An Industrial Project Report

on

TOYEEZ, Baikampady, Mangaluru

Submitted by

Surabhi. B

Kishan K Shenoy

Abdul Latheef

Under the Guidance of

Dr. Sudhir Raj K

Professor

JKSHIM, Nitte

Justice K S Hegde Institute Of Management

NMAMIT, Nitte

20, June 2016

Table of Contents

Sl. No. Particulars Page No.

1. Executive Summary 1

2. Industry Profile 2

3. Company Profile 3

4. Type of Enterprise 3

5. Ownership Pattern 3

6. Sector/Industry 3

7. Product Line 3

8. Products manufactured 3

9. Area of Plant 4

10. Broad Layout Identifying Operations, Storage, Office,

Warehouse etc:

4

11. Major Raw materials Used in the Production of Toys 5

12. Major Suppliers and Location 5

13. Major Customers and Location 5

14. List the Major Machines, Tools, Equipment Used 6

15. Approximate Number of Labor force 6

16. Staff Strength 6

17. Approximate Labor Component of Product 6

18. Brief Details of the Process 7

19. Primary and Secondary Packing Details 8

20. Warehousing Procedure of Finished Goods 8

21. Export Products/Import Products 8

22. Working Capital Requirement 8

23. Average Annual Turnover 8

24. Capital Invested 8

25. Storage Facilities 9

26. Raw material Inventory 9

27. Plant Capacity 9

28. Operational Overhead 9

29. Operational Challenges 9

30. Critical Business Issues to the Enterprise 10

31. Organization Structure 10

32. Competitor’s Analysis 10-12

33. Financial Details and Its Implication 13

34. Value Chain Analysis 15

35. Value Chain of Toyeez 15-16

36. Findings 17

37. Conclusion 17

Bibliography

List of Figures

SL No: Name of figures Page No

Table-1 Table explains process of Toyeez 7

Chart-1 Table explains competitor's strategy 12

Table-2 Table show the sales of the industry 13

Table-3 Table shows the net profit of the industry 14

Chart-2 Value Chain of Toyeez

16

1. Executive Summary

This Report has been aimed at in understanding the overall view of the Toyeez Industry and

the various procedures followed in this Industry. This study gives emphasis on the operation

of overall structure and practices in the Toyeez. The purpose of this report is to identify the

Industry behavior, input- output process, impediments that the management face and

solutions that they provide for these impediments and how do they equip themselves in facing

the current business situation, etc. The data for this Report has been collected by visiting the

Toyeez Industry, interacting directly with the sole-proprietor and staff of the Industry.

From the data so collected, we understand that Toyeez has its own standards and they will not

compromise in quality and price. The Industry is seeking new ways and methodologies to be

adopted to satisfy various kinds of customers. On a visit to production unit of an Industry, we

got the opportunity to learn many new things about machineries, storing facilities,

precautions taken by the Management and an understanding of the marketing related

activities. The task of the industrial visit and the report writing exercise gave us a new

horizon of thinking. We also developed analyzing skills which enabled us to understand the

working of an organization in a competitive environment.

2. Industry Profile

Toys are enjoyable items to all human beings, especially to the kids. There are varieties of

toys available in the market with different brands and non brands with different pricing

strategies based on the availability of place like showrooms, exhibitions, etc. Playing with

toys is important when it comes to growing up and learning about the world around us. Kids

use toys to discover their identity, help their bodies grow strong, learn cause and effect,

explore relationships and practice skills that they need as adults. Adults use toys to form and

strengthen social bonds, teach, remember and reinforce lessons from their youth, discover

their identity, exercise their minds and bodies, explore relationships, practice skills, and

decorate their living spaces. Educational toys for school age children often contain a puzzle,

problem-solving technique, or mathematical proposition.

As earnings of the people has been increased steadily, demand for these products has been

increasing in the market. The market for toys are generally clustered around the temples

espeially during the temple fairs. India is a land of temples. South India, is, indeed,

characterized as the peninsular of temples. This provides a potential market for toys.

