In previous years, India imported toys primarily from country like China. This dependency on imports became a key challenge for the Indian toy industry. To combat this, the Indian government has made significant strides to transform India into a manufacturing hub.
With the government's vision to make India a global hub for toy manufacturing, the government has introduced a range of strategic initiatives, including the Vocal for Local campaign, Toycathon, and the Aatmanirbhar Toys Innovation Challenge. Additionally, the Ministry of Commerce and Industry has recommended an allocation of ₹3,489 crore for the Production Linked Incentive (PLI) scheme, designed to enhance domestic toy production and curtail reliance on imports. Alongside this, initiatives like National Action Plan for Toys (NAPT), Quality Control Order (QCO) and customs duties on toy imports have been increased from 20% to 70% in recent years to protect domestic manufacturers and curb reliance on foreign products.
According to the Economic Survey 2023-24, the government's measures, including mandatory quality norms, higher customs duties have significantly boosted toy exports and reduced India's reliance on Chinese imports. India's toy industry has undergone a remarkable transformation over the past decade. In FY13, India was predominantly a net importer of toys, with imports valued at approximately $225 million. However, by FY24, India has undergone a significant transformation and emerged as a net exporter of toys, with exports estimated at $106 million. This shift is further underscored by the impressive growth in toy exports, which have expanded at a Compound Annual Growth Rate (CAGR) of 15.9% between FY13 and FY24.
The country's toy export bill has surged, while imports, particularly from China, have drastically reduced. From FY13 to FY24, India’s imports from China dropped from USD 214 million to USD 41.6 million, reducing China’s share in India’s toy imports from 94% to 64%.
Urban Tots: A Leader in Toy Manufacturing
Urban Tots is an industry leader in toy manufacturing, known for its diverse product range. Specializing in plastic toys, electronic toys, role-play items, baby swimming pool and other kids wear, it also plans to expand into metallic and wooden toys. Urban Tots has established a significant manufacturing presence.
Urban Tots operates a state-of-the-art manufacturing plant spanning 36,000 square yards in Bhiwadi, Rajasthan, which is part of the PLI scheme. This facility employs over 350 individuals and is equipped with heavy machinery, including 55 machines imported from abroad, making it a self-reliant and independent manufacturing unit.
Challenges in the Indian Toy Industry:
While the Indian toy industry is growing, it faces several challenges, including:
Dependence on foreign raw materials: The industry remains reliant on imports for raw materials and components, affecting cost competitiveness.
Stiff competition from low-cost imports: The influx of low-cost toys from countries like China has been a significant hurdle for domestic manufacturers.
Urban Tots addresses these challenges by leveraging government schemes like the PLI and DIC schemes, and by collaborating with local artisans to reduce dependence on foreign materials. This strategy not only helps reduce costs but also supports local economies.
Business Model and Strategic Growth:
Urban Tots operates on a multifaceted business model, manufacturing and selling a wide range of toys through various channels, including:
Major retail outlets such as Hamleys, FirstCry, VMart, DMart and Reliance Retail.
Online platforms like Amazon and Flipkart.
Their exclusive retail outlet, Urban Tots, where they sell directly to consumers.
In January 2023, Urban Tots formed a significant partnership with Indian Oil Corporation (IOC), signing an exclusive Memorandum of Understanding (MOU) to set up toy shops and kiosks at IOC retail outlets across India. On April 2023, Union Minister Hardeep Singh Puri inaugurated a Toy Kiosk at Urban Tots in Mohali, showcasing the collaborative efforts between the company and Indian Oil. This collaboration further strengthens Urban Tots' reach across the country.
Impressive Financial Performance:
Urban Tots has demonstrated a robust financial performance in recent years. For the financial years ending March 31, 2023 and March 31, 2024, the company achieved substantial growth in both revenue and profit. The key financial metrics are as follows:
Key Financial Metrics Comparison:
Particulars | FY 2024 (₹ in Lacs) | FY 2023 (₹ in Lacs) |
Revenue from Operations | 7,882.36 | 4,915.06 |
Other Income | 69.00 | 54.77 |
Expenses | (7,128.63) | (4,471.37) |
Profit Before Depreciation | 1,270.24 | 851.44 |
Profit Before Tax (PBT) | 822.73 | 498.46 |
Profit After Tax (PAT) | 710.30 | 418.43 |
Basic EPS | ₹1.28 | ₹1.21 |
Strategic Partnerships: Urban Tots and Mahindra
On February 19, 2024, Urban Tots announced a partnership with Mahindra, marking a pivotal moment in the Indian toy industry. This collaboration sees Urban Tots manufacturing miniature Mahindra tractors, as well as toys based on the Mahindra XUV700 and Mahindra Thar models. The partnership has already delivered significant results, with Urban Tots securing an order for 2,000 Mahindra tractor toy models monthly, adding ₹1 crore to its top line each month. The company plans to expand its product range further, ramping up production to 25,000 units of tractors and SUVs. This strategic alliance positions Urban Tots as a major player in the premium toy segment
Future Expansion Plans:
Urban Tots is well-positioned for future growth, with plans to open two more manufacturing plants to expand its production capacity. This will help the company substitute toy imports and cater to the growing domestic demand.
The company is also exploring retail expansion and innovative marketing strategies, including digital engagement and social media campaigns to increase brand awareness.
As per the news Urban Tots is also planning for its IPO by 2026, further expanding its reach and creating significant investment opportunities.
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