Introduction
Established in 1971, Sheela Foam Ltd., a flagship company of Sheela Group, is a pioneer in the manufacturing of polyurethane foams in India. With ten state-of-the-art manufacturing facilities strategically located across the country, Sheela Foam has established itself as a leader in the mattress and foam industry. The company offers a wide range of products in home comfort, technical foam, and institutional foam, catering to diverse customer needs. Currently, Sheela Foam boasts more than 1,800 Exclusive Branded Outlets and an extensive dealer network of nearly 13,323 dealers. The company also enjoys a significant international presence, exporting its products to over 20 countries worldwide. With 16 manufacturing locations across India, Australia, and Spain, Sheela Foam is well-positioned to meet global demand.
Founded by Ms. Sheela Gautam and Mr. Rahul Gautam, Sheela Foam Ltd. was originally incorporated as a private limited company on June 18, 1971, in Delhi. The company commenced the manufacture of PU Foam in 1972. Over the years, Sheela Foam transitioned to a public limited company in 2016, marking its growth and expansion in the industry.
Sheela Foam has undergone significant restructuring to integrate similar and complementary business lines within its operations. In Fiscal Year 2003, three wholly-owned subsidiaries merged with Sheela Foam. This was followed by the merger of Serta India Private Limited in Fiscal Year 2011 and five additional subsidiaries in Fiscal Year 2013.
In a landmark financial move, Sheela Foam’s promoter, Polyflex Marketing Pvt Ltd., offloaded shares worth Rs 510 crore through an initial public offering (IPO) in December 2016. The IPO was priced at Rs 730 per share, and the stock was listed on the bourses on December 9, 2016.
The company has continually innovated its product offerings, introducing the economy model mattress ‘Starlite’ in 2017 and the mid-level mattress ‘Feather Foam’ in 2018. In the furniture segment, Sheela Foam has tied up with carpenters and upholsterers under the ‘Anmol Bandhan Scheme’, enhancing the sales of Sleepwell and Feather Foam Furniture Foam.
In FY 2019, Sheela Foam expanded its footprint in Europe by acquiring Interplasp S.L., a subsidiary in Spain. In FY21, the company established a new subsidiary, International Comfort Technologies Private Limited, and commenced construction of a new plant at Maneri Industrial Area near Jabalpur, MP. During the year 2022-23, Sheela Foam issued bonus shares in the ratio of 1:1.
A leader in Polyurethane (PU) Foam, Sheela Group is a multi-billion rupee entity with a nationwide manufacturing presence and a global marketing perspective. Committed to enhancing lifestyle through comfort, convenience, and luxury, the group’s winning brands include:
– SLEEPWELL: The flagship brand for mattresses and comfort accessories.
– FEATHER FOAM: A pure PU foam.
– LAMIFLEX: A superior quality POLYETHER/POLYESTER foam for lamination.
These brands rank as the largest selling PU Foams in the country, reflecting Sheela Foam’s commitment to quality and innovation in the foam industry.
Business Products
Sheela Foam’s operations are divided into four primary business segments: Mattresses, Comfort Foam and Home Care Products, Technical Foam, and Furniture Foam. Each segment is integral to the company’s comprehensive product portfolio, contributing to its market leadership.
Mattresses: Sheela Foam is renowned for its extensive range of mattresses, marketed under the Sleepwell, Starlite, Kurl-on, Feather Foam, and Spring Air brands. Established in 1994, Sleepwell has become one of India’s most popular mattress brands. The acquisition of Kurl-on has further strengthened the company’s position in the market. The product range caters to various price points, from INR 8,000 to over INR 1 lakh, and includes models like My Mattress, Spring Range, Technology Range, Custom Cell Range, Back Support Range, Flexi PUF Range, Showroom Range, Economy Range, and Online Brand. Mattresses account for 41% of the company’s revenue.
Comfort Foam and Home Care Products: This segment includes foam sheets, foam blocks, comfort range accessories, foam cores, furniture cushions, pillows, bedsheets, comforters/blankets, mattress protectors, and sofa-cum-beds. The company has ventured into the home accessories segment to expand its strategic offerings. The acquisition of Kurl-on has further expanded this product portfolio. Comfort Foam and Home Care Products contribute 21% to the company’s revenue.
