How Rajat Verma Built a ₹2,500 Cr Revenue Deep Tech Co. Taking On China's Critical Minerals Monopoly

[00:00:00]What motivates you more? Is it fear of failure or is it the thrill of winning?

[00:00:05]>> Certainly thrill of winning. A lot of that has to do with just getting India to the right place. That can only happen if you sort of roll up your sleeves and start doing.

[00:00:11]>> You went to Harvard. The plan for you was not to come back to India. What changed?

[00:00:15]>> It was actually just a personal reason.

[00:00:17]You know, my mother was not keeping well and and I just wanted to spend the last few years of her life with her. That 6 month initial come back to India turned into me spending 7 years with her. That also made me just fall back in love with the country. The world needs diversification. There's one country where there's a lot of concentration of knowledge, industrial capacity, research, and resources. China started its critical mineral mission in 1970.

[00:00:38]It's a 56-year advantage that they have.

[00:00:40]That is, I think, what allowed us to start looking at all the opportunities within the metal sector. I did what any good entrepreneur in Delhi does, which is go to place refurbishers. What do you do with all this scrap? Said here's a scrap and you pay for it. The Maralas are paying for it. What are they doing?

[00:00:53]Surely they can't be sophisticated that they can take out with him. But they were. What was the business like? What were you doing and how were you making money? The four pillars of the business are the first business which was recycling. The second business which was processing, the third business which is advanced materials and the fourth and the most recent business. We've actually started acquiring mines. See the revenue scale at which we operate today is about 2500 cr peranom. As a company we've been profitable for the last 6 years. We run a double digit ibida business. I mean I would have love to say lo is special but I actually have to look that India is special. 2500 cr in revenue profitable for the last 6 years built on metals most people can't even pronounce. Lo started with Rajat WHMA cracking open old laptop batteries in Nehu place and today it is becoming India's answer to China's dominance in critical minerals.

[00:01:40]This conversation is about first principles patient capital and what it actually takes to build deep tech in India from scratch. Now I bring you Rajat.

[00:01:49]>> Rajett super excited to have you on.

[00:01:52]Thank you, Shiva.

[00:01:53]>> It's been a while. Uh I'm glad that uh we're able to do this today. Uh and by the way, cool office.

[00:02:02]>> I just heard that you've recently moved in here >> about 6 8 months now. Yeah.

[00:02:07]>> Yeah. So Raj, I want to start with this uh question.

[00:02:13]No. What motivates you more? Is it fear of failure or is it the thrill of winning?

[00:02:22]Good question. Uh certainly thrill of winning and I don't think fear of failure is something that you think too much about because uh if you're generally you have a general sense of conviction about what you're doing. You will then start looking for wins all the time and you may not win all the time. Certainly you don't win all the time but certainly that thrill of winning does keep you motivated. But I think there's there's more than that, right? Why uh why do you remain motivated? The causes have to be more than just winning or losing, right? It has to be a cause that somewhere is closer to you, closer to your heart or closer to the purpose or closer to your own uh mission in life, right? And a lot of that has to do with just getting India to the right place. just making sure that we contribute to develop India to the India that we all want it to be right and that can only happen if you sort of roll up your sleeves and start doing what needs to be done and in that process there'll be >> there'll be wins there'll be defeats but the but would we as a society be one step better than where we were before you started out that's the ultimate thrill >> or the ultimate motivation for meh getting India to the right place uh whether it personally where does that come from?

[00:03:48]>> I think it's just uh it's just who you are, right? Uh I don't think there's uh it's just a you know it's it's a probably a product of all the influences I've had all all through my life, right? Whether it is the influence of family, whether it's the influence of what I read, whether it is the influence of people I've met outside of family or whether it is just the experiences you have had in other countries which sort of makes you feel like why are we not there? Why are we not like them? It's just everything, >> right? I there's no particular individual thing that drives you, right?

[00:04:23]But uh all those things combined just make you feel look I mean there's there's this massive opportunity available in India you know there is there is this big way in which this country can be transformed from where it was to where it can be.

[00:04:38]>> Uh why should I not be part of that?

[00:04:40]>> Yeah. Uh so look you went to IIT Kpur uh and then you decided to move to US you went to Stanford. Uh you worked at Lo what is that company called? Loheed.

[00:04:53]>> Loheed.

[00:04:54]>> Yes.

[00:04:54]>> Uh and you're working in Loheed is basically a space company.

[00:04:58]>> It's a it's a defense large defense contractor with a lot of work that they do in space, a lot of work that they do in defense in general. That was fairly short stint though. I mean right after that I ended up joining a startup which was started by a few friends of mine >> uh which had nothing to do with my background. But if you were in the valley uh back in late 90s early 2000s a startup was almost a passage of life. So did that and I think uh that was my first exposure to a sector with which I had nothing to do >> and that was a hardcore software startup. Uh but we got lucky. We survived the crash and we ended up selling that company to HP >> which was I think that thrill of winning that you talked about that first thrill of you know seeing a very interesting outcome >> of what you were uh trying to do.

[00:05:48]>> Mhm. And then you uh went to Harvard.

[00:05:51]>> Yes.

[00:05:52]>> Uh and what I've uh heard uh the plan for you was not to come back to India.

[00:05:59]>> That's correct. uh what changed and how did that happen?

