BPPL plans regional expansion
BPPL Holdings PLC, makers of sanitary and janitorial products, is aiming for growth through their new yarn plant this year while aiming to go to other regional places to offer solutions to plastic waste issues, officials say.
Being a solutions provider to plastic waste has bode them well as their quest to make plastic that behaves like fabric, or fabric that has all of plastic’s wonderful qualities through plastic bottles has brought new lines of business to the country. As it were all the PET (polyethylene terephthalate) bottles end up in landfills or the Indian Ocean where it can take over 1000 years to degrade. So, BPPL uses 15 to 20 per cent of PET in their manufacturing which helps eliminate this issue to a certain extent.
“Recycling for sustainability is what our business is about,” BPPL Managing Director Dr. Anush Amarasinghe told the Business Times in an interview this week. Recycling is done through BPPL’s main subsidiary, Eco Spindles. This company has two plants – recycled polyester yarn plant with brand new German technology and a recycled brush filament extrusion plant. Dr. Amarasinghe noted this is a year of consolidation for them with these two plants and that they are seeing steady growth in brush manufacturing. But the company in the 1HFY19 saw slow growth in the brushes segment which was largely due to space limitations on input filaments for the brushes as the existing filament extruders reached capacity during the period.
Brush filaments are made with PET bottles and also polypropeline which is the second-most widely produced commodity plastic. When using PET bottles, recycled ones are used while virgin materials ( which is twice more expensive than recycled materials) were used. The company's gross margins were lower during the second quarter of the current year as the last quarter was affected by a higher proportion of plastic brush sales made with virgin polypropylene as against recycled polypropylene.
As a result of this issue, Eco Spindles came up with products that can use recycled polypropeline as well. This is what prompted the company to fast track their new filament extruder plant, Dr. Amarasinghe explained.
To make recycled polyester, BPPL cleans and sorts bottles (that are collected across the country through a network of collectors) at Horana and places them into a machine that chops and grinds them into miniature bits. The small pieces then get melted, and the softened plastic gets pressed through a plate that has a number of tiny holes in it, similar to the old Play-Doh, a modeling compound used by young children for arts and crafts. The plastic comes out in thin filaments forming a yarn that’s ready to weave into recycled polyester and filaments. Eco Spindles processes over 250 tonnes of PET bottles a month.
Major global sportswear makers use it for their shoe uppers, t-shirts etc. Dr. Amarasinghe noted that it takes 10 bottles to manufacture a t-shirt, 27 for a graduation gown and 63 for a sweater.
The group’s products that use polypropeline were researched and developed, tried and tested on their shop floor. Dr. Amarasinghe noted that only 30 per cent of the group’s total cost is imported. “The rest is made within Sri Lanka. The level of value addition within BPPL is really high."
The group supplies brushes for professional use where cleaning is far superior to domestic cleaning needs are such as construction, oil and gas and food (McDonald’s, Burger King and Starbucks). All their industrial products are exported to places such as the US, Canada, Australia and New Zealand. They also have a strong presence in Netherlands and the UK.
In their unaudited financial results for the nine month period of April to December 2018, BPPL's consolidated revenue for the period was Rs. 2 billion, marginally up over the corresponding period in the previous year.
Gross profit for the period was marginally lower at Rs. 694 million, although gross margins for the quarter picked up to match those of the third quarter of the previous year. A higher effective tax rate of 14 per cent compared to 9 per cent in the April to December 2017 period also limited ProfitAfter-Tax attributable to the company’s shareholders to Rs. 216 million or Rs. 0.70 per share, compared with Rs. 295 million or Rs. 0.96 per share for the corresponding period in the previous year.
The higher tax rate was following a hike in corporate tax rates in the November 2017 government annual budget as well the ending of a tax holiday for the group’s filament and yarn production subsidiary in March 2018.