Akij Poly Fibre Industries Ltd.

Value Chain Management Process

Letter of Transmittal

28 March, 2011

Mr. Shawkat KamalCourse InstructorBusiness StrategyBRAC Business School

Sub: Submission of term paper.

Dear Sir,

It is our pleasure to submit the term paper on “Value Chain Management Process of Akij Poly Fibre Industries Limited” as a part of our course of Business Strategy (MGT 401).We enjoyed preparing this term paper, which help us to enrich our knowledge of the theoretical concept. We tried to reflect the practical operational aspects of the manufacturing industries, which is complementary to the theoretical lesson.We are very glad that you have given us the opportunity to prepare this term paper and gather some new and very important knowledge. We hope that this will meet the standard of your judgment.

Faithfully Yours,

Sabrina Safa (ID-07104087)Sharmila GuptaPartho Kumar Mohonta (ID- 08304103)

Acknowledgement

Our purpose of the report is to know the value chain process of Akij Poly fibre industries. For

these purpose we needed many resources to get the full information. We are a group of five

members and without the help of others it is not possible to make the report done. In every step

of this study, many individuals and institutional experts supported us. We respect them

wholeheartedly and gratitude them for their inspirational help.

At first we would like to respect our honourable Lecturer, Shawkat Kamal, BRAC Business

School, BRAC University for giving us the opportunity to learn about the value chain process,

specially the production process of Akij Poly fibre industries and also thankful for his continuous

help when we get any problem, he was always there. Second most importantly we also thankful

to the DGM of Marketing Mr. Jasim Uddin, Factory Manager- MR. Jahangir Hossain who gave

us the permission to visit the factory. Our special thanks to Assistant manager Mr. Mashudur

Rahman who gave his valuable time to let us know the whole production process of the factory.

At the end of our acknowledgements we want to give warmest thanks to our group members

without whom this team effort cannot be successful and end of the report each and everyone’s

work has been appreciated by all members.

Executive summary

Poly fibre industry is one of the most newly emerged sectors in Bangladesh. This sector has been

developed in our country depending on the cement industry. But, most of the time, it is

considered as a backward integration for our growing cement industry. The necessity for this

industry has been realized after 1990s from the time cement industry started to develop: before

1990 there was no poly fibre producing company in Bangladesh and then cement was imported

from China. In 1990, Poly Fibre industries first produced double-ply bags for cement processing

in which a craft paper was attached inside the bag for protecting the cement from moisture. But

double ply bag could not protect the cement from outside dust that much. To solve this problem

in 2003 Shah Cement first introduced the single-ply bag. But commercially Akij Poly Fibre

industries introduced it to the market. Now a days, demand for poly fibre bags are growing

rapidly with the market for cement especially in the developing countries. The main

specialization that makes the Akij Poly fibre bags better than the others is its outlook and shape.

Akij also don’t use fly ash that some other companies use. There is a dimension for the bag

where they strictly maintain strength, shape and color for the bag. For the operation of poly fibre

three basic elements are needed. The virgin material is considered as poly propylene which is

imported from UAE, Australia, Korea and also Dubai. This poly propylene is a by product of

petroleum. After that the second core material is used is calcium carbonate which is used for the

better strength of poly fibre.

The operation process has six steps. The first step is called Tapeline. The operation process

starts with making yarn by mixing the three materials- Poly Propylene, CaCO3 and Master

Beige. For the operation they bought a machine Star EX from the company Star lingers. In the

next part the tape bring into the Loom department, where the yarn sew through knitting machine.

Then the fabric comes out with a shape of tube. Thirdly, lamination is very important process for

protecting the cement from outside moisture and strengthens the bag. Lamination specially has

done with poly propylene and LDPE in coating machine. Fourthly, printing steps comes where

the factory use the printer named Dina flex which has been specialized for Flexo printing. Here

they use water base printing with low ink consumption. After that, in the fifth step every part of

the bag is attached in the machine of Roll slitter by giving hit of 650OC. finally in the sixth step it

is called Sack press. Here, the bags the taken into a bunble and then it s sent into the cement side

for pouring cement. The operation process is finished here.

After that we came to know about the competitors. There are so many competitors of Akij Poly

fibre in recent time. Many companies are starting produce Poly fibre bags for cement. The main

competitors of Akij Poly fibre industries are Shah Cement, Bengal group, Tiger Brands, Global

by Meghna group, MDC by Madina group and very recently Bashundhara group also starting

this business. After that comes the marketing and distribution process of the company. Akij Poly

Fibre Industries don’t have any specific distribution channel. They go directly to the buyers to

sell their product. They go to every potential buyer and show the advantages of their product by

showing samples. They mainly target the cement producing company in Bangladesh only. Akij

Poly Fibre Industries don’t do that much advertisement. They advertise their product through

their marketing people. The Marketing people go to the buyer directly and show their product.

They always try to give the best services to the customer. To ensure the service quality they call

their buyers by their own.

These are the total value chain process of Akij Ploy fibre. They are operating fully automated

factory which has both positive and negative side.

Table of Content

Chapter No. Chapter Name Page No.

01

02

03

04

05

06

01

Introductio

n

Poly fibre industry is one of the most newly emerged sectors in Bangladesh. This sector has been

developed in our country depending on the cement industry. But, most of the time, it is

considered as a backward integration for our growing cement industry. The necessity for this

industry has been realized after 1990s from the time cement industry started to develop: before

1990 there was no poly fibre producing company in Bangladesh. In 1990, Poly Fibre industries

first produced double-ply bags for cement processing in which a craft paper was attached inside

the bag for protecting the cement from moisture. But double ply bag could not protect the cement

from outside dust that much. To solve this problem in 2003 Shah Cement first introduced the

single-ply bag. But commercially Akij Poly Fibre industries introduced it to the market. Now a

days, demand for poly fibre bags are growing rapidly with the market for cement especially in

the developing countries.

Objectives

Our main purpose of preparing the report is to have some knowledge on poly fibre industry’s

total value chain process which is actually quite new for us. Moreover, we want to introduce

with:

The production process of poly fiber.

The ingredients or materials use to make this product.

The distribution & marketing strategy.

Methodology 02

Our main report is to know about the total value chain process of Akij poly fiber

industries and mostly the operation process because it emphasizes more on operation. For

these reason we collected data from various sources. First we collected primary data from

the head office of Akij Group, 73, Dilkusha C/A, Dhaka-1000 by an appointment with

Mr. SK Jasim Uddin who is DGM of marketing of Akij group on 22nd March. We went

there with a permission letter from BRAC University assigned by our course instructor

Mr. Shawkat Kamal and they approved it and we got permission to meet Mr. Zahangir

Hasan who is a factory manager of Akij Poly Fiber Industries and to visit the factory. We

got permission to visit the factory on 24th March, 2011 at 3:00 pm. On the assigned date

we all group members started from our BRAC University campus on a Micro Bus at 1:00

pm. We were a little late to start due to our makeup class. There were a huge traffic jam

and that’s why we were also late and on the way we took gas from CNG Station. That

time we had little snacks from a food corner beside the CNG station. However, it was not

that difficult for us to find out the location and the factory road was so good. After

reaching there we came to know that some days before our Prime Minister Mrs. Sheikh

Hasina inaugurated this road. Then at 3.30 we reached at the factory and there we signed

on the visitors book and sat on the cabin of Mr. Zahangir Hasan. Then we were served

snacks with Mojo cola and we waited. They delightfully offered lunch. We waited there

for about 30 minutes as the appointed persons were too busy. After taking snacks we met

Mr. Zahangir Hasan and Mr. Mashudur Rahman. Mr. Mashudur Rahman who is the

assistant manager gave us his valuable time and discussed the total value chain of Akij

Poly Fiber Ind. Ltd. and also answered our queries. From this discussion session we

collected our most of the information. After finishing the discussion we went to the

factory at 5 p.m with him. It took one and half hours to visit the whole factory. He was

that much energetic person because he showed us each and every step of the operation

with lots of patience to understand the whole process of production. After the visit we

03

had tea & biscuits, took some snaps in front of the factory and started for our home at

7:00 pm. And reached at home around 10 p.m. However, Mr. Zahangir was too busy and

he was not in his cabin and that’s why he could not give us time.

Besides our visit, Mr. Mashudur Rahman gave us other relevant information by e-mail

later on.

Limitation

We have faced the following limitations while preparing our report:

We cannot take pictures inside the production area due to some restrictions of the

company.

We have some problem in understanding some mechanical terms as we were not quite

acquainted with this industry.

Due to the company’s policy we can’t get some information regarding pricing and

other issues.

04

Company Overview

05

Akij Poly Fiber Ind. Ltd. is one of the sister concern of Akij Group. Akij Group has a family

oriented business founded by Late Sheikh Akij Uddin. As mentioned before, it is considered as

the backward integration for Akij Cement Ltd. Basically, Akij Group started in late 1940s with

Jute mills. Later on, its business segment started to increase and at present total business sector is

22 (twenty two) like Akij Jute Mills, Akij Bidi, Akij Food & Beverage, Akij Cement, Dhaka

Tobacco, Akij Textile and others. In the current year Akij group has launched another two

business sectors; they are- Akij Ceramics & Akij Melamine. There are about 100000 people

working in various sectors of Akij group.

Akij Poly Fiber Ind. Ltd. started its operation in 2009. It produces only single ply bags for Akij

Cement and above mentioned clients. It has only one factory situated in Nabiganj, Kadam Road,

Narayangong. The distribution & marketing activities also operated from its factory mainly.