[00:06:03]>> So uh it was actually just a personal reason you know my mother was not keeping well and you know I just wanted to spend she was we we knew she would not survive beyond a certain point of time uh given her condition. uh it's just that we didn't know for how long and I just wanted to spend the last few years of her life with her you know so not very different from a lot it is I mean in fact if you look at uh a lot it is one of the reasons why a lot of us come back right parents are aging no one to look after them they may not need your support but you yourself sort of want to spend in some time with them so that's what I did I just came back thought I'll spend time with her >> she was a fighter you know we you know the doctors had told me that she doesn't have more than six months Um from the point of time I returned uh she survived another seven years and for me every day was another 6 months. I had no idea whether it'll be more than 6 months. So that six month initial come back to India turned into me spending seven years with her. So I was it was great that I could but that also made me you know just fall back in love with the country. uh that you know when I talked about you know when you see the opportunity available in the country like hey look I've seen what what is there in the US and now I'm coming back to India and there's so much more that we can do here >> might as well now do it out here >> so that was the reason and that's how I sort of continued to stay back in India >> yeah so when you came back uh as you mentioned you wanted to take care of your mother you wanted to spend time with her were you working >> I was I you know I did a little bit of private equity. So I had never worked in India. That was a thing, right? I I'd moved to the US right after college and uh had no idea what it means to work in India. Even though I grew up in Delhi and grew up in a sort of semi- bureaucratic family, but had no background of doing actual work. So thought I'll take the easy way out. Uh sort of uh with apologies to my private equity friends if they're listening, but that seemed like the easy job where you don't have to do much. you can you know sort of sit have coffee with friends and coffee with entrepreneurs and you know just learn and that was >> sort of my first exposure to what it is like working in India right and and you know I didn't sort of my friend had started a fund and I just I became just a part of that and I that allowed me to sort of sit on various board meetings understand how Indian entrepreneurs think uh this was a uh this was not VC this was P you know I was coming from a tech world in the US and I started looking at more of a brick and mort world in India >> uh and understood the challenges of growing such organizations in India.

[00:08:47]>> So that was sort of my transition back to the country.

[00:08:51]>> Mh.

[00:08:51]>> Uh and then I started doing a little bit of my own investments across different spaces uh you know made some you know I think there were some good bets there were some random bets. Uh but that allowed again me to start seeing how difficult it is to start a company within India. Mhm.

[00:09:08]>> Uh but during that investment phase, I you know uh sort of started looking at a bunch of waste management companies.

[00:09:16]>> Uh and that waste management focus initially allowed me to sort of go deeper into the metal waste sector which at some level was the genesis of Loha.

[00:09:28]>> What year was that?

[00:09:30]>> Roughly 2014 2015.

[00:09:32]>> Mhm.

[00:09:32]>> Yeah. So 145 is when I started investing in waste management companies.

[00:09:37]>> Yeah. uh looked at a few uh you know started working closely with them to understand what their business model is all about >> uh and then at the same point of time u you know I was very much in touch with my uh my co-founder at Lohan who was my classmate at uh business school and right from business school we had sort of formed a thesis about life and our thesis about life was that look >> uh India and America are friends we'll always be friends and we got to take on that other country together.

[00:10:10]>> And I think we were always looking for something to support that thesis.

[00:10:14]>> He had a military background so his military background sort of allowed him to think of countries as friends and enemies and then I had to sort of put things into that perspective.

[00:10:23]uh and uh I think that always used to play at the back of our mind that you know okay is there some India and America alignment story in what we will do and then how do we sort of find an opportunity which resonates with that >> and what is that other country >> I think we all know about [laughter] that big country which probably dominates all conversation today but you know but again I don't look at it from a friend or enemy lens it's more like the world needs diversification there's one country where there's a lot of concentration ation of today you know uh knowledge industrial capacity research uh and resources right so how do you diversify that that's the way we think >> uh and that is I think what allowed us to start looking at >> uh the broad metal sector and all the opportunities within the metal sector >> so I think even today uh most people probably wouldn't know what Loham does Sure.

[00:11:23]>> Uh and you started this in 2018.

[00:11:28]>> Technically 17 is when we started, 18 is when we incorporated this company.

[00:11:34]>> Yeah.

[00:11:34]>> But 17 we started it as a as a as our work every day. Yeah. So imagine in 2026 majority people don't know what Luhamm does and and you had the conviction in 2017 that this is what I want to do for the next let's say decades. uh what was that conviction about uh how it kind of like shaped uh and then we can you know slowly get into uh you know what Loh does and then of course later on we can you know eventually get into how it has evolved over the years. So the conviction was fairly straightforward right I mean way back I think I've looked at and I'm not the only one who looks at the world with this lens but there are a lot of folks who probably do the what we call the atom and the bits world right there's a world of atoms and there's a world of bits lot of smart people are in the world of bits the world of atoms has somewhere been left behind and the world of atoms has been largely given to this one large country to solve for and people need to also address the atoms question while they're building the while they're developing the bits world right and so I wanted to be a contrarian and I think that's who I have been throughout my life a contrarian right I uh never wanted to do never wanted to follow the mainstream approach so what is it that we do in the physical world was a question that we always were trying to address and the physical world starts with raw materials right it starts with raw materials and it's no surprise that raw materials are dominated by a particular country because the world had always solved for efficiency. It had never solved for diversification. It had never solved for sovereignty. It does. It does every time. It gets a shock. Right?

[00:13:25]Historically, the world has done this.

[00:13:26]And in fact, I'll share with you some stories back from 1850s which will tell you how this happens all the time.

[00:13:33]>> But the world needs a jolt before it gets there. Now, we didn't need the jolt. We knew that something like this will happen again, right? But that this is a problem that we want to solve. And it's good that not a lot of smart people are solving this because it'll allow us to sort of get ahead and position ourselves as leaders before others enter this industry.

