Case Studies

CONTENTS
Page No.
1 Introduction 1
2 Manufacturing Unit 1: Mumbai 2-10
3 Manufacturing Unit 2: Chennai 11-13
4 Manufacturing Unit 3: Mumbai 14-16
5 Manufacturing Unit 4: Uttar Pradesh 17-18
6 Manufacturing Unit 5 : Uttar Pradesh 19-20
10 Manufacturing Unit 9: Delhi 31-32
11 Manufacturing Unit 10: Delhi 33-34
13 Manufacturing Unit 12: Delhi 39
14 Manufacturing Unit 13: West Bengal 40-41
15 Manufacturing Unit 14: West Bengal 42-43
16 Manufacturing Unit 15: Karnataka 44-45
17 Summary of Industry Requirements 46-48
18 Study Team 49
Case Study Report Productivity and Competitiveness of Indian Toy Manufacturing Sector
Diagnostic Case Studies

Introduction
This report contains diagnostic case studies of fifteen toy manufacturing units selected from
seven different toy product categories. The study focuses on unit specific problems related to
production, raw material availability, marketing, finance, productivity, export performance
etc. These case studies also throw light on other aspects of the working of these units such as
product range, market scenario, taxation structure etc.
Though the manufacturing units produce a wide range of toy products, for the study purposes
the units have been broadly grouped under seven major product categories. Number of
manufacturing units taken up for detailed case study based on the seven major product
categories are given below.
Product categories and the manufacturing units studied:
S. No Product category Manufacturing units

1. Manufacturing Unit
1 Educational Toys
2 Wooden Toys 7. Manufacturing Unit
Soft Toys 8. Manufacturing Unit
4 Plastic Toys 9. Manufacturing Unit
5 Vinyl Toys 10. Manufacturing Unit
6 Metal Toys
7 Traditional Toys 14. Manufacturing Unit
National Productivity Council, New Delhi Page 1
Manufacturing Unit 1: Mumbai

Product category: Educational Toys
About the Unit
This unit has been in the business of toys, games and puzzles meant for young children. It is a
small scale family business, based in Mumbai. They focus on providing good quality and safe
toys that help in teaching the children and improving creativity of the child, at prices that a
common man can afford. They have 64 product categories under construction kits, art hobbies
and craft kits, alphabets and numbers.
Objective of the company:
The objective of the company is to see the constant growth of the company as a whole
including the share holders, customers either external or internal, suppliers and all others who
are directly or indirectly related to the company.
Mission:
Their mission statement is:

¾ To be the company that sets standards in the children Edutainment industry.
¾ To make intellectually stimulating and visually appealing products which are cost
effective to share holders, clients, customers and the ultimate consumers – the
children.
Present Scenario:
Number of workers in the unit, at present, is 150 out of which 125 are unskilled and 25 are
skilled. At present they have two types of products that they export; (1) The goods they
manufacture and send to the market themselves (2) The goods they manufacture for other
companies abroad. However, their manufacturing capacity is limited at present. Their export
has declined from Rs.42 lakhs in 2006-07 to Rs.18 lakhs in 2007-08. They are working
towards becoming manufacturing base for foreign buyers.
Marketing Strategy
The Indian toy market is on the highway to growth and has the potential to become one of the
largest toy markets in the world. This is due to the high rate of population growth and the
increase in GDP and personal incomes. Also, People are getting more aware of the
importance of toys in shaping various aspects of children’s development and hence, giving
them a holistic growth. Earlier, the market was flooded with imported and cheap toys from
China. But, increasing awareness about the health hazards caused by these toys has forced
people to away from them slowly. Retailers have now started giving more shelf space to
Indian products replacing the Chinese ones, which shows that the market is becoming more
favorable towards the Indian manufacturer.
Competition from other Indian manufacturers:
With the reduction in imports of Chinese products, the unit is looking at stiffer competition
from Indian counterparts. Indian toy manufacturers have learned a lesson from the imports
and have become more aggressive than ever. Now, the prices offered are very competitive as
well as the products produced are in direct competition to their range. The only thing that
helps the unit sustain is the perception value of their products and the brand image that has
been created around their products in the mind of the consumer and the customer. Their
quality has also kept them ahead of the pack.
Market Segmentation:
The customers or end users who buy their products are basically of two types:
(a) Children: Children are the end users for most of their products. They play an influential
role in the buying decisions. This group mainly looks for fun and appeal of the product.
(b) The parents or guardians: This is the group that actually pays for the product but may
not be the end user of the product. They mainly look for simplicity of understanding, ease of
use, monetary value changed and educational or creative value. When parents buy the
product, it may be for use by their own children or as gifts to other’s children on various
occasions like birthdays.
Strategy and Implementation:

Strategy adopted by the company is based on three important modules: Product, Price and
Place.
Product: As seen earlier their product range consists of 64 products. These products have a
very high standard of quality which is above the market average. The second noticeable thing
about their products is their perceived and play value, which indicate the monetary value of
the item. The third strength of the products is their packaging and designing. All these factors
put together make their products noticeable on the shelf and fulfill their basic purpose. Now,
they are setting up a system which will help them introduce, on an average, 2 to 5 new
products every month. They have got EN-71 73 certification for lot of their products.
However, the bulk of the products have not been certified as the testing process is relatively
expensive. The products having the certificates are doing very well in the European markets.
Price: Their pricing system is cost plus mark up. They will be following this system in the
future too. This ensures their prices to be quite competitive compared to the product quality
they offer. For exports they have based prices on the FOB values, and provide their products
at that rate. These FOB rates are comparable to their wholesale rates.
Place:
Local markets: For the Indian markets they will follow the current system, that is appointing
distributors in various cities across the country. These distributors will be responsible to
distribute and market their products in their specified territories. This will be for the
unorganized and small/local retail shops only. For the large format stores and malls they will
distribute directly. This kind of distribution will ensure maximized distribution and also make
sure their products are available and pushed through all the retail shops. Slowly they will
introduce new clients in unrepresented areas as distributors till their products are available in
almost all cities.
Export markets: At present they have two types of products that they export
1. The goods they manufacture and market themselves.