06

Product profile

Akij Poly fibre Industries mainly produced the single-ply bag for cement. Single-ply Bag

produced with some specialization that helps to protect cement from outside moisture. Because,

outside moisture can hamper the cement. The main specialization that makes the Akij Poly fibre

bags better than the others is its outlook and shape. Akij also don’t use fly ash that some other

company use.

Dimension: Width- 390mm in the middle & 110mm in two sides.

Length- 610mm-630mm

Strength: Normally this type of regular single-ply bag can afford 4 to 4.5 kg normal weight

where Akij bag can afford 5.5 to 6.0 kg weight which elastration ability is 25 kg which has

extreme strength to resist in 10 to 15 hands of delivery to its ultimate user.

Elasticity: Standard elasticity of poly fibre maintained by AKIJ is 22-25 Newton.

Colour: Colours depend on the customer demand. But we found them to produce specially two

colours- golden & White.

Shape: Shape also depends on the customer demand. But they suggest the buyers about bag

shape according to their demand. But the specialization of Akij Poly Fibre Industries is

producing brick shape bag which is modern and good looking.

07

Price Comparison

The company has many competitors in market now and they maintain a high policy. For this

reason they do not reveal their price rate to anyone. But normally their price rate is between BDT

15- 18 per bag. Different company charges different prices and also charge low price so we can’t

get specific idea of their pricing, rather a range of price.

08

09

Procurement

For the operation of poly fibre three basic elements are needed. The virgin material is considered

as poly propylene which is imported from UAE, Australia, Korea and also Dubai. These poly

propylene is a by product of petroleum. In Saudi Arab, one of companies named SABIC is doing

the job of bringing these polypropylene from petroleum. They are involving almost 35 million

workers in operation and in processing of bringing these polypropylene. This polypropylene they

get from the upper level of petroleum. After that the second core material is used is calcium

carbonate which is used for the better strength of poly fiber and thirdly master beige which is

light brown element and is used for the color when color is needed.

At the time of coating, secondly LDP (Low Density Poly propylene) is used for better strength.

Raw Materials: Poly Propylene, CaCO3, Low Density Poly Ethylene (LDPE) and Master Beige

Yarn color.

10

11

Operation

Tape Line: The operation process starts with making yarn by mixing the three materials- Poly

Propylene, CaCO3 and Master Beige. For the operation they bought a machine Star EX from the

company Star lingers. This machine has 3 different compartments for yarning. First there is a

parameter is used to measure quantity of materials. After that through the tape line 3 materials is

mixed together through melting and a sheet is made. Then a blade is used to filter the dust and

after that it is put into cold water of 20 degree centigrade to make it stronger. After that it enters

to a well protected oven to make the sheet smooth and elastic by giving hit of 390 degree

centigrade. Then finally the yarn comes out in form of bobbin.

Loom: In the next part the tape bring into the loom department, where the yarn sew through

knitting machine. Then the fabric comes out with a shape of tube. Then the tube shape fabrics

cut into three different shapes in three different machine.

Lamination: Lamination is very important for protect the cement from outside moisture and

strengthen the bag. Lamination specially has done with poly propylene and LDPE in coating

machine. LDPE specially use pasting the bag to make the bag strong.

Printing: The name of the printer is Dinaflex 4 which specialized for flexo printing. They use

water base printing with low ink consumption. Firstly they paste the required design in a mold.

Then the mold put into a slender. Then the fabrics roll into the fabric roll. Then different parts of

the bags print differently. Then the fabric roll again into a fabric roll. The machine print through

Anilox roller which has 80 whole per cm thus the print can be done with high longevity. In the

12

Anilox roller there is ink chamber in which ink controlled by a bled. They use Doctor Grade Cut

ink, which make the printing colour from their competitors. After printing they do Corona

treatment to increase the longevity with 24000 voltages. There is a laser ray safety around the

machine. There are two cameras, one inside the printing machine and one outside the machine to

observe the machine works.

Roll Sliter: After printing the different parts of fabric start rolling in different slinder.

Ad*Star kon 60: In this stage all the different part join together through a machine. The

machine needs 650OC. There are 2 lines in the machine to join two sides of the bag. There are

five different parts join together. After joining all the parts together the machine make two

wholes in the entrance place. Here the finished bags come out from the machine.

Before making bundle of the finished product group of workers give the sill for date on the bags.

Sack Press: In this step workers make bundle of the finished bags. There are maximum 200

pieces of bags in a bundle.

Truck loading: The final steps is to load the truck with finished product.

13

14

.

