Mumbai, India - India’s largest PU foam manufacturer Sheela Foam expects to invest INR 1bn ($13.5 m) to build two new sites in the next couple of years and expand production.
Sheela Foam scouting locations for two new sites in India
The move is to control rising freight cost – driven by surging fuel prices -- to cut delivery time and to be closer to its growing customer base.
'The Process of identifying the right location is already on. We are considering two places about 500-600 km from existing sites in Eastern Uttar Pradesh and another in Central India. We hope to have two new sites operational at both locations by 2020,' said Rahul Gautam, Managing Director, Sheela Foam. He added that his firm 'would likely invest about INR 1 bn in the expansion.' 'We are scouting for a location somewhere in between the North and the East,' he said. The site would be located near growing demand in an established manufacturing area.
Gautam was talking on the fringes of the recently concluded PU Innovation Day in Mumbai.
Overall, Sheela operates 10 manufacturing units in India. It has five in the North, two in the West, two in the South and one in the East of the country
India's large size makes the expansion necessary, said Gautam. In the north of India for example, his firm's plants in Greater Noida, near New Delhi, and Kala Amb, Himachal Pradesh which makes mattresses are almost 2,000 km away from the company's next nearest site in Siliguri in India.
Sheela's sites in the south are also around 2,000 km from the northern sites. These are at Hyderabad, where the company makes foam and mattresses and Erode, where there is a foam plant. It also operates mattress and foaming site in Silvassa in west India 160 km north of Mumbai.
The group is the largest player in the in the organised [non-cash] mattress market and is now targeting turnover of INR 22bn in this fiscal year.
'There is huge growth potential in the domestic market due to low penetration of PU. Per capita consumption of polyurethane is still low by global standards. Moreover, 70% of the population does not use modern mattresses,' Gautam said.
'Rapid urbanization, rising disposable income, growing housing and the hospitality sector will spur the growth'. Increasing demand from end user industries is propelling the Indian flexible PU foam market. It is expected to grow at a compound annual growth rate of 11-12% between 2016 and 2021, he added.
On the market outlook, he commented, “The organised [non-cash] mattress market accounts for 35% of the total and it is expected to account for more than 41% of the market by FY 2021. Of the three kinds of mattresses, PU foam mattresses account for almost 50%. Spring mattresses take 20% and coir mattresses about 30% of the total.
India’s largest foam and mattress producer is also considering expanding overseas. But the expansion beyond India is still at the board room. 'We might consider an operation in Europe or North Africa, but nothing is concrete yet. This is something five years down the line,' Gautam said.