2. The goods they manufacture for other companies abroad.
They export their products when they get an enquiry from a foreign buyer .The buyer may or
may not give them a repeat order. This is a very unorganized way of doing exports. The other
way is when they manufacture for another company. At present they are sole manufacturers
for a European company. This is the model they would like to focus on and get more such
companies to invest. Thus they would be the manufacturing base for foreign buyers. However
at present their manufacturing capacity is limited. They are also negotiating for manufacturing
with two other companies a Dutch company and a German company. This should take effect
and show results by the end of this year.
Problems faced by the unit:
1) Space requirement: At present the unit has area of just 10,000 square feet. Hence faces a
lot of space constraint. They have to their working environment which further causes losses in
damages as well as oversight, and wastages. It also reduces the output as the working
environment is not perfect for their employees.
2) Labour: The other major requirement they have is labour both skilled as well as unskilled.
There is a shortage of labour as enough workforces is not available. Another problem they
face is the extra money that they need to pay to the ‘Mahtadis’.
3) Double level taxation: Since their unit is in Navi Mumbai they face a higher level of
taxation in the form of Cess with no other tax benefits. They have an ongoing battle against
the Municipality v/s the association for entry taxes, which also is being paid to MIDC, their
proximity to Mumbai warrants that a lot of goods to be reshipped outside Maharashtra and to
pay octroi. All the raw material and semi finished goods they use are octroi paid which makes
their products even costlier.
4) Electricity: The other major input required by their firm is electricity. For working, all
their equipment requires a lot of electricity which is not available at times due to power
shortage.
5) Availability of Raw Materials: Raw materials used by them mainly include paper board,
plastic as well as metal. The unit faces problems in procuring these materials as the sellers of
these materials manipulate prices and also resort to hoarding to increase their profits. More
details about these would be available from TAITMA..
6) Lack of cheap and easy availability of Finance: One of the most important issues they
face as toy makers is the cheap and easy availability of finance. If they are able to overcome
this issue then they can easily overcome the factors like:
a) Lack of space.
b) Inventories.
c) Stock keeping.
d) Vendor management etc.
7) Lack of latest technology and knowledge about material and processes : The toy sector
being in nascent stages does not have easy access to technology or the proper use and
maximization of the same. Usage of new processes, better production practices, etc, is not
widespread, as mostly new technology is very expensive as well as quite well guarded.
8) Lack of trained manpower: A lot of factors from designing to manufacture to inventory

management all require certain set of skills from a person. However being a small unit they do
not have the expertise as well as the funds to search and employee people suitable to these job
profiles.
9) Distrust about the Indian Brand: They have been exhibiting in the Nurnberg Toy Fair
for the past 5 years, and have noticed that people do not trust an Indian company to give the
right quality and products at the right time. There is distrust amongst importers from around
the world on this fact.
Suggestions by the manufacturing unit
1) Easy and cheap availability of Raw materials: There have been a number of occasions
when they have not got raw materials for production, or that the raw material prices have been
hiked up for vested interests of major corporations. This makes it almost impossible for them
to live up to the price commitment that they have given to foreign clients. They could
probably have a buying unit that negotiates the rates of the raw material with the
manufacturers on behalf of the entire or majority of the toy industry so that the bargaining
power increases tremendously as the quantum of material required multiplies number of
times. Thus material can thus be distributed to participating companies at the procured rates,
thus improving their competitiveness in the international markets. This method is bound to
work, as this system is followed by certain other countries, and thus the material imported
from India is cheaper to them than what rate the unit purchase at.
2) Availability of infrastructure: Every toy manufacturer in India is miniscule as compared

to their counterparts mainly in China. The smallest Chinese companies are at least 10 times as
large as the largest Indian manufacturer. The main hurdle that Indian companies face is space
crunch. Mostly the Indian units are working in small galas in industrial areas, and so cannot
expand their manufacturing capabilities and are unorganized, for lack of space. Also the
revenues generated from these units are very minute as there has been intense competition in
terms of price from other countries. It is almost impossible for such a manufacturer to think of
putting up an organized unit and they do not have the luxury of space to help them. There was
an international company that was looking to shift a part of its production to India from
China, and they did visit various companies throughout the country. They were impressed
with the unit’s setup but unfortunately they had a minimum requirement of at least a 120
molding machines with the capacity similar to their machines. This was not feasible as the
units do not have the space of money to invest. Therefore, the company still produces in
China completely. The government could help them in a way by providing land to toy
manufacturers to setup their units. It is not a very farfetched idea since lot of state
governments do provides such benefits to bigger corporations, as it improves the employment
scenario.. Since, the toy industry is highly labour intensive, employment potential is very high
in this sector; and hence,it deserves all possible encouragement.
3) Free Training Seminars: Majority of the Toy companies are small scale to medium scale
units. These are mostly run and owned by families. These owners do not have the money or
resources to employ professionals to run the various aspects of their unit. They themselves
rely a lot on experience to run their companies and these techniques may be out dated and old
fashioned. Most are not even aware of the major aspects of negotiating, exhibiting, and
dealing with people from various countries. They do not possess enough soft skills or hard
skills to compete in the international market place. They are very good at production and
factory management but lack the skills of promoting, interacting, convincing, negotiating, and
selling to potential clients from various countries. To get over this shortfall, there can be
interactive training seminars held from time to time to empower them with a variety of the
skills they lack.
4) Setting up Guiding Centers: The industry has a tremendous lack of knowledge, in various
skills, and techniques. They need to learn how to handle people and situations. We also need
to learn a variety of other skills including costing, production planning, and inventory
management systems. However this will not be possible to amass these skills even over a
period of time. Guiding centers or consulting bodies may be set up that can advice or give
guidance when there is an aspect where such help is required.
5) Cheap & easy availability of funds: To run a company smoothly and with a good deal of
efficiency there is a constant requirement of fund management and flow. This is where a lot of
the industry gets stuck. Since most of the units are small scale and are family run businesses,
the funds flow is very slow. Also the cost of money is very scary with the competition level
increasing; it becomes even harder to borrow money at the prevailing market rates. All these
facts keep the money inflow or the capital to a very low level, and this barricade cannot be
broken until there is a cheaper access to funds. A body can be set up which can have a study
of the various toy companies, and the companies that this body recognizes as potential and
has promise can be provided funds at a much cheaper rate to improve and strengthen their
growth, locally and internationally.
6) Technology up gradation benefits: Small scale toy units do not have access to more
expensive technology and most of the time there is no awareness of technology. There could
be various field trips to places that are very successfully using technology to improve every
aspect of accounting, purchasing, inventory management, quality control, production,
marketing and sales. A lot of Indian companies have implemented world class technology, but
the toy companies, do not have access to it. Also there can be B2B meetings set up with such
technology providers who would like to implement their technology in the toy industry. They
could also have seminars where the benefits of the same are highlighted. Also to assist in the
implantation of such technology there should be means of cheap funds availability.
7) Tax exemptions for experimenting and nurturing: Major change and improvement will
only become very evident and visible over a period of time. There will definitely be a need to
keep the process up and improving. For the same, there are a lot of places where there are
certain kind of tax exemptions for particular periods. However, it is not always practical to be
located in these specified areas. Therefore, some benefits are provided to units located outside
such zones.
Recommendations:
1) Special schemes for easy and cheap availability of funds, for capital and asset building
reasons. The funds required are a lifeline of any company. There should be an
arrangement where manufacturers have easy access to cheap source of funds.
2) Easy availability of good quality and competitively priced raw material. The raw
materials especially plastic, paper and metal are all owned by large corporations, who
dictate the terms of trade. These materials should be made available freely with good
quality and fair price.
3) Special schemes even during the incubation period before exports can be established,
not only after exports actually take place. Before exports can be established, a
company needs to earn the confidence and acceptance of the foreign company as
capable and reliable supplier. This takes time, effort and money. The current benefits
are all available after the actual exports have taken place. These kinds of benefits, with
least number of paper work or human intervention should be available for a certain
period, before the actual exports can take place.
4) Training on soft skills and export produces. Almost all the toy industries are family
run business with little or no soft skills or interpersonal skills that is required when
discussing with potential clients or foreign partners. These skills could be taught at
seminars or development programs.
5) Setting up of a consultation body to help remove doubts, and consult in matters that
need special skills and knowledge. These will help the company at any point where
they get stuck due to l imited knowledge, or experience.
Skilled Unskilled
Sales Value Export
Sr. No. Years Workers Workers
(Rs. Lakhs) (Rs. Lakhs)
(numbers) (numbers)
1 2005-06 225.86 - - -
2 2006-07 447.04 42.18 20 100
3 2007-08 514.56 18.56 22 110
4 2008-09 - - 25 125
Capital Investment
Wages & Salaries
Sr. No. Years (Book Value)
(Rs. Lakhs)
(Rs. Lakhs)
1 2005-06 9.14 5
2 2006-07 18.01 14
3 2007-08 18.24 -
4 2008-09 - -
Manufacturing Unit 2: Chennai