Technical Foam: Technical products offered by Sheela Foam find diverse applications in home furnishings, car seats, clothes and accessories, auditoriums, hospital beds, and various other industries. The product lines include Automotive Foam (poly-ester foam, poly-ether foam), Reticulated Foam (ester-based foam, ether-based foam), Ultra Violet Stable Foam, and Slientech Foam (ester-based PU foam). These products enhance comfort and convenience in various end-user industries. Technical Foam constitutes 26% of the company’s revenue.
Furniture Foam: As one of the largest producers of PU Foam in India, Sheela Foam has expanded into allied segments to create more value for its product portfolio. Furniture cushioning is a critical component for furniture such as sofa sets, chairs, and custom sofas. The product range includes Primo, Resitec, and Cool Gel-S. Primo incorporates unique composition and extra thickness for enhanced comfort and support. Resitec uses advanced High Resilience (HR) Cushioning Technology for personalized comfort, while Cool Gel-S particles dissipate heat easily, offering a cool feeling. Furniture Foam represents 12% of the company’s revenue.
Sleepwell
Sleepwell is recognized as a specialist in providing state-of-the-art sleep solutions that promote good health and serenity in daily life. As the flagship brand of Sheela Group, Sleepwell holds an ISO 9001 certification and has established itself through its relentless efforts to bring the most advanced technologies from around the world to its customers, continually adapting to meet their evolving demands.
Innovative Technologies
Health Fresh™ Advantage: Sleepwell mattresses are treated with Health-Fresh™ Technology, an internationally recognized treatment that prevents the breeding of dust mites, bacteria, and fungi. This helps avoid respiratory problems and is particularly beneficial for asthmatics.
SANtech™ Advantage: Sleepwell Flexi-PUF products incorporate advanced SANtech™ technology to enhance firmness and breathability for added comfort. Constantly pushing the boundaries of technology and innovation, Sleepwell crafts sleep solutions that cater to personal comfort preferences.
Over five decades of helping India sleep better, Sleepwell started the modern mattress revolution in the country. Through learning about various sleeping styles and individual definitions of comfort, Sleepwell has developed products to match each one. The company is committed to designing and crafting personalized sleep solutions for generations of delighted customers.
Manufacturing Excellence
Made in 100,000 square feet of advanced factories, Sleepwell is a market leader offering a pan-India distribution and manufacturing network, a diverse product portfolio, and robust R&D capabilities. Sleepwell operates with:
- 4,000+ Exclusive Dealers
- 100+ Distributors
- 10+ Manufacturing Units
Awards and Recognitions
Sleepwell’s dedication to quality and innovation has earned it numerous awards, including:
- India’s Most Trusted Brand by India Today (2020)
- Economic Times Best Brands (2019)
- Reader’s Digest Trusted Brand (2018)
- Business Person of the Year by Zee Business
- Excellence in PR Communication by SABRE APAC (2021)
Through continuous innovation and a deep understanding of customer needs, Sleepwell remains committed to enhancing the sleep experience and fostering a strong relationship with its products.
Feather Foam
Feather Foam is one of the most trusted brands of Sheela Group, specially crafted to meet the needs of the young generation. Feather Foam mattresses are designed to ensure quality sleep for fresh and energetic mornings. They offer a blend of excellent firmness, resilience, and strong cell structure, providing long-lasting comfort, support, and durability.
With a guarantee of being 100% pure and a warranty lasting up to 60 months, Feather Foam products retain their shape for years without sagging. Additionally, all Feather Foam products are treated with Health Fresh technology, which prevents the breeding of dust mites, bacteria, and allergens, ensuring health and hygiene.
Feather Foam Range of Products:
– Mattresses: Zippy Luxury, Zippy Plus, Zippy, Trendy, Anand, Sporty
– Pillows: Breeze Flexi-PUF Pillow
– Sofa Cum Bed
Starlite
Starlite is a smart choice at the right price, offering the desired comfort and firm support for a restful sleep. Created by Sheela Foam, Starlite mattresses feature a top layer of Soft PU foam quilting, providing an extra touch of plushness and softness. Explore the Starlite range of products and experience a star-like rest. The Starlite range includes mattresses such as Splendor, Mega, Select, and Discover, as well as the Venus Pillow and Sofa Cum Bed.
