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“The shelf life of any toy has gone down significantly. Nowadays, children want new toys frequently. Also, the number of products in our industry is huge. So, we have to develop products continuously. This provides a great opportunity for toolmakers, as no toy can be made without a tool,” says Vijendra Babu, Founder & MD of Micro Plastics Pvt. Ltd in conversation with Nishant Kashyap during the ToolTalk session organised by TAGMA India.
Prior to setting up Micro Plastics, you worked with companies like BPL, TVS Electronics and Continental. What inspired you to become an entrepreneur and cater to the toy industry?
When I started the company in 2005, I was catering to the automotive and consumer industries. But in 2009-10, I was looking to diversify into other industries and get into product manufacturing and sub-assemblies. Incidentally, I came across a UK-based company called Hornby. They were looking for suppliers in India for their collectibles under the brand name Airfix. We met and I convinced them that these products could be made in India with equally good precision and speed. Today, I am elated to share, we are the single-source partner for Airfix. In fact, all Airfix kits are only made in our Micro Plastics facility in India.
In 2015, we bagged Hasbro as an esteemed customer. Even since, we have grown significantly in the contract toy manufacturing space. We are now manufacturers for 8 of the top-10 brands. We started with one factory and today, we have six. In fact, on February 14 this year, we inaugurated a new manufacturing facility for M-Plastics Toys and Engineering, which is a subsidiary of Micro Plastics. It is India’s largest manufacturing set-up for toys in the country. The new facility has about 650,000 square feet of area and, together with the existing facility, we have about 1.2 million square feet of manufacturing space. That’s a summary of our journey.As a first-generation entrepreneur, the past 15 years have been a roller-coaster ride.
What message would you like to give budding entrepreneurs, who are looking to succeed?
There is no fixed formula for success! The most important factor to keep in mind is that you have to be innovative and you have to have patience. There’s nothing like overnight success. I have my own definition of success. I always tell people that you need to be LUCKY. Let me elaborate.
‘L’ stands for location. Being in the right location can play a major role.
‘U’ stands for understanding. You need to have a thorough understanding of the industry you want to operate in.
‘C’ stands for connection. It’s important to build the right connections. Having the right connections is extremely important in the B2B industry.
‘K’ stands for knowledge. Knowledge of the market and product you are building will eventually define your business’ success.
‘Y’ stands for you. If you focus on achieving the above, you are on the path to success.
You earlier mentioned about a new facility inaugurated in February. Could you tell us more about the new facility and its manufacturing activities?
Once fully operational, this factory will have about 150 injection moulding machines. As a group, we will have about 450 moulding machines. We already have about 300+ injection moulding machines and are adding another 150 moulding machines to the new plant.We have a very good in-house tool room, which is capable of manufacturing about 500 moulds a year. In the new plant, we plan to have a huge tool room with all the modern machines and facilities. We also have an in-house PCB manufacturing set-up, blow moulding, and rotational moulding set up.So, it’s a complete gamut of infrastructure required for manufacturing toys.
With the addition of new plants, we will be generating employment to an additional 2000+ people, where about 60% of those employed will comprise women from rural areas. Now, many people may not know that toys are highly engineered products. This means that you not only need very skilled middle management and senior management, but also require skill in terms of decoration, assembly, and, of course, tooling.
There have been significant developments in the Indian toy making industry in recent years such as India’s first SEZ for toymakers was recently inaugurated in Karnataka. Also, about 14 toy clusters across the country were approved. In the light of these updates, what do you think are the emerging trends in the global toy-making industry vs the Indian toy-making industry?
Toys comprise two segments – domestic manufacturing, and companies that are into complete exports where they do the contract manufacturing for OEMs and brands.
I am talking from the point of contract manufacturers for OEMs, because I come from that background. Toys is a fairly large industry globally with a market size of about $100 billion in terms of retail revenue with China being the largest producer of toys. I think China exports more than about $40-45 billion worth of toys. China’s toy manufacturing capability is very mature with experience of at least six to seven decades. However, with the growing geopolitical situation and also the ever-increasing labour cost in China, India has a great opportunity. Considering our geography and the people’s strength, global toy brands are looking at India as an alternative destination.
The expectation is different in both domestic and overseas industries. For exports, the expectations from the OEMs are completely different in terms of infrastructure requirements, chemical adherence, quality, and services. They need all the latest in place. However, to serve the global demand, we need an ecosystem in place. When we talk about the ecosystem, compared to China, India is still in the nascent stage. Of course, there has been good progress in the last 4-5 years, but we still need to develop the whole ecosystem. I must say MPPL along with a couple of other major players, have jointly developed a good ecosystem in India, where our reliance on imports has come down considerably. But still, in the knowledge department, I can say working in progress. We still need to work hard in skill development.
A drop in toy imports was reported for the first time in India. Also, a significant number of MSMEs have registered for toy making in recent years. How do you see the future of the Indian toy-making industry?