Distribution

Akij Poly Fibre Industries don’t have any specific distribution channel. They go directly to the

buyers to sell their product. They go to every potential buyer and show the advantages of their

product by showing samples. If the buyers convinced to take product from them they can give

orders. To give the orders buyers have to pay the price first to ensure the order. After getting the

orders they start production. After completing the order they first clear VAT for all the finished

goods. Then they send the order to the ordered place at time.

Marketing process

Target Customer: They mainly target the cement producing company in Bangladesh only.

Before they sold their products to MTC, Bashundhara cement, Rubi Cement, Premier Cement

and their number of sold was 45lacs begs per month. But now they only sale their products to

Scan Cement, Crown Cement and Lafars Cement and now they sale about 30lacs bags per

months. But they have a plan to export the foreign customer in future.

Competitors: There are so many competitors of Akij Poly fibre in recent time. Many companies

are starting produce Poly fibre bags for cement with the huge demand for the fast growing

cement companies. The main competitors of Akij Poly fibre industries are Shah Cement, Bengal

group, Tiger Brands, Global by Meghna group, MDC by Madina group and very recently

Bashundhara group also starting this business.

Advertisement: Akij Poly Fibre Industries don’t do that much advertisement. They advertise

15

their product through their marketing people. The Marketing people go to the buyer directly and

show their product and describe its advantages and also describe how the product is better than

the others.

Services: They always try to give the best services to the customer. To ensure the service quality

they call their buyers by their own. They call the customers to know that are they satisfied with

their product or not, are they facing any problems. They also give after sales services directly

going the customers place.

16

17

Supporting Activities

Research & Development: Poly Fibre bags are something that actually doesn’t need any

special development. They just try to development in processing thus they can reduce wastage in

production and the breakdown at work.

Labour Management: In Akij Poly Fibre there are a total of 208 labours at present. Among

them 125 labours are permanent, 36 are non permanent 35 are daily labours and 12 labours are to

be appointed.

Working hour- Working hour is 8 hours per shift. There are 3 shifts a day.

Requirements

The labors working there must have to be 18 years and above.

The must be HSC passed.

Training- Akij Poly Fibre Industries arranges in house training for their labours.

General Administration:

As Akij Poly Fiber is very small business segment of Akij Group, it does not have any complex

hierarchy. On the top of the organization Akij Poly Fiber have chairman. Beneath chairman they

have a managing director. There are two directors who are working under the managing director.

Akij Poly Fiber is under supervision of a factory manager and one assistant Manager

(Production). The factory manager directly reports to the Managing Director. The HR of Akij

Poly Fiber is supervised by one Deputy Manager. Marketing activities is managed by the

Marketing & Sales department of Akij Cement. In this department, there is a Deputy General

Manager. However, distribution & logistics of Akij Poly Fiber is operated from the factory under

supervision of the factory manager. All accounts issues are handled by the accounts & finance

18

department of Akij Group under a small sub-department for Akij Cement & Poly Fiber.

Administration of Akij Poly Fibre Ind. Ltd.

Chairman(Mr. SK Nasir

Uddin)

Managing Director

(Mr. SK Bashir Uddin)

Director(Mr. SK Shamim

Uddin)

Director(Mr. SK Jamil

Uddin)

Deputy Manager, HR & Admin(Mr. SK Jafor

Uddin)

DGM, Marketing(Mr. SK Jasim

Uddin)

Factory Manager(Mr. Zahangir

Hasan)

Accounts Department

Asst. Production Manager

(Mr. Mashudur Rahman Khan)

19

Appendix

Process Diagram

Please see the next page

Printing

Input OutputFabric (Meter) with coating, Red/Blue ink, Thinner, Accelerator, Reterder etc.

Printed Fabric (Meter)

Loom

Input Output

Tape (In form of bobbin)

Fabric (Meter)

Tape Line

Input OutputPP,CaCo3 & Master Beige (Color)

Tape (In form of bobbin)

Lamination

Input Output

Fabric ( Meter) Fabric (Meter) with coating

Roll Slitter

Input OutputPrinted Fabric (Meter) for top/bottom/valve.

Roll (Pieces) for top/bottom/valve

AD*STAR KON 60

Input OutputPrinted Fabric (Meter) for body, top/bottom & valve

Finished Bag (Pieces)

20

From the bottom of the previous page

Sack Press

Input OutputFinished Bag (200 Pieces in a bundle)

Compressed Bundle

Truck Loading

21

SWOT Analysis

Strength

Good quality product

After sales service

Commercially first mover

Very good manufacturing plant (Automated machines)

Opportunity

Global Market

New comers in Bangladesh (Cement producing companies)

Weakness

Over price

Fully automated machines- so hard to find mechanical lickage if there is any problem.

Lack of efficient labor

Poor management/inefficient management

They have no well developed website

Ni advertisement and well developed marketing plan

Threat

Local competitors (Cement companies are coming with their own poly fibre plants)

Threat if latest technology

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