Product category: Educational Toys
Company Background:
It was set up in the year 1987. The commercial operations began with the setting up of a
factory at Goa with all the machinery and equipment to manufacture high quality toys. To
cater to the increased demand a second factory was set up at Ranipet, about 100 miles from
Chennai.
The main objective of the company is to provide well researched, time-tested, safe, durable
toys which offers excellent play value for children. They believe that fun and learning forms a
natural alliance. Infants, toddlers, pre-schoolers and grade school children can learn as they
play with their toys. The wide range of toys help children of all ages to improve hand-eye-co-
ordination, auditory discrimination, motor skills, creativity, logical thinking, problem solving
skills, vocabulary and even general academic intelligence. Their product categories; Infants;
Preschool; Creative; Play-Doh; Game;Eduline; Puzzles; Mega Blocks
Present Scenario:
Currently, the company manufactures and exports a large number of products for their
international partner. Their products are exported to all major countries across the world.
They also undertake orders for other private concerns. Their hallmarks are compliance with
international manufacturing norms and adhering to time bound delivery schedules. All the
products/toys that are produced in the unit are in compliance with the European Standard,
Safety Parameters of Toys (EN71).
Technology:
Multiple Technologies :
Some of the technologies that are used are listed as below:-
Injection Moulding Box Making
Blow Moulding Game Board Making
Rotation Moulding Shrink Wrapping
Sonic Welding Wood Working Saw
Thermo Forming Wood Working Machines
Pad/ Tampo Printing Cross Cutting Machines
Embossing/ Hot Foiling
Hair rooting for Dolls
Machines
Spray Painting Board Sizing Machines
Safety: All the products/toys that are produced are in compliance with the European
Standard, Safety Parameters of Toys (EN71). The product has to pass all the required tests as
per EN71, before it is taken up for production.
In the manufacturing process, every hour, they have a quality inspector who does the
inspection/checks of the items/product produced. The process of manufacturing / Type of
product / qty produced at each stage is noted and checked as per EN71.
Productivity Estimation:
Sales value Import Export
Year (Rs. Lakhs) (Rs. Lakhs) (Rs. Lakhs)
2004-05 3145 219.86 1063
2005-06 4174 778.85 1155
2006-07 3999 885.08 778
2007-08 4256 786.58 775
2008-09 4770 1072.00 698
Unskilled Wages & Capital

Skilled Workers
Year Workers Salaries Investment
(number)
(number) (Rs. Lakhs) (Rs. Lakhs)
2004-05 139 305 5350 --
2005-06 136 69 5337 1132
2006-07 135 98 5532 1238
2007-08 131 100 5981 1278
2008-09 131 145 6857 --
Labour
Labour Labour Productivity
Year Productivity
Productivity Growth Rate Index
Growth Rate
2004-05 378383 -- 100.00
2005-06 1040950 175.10 79.96
2006-07 832352 -20.04 82.53
2007-08 853765 2.57 69.04
2008-09 738573 -13.49
Manufacturing Unit 3: Mumbai

Product Category: Educational Toys
Company Background:
The manufacturing unit was started as a family business way back in 1942, producing toys for
local consumption. In the begining it was only a trading company which was engaged in
importing many products including toys and kitchen ware from USA, Germany, United
Kingdom, Japan etc. Their products include educational plastic building blocks – Bebe
Blocks, Kinder Blocks, and Smart Blocks.
• To produce toys which are safe and has educational values for children.
• To make quality toys for national and international market.
• To create toy awareness amongst parents, and to explain the importance of toys for
children.
• To export our toys.
Business Model
1. Market share is very less compared to total toy industry.