The Indian toy industry is estimated at about 400 million US dollars and until now has

generated only 0.5 per cent of the global market. The growth of toys industries is estimated at

15% and there is a good deal of potential in this industry to be tapped by the upcoming

entrepreneurs who are into the manufacturing of toys in India. There is a wide scope for

tapping the local markets and this can be done by improving the transport and communication

network in the local areas. This industry cannot shut its eyes for the competition coming from

the foreign companies. There is an urgent need to improve the quality and economics of

pricing the toys by the Indian companies.

3. Toyeez Industry Profile

TOYEEZ Industry has been established in the year 2000 and it has been owned and managed

by Mr. Henry C.F. Britto. It is a sole proprietorship. It is located in the Plot SPL-4, Industrial

Estate, Baikampady, Mangaluru.

The Industry was started 16 years ago to meet the needs of children in and around the

Mangaluru. The Industry is able to produce and distribute multiple items in the market. The

Industry is located in the urban area with well furnished, good transport system, electricity

supply, water and raw materials.

4. Type of Industry

Toyeez Industry is Sole-proprietor owned business. The Industry is a small scale labor

operated industry which believes in good quality and trying to produce with greater speed and

with low cost of production. The Industry markets its products in the major cities of India.

5. Ownership Pattern

Toyeez is a sole-proprietor owned Industry.

6. Sector / Industry

The Toyeez Industry belongs to micro industry, operating its business in line with the small

scale industries. It is in the manufacturing sector.

7. Product Line

The industry is well versed in producing varieties of toys to its potential. The different types

of products are produced under one roof. They are different types of balls, sound making

toys, masks, kitchen sets, bats like cricket bat, hockey bat, shuttle badminton, etc.

8. Products Manufactured

Plastic Toys

Dolls

Novelty Stationery

9. Area of the Plant

The activities of the industry are mainly driven by laborers and machineries. The Industry

has been spread over across 7600 Square Feet in Baikampady Industrial Area, Mangaluru.

The maximum space available is used for production and storing purposes.

10. Broad Layout Identifying Operations, Storage, Office, Warehouse

The Industry makes effective utilization of the available area .The maximum space available

is used for production and storing purposes.

Manufacturing of Polythene Balls

(2nd floor)

Assembly Line Storage Facility

(1st floor) Raw materials and Finished Goods

Manufacturing of Other Toys Finished Goods Storage

(Ground Floor)

Office

11. Major Raw materials Used in Production

All the raw materials are bought in bulk according to the orders received from the customers.

They include

High-Density Polyethylene (HDPE)

HDPE is known for its large strength-to-density ratio.

Petroleum Products

Petroleum products are materials derived from crude oil and it is processed in oil

refineries.

PVC( Polyvinyl Chloride )

Polyvinyl chloride, more correctly but unusually poly, commonly abbreviated PVC, is

the third-most widely produced synthetic plastic polymer, after polyethylene and

polypropylene.

Poly Propylene.

Poly propylene is one of those most versatile polymers available with applications,

both as a plastic and as a fiber, in virtually all of the plastics end-use markets.

12. Major Suppliers and Location

The Industry has a good network of suppliers from Mangaluru and surrounding area.

There are different suppliers for each kind of raw material required in production. They are as

follows

Indian Oil, Reliance Industries, Chemplast in Chennai and KVK in Mumbai for

Colors

The Industry has maintained a good business relationship with the suppliers by which

production and sales are made possible in time.

13. Major Customers and Location

The Industry has an excellent network of retail shops which have a potentiality to cater major

population. The Industry has Channel of distribution consist of agents and retailers. The

Industry regularly caters its products through rented transport system using trucks for its

distribution purposes. The industry has well established network of 500 shops across South

India. They do not have any such particular major customers

14. List the Major Machines, Tools, Equipment Used

The Industry has following traditional method (manually) and machineries to produce the

products. Interestingly it is managing its competitive strength in the market characterized by

sever competition.

