Soft Touch Limited

Financial year end 30 June 2020

Soft Touch Limited (STL) is an Australian public company. The company is not listed. It manufactures high-quality toilet paper and tissues in two states, Victoria and Western Australia using Australian wood chips. STL commenced operations in 1992 and maintained slow but steady growth over the years. Its major customers are the large supermarkets: Coles, Woolworths, IGA and Aldi. It also sells to smaller outlets, such as pharmacy stores.

STL has had a tumultuous 2020. The bushfires throughout Australia in January and February led to a shortage of woodchips from its usual suppliers, reducing STL's ability to maintain its manufacturing processes. Fortunately, by the end of February, STL was able to source additional supplies of woodchips, albeit at a significantly higher cost. In March toilet paper and tissue sales increased exponentially due to toilet paper and tissue stockpiling associated with COVID-19. This made access to sufficient woodchips even more difficult.

The company initially responded to its increased orders by extending its manufacturing hours by 2 hours a day and offering overtime to its fulltime staff and additional hours to its casual staff. However, this was not sufficient to meet demand, and the company doubled its normal employee numbers by hiring more casual staff and operating its manufacturing processes 24 hours, 7 days a week for 6 weeks from the middle of March to the end of April. Manufacturing was then decreased to 24 hours for 5 days a week. Unlike the normal 2 week induction period for new staff that the company had previously offered, the new workers hired at this time were provided with a one-day induction and then went straight on to the production line.

The company has two delivery drivers who normally deliver to the supermarkets large central warehouses and pharmacies. The drivers worked extensive overtime during this period. However, due to the inability to meet demand, STL ceased deliveries to small pharmacies, forcing them to find other suppliers.

As a result of the huge surge in demand for toilet paper and tissues, other companies have entered this market. To establish themselves these companies have offered their products at a discounted rate. They have become the preferred suppliers to the pharmacies where STL ceased deliveries.

By the end of June, demand for toilet paper had fallen to pre-COVID-19 levels and the company held a large inventory of both toilet paper and tissues in its warehouses.

The company is audited by Contessotto, Perera and Chandra (CPC), a mid-tier audit firm located in Melbourne. CPC has audited STL since its incorporation.

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