2. They use both direct distribution and wholesale system, as and where necessary.
3. Products are economically priced.
4. Toys are sold all over India through the above channels.
5. Service in terms of manufacturing defects are accepted without any questions.
6. Good understanding with wholesalers and distributors.
Productivity and Competitiveness
To improve productivity and competitiveness:

• Technical aspect
• Ways to reduce cost of manufacturing
• Optimum use of available finance

• Marketing
Policy Interventions required:
1. Finance at very easy (low) interest rates

2. To be put in special category with extra benefits
3. Different grants for exports which should be at priority and looked into new areas of
new markets
4. Education on lean manufacturing
5. Raw materials availability at the best price
SWOT Analysis
STRENGTH WEAKNESS
Experience, Quality, Reasonable price, Finance, Professional work force needed,
Production capacity, relation with the Space
distributors.
OPPORTUNITY THREATS
There are few Indian copies and from Mainly from cheap Chinese Blocks imports
cheap Chinese Blocks which do not have
much quality
DATA
Skilled Un Skilled
Wages/Salaries
Sr. No. Years Employees/Workers Employees/workers
(Rs Lakhs)
(numbers) (numbers)
1 2004-05 3 21 10.50
2 2005-06 3 21 10.75
3 2006-07 5 22 11.50
4 2007-08 5 22 12.00
5 2008-09 6 24 13.00
Sales Value Capital Stock

Sr. No. Years
(Rs Lakhs) (Rs Lakhs)
1 2006-07 850 400
2 2007-08 800 400
3 2008-09 1000 400
Labour Labour Productivity Labour Productivity

Year
Productivity Growth Rate Growth Rate Index
2006-07 1526745 -- 100
2007-08 1373013 -10.07 89.93
2008-09 1424501 3.75 93.68
Manufacturing Unit 4: Uttar Pradesh

Company Background:
It is an innovative Australian company, engaged in the development of an amazing line of

unique, mind challenging puzzles and games. They make high quality, tactile puzzles and
games.
They are characterized by extremely simple rules with rich and deeply satisfying play value.
From addictive single player puzzles to fun, interactive and compelling family games for up
to six players, they have something for everyone. Their products are sent to almost all retail
houses. The products are sent to 27 countries and there are 27 distributors. All the products
are EC approved.
Mission:
Under the arch brand of The Dr. Wood Challenge Centre, their goal is to give to the world a
series of: “Fresh, intelligently crafted, intellectually stimulating puzzles and games that
redefine the genre!”
SWOT Analysis
Strength: Brand image, quality, design, uniqueness

Weakness: Lack of Resources
Opportunity: Better Prospects
Recommendations:
• Subsidized Space and resources
Data:
Output Employment Export

Year
(Rs Lakhs) (Rs Lakhs) (Rs Lakhs)
2004-05 40 22 46
2005-06 58 25 120
2006-07 93 36 105
2007-08 98 46 174
2008-09 157 62 251
Un Skilled
Skilled Capital
Employees/w
Sr. No. Years Employees/Workers Investment
orkers
(numbers) (Rs Lakhs)
(numbers)
1 2006-07 10 50 300
2 2007-08 10 55 300
3 2008-09 10 60 350
Productivity Estimation
Labour Labour Productivity Growth
Year
Productivity Rate Index
2006-07 75170 100
2007-08 69865 92.94
2008-09 95849 130.13

Company Background:
The company started its operations in 1987. Since 1988, the unit has been making teacher-
created, child-tested products to boost confidence, teach basic skills, and inspire joy of
learning in children between the age group of 2 to 14 years. The unit’s name is synonymous
with games of advanced educational content, manufactured from the highest quality materials.
The games track the child's development from his/her first steps from the age of two until fifth
grade. The product range comprises of educational toys for the age group 13 months – 15
years. There is a wide variety of board games, puzzles, quiz, craft kits, memory games and
craft kits for all age groups.
They presently export to Middle East Countries.
Mission:
"Partners in Your Child's Development"
Technology:
Dye cutting machine and machine or making cases which has been imported and is under
trial.
Competition
There is no competition from China. Frank Toys and Play Craft are the only competitors
Problems faced by the unit:
Raw Material:
Mathematics material and board plastic material is imported as it is costly in India.
Infrastructure:
There are infrastructural problems such as power, roads, logistics. There is 4-6 hrs power cut
every day. The unit runs on generator.
Government Policies affecting the unit:

• SIDBI- machines are too costly
• Raw material duties
• Interest rates on loan
• VAT – It is more in UP (0.5% extra)
• NREGS – National Rural Employment Guarantee Act (NREGA), also known as
National Rural Employment Guarantee Scheme (NREGS) is Indian legislation enacted
on August 25, 2005. The NREGA provides a legal guarantee for one hundred days of
employment in every financial year to adult members of any rural household willing to
do public work-related unskilled manual work at the statutory minimum wage. As a
result of this scheme there is shortage of labour in toy industry.
Suggestion
• Requirement for a Toy Board/committee which will be fully committed towards Toy
Industry.
Data
Years Capital Investment Output (Rs Lakhs)
(Rs Lakhs)
2006-07 110 780
2007-08 125 825
2008-09 140 900
Years Skilled Workers Unskilled Workers

(numbers) (numbers)
2006-07 45 120
2007-08 52 120
2008-09 52 130
Year Productivity Growth Rate Growth Rate Index
2006-07 229257 -- 100
2007-08 222267 -3.05 96.95
2008-09 211327 -4.92 92.03

Company Background:
The company started in 1989 and it became private limited in 2000. It started its business
activity modestly with one product, Modelling Clay. They are pioneers in this product and a
new range of Perfumed Dough has been introduced; with many accessories and amazing
packings. World wide and in India Clay and Dough related products are essential and core
category of Toys for Child Development in area of Creative Skills. They are tirelessly
working to bring wide and meaningful range in this category.
The child is assured of full value for the money through their current and subsequent range of
Clay and Dough, Preschool, Musical, Indoor and Outdoor activity toys.
Mission:
Zero-defect, full value for money products and services.
Present Scenario
The staff is highly qualified to take up all jobs of complete Moulds in Plastics, Die casting
and sheet metal plastics Die casting and sheet metal plastics is the most preferred area. Fifty
per cent staffs are on contract basis and rest fifty per cent are regular. 30-35% are skilled
labours and 30% are semi skilled and 30% unskilled. Marketing is done through whole
sellers and distributors.
Manufacturing:
Commercial Tools Technology
With state of the art tool room and highly skilled manpower the company produces moulds
which are world class. The moulding machines installed are most suited to toy manufacturing
and the assembly of all products is on latest working methods. Quality Inspection of incoming
components is thorough and finished products are checked and rechecked for quality
assurance.
Commercial Tools Technology (List of Machines and Infrastructure)
The machinery installed in Tool Room is as follows:

• Two Numbers – C.N.C. Machining centre (Haas VF-2) with CAM Software of
DELCAM and CAD Software of SOLID WORKS.Travel size XYZ 762 x 406 x 508.
Maximum job weight 1300 Kgs.
• Two Numbers - E.D.M. (Electronica PSR 35)
Travel size XY 280 x 200 3 Axis with DRO Maximum job weight 175 Kgs.
• Two Numbers - CNC Wirecut Machines Electronica Make, Fine Cut
• Three Numbers - Milling Machine (Presicut/Taiwan M-1 TR Model) with DRO.
• Praga Surface Grinding Machine with auto feed facility on X and Y axis.
• Lathe Grinder, Drill, Polishing Machines etc.
They have Moulding Machines ranging from 80 Tones to 200 Tones in house which are
engaged in home production of toys numbering 15.
The company has complete facilities for all other areas of Tool Room operations such as, 3D
CAD/ CAM Modeling/ Programming on Delcam, C.N.C. engraving, EDM Drills and they
shall shortly have 4 - axis CNC VMC of DECKEL - MAHO.
Their esteemed and satisfied clients are following who are giants in auto parts manufacturing :
• Shriram Pistons and Rings Ltd. Ghaziabad, U.P.
• Subros Ltd. Noida Ph-II, U.P.
Accreditation:
The company is in process of getting accredition.
Finance:
SIDBI provides finance.
MARKETING
Marketing is done through whole salers and distributors. The company has not started exports
as it requires setting up of another factory and lot of investment.
IMPACT OF CHINA
The company is facing some competition from China but they consider it as a positive sign as
China’s entry into Toy industry in India has contributed towards showcasing of more variety
of toys with new designs, techniques, colors, fabrics and raw materials. Indian manufacturers
are now exposed to new varieties of toys. Now Indian industry is also trying to come up with
new toys in competition with China.
Recommendations:
• Subsidized Space and resources
• Low rate of Interest
Capital Investment
Years Output (Rs Lakhs)
(Rs Lakhs)
2006-07 180 420
2007-08 250 480
2008-09 300 750
Skilled Workers Unskilled Workers

Years
(numbers) (numbers)
2006-07 36 80
2007-08 43 120
2008-09 45 150
Labour
Year Productivity
Growth Rate
2006-07 175591 -- 100
2007-08 136459 -22.29 77.71
2008-09 164366 20.45 98.16

Product Category: Wooden Toys
Company Background:
It began in 1991-92 and it became private limited company in 2001.
Objectives of the Company:
The main objective is to develop better quality toys, and have internal satisfaction by
developing toys for the children. 30 years back these toys were not easily available and
whatever was available, was very expensive. Most of the toys came from outside India.
Therefore the unit was established in order to produce toys for the children. Their product
includes Wooden and Educational Toys.
Marketing
They follow a simple marketing chain:

Manufacturer – Distributor – Retailer
Sources of Finance
Bank of India which at present is providing finance at 12% interest rate.
Raw Material:
The main raw material is wood – Medium Density Ferro (MDF). 90% of raw material is
imported as cost of raw material is high in India.
Infrastructure:
There are infrastructural problems such as power and transportation. There is 4-6 hrs power
cut everyday and there is no transportation upto 20-30 kms.
Technology:
Traditional machinery is used. It’s a labour oriented unit. Most of the work is done by hands.
The unit is not equipped with latest machinery like CNC Router, which is available in China
and is time and labour saving.
Government Policies affecting the unit:

• Anti Dumping duty imposed on raw materials.
• Transfer Tax
• Additional taxes
• VAT – It is more in UP (0.5% extra)
Suggestions and Recommendations:
• Need of a Toy Mart or a common place where all toys can be put on display at both
national and international level. Approved prices by Toy Association of India and
registration at nominal charges.
• Shelf space for Indian toys to be increased.
• Desired rate of interest – 7-9% (at present 12%)
• Cost of raw material should be uniform
• Power crisis to be solved
• Sample Testing facility for quality control at reasonable prices.
• Design registration at nominal charges to start.
• Remove anti dumping duty on raw material
• Requirement of a Toy agency that keeps all updated about the latest trends and
requirements for Toy industry.
Data:
Capital Investment (Rs
Lakhs)
2004-05 28.61 120
2005-06 38.65 180
2006-07 44.50 250
2007-08 51.29 300
2008-09 108.29 400

Years
(numbers) (numbers)
2006-07 25 125
2007-08 30 150
2008-09 30 150
Year
2006-07 80828 -- 100
2007-08 77232 -4.45 95.55
2008-09 94967 22.96 118.51

Product Category: Soft Toys
Company Background:
Established in 1996, it is a professional manufacturer specializing in stuffed toys. It offers a

wide range of exclusive soft and cuddly toys designed by their in-house team of professional
experts. The trial production started in Delhi and later they shifted to Noida in 2003. Their
strengths are state-of-the-art manufacturing facilities and continued commitment to research
and development. The soft toys produced by them are of various varieties such as:
• Cushion Toys
• Standing elephant
• Sitting Monkey
• Cute Teddy
• Patch Dog
• Laying Floppy Dog
• Sitting Bull Dog
Employees:
At present there are about 70-80 employees. Out of this 45 are skilled labors and 20-25 are
permanent labors who are on payroll.
Manufacturing:
This unit is based on manual labour. Most of the work includes:

Stuffing, sewing, cleaning, cutting and the machines used are stuffing machine, sewing
machine, metal detectors, hydraulic machine etc. They started with five machines in 1996 and
at present they have 50 machines (25 in-house and 25 outside on rent).
Marketing:
Marketing is done through distributors and corporate houses. The unit has reduced catering to
domestic market and mainly concentrating on corporate houses. They are getting huge orders
from corporate houses.
Finance:
Bank of India provides finance.
Raw Material:
Raw material is imported through importers and not directly. The whole process of importing
fabric is very complex and there are no manufacturers of required fabrics in India except
Sheetal Fabrics. There is 10% duty on fabric and 10% duty on toys. They face a lot of
competition from China in terms of fabric as China has finest variety of fabrics which are not
available in India.
Export:
The unit has not tried for export till now due to two main problems – labor and raw material.
SWOT
Strength: Quality, Design, Pricing

