Mthembu Tissue Converting (MTC), which received funding from the Industrial Development Corporation (IDC) in 2017, is targeting a R1 billion annual turnover by 2025 and the establishment of branches nationwide. The 100% black-owned tissue manufacturing company, based in Durban, Kwa-Zulu Natal, used the IDC loan to purchase energy-efficient equipment to expand its production capacity and increase efficiency and speed of its production line.
Founded by its Chief Executive Officer, Thembinkosi General Mthembu, in 2005, the company manufactures serviettes, one-ply and two-ply toilet paper and paper towels for petrol stations and kitchens – for both the household and industry markets. The company started with 37 employees, today they have 103 full time employees on our books. In May 2018, the company also launched its own toilet paper brand called Cloud Nine, which is already being distributed to different supermarkets in the retail market.
In addition to manufacturing tissue paper for the Twinsaver Group, MTC also manufactures a special tissue brand for giant retailer, Game. Mthembu, who started the company in 2005 after having worked for Nampak Tissue for 24 years, says the company has come a long way during its 13 year existence. Mthembu started working for Nampak Tissue in 1981 as a packer and moved up the ranks until he was Production Manager. After experiencing slow business for several years at its Durban manufacturing plant, Nampak Tissue decided to close shop in 2005 and sold the plant to Mthembu. “Nampak Tissue sold the Durban plant to me when they closed down their operation, and I became their supplier. We produced 400 tons of tissue for them in our first month of operation.” Mthembu says.
Although the company got off to a good start, there was one big challenge, “Most of the operating machinery we inherited was old and needed to be changed,” Mthembu says. The company purchased new machines in 2007 and 2008 with a R14 million grant from the Department of Trade and Industry (dti) and a R33 million loan from the IDC, Mthembu says they have now replaced 85% of the machinery inherited from previous owners. “When I applied for the Black Industrialists grant at the dti, they advised me to approach the IDC for a loan to increase my capital. The loan we received from IDC was a good investment and we have already started to see the good results in our production and profit even though we received the loan only recently. We now have a machine that produces 1.7 million units of serviettes per day. We are growing as a business and the future is looking good for us”.
Mthembu says the success of his business lies in meticulous attention to detail and compliance to industry standards. The company is fully licensed and accredited as a tissue manufacturer and acquired ISO 14000 in 2014 from the South African Bureau of Standards (SABS), “We have just upgraded our ISO to 27000. We do not cut corners as a business because there is no place for that in this industry,” Mthembu said.
For more than a decade, their quality products have helped position MTC as a reputable manufacturer and right now Mthembu feels it is the right time for the company to go big, “We have been buying raw material to produce our products, but we now intend to own the production of raw materials ourselves so that we own the whole value chain- from producing raw materials, to using them for manufacturing.”
Management have started working on a business strategy to realise this dream and that of reaching a R1 billion annual turnover, “They have opened three more branches in Johannesburg, Port Elizabeth and Cape Town. With its newly purchased machinery from the IDC loan, the company has now reached capacity to produce 2700 tons of tissue per month, a significant increase from the 900 tons they were producing,” said Stuart Bartlett, Head of Developmental Impact Support at IDC.
The company has set these high growth targets in order to realise its ambition of supplying tissue to the export market. He adds that they did not have these ambitions in their 13 year history because it was important for them to first entrench themselves and take time to study and analyse the industry, its trends and patterns. But now, MTC is ready to strike and its administration is rock solid. The company has fully fledged Human Resources, Finance, Quality Control, Maintenance, Warehousing, Safety and Risk, and Distribution departments.
“MTC was one of the black industrialist enterprises for which we approved funding in 2017. They have done well in a very competitive industry and created eleven jobs following our investment,” said Zama Luthuli, Divisional Executive for Corporate Affairs at IDC. The value of IDC funding approved for black industrialists in 2017 was R796 million, up from R316 million in 2016. IDC’s funding for black-empowered companies, black industrialists, women and youth entrepreneurs increased significantly in 2017 as the corporation ramped up funding for economic transformation.
Recently Mthembu’s business acumen has received acknowledgement from various sectors. In 2017 he was voted African Black Industrialist of The Year by the All Africa Business Leaders Awards (AABLA). He was also awarded the Platinum Technology Award in Germany earlier this year. With a founder like Mthembu, who is an astute businessman, the company’s goals are achievable.
By Jabulile Zwane