 "People join and leave Mattel every day: Peter Broegger")
The Mumbai office of Mattel, the world’s largest toy maker, saw the exit of senior-level people recently in the wake of the audit of its books. Peter Broegger, senior vice-president and general manager, (Asia-Pacific), Mattel East Asia, tells Viveat Susan Pinto what has gone wrong and what corrective steps the maker of the popular Barbie range of dolls is taking to restore stakeholders’ confidence in the company. Edited excerpts:
What did the forensic audit show, which prompted you to ask senior managers to leave the company?
We do audits every year in India. This is an annual process where we go through full audit of our inventory and of our books. In between, we tend to do one or two spot checks on our internal audits, which is something we do across the world on all our businesses. This is part of our normal business procedure.
But this audit was different. There were discrepancies in the monthly sales numbers. You confronted the management and then came the spate of resignations. Wouldn’t you want to clarify your position on the issue?
Karun (Gera, former country head of Mattel India) handed in his resignation earlier in the year. We had a conversation where I said just hang in till I am back in the marketplace and we can have an opportunity to figure out how to navigate transition. I don’t want to get into details of people either working for or having worked for Mattel. Resignations happen as part of every normal business. People join and leave Mattel every day. Karun resigned earlier in the year and so did the operations and finance heads. The audit and the resignations are merely a coincidence.
What steps are you taking to restore confidence of stakeholders in the business?
Our commitment to India when you compare it with any other toy company in the business is second to none. You don’t see any other international player having the scale we have in India. We have been in the country for many years. We have been through ups and downs. The toy industry has been through its ups and downs. There are years when we have great movies and properties. There are years when we make the wrong bets. But as far as our commitment to India goes, short-term or long-term, it remains intact. There is no question about that. Yes, what we do is, we always look at who is the best possible person to run the company. That person can be internal candidate or an external one, from within India outside. But we sit down and see who is the best person who can lead the company. We’ve had a successful run in the past three to five years. We have all the intent to continue that.
So who have you identified as replacements to the people who have moved out of the company, especially your country head?
It is all in the process. Right now we have a team running the office, that is, Rahul (Bhowmik, marketing director), Ritesh (Bindal, sales director) and Rasika (Mahajani Malhotra, HR head). They are doing a brilliant job and are doing everything that needs to be done to grow the business. I am here three to five times a year and am available at short notice if required.
What is your turnover from the Indian market and what are you doing to improve market share?
There is no real syndicated study of the Indian toy market. The closest that you can get to an estimate of the market is from Euromonitor. I believe the latest published data from Euromonitor is from 2012 (2013 has not been updated yet). In 2012, Mattel’s share of the traditional toy market was 9.8 per cent and that of our closest competitor (Hasbro plus Lego) was 6.5 per cent. I have a pretty good feel of what the market did last year. My hunch is that the market grew in high single digits — in the region of five-10 per cent. We outpaced that growth by a factor of three. If you run a single company and if you have competition putting different companies together, it is like comparing one biscuit company to three biscuit companies. What I know is, we grew last year. We feel good about where we are and about the momentum we have in the business. And more importantly, we have a solid platform and leadership team that can take our business to the next level.
What are the investments you’ve made, and continue to make, in the Indian market?
The fact that we are in the marketplace in comparison to our competitors who have chosen to work through distributors is an investment in itself. There is no problem with working with distributors. We work through them in a number of markets in Asia-Pacific. But a full-blown organisation means having staff, investing in their training and development, travel, etc. From a marketing and branding point of view, we obviously make a lot of investments to ensure that our business grows. We have a manufacturing facility here in India, which is a unique characteristics of the market. There are very few places on the planet where Mattel has an associated manufacturing facility. We have created one here in India that works hand-in-hand with the local subsidiary to respond to local needs in addition to our global sourcing of products. Everywhere else, the units there get their products from our global manufacturing hubs located in China, Indonesia, Malaysia, Mexico and Thailand. While almost 75 per cent of our portfolio in India consists of imported toys; 25 per cent is manufactured locally.