Furniture cushioning
Sleepwell introduces an innovative range of furniture cushioning products that promise lasting comfort, support, and durability. Cushioning is the most important element for furniture such as sofa sets and chairs. Sleepwell’s quality cushions not only enhance comfort and durability but also enrich aesthetics. All furniture cushioning products are treated with world-renowned technologies like Health Fresh, which prevents the breeding of dust mites and bacteria, and SANtech, which enhances firmness and breathability for ultimate comfort and support.
The Sleepwell Furniture Cushioning Range includes:
– Primo: Incorporates unique composition and extra thickness for enhanced comfort and support.
– Resitec: Uses advanced High Resilience (HR) Cushioning Technology to provide personalized comfort for the ultimate cushioning experience.
– Cool Gel-S: Cool Gel-S particles are a scientific breakthrough in furniture cushioning that dissipate heat easily, offering a cool feeling.
Trade Brands
Sheela Foam provides a comprehensive range of Flexible PU foam for various furniture cushioning applications:
– Pure Grade Foam: Feather Foam
– Deluxe Grade: Mystic and Splash
– Standard Grade: FlexiTuf, Restwell, Indigo PUF, Rainbow, and Champion
– Commercial Grade: Classic, Magic, and Surya Premium
Pure Grade Foam
Feather Foam has emerged as the most reliable name in furniture cushioning. It offers Equicell, the only pinhole-free technology, providing Feather Foam sheets and cushions with extra bounce. Treated with SANtech™ technology, it increases airflow for enhanced comfort and support. With the assurance of being 100% pure, Feather Foam sheets and cushions retain their shape for years.
Other products offered include Deluxe Grade Foams, Standard Grade Foams, and Commercial Grade Foams. These foams have multiple applications, such as packaging and low-cost upholstery. They are commonly used in upholstered furniture, ottomans, chairs, benches, and more.
Associate companies
Australian Subsidiary
Sheela Foam has a strong presence in Australia through its wholly-owned subsidiary, Joyce Foam Pty Ltd. The company expanded its operations by acquiring the manufacturing businesses of PU Foam and polystyrene products from three Australian companies: Joyce Corporation Limited, Joyce Indpac Limited, and Marfoam Pty Limited in 2005.
Joyce Foam operates five state-of-the-art production centers located in Adelaide, Canberra, Melbourne, Perth, and Sydney. These facilities produce raw materials for branded mattress makers and cater to various industries, including:
1. Furniture
2. Medical
3. Industrial
4. Moulded
5. Polystyrene
Joyce Foam boasts an annual production capacity of 11,000 MTPA across its five manufacturing facilities.
The financial performance of Joyce Foam has shown steady growth, with revenues recorded at INR 4,130 million in FY21, INR 4,295 million in FY22, and INR 4,379 million in FY23. For the first nine months of FY24, revenues stood at INR 3,189 million.
Joyce Foam is recognized for its quality standards, holding certifications such as OEKO-TEX Standard 100 and CompriShield anti-microbial protection, ensuring the highest level of product safety and hygiene.
Spain Operations
Sheela Foam has a strong presence in Europe through its wholly-owned subsidiary, Interplasp. Recognized as one of the best European flexible polyurethane foam manufacturers, Interplasp is known for its strong technological base and innovation. It operates a modernized manufacturing facility in Yecla, Spain, which is one of the most cost-effective manufacturing locations in Europe. This enables the company to maintain a competitive edge and develop strong footprints in the region.
Interplasp is well-positioned to expand operations to meet the growing demand from Europe and the US. Recently, the company has started exporting to the US with the ‘Bed-in-a-box’ mattress strategy from its Spain plant, capitalizing on new opportunities as the US imposes trade restrictions on other countries.
Interplasp is a member of EUROPUR (the European Association of Flexible Polyurethane Foam Blocks Manufacturers) and (Use code DHS_25_SPECIAL to get 25% discount on yearly subscription) holds the Innovative Company and Quality OEKO-TEX Standard 100 certifications.
