Skip to main content
Sister Publication Links
  • Middle East Foam & Polyurethane
  • UTECH Asia/PU China
  • UTECH Europe
  • UTECH Las Americas
Subscribe
  • My Account
  • Login
  • Subscribe
  • Coronavirus
  • News
    • Asia
    • Americas
    • Europe
    • M & A
    • Financial results
    • Automotive
    • Jason Furniture plant construction in China and Vietnam continues
      Istock, Dubai, Silhouette, 800, Web, 2020.jpg.jpg
      Pearl rolls away from Covestro
      Sheela’s foam production restarts in Jalpaiguri
      Wanhua completes MDI expansion in Yantai
    • 2019, istock, spray foam, spf, generic, 800.jpg
      CPI and Caliber expand Canadian SPF safety training
      Maine’s Poly Labs doubles workforce
      Novoloop introduces TPU made with recycled PE
      Casper 2020 sales up 9%, losses fall
    • 2020 sales down in busy year at Recticel
      Asset write downs hit BASF in 2020, trading flat in year
      iStock, 2019, automotive, interior,generic,original.jpg
      Adler Plezer in talks to buy Faurecia's AST interiors business
      Depressed automotive demand in 2020 hit Faurecia's numbers
    • 2020 sales down in busy year at Recticel
      iStock, 2019, automotive, interior,generic,original.jpg
      Adler Plezer in talks to buy Faurecia's AST interiors business
      Turkish sandwich panel maker expands to Azerbaijan
      BPCL Polyol project in doubt
    • 2020 sales down in busy year at Recticel
      Asset write downs hit BASF in 2020, trading flat in year
      Depressed automotive demand in 2020 hit Faurecia's numbers
      Casper 2020 sales up 9%, losses fall
    • iStock, 2019, automotive, interior,generic,original.jpg
      Adler Plezer in talks to buy Faurecia's AST interiors business
      Depressed automotive demand in 2020 hit Faurecia's numbers
      Global car sales on rise in January 2021
      Coronavirus takes 14% off Lear's top line
  • Data
  • Information
    • Country Overview
    • Market Sector overviews
    • Technical articles
    • Company profiles and strategies
    • China’s PU industry on the path to recovery; plans for technology upgrades
      Chinese cold chains grow bigger
      Flexible foam rises to challenges in the Middle East and Africa
      Life at the cross-roads: what does the GCC offer PU?
    • Europe's flexible foam makers face rising prices as outages hit markets
      Western European car registrations rebound slowed in September
      Western European car registrations regained some ground in August
      Western European Car registrations rebound continued in July
    • Take out the VOC with hybrid release agents
      Batteries give pultrusions power
      Seeing a way through VOC and FOG
      Aromatic polyols for simpler rigid PU formulations
    • Hennecke and Frimo: an automotive partnership
      Pushing ahead: AutoRIM drives KM’s UK growth
      BASF opens it first ‘Creation Center’ in Mumbai with a PU twist
      Persistence pays off for CTM
  • Events
    • Exhibitions
    • Conferences
    • Webinars / Livestreams
    • Become a Speaker
  • Advertise
  • Contact Us
  • Issues
  • Subscribe
MENU
Breadcrumb
  1. Home
  2. News
September 04, 2019 11:01 AM

Sheela looks overseas for added growth

Satnam Singh
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Noida, India Despite slowing domestic sales, India’s only listed polyurethane foam producer, Sheela, is expanding both globally and at home. Satnam Singh reports.

    Sheela Foam most recently made the news in June, when it announced its plan to buy the majority of Spain's Interplasp in a EUR 42m deal. But the company is not content with that. It is also building an INR 500m ($6.98 m) greenfield facility, which will be its 12th in India.

    Gautam: still on the lookout

    The Spanish deal is expected to complete by the end of September. It will be funded by an even mixture of debt and cash, according to Rahul Gautam, Sheela Foam's managing director. Gautam was speaking in his office in Greater Noida, near Delhi.

    Interplasp operates a 22kT/year plant in Yecla, Spain. This facility currently produces about 12 kT/year of flexible polyurethane slab-stock. Sheela has plans to bring production closer to capacity in the next two to three years.

    'In flexible polyurethane foam, capacity is a difficult term to explain,’ Gautam said. ‘Foaming machines always have large capacities, they don’t run all the time and capacity can be hiked by simply adding more space. The exact figures or numbers are always difficult to share.'

    The acquisition is strategically important for Sheela. It will gain access to Europe, the single largest market for polyurethane foam globally.

    'The European polyurethane market is about 1.3 MT/year and Spanish site produces less than 1% of the total European market,’ he said. ‘The headroom to grow is quite large. The presence in Europe will help us in creating strong foothold in that market.'

