It gives me immense pleasure to present the FY 2018-19 Annual Report of the Company.The last financial year witnessed an industrial slowdown due to a fall in consumer demand.Pre-election uncertainty has also affected the market. Despite the slowdown and uncertainbusiness environment our Company has managed to post growth. We are considered as theleading Manufacturer & Consumer Brand of Mattress and Home Comfort Productsin ourindustry. Our constant efforts in product and process innovation helps us differentiatefrom our competition. The demand for our products is constantly growing and to cater tothe same we are planning to invest into new capacities as well as expansion of theexisting capacity is also under consideration.
The health of our consumer is a priority for the Company. To address this the Companyhas introduced Neem-Fresche a unique technology innovation that protects againstBreathing Problems and Skin Allergies which occur due to Dust-mites and Allergens presenton mattress &soft furnishings. All Sleepwell & Featherfoam products will have theProtection of Neem Fresche and this is exclusive to us.
In the Automobile industry Four- wheelers and Two-wheelers production is not at thesame level as last year and has been de-growing for the last 2 quarters. Automobiles beinga core industry reflect the economic health of our country. Our Company has beenindirectly impacted because our technical foams form a major part of our offering to theautomobile industry.
The Index of Industrial Production (IIP) was also at its lowest level at the end of theyear due to which a tight fiscal condition was observed in the markets. This alsoreflected in the GST collection numbers and at the end of year average collection wasless than Rs. 100000 crore per month. This is lower than what was forecasted for themonth and the year.
The TDI price during the year was volatile and unpredictable which impacted the EBITDAfor the year under review. Through the introduction of an economy range mattress in themarket and extensive push we expect a volume increase. We experienced growth of 9% fromRs. 1667 crores in FY 2017-18 to Rs.1814 in FY 2017-18 in the Indian business. TheAustralian business registered a growth of 5.4%.
For the Indian business the EBITDA for the year was Rs.182 crores and for theAustralian business it was Rs.28 crores. Both businesses are growing as per the industrytrends. The consolidated turnover for FY 2018-19 was Rs.2141 crore.
Securities Exchange Board of India (Listing Obligation and Disclosure Requirements)Regulations 2015 read with Rule 19 (2) and Rule 19A of the Securities Contracts(Regulation) Rules 1957 require that the public shareholding in a listed Company shouldnot be less than 25 percent. To bring the level of public shareholding to the level of25% the promoters of your Company have diluted 10.68 % of shareholding through an Offerfor Sale during the year under review.
Manufacturing Capacity of the Greater Noida plant has been increased. Consolidation ofTalwada plant has been done by shifting the re-bonding plant from Silvassa. For thisadditional land was purchased next to our existing plant. The Company is planning toexpand the capacity of the Erode plant and also to start manufacturing at Sahibabad. TheCompany is further looking to establish one new factory in the North/Central part ofIndia. This will help improve the capacity and reduce the dependency on exiting factories.
Brand building activity is a continuous exercise in Sheela Foam. With a strong Brandleadership in our core products such as mattresses and bedding materials as well as highergrade technical PU foam lines present us a significant headroom for growth. We will alsoramp up our marketing initiatives for further enhancement of customer experience throughour various offerings under the Sleepwell Brand i.e. My Mattress Comfort Cell My Pillowetc.
Launch of Economy Product Range & E-commerce
The Company intends to leverage the existing range of products through its specialisedknow-how and manufacturing capabilities to produce niche and higher-margin productsincluding more sophisticated grades of technical PU foam. The Company is trying to enhanceits sale through penetration in the rural markets by introducing budget mattresses i.e.Starlite '& Feather foam' considered as a Value for Money range anddifferent channels are being leveraged to market these products.
The Company is also actively developing the E-commerce channel for the sale ofMattresses and Allied products. The Company is planning to use its own E CommerceWebsite for mattress sale and is also developing a separate sub-brand and product line bythe name of SleepX' to retail on Marketplaces like Amazon and Flipkart. Since it isa new Channel there will be a learning curve both in terms of the Products Mix andretailing strategy and how it fits into our overall business. As a company we expect it toadd to both our Top Line and Bottom line growth in the future and details of the same willbe shared in due course of time.
Expansion of Distribution Network and Export sales
Taking a Micro market penetration approach the Company continues to expand itsDistribution channel in newer territories. Also export operations will be furtherleveraged to sell higher volumes of technical foam to manufacturers in SAARC nations. Inaddition the company will continue to open more Sleepwell Retail 2.0 stores' i.e.Experience Lead Brand showrooms on franchise model in major towns.
Adoption of Advanced Production Technology
Some of the Notable advanced Production Technologies that the company has adopted are -Comfort Cell which lets us personalise a mattress to a customer's needs and Vertivac(Vertical Variable Pressure Foaming) which is used for making Foam used for quilting ofmattress. The company will keep adopting and using the latest in technology to gain andmaintain an edge over its competition.
Poor roads and infrastructure conditions in the rural markets make it difficult forvolumetric materials to be transported coupled with low affordability leading to lowpenetration of our products. However more than 65% of our population lives in rural areasand those are largely untapped. With the development of roads and increasing financeoptions the company plans to increase its penetration in rural market with low pricedproducts.
To tap the large furniture foam market we have started a loyalty cum skill upgradationprogramme (Anmol Bandhan) for carpenters and upholsters where they are trained aboutusage of Sleepwell foam for the furniture made by them. The Company has created thisprogramme for the carpenters and upholsters to motivate them and in turn increase use ofour Furniture cushioning foam products.
In conclusion on behalf of the Board I take this opportunity to thank ourShareholders partners customers and employees who are a constant support in ourendeavour to grow the Company.
With best regards
Chairman & Managing Director
Sheela Foam Ltd