Exclusive | Aiming for INR 17 - 18cr in FY'13 - 14: Toy-Kraft's Shyam Makhija

Toys are undoubtedly any child’s best friend. They are useful not only in terms of entertaining a kid but have also helped in developing diverse skills while playing. Education and learning during play are important attributes which are passed on to the child. A toy which communicates this in a large measure can be termed as an edutainment toy.

As education is foremost on the Indian parents’ mind, they look out for toys which provide educational value through play. Here again the dividing line of education vis-à-vis play varies from toy to toy. Some experts are of the opinion that most toys provide educational value as children love to investigate and probe their actions.

To know more about the growing and evolving toy industry, we at Adgully caught up with Dr. Shyam Makhija, Director – Business Development, Pegasus Toy-Kraft 

Private Limited. Dr. Makhija has a rich experience of almost 20 years in the Toy Industry and is responsible for Sales, Marketing of the toy range. Having a research background, he also looks at ideation, creation, development and design of new toy products.

When asked to give an overview of the toy industry, Makhija said, “From a purist’s point of view we can look at an edutainment toy as one which provides direct and immediate educational learning through play. The categories which fits the bill most appropriately is educational jigsaw puzzles, tile puzzles, memory based games, do-it-yourself art and craft kits, builder blocks and construction sets. There are a large number of Indian manufacturers who have toy products in these categories.”
The manufacturing technology for these categories is not as challenging as against other toys such as die-cast metal cars, fashion dolls, higher end infant and preschool toys or even radio controlled toys.

“The one important factor - toy innovation and original content leading to Intellectual property of the edutainment toy is unfortunately very miniscule among most of the local manufacturers. The majority of the manufacturers resort to rampant copying and piracy/pass-offs is very common. This is inexplicable as one of the important advantages that the country has is a large pool of intelligent brains and designers. This has not been exploited resulting in a poor contribution from our country to the world market,” lamented Makhija.

Speaking about the differentiating factor of Toy-Kraft that sets it apart from other toy manufacturers in its category Makhija elaborates, “Toy-Kraft manufactures a wide range of toys providing children with a stimulating platform that fosters personal expression and intellectual growth. The toys provide vistas in opening a child's mind to new ideas and skills. Innovation, design and vivid graphics are the hallmark of all the company’s products. Whether it is play or educational value in a preschool toy, assembling skills in a construction kit, creative ability in the craft and hobby range or learning skills encountered with puzzles and board games – all the products have been carefully researched and developed with these values in mind.”

Since the company’s inception in 2007, a diverse portfolio of state-of-the-Art toys has witnessed strong consumer interest. So much so, that the company has earned an unparalleled 15 toy awards in 4 years of Toy-contests.

The company manufactures more than 200 toys and this entire operation is made possible by an early implementation of ERP software which is now being utilized to streamline all the key operations. Being progressive, the company has recognized the importance of systems for the future growth.

Forays in In-store branding & promotions at Hypercity, Reliance, Odyssey, Landmark, Hamley and Crossword chain of stores have strengthened the customer’s acceptance of the product-line.

“The Toy-Kraft brand is being recognized by consumers as a quality and value for money toy range. The product has also an exclusive visibility at 22 Mahindra Resorts in the country and art and craft activity is conducted at these resorts with products in this range,” Makhija explained when asked how tall Toy-Kraft stands viz-a-viz competition.

The estimated size of toy industry at retail prices is $ 600-650 million (Rs 3500-3900 crores) only, out of which the organized sector contributes just 20%  Makhija believes that the turnover industry as projected by the TAI is grossly exaggerated by almost double the realistic figures. This he says is evident from the turnover of the two largest toy companies in India who contribute below 10% of the industry and they have a market share of as high as 25-30 % in the modern retail trade format.  The Indian manufacturing industry contributes to around 25 % of the total but if we look at edutainment toys the manufacturer’s contribution would be higher at around 35-40%.

While sharing with us  a sense of the market share  specifically of edutainment toy industry in the total toy market of India vis-a-vis the international scene, Makhija says “Most of the branded imports come from die-cast metal cars, radio controlled toys, upper end infant and preschool toys, fashion dolls, collectibles etc. The unbranded imports again do not contribute significantly to the edutainment toy kitty as they mainly comprise of action toys and also those based on light, sound and motion. On the international front the size of the Industry is pegged at $82 billion and so it is evident that we do not even contribute to 1% of the world market of toys!”
When asked to share his view on competition and how he would place Toy-Kraft  in the market share scene, he said, “There are not many companies who manufacture 

exclusively edutainment toys. There are less than 10 companies whose average turnover would range between 10-20 crores at retail prices. Most of these companies have been in existence for more than 20 years. Toy-Kraft is projected to do a turnover of around 17-18 cores in the current financial year.”

