Paper cup: the business of protecting environment
Not all were lucky enough to benefit from the stockmarket bubble of 2010 and roll money for a bigger cause. But Kazi Sazedur Rahman could.
He became a stockmarket investor in 2008 with the money he had made from supplying to a power plant and sold off all the shares just couple of days before the bubble bust. He was all of 24 years of age then.
“I did not have any clue about the market crash. I liquidated shares to chase the dream of making environment-friendly paper cups,” said Rahman, who had set up a small factory to make paper cups two years from later.
The idea came when he was performing Hajj with his mother in November 2010. He was given some dates for iftar in a disposable paper cup.
“I was fascinated by the cup. This was eco-friendly and still made of food grade products. I felt that I got what I was looking for.”
Upon returning home, Rahman sold off his holdings in stocks and started looking for information on paper cup.
He mainly found plastic cups. In his quest, he went to Malaysia and later to China, where he stayed one and a half months to receive training on the technology to make paper cups.
However, training and some cash was not enough for him to start business. Rahman applied for loans to some banks, and all but Islami Bank agreed to lend him for the project.
Rahman was given Tk 30 lakh, although the money was one-third the amount he sought.
With the loan and Tk 10 lakh in hand, he ventured into making paper cups by renting a small room in Tejgaon and KPC Industries was born.
He set up three machines by investing Tk 23 lakh and went into production in June 2012.
“I had no office when I applied for loans. One of my relatives allowed me to prepare documents by using the address of his garment factory in Ashulia. This support helped me a lot to start the business.”
With the cups produced in the factory, Rahman went to Gulshan kitchen market and sold one cartoon of cups for Tk 3,000 to retailers there. He bagged orders for supplying 2 lakh pieces of cup per month from Chevron, the American energy company.
“Later, Pepsico began buying from us. This gave me great strength.”
Rahman never looked back after this. Within six months of production, his corporate clients rose to 55. Today, it stands at 160 and includes household names like Nestle and Pran.
KPC now manufactures 3.30 lakh paper cups a day along with paper plates and bowls. It is also eyeing expansion.
“We are building a plant at our own land. We will have zero wastage in the factory,” said the proprietor of KPC, whose turnover soared 22 percent to Tk 11 crore in 2016-17.
The new facility, which will be set up at Rupganj, Narayanganj, will manufacture 12 lakh pieces of paper cups a day to cater to both the domestic and export markets.
Rahman expects to commence production in the new factory in 2018. “The prospect in the domestic market is huge. Just think how much tea the people in this country drink. If the tea stalls begin using paper cups, there will be a huge demand.”
Some 15 crore pieces of cups are used annually in the country, with the majority being supplied by local manufacturers. Globally, the market for paper cups is $280 billion per year, he said.
“The most beautiful aspect of this is that the paper cups help us protect our environment from degradation by replacing plastic cups and at the same time, create business for us. I was thinking of doing something like this.”
The paper cups, which are made of cup stock board from virgin wood pulp, can be converted into organic fertiliser within 21 days, he said.
However, there are challenges. The paper cup manufacturers have to import the raw materials by paying a total of 61 percent tax and duty.
The import duty for finished product is also the same. As a result, local manufacturers like KPC have to face tough competition with imported cups from India.
“Bangladesh Bank should include paper cup making into its green projects refinance scheme.”
If the government withdraws import duty on raw materials, the production cost will decline substantially.
“We will be able to sell the cups at less than the current prices. This will drive the environmentally hazardous plastic cups out of the market,” said Rahman, who was recognised by the SME Foundation as the fourth best industrial entrepreneur in 2016.