Toy maker Funskool India Ltd, promoted by MRF Group, has recorded a turnover of $40 million in FY26, which is marginally short of their initial growth targets due to the US tariff tensions, but is a healthy 14 per cent y-o-y growth. The revenue is largely led by exports, that have grown at 19 per cent year-on-year during the same period.
Given the ongoing geopolitical situation in West Asia, the company is anticipating a moderate growth outlook of 12–15 per cent, with plans to revisit targets after Q1FY27, once the situation stabilises.
The US tariffs had a noticeable impact on export momentum in the second half of FY26, KA Shabir, CEO, Funskool India, told businessline. But, we were still able to maintain overall growth rate by ways such as offering price adjustments to customers to offset the tariff differential and engaging closely with them to prevent relocation of projects to countries like Vietnam and Indonesia, he added.
“We also undertook direct engagement with some of our customers, including visits to their offices in Hong Kong, which helped retain business and has resulted in a positive order outlook for Q1 of FY27,” Shabir said.
Funskool, over the past year, has also strengthened partnerships with global companies such as Spin Master (Canada), Moose Toys (Australia), Melissa & Doug (USA), and Asmodee (France), along with several other European partners. In the last year, it has also established new partnerships last year with Learning Resources (USA) and Buffalo Games (USA).
However, just as the tariff situation was stabilising for the industry, the US-Iran war and the resulting tensions in West Asia have brought challenges in the form of input cost volatility. The toys major anticipates undertaking price negotiations with global customers or absorbing part of the input costs increase, which could hit margins.
“While the order book remains encouraging, the sharp increase in raw material prices, especially plastics, is a key concern. Currently, existing and pipeline inventories are supporting production until end-April/early May, but beyond that, higher input costs will start impacting exports,” Shabir said. “Overall, while demand remains good, cost pressures and margin management are the challenges for exports in the current environment,” he added.
On the bright side, the CEO said FTAs have opened up good opportunities for exports by improving market access and making Indian products more price-competitive.
“In the case of the Europe FTA, we initially saw a strong and encouraging response from customers, with increased engagement and interest in sourcing from India. However, the momentum has slowed in recent months due to the lack of clarity on the timeline for implementation,” he said. EU customers are waiting to see how the actual duty advantages play out, he added.
As for the expansion of its Goa plant, Shabir notes that the facility is expected to be completed by March 2027.
The domestic business, which holds a lower share relative to exports, has grown at a modest single-digit pace over the last two years, Funskool said. It is witnessing encouraging traction in key categories such as Fundough (dough) and Handycrafts (arts & crafts).
In the domestic business, Funskool expects a significant shift in growth momentum for FY27, driven by the introduction of new categories such as friction vehicles under the brand “BlazeTrix” and remote-control cars under “VoltRush”, along with the addition of popular licenses such as Paw Patrol.