Fall 2018

Case Study: The Never-ending-faults of Tissuetech Industry Ltd-Paper

Converting Company
Section- 13
International Business-372

Submitted by: ‘Team Blue’

Serial Name ID
23 Susmita Das 1711812030
27 M. Salman Islam 1712923630
28 Rukayea Hasnin 1721291030
29 Mohammad Asifur Rahman 1721656630
33 Morium Akter 1811508630

Submitted to:

Mahmud H. Zaman

Department of Marketing and International Business

North South University

The Never-ending-faults of Tissuetech Industry Ltd-Paper
Converting Company

According to experts “the pulp and paper industry is an environmentally sensitive sector due to its heavy
dependence on water, energy, and the vitality of forest ecosystems as a source of wood fiber” (Toppinen
et al., 2007, pg. 4). According to Ojala et al., (2007) “moderate degree of competition existed in the
global forest industry up until the end of the 1990s” (pg.3). However, the recent works of, Kozak (2013)
describes how the industry is suffering due to multinational corporations producing commodity products
at an increasing rate.

The tissue paper industry was led by the local factories, which was booming in the USA due to the
change in the people's lifestyle (Bor et al., 2017). In the USA income inequality has increased
dramatically over the past many years Bor, J, Cohen, G.H., & Galea, S.(2017).

In a developing country such as Bangladesh, there are 13 Tissue Manufacturing Plants and more than 15
Tissue Converting Plants until 2018. The global growth of tissue roll use was 3.2 percent in the last 15
years Jalil,(2018). The industry is led by several companies including Bashundhara, Bangla tissue, Fresh
Tissue which produces approximately 3,940 MT per month. For example, Bashundhara produced 1300
MT paper napkin per month while, kitchen towel, hand towel, clinical bed sheet are produced by the same
company at 160 MT per month.

The highest demand for tissue paper was approximately 3,500 tons in 2007 while the country's 43 pulp
and paper companies produced 50,000 tons in 2018. The local tissue paper industry can finally meet the
demand for toilet paper, facial tissue, kitchen towels, table napkin, and wrapping tissue, incentivized by
diversified consumers.The companies supply the tissue paper to super shop, (Modern trade) digital market
Trade and corporate house, Diplomatic zone, hotel and restaurant. More than 25,000 restaurants in
Bangladesh use one or two-piece tissue box a day. According to the Bangladesh Paper Mills Association
(BPMA) and 50 % of the factories are now producing its raw material 'paper pulp' locally which helped
the sector raise their maximum value addition (Sector insiders, 2007).

Now from a washroom in a five-star hotel to hotels in villages, hospitals to restaurants and fast-food
shops, local tissue papers are available. And with a variety ranging from toilet rolls to tissues with stylish
logo, from paper boxes to tiny packs. The local tissue paper industry meets the demand for toilet paper,
kitchen towels, clinical bed sheet or facial tissue by multi-dimensional people from posh guests in the
flights of local airlines to the students in a distant village. The industry has turned from almost nothing
into a billion taka market in the past 20 years and reached a good number of people. The market size of
the local tissue industry is around Tk.120 cr. with a 20 percent growth a year. Janani Paper Mill has
entered the market recently with the production capacity of 500 tons. Bashundhara Multi-Paper Industry
is now producing 1,900 metric tons of tissue paper alone both for local and foreign buyers. In 2000,
Bashundhara Group started manufacturing the item locally. Bashundhara holds 60 percent of
Bangladesh's paper napkin market and exports around 500 tons of tissue products annually to various
countries in Asia, Africa, and the Middle East. Bangla Tissue is producing 250 metric ton tissue per
month. Fresh tissue is producing 800 MT/ Month (Jalil, 2018).
 Figure no:1 Market size of tissue industry. (retrieved from tarunnoloak.com)

The growth in semi-urban and rural areas was 8.0 percent (2010-2017) which might cross 20 percent in
the next five years. More than 1.0 million families now use toilet paper rolls every week. 25,000
restaurants consume 10.0 million pieces of table napkin annually which helped maintain a 25 percent
growth, they added. The families along with 0.2 million public and private offices use facial tissue box at
least a month Prices of 'toilet paper' range between Tk.16 and Tk.22 while facial paper box between
Tk.38 and Tk.42, table paper between Tk.48 and Tk.52, pocket tissue between Tk. 8 and Tk.10. The paper
napkin turned into a Tk.1.5 billion market from Tk.500 million in the past 10 years with 80% of the
people using tissue papers at least once a month. Though average annual growth rate 1.70 and density of
population of Bangladesh is the key growth tissue market in South Asia. It can be assumed that in 2022
the production of tissue will be 103614 MT / Year (Jalil, 2018).
 Figure no:2 Population vs tissue use. (retrieved from tarunnoloak.com)

Tissue Market history in Bangladesh:

First in 1987, Kollol Industries Limited has developed a converting unit to start commercial operation. In
2000 Bashundhara stated first manufacturing plant in Bangladesh. Now in 2017 Bangladesh has 10 tissue
manufacturing company.
Some people used the tissue product at that time and that's why the market was limited. But with the
development of our country, the market has spread widely as even to the mass people. To meet the market
demand Bashundhara, fresh, Hakkani superstar and other companies established their own factory. And
also some companies engaged with converting unit by collecting tissue jumbo roll from Both local and
import based on doing business own Pvt Brand is growing market to reach the position on established
Brand on Bangladesh Market.

