rises. Polygenta also intends to export a significant part of its production.

There are hundreds of Indian companies that manufacture polyester yarn but the market is dominated by a few major ones. Further concentration in the fragmented production structure is expected as small and inefficient manufacturers close down or merge into larger companies.

Polygenta is a small but competitive player when it eventually operates at full speed. Its new manufacturing process allows it to use unsorted bottles, which reduces raw material costs.

It is one of the few fully-integrated manufacturers in India i.e. carrying out all of the production phases in house and 100% of its raw feedstock is transformed into finished product. This helps it manage production costs and control quality easier than its competitors. An integrated production model also saves in packaging and transport costs otherwise incurred for intermediate products.

Finance from Finnfund and Swedfund

Finnfund is financing Polygenta’s production plant with a long-term investment loan. Among the other backers is the Swedish development finance company Swedfund.

“The positive environmental effects of the investment are an important reason for our participation,” says senior investment manager Juha-Pekka Tuomipuu at Finnfund.  “Polygenta is also creating new jobs in the production plant and in operations related to bottle recycling.  What’s more, it will bring India tax revenue and, when exports begin, export earnings too.”

For more details, please contact Mr Juha-Pekka Tuomipuu tel. +358 9 3484 3321, firstname.lastname@finnfund.fi