[00:13:53]>> And that's what we did. That's what we started building that raw material, you know, raw materials can be many, right?

[00:13:59]I can solve for the grain problems. I can solve for the farmer problems or I can solve for the industrial raw material problems. And we chose metal as a raw material that we wanted to focus on. and >> sort of uh one thing that you know uh my co-founder Justin and I are still very proud of our first deck is not very different from the current deck that we put out.

[00:14:19]>> Uh so in 2017 what we had put together as our thought process is pretty much the thought process you know that we'll be putting out when we sort of list ourselves.

[00:14:30]>> What is it? It's just that we need to diversify uh we need to create a large advanced materials company which is based off all the minerals which are considered critical minerals.

[00:14:41]>> That's who we were when we started out and that's who we are today. Now of course that journey requires us to keep adding various legs and various uh other belts and whistles which are needed to be successful in this journey. But it was a very simple straightforward vision. And even today if you attend any of our town halls I mean it's the same vision that we keep repeating.

[00:15:02]>> A Dupont a BASF a Heras I mean a DAO name large materials companies or 3M right large materials companies that have formed in the world they have been they've grown over a 150 to 200 year time frame.

[00:15:20]>> Mhm. We want to ensure that that next advanced materials large advanced materials companies emerges a out of India >> b in a 15 to 20 year time frame at the scale at which these global material giants operate >> advanced material. So uh Rajad we need to step back a bit >> sure >> we let's use a language you know where even let's say 16 year old can kind of like understand. So you have this conviction, you got a good team together. Uh you know, you probably uh raised some capital as well. Now let's go back in time 2018 or 19. Uh you know, you got let's say a factory uh and now walk me through you know the first let's say one or two one to three years. Uh what was the business like? What were you doing? Who were your customers? And how were you making money?

[00:16:19]>> Sure. So from the very beginning this was a materials company. So [clears throat] our job was very simple.

[00:16:29]Make something and sell it and ensure that the process of making it is a profitable activity. Right? So your raw material conversion to your finished good should be a profitable activity and there should be a market that should be willing to pay for your finished goods >> which is what pretty much every factory in the world does.

[00:16:47]We decided to focus on advanced materials which were based on what is today known as critical mineral. Now please remember when we started in 2017 2018 there was no definition of critical mineral. There's nothing that was considered critical. It was just our own hypothesis that these set of metals will start becoming critical as the new industrial world uh takes shape. uh and so we were very clear that you know the things like lithium, cobalt, nickel uh you know platinum, palladium so things that are uh important for the world by virtue of the modern industries that are coming up we have to somehow figure out how to make products out of them >> now to make money and I give a lot of thanks to my professors at the business school who made this very clear to us that in any value chain be either at this end or at this end everyone in in between will get squeezed eventually right you may get some technical advantages in between but eventually be the brand or be the owner of the original asset we decided we don't have sufficient money to become a brand that and you know if you want to become a brand very quickly you have to burn a lot of money >> which was a classic VC route that a lot of people tend to take which is not the route that we wanted to take so we said we'll be on the other end we'll try to figure out how to be the first player in the value chain or the supply chain and try to make some money of that and then of course it was very clear materials metals important metals new age metals that is what we have to do. So the first journey was in figuring out how do we make money from lithium cobalt and nickel >> and uh it's not very difficult to sort of arrive at the conclusion that maybe we can actually pick up scrap convert it into something and sell it. That was the original thought process that let's start there. Let's first figure out if we can pick up scrap because if you've got to go and acquire a mine, mine is the very end of this journey, right? So you have either a real physical mine or you've got what we call an urban mine.

[00:18:49]Those are the two beginning points of this entire value chain.

[00:18:53]>> Mining is too complex in operation for us to start and this is 2017, right?

[00:18:58]We're a small team. We have no history in mining. Extremely difficult. But urban mining is much easier. So let's go down that path and let's start picking something there.

[00:19:08]Not very difficult to find batteries in the market. People were doing nothing with those batteries. Uh batteries were one of the biggest consumers of lithium, cobalt and nickel, the three initial metals that we started focusing on.

[00:19:20]>> So I did what any good entrepreneur in Delhi does which is go to Neu place right and I went to Neopl and we started figuring out from the Neup place refurbishers what do you do with all the scrap? They said well here's a scrap and you pay for it and we were like why should we pay for it if it is scrap he said no the kabari walas pay for it like kabari wallalas are paying for it what are they doing surely they can't be sophisticated that they can take out lithium cobalt nickel >> but they were so the next you know the next car ride was from Neu place to the Kabari ecosystem which in Delhi is largely concentrated in the northeast part of Delhi so we go there and we start seeing what they're doing and it's very clear that they're extremely shrewd businessmen. They pick up the scrap from NU place.

[00:20:11]They pick up the battery scrap. U you know I'm sure you have owned at some point of time those old laptops which had a battery >> uh coming out of the back. They would open the crack open the battery pack, take out the individual cells. They had like a room probably this big where maybe four or five people are working on the floor with voltmeters just checking on the voltage of the cell seeing that there is some power left in the cell >> putting it into a small DIY kit that they used to get from China uh you know which was a power bank kit which had everything but battery in it. So it had the casing, it had the PCB, it had the wire. those were the only three or four things that you needed and so you just needed to insert battery into it. So you can almost think of it like you know you have a torch you just need to insert batteries into the torch and lo and behold you've got a working product.

