DC CORRESPONDENT
September 04, 2014
The organised players in the domestic toy industry are moving out of the business as they are finding it difficult to maintain minimum margins due to cheap imports from China, mostly through unofficial channels.
As per industry experts, manufacturers need to earn a margin of atleast 30-35 per cent to stay afloat whereas they are now able to generate only 10-15 per cent margins on their business due to low cost imports from China.
“Some of the Chinese products are sold at a price that is lower than the cost incurred for just raw materials by the domestic toy manufacturers. Some of the electronic toys imported through unofficial channels are sold at unbelievably low prices,” said Bhavesh Sheth, director, Plastech International.
For example, he said, if a toy manufactured in India is sold at Rs 100, an imported toy from China with all similar features and characteristics are sold at Rs 40– Rs 70.
Experts said that the domestic toy manufacturers need a minimum margin so that they could invest in new technologies, machinery, R&D to expand their business operations.
“The unorganised market occupies the low value space where overall revenue does not scale up to make it a big value industry. Due to the dominance of the unorganised players in the domestic market, most of the organised toy manufacturers are registering a de-growth or have decided to move out of the industry,” said Adnam Chara, vice-president, gaming, telecom and toys, Mitashi Edutainment.
The organised toy business in India is about Rs 500 crore while the imports through unofficial channels are estimated to be around Rs 1,500 crore. According to Mr Chara, 31 per cent of the population in India is between the age group of 0-14 years, which offers great opportunities for the toy manufacturing industry.