Where does India stand in the pecking order of markets in the Asia-Pacific region? And what are you doing to plug the gaps in your business here?
India ranks among the top-five markets in Asia-Pacific, the others being China, Japan, Australia and south-east Asia. As far as our gaps are concerned, we need to ensure we are getting placement in all the stores we want to be in.
What did the forensic audit show, which prompted you to ask senior managers to leave the company?
We do audits every year in India. This is an annual process where we go through full audit of our inventory and of our books. In between, we tend to do one or two spot checks on our internal audits, which is something we do across the world on all our businesses. This is part of our normal business procedure.
Also Read
Karun (Gera, former country head of Mattel India) handed in his resignation earlier in the year. We had a conversation where I said just hang in till I am back in the marketplace and we can have an opportunity to figure out how to navigate transition. I don’t want to get into details of people either working for or having worked for Mattel. Resignations happen as part of every normal business. People join and leave Mattel every day. Karun resigned earlier in the year and so did the operations and finance heads. The audit and the resignations are merely a coincidence.
What steps are you taking to restore confidence of stakeholders in the business?
Our commitment to India when you compare it with any other toy company in the business is second to none. You don’t see any other international player having the scale we have in India. We have been in the country for many years. We have been through ups and downs. The toy industry has been through its ups and downs. There are years when we have great movies and properties. There are years when we make the wrong bets. But as far as our commitment to India goes, short-term or long-term, it remains intact. There is no question about that. Yes, what we do is, we always look at who is the best possible person to run the company. That person can be internal candidate or an external one, from within India outside. But we sit down and see who is the best person who can lead the company. We’ve had a successful run in the past three to five years. We have all the intent to continue that.
So who have you identified as replacements to the people who have moved out of the company, especially your country head?
It is all in the process. Right now we have a team running the office, that is, Rahul (Bhowmik, marketing director), Ritesh (Bindal, sales director) and Rasika (Mahajani Malhotra, HR head). They are doing a brilliant job and are doing everything that needs to be done to grow the business. I am here three to five times a year and am available at short notice if required.
What is your turnover from the Indian market and what are you doing to improve market share?
There is no real syndicated study of the Indian toy market. The closest that you can get to an estimate of the market is from Euromonitor. I believe the latest published data from Euromonitor is from 2012 (2013 has not been updated yet). In 2012, Mattel’s share of the traditional toy market was 9.8 per cent and that of our closest competitor (Hasbro plus Lego) was 6.5 per cent. I have a pretty good feel of what the market did last year. My hunch is that the market grew in high single digits — in the region of five-10 per cent. We outpaced that growth by a factor of three. If you run a single company and if you have competition putting different companies together, it is like comparing one biscuit company to three biscuit companies. What I know is, we grew last year. We feel good about where we are and about the momentum we have in the business. And more importantly, we have a solid platform and leadership team that can take our business to the next level.
What are the investments you’ve made, and continue to make, in the Indian market?
The fact that we are in the marketplace in comparison to our competitors who have chosen to work through distributors is an investment in itself. There is no problem with working with distributors. We work through them in a number of markets in Asia-Pacific. But a full-blown organisation means having staff, investing in their training and development, travel, etc. From a marketing and branding point of view, we obviously make a lot of investments to ensure that our business grows. We have a manufacturing facility here in India, which is a unique characteristics of the market. There are very few places on the planet where Mattel has an associated manufacturing facility. We have created one here in India that works hand-in-hand with the local subsidiary to respond to local needs in addition to our global sourcing of products. Everywhere else, the units there get their products from our global manufacturing hubs located in China, Indonesia, Malaysia, Mexico and Thailand. While almost 75 per cent of our portfolio in India consists of imported toys; 25 per cent is manufactured locally.
Where does India stand in the pecking order of markets in the Asia-Pacific region? And what are you doing to plug the gaps in your business here?
India ranks among the top-five markets in Asia-Pacific, the others being China, Japan, Australia and south-east Asia. As far as our gaps are concerned, we need to ensure we are getting placement in all the stores we want to be in.