    Africa too

    Sheela Foam is also eyeing entry to neighbouring north African markets, including Morocco, Tunisia and Algeria. These would be supplied from Yecla. 'These are not big markets, but they do need special foams which are not locally available,’ Gautam explained. ‘These could be shifted across to these market from the Spanish site easily.' It would take about 6-7 hours to ship the goods by sea.

    It may also be possible to sell into the US more easily from Europe because of the current trade dispute between the US and China. 'China supplies a lot to the US market, but now high tariffs are levied on Chinese imports,’ he said. ‘Import tariffs are nominal for European shipments to the US. North America is much closer to Spain than India. The Yecla site is well positioned to supply all three regions, Europe, North Africa and the US.’

    Gautam sees plenty of opportunities for cross-fertilisation between the Spanish and India businesses. 'Europe operates a lot in bed-in-a-box segment, and we can share information about the technical foams we make at Sheela,' he said.

    Sheela will also gain more purchasing power with this increased size. Procurement in Spain will be bundled with India and the Joyce Foam business in Australia. The Indian sites consume about 50 kT/year, Australia 10kT/year and Spain about 12 kT/year. The company expects its fixed costs to fall as the volumes of raw material it uses increases. Gautam said that this will make the final product more competitive.

    Sheela is expanding internationally because it is getting tougher to grow in India. 'The domestic market is definitely a large market,’ he said. ‘In spite of the current economic trends, it is still growing and the potential to grow is also large. But there is no doubt when you have large share, it is also difficult to grow the market share.' Currently, on the foam side, Sheela has a 25-27% share in the Indian market.

    Overseas interests

    This is Sheela Foam's second international foray after a hiatus of almost 14 years, when it bought Joyce Foam of Australia. Indian has benefitted from the implementation of some ideas from Australia in its home market.

    'We have brought high-end mattresses, upwards of INR 25,000, from the Australian market,’ he explained. ‘This market is far more mature in comparison to India. Though the India market is very small, and a high end mattress typically costs around INR 500, it is growing at about 15% annually.’

    Sheela Foam could make more overseas purchases if there is an opportunity and it makes sense for the company, Gautam said. 'Acquisition targets should be affordable, small to mid-size. Secondly, the technology should be absolutely top-of-the-line. This is the case in both in our Australian and Spainish acquisitions, the technology is comparable to the best in the world.'

    It also prefers that an acquisition target should be well-managed and that the top managers remain at the helm after the acquisition. Single-owner businesses, where the owner wants to sell and exit are not attractive, he said. But the company should have potential to grow and it should be able to bring some value to the group.

    Geography is not a concern, but the target company should also be in a politically stable country, he emphasised.

    India is the company's core market, and that 12th factory is being built in Jabalpur, Madhya Pradesh. This will serve customers in Eastern Uttar Pradesh and Western Bihar, as well as its home state. The location is in a part of the country that cannot be economically served by existing plants.

    'The large Jabalpur site spreads over 30 acres (12 ha). It will have installed capacity of 25kT/year, and Gautam said that it is likely to be operational by the end of 2020.

     

    Recommended for You
    CPI and Caliber expand Canadian SPF safety training
    CPI and Caliber expand Canadian SPF safety training
    Maine’s Poly Labs doubles workforce
    Maine’s Poly Labs doubles workforce
    Jason Furniture plant construction in China and Vietnam continues
    Jason Furniture plant construction in China and Vietnam continues
    Latest Issue
    Click HERE for Free Download
    View All Archives
    Get our newsletters

    Breaking news and in-depth coverage of essential topics delivered straight to your inbox.

    Subscribe today

    Register to access our archive of leading information on the polyurethanes industry.

    Subscribe now
    Connect with Us
    • Twitter
    • LinkedIn
    • Facebook
    • Youtube

    Follow us on social media for the latest polyurethanes industry news and event updates.

    Logo
    Contact Us

    Office 127,
    61, Willow Walk,
    London
    SE1 5SF
    E-mail us
    +44 (0) 203 287 5979

    Customer Service:
    +1 313 446 0450

    Resources
    • Advertise with Us
    • Media Kit
    • Staff
    • Careers
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • Coronavirus
    • News
      • Asia
      • Americas
      • Europe
      • M & A
      • Financial results
      • Automotive
    • Data
    • Information
      • Country Overview
      • Market Sector overviews
      • Technical articles
      • Company profiles and strategies
    • Events
      • Exhibitions
      • Conferences
      • Webinars / Livestreams
      • Become a Speaker
    • Advertise
    • Contact Us
    • Issues
    • Subscribe