How Toilet Roll Production Can Spin Money
By Godwin Uba

The federal government of Nigeria in the 2004 fiscal policy, just released, included toilet roll of any type amongst other products on the import prohibition list.

That means that from the year 2004 and beyond, no foreign toilet paper, serviette or face tissue would be imported into this country.

This government policy is in the right direction. The marginal propensity to consume in third world countries is very high. This leads to low savings, low capital formation, low investment and low productivity. The end results are the vicious circle of poverty which, without sounding a false alarm, is the picture of Nigerian economy.

In order to break this vicious circle of poverty a meticulous identification, evaluation and appraisal of viable projects in terms of small capital outlay, local raw materials availability, cheap manpower requirements and availability of sustainable high market demand, low but nonetheless appropriate technology, employment generation and incremental gain among others, have been carried out by this writer. The end result is that toilet roll production, even at a small scale level fits well the technologically, the payback period short and economically very viable if properly managed.

This brief write-up seeks to enlighten any interested investor, businessman on what it takes to set up a profitable toilet roll manufacturing plant.

For Whom?

The prospective beneficiaries of this project include: pensioners, and retirees, (civil servants, uniformed personnel, OPS), unemployed school leavers, those currently working but who want to have a running side project into which to transit smoothly, entrepreneurs who want to diversify into a profitable, low capital based small scale business.

Market potentials

Toilet rolls are consumed on daily basis by all and sundry irrespective of age, social class or religious divide for sanitary and cleansing purposes.

They enjoy high aggregate demand in places like households, hotels, schools, hospitals, various types of institutions, parties of sorts, canteens, churches and mosques. Others are maternity centres, offices etc. The beauty arsenals of any lady are not properly assembled and deployed without a toilet roll, a permanent of their handbags. Can you imagine a world without toilet rolls?

Toilet rolls have a high repeat sales tendency which is fuelled by such factors as increasing social and sanitary awareness of the need for hygienic and good quality living standard, geometrically exploding population, continued drift from the rural to the urban centres in search of the better things of life and job opportunities, affordability of the product price etc.

The market for toilet rolls has been well established and developed. It is large, expanding and sustainable.

The country's population which has been estimated in 2000 to be in the neighborhood of 120 million grows at an annual rate of 2.831%. In addition the ECOWAS has about 300 million people with similar growth rate.

What this translates into is that any ventures into this lucrative toilet roll production business will tap into the already existing and expanding local and export markets.

The disposal of finished goods will not pose a serious problem as large and medium scale distributors with adequate purchasing power can be appointed in nearby urban centres to handle the selling function. The fewer these are the better for the manufacturers because of the debt collection problems involved when there's a proliferation of small distributors/agents, some of them may not be honest. The entrepreneur must be prepared to part with a reasonable percentage of the unit sales price and allow some days of credit sale to induce continued patronage by the distributors.

My recent research findings reveal woeful supply inadequacy Vis-a Vis demand for toilet rolls thus creating a gap yearning for quick satisfaction. Nigeria alone needs over 950 million toilet rolls per annum out of which local supply through production meets only 150 million. This enormous demand supply gap translates into a viable investment opportunity for any entrepreneur that exploits it. For such a determined investor, the illusion created by the sight of many people hawking toilet rolls of various types and their packing in stores and warehouses should be discarded as it doesn't portend market saturation but rather that the products is in high daily demand. To confirm the veracity of this assertion, one needs to go observe the many lorry loads of toilet rolls being carted away daily from the warehouses of major distributors.

Enterprising traders from ECOWAS daily besiege Lagos markets in search of toilet rolls and other toiletries.

Their bulging lorry loads of merchandise as they speed home to go and sell and come back bear an eloquent testimony to this.

Do I hear you say: 'ah, does it mean that I will not have competitors? Of course you will have; there is competition even if you have only two producers or service produces. But the assurance you have in toilet roll production is that the prevailing competition is not such as will rock the boat.

You are on a safe landing coast based on our experience and research funding.