[00:21:01]>> So they would have everything else and they would take out battery from a laptop put it into this casing and they had a power bank to sell >> and they had a power bank to sell and they didn't have to back it up with any warranty. So which is the best market for them? Palika bazar in Delhi. So that is where they end up going and selling >> and then making neat little money neat little profit. So we realized okay so we have to compete in the space we have to do something better than these guys right uh so can we actually make more money by taking out lithium cobalt nickel or do we need uh you know do we need to actually sell a finished good and I think uh very quickly we realized that just by extracting lithium cobalt and nickel there's no way we can compete I mean end of the day the economics of it is very clear lithium cobalt and nickel are raw materials to a power bank so obviously a power bank will sell at a higher So the kabariala's ability to pay more than me is always superior.

[00:21:54]>> And so we started this thing wherein we started uh you know taking these uh scrap from uh meu place. We also started converting it to power bank except we were a bit more sophisticated converter cuz we had to back it up with warranty because we had to sell it on Amazon. So the first product that we ever sold was actually a B2C product which is very very far from who we are as a company right but that was the first avatar of the company where we selling products on Amazon um you know and MI was listed at 1,000 rupees >> ours was listed at 500 rupees the Kabariala was selling it at 200 rupees in uh ch in you know in their market >> so that was the initial point we very quickly realized that we can make money this way uh we started scaling that up.

[00:22:45]Knowing very well that this advantage is not going to last for long, we have to figure out the real business model which was the original intent of the company which is to take out lithium cobalt nickel and sell it. M >> now the good thing here was when you crack open a laptop battery four good cells do exist which is what the kabarala was selling but there were two bad cells too which the kabarala was throwing away >> which we also had to throw away if we didn't take out the lithium nickel and cobalt from it which is what then we started working on in our R&D setup how do we actually take out the lithium cobalt nickel how do we extract it how do we extract it with purity >> so that was sort of while the bread bread and butter was coming by selling power bank. The research was happening in terms of extraction. How do we extract the raw material from these >> cell >> and I think from there we started building more and more capabilities along both legs of the business. How to refurbish and sell something more interesting and how to extract and in that journey you know there were a lot of different intermediary group intermediate forms that we took. You know, one day we suddenly got a call from uh from Samsung in Korea that we don't need the lithium cobalt nickel.

[00:23:57]Just sell us a black powder that you take out. We'll do the refining. Like, okay, we can make money by selling this black powder. Very interesting.

[00:24:04]>> They quoted us a price. Uh we knew our cost and we're like, "Wow, there's money to be made in just selling this black powder. Why do I need to do so much of research? Black powder is nothing but a crushing outcome."

[00:24:14]>> Yeah.

[00:24:15]So we started crushing and that's when you know we had our first one ton ready for Samsung to come and inspect and they're like we don't like this there's too much aluminum and copper in this you know so when you crush a battery there's aluminum and copper there like no one's going to take it >> we suddenly thought what seemed like a very easy business of just crushing and selling suddenly became a more complicated business because their expectation was to reduce the aluminum and copper so that made us go back to our uh drawing go go back to our research table and see how could we eliminate the aluminum and copper. So three different things happening now in parallel. There was a business which was selling used batteries in the form of some final product. There was a business of selling this intermediate which where the research was around removing the aluminum and copper and then there was ultimately the final aspiration that we still need to figure out how to sell lithium, cobalt and nickel profitably. I think we continued working along those three lines that built the the research muscle of the company, the scaling to a plant muscle of the company, >> ability to work with different kind of streams, u ability to work with different verticals in the company.

[00:25:27]>> I think those were the first few years which allowed us to become who we are today.

[00:25:32]>> Who we are today. Today I hear uh that in your industry you hold let's say 70% or more of the market share uh you know talk us where are we today uh what's the scale of or let me put it this way in simple language what is lo today >> versus what you just mentioned yeah >> uh and then I want to get into uh R&D part sure to post that >> so Loham the name comes from loa right loa is steel and steel is the only metal we don't work with right so we work with every other metal but we consciously decided to stay [laughter] but the good thing is steel is effectively representation of you know the metal strength of a country right and that is what we want to demonstrate while right that metals and then materials formed from the all these other metals is what we really want to showcase and we want to demonstrate that we can create that company out of India.

[00:26:34]We can create a large organization out of India which is a very cutting edge of the uses of some of these metals.

[00:26:40]>> Yeah, >> that's what we are doing. So we today have four pillars in the business. Uh the four pillars of the business are what was the first business which was recycling, the second business which was processing, the third business which is advanced materials and the fourth and the most recent business which is we've actually started acquiring mines which was not the initial journey of the company.

[00:27:04]>> These four pillars across various different metals is the platform that Lohan has created. M >> so give us any input you know our goal is to create an advanced materials out of that input and we have a system through which we can convert it to that advanced materials we've almost I would say codified that >> so allows us to get into new materials and new metals and new kinds of feed stocks very quickly >> and uh you know deal with various different kinds of inputs and outputs so in terms of >> um inputs uh you know or in terms of outputs we work with lithium based products, cobalt based products, nickel based products, platinum, paladium and roodium which are collectively known as a platinum group based products, >> rare earth based products which is for those of of your listeners who are familiar with the periodic table. This is what is known as the lanthnide series in the periodic table. So we work with neodymium, pridemium, disprosium, turbium. Sorry I'm boring you with chemistry lessons here >> but those products and then of course >> whenever you deal with all these products you always have to deal with things like copper, aluminum, zinc etc. So you do work with base metals >> uh and that's the broader portfolio.

