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Creating Value from Waste: Lessons from Mahindra & Mahindra

When incentives are created for recycling you lay the foundation of a ‘circular economy.’

Anand Mahindra, Chairman, Mahindra Group

Introduction

Nasir Deshmukh, General Manager & Head of Igatpuri Plant of Mahindra & Mahindra was looking
forward to hearing from the Group Sustainability team at Mahindra Group on the advances and
changes in processes his plant would need to make towards the ‘zero waste to landfill’ certification
by Intertek (USA). The certification required factories to divert more than 99% of its waste from
landfill. The reward for this would be the recognition of being the first factory in India to receive this
certification. Nasir knew there would be challenges in reducing his plant’s contribution to landfills to
zero. They would need to view waste differently if they were to be successful.

One example that he could think of was the simple issue of the use of white cotton gloves worn
during manufacturing processes by the factory workers. These gloves needed to be disposed after
every use. One recommendation they had pursued was to simply wash and re-use them, but the
workers were not happy about re-using stained gloves. Nasir’s worry was that if they had trouble
moving forward on this seemingly simple issue, then how was he going to deal with the massive
amount of waste coming out of the automotive plant?

Mahindra & Mahindra Limited

The $20.7 billion Mahindra Group, (Exhibit 6) was established as Mahindra & Mohammad in 1945 by
two brothers, JC Mahindra and KC Mahindra, and their friend Ghulam Mohammed. Both the
Mahindra brothers left their lucrative careers to start the company. When Ghulam Mohammed, one
of the founders, migrated to Pakistan after the partition of India in 1947, the company was re-
named Mahindra and Mahindra. By 2019, the group operated in more than 100 countries with
240,000+ employees. They manufactured products and provided services in 11 sectors (Exhibit 2),
22 industries and through 150+ companies. With 55 manufacturing facilities and 10 R&D centres
around the world, Mahindra was truly global in its operations. Its group companies were among the
leaders in many sectors (Exhibit 3). M&M considered the banyan tree as a metaphor for its business
(Exhibit 1). Like the tree itself, the company believed in accepting no limits,
unconventional/alternative thinking, creating positive change and adhering to its core values. The
iconic Willys Jeep was the first product the company sold in the Indian sub-continent. Other
products included light commercial vehicles and tractors.

Innovation played a key role in the Mahindra Group’s strategy to become a global top 50 brand by
2021. The term #FUTURise, (Exhibit 5)combining the words ‘future’ and the corporate slogan ‘Rise’,
was coined to signify how the company would innovate to ‘bring in the future’ by accepting no limits
and thinking differently . Innovations were driving several business sectors: mobility (electric cars, e-
racing); urbanization (smart cities, renewable energy); farming technology (rental model, fruit
picking robots); information technology (analytics platform for energy access, analytics for car
pricing). Three guiding principles powered the innovation at M&M: ‘doing more with less, doing it
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together, doing it for all’ (www.mahindra.com/innovation). The innovation capability of the group
was recognized by the Innovator of the Year awarded by the TIME India Awards 2017. (Exhibit 6)

Indian Automobile Industry

The Indian automobile industry employed 37 million people and contributed 7.5% to India's GDP.
The expanding millennial demographic, changing lifestyles, traffic congestion, pollution concerns,
longer commutes, steep parking fees, metro rail (operational or being built in eight cities) and
development of new app-based mobility solutions — was reshaping how Indians bought, owned or
used their cars. Many people were opting out of car ownership. The sector was facing a 17% year-
over-year sales decline in April 2019. A wide variety of factors — ranging from industry-specific
challenges to frequent policy changes and macro-economic factors to poor consumer sentiments —
had affected sales. Other industry specific factors included the Indian government’s decision to
leapfrog from BS-IV to BS-VI emission norms by April 1, 2020 and to have 100% electric vehicles by
2030.

M&M’s leadership in automotive sustainability

Mahindra & Mahindra Limited (M&M), the automotive division of the Mahindra group was India’s
4th largest vehicle manufacturer. The Mumbai-based auto major was at the forefront of the electric
vehicle (EV) segment in the country. Mahindra Electric, a part of the diversified Mahindra
Group, manufactured a range of electric vehicles such as the sedan e-Verito, the van e-Supro,
compact car e2oPlus and three-wheeler Treo in addition to working on higher range electric
powertrains with a longer range. .

