Chennai: ''Selling toys is certainly not child's play. One has to address - and impress - three individual minds with three different attitudes,'' says Funskool India chief executive Raphael Kuriyan.
''While the customer is the child and the mother is the executor of the child's wishes, it is the father who holds the purse strings,'' he says. ''Apart from bargaining with the toy-seller, the father strikes a deal with his child, that s/he will secure good marks in school exams before parting with his money.''
Divya Ragunathan, a tenth standard student, smiles: ''[What Kuriyan says] is true; I had to face such situations several times.'' And, of course, the mother cannot be ignored. ''If you have to sell babies' toys, it is she who has to be targeted,'' says Kuriyan.
Funskool is a 60:40 joint venture (with a Rs 4-crore equity-base) between the Chennai-based tyre major MRF and Hasbro International, the world's largest toy manufacturer. Funskool, which has a turnover of Rs 45 crore, used to import moulds for making toys for the domestic market earlier, but recently it reversed that trend.
Competing with several companies in China and other markets, Funskool developed a mould for the 'Action Hero' toy, one of Hasbro International's fast-moving children's fancies. ''When major Indian toy players are importing the product, we are exporting it to the global market,'' says a beaming Kuriyan.
An engineering graduate and a business management post-graduate, Kuriyan is arguably the most-experienced person in the domestic toys industry. Recently he spoke to domain-B about his company's future plans and other issues pertaining to the industry. Excerpts:
What is this industry's domestic market-size? And at what rate does it grow?
The industry is dominated by small-scale units, so it is difficult to give you an exact figure. Based on the market feedback I would conservatively estimate the market-size to be in the region of Rs 500 crore. There are others who estimate it at Rs 1,000 crore. Talking about Funskool, our sales and profit grew by 20 per cent during 2001-02, while exports went up by 30 per cent.
How is Funskool planning to cater to Hasbro International's global market needs?
We have designed two toy moulds for Hasbro's popular toy range, Action Man, a $800-million brand. We did this after obtaining the concept from our foreign partner. Competing with us were Hasbro's other outfits located in countries like China. Hasbro will need at least 5 lakh numbers of each toy and we will stamp them out with our moulds. This is the first time that an Indian company has designed a mould for toys and exported them.
As you know, toys and dolls do not possess a strict geometric shape, and they have lots of moving parts, thus complicating the mould designing. The standard procedures of mould making do not apply to our industry. We started our exports in 1995, assembling the imported components and taking advantage of the cheap labour. Going up fast in the value chain, we started to import moulds to manufacture and export toys. With the cost of moulds increasing constantly, we decided to design the moulds ourselves with concepts borrowed from our collaborator. Our next step is to make toys for international markets with our own concepts.
What are the market dynamics of this industry?
The product lifecycle is short - one to three years. Every year we launch at least 50 products. Over the last 14 years we have produced around 600 products and of that just 250 are alive today. The Indian market is vastly different from that of overseas, where toys are bought as a child development aid; they are considered as equivalents to books. Toys, I should say, provide lots of content for child development.
But in India the scene is different. Content and quality are the major drawbacks here. Toys' bad quality - blame our unorganised small players - not only spoils our market but the child's mental development. Toys should be rugged to withstand child handling. But toys made by small players crumble faster because of bad quality inputs. Unfortunately even educated elders blame children, instead of blaming the manufacturers, for selling bad quality toys.
You mentioned about the short product lifecycle. Is it possible to resurrect an old game or toy to address the new generation?
Resurrection or regeneration of old games and toys generally does not work. On the other hand we alter the content of an old toy/game and relaunch the same.
The new concepts in toys, like GI Joe, Action Man, Bat Man and others, are foreign. Why can't we initiate well-known Indian concepts - say, images of Arjuna, Duryodana, Karna…?
I always face this question. For any child - Indian or foreign - a toy is just a toy. There is no need to differentiate between an Indian and a foreign concept. Having said that we do design or modify some games to reflect the Indianness in them. For example, we have cricket games, which are more relevant to India. Some of the games we import are slightly modified to Indian interests. For instance we slightly Indianised Monopoly.
But we want to keep away from selling mythological toys to avoid any controversies. For instance, if I make Duryodana somebody might raise an objection about the size of the doll. Once a customs official held back our import of Batman dolls on the ground that it is an animal image and falls under restricted list.
How do you design your games and toys?
We have three sources - our collaborator, in-house development, and buying ideas and concepts from individuals. In the latter's case we pay royalty to the game inventor. One of our popular games, cricket, was conceptualised by a young boy some years back and we still pay him royalty.
Which are the segments you are going to focus in the future?
In the board games category we have a wide range of products. We came up with lots of content in the board games. Next year we will be focussing on war games for boys. We have a whole range of action figures like GI Joe, Action Man, Batman and Super Man. The other major line is a toy that kindles the child's creativity. We have Playdoh, a clay-modelling toy. We also have a major presence in the pre-school children toys segment. Now we are building up strength in the girl children area. Here we hope to play the price game - our doll Sindy is competitively priced.
China has started exporting a slew of toys. How serious is the Chinese threat?
The toys that are currently imported do not have much content, and we don't face any threat. Most importers are first-timers and they discard toy imports due to poor margins. Generally imports increase the domestic price points, and they are actually good for us. Chinese products may be a threat in the future when toys with good content are imported. But even then my margins will not be affected, as my cost of production is very low.
What is your view about the Tamil Nadu Pollution Control Board's (TNPCB) campaign saying that toys made from PVC are dangerous for kids? Safety of toys is one of the issues that has assumed importance now.
There are international quality standards for toys. We are working with the Indian government to evolve such standards here. The Bureau of Indian Standards has drafted a standard for toy manufacturers, but meeting them is not compulsory. Apart from the durability factor, quality in toys means being non-toxic and not injurious to children. Coming to TNPCB's move against toys made of PVC, my view is that the campaign is an ill-advised one.