Metal Scrap Business in India – Profit Margin & Business Plan
The scrap industry has the power to reduce environmentally hazardous trash and thus benefit the environment. With a small initial investment, one can start their own metal scrap business in India. Given the amount of scrap being discarded everyday in India, this is one of the most lucrative businesses to choose. Metal recycling is a booming industry for many individuals, particularly in these challenging economic times. The core of the scrap industry is the recycling of discarded materials, especially aluminium. The globe over, aluminium is a metal that is often recycled. As time has gone on, the scrap industry in India has drawn the attention of the educated classes and there have been many who have resorted to establishing themselves as prominent metal scrap dealers.
Business Plan for Metal Scrap Business
Now, let us try to understand what a scrap business essentially is. Households typically keep discarding unwanted metal or plastic wares and these are sold to the scrap dealers. They recycle all of the supposedly useless metals, plastics, textiles, food, etc. in this manner. Recycling entails melting them down and turning them into raw materials that can be reutilized to manufacture goods. In the industrial sector, products composed of metal or other materials that cannot be reused are referred to as scrap. To make new items, metals are melted down and recycled. Therefore, the scrap industry is a means for company owners to profit by gathering these raw materials and recycling them.
Carry Out Market Study
Before one decides to start their scrap metal business, one must carry out an extensive market study. First and foremost, understand the scrap market industry. Not only should you have a trustworthy source of suppliers, but also you must focus on buyers who will take your recycled metals. In order to do so, one must also spend time understanding the various kinds of metals that end up as scrap. One can simply google “scrap metal near me” to identify a list of such dealers. Typically, there are five essential metals that one can readily find in the bulk of the scrap sourced from dealers. These metals are steel, iron, copper, brass, aluminium, bronze and lead.
Read More: Top 10 Scrap Manufacturers, Suppliers & Exporters in India
Segregate Scrap Into Various Bins
When one source scrap from scrap metal dealers, it is important to segregate scrap into various bins. Whenever scrap is obtained, companies utilize giant crushers and saws to break down the components into tiny parts. Steel is an alloy of iron and can be detected by using big magnets after crushing the scrap. The strong magnetic force pulls the iron and steel parts and is segregated from the rest of the scrap. Copper is generally found in wiring and high-quality electronic items such as discarded air conditioners, heaters, fans etc. Aluminium is one very common metal found in the scrap and mostly they need to be hand segregated. Aluminium is found in soda cans, medicine wrappers, etc.
Plastic Needs To Be Removed
Other metals that one may find in the scrap include tin from tin containers, lead from bullets, bronze from bronze utensils and art work. In the process of breaking down of computer good, gold and silver are also found in small quantities in motherboards, RAMs, and other computer peripherals. One of the most common non-metallic and hazardous material is the plastic. Before any recycling of metals takes place, plastic must be removed and segregated for sale to plastic recyclers. Therefore, you should spend time to learn a lot about the different types of metals before starting your scrap company.
Purchase High Quality Machines
After having sourced the metal scrap, one must spend money buying high quality machines specializing in segregating different metals. Remember, there can be minute dangers present when disassembling of big pieces of scrap. Hard plastic, electrical goods, glass, and metals may hurt people if they are not separated carefully. Because accidents happen in this industry relatively often it is important to exercise caution.
Identify Reliable Sources
Now that you have done your extensive research into your market, identify the segment you want to target. You might want to focus only on recycling aluminium or iron or copper. Trying to recycle everything in one facility requires more amount of investment. Therefore it is prudent to identify reliable sources of these scraps. If you want to focus on recycling copper, then buying plastic scrap makes no sense. Similarly, buying a bulk of computer scrap in order to recycle steel is probably not a good business strategy. Thus, you must spend time to identify your sources of scrap. Also, it is important to keep an eye out on the market prices of these scrap items. Buying a big container of Aluminium scrap, shipped from the USA might make sense, but you must also factor in the cost of shipment and recycling. Under no circumstance should your total expenditure for procurement and recycling be more than 30-35% of he current market price of that metal commodity.
Get The Best Transport System
Once your sources have been identified, you need a transport system to have them delivered at your premises. It is prudent to engage heavy duty trucks to carry the scrap parts to your facility. You need not have to purchase a new truck as you can simply take them on hire. In case your business is booming, it would be wise to invest on buying a new truck. Remember, scrap metals come with sharp edges. Therefore, the container part of the truck must be suitably reinforced and care must be taken so that scrap does not fall on the roads or highways during transit.
Invest in High Quality Safety Gear
After the scrap has been delivered, it needs to be off loaded in a holding area so that it can be sent for recycling. Before any machines are brought in, manual checking of scrap is important to ensure that easily identifiable non-compliant scraps can be removed before processing. You must invest in high quality safety gear for your employees. With scrap metals segregated, it can be recycled by melting it in a furnace and using the necessary chemicals to remove slag during the process of melting. Once pure metal is obtained, it needs to cast into blocks or rods and then cooled. Metals are helpful, flexible, and essential; they are used to build ships, automobiles, trains, aeroplanes, and other things. The most prosperous recycling business is that of metal scrap. Two of the metals that are recycled the most often are aluminium and steel. The characteristics of the metals are used to classify them. After collecting all metals, sort the scrap metal into categories that can be recycled and those that cannot. A high grade recycled product can only be produced by using high-quality original materials throughout the recycling process.
Advertise Your Products Or Business
Now that you have produced the recycled material, you must have your buyers ready. For this, it is important to advertise in as many forms as possible. Remember, your company is not profitable unless your products are sold as a premium. For the same, it is important to develop a network of scrap dealers from whom you can source cheaply and sell the recycled products to companies at a good price. It is important to note that you must always be on your toes and spend a lot of time networking to ensure that your products do not sit in the warehouse for long time.
Set Up A Website
It would be prudent to set up a website, actively managed by your employees so that your company is traceable on the internet. Remember, now people often turn to the internet to buy or sell goods. Having a good review from your clients will always instil confidence in your buyers and make transactions more fruitful.
Scrap metal prices in India will vary depending on the purity of the product. Right from the time you buy your scrap to the time you sell it, you must be aware of what you are sourcing and how pure a metal you are selling to your clients.
Conclusion: The stigma that scrap metal business was meant only for the poor has long gone and many big businesses have seen that this is one profitable business sector. This is a low cost investment yielding very high returns and thus is very lucrative.
FAQs: Metal Scrap
Q. How can I start a scrap metal business in India?
Ans. If you are willing to do market research, study up on various sites about different kinds of metals and learn to establish business connections, then scrap metal business is a lucrative option for you. Remember, you must learn to identify different metals and their properties as well as their industrial usages.
Q. Is it possible to sell metal scrap online?
Ans. In India, selling metal scrap online is still in its nascent stage. However, as a business you can advertise your recycled goods for the manufacturers to take interest in.
Q. What is the typical profit margin if I want to focus only on metal scrap business?
Ans. The range of margin cannot be defined unless you identify the price at which you are sourcing your metal scrap. If you can get them for free, then whatever you earn after covering your production and recycling cost is all profit!
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