The sole-proprietor of this Industry has invested capital on following machineries

Blow Moulding

Injection Moulding

There are different moulds for different shapes and size to produce varieties of products used

under one machine. Machineries are purchased in Gujarat and Mumbai. The use of

technological equipments has made human efforts easier, faster, quality oriented and error

free in their activities. Plant capacity is 150 tons and utilization capacity is 30%. The reason

behind this is that the workers are unwilling to work during night shifts.

Approximate Number of Labor Force

The Industry has twelve members in its labor force. All twelve laborers are semi- skilled. The

major labor force consists of women.

15. Staff Strength

The Industry is sound enough to carry out its business activities with twelve members as its

human assets. The workers are doing their job with high enthusiasm and motivation.

16. Approximate Labor Component of Product

The labor requirement for preparation of each item varies with the quantity, need of

observation, unskilled labor force and other factors. They can be defined as preparation of

following items and their labor component are as follows.

Two laborers for manufacturing of Balls, Two laborers for manufacturing shuttle cock, Two

laborers for manufacturing polythene Balls, and Three laborers for packaging and remaining

laborers are engaged in business and production.

17. Process Details of Toyeez

Table No-1

Table No 1 Explaining the Process Details of Toyeez

The process starts with taking the plastic beads (high density polyethylene) and put that into

plastic melting machine after adding 30% plastic wastages to melting process which is a first

step in manufacturing process. This melting process is converted into liquid form and passes

through standard injection moulding machine. The delay time depending on the thickness of

the layer and moved to ball shaped machine which have two pushing handles. This process

gives shape to the plastic materials. When the cavity is 100%, a semi-skilled person pushing

two handles simultaneously nozzle is generated and automatically nitrogen is injected.

The final process involved is, the plastic material is put into the water tank to reduce the

hotness of the material and semi-skilled person is taking the extra wastages from the ball and

gives a final touch up to the shape of the ball.

18. Primary and Secondary Packing Details

Finished Toys

Packing Process

Grading Packing

Manufacturing Process

Blow Moulding Injection Moulding

Raw materials

HGPE Petroleum Products

PVC Poly Propylene

The packing procedure is simple in Toyeez industry. The Industry places the finished

products inside net packaging covers or bags. The packing is done differently based on items

like balls, bats, musical instruments, kitchen sets, etc. The Industry is more focused on

quality and trustworthy delivery of service rather than attractive packaging.

19. Warehousing Procedure for Finished Goods

The warehousing facility for Toyeez Industry is located inside the industry. There is no

separate warehouse to store the finished goods and raw materials. The finished goods are

stored in packs. There is no need of a big separate ware housing unit because most of them

are produced against the orders and they are quickly dispatched to the market.

20. Export Products /Import Products

There are no imports and exports.

21. Working Capital Requirement

The activities of business are continuous and uncertain. There are many difficulties in

calculating the exact working capital of actual business due to various variables that affects

the day to day business. Approximately Rs.10,00,000 is the working capital requirement.

22. Average Annual Turnover

The annual turnover of Industry varies from year to year. Rate of turnover from Industry to

Industry will not be the same. The average annual turnover of this industry is approximately

as Rs. 60, 00,000 capital invested.

23. Capital Invested

The initial capital investment was Rs.1,50,000.

24. Storage Facilities

The products are stored inside the Industry itself.

25. Raw material Inventory

The raw materials are purchased from a good source. It is interesting to note that Toyeez has

a good network of suppliers. The quantity of purchase varies with the quantity of sales order

in hand. The Industry gives more importance to the quality of raw materials and customers’

delight.

26. Plant Capacity

The Toyeez Industry is a small scale industry. This Industry has the capacity to produce

approximately 150 tons annually but it only utilizes 30% of its plant capacity.

27. Operational Overhead

The operational overhead involves the electricity, wages of workers, maintenance and repairs

of production equipment, cleaning, etc.