Mahindra MSTC Recycling Pvt. Ltd., a joint venture between Mahindra Group and state-owned MSTC
Ltd was established in 2018 and had plans to set up 30 end-of-life vehicle recycling plants by 2022.
M&M also planned to incentivise the adoption of the scrappage policies with the help of reduced tax
rates, purchase price discounts, and simplified compliance processes. The company reaffirmed its
commitment to cleaner vehicles by planning an investment of over $140 million by 2022.

M&M’s Commitment to Sustainability and Corporate Social Responsibility

M&M had a long standing history of social and environmental responsibility towards its stakeholders
(Exhibit 7). Though CSR activities can be traced back to the 1970s, sustainability found a place in
corporate documents in 2008. In 2019, the company claimed that “sustainability as a concept has
gained considerable momentum at the strategic, managerial and operational levels across the
Mahindra group.” (www.mahindra.com/sustainability). At the global level, Anand Mahindra
represented the corporate world at the Paris Climate Agreement signing ceremony in 2017.
Activities included employee volunteering programme, focus on reduction of greenhouse gas
emissions in its operations with average reduction of 40% since 2010.

The Mahindra group achieved a water positive status (created/captured more water than it used) in
2014 and was also the first Indian company to fix an internal carbon price of $10. Across several
communities, the company educated close to 300,000 girl children from economically disadvantaged
families through its Nanhi-Kali (meaning “little buds” in Hindi) program. Skill development of Indian
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youth was taken up through vocational training. There was also focus on agriculture through grants
that supported women interested in agriculture. However, beyond CSR, many group businesses
were focussed on building green business- solar energy, steel recycling, electric vehicles and micro
irrigation contributed $480 million as revenue to the company. The solar energy business continued
to grow and Mahindra Finance made strides in financial inclusion by offering loans to unemployed
youth and traders who could not get loans from banks. In its assessment of its 10 year sustainability
journey, the company was convinced that “climate change is the biggest business opportunity in this
century”.

Waste Management - Zero Waste to Landfill (ZWL)

M&M considered ZWL as a great example of its environmental stewardship and commitment to
sustainability. The company had a long history of responsible and clean manufacturing and it
considered waste management as an important part of its operations.

Though there were some efforts to identify the best practice to adopt on waste management since
2015, momentum gained under the leadership ofy the Chief Sustainability Officer, Anirban Ghosh.
His focus on the work was motivated by the recurrent fires at the Deonar Dumping ground. This
dumping ground had caused health issues for the residents from Mumbai's neighbourhood of
Chembur, Govandi and Mankhurd and the fires at the dump had caused conditions unfit for
habitation for residents of the adjacent area. Mr. Ghosh was on the lookout for solutions that would
ensure that none of the company waste landed in the dumping grounds like Deonar.

The corporate sustainability group spent a few months looking at the available options and finally
zeroed in on ZWL as an internationally recognized waste management system. Since the automotive
division of the group was the largest in terms of revenue share, it was decided to implement the first
ZWL system at the Igatpuri plant of M&M. This was where some of the best - selling sports utility
vehicles of India like Scorpio and Bolero were being manufactured. There was a general consensus
that ZWL would require M&M to have a complete re-think about waste generation and disposal.

Waste Categories

M&M’s long term focus on waste management ensured that by 2016, only 2% (50 tonne
approximately) of the factory waste at Igatpuri, which was largely hazardous, was being sent to
landfill. The waste produced could also be further categorized into production waste, which was
largely hazardous, and non-production waste. (Exhibit 8)

Production-related Waste

Waste was categorized into two categories- hazardous and non-hazardous and was produced both
during production as well as from other sources like office cafeteria and clinics (Exhibit 9). Each part
of the engine production process generated hazardous/non-hazardous waste.

