SOFT TOYS

INTRODUCTION
Soft Toys are made of fur or plush fabrics. They find wide usage in homes by
children, women and the elderly using as pets or as ornamental displays. Several
patterns like Teddy Bear, Mouse, Pigs, Dog, Cat, Chicken, Monkey, Elephant and
various other animals and birds are common among soft toys. They resemble living
creatures. The main features of soft toys are that they can be washed or surface
cleaned in cool or lukewarm water with mild soap and liquid detergents. The soft
toys have good market abroad in USA, Europe and other advanced countries as the
labour charges involved in making there are very high and they are imported from
other countries. The Soft Toys market is slowly picking up in India also.

MARKET POTENTIAL
In highly developed nations like USA, Canada, Germany and other European
countries, Soft Toys find an important item in their monthly purchases. The children
are very fond of life like toys of animals, birds and other pets. The toys adorn the
home in show cases, bed rooms, kitchen cans, sit-outs etc and grace the interiors.
Frequently these soft toys are replaced and each child will have too many soft toys
of different patterns and sizes. Even women and elderly folk in homes have their
own soft toys.

The child observes a lot of things around him – animals, birds and he will be thrilled
to have miniatures of these and play with them. Only this taste has opened up a
large market potential for soft toys especially those made from developing
countries like ours. Several export oriented soft toys manufacturing units have been
set up in India in view of increasing demand. Some of the units which are set up in
Chennai for export of Soft Toys are the following:
1. M/s.Chandamama Toytronix Pvt. Ltd., Chennai 26.
2. M/s.T.G.Toys Pvt. Ltd., MEPZ, Chennai 45.
3. M/s.Ani toys Pvt. Ltd., MEPZ, Chennai 45.
4. M/s. Soft World, Tiruvanmiyur, Chennai 41.
5. M/s. Park Toys India Pvt. Ltd., Chennai 32.
6. M/s. Shirala Woogie Toys Co., MEPZ, Chennai 45.
The manufacturer has to locate suitable buyers in USA, Canada, North America
countries, Europe and other places and negotiate with them for items, quantity and
specifications of supplies. Normally orders are placed bulk, large quantity of a
particular size and pattern. As the main raw materials are being imported, proper
planning of production to keep the schedule is a pre-requisite. The Handloom
Export Promotion Council has to be contacted for obtaining addresses of
prospective buyers abroad. For local sales, fancy shops, toy shops, super markets
and other stationery shops where they are sold have to be contacted with attractive
discounts.

TECHNICAL ASPECTS
INSTALLED CAPACITY
The project envisages a capacity of 3000 Nos. Soft Toys per day. This works out to
900000 Nos. of Soft Toys per annum, on single shift operation, 8 hours per shift,
and 300 working days in a year.

PLANT & MACHINERY

The cost of machinery and equipment works out to Rs.47.00 lakhs as detailed
below:
Sl. No Description Qty
1. Gear Type Press 1
2. Stopping M/c.(Staffing M/c.) 1
3. Eye setter 1
4. Fan C Feeding Machine 1
5. Pile Reclaiming M/c. 1
6. Cutting M/c. for cotton Gin 1
7. Compress 1
8. Needle Detector 1
 9. Dusting M/c. for cutting material 1
10. Dusting M/c. for cutting material 1
11. Cotton Gin 1
12. Dust absorber of the finished goods 1
13. Dust absorber of the finished goods 1
Total A 28.70
Sewing Machine -- 30 Nos.
Patterns – 1 set
Value in Indian Rupees (Rs.lakhs)-Total-B 13.80
Furniture & other Miscellaneous items Total-C 11.50
Total machinery value -- A+B+C (Rs.lakhs) 54.00

MANUFACTURING PROCESS
The following chart shows the manufacturing process of Soft Toys.
DESIGNING

PATTERN CUTTING

CUTTING OF SYNTHETIC FUR/PLUSH FABRICS TO DESIGN

FIXING THINGS LIKE GLASS EYES, NOSE, BUTTONS, JOINTS ETC.

MECHANICAL STITCHING WITH STITCHING MACHINE

STUFFING WITH SPONGE COTTON OR MANMADE POLYSTER FIBER FILL

CLOSING

PACKING
QUALITY SPECIFICATION
The materials to be used for Soft Toys should be metal free. For export purpose
only imported special fur, plush fabrics are to be used. The soft toys is to be made
as per International standards conforming to American Standards 16 CFR/1303,
1501, 1601, ASTEM F.963-86. The seams and plastic fixtures should be pull-
resistant as they should withstand upto 66 Newtons pull-force only nontoxic
colours, dyes, chemicals and materials should be used for manufacture.

RAW MATERIALS
The main raw materials required are Synthetic Fur, Plush fabric, Sponge or
Manmade polyester fiber fill, other consumables like threads, fixing items eyes,
nose, etc.
Material cost per piece is Rs.28.00/-

LAND & BUILDING

Land required -- ½ acre
Building 10,000 sqft. – Rent Rs.1,00,000/-,
Advance -- Rs.10.00 lakhs.

UTILITIES
Power:
The power requirement of the unit will be about 72 HP.
Water:
Water is not required for the process.
Man Power:
The main workers to be employed by the unit will be the following.
Category Nos. Monthly Total
Salary monthly
Salary
Designer 1 12000 12000
Supervisors 5 8000 40000
 Semi Skilled workers 60 5000 300000
Helper 20 4000 80000
432000
Add : Benefits 20% 86400
Total 518400
6220800
Administrative salary
General manager 1 15000 15000
Export manager 1 8000 8000
Accountant 1 6000 6000
Assistant 5 4000 20000
49000
20% 9800
58800
705600
Total wages per annum [Rs.lakhs] Rs.0.00 Rs.69.26

IMPLEMENTATION SCHEDULE
The machinery can be ordered and erected within a period of 4 months, building
can be constructed in 4 months period. The project can be implemented within a
period of 6 months after conceiving the idea.

COST OF PRODUCTION & PROFITABILITY

ASSUMPTIONS
Installed capacity 900000 pieces of soft toys per annum (3000
pieces Per day)
Capacity utilisation Year-1 -60%
Year -2 -70%
Year-3 onwards- 80%
Selling price Rs. 51 per piece
Raw materials Rs. 28.00 per toy
Power Rs. 6.77 lakhs per annum at 100% capacity
utilisation.
Wages and salaries Rs. 69.26 lakhs as per the break up given

Repairs and Maintenance
Depreciation
Selling general and
administrative expenses
Interest on Term loan
Interest on working capital
Income tax
above with increase of 5% every year.
Rs. 2.76 lakh per annum with annual increase
of 10%.
Written down value method -15 % on
machinery
Rs.18.00 lakhs for the first year with annual
increase by 5% on every year.
12% per annum
12 % per annum
33.22 % on profits

LIST OF MACHINERY & EQUIPMENT SUPPLIERS

1. M/s. CATSSO JONG Co. LTD. RM306, Hongwon Building 176-8.
2. M/s. Chugyo Dong, Chung-Gu, Seoul, Korea, Fax – 02-268-1755; Phone 02-
268-1753/4
3. M/s.Intech Corporation, No.1001-1, 10F, Jeil Building, 44-35, YOID – DONG,
Yong Dungpo-Fu, Seoul, Korea, Fax 82-2-761-9659; Phone 82-2-3448-4309-
4310

FINANCIAL ASPECTS
1. COST OF PROJECT [Rs.lakhs]

Building (Advance) 10.00

Plant & Machinery 54.00
Other Misc. assets 2.00
Pre-Operative expenses 5.00
Margin for WC 10.16
81.16

2. MEANS OF FINANCE
Capital 40.66

Term Loan 40.50

81.16
3. COST OF PRODUCTION & PROFITABILITY STATEMENTS
[Rs.lakhs]
Years 1 2 3
Installed Capacity (Nos.) 900000 900000 900000
Utilisation 60% 70% 80%
Production/Sales (Nos.) 540000 630000 720000

Selling Price per piece Rs.51.00

Sales Value (Rs.lakhs) 275.40 321.30 367.20

Raw Materials 151.20 176.40 201.60

Power 4.06 4.74 5.42
Wages & Salaries 69.26 72.73 76.37
Repairs & Maintenance 2.76 3.04 3.34
Depreciation 13.50 10.13 7.59
Cost of Production 240.78 267.04 294.32

Admin. & General expenses 18.00 18.90 19.85

Interest on Term Loan 4.86 4.25 3.04
Interest on Working Capital 4.41 4.41 4.41
Total 268.05 294.60 321.62

Profit Before Tax 7.35 26.70 45.58

Provision for tax 2.44 8.87 15.14
Profit After Tax 4.91 17.83 30.44

Add: Depreciation 13.50 10.13 7.59

Cash Accruals 18.41 27.96 38.03
4. WORKING CAPITAL:
Months Values % Margin Bank
Consumptions Amount Finance
Raw Materials 2.00 25.20 25% 6.30 18.90
Finished goods 0.50 10.03 25% 2.51 7.52
Debtors 0.50 11.48 10% 1.15 10.33
Expenses 1.00 0.20 100% 0.20 0.00
46.91 10.16 36.75
6. PROFITABILITY RATIOS BASED ON 80%
UTILISATION
Profit after Tax 30.44
= 8%
Sales 367.20

Profit before Interest and Tax 53.03

= 45%
Total Investment 117.91

Profit after Tax 30.44

= 75%
Promoters Capital 40.66

7. BREAK EVEN LEVEL

Fixed Cost (FC):
[Rs.lakhs]
Wages & Salaries 76.37
Repairs & Maintenance 3.34
Depreciation 7.59
Admin. & General expenses 19.85
Interest on TL 3.04
110.19

Profit Before Tax (P) 45.58

FC x 100 110.19 80
BEL = = x x 100
FC +P 155.77 100

57% of installed capacity