Makhija then went on to enumerate the various edutainment toys that are most popular in India. “There are a large number of such toys which do sizable numbers and the most popular amongst these in my opinion is the Rubik’s Puzzle cube,” he said.

Toy-Kraft recently launched an entire new category of toy products under the Acorn brand which comprised 50 innovative jigsaw puzzles and educational aids. Elaborating further on that, he said, “So far the category is replete with standard puzzles which do not have extended utility and value based learning with the target group. The new range from Toy-Kraft incorporates some very novel and multi-level play options.”

Some of the products – especially in the craft and hobby section also incorporate traditional Indian values. The board games and teaching aids are original scores and impart high learning skills. While some of the metal construction toys provide an ideal platform for a budding engineer or architect to stimulate learning in this specialized skill.

Stating the key markets for this industry and Toy Kraft, specifically Makhija informed that the Industry sells through organized and unorganized Retail and some players sell through E-Commerce portals. He says in today’s scenario there are even fewer manufacturers who export toys.

Toy-Kraft sells its product-line through Organized Retail (Modern Trade) ; Network  of  pan  India  distributors  (around  40)  who  supply  into  the  retail market ; e-commerce portals ; company’s own webshop ; as an OE supplier to other toy assemblers ; corporate accounts and lastly exports.

Sharing about  the key growth drivers for edutainment toys Makhija says, “The  toy  libraries  –  schools  and  private  operators  are  one  of  the  drivers  for popularizing  this  category.  The  pan  India  presence  of  large  number  preschool players  has  also  contributed  to  the  growth  of  this  segment.  E-Commerce is emerging as a strong platform for parents who can now have a bigger portfolio of toys to select from compared to what is available at a neighbourhood store.”

Since the target consumer viz. kids are a tricky set of people, how is the marketing/promotion and advertising for these items designed and planned? Answering that Makhija said, “Selling educational toys poses a challenge to manufacturers as toy preferences among Indian children is driven by TV serials. Most urban children want to play with toys which are character based or with the popular category of fashion dolls and cars which are associated with big brand names. So most manufacturers of this category address the parent and talk about the strong USP of learning through play in their sales and marketing pitch.”

“With toys as a product we believe in demonstrations more than anything else. As an alternate and direct interaction, we conduct workshops at retail floors and even at preschools. We also take part in exhibitions in which the products are sold after explaining their utility,” he added.
Shedding  light  on  the  business  gains  from  both  online  and  retail models and how  e-commerce contributes to the business at Toy Kraft Makhija said,
“The modern trade of Organized Retail stores has helped the brand grow because the product line is visually merchandised much better here. On the other hand the E-Commerce portals give the company an opportunity to showcase the entire range to the customer. We are expecting to see the web business grow 10 fold in the next 3-4 years.”

At Toy-Kraft the main USP of the brand of being Creative and Innovative has kept competition at bay both in India and overseas markets. Buyers are always on the lookout for something new and that has been a hallmark of their success.

In the recent times the Indian buyers perception of ‘toys’ is usually stereotyped with the notion of ‘Made in China’. When asked if this industry is threatened by the Chinese market Makhija opined, “Ever since the Government opened up the market for imported toys almost 15 years ago there has been a deluge of toy imports from China. This was only to be expected as China caters to 70% of the world toy market. The industry there has a strong ancillary support and caters to all sorts of markets. Even today, around 75% of the Indian market for toys comes from China. In recent times with the appreciation of the Chinese Yuan against the Dollar, increased wages for Chinese labour and also the depreciating Rupee against the dollar has seen a marginal slowdown in import of toys from China.”

Speaking about how the tough financial conditions have impacted the toy industry, Makhija explained, “The present difficult economic scenario has impacted the overall toy industry including edutainment toys very badly as toys are not the primary items in the shopping list of the consumer who is currently cash strapped. The slowdown in sales in the current year in the Industry through a random survey shows a drop of around 20-25%.”

“At Toy-Kraft we had foreseen this development and concentrated more on exports and brand building. To circumvent the slowdown we have made initial forays in the C and D category retailers in metro and tier 1 towns and also entered the smaller tier 2 and 3 towns for the first time,” he added.

He is of the opinion that the edutainment toy industry is expected to grow much faster than the toy industry in general as more new methods of teaching are being followed by the schools. “We are hopeful of maintaining the growth that we have achieved. We are also very optimistic of striking new business alliances with International toy companies who value our IP,” concluded Shyam Makhija.

Today standing as the India’s manufacturer and exporter of value based and cultural based edutainment toys, Toy-Kraft moulds the tender minds of children’s inquisitive and alert minds in line with learning with joy. It offers a wide range of toys providing children with a stimulating platform that fosters personal expression and intellectual growth.