As I earlier mentioned, when we started out, there were lots of challenges in terms of developing the ecosystem. But today, we are in a far better position than we were earlier. Coming back to the opportunities in India. I, as a toymaker, see huge opportunities before us. Toymakers are not only thinking about the domestic market, which is also huge, but are exploring exports as well.
Today, our honorable Prime Minister and many other leaders are talking about developing the Indian toy industry. So, I would say, our concerns are definitely being heard at the ministry level.
The industry can generate huge employment opportunities in the future. The very fact that imports are reducing due to the BIS requirement, QCO requirements, and also import duty going up provides a very huge opportunity to domestic players. I see many OEMs that used to import end products and sell in India are enquiring with us about the possibility of manufacturing in India for domestic and export purposes.
Also, since the per capita consumption of toys in India is very less, as compared to developed economies, increasing the purchasing power of the middle class, it makes huge business sense to manufacture in India.
As a toymaker, what would you say are the requirements from your suppliers such as die and toolmakers to support such growth?
The toy industry demands speed and competitiveness. The shelf life of any toy has gone down significantly. Nowadays, children want new toys frequently. Also, the number of products in our industry is huge. So, we have to develop products continuously. This provides a great opportunity for toolmakers, as no toy can be made without a tool. Be it die-cast or plastics, the role of the tool is extremely important here. Also, since we mass produce, we need quality tools.
If we analyse it from the export point of view, on an annual basis, there are about 200 SKUs we develop every year and each toy needs approximately 20-25 tools. If we do the math, we need at least 4000-5000 tools a year only for exports. Also, all these tools need to be developed within a very short frame and the cost is very crucial here. We expect the toolmakers to be able to deliver in terms of speed at a reasonable cost.
Today, the time taken from concept to market has shrunk to about 20 weeks. You can now imagine the time given for toolmaking. A toy may need anything between 5 and 70 tools depending on the requirements. Customers need these products within a maximum period of eight weeks. The lead time expected by the customer today is six weeks for T1 and another two to three weeks for problem-solving. So, between T1 to qualification, the maximum time we get is eight weeks for complete qualification. Whether it is just four tools per product, or even 70 tools per product, we need to develop the product within 8 weeks, which is a huge challenge for us.
Does this mean that efficiency is the biggest requirement?
Not only efficiency, speed and cost competitiveness as well. This is because, whether we like it or not, today, for us, especially in terms of exports, we are competing with China. And even today, the Chinese costs are very competitive. To compete with them, tools, raw materials, and another components need to be made available to us in a cost-effective manner. Besides this, we have to catch up with China in terms of enhancing our speed and efficiency.
Where do Indian toolmakers presently source their tools from? Do you think Indian toolmakers are competent enough to serve the growing demand of the toy industry
Many OEMs are genuinely looking for China substitutes. So, they encourage us to source them within India, as they don’t want to depend entirely on one country. But sometimes, we are forced to import from China because of the cost and time involved. Nonetheless, we are looking to develop 100% tools in India – be it in our in-house tool rooms or through a strategic partnership with toolmakers.
No doubt some toolmakers are really good. But overall, we are still struggling in terms of price competitiveness and speed. Indian toolmakers don’t offer “the complete package”. Both Indian toolmakers and our tool rooms are still lagging in terms of speed and efficiency.
In your opinion, would toymakers backward integrate and set up captive tool rooms, or nudge existing toolmakers to enhance capacity? What do you think will be the trend going forward?
Not all toymakers have captive tool rooms. The requirements are so huge that a toymaker can’t manufacture all the tools in-house. In our case, we are expanding our tool rooms to be able to manufacture at least 500 tools per annum, but that’s not sufficient for our requirements and we have to source externally. Today, we have about 150 to 200 tools per annum kind of capacity, but we are now almost doubling our capacity to reach that level. Irrespective of whether toymakers have a captive tool room, the development cycle is so short and the industry is so seasonal, there will always be ample opportunities for us to look for strategic toolmakers.
What are the key evaluation factors toymakers considerbefore finalising a tool room for any project?
I would say:
Infrastructure: Infrastructure makes a big difference. The tool room should have the latest CNC machines, be it a milling machine, EDM wire cuts, or tool design capability, among others.
Capacity: I wouldn’t want to distribute my tool requirements to many toolmakers.It wouldn’t make much sense because the fit and function, colours, etc., and many other things need to match here. I would prefer one toolmaker to handle the project. If there are multiple products to be developed at the same time,then the tool room should have capacities to handle at least 50 to 100 tools at a time.
These are the two most important factors to be considered while choosing toolmakers. But yes, cost-effectiveness also matters.
…and, what kind of tools are required in the toy-making industry?Can you classify them?
Predominantly, we need injection moulding (80%), blow moulding (10-15%), and rotational moulding (5-10%) tools.
Any suggestions for Indian toolmakers?
I do have some suggestions.
The interview was first published in TAGMA Times Newsletter. All the rights related to the content of this interview belong to TAGMA India
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