Materials - Rs. 1, 20,000 per ton.

Labor - Rs. 8,000 (minimum) and Rs. 16,000 (maximum).

Overhead - 30% on selling price.

Other Expenses - 20% on selling price.

28. Operational Challenges

Continuous motivation and a genuine interest in job.

Lack of adequate Capital.

Hyper competitive market.

Use of sophisticated technology.

29. Critical Business Issues to the Industry

Inadequate Availability of Laborers.

Intense Competition.

Increasing Cost of Production.

Changing Pace of Technology.

Lack of Professionalism.

30. Organization Structure of Toyeez

Proprietor (Managing Director)

Supervisor Salesmen

Production Grading Packaging

31. Competitor’s Analysis

Toyeez industry is located in the industrial area of Baikampady and it has to face competition from

one of the Industry present in the Young World Kasaragod, Kerala. The only Industry which is

competing with this Industry in technology, sales, market, cost and other factors. There is an small

unit in Udupi but there is no much competition in the market, so Industry is not bothered about

those small units. The major competition to Toyeez is Chinese products that are imported to India

and they positioned well in the Indian toys market. This competition had a greater impact on Indian

small scale toys industry and 40% of Indian small scale industries had shut down. 75% of toys

produced and distributed worldwide is from China. Companies like Good baby, Auldey and Great

dreams are the major competitors for Toyeez industry.

Competitor’s Strategies

Pricing Strategy Competitors are adopting lower price strategy in order to lead the

competition in the market. Toyeez is unable compete with the pricing strategy as

materials cost is higher.

Quality of the Products Products manufactured by competitors is of high quality

compared to Toyeez products, this is because of cost and availability of the raw

materials.

Distribution Network Toyeez does not has their own distribution network and

transportation facility as the cost is high. Competitors has their own distribution

networks and cover wide areas of nation and world.

Technology Technology is consistently getting updated and according to the changes

competitors are updating but Toyeez is still using the traditional technology that is

certain products are still produced manually, this is because of insufficient capital.

Chart No-1

Chart 1 Showing the Competitor's Strategy

(The information pertaining to the above chart has been provided by the owner during the

interaction)

Industry is unable to update technology as it lacks capital, as the cost of the machineries are

relatively higher, they cannot afford it and even the maintenance cost of these machines are greater.

Toyeez is unable to capture the entire market as they do not have their own transportation facility

and so the Industry is unable to meet the changing needs of the market. As the cost of the raw

materials and labor is high, cost of production increases and the quality of the products decreases.

In spite of all these, the company is still sustaining because of its trust worthy in the market with its

suppliers and customers. Toyeez has good network in local market but not in global market. Young

World Kasaragod and Chinese products are the major competitors for Toyeez Industry, they have a

good presence in the global market. The above Chart-1 shows the strategies adopted by the

competitors and the Chinese products set the benchmark in the toys market.

32. Financial Details of Toyeez industry

Table No-2

Competitor's Stratergy

Cost Effective

Technology

Pricing Stratergy

Quality

Table 2 Shows the Sales of the Industry

The ultimate goal of every industry is sales maximization. There are two reasons for increasing

sales, first reason for profit maximization and second reason is for reducing its overall cost of

production. To be successful in the market, the Industry should adopt effective sales technique in

order to increase its sales.

(The above tabular information is provided by the owner of the industry during the interaction)

Interpretation

The sales of Toyeez is consistently increasing. It is clear from the above Table-2 that sales of this

industry has been increasing from 2010 to 2014. In the year 2010, the sales was Rs.36,00,000

approximately and in the year 2014, the sales has been increased to Rs. 52,00,000.

Table-3

0.00

10,00,000.00

20,00,000.00

30,00,000.00

40,00,000.00

50,00,000.00

60,00,000.00

2010 2011 2012 2013 2014

Sales

sales

Table 3 Shows the Net Profit of the Industry

Net profit is earned after deducting all the working expenses. Net profit or net income is a measure

of profitability. It is said that if the company has net profit, it means to say that it is able to meet all

its expenses.

