HATIBANDHA, Bangladesh (AFP) - Every year, Bangladesh's garment sector produces billions of dollars worth of high-street clothes for major western brands -- and generates mountains of fabric offcuts in the process. While an informal recycling sector has sprung up to deal with the scraps of leftover jeans and T-shirts churned out by the country's 4,500 garment factories, it produces only low-value products for domestic consumption. But one Bangladeshi entrepreneur has found a new, more lucrative way of dealing with the estimated 100,000 tonnes of scrap fabric the garment sector produces each year: making rag-rugs for export. "The rags produced by the garment factories are seen as worthless waste but I saw that they could be a way to build a business -- then Kik picked up my products and everything started to take off," Tauhid Bin Salam told AFP. Tauhid set up his company, Classical Handmade Products Bangladesh, in 2008 and has now built it into a successful business with an annual turnover of 80 million taka (1.2 million dollars) and a workforce of 530, mostly women. Tauhid's first buyer, German company Kik Textilien, is one of Europe's largest textile discounters with a presence in six European countries. It primarily sources its low-cost goods in China and Bangladesh. His four factories are stretched across the impoverished north of Bangladesh, where non-agricultural work is scarce and his rag-rug factories provide a valuable source of jobs, especially for rural women. Traditional garment waste processing units tend to be concentrated in Dhaka, where nearly 11,000 people are believed to work in the informal sector, recycling garment factory waste into cheap clothes for domestic sale. Tauhid's factories are now producing some 80,000 rugs a month, all of which are exported and sold in Germany, where Kik is preparing for the usual Christmas surge in sales at its stores. "We are now planning to increase the volume of our orders and begin selling those rag-rugs in other European countries such as Austria and Slovenia," Petra Katzenberger, Kik's corporate social responsibility manager, told AFP. The rugs have proved a big hit in Germany, as they are cheap, unique, handmade and environmentally-friendly, said Daniel Seidl from the Bangladesh German Chamber of Commerce and Industry. "Nearly three percent of all Germans now own one of these rugs," Seidl told AFP, adding that this was about two million people. Tauhid uses only 100-percent cotton scraps from the best quality clothes to produce his rugs, saying that the company could easily expand as there is so much scrap waste to use up thanks to Bangladesh's booming garment sector. Fabric scraps are collected in huge bales from garment factories, taken to Tauhid's factories where they are sorted into different colours and trimmed into long, thin strips of cloth. These strips of cloth are then woven by hand into rugs using a traditional wooden hand loom, and while the size -- 60 cm by 90 cm (about two feet by three feet) -- is uniform, each rug's pattern is unique. "Every year, a large garment factory will produce enough scrap material to make one million rugs," Tauhid said. There are up to 600 large garment factories in Bangladesh -- defined as a factory which employs over 1,000 people -- out of a total 4,500 factories overall.