Non-hazardous waste included- fine materials after boring the parts while hazardous waste included
used oil, grinding mud and oil soaked cotton. Sludge obtained at this stage was also treated as
hazardous (CTP sludge). Once machining was done, the parts were sent to the engine assembly
plant. Here hazardous waste included used oil, oil-soaked cotton and empty tin/drum.
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Non-hazardous waste included packaging scrap, wooden pallets and rejected engine parts. Some of
the parts produced in the engine assembly plant were sent for testing in the engine testing shop.
Here non-hazardous wastes included some rejected engine parts and hazardous wastes included oily
filters, treated oil and sludge that went to the effluent treatment plant. Igatpuri plant management
realized that sustaining the hazardous waste reduction was critical to maintain the ZWL certification
of the plant.

An Example of Production Waste: The Camshaft Grinding Waste

Camshafts were an integral part of modern internal combustion engines used in cars that improved
the cruising efficiency of cars. The waste generated during the grinding of camshaft was known was
‘Grinding Mud Waste’. Grinding mud waste, containing heavy metals like Cadmium was toxic to
human life and was considered hazardous for the environment by the regulator, the Maharashtra
State Pollution Control Board. Annually around 50 ton of such waste was disposed of through a
specialized agency Maharashtra Enviro Power Ltd who ensured that this waste was disposed of in an
approved hazardous waste facility. M&M tried several innovations to reuse this waste.

Initial experiments to make paver blocks (blocks used for pavement making) with grinding mud
waste did not work as the blocks did not have the strength required of such construction materials.
The next attempt was to use the mud along with bitumen for road construction. This experiment
also failed as the bonding between bitumen and mud was not sufficient. Supply chain head Shekhar
Karanjikar’s next innovation was to use the grinding mud as an ingredient for red clay bricks that
were widely used in construction. Addition of this new material was highly successful. Bricks that
were made with this waste passed the required strength tests for bricks as per standards but the
local pollution control authority did not allow this new type of brick to be used in construction. The
team persisted. The fourth innovation was to use the grinding mud waste as baking media in the
production process. Though the trial succeeded it was felt that there was not enough volume of
waste generated to go ahead with this solution.

The focus now shifted to recover as much value from the waste as possible. Gunny bags started to
be used at the point where mud is generated in order to reduce the coolant (chemicals used to
reduce the heat generated during grinding) content of the waste material. Magnetic separators were
used to attract the ferrous materials and the remaining materials were collected in bags and efforts
were made to re-use the collected liquid. However, when none of these innovations could show
promise, the company finally decided to take the help of external agencies to see if a better solution
was possible. Alchemist, a Pune based company was roped in to recycle this waste material and
recover metal, oil and carbon black (a costly raw material) from it. This step received the final
approval of the local regulatory body, Maharashtra Pollution Control Board.

Non-production waste

Apart from waste generated during the production process, other non-production related waste
included office waste (paper, plastic, broken glasses), waste from utilities (oil from generator set,
batteries), cafeteria waste (paper, plastic, utensils, food waste), waste from dispensary (paper,
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plastic, glass, bio medical waste) and waste from the garden in the factory premises. Some of these
were hazardous and others non-hazardous. Non-hazardous wastes were dealt with the 5R approach-
Reduce, Reuse, Recycle, Refuse & Rotten. The approach would first try to reduce waste generation at
source. Employees then tried to re-use waste that was generated through innovative means. What
cannot be re-used was recycled for use in other applications. Waste that cannot be recycled was
refused and needed to be disposed of. Rotten signified those waste that had to be sent to landfill.

Much of the metal/plastic non-hazardous waste was re-used to make small furniture for the factory
premises. For example, scrap tyres were used for beautification of the factory premises like creating
aesthetic fencing around the waste water pond. While non-hazardous waste was relatively easy to
recycle and re-use, hazardous wastes were governed by several rules and regulations making it
difficult for M&M to devise ways of reducing or disposing them

An Example of Non-production Waste: Packaging

Packaging was one area that generated a large amount of waste. Parts of car engines were shipped
in wooden or cardboard boxes, which contributed to large amount of waste. M&M replaced
traditional packaging with recyclable packaging in collaboration with the American company Chep
that provided sustainable packaging solutions. Suppliers were asked to also use Chep products
(recyclable packaging pellets) as this would lead to long term cost savings for both M&M and its
suppliers. The move to sustainable packaging started before the ZWL decision was taken but it fitted
well into the ZWL process. Wooden packaging that was used for certain engine parts was now
replaced with recyclable packaging. Some of the requisition process in the materials management
department was re-designed to reduce paper usage. For example, approvals for sending requisition
to suppliers were now done through mobile phones. Packaging used for gaskets (mechanical seals
used to prevent leakage) was re-used for printing, saving 11,100 sheets in the process.