[00:28:16]>> We've also uh you know just because our journey started with uh batteries batteries also have a very strong non-metal in them which is graphite. So we do have a carbon/graphite portfolio in the company as well which remains a very important part of our work.

[00:28:34]>> Uh in fact I plan on uh putting the transcript in chat GPT and asking describe me these things as if I'm 16 year old. Uh but Rajat let's break those four pillars down very quickly. Yeah. uh in simple language really essentially every pillar uh this is what your business is meaning this is what you sell to a customer who are those customers uh and you know it can be a range you know this is like >> we sell this thing for this much money or dollars uh and then I want to get into what kind of scale that lo today has what kind of revenue as a company it's making so in simple language like help us understand those four pillars who are the customers revenue. So see the revenue scale at which we operate today is about 2500 K peranom. That's the run rate at which we are operating as a company. We've been profitable for the last six years. Uh we run a double digit ibida business. Uh and been fairly uh I would say cash efficient in terms of our ability to convert our cash into returns. Uh what do we sell? Right?

[00:29:56]The entire world of uh materials can be split into the first part which is selling the commodity and the second part which is selling the advanced product and the two have slightly different dynamics associated with them.

[00:30:12]The first part is all is really a spread business, right? A spread business is a business in which there is, you know, a bid and an ask and then there is something available in between and you have to ensure that you're making your money by capturing that by ensuring your cost structure is below the bid and the ask.

[00:30:31]>> That is the first part of the business where you sell commodities which is really the metal business in the world.

[00:30:36]Uh to give you a simple example, what does that mean? Uh for people who are not very familiar with spreads, let's say there is something called let's take one example maybe the cobalt metal, right? Uh cobalt is a very beautiful metal. Just a small anecdote about it. Cobalt is what turns your tiles in your bathroom blue. So the joke out there is whenever cobalt prices go up, the tiles in your bathroom turn green because no one uses cobalt. Cobalt as a metal you buy it at what we call a payable. Cobalt is listed on the London Metal Exchange. So anyone from the Kavari Wala to the sophisticated trader sitting in the best bank in the world is aware of the London Metal Exchange price right that this is where the index is at. Now different players in the value chain will quote a price which is a percentage of the London Metal Exchange price which is known as a payable.

[00:31:33]Right? So someone who's operating a mine will quote a payable let's say which is 30% of LME.

[00:31:40]Someone who's running a processing plant uh will quote a payable let's say which is 70% of LME.

[00:31:46]>> Mhm.

[00:31:47]>> Someone who's selling the end product let's say to the aerospace or the battery sector will quote a price which is let's say is 99% of LME.

[00:31:56]>> So this is what how the market operates and you are an operator in the market.

[00:32:00]So you'll have a buying price and a you'll have a buying table and a selling table.

[00:32:04]>> Mh.

[00:32:05]>> And the difference between the two is the money that you make taking care of your own cost structure.

[00:32:10]>> Understood.

[00:32:10]>> Right. So that's the simple way in which the commodity part of the metal business works.

[00:32:15]>> Then we come to the second part which is what we really want to which is the part of the business that we really want to scale and which is where like we like to say we want to be an advanced materials company and advanced materials does not sell commodity. The advanced materials company is selling performance. It is selling performance to the end customer.

[00:32:35]What does that mean? We again stick with cobalt here. Right now this cobalt is going in a battery. It is not going into a battery in the form of a cobalt. It's going into the battery in the form of an advanced chemical called cathode active material. Mhm. My guy on the other side is basically either a battery seller or he could be a vehicle seller who needs a battery in the car or he could be a phone seller who needs a battery in the phone. So for them it is more about what feature set is improving. Is their cost structure improving or is their performance improving?

[00:33:11]>> And you have to now sell that to them.

[00:33:14]And that is how you arrive at the pricing of your product that hey look if you take my cathode active material and my material allows you to fast charge your battery >> by let's say instead of charging your battery in 1 hour I my material allows you to charge it in 15 minutes >> should you not pay me a premium for it >> that is how you sell in that part of the market right and so you have to invest a lot into showing that why your material is a high performance material So that's the two different worlds that we navigate. There's a spread world, there's a performance world, >> right?

[00:33:50]>> The spread world is humongously dominated by China has always been.

[00:33:56]Reason being China always had the lowest cost structure. The lower your cost structure, the tighter the spread you can work with.

[00:34:03]>> Mhm.

[00:34:04]>> Because of the labor, because of scale.

[00:34:07]>> Scale, >> right? China just to tell you I mean uh today you say you know you said 2026 people still probably don't know what critical minerals is in the world right and so they'll have a very hard time understanding China started its critical mineral mission in 1970 so it's a 56-year advantage that they have where they also got lucky that the western world decided to also outsource their manufacturing to China so 1990s 2010s 2020s China also built humongous scale and that scale allows them to operate at the lowest cost >> and that is the world that is the competition that we are all now trying to catch up with.

[00:34:47]>> Mhm.

[00:34:48]>> So you have to do you know you have to set up scale u China obviously we all also know gets a lot of support from their government. So that comes into China having an even better cost structure than let's say pure business economics would allow them to you know so that's that's the tough part of that business advanced materials business on the contrary is a game of where does a downstream industry exist >> right typically the downstream industry should exist where the demand is but again the the world decided to do all the downstream industry in China.

[00:35:25]>> Mhm.

