GMR plans to build toy manufacturing hub in Kakinada to take on imports

HYDERABAD: Infrastructure conglomerate GMR plans to develop India's largest single hub for toy manufacturing at its special economic zone that is coming up close to Kakinada port on the country's east coast.

The group has earmarked 300 acres of the 10,000-acre SEZ exclusively for toy-makers -both soft and plastic -from India as well as abroad. It has already roped in some toy-makers, including Chinese soft toy-maker Pals Plush, and is in advanced talks with a few others. In all, GMR hopes to attract Rs 1,000 crore investment for the toy hub, which is expected to create at least 10,000 jobs in and around Kakinada. A GMR executive, who did not wish to be named, said the group was in talks with at least half-a-dozen global toymakers and hopes to firm up deals over the next few months.

" We are talking to both finished product makers and raw material suppliers, so that we can have the entire ecosystem helping all the players," the executive said.

Prasanna Challa, president at GMR Kakinada SEZ, con firmed that talks were on with some global toy-makers, including Pals Plush and Hasbro, but refused to divulge details. GMR's move to set up India's largest toymaking hub comes at a time when domestic manufacturers are finding it tough to survive in the backdrop of flooding imports from China and Italy, which are offering a wide range of products at affordable price points.

Pals Plush is the first toymaker to sign an agreement with GMR. It has committed Rs 100 crore in to invest at least in the first phase and create over 2,000 jobs. The toymaker, which supplies products to global giants such as Walt Disney and Hasbro, has commenced construction at GMR's Kakinada SEZ and hopes to begin toy manufacturing by October.

"We are in talks with a few of our Chinese partners, who are into making raw material for toys, including fabric to set up their ancillary units around our facility to begin supply of raw materials to us by 2017 or so," Ajay Sinha, president of Pals Plush, told ET.

Promoted by Sinha, Pals Plush made its first India investment in Sri City SEZ in Andhra Pradesh.

The Indian toy market, which was estimated at around Rs 8,000 crore in 2013, is projected to report 30% compounded annual growth rate by 2015 on the back of rising demand from middle-class buyers, according to Assocham. Only a fifth of the demand is served by domestic manufacturers, while imports make up for the rest. Players such as Funskool, Hasbro, Lego, Leap Frog, Mettel and Bandai together control nearly 70% of the domestic market.