Home comfort products maker Sheela Foam, best known for its Sleepwell brand, is looking at further acquisitions within the Rs 10,000-crore modern mattresses market, as consolidation grows in the category. The Rs 3,000-crore company announced on Monday that it was acquiring a nearly 95% stake in rival mattress brand Kurl-On for Rs 2,035 crore. The company also said that it was picking up a 35% stake in Furlenco Furniture for Rs 300 crore.
“We may consider further buys once we close and integrate the two acquisitions that we have just announced,” Rahul Gautam, chairman and MD, Sheela Foam, said. “The modern mattress market is undergoing consolidation and there are players who want to exit. But much will depend on the valuations, how much of a fit it will be for us, etc,” Gautam, 70, said, in a conversation with FE.
While the Furlenco deal will be closed by August-end, the Kurl-On transaction would close by November-end. The integration of these brands into the company may take some time, implying that new acquisitions, if any, would happen in FY25, Gautam said. The company is also open to adjacencies in the larger home furnishings space such as bed covers, bed sheets, pillow cases, etc, as consumers look at better home grooming options.
FY25 will also be the year when the Noida-based company could touch the Rs 5,000-crore-mark in terms of turnover, given that the two new acquisitions of Kurl-On and Furlenco will give the company a boost of Rs 1,200 crore in terms of topline in FY24, Gautam said.
Organic growth of around 15-20% per annum could kick in by next year, higher than the compounded annual growth rate of about 10% the business has been seeing over the last few years, Gautam says, as the company taps tier II and III markets with a new, affordable range of mattresses under the Sleepwell umbrella.
“This is a new range that will be launched by November this year from our Jabalpur factory,” Gautam says. “This range will be available at half the price of our current entry-level mattresses that come for Rs 4,000-5,000 per unit. We see this as a game-changer and one that could improve the penetration of modern mattresses in small towns and semi-urban markets,” he says.
The overall mattresses market in India is pegged at Rs 25,000 crore, according to industry experts. Of this, the traditional mattress market that includes coir and cotton mattresses, dharis, etc, constitute 60% (or Rs 15,000 crore) of the overall market. This is completely unorganised and highly fragmented.
The balance 40% (or Rs 10,000 crore) is the modern mattress segment, which is foam-based, according to industry experts. Here again 60% of the market is unorganised, while the balance 40% is organised. Sheela Foam is the largest player in the organised modern mattress segment, with a share of around 12%. Following its acquisition of Kurl-On, which had a share of around 9%, the company’s combined share has jumped to 21%.