[00:35:26]>> So the advanced material industry also which historically was an industry led by Japan, US, Germany, France, Korea, Taiwan has shifted to China as well. So basically you're competing in both segments of the business with exactly one country.

[00:35:42]>> Mhm.

[00:35:43]>> Even though that company country does not should not have the right to win in that in both sectors.

[00:35:49]>> Yeah.

[00:35:50]>> So that that's broadly how this business operates. But then again, I mean I I'm guessing you've understood the spread side of the business. That is what allows us to make money.

[00:35:59]>> Uh that is what has been allowing us to scale. Every year we keep adding more products to our portfolio. We keep expanding the scale of any particular product. So >> you know lithium, cobalt, nickel, aluminum, copper, uh platinum group, rare earth group, they're all revenue contributors to the business. Uh they all have different >> you know price points at which they operate. But we have a very simple rule in this company. We'll only work with what we call dollar dense material. A dollar dense material is a material which has a high dollar value per kilo.

[00:36:29]>> As simple as that.

[00:36:31]>> Understood. Got it. Uh [clears throat] I'm hearing uh that you know Loham is started to become a global company now.

[00:36:44]So what that means is you're working with other countries uh helping them set up you know their uh expertise in uh uh in uh in processing critical minerals. I think you're working with the UA government. Uh maybe quickly uh Rajat walk us through how would the next let's say three to five years look like for low.

[00:37:12]>> Sure. So look uh maybe we should first understand the uh background of what is happening in the critical minerals and the advanced materials world.

[00:37:21]>> Yeah. So maybe one question. Yeah. Uh >> I think uh China dominates uh the processing of critical minerals or call it rare earth 90 to 95% of it. Uh and world cannot be dependent on that that everyone knows. Uh China plus one is a important strategy. Why China plus one is an important strategy? Second, why you think India would play a very important role in that China plus one strategy and how Loham is positioned to kind of enable that China plus one opportunity.

[00:38:00]>> Absolutely. So I mean again all the right questions here it's all in China we just talked about that right everything whether it is the commodity or the advanced material everything is being produced in China and then the geopolitics of the time is such that you cannot rely on one country you know just the last six seven years we've had many economic shock events we had covid one we had covid 2 we had the Ukraine war we had the west asia crisis >> uh and probably we'll have several more if the powers to be have their around the world, right?

[00:38:32]>> So the world knows that it needs a diversification strategy. It cannot just put all its resources in one country.

[00:38:37]Whether that one country is China or that one country is Ukraine or that one country is Africa or that one country is India. No one wants to be dependent on any one country. That's part one of the story. Part two of the story of our times also is the fact that jobs are becoming more and more difficult to find. I mean all of us think about AI, all of us think about robotics, all of us think about other things which ostensibly could be job killers, right?

[00:39:01]In a more narrow way of thinking.

[00:39:04]>> So these are two things which are driving the politics and the business of our times. Politicians need to show that they are creating jobs. Businesses need to make sure that they're not dependent on one country.

[00:39:15]>> Marry the two. That is exactly where you need not just China plus one. You also need localization.

[00:39:23]Right? You need both these things to work hand in hand. That's the high level answer. Now the bottom reality is and I was at PAX silica India just became a signary to PAX silicon and I was in Washington DC about 10 days back. The bottom reality when you meet within Pacilica originally started by US, Japan and Australia to cover AI semiconductors and critical minerals. India became a recent signary.

[00:39:51]The bottom line is the western world understands they do not have any competitive advantage when it comes to manufacturing. Their processing cost will be much much their conversion cost, processing cost, manufacturing cost will be much larger than that of China.

[00:40:05]>> And this is not an environment arbitrage. It is just a scale arbitrage of China that these guys can never sort of catch up with.

[00:40:16]>> Mhm.

[00:40:16]>> So the question becomes who do they go to, right? uh and that is where India offers a very interesting option to everyone. A India is a large market. So India can create scale of its own market. Right? That answer is also true for us. Answer is also true for the European Union as a whole. Right?

[00:40:36]Collectively there are large demand markets.

[00:40:39]B India historically particularly in the chemical and the metal sector has built a lot of strength. Right? metal I mean again like I said loa >> steel >> is a sector where we've built capacity for a long time and we've actually not killed that industry >> lot of western world actually killed that industry and gave it all away to China we didn't chemical again we are one of the largest chemical countries in the world right whether it was because of pharma or whether it was because of the fine uh and the uh specialty chemical sector >> or whether it was because of the fertilizer sector Right? Name any sector. But we've built a lot of capacity and lot of capability in the chemical world. All that means is India has talent.

[00:41:26]>> India has talent to quickly work on the problems and get the things up and running very quickly. I give a simple example without naming my competitor.

[00:41:34]Competitors started the same time as we did. Um raised about uh north of $2 billion. Uh and I'm talking about a western competitor, right?

[00:41:46]uh we've raised you know I think in our journey so far we've raised probably close to $150 $200 million big difference uh they've still not been able to commercialize >> wow >> right and not because I would say I mean I would have loved to say lo is special but I actually attribute that to India is special we've got enough talent available here who can quickly come quickly set up these factories quickly get the factories to run and quickly take the research that we do in the lab and convert it into a factory scale activity. Mhm.