The continuous development at Interplasp has led to the creation of five ranges of flexible polyurethane foams:
– CONTACT PLUS: Conventional foams
– CONTACT BIO: Soy foams
– CONTACT HR: High-end foams with high resilience
– CONTACT BS: Fire retardant foams
– CONTACT DREAM: Viscoelastic foams
These developments have allowed Interplasp to cater to 1% of Europe’s market, demonstrating its significant impact and potential for growth.
The financial performance of Interplasp over recent years underscores its growth trajectory. Revenues have steadily increased from INR 1,032 million in FY20 to INR 3,954 million in FY23, with a revenue of INR 2,478 million recorded for the first nine months of FY24. This consistent revenue growth reflects the successful execution of strategic initiatives and the company’s robust market presence in Europe.
Clients
Capex
Sheela Foam has embarked on significant capacity expansion to capture growth opportunities in the economy mattress segment. This includes setting up new export-oriented greenfield plants in Madhya Pradesh and Gujarat, leveraging advanced technology from Australia and Spain. The key details of the expansion are:
Total Capex: INR 350 crore for capacity expansion.
Indian Manufacturing Capacity: 1,23,000 MTPA with a daily mattress production capacity of 20,000 units.
Spain Operation Capacity Increase: 5,000 MTPA.
New Plant in Adelaide: Focused on enhancing market share in Australia and expanding capacity in Spain for the ‘Bed in a Box’ strategy targeting the US market .
Based on the Conference Call Highlights (February 2024):
During the conference call, the management discussed the capital expenditure plans and their impact on future operations:
Manufacturing Plant at Jabalpur: The company has set up a new plant to offer high-quality, affordable PU foam mattresses targeting the traditional/mass market. The plant, spread across approximately 11.7 hectares of land, commenced commercial production in Q4 FY24 with an incurred Capex of INR 1.2 billion .
Annual Report Highlights (FY23)
The annual report further elaborates on the capital expenditure:
Capital Work-in-Progress: INR 28,749.03 lakhs as of March 31, 2023, compared to INR 11,989.21 lakhs as of March 31, 2022, indicating significant ongoing projects and investments in infrastructure .
Purpose of Loans for Capex: Loans from JP Morgan and Kotak Mahindra were specifically used for Capex at new plants in Nandigram, Jabalpur, Umbergaon, and Medhi Niwas .
This strategic investment in capacity expansion is aimed at meeting the growing demand in both domestic and international markets, ensuring Sheela Foam’s continued leadership in the mattress and foam industry
Financials
For the Year ended March 23
- Total revenue from operations for FY23 was INR 2,873.32 crores, compared to INR 2,865.58 crores in FY22, marking a slight increase of 0.27%.
- EBITDA for FY23 was INR 297 crores, compared to INR 314.9 crores in FY22, indicating a decrease of 5.7%.
- PBT for FY23 stood at INR 273.08 crores, down from INR 296.36 crores in FY22, reflecting a decrease of 7.85%.
- Net profit for FY23 was INR 203.06 crores, compared to INR 218.73 crores in FY22, showing a decline of 7.15%.
- Basic and diluted EPS for FY23 was INR 20.81, compared to INR 22.42 in FY22, indicating a decrease of 7.2%.
- Company had an Roce of 14% which was quite less compared to last year maybe on account of additional investments.
- The company’s debt increased significantly, as evidenced by the balance sheet. However, there was also a substantial increase in the current work in progress.
- Additionally, the company holds a sizable amount of investments.
For the current Quarter ended Q4 FY24
- Net sales stood at Rs. 878.89 crore in December 2023, up 7.58% from Rs. 816.98 crore in December 2022.
- Quarterly net profit was Rs. 30.75 crore in December 2023, down 49.19% from Rs. 60.53 crore in December 2022.
- EBITDA reached Rs. 108.01 crore in December 2023, up 3.97% from Rs. 103.89 crore in December 2022.
- Sheela Foam’s EPS decreased to Rs. 2.83 in December 2023 from Rs. 6.27 in December 2022.
For the 9 months ended FY 24
- For the nine months ended FY24, the consolidated revenue remained stable Y-o-Y at INR 2,137 crores.