Raw materials needed

The essential raw materials needed are the jumbo reels, core paper and white glue while the packaging materials are the wrapping paper on which the producer's name, address and brand name will be conspicuously printed, cellophane, staple pins etc.

Each of these is obtainable locally from suppliers. The jumbo reels are either pure white or off white. (greyish in colour).

Pure white sells for between N160,000 and N165,000 per tonne while off white sells currently between N95,000 and N100,000 depending on your source. From each jumbo real, one can produce 20, 000 double ply toilet rolls in an ideal situation. Details will be given to prospective investors on contacting the writer.

Needed equipment

The relevant machinery and equipment, all of which are obtainable locally are: Core cutting machine Core gluing machine

Jumbo reel winding machine Band saw cutting machine

These have been tested, found to be reliable, rugged, long lasting and high performing by those who have been using the plant. The equipment supplier grants guarantees of 3 years for their performance, will install, test run the plant and train the prospective investors staff etc before handing over the factory anywhere in the country. This is to ensure that the entrepreneur does not have any start up problems associated with machinery and equipment. It should be noted that prospective investors can as well import these machines from some tested foreign machine producers on contacting the writer.

The rated daily input is one metric tonne of jumbo reel. This gives an output of 20,000 2-ply toilet rolls. This means that if you work 250 days a year, you will turn out 5 million toilet rolls or 108,167 packets of 4 dozen each. If this output seems too small for your liking, you can either increase the number of machines or the number of shifts worked or a combination of the three.

Given the above scenario, if the current demand supply gap of 800 million toilet rolls per annum is to be filled, all things being equal, it means that not less than 160 additional toilet roll producing plants of the same capacity as above will have to be established (by straight forward arithmetic. Ideally, this should be slightly less for obvious reasons) and kept running daily nationwide.

In terms of factory space, a three bedroom space or duplex is ideal to house both the plant and raw materials. Of course you can build a factory if you are contemplating a bigger plant. You can also hire a warehouse type of accommodation.

Production technology

After you have selected and purchased good quality jumbo reels, received and stored them, the production of toilet rolls involves the following brief processes. First, the core paper is fed into the core making machine from two different rolls and glue applied.

The core pipe length is determined and cut. Jumbo reels are fed into the jumbo reel making machine with the core pipe from the core making machine. The jumbo reel sheets are wound or wrapped round the reel to be made. The jumbo reel sheets are wound or wrapped round the core pipe automatically by the reel to be made.

This is now sent to the band cutting machine where the toilet roll tissue paper is cut into desired market sizes.

The cut toilet rolls are then manually wrapped, packaged in cellophane wraps, stapled and sent to the store ready for sale.

Labour requirement

Not more than five production staff will be needed based on experience.

Project financials

The sum of N4, 702,000 will conveniently set up a toilet roll plant to produce 5 million toilet rolls per annum.

Generally and based on experience, establishing and running a toilet roll factory is a very lucrative venture if due diligence is given to good management practice. From an input of 250 metric tonnes of jumbo reels and after making allowances for expected wastages, and operating at 40% utilization capacity, gross profit of N21,8 million will be made within first year of the business. Deducting annual operating cost of 14.7 million, profit before tax of 7.2 million would be recorded in the first year of operation. Deducting the annual taxation of 2.2million, net profit after tax of 4.96 million would be recorded. Further analysis of the investment revealed that percentage return on sales would 22.7% while percentage return on investment would be 137.0% (as shown below).

This is not considered bad at all given the prevailing economic climate.

Various funding options are open to the entrepreneurs. Of course the newly established SMIE small and medium scale equity investment fund can also be considered.

Should you need assistance in setting up the above project either by way of further information, incorporation of the company to implement the project, preparation of a realistic, comprehensive and bankable feasibility report, machinery and. equipment sourcing, fund sourcing and negotiation, please get in touch with the writer.

*Uba can be reached at Global Trust Ventures (Nig) Ltd 56, Ishaga Road (lst Floor) Surulere, Lagos Tel: 4721550, 08023664368 Email: ubagodwin@yahoo.com