[00:42:19]>> So, so then I'm now answering a question as to why we needed China plus one, why that could have meant anyone, but then why India is somewhat special and then within India, what Loham did was a identify that yes, this is what is special about India, but B more importantly decided to actually embrace the tough uh R&D needed to get there and the journey from R&D to factory needed to get there and actually provision from day one. I still remember the first investment I made in the lab uh was this uh uh was this equipment called an ICP which is basically you know spectroscopy equipment and I think allin that cost us close to a k and everyone was asking me rajat you can go to IT Delhi and use their machine you can go to XY Z and use their machine I was like and that will mean that what I can do in our lab in one day I'll end up getting it done in 10 days that's not the pace with which I want to work We were very clear, very sure that R&D is what will give us the edge from day one and we decided to invest in the equipment and empower our researchers with all those equipments to quickly see whether the R&D is bearing fruit or not.

[00:43:28]>> Mhm.

[00:43:29]>> Mhm.

[00:43:30]>> Uh Rajat so you know in fact I was going to my question and you have already answered that R&D is actually the mode of low. where does that mindset comes uh from for you that hey you know this is a R&D first company versus anything else >> so I I think the mindset is one of first principles right more than R&D I think the mindset is always of first principles that let's figure out what can we do right and let's figure out from scratch what we can do right uh we're not doing R&D for the heck of it are we sure that what we are doing is the best way to do it or are there better ways to do it and then I keep asking questions to all my colleagues in the organization. Tell me why. Tell me why. Tell me why.

[00:44:19]I think that's the only way one should do things. That's my view. I'm sure there may be people who may not agree with it, but my view is if you've not done if you're not doing things from first principles, you probably will never be able to uncover the full depth of what you can uncover. That's who I am as an individual. That is probably the DNA and that's probably the family that I grew up with. I think that's a lot of what was there in my DNA. I'm blessed that a lot of folks who have joined me in this journey that we've all taken together, a lot of them also seem to either have that DNA or willing to embrace that DNA.

[00:44:50]>> Uh and I think that is that is really the starting point. And I think once you go to first principles, you can call it research, you can call it whatever term you want to give it, >> you actually start solving problems differently >> and that is what allows you to build the differentiated advantage over someone else. Mhm. So look, you came back and you started this deep tech company uh which even today is hard to start a deep tech company in India and you started this 10 years back. Uh Rajat, you know, with your experience and of course now you have confidence as well because you have success on your back. uh what are two or three specific things that needs to be done where deep tech as a ecosystem can really flourish in India as you mentioned look talent is there uh ambition is there as well capital not so much yes government has this fund but still we need large sums of capital but you got my point let's say two three things that you would do or that needs to be true not necessarily you would Yeah, three things in look um end of the day uh what is business? Business is about creating things that people love, right?

[00:46:10]That is what a business is. And then when your business is based on deep tech, you're still creating things that people want, right? So ultimately what people want is either something that they already know or it is something that you sort of convince them that they want. Right? And I think that's something that's not going to change in the world.

[00:46:28]You want to make sure you've got a society which is functional in this framework. That means different people are doing things which ultimately allow them to create things which others want.

[00:46:36]Right? And that functional society is what you're trying to create. And we need to do that in India. We need to do a lot more of that in India because we've got a very large part of the population which is working in a very inefficient manner. Whether it is in rural India or whether it is in urban India doing things where you're not ex exploring the full depth of their potential.

[00:46:56]Once you recognize that then you know to do that you have to sort of you can either go and buy products from outside and sell it to people. In that process, you're just catering to some folks in the country and you'll always run into classic capitalist issues or you build those products internally.

[00:47:16]Right now, we've got a massive market.

[00:47:17]We can build enough products for our market. Right? whether a market wants to you know just uh you know uh own shiny cars or whether they want to take rockets to space or whether they want to sort of defend themselves from enemy whatever be it right I mean every category if we can build it ourselves we are leveraging the econ leveraging the population strength that we have and leveraging the intellectual strength that we have etc etc having said that there are others who have done it in other parts of the world others who have done something in other parts of the world who may have a lot of experiences to offer that you want to capitalize on. So then what does deep tech mean? For me, deep tech means leveraging a the potential of our people, but then helping them understand the experiences of the global ecosystem and then putting that in a framework which the modern capitalist market understands, right? Which is where is the ROI, >> right? You also need to convince everyone. Now, this is where R&D typically goes wrong, right? Now, you can go to several R&D organizations in the country which are pure research organizations, right? The third linkage is something that people don't understand, right? Everyone likes to have people working for them. Everyone will have hundreds of researchers sitting with them. So yes, you're solving the job problem. You're probably also working on some interesting uh research area which ultimately will result in a product that the that the people of the country need, right? I mean yesterday I was chatting with some kid who has developed some absorbent through which you know and through which he can extract water from air >> right and and there'll be similar such things all these problems ultimately have a need they have a requirement there's someone out there who will be willing to pay for it and will be willing to use it but where is the ROI in developing the product and I think that is what we've institutionalized at Loha we follow R&D we do R&D in a methodical manner >> having recognizing the fact that R&D always has a serendipity serendipity component to it.

[00:49:23]So all R&D cannot be methodical. There will be some serendipity. And we've sort of followed the Google way, right? 80% of the researchers time in doing methodical work. 20% do whatever. Maybe it will uncover something that none of us can ever think about. Simple model that Google explained to the entire world back in 1999 20201 their early days and this is how people at Google work and we followed that culture here as well. Now that 80% of the time is what I'm more bothered about. 20% it may generate some moonshots or some we'll see what it does but that 80% of the time is what we've really structured and what we call again not a framework that we've discovered it's a NASA framework that we use and now thankfully a lot of people have started understanding the language of that framework which is TRL1 to TRL 9 technology readiness level one to technology readiness level 9 and what we've done in this company is we've said very clearly TRL1 to three we will not do at this company we will work with great architect ademics all over the world and we'll identify problem sets that we want to solve and the academics there's no literature around 1 123 right so 1 2 3 is where literature needs to be published >> let's work with academics in potentially getting that literature right so it could be something like you know India did a lot of great mining um of let's say copper you're left behind with 01% nickel in the earth that was dug out while digging out that copper. Now let us figure out how to actually turn that 01% nickel into a sellable product. Right? There may be no literature around it because no one has no one needed to solve that problem. It was a problem very specific to some geography something that we did.