Bangladesh Market well-known Types of products:

Facial Tissue, Toilet Tissue, Kitchen Towel, Napkin Paper, wallet tissue. Clinical Bed sheet, Shower
tissue, Hand clean tissue, shower cap tissue, Makeup remover Tissue, Etc.
 
Tissue sales sector:
General trade. Super shop, (Modern trade) digimarket (Trade), and corporate house, Diplomatic zone,
Hotel, and Restaurant.

Increase tissue users:

The tissue paper industry, mostly led by local factories, has kept booming in the country due to a change
in the people’s lifestyle with rising incomes. The local tissue paper industry meets the demand for toilet
paper, facial tissue, kitchen towels, table napkin, and wrapping tissue, incentivized by diversified
consumers of the country. Rapid urbanization is leading the industry, he said, adding that the size of the
market will increase tenfold in next five years due to growing use of the product even in rural areas (Jalil,
2018).
Tissue Tech Industry

After obtaining an interview with Mr. Delwar Hossain Howlader who was the formal chairman of Fa
Tissue Trading Ltd, we have known that The Tissue Tech industry is one of the rising local tissue
factories, since 22 January 2014. The name of the brand is PERSONAL TISSUE. It was a proprietorship
company. From the beginning, this company tried their best to be a good company and they almost
became a good one. At the beginning of 2016, they had a great loss and had to close the factory. After 5
months later, on 16 July 2016 ‘Tissuetech Industry’ was bought by ‘Fa Tissue Trading'. The new owner
came up with a new brand name which is ‘Fa Tissue’. So, they had both Personal and Fa tissue. At that
time Tissuetech was known for Facial Tissue, Toilet Tissue, Kitchen Towel, Napkin Paper, wallet Tissue,
Hand Clean Tissue, Wet Tissue etc. As a newly started company, Tissuetech wasn’t big enough to
produce its own raw materials. Raw materials were imported from Bashundhara Tissue Ltd, Diamond
Tissue Ltd, and a few others. Tissuetech bought the non-useable paper roll, refined those and converted
them into useable tissue. Tissuetech supplies tissue to Dhaka, Cumilla, Khulna, Rajshahi, Barisal, Jessore,
Mymensingh, Chittagong, Sylhet, Kishoregong. They were focusing on both dealers and consumers, and
based on that they hired people for promoting the brand to more dealers. After 16 July 2016, they
produced approximately 25 tons of tissues per month with 35 people working in the factory. In the first
year, they also had monthly sales of 80 lac Tk (Tissue Tech, 2017). As local brands play a dominant role
in producing tissue paper in Bangladesh, most of the local manufacturers are producing good quality of
tissue paper. Tissue tech was one of them and they maintained the good quality of tissue paper.

Not every company can be successful because of the profitability of a particular sector. In today’s world,
there are so many competitors and so many factors which are responsible to make a company successful
or failure such as marketing, operation, strategic focus, finance, situation analysis etc. The Tissue Tech
industry also faced those kinds of obstacles in its lifecycle. On June 17, 2017, there was heavy rainfall. It
became very difficult for them to collect the raw materials to produce tissue. From June to August, those
three months because of bad weather they couldn't get their raw materials properly which affect their
output. They didn't have that kind of arrangement to convey their products to far distance in a hostile
environment. So, on those three months, it was impossible for them to supply their tissue outside Dhaka.
It brought a loss to this company by over 40 lac. Eventually, they stopped publishing their advertisement.
When they were facing those problems they thought if they focused only on the internal market and
supplied tissues only to dealers, it would be better. The dealers were not so much interested in this
company because of the communication gap and lack of advertisements. The profit began to decrease and
it became around 40 lac whereas the company's target income was above 1cr. Another problem arose
when the price of raw materials became high. It had become a nightmare for them. Their cost of
production and industrial cost began to go up. Their financial crisis was being increased day by day. On
December the income of the company was around 20 lac (Tissue Tech, 2017). It was tough for this
company to compete with its competitors. The competitors started to take its place because of this
company’s so many lacking. The production of this company was machine based. There were employees
to monitor the machines. The employees didn't perform properly as the managers were indifferent to
supervise them. But gradually this thing brought the company to a horrible situation. It was the wastage
problem. There was a lot of wastage of their company. The wastage of this company was 8% to 10%
whereas the industrial wastage should be 3% to 5%. The profit of this tissue company is falling day by
day and now the profit margin is around 6% (Tissue Tech, 2017).
QUESTIONS:

1. As the demand for tissue is increasing, how can a company like Tissue Tech achieve
sustainability?

2. Why did Tissue Tech Industry Ltd collapse?

3. What are factors that contributed to Tissue Tech’s potential collapse?

References:

 Bor, J., Cohen, G. H., & Galea, S. (2017). Population health in an era of rising income inequality:
USA, 1980–2015. The Lancet, 389(10077), 1475–1490.
 Jalil, K. M. A (2018),: Tissue paper products market growing. ACCESSED
http://tarunnoloak.com/tissue-paper-products-market-growing/
 Toppinen, A., Pätäri, S., Tuppura, A., & Jantunen, A. (2017). The European pulp and paper
industry in the transition to a bio-economy: A Delphi study. Futures, 88, 1-14.