(The above tabular information is provided by the owner of the industry during the interaction with

the authors)

Interpretation

From the above Table-3 we can interpret that there is an inconsistency in its net profit. The data is

provided for the year 2010-2014. In the year 2010, the net profit is Rs. 41,00,000 , in 2011 Rs.

47,00,000 , in 2012 Rs. 42,00,000 , in 2013 Rs. 33,00,000 and in the year 2014 it is Rs. 38,00,000.

Sales is increasing but net profit is decreasing because of increase in cost.

The industry's total capital is Rs. 18,26,591.34, major capital consist of secured loans of Rs

17,47,918.83 as per year 2014-15. The industry's major current assets includes sundry debtors of

Rs 3,35,673.00 as per year 2014-15.

Financial Implications

0.00

50,000.00

1,00,000.00

1,50,000.00

2,00,000.00

2,50,000.00

3,00,000.00

3,50,000.00

4,00,000.00

4,50,000.00

5,00,000.00

2010 2011 2012 2013 2014

Net Profit

Net profit

Insufficient capital for its daily operations.

Increase in debtors which will have bad impact on cash.

Cost of production is high and the return on their investment is low.

Inadequate of working capital to meet the market demand.

The industry has invested its capital majorly through the loans and there is an obligation to

pay every year fixed rate of interest on loan.

The major expense of the Industry is to pay interest on loan.

The return from the Industry is less and it has major Income from other sources like

agriculture, rent received, interest received, etc., the Industry can utilize these incomes for

the growth of the Industry.

When comparison is made for last four years’ financial statements, it may be concluded that

there is a very small increase in its sales but not in its net profit. This is due to increase in

overall cost of production .

33. Value Chain Analysis

The value chain is the process or activities by which a company adds value to an article,

including production, marketing, and the provision of after-sales service. Products pass

through a chain of activities in order, and at each activity the product gains some value. The

chain of activities gives the products more added value than the sum of added values of all

activities.

Chart-2

Value Chain of Toyeez

34. Findings

Entry of Raw matrials

• Raw matrials are supplied to industry by the local market, quality of the toys is based on the nature of raw matrials purchased.

Manufacturing Process

• Improved productivity since the assembly line is in the plant itself.

• Entire process is not automated since most of the activities carried manually.

• More importance is given for testing facilities.

Outbound Logistics

• Propensity to buy increases since buying of the toys has great learning effect to the kids.

• Targeted customers are parents and final cunsumers are kids. End Consumer

• No extra precaution is requried so as to ensure the quality of the end product.

• Industy does not have its own transportation facility so it is out sourcing it.

Sales and Retailing

• Retailer need more shelf space for display the final produc.

• Margin per square foot dercreases.

• Increases the sales as customer prefere larger units.

The industry does not have adequate capital.

The space in the industry has not been utilized properly, machineries are not

organized and goods are stored in a haphazard way.

The Management has provided with good working facilities to its laborers like

transportation facility, accommodation facility, tea and snacks but the only problem is

the space for working is so congested as things are out of control.

Women workers has been given importance for their career growth. The Management

has been supporting women workers by providing an equal opportunities.

The industry is mainly facing stiff competition from Chinese toy products. This is

going to be a big challenge to Toyeez.

35. Conclusion

The TOYEEZ industry is working on labor oriented activities. The industry is following

traditional method of production but new technology has been adopted in certain areas of

production. There has been problem with promotion of product because TOYEEZ industry

does not have any brand name and it is not promoting its products in the potential market.

The Industry has to make earnest efforts in adopting modern technology in its production unit

and it has to tap the potential new markets to market its products. Professional approach to

business is very much required for Toyeez so as to face the stiff competition posed by the

Chinese and local companies.

Bibliography

http //assocham.org/newsdetail.php?id=4125

http://www.indianmirror.com/indian-industries/toy.html