OK Play Interview with Rajan

OK Play India is a company which makes plastic toys. It has got a market cap of Rs 200 crore.

Rajan Handa, MD of OK Play India stated that they initially started with toys but have now diversified into roto-moulding, which is a kind of plastic molding different from injection and blow moulding.

Handa adds that they have an extensive distribution network. 

Excerpts from CNBC-TV18's exclusive interview with Rajan Handa:

Q: Tell us about your product and how big is the market for it? How much of your revenues come from domestic sales and do you have any exports at all?

A: We started with plastic toys but now we have diversified into several other areas. Toys, per se, may not be the main line of business today, though it has been the major contributor till now.

We mainly make playground equipment and children's furniture. We are doing products for children to play on, rather than play with. So, we are not too involved in exports since it is largely voluminous products and we are looking at a large domestic market.

Q: Do you tie-up with schools and source your equipment to them or do you sell like any other toy manufacturer through retail stores?

A: We have a rather extensive distribution network. In fact, we have the best distribution network for toys in the country today. These distributors, who are spread throughout the country, are also servicing the schools, playschools and creches.

We also have a large number of institutions on our direct mailers and we supply directly to them and chain stores, so on to the retail stores also.

We also have arrangements with UNICEF for most of our furniture products. Our products are supplied to these schools by the UNICEF Group.

Q: Are you negotiating with a global company, for a large molded plastic products order, which will transform your topline? What kind of products would that order entail and how close are you to sealing it?

A: Basically, it was toys that we started with but now we have diversified into 4-5 sectors. We have been largely into roto-moulding, which is a kind of plastic moulding different from injection and blow moulding, which is carried on universally.

Roto-moulding allows us to do products which are large, voluminous, and hollow. We have tied up with one of the best companies in the US doing roto-moulding products, especially for the auto sector. That is where one of our major key growth areas is coming up.

We would be looking at servicing the tractor market, the LCV, the bus market, three-wheeler market and eventually the two-wheeler market for this product range.

Q: What might it do for your order book and for your sales?

A: The market size is pretty large. If one looks at the 2005-06 figures for tractors, we did close to 0.3 million tractors in the country, about 0.22 million trucks and LCVs, close to 0.45 million of three-wheelers and almost 7-million of two-wheelers.

Looking at the numbers and growth rates we projected of almost 10-12%, I think there is a huge market. We are looking at products which are basically replacement products for the existing ones. For example, fuel tanks are primarily being used in metal today and we will be getting better and modern options in plastics.

Similarly, in the LCV and the truck market, we are doing products like bus seats, bumpers shields and so on. That is a huge market available and we are in talks with several large companies within the country for looking at their requirements.

Q: What kind of margin profile does this business have, particularly about the auto sector?

A: The auto sector, would in this case, give us a decent 10-15% net profit.

Source: moneycontrol.com