[00:51:09]>> So you give that problem and there's no no literature around it. Right? And the literature here has to be someone demonstrating that 01% nickel 200% nickel there's a there's an established pathway or there's a pathway in literature.

[00:51:23]>> Yeah.

[00:51:24]>> If that literature does not exist we work with academics right their incentives are better aligned in publishing papers and we do that with them.

[00:51:32]>> We come into the picture TRL4 >> which is we say okay there is something in the literature but we don't know whether this is actually viable for business. M >> and so we've got a three-part framework which is DRL 4 to6 which is lab viability is first demonstrated 6 to8 which is a pilot plant viability is what we then demonstrate so lab viability you can think of I'm solving problems at 1 g to 10 g scale pilot viability I'm solving problems potentially at 1 kg to one ton scale and then I move into my commercial plant >> we've demonstrated this with product after product after product which is why the investing world has confidence in us right Okay, these guys are not doing R&D just for the heck of it. They seem to know how their R&D is going to progress.

[00:52:16]We are also very clear if lab viability cannot be established in two quarters, we shun that area of research.

[00:52:22]>> Right. So that's I think bringing that structure into any R&D happening in the deep tech world is super important. I think then capital will flow.

[00:52:30]>> Will flow.

[00:52:30]>> Yeah.

[00:52:32]>> One more before we move into our last section. uh Rajett like you've come back uh and I'm sure you are proud of what you've done for yourself for the country and of course still long way to go uh probably you know you wouldn't have had the kind of impact that you've gotten here if you had let's say stayed back in the US what advice would you give uh to somebody who's high functioning ing in the valley tinkering uh on the fence thinking about moving back to India.

[00:53:12]Look, I mean this is a this is a country which is very serious about where it need where it wants to be right what we all collectively as a nation what we all want to achieve. I think that's very clear and the gaps are huge.

[00:53:29]So in simple entrepreneurial terms the business opportunities are super large right? So let's accept that that there are many many large problems that can be solved here. Pick your problem, right? Pick an area which is of interest to you. I think one thing that um I'll always say is what you'll not get here is what you had in the US which was uh you know very well-trained talent right that talent becomes super functional on day one when you you will have to groom and mentor people right you will have to you'll have to identify good people right but do not expect them to be ready for the industry on day one you may not even find the talent in the industry because depending on the industry you are software is a very different industry but rest of the industries you may just not find talent uh who sort of meet your high functional needs as you just said >> you will have to train you'll have to groom them which basically means you'll have to have patience >> you'll have to give some time to people you'll have to create methods you'll have to create I never understood what training ever meant I never understood why do you need to train people because we never had any training sessions in the valley you were at your work you're going around you're trying to learn from others you're you're doing it on your own. You need to have structured training here. I'll be I'll also say I was guilty of not doing that in the initial few years. We've now started more formal training programs here. But people want to be trained here, right?

[00:54:55]And they're not getting the relevant training in their in their original uh you know institutions from which they've come.

[00:55:04]>> So spend that time number one. Number two, I and Lohed a lot from it. engage with policy makers, right? Policy makers are willing to listen. They really want to understand what is happening on the ground. They're seeking raw authentic data. It's only a practitioner who can tell them of the challenges on the ground. Don't think of it as wasting time with a bureaucrat.

[00:55:28]You know, yes, a bureaucrat, please also understand a bureaucrat is also involved in 50,000 things. The bureaucrat will be frustrated. You'll be frustrated that that your message is not getting across.

[00:55:41]But be relentless. We have seen very clearly that building your people and engaging with bureaucrats, engaging with policy makers ultimately rewards you. It ultimately gives you the kind of success that you're seeking out here. Most people in my opinion have not done that out here.

[00:55:59]So look uh Rajat uh we know you uh you know as a somebody who has high conviction in things which are not obvious yet uh and you've built a massive company. Uh one, what do your friends know you for?

[00:56:21]Who are you outside of work?

[00:56:23]>> Where am I outside of work? I think today I'm just work and nothing else.

[00:56:27]I'll be very honest. I don't know if I can actually say that I have any significant life but I am honestly very passionate about you know my original reason to be in India is I do want to see a very different India. Uh my friends do know of my uh passion to do things which normally a lot of people don't touch. So I do work a lot with villages. Uh I do a lot of work with people who are not so fortunate as we are and I do try to see if I can make them fortunate. So I do spend a lot of time I've I've taken up uh you know I've every year I pick about 10 15 kids from various villages on the outskirts of Delhi and uh I provide for their uh board and u you know uh lodging and I and their coaching and I ensure that they sort of have an they do get into a position where they have the ability to uplift their house their families and I've been doing this for the last 15 years and it's been a very rewarding experience >> and I think I continue doing that that is something that excites me. My friends otherwise probably uh think of me as a guy whose jokes are not very funny.

[00:57:34]Yeah.

[00:57:36]>> Thank you so much uh Raj. This was fun.

[00:57:39]>> Thanks. Thanks Sha.