Weakness: Raw material, labour, infrastructure
Opportunity: Exploration of International market
Threat: deferred payment
Recommendations:
• Pile fabric should be produced in India and there should be less custom checking.
• Labour laws to be flexible
• The problem of raw material to be sort out.
Data:
Capital Investment
(Rs Lakhs)
2006-07 80 350
2007-08 80 370
2008-09 90 420

Years
(numbers) (numbers)
2006-07 20 45
2007-08 22 50
2008-09 25 70
Labor Productivity Labor Productivity

Year Labor Productivity
Growth Rate Growth Rate Index
2006-07 261136 -- 100
2007-08 238132 -8.81 91.19
2008-09 188934 -20.66 70.53
Manufacturing Unit 9: Delhi

Product Category: Plastic Toys
Company Background:
Established in 1990, they have two manufacturing Units located at New Delhi. The unit is
Synonymous with wide variety of Quality toys for Kids. They manufacture and supply a wide
range of fun-filled plastics toys such as automobile miniatures and other models for aero
planes and helicopter. It is the leading manufacturer of scale model toys cars, bus, aero planes
etc.
Their in house R&D helps develop new products on a regular basis. They have stringent
quality control ensures minimum defects and maintain high level safety standards. They
conduct quality checks in accordance with the national and international standards to ensure
the flow of excellent products to the market.
Mission:
Their main mission is to produce exclusive range for kids toys.
SWOT Analysis
Strength: R&D, Team effort

Weakness: Lack of variety, Labour laws
Opportunity: Highly labor oriented industry
Threat: labor laws
Suggestions & Recommendations:
1. Use of modern technology in product design & development

2. Better tool/mould design for quick assembly
3. Use modern tools in assembly line
4. Use of energy saving injection moulding machine
5. Availability of raw material at level with Chinese Industry
6. Availability of funds at lower interest rates

7. To provide subsidy on capital equipment
8. Liberal labor laws
Data:
Un skilled Wages & Capital

Skilled workers
Years workers Salaries Investment
(number)
(number) (Rs Lakhs) (Rs Lakhs)
2004-05 60 40 108 29.07

2005-06 60 10 75.6 34.35
2006-07 59 7 72 52.19
2007-08 50 13 68 57.44
2008-09 50 25 90 58.00
Sales Value Production Cost

Years
2004-05 360 295

2005-06 252 206
2006-07 240 196
2007-08 228 189
2008-09 300 246
Labour Productivity
Year Labour Productivity
Growth Rate Index
2004-05 192308 100
2005-06 184049 95.71
2006-07 176351 91.52
2007-08 167704 86.62
2008-09 170940 88.55

Product Category: Vinyl Toys
About the unit:
The company is engaged in manufacturing and exporting of toys & dolls from last twenty six
years. They have unmatched capability in producing high quality Dolls. All products are
designed and made with safety standards. Their items have been made with their usual soft
and scented material as per their high quality standards. Their products include Vinyl Toys,
Vinyl Boys, Moving Eyes Dolls, Singing & Crying Dolls, Soft Body Boys and Dolls,Soft
Toys.
SWOT Analysis
Strength: Product range
Weakness: Imports from China, raw material
Opportunity: Roto moulding machines
Threats: Chinese products in Vinyl Toys
Data:
Years Total workers Sales Value Wages & Salaries Capital Investment
(number) (Rs Lakhs) (Rs Lakhs) (Rs Lakhs)
2004-05 5 100 1.86 4

2005-06 7 130 2.77 4.3
2006-07 8 150 3.36 4.5
2007-08 10 180 4.56 4.8
2008-09 10 200 4.8 5
Year
2004-05 1068376 100.00
2005-06 949460 88.87
2006-07 909311 84.64
2007-08 834106 76.37
2008-09 854701 78.84

Product Category: Metal Toys
Company Background:
Towards 8 years of creating collectible tin toys for Collectors world over, the unit was
founded in 1989. Only a trading company then, it was dealing in many products including
toys and novelties.1997 was the year when the director of the company visited Nuremberg
Toy Fair in Germany and grabbed the opportunity to start exports of tin toys from India. Early
2002 saw growth opportunities and a new factory were constructed in Toy City, Greater
Noida to increase number of new items and production. Tradition of old hand operated
machinery was kept alive for production of toys, along with new machinery for the deep draw
and tooling. They manufacture and export different kinds of products like Tin treasure ,Toys,
Trick stuffs, Novelties, Games, Boats, Automobile and locomotive, Automobile include
Action set, pop-up boats, coin banks, science fiction etc.
Present scenario
At present they are having 40 employees of which 10 are skilled, 7 semi skilled and rest are
unskilled.
Factory, machinery and infrastructure details:
• Built in 2002. Currently encompassing 7,200 Sq. Ft. area, total capacity of 33,000 Sq.
Ft. of construction area. Thirty-nine hand presses machines have total production
capacity of 300,000 toys per annum.
• One hydraulic automatic 15 Ton machine for deep draw upto 15 CMS .
• One shearing machine.
• Two lathe machine.
• One Milling Machine.
• One Surface Grinding machine.
• Two drill machines
• QC facilities that are randomly inspected by qualified personnel while in production

and packing.
• Factory meets all necessary compliances viz. health, safety, labour and municipal
regulations.
• Virgin tin plate is used procured from Tata Tin Plate.
Advantages of being factory located in Greater Noida
The cost of power being amongst the cheapest in the country.

Good availability of skill and semi skilled labor.
Healthy working environment.
Swift access by roadways and railways from all major towns in India.
Access to and from Delhi (25 kms) is within 45 minutes by car and public transport.
Land freely available for vast expansion.
Manufacturing:
Mould designing, Manufacturing and storing process:
¾ Toy and Tools are designed using Cad Cam and Pro-V software’s.
¾ Key Tooling are made by Wire cut machines and CNC
¾ Dies & Tooling are maintained and stored in special designated rooms.
Orders are dispatched within 30 days of order placing. In some cases when warehouse stocks
do not meet the order quantity; a timeline is given to the customer and subsequently this
timeline is adhered with 95% alacrity. Consumer complaints though at 0.01% of total sales,
they are promptly addressed and corrective action are taken on priority. Also efforts are taken
to further reduce such complaints.
Sales Distribution
Germany – 41%
Spain – 17%
USA – 11%
Australia – 7%
Switzerland – 5%
U.A.E.– 5%
New Zealand– 4%
Italy - 4%
All other countries combined – 6%
20 distributors and wholesalers
1,500 retailers
Great customer relationship and market understanding
SWOT Analysis
Strength: Low volume, designing, quality, language