ZWL was not a one off sustainability initiative in M&M but rather triggered by the group CEO Anand
Mahindra’s clear vision to embed sustainability as a part of core business strategy of M&M. (Exhibit-
7) Mahindra Sustainability Framework). Implementing ZWL needed a complete relook and rethink
about the type of wastes generated in the plant and how to manage it to reduce diversion to landfill.
The journey to ZWL could be divided into several steps- implementing a ZWL policy for the plant,
documenting management process and procedures, a management information system to
demonstrate quantification of waste, tracking system for the waste, shipping records and other
waste handling and disposal information. Several initiatives, termed ‘Waste to Wealth’ strived to
recover value from the waste produced in the factory. These included installing a heat recovery
system (using heat generated) at the engine testing facility, a bio gas plant at the canteen, re-using
canteen waste water for gardening, compost manuring pits among others. ZWL system was
monitored for progress and included in the internal audit process of the company. Indicating the
seriousness M&M accorded to sustainability initiatives, ZWL system was made part of the
management review meeting.

Changing mind-sets for changing gloves?

Cotton gloves used in the production process in the M&M factory posed a challenge for the ZWL
team. The usual practice was to issue new, white, cotton gloves to workers in the production line.
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Workers disposed of the gloves after the shift was over. Used gloves constituted a significant portion
of the non-hazardous wastes in the production process. The ZWL team tried washing used gloves
and encouraging workers to re-use them. Employees refused to use old gloves and the management
had no option but to issue new gloves to them.

The cotton gloves issue was at the front edge of the waste management issue. M&M factory
management needed to find innovative solutions and change employee behaviour. The cotton glove
issue was a metaphor for larger waste related issues in the factory. The ZWL certification was not a
one-off achievement but complemented Mahindra’s clarion call to integrate sustainability thinking in
every aspect of business operations and strategy. Thus what was needed was not just reducing the
waste related to cotton gloves, but a change in the corporate culture itself.

The Road Ahead

Nasir was confident that by March 2020, the factory could achieve a 99.84% landfill diversion rate
i.e. only 0.16% of the total waste generated in one of the most important M&M factories would go
to landfill. More importantly, several benefits resulted from the ZWL process including material
saving, cost reduction, waste upcycling apart from a great boost to the Mahindra brand equity as a
sustainability focussed global brand. ZWL process not only led to efficiency improvement in
manufacturing process but also saved physical and financial resources through circular economy
thinking. Yet, two challenges remained. At the operational level, how to address issues like refusal to
re-use cotton gloves by shop floor employees? Second, how to embed waste management into the
factory process? If the Igatpuri ZWL initiative was successful, there was some discussion about
rolling out similar initiatives in other Mahindra Automotive plants and finally to all M&M facilities.
Some of the other M&M plants in India had requested the corporate sustainability team to support
them for ZWL certification. As Nasir headed for the all-important meeting, he wondered what would
be the best way to go forward with ZWL.

Acknowledgement

This case, written by Prof. Subhasis Ray (XIMB) and Prof. Tima Bansal (Ivey School of Business) is
based on a research project sponsored by M&M and based on field interviews and secondary sources
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Exhibit 1 – Core Purpose of M&M

(Source: Company documents)

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Exhibit 2: Mahindra & Mahindra - leading position in several sectors

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Exhibit 3: M&M’s recent accolades

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Exhibit 4: Vision - Mahindra & Mahindra

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Exhibit 5: Innovation at Mahindra & Mahindra

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Exhibit 6: Mahindra & Mahindra revenue chart

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Exhibit 7 : Mahindra Sustainability Framework

(Source: Company documents)

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Exhibit 8- Production process waste generation

(Source: Company documents)

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Exhibit 9: Non-production process waste generation