- The EBITDA was flat at INR 220 crores, with EBITDA margins at 10.3%.
- The net profit for this period was INR 118 crores, showing a decline of about 24.5% Y-o-Y.
Management’s comments
Tarang is a unique product designed for customers currently using cotton mattresses, which typically cost between INR 800 and INR 1,200. Priced at around INR 2,000 and offering a 3-year warranty, Tarang provides good lifetime value and has received positive initial consumer feedback.
Future Outlook
In addition to Tarang, Sheela Foam has introduced two new products under the Sleepwell brand: Nexa and FitRest. Nexa, launched with a marketing campaign during the World Cup, is superior to traditional memory foam and is priced from approximately INR 24,000, available in three variants. FitRest, positioned at a slightly lower price point, features a profiled design and targets consumers who prefer locally made mattresses with various fabric covers. These initiatives have significantly contributed to a 26% growth in the Sleepwell mattress segment during the third quarter.
Regarding Furlenco’s financial performance, Management explained that the focus is on making the business profitable. Although there was a slight delay, with profitability now expected in February instead of January, Furlenco achieved positive EBITDA in December. The top-line numbers are increasing, contributing to the bottom line, along with cost management initiatives. Once profitability is consistently achieved, the company will pursue further growth and other strategic objectives.
Regarding the increased net worth of INR 2,900 crores following the QIP, the potential to achieve 18% to 20% ROE was discussed. Although the acquisition has been completed and things are settling down, the question remains somewhat forward-looking. The expectation is that as business synergies take effect and operations integrate over the next few quarters, achieving such return numbers will be possible.
The company is confident in achieving the projected return numbers following the acquisition of Kurlon. The combined strength of the two brands now makes them leaders in nearly all parts of the country, offering benefits like reduced freight costs and operational efficiencies. Kurlon’s expertise in rubberized coir and Sheela Foam’s efficient foam manufacturing, which yields approximately 10% higher, are expected to yield tangible benefits. The enhanced market penetration and increased market share make the return figures reasonably achievable.
Sectorial Outlook
India’s health and wellness market is projected to grow at a CAGR of 5.55% from 2023 to 2028, driven by a focus on fitness, wellness, nutrition, personal care, and preventive medicine. Chronic lifestyle diseases, medical advancements, and the rise of sports centers, naturopathy, and health tourism further boost this market.
India’s mattress market is fragmented, with the unorganized sector dominating due to the low cost of cotton fillers. Demand is increasing with more residential units, with king-size mattresses being the most preferred. Growth drivers include the work-from-home culture, increasing awareness of quality sleep, e-commerce expansion, and infrastructure development. The real estate and hospitality sectors also contribute significantly to the demand for mattresses.
Consumer preferences are shifting towards premium mattresses with rising incomes and greater health consciousness. Increased brand awareness and digital literacy are also driving demand for innovative and branded mattresses. The organized mattress sector is growing, focusing on PU foam, Rubberized Coir, and Spring Mattresses, with a trend towards customization. Online sales are expanding rapidly, with demand for customized and luxury mattresses expected to rise.
Flexible PU foam, used in furniture, packaging, transportation, and bedding, is gaining popularity due to its customizability, durability, and support. The Asia-Pacific region is expected to be the fastest-growing market for polyurethane foam, supported by government incentives and rising demand.
Opportunities in the sector include product differentiation, e-commerce growth, export potential, and the rural market’s untapped potential. Threats include market fragmentation, raw material dependence, and the need for continuous innovation.
Conclusion
This is a 52-year-old company with a rich history in manufacturing and innovation. Over the past three years, Sheela Foam has achieved a sales CAGR of 11%, reflecting its strong market position and growth potential. The company’s strategic acquisitions, extensive product portfolio, and focus on quality have solidified its leadership in the mattress and foam industry. Continuous innovation, robust distribution networks, and a growing presence in both domestic and international markets position Sheela Foam for future growth. The company’s commitment to health and wellness, along with its ability to adapt to changing consumer preferences, ensures its continued success in the evolving market landscape. This is what makes Sheela Foam worth exploring for the long term.