Sheela Foam Ltd Management Discussions

Economic Review

Global Economy¹

The global economy displayed stability in CY 2024, successfully overcoming early concerns about a potential downturn caused by supply chain disruptions, geopolitical uncertainties and inflationary pressures. Posting a growth rate of 3.3% for the year, the global economy managed to sustain its momentum despite several headwinds. The US economy showcased resilience with high employment rates and impressive corporate earnings. In the US, there has recently been a change in Presidency, which may result in considerable policy changes, impacting global trade and bilateral relations among nations. Europe, despite facing political and economic challenges, navigated uncertainties and is positioned for a robust recovery. Meanwhile, China, having reopened its economy post-COVID, is actively addressing overcapacity and financial strains in the real estate sector, laying the groundwork for sustainable and balanced economic growth. Emerging markets and developing economies outperformed with a robust 4.3% growth rate, significantly outpacing the modest 1.8% expansion seen in advanced economies.

A substantial decline in global inflation from 6.7% in CY 2023 to 5.7% in CY 2024² played a crucial role in stabilising prices and fuelling economic activity. This achievement was largely driven by proactive and well-timed monetary policies implemented by central banks, alongside an expansion in energy supplies that helped ensure steady economic growth. Additionally, resilient consumer demand played a vital role in sustaining economic momentum, as household spending remained strong despite prevailing uncertainties. Government spending and targeted fiscal measures further supported this steady progress, countering the effects of structural and geopolitical challenges.

Regional Focus

Australias economy is on a steady recovery path, with GDP growth expected to rise from 1.2% in CY 2024 to 2.3% in CY 2026, supported by a rebound in household consumption and resilient business activity. Inflation has eased significantly, with headline inflation at 2.8% and underlying inflation at 3.5%, both on track to reach the Reserve Banks 2.5% target by late CY 2026. While financial conditions remain tight, they are effectively balancing inflation control with economic stability. The labour market is gradually adjusting, with unemployment projected to stabilise at 4.5%. Despite global uncertainties, Australias strong trade partnerships, sound financial policies and resilient economy provide a solid foundation for sustained growth and prosperity.

Spains economy demonstrated robust growth in CY 2024, with a GDP increase of 3.2%, positioning it as a leading performer among developed nations. This expansion was primarily driven by a resurgence in tourism, strategic investments in renewable energy, and a significant influx of immigrants bolstering the labour market. The unemployment rate declined to 11.5% in CY 2024 and is projected to further decrease to 10.7% by CY 2026. Inflation rates have been on a downward trend, reaching 2.8% in CY 2024, with expectations to stabilise at 2.0% by CY 2026. The governments fiscal deficit stood at 3.0% of GDP in CY 2024, with a gradual reduction anticipated in the coming years. While challenges such as high public debt and youth unemployment persist, Spains economic outlook remains positive, supported by strong domestic demand and strategic investments.

Outlook

Looking ahead, amidst the geopolitical uncertainty around US tariffs on its imports, the global economic outlook remains cautiously optimistic. Expectations of more accommodative monetary policies and continued easing of inflationary pressures may hedge the uncertainty and provide a cushion for economic growth. Global GDP is projected to growat 2.8% in CY 2025 and 3.0% in CY 2026.Emerging markets and developing economies are expected to maintain their positive performance with a forecasted 3.7% expansion in CY 2025, while advanced economies are likely to see a moderate uptick to 1.4%.

One of the key drivers of this outlook is the resilience of consumer spending, which is anticipated to remain a crucial pillar of growth. With inflation gradually retreating, which is expected to decline to 4.3% in CY 2025 and 3.6% in CY 2026. Household purchasing power is set to improve, further buttressing demand across various sectors. Advanced economies are likely to achieve inflation targets sooner, providing additional stability. While geopolitical uncertainties persist, sustained government investments, prudent fiscal management and strong consumer activity are expected to create a balanced and inclusive global economic landscape.

World GDP Growth Trends

Global Economy

CY 2024	3.3%
CY 2025 (P)	2.8%
CY 2026 (P)	3.0%

Advanced Economies

CY 2025 (P)	1.4%
CY 2026 (P)	1.5%

Emerging Market & Developing Economies

CY 2024	4.3%
CY 2025 (P)	3.7%
CY 2026 (P)	3.9%

P – Projected Source: IMF

Indian Economy⁵

During the year under review (FY 2025), Indias GDP grew at a rate of 6.5%. Despite global economic turbulence and geopolitical conflicts in parts of Europe and the Middle East, Indias economy demonstrated significant resilience. This impressive expansion was fuelled by strategic government initiatives and a steady increase in exports.

Inflation has eased, decreasing from 5.4% in FY 2024⁶ to an encouraging 3.6% in FY 2025, creating a more stable economic environment. This downward trend in inflation is bolstering positive consumer sentiment, setting the stage for heightened consumer spending across key retail categories.

Although urban consumption exhibited a plateauing trend, rural consumