Sheela Foam IPO | Price DRHP (Sleepwell IPO Review)

Sheela Foam IPO is opening on 29th November. We have also Provided the Review of Sheela Foam IPO. The company has already filed its DRHP with the SEBI. The DRHP of Sheela Foam is available for download below. A leader in Polyurethane (PU) Foam, Sheela Group is a multi-billion rupee entity, says its website page. Sheela Foam is planning to raise Rs.500 crore through this IPO.  Sheela Form was incorporated as ‘Sheela Foam Private Limited’. The  Company was then converted to a public limited company in April and the name of the Company was changed to ‘Sheela Foam Limited’. Also Read the IPO Details of Continental Warehousing, Avenue SuperMarts DMartGR Infra Limited, Prataap Snacks, Majestic Research and Green Signal Bio.

Sheela Foam IPO Sleepwell Mattresses IPO Date Share Price Review DRHP

Sheela Foam IPO Review

Consolidated Profit for this Year Half Rs.65 Crore
Sales for this Year Half Rs.800 Crore
EBIDTA 13.2%
TDI cost (Imp Raw Material) Cost increased by 90%
Debts Rs.30 Crore
ROI 16.5%

Sheela Foam IPO Draft Prospectus

Download DRHP of Sheela Foam IPO Download

Stringent Labour Laws Risk Factor : Sheela Form IPO

Sheela Form is subject to stringent labour laws or other industry standards and any strike, work stoppage or increased wage demand by the employees or any other kind of disputes with employees could adversely affect the business, financial condition and results of operations.

As of September 30, 2016, Sheela Form had 1,928 permanent employees engaged across various operational and business divisions in India and 150 production and operational employees in Australia.

Furthermore, certain recent changes, and proposed changes to Indian labour laws could adversely affect Sheela Form business.

For instance, a recent amendment to the Payment of Bonus Act, 1965, has, inter alia, increased the eligibility ceiling for bonus payments to employees of factories and certain other establishments from Rs.10,000 per month to Rs.21,000 per month.

The GoI also proposes to enact the Code on Industrial Relations Bill, 2015 and the Labour Code on Wages Bill, 2015, which seeks to consolidate all existing labour legislation in the country (including the Minimum Wages Act, 1948) into distinct codes dealing with industrial relations, wages, social security, industrial safety and welfare.

Contract labourers : Sheela Foam IPO

Sheela Foam appoint contract labour for carrying out certain of their operations and may be held responsible for paying the wages of such workers, if the independent contractors through whom such workers are hired default on their obligations, and such obligations could have an adverse effect on our results of operations and financial condition.

As on September 30, 2016, more than 1,500 contract labourers were engaged at Sheela Foam manufacturing facilities.

Legal Cases Pending : Sheela Foam IPO

Nature of cases Amount involved (in Rs. million)
Civil proceedings 24.83
Taxation matters 211

Negative Cash Flows : Sheela Foam IPO (Sleepwell)

Sheela Foam have experienced negative cash flows in relation to our investing activities and financing activities for Fiscal Years 2014, 2015, 2016 and the six months ended September 30, 2016.

Sheela Foam had a negative cash flow from investing activities of Rs. 269.32 million, Rs. 486.29 million, Rs. 336.63 million and Rs. 529.12 million for Fiscal Years 2014, 2015, 2016 and the six months ended September 30, 2016, respectively.

Further, in the same periods, Sheela Foam had a negative cash flow from financing activities of Rs. 528.62 million, Rs. 585.39 million, Rs. 425.20 million and Rs. 340.94 million, respectively.

Proceeds of the Offer : Sheela Foam IPO (Sleepwell)

As of the date of this IPO Red Herring Prospectus, Polyflex Marketing Private Limited holds 27.75% of the equity share capital of Sheela Foam and has obtained approval for sale of such number of Equity Shares aggregating up to Rs.5,100 million in the Offer for Sale pursuant to its board resolution dated May 16, 2016 and consent letter dated July 25, 2016.

Given that the Offer comprises of the Offer for Sale by Polyflex, the proceeds from the Offer will be remitted to the Selling Shareholder, and Sheela Foam will not benefit from such proceeds

Competitive Strengths : Sheela Foam IPO (Sleepwell)

As per the IPO DRHP, Sheela Foam principal competitive strengths are:

  • Well recognised and established brand built over consistent quality and innovation
  • Extensive and well developed pan-India sales and distribution network
  • Quality manufacturing capabilities and technological innovation.
  • Integrated operations and economies of scale.
  • Well qualified and professional management.

Board of Directors : Sheela Foam IPO DRHP (Sleepwell)

The following table sets out the details regarding Sheela Foam Board as on the date of filing of this Red Herring Prospectus:

Name Designation
Mr. Rahul Gautam Managing Director
Ms. Namita Gautam Whole-time Director
Mr. Rakesh Chahar Whole-time Director
Mr. Tushaar Gautam Whole-time Director
Mr. Ravindra Dhariwal Independent Director
Mr. Vijay Kumar Chopra Independent Director
Mr. Som Mittal Independent Director
Mr. Anil Tandon Independent Director

Overview of the Indian mattress industry : Sheela Foam IPO (Sleepwell)

The Indian mattress industry has transitioned over the last few decades from a largely unorganised one dominated by local outfits specialising in hand-made mattresses (where raw materials such as cotton, foam, coir and combinations thereof were quilted in terms of individual customer specifications) to one in which the organised market has developed significantly, with domestic and global manufacturers incorporating advanced technologies and offering superior quality products across a wide range of price points.

The mattress industry in India comprising rubberised coir, polyurethane foam and spring mattresses is estimated at Rs.85-Rs.90 billion as of fiscal year 2016.

The industry has grown at a CAGR of 8-10% over the past five years, primarily on account of rising urbanisation, increase in disposable income, increase in health related issues of the Indian population and increasing awareness about sleep products.

The organised market (comprising large, mid-sized and smaller branded manufacturers) is estimated to constitute around 33-35% of the total market, the rest being unorganised.

Closing Statement : Sheela Foam IPO

Sheela Foam IPO (Sleepwell) is one of the hottest Public offers in the recent times. Entire Indian Securities Market is waiting for Sheela Foam IPO to become a success. There are high chances that the IPO will be over subscribed by atleast one and half times.