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Investing in reels manufacturing plant

By Godwin Uba
02 November 2021   |   2:29 am
COVID-19 pandemic has not only affected the way businesses are now run, but also changed the nature of investments. With the new normal now here, investors have begun to look for profitable businesses...

COVID-19 pandemic has not only affected the way businesses are now run, but also changed the nature of investments. With the new normal now here, investors have begun to look for profitable businesses that would not expose them and their workers to much risk. One of such businesses is the manufacture of reels; a major raw material for the production of toilet rolls and serviettes.

Nigeria with its many small and medium scale firms producing toilet rolls and serviettes has only two companies in Lagos manufacturing reels. These two companies are overburdened serving the various companies in the country and the neighbouring West African countries. This means there is a great vacuum in the reels and toilet papers production sector to be filled by investors.

Although, establishing the plant may be cost intensive, investors will not regret their efforts, as demand for the products is very high, which makes the gestation period for profits to start coming in soon afterwards. The major raw materials, including waste and convertible papers needed, are available locally. Also, the manufacturing unit can be set up in any urban area in the country.

With teeming population and the need to maintain a good hygiene at homes and in public spaces, it becomes necessary to include toilet rolls and serviette as one of the daily need products — meaning a huge market for toilet papers and tissues. Tissue papers are used for diverse purposes, hence the products are found in hospitals, offices, homes, social gatherings, shops, hostels, among other places.

According to research, Nigerians yearly demand about 800million tons of toilet rolls and serviettes, while the total production and supplies are less than 100 million tons per annum. The shortfall of about 700 million metric tons comes form Brazil, Germany, Netherlands, UK, among others.

To set up a reel manufacturing company, a prospective investor needs two plots of land or its equivalent. The raw material, which comprises waste papers, can be got from printing press, schools, and offices, among others. The core papers, however, from paper dealers.

The proposed plant has three main parts — stock preparation line that converts sorted wasted papers into refined pulp. Tissue making machine that converts refined pulp into jumbo tissue rolls and the auxiliary section that completes the production line.

An average machine operates at 85 per cent of its installed capacity working three shifts of eight hours each for 300 days in a year.
From research and investment analysis, N370,953,000.00, which covers production cost, marketing and administrative expenses, will yield N570,240,000.00 in a year, leaving a gross profit of N199,287,000.00. This is, in fact, encouraging for any small and medium firm in the country.

This could be through the Federal Government assisted programme, as government has currently released over N500 billion through CBN for small and medium scale industries in the country. Anybody with good business plan will benefit from the fund. There are also other financial institutions and Special Project Funding Organisations that may want to partner with you.

With a minimum of 12 workers the project is on the go. For further details on procurement and installations of machines (both local and foreign), preparations of comprehensive and bankable feasibility studies/reports, sourcing of the required funds as well as other investment advisory services contact the writer.
• Uba is from Global Trust Consulting. Tel: 08034494437(WhatsApp), 08023664368. Email: ubagodwin@yahoo.com