Plastic bottle is one of the ubiquitous objects in our environment nowadays. Bangladesh manufactures, uses and discards a staggering 400 core PET bottles a year and spends $ 225 million importing, PET resins, raw materials for manufacturing them. While some of these bottles are refurbished and recycled, a troubling amount of it is discarded just after one-time use and thrown away to landfills around the country. Moreover, plastic bottles are nonbiodegradable and are seriously hazardous to the environment.
But what if you could recycle these bottles and help create jobs and simultaneously address an environmental problem and make money?
This is what Bangladesh Petrochemical Company (BPCL) in Dhaka precisely doing. Founded by Khadem Mahmud Yusuf, the startup recycles discarded plastic bottles to produce PET resins, the raw material for manufacturing plastic bottles and fabric, while saving the environment and foreign currency and creating jobs in the process. The company now produces 400 tons PET resins a month and employs 200 people.
The Beginning
Born and raised in Dhaka, Mr. Yusuf attended Government Laboratory High School and Dhaka College and went to the USA in 1988 for higher studies. He holds degrees in electrical engineering from Washington University and Texas A&M University. After working for 17 years in Silicon Valley he returned to Bangladesh to found and subsequently sell Alap Communications for BDT 300 million, a broadband wireless network company he co-founded in 2003. After that, Mr. Yusuf went on to work for Nokia-Siemens Network where he stayed till 2011.
“After leaving Nokia-Siemens in 2011, I helped my now chairman of BPCL with managing a project at Eastern Refinery building Oil infrastructure,” says Yusuf in an interview with Future Startup. While working on the project, he used to visit the Eastern Refinery in Chittagong on a regular basis.
“I started to realize the importance of energy and found it very interesting and tried to dive deeper into the industry,” says Yusuf, “that’s when I decided to do my next project on somewhere along the line of energy and part of the idea of BPCL came to being.”
That’s when Mr. Yusuf first came to know about PET resins from General Manager of Eastern Refinery but it was made from a different material called Naphtha. The project was too complex and costly to pursue but Mr. Yusuf remained passionate about the PET resins and recycling.
“I did some research and came to know that PET was being produced in Europe through a reverse process, for instance, Italy, Germany, and Austria were producing PET from waste bottles,” says Yusuf. In order to understand more deeply, he went on to a trip to Austria, Italy, and Germany in August and September 2012 and visited plants and vendors. “It fascinated me very much”, says Yusuf.
After returning to Bangladesh, he conducted a research to understand what’s happening around it in Bangladesh. “The research further revealed that the wasted bottles were being exported to China. And in return, China used to export PET resin back to Bangladesh. That’s when I finally designed a business plan to use these bottles and BPCL came to exist.”
Funding
“Everyone was quite skeptical at first,” says Yusuf, but I was lucky to have a couple of investors who were convinced and agreed to invest. “I started with around BDT 30 million external cash investment, and around BDT 7 million from my savings,” says Yusuf.
Later, DEFTA Partners from San Francisco, USA approached and expressed their interest. “We took a loan of BDT 250 million from Islami Bank putting the land up as collateral. It was later increased to BDT 280 million. As we’ve been able to build it as an environmentally friendly company, IDCOL decided to increase the investment from 280 million to 550 million BDT last year,” adds Yusuf.
The state of the union
The company now employs 200 people and has 2 collection hubs in Hazaribagh and Basabo, and planning to build a third one in Mirpur. It also works with 57 suppliers from across the country.
The company has started production in October last year and gradually stabilizing. The average capacity of the plant is now 400 tons a month. “We have plans for an expansion to 1000 tons month within the next year”, says Yusuf. Currently, Bangladesh imports 12,000 tons of raisins per month.
BPCL now meets around 3% of the total needs of the local market and after expansion that will amount to 7%-8%. Its customers are mainly bottle-makers, such as AST Beverage, Meghna, Olympic and some others.
Challenges
The key challenge for BPCL is to ensure quality and maintain safety. “The bottles we produce are used for storing water and other beverages,” says Yusuf “a little carelessness in our process can bring about catastrophes. This is why we have to be very meticulous in examining the bottles we bring in for recycling which takes up a huge amount of our costs.”
Educating customers is also a challenge for BPCL since people perceive recycled products as of low-quality. “More critically, people here do not believe that a Bangladeshi company can produce quality materials from waste. However. we are doing well since there is a demand for PET resins and our product is price competitive,” says Yusuf.
The company aims to reach the break-even within June next year. BPCL has no local competition yet, But it competes against imported Virgin products.
The Future
“We are planning to expand our production capacity,” says Yusuf, “which we hope to be able to implement by 2018 or 2019.
The company also wants to get into packaging. “People have become quite sensitive about how their products are presented to them,” says Yusuf, “there is growing demand for packaging of all kinds of products. We have advantages in some areas and we want to explore those areas.”
