Sheela Foam will launch three products from the upcoming manufacturing unit at Jabalpur: Rahul Gautam, MD

Rahul Gautam, Managing Director, Sheela Foam Ltd, talks about Q1FY22 numbers, Performance of domestic and overseas business, price increase, installed capacity, distribution network and product pipeline among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: The company has posted a strong set of numbers. What are the highlights and from where the demand came from? Do you think that the performance is sustainable or will improve further?

A: I would like to draw a little bit of attention towards the numbers of this quarter, it seems that there is a lot of year-on-year growth. But if you will see at this year’s first quarter and the last year’s first quarter then last year's things were shut for one and a half months to two years due to the general lockdown. So, the growth is very high and there is a 150% growth in the gone quarter. It is also true that there were lockdowns in this quarter as well, but it was not a total lockdown, the markets were opening partially, sales didn’t happen as they would have been, but it was acceptable and comparable. As far as our position in the future is concerned then stability is coming slowly, markets are turning stable. As you are seeing the situation of CORONA at this point of time and may God make it stay like this and the third wave may not hit, then the markets are looking good and the season we are approaching should be good. 

Q: How has the business performed both in India and overseas for you? What is your growth expectation in the next couple of quarters from both the markets and what will be their contributions?

A: I have already spoken about the Indian market that if the third wave comes in a scattered manner. Lockdowns will not be enforced in the markets anymore therefore we wish that we should look at a good growth in the coming time. The other two areas where we are present, namely Australia and Spain in Europe, and the conditions of both the places are completely different. The first wave never came in Australia and by and large, the markets remained open. Now, when some numbers – 400 to 600 on a per-day basis – is reported then a panic situation has emerged there, and they have implemented lockdowns in the two biggest cities of the country. New Zealand was put under lockdown just after a case emerged there. So, these responses will stay in place for the next few days although they have said that it will stay till August end, I feel it will continue till September and then pick up. But the market and production, both, are open but are subdued. As far as Spain is concerned, CORONA is present there and is infecting people, but it has a culture that is not affected a lot. Markets are open and production is taking place and the progress is good and is going on. 

Q: Raw material prices are constantly increasing for you. Average per Kg. prices of TDI and POLYOL has increased both on QoQ and YoY basis. Are you going to increase the prices, if yes, what will be its quantum and by when it will come?

A: You got it right, our biggest problem is that there is no stability in the price of our raw materials, it increases or decrease at any point in time. There are some shortages, not at a macro level, but there are shortages due to the supply chain and there is a lot of fluctuation as well as instability. We do hesitate a little in increasing the price because when it falls, then we do not drop the prices. But we have already started increasing the prices and definitely, it will be implemented in this quarter and increase. The situation ahead will remain unstable because it is a matter related to shipping, global, logistics and supply chain and I cannot say anything about by when this will stabilize but there is no issue related to availability but there is an instability in price. 

Q: What is your installed capacity at present? During the last interaction, you said that you are looking forward to increasing the distribution network. At what level it is standing at present, and do you have any plans related to investment, if yes, where it will be done? 

A: First of all, I would like to talk about our overseas plants. We are increasing one capacity in Australia. 

The main manufacturing is based in Sydney, and we are creating one more facility in Adelaide because the market size has increased there. We are also expanding in Spain because opportunities related to supply to America and the rest of Europe is opening up, especially export to America. As far as India is concerned, we had a site at Jabalpur in India, which was stalled during the CORONA, but we have restarted our work on it. That is going to be our largest site created on 30 acres of land and the technology being used there is going to be unique and propriety technology, which is not used anywhere else in India. It is environment friendly and large on producing products that can’t be done in any different manner. There are three to four different types of markets that we will cater to at the same time, we will also increase the existing markets. One market that we will cater from this unit to attract our rural market or tier IV & V towns or villages. This capacity will be created by the middle of the next year and our machines will be installed in the unit after which operations will be started there. On the distribution front, we at a constant pace are increasing our showrooms and around 50-60 new showrooms are added in a month. So that is the position. 

Q: How is the product pipeline and are there some new products and is there any extension of what you already do? What is your product mix?  Also, the company’s margin has been under a bit of pressure, so going forward, what margin trajectory is visible?

A: First I would like to talk about the margin, which looked subdued as our sales did not happen as they should have been in the quarter. Of course, as I said, there was a mirage situation in which a huge growth was seen on a year-on-year basis as last year’s growth was almost nil. But as many sales would have happened. But the margins would have been intact if there were good sales but as we progress it will retain its place. As far as new products are concerned, I have talked about our upcoming project in Jabalpur, where a new technology will be used and at least three such products do not exist, and it will cater mainly to the larger part of India. Our slogan on the front is “Mattress for Every Indian”. Currently, we are catering through the Sleepwell brand, and it majorly focuses on middle-end and higher-end, and we try that its price increases and value is added to it. But the three new projects that will come from the plant will cater to a completely different part of the market or segment, unorganized sector or rural sector. Right now, I can’t say more than this about it but definitely, our innovation line is open and functional.