NTPM in paper recycling venture

PAPER waste has become a key raw material in NTPM Holdings Bhd’s business strategy to produce new products for the domestic market.

The group is now installing machinery from China at its plant in Nibong Tebal, Penang, to manufacture compressed boards using paper waste.

Group managing director Lee See Jin told StarBiz that NTPM was investing RM3mil into the compressed board manufacturing business.

“The raw material, paper waste, is obtained from the production floor of our tissue paper products.

“Since the raw material is sourced internally, we will be able to price the compressed boards competitively in the market,” he said.

Lee See Jin with some of the company's products

Lee said the group would be able to manufacture 30 tonnes of compressed boards per day from the daily paper waste.

“We should be able to start marketing the compressed boards, which are used to make partitions and bags, next year,” he added.

Lee said the group was also exploring the use of plastic waste from tetra-packs to manufacture recycled plastic products for the consumer goods industry.

“We are able to source tetra-packs from the domestic and overseas markets. We plan to produce about 50 tonnes of recycled plastic materials per month for the local consumer goods industry.

“The recycled plastic materials should be marketed next year also. Both the compressed boards and recycled plastic materials should contribute positively to the group a year or two after they are introduced into the market,” he added.

Lee said the group would be shifting the production of its sanitary napkins to a new RM4.5mil facility on a four-acre site in Parit Buntar early next year.

“The 150,000-sq-ft plant is expected to produce sanitary napkins worth RM60mil per year.

“Presently, we are producing about RM20mil worth of sanitary napkins at the Nibong Tebal plant yearly,” he said.

NTPM’s sanitary napkins are marketed under the brands Intimate and Senora, which were introduced in 2003.

“We spent RM2mil to RM3mil a year on advertising and promotions to market the sanitary napkins,” Lee said.

He said the group also aimed to increase the daily production of tissue papers under the Premier and Cutie brands, as these products contributed about 85% to group revenue.

NTPM plans to raise the monthly output of tissue paper products to 280 tonnes per day from the present 250 tonnes by year-end.

“A significant percentage of the tissue paper products are exported overseas.

“We have customers in the Philippines, Australia, Britain, Maldives, the US and Middle East,” Lee said.

For the year ended April 30, the group posted a net profit of RM34mil from a revenue of RM306mil, compared with RM32mil and RM270mil respectively achieved in the previous year.

Lee said the price of raw materials used for the manufacturing of tissue paper products generally ranged from RM550 per tonne to RM1,100 per tonne, depending on the grade of waste paper.

“However, the price for the particular grade of raw material used for making our tissue paper products has increased by 30% over the past 12 months,” he said.

On power expenditure, Lee said NTPM spent about RM2.3mil per month on electricity charges after June 2008, compared with RM1.8mil per month previously.

“We are able to pass the higher production cost to our customers,” he added.

On the group’s working culture, Lee said all its employees were trained to be pro-active and thrifty.

“They are trained to follow up on their work without leaving loose-ends. The manufacturing and marketing teams are trained to save costs and increase efficiency in every possible way,” he added.

OSK Research forecast in a recent report that NTPM’s earnings for the financial year 2009 would be about 2.7% lower, reflecting the possible erosion in margins as well as the hike in selling prices.

The drop in margins is due to the rising cost of raw materials such as plastic, carton boxes and other chemicals.

The brokerage said NTPM was expected to raise the selling price of its products by 10% in 2009, which would enable it to offset the drop in sales volume.

In 2008, NTPM had raised its selling price by 8%, OSK added.

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