Funskool looks at expanding market to Latin America, other markets

Eyes acquisition of international brand to cater Indian market, appoints KPMG for potential tie-ups

Funskool, a toy manufacturing company and part of MRF Ltd, is looking at expanding its presence to the Latin American and the erstwhile USSR market to increase its exports. The company, which is expected to clock in a revenue of Rs 220 crore this year, is also looking at acquisitions in the international market with the help of KPMG.

The company aims to increase the share of exports in its business to 50 per cent a year, from 20 per cent currently. It exports toys to Europe, UK, US and Australia.

"We are looking at entering Latin America and many of the erstwhile USSR countries. In the USSR region, we have already appointed a distributor and will start exports soon," said K John Baby, chief executive officer, Funskool (India) Ltd. Indonesia, Vietnam, Thailand and many of the African countries are less penetrated, but the market is not big. Thailand is estimated to be one of the largest market, but it is close to China and is filled with Chinese products.

"For exports, we are growing around 50 per cent from the current level. We want to go all out for exports, which helps in building a global brand and improving quality," he added.

The company is looking at acquisition of international toy brands which are relevant to the Indian market and has appointed KPMG for potential tie-ups. It is engaging international designers for toy designing, which would help it to sell the products both in Indian and overseas market.

Funskool is looking at growing its own brands in the near future. About 25 per cent of its sales are from its own brand now and it is aiming to grow this to 50 per cent during the next five years.

In order to cater market growth, in the past two years it has expanded its facility in Goa with two additional factory sheds at an investment of about Rs 15 crore. It will be investing another Rs 15 crore over the next two years to automate manufacturing activities. Last year, it had a Rs 75 crore production in the facility and this year it is expected to go up to Rs 100 crore. Next year it would be around Rs 130 crore, John Baby said.

The company, which has been growing at around 21 per cent CAGR for the last five years, is expected to see a decline in growth to 10-12 per cent this year, owing to overall lower sentiments in the market and demonetisation. Toys, being a discretionary item, were hit hard by the demonetisation, affecting the company's target of reaching a revenue of Rs 250 crore this year. Last year, its revenue was Rs 194 crore, which would be growing to Rs 220 crore this year.