Weakness: Labor laws
Opportunity: High orders from abroad
Threat: Collectible toys are considered toys for children
Recommendations:
• Requirement of a cluster scheme so that machine value can be explored. The cluster
scheme should be permitted to start with ten members.
• Labor laws to be flexible
• Infrastructural improvements in terms of power and transport
• Service Tax should not be charged if it has to be refunded later.
• Export friendly approach should be adopted.
• Common facility centre such as designing centre.
Years Capital Investment Output (Rs Lakhs)

(Rs Lakhs)
2006-07 120 420
2007-08 120 485
2008-09 130 630

Years
(numbers) (numbers)
2006-07 12 30
2007-08 15 35
2008-09 18 40
Labor Labor Productivity Labor Productivity

Year
2006-07 484966 -- 100
2007-08 449490 -7.32 92.68
2008-09 464191 3.27 95.96

Product Category: Plastic & Metal Toys
About the unit:
The unit was founded in 1985 and started manufacturing in 2002. Their main objective is to
supply the best quality & safe toys for the children. Their product range includes battery
operated toys, friction, inflatable toys, general toys, ride on toys, and electronic toys.
Government decisions affecting the unit:

‐ VAT
‐ Labor laws
Recommendations
‐ Low interest rates
‐ Flexible Labor Laws
Data:
Wages &
Total workers Sales value Capital Investment
Years Salaries
(Rs Lakhs)
2004-05 60 328.05 23.6196 196.83
2005-06 55 364.5 26.244 218.7
2006-07 55 405 29.16 243
2007-08 50 450 32.4 270
2008-09 50 500 36 300
Year Labor Productivity Labor Productivity Growth Rate Index
2004-05 292067 100.00
2005-06 338818 116.01
2006-07 357111 121.41
2007-08 417053 138.19
2008-09 427350 140.66
Manufacturing Unit 13 : West Bengal

Product Category: Traditional Toys
About the unit:
The unit is part of the clusters existing in Nadia district. There are about 25 to 30 units in the
cluster of traditional toys. The product category includes Clay, Bronze, Stone, Plaster, Cement
human forms. The unit is based on manual labour.
Recommendations:
• Development of proper market channel for sale of traditional toys.
• Representation in international market in various international exhibitions.
• Assistance for production and marketing.
Data:
Year Output (Rs) Investment (Rs)
2004-05 18000 5000
2005-06 20000 6000
2006-07 25000 6000
2007-08 20000 8000
2008-09 20000 8000
Year Skilled workers Wages & Salaries (Rs)

(number)
2004-05 3 2880
2005-06 3 3600
2006-07 4 3960
2007-08 4 5760
2008-09 3 4860
Labour
Year Productivity
Productivity Growth Rate
Growth Rate Index
2004-05 3205 -- 100
2005-06 3408 6.34 106.34
2006-07 3031 -11.07 95.27
2007-08 2317 -23.56 71.71
2008-09 2849 22.96 94.67
Manufacturing Unit 14: West Bengal

About the unit:
The unit is part of the clusters existing in Nadia district. There are about 25 to 30 units in the
cluster of traditional toys. They produce wooden dolls. This unit is based on manual labor.
Product:
Wooden dolls
Employees:
At present there are three employees.
Manufacturing:
This unit is based on manual labor.
Finance:
Self finance
Raw Material:
The raw material used is wood.
Impact of China
The unit is facing competition from China in terms of plastic toys. Another important factor is
cost as Chinese toys are very cheap
SWOT Analysis
Strength: Availability of raw materials
Weakness: No marketing channel
Opportunity: International/metro city demand
Threats: Toy Industry
Recommendations:
• Development of proper market channel for sale of traditional toys.
• Representation of traditional dolls in various exhibitions.

• Assistance for production and marketing.
• Financial assistance to artisans
Data:
Year Output (Rs) Capital Investment (Rs)
2004-05 10000 4000
2005-06 10000 4500
2006-07 12000 5000
2007-08 10000 6000
2008-09 10000 7000
Year Skilled workers Wages & Salaries (Rs)

(number)
2004-05 3 3240
2005-06 3 3240
2006-07 3 3600
2007-08 3 4320
2008-09 3 4680
Labor Labor Productivity Labor Productivity

Year
2004-05 1781 -- 100

2005-06 1704 -4.29 95.71
2006-07 1940 13.83 109.54
2007-08 1545 -20.37 89.16
2008-09 1425 -7.78 81.39
Manufacturing Unit 15: Karnataka

About the unit:
The unit was founded in 1980. Their main objective is to supply the best quality & safe toys
for the children. Their product range includes mainly traditional toys. The company is a
medium scale company and it is registered also.
Suggestions & Recommendations:

• Sample development is needed.
• Technology for fast production is the need of the hour.
• Purchasers of the product are required.
• Financial help is needed for selling and marketing in domestic and international
market.
• Training centres are required for improvement in the production.
• Facility of fairs to display products at low cost but selling at good prices.
Data:
Skilled workers Wages & Salaries Capital Investment

Years
2004-05 12 10 10
2005-06 12 10 10
2006-07 12 10 10
2007-08 10 8 10
2008-09 7 6 10
Sales Value Production Cost

Years
2004-05 16 14.5
2005-06 25 23
2006-07 25 23
2007-08 20 19
2008-09 12 11
Labour Productivity
Year Labour Productivity
Growth Rate Index
2004-05 71225 100.00
2005-06 106510 149.54
2006-07 101035 144.40
2007-08 92678 136.13
2008-09 73260 115.18
Summary of Industry Requirements

I) Traditional segment
1. Development of proper market channel for sale of traditional toys.
2. Representation in international market in various international exhibitions.
3. Assistance for production and marketing.
4. Representation of traditional dolls in various exhibitions.
5. Financial assistance to artisans
6. Cluster development is needed.
7. Technology for fast production is the need of the hour.
8. Financial help is needed for selling and marketing in domestic and
international market.
9. Training centres are required for improvement in the production.
10. Facility of fairs to display products at low cost but selling at good prices.
II) Modern segment
a) Government Policies Interventions required:

1. Industry to be given special category with extra benefits.
2. Space requirement.
3. Power crisis to be solved to ensure un- interrupted power supply.
4. Finance at low interest rates. Desired rate of interest – 7-9%.
5. Marketing Development grants for exporters to foreign exhibitions & Buyer Seller
meet to develop new export markets.
6. R & D and Design clinics
7. Need of a Toy Mart or a common place where all toys can be put on display at both
national and international level.
8. Cost of raw material should be uniform
9. Sample Testing facility for quality control at reasonable prices.
10. Availability of Raw Materials
11. Shortage of labor
12. Requirement of a cluster scheme so that machine value can be explored. The cluster
scheme should be permitted to start with ten members.
13. Pile fabric should be produced in India and there should be less custom checking.
b) Easy and cheap availability of Raw materials:
There have been a number of times when there has been a shortage of Raw materials for
production, or the raw material prices have been hiked up for vested interests by major
corporations, this makes it impossible to keep the price commitment given to foreign clients.
Raw material Custom duties
An organized Body looking after the Raw material requirement to negotiates rates & supply
of raw material with the manufacturers on behalf of the Toy industry, as requirements would
be in bulk quantities which would give the bargaining power to get material at competitive
price. This method of cooperative buying is followed by certain countries very successfully.
c) Availability of Space for expansion.
Every toy manufacture in India is miniscule as compared to their counterparts in China. The
smallest Chinese company is 10 times the size of the largest Indian Toy manufacturer.
Availability of land in Industrial areas is very difficult and due to cost of land is out of reach
for the MICRO & MSME manufacturers. Due to the small quantities being produced the
profits are lass than 10% of total distributor price There was an international company
looking for OEM manufacturing facility to shift part of its production China, they visited
various companies. They were impressed with the manufacturing set up. Unfortunately they
had a minimum requirement of 120 molding machines. This the Indian Toy Manufacturer can
not comprehend, due to precocity of Space & finance.
e) Shortage of Labor
The Toy Industry is facing shortage of labor from migrant labor who have gone back to there
villages to avail of the NREGS – National Rural Employment Guarantee Scheme The
National Rural Employment Guarantee Act is Indian legislation enacted on August 25,
2005. The NREGA provides a legal guarantee for one hundred days of employment in every
financial year to adult members of any rural household willing to do public work-related
unskilled manual work at the statutory minimum wage.
f) Free Training Seminars:
A majority of Toy companies are in the MICRO & MSME sector. These units are mainly
Propriety concerns. As the scale of operations is small they can not afford to employ
professionals in Designing, Manufacturing & Marketing.
g) Setting up Awareness Centers:
The Toy Industry in India is backed by Native business practices. The present production &
business procedures have changed drastically and specialization in each field has become very
important. The industry requires awareness programmes / workshops in Technical up
gradation, latest techniques, costing, production planning, inventory management systems &
Marketing.
h) Cheap & easy availability of funds:
To run a company efficiently & smoothly requires constant funds. Nationalized Banks should
release funds up to Rs 100/- lac without any hypothecation and such funds should be at
minimal rate of interest.
STUDY TEAM
PROJECT ADVISORS 1. Shri. N.C. Vasudevan, IAS
Director General
2. Shri. O.P. Joshi
Deputy Director General
3. Shri. V.K. Soni
OSD (Economic Services & Admin.)
STUDY/CORE TEAM
Team Leader: Shri. Indrajit Frank Agarwal
Senior Consultant, Toy Industry
Project Director: Dr. K. P. Sunny
Group Head (Economic Services)
External Consultants: 1. Dr. V.J. Sebastian
Associate Professor(Economics)
IMT, Ghaziabad
2. Prof. Sudarshan Khanna
Formerly Professor, NID
Team Members: 1. Dr. Rajat Sharma
Deputy Director (Economic Services)
2. Mr. Deepak Gupta
Asstt. Director (Economic Services)
3. Mr. Eno Rai
Research Associate
4. Ms. Asmita Raj
Research Assistant
Field Survey: NPC consultant/Research Associate/

Anbhav Enterprises

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Case Studies

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CONTENTS

Diagnostic Case Studies

Product categories and the manufacturing units studied:

S. No Product category Manufacturing units

Manufacturing Unit 1: Mumbai

Objective of the company:

Their mission statement is:

Competition from other Indian manufacturers:

Strategy and Implementation:

1. The goods they manufacture and market themselves.

Problems faced by the unit:

8) Lack of trained manpower: A lot of factors from designing to manufacture to inventory

Suggestions by the manufacturing unit

2) Availability of infrastructure: Every toy manufacturer in India is miniscule as compared

Manufacturing Unit 2: Chennai

Objective of the company:

2004-05 3145 219.86 1063

2005-06 4174 778.85 1155

2006-07 3999 885.08 778

2007-08 4256 786.58 775

2008-09 4770 1072.00 698

Unskilled Wages & Capital

Manufacturing Unit 3: Mumbai

Objective of the company:

1. Market share is very less compared to total toy industry.

Productivity and Competitiveness

To improve productivity and competitiveness:

• Optimum use of available finance

Policy Interventions required:

1. Finance at very easy (low) interest rates

Sales Value Capital Stock

Labour Labour Productivity Labour Productivity

Manufacturing Unit 4: Uttar Pradesh

It is an innovative Australian company, engaged in the development of an amazing line of

Strength: Brand image, quality, design, uniqueness

• Subsidized Space and resources

Output Employment Export

Manufacturing Unit 5: Uttar Pradesh

They presently export to Middle East Countries.

Problems faced by the unit:

Government Policies affecting the unit:

Years Skilled Workers Unskilled Workers

Manufacturing Unit 6: Uttar Pradesh

Commercial Tools Technology

Commercial Tools Technology (List of Machines and Infrastructure)

The machinery installed in Tool Room is as follows:

• Shriram Pistons and Rings Ltd. Ghaziabad, U.P.

• Subros Ltd. Noida Ph-II, U.P.

The company is in process of getting accredition.

2006-07 180 420

2007-08 250 480

2008-09 300 750

Skilled Workers Unskilled Workers

2007-08 136459 -22.29 77.71

2008-09 164366 20.45 98.16

Manufacturing Unit 7: Uttar Pradesh

Objectives of the Company:

They follow a simple marketing chain:

Bank of India which at present is providing finance at 12% interest rate.

Government Policies affecting the unit:

Suggestions and Recommendations:

Skilled Workers Unskilled Workers