With a production capacity of 10.2M a day, this company supplies promotional toys to Colgate, Puma

When Gaurav Mirchandani enrolled at the University of Georgia in 2005 to pursue a Bachelor's degree in Finance and Marketing, he had no idea that a series of opportunities would eventually bring him back to India, where he would find his true calling—toys.

Gaurav founded the Indore-based Candytoy Corporate (CTC) in 2019. The company produces plastic promotional toys under the brand name SM Toys.

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CTC has three factories with over 250 machines and a daily production capacity of 10.2 million toys. It had a turnover of Rs 125 crore in FY 22 and expects to close the current fiscal year with a turnover of Rs 200 crore.

The beginning 

During his undergraduate days in the US, Gaurav worked a number of different on-campus jobs to pay his tuition. During the final year of graduation in 2007-08, he was managing a perfume store. Since his sales numbers were high, the owner offered him the opportunity to buy the store. 

Gaurav, who was pursuing his MBA at the time, did not have the money to invest in the store. The owner's requirement was that Gaurav would have to sell the perfumes that only he supplies.

During the festive season in November-December, Gaurav made $200,000 in sales, allowing him to return $80,000, the amount owed to the owner, and then restock the store.

“I learned more than any MBA class would have taught me. Christmas is a crazy time there. I decided I would open one store every year during the festive season,” Gaurav tells SMBStory. 

He, along with his cousins, opened a chain of around six perfume stores, called Pure Sentiments, in Miami, Pensacola, Atlanta, and Florida.

“In 2013-14 when the online business started growing a lot in the US, there was a huge decline in revenues of these kinds of stores. I was on the lookout for new business prospects,” says Gaurav. 

Gaurav returned to India in 2015 for a vacation. At the time, Yellow Diamonds, a snacks company, was a client of his father's dye and chemical company.

During a chance encounter with a company representative, Gaurav learned about the promotional toys that Yellow Diamonds used and how they were all sourced from China. 

The company offered him the opportunity to travel to China and trade promotional toys. “I accepted the offer because I was curious about the Chinese market and the manufacturing scenario there. When I went there I saw that even small factories were doing a huge turnover,” says Gaurav. 

He took a loan from friends and family to buy toys worth Rs 20 lakh, making a small profit of around Rs 1.25 lakh. However, seeing the potential in the segment, he opened a trading firm for promotional toys in 2016.

Around the same time, another snacks company and a competitor for Yellow Diamonds, Crax, was using balloons as free gifts inside their packets. 

“This made things go haywire at Yellow Diamonds. They said that whoever would arrange these balloons for them would be given a big purchase order. We received a Rs 2 crore order for 20 million pieces,” says the founder. 

Gaurav returned to China, closed deals with local businesses, and imported large quantities of balloons. This is when he decided that he would not return to the US. 

Establishing manufacturing units

The Chinese government’s massive support has propelled the country’s toy industry. China-made toys are less expensive, and their manufacturing units have better infrastructure. 

About 80% of toys in India are imported, of which China accounts for around 70%. 

However, the steps taken by the Indian government have helped in reducing imports. The government increased the excise duty on toys from 20% to 60% in 2020. 

It also imposed a ‘Toys Quality Control Order’ whereby toys sold in India for kids are required to have an ISI mark to approve the quality. Chinese toys have components of heavy metals that are harmful to children.

According to government data, these measures reduced toy imports from Rs 2,960 crore to Rs 870 crore in 2021-22.

“In India, there was a huge demand for promotional toys but nobody was manufacturing them. There was a huge reliance on China, and I wanted to explore this gap,” says Gaurav. 

“This is also an employment-driven industry. I wanted to do something that could create more and more jobs. This inspired me to enter the manufacturing segment,” he adds.

In 2019, Gaurav founded Candy Toy Corporate.

“Moulds are the most integral part of the toy industry. It requires innovation and creativity,” says the founder. Until 2020, the company was dependent on China, Japan, and Taiwan for moulds. 

In 2020, the company established its own manufacturing units. It now has three factories located in Indore, Hyderabad, and Delhi. 

The design team is headed by Gaurav. The company now has more than 2,200 moulds in its library.

Gaurav's wife, Reema Mirchandani, handles the business's operations, while he handles sales.

Under SM Toys, CTC collaborates with snack companies to create promotional toys. It also partners with other brands that are looking to attract youth. Its clients span across sectors from airlines Vistara and AirAsia to shoe brands such as Action and Puma. 

It has also partnered with companies such as MTR, and Bournvita. For Colgate, SM Toys created sand timers to encourage kids to brush their teeth for two minutes.

Generating employment

SM Toys recently began employing middle-aged and older women under their initiative called ‘Amma Movement’, to package their products. Toys must be properly packaged so that they do not come into contact with food. For this, the company is working with approximately 5,000 women, a majority of whom are in their sixties and seventies. 

These women have set aside a small area in their homes to pack the toys. The minimum payment for this is Rs 10,000 and depending on the order, they can earn up to Rs 20,000.

Other than this, 700 people are directly employed by the company.

Challenges in the sector

According to Gaurav, they have a monopoly over the manufacturing of promotional toys in the Indian market. “There are challenges to start in this sector. One has to have a lot of moulds in the library to attract the clients. There are small players in Delhi who are using one or two moulds,” says Gaurav. 

“Another challenge is the infrastructure. There are a lot of tools that we need to manufacture the toys. Parallel growth of the manufacturing units for these tools is important,” says Gaurav. 

If the company gets an order to make LED toys, they still have to depend on China for the tools needed. “There are gaps where new manufacturing units can up,” he adds.

Future plans

SM Toys started exporting to Turkey, South Africa, Japan, and Saudi Arabia last year. It has closed orders with companies in Europe and US, and plans to export to them in the next financial year. It is also opening a new factory in Jebel Ali, Dubai.

For FY24, the company has a revenue target of Rs 200 - Rs 250 crore, and is expecting a YoY growth of 40%.

(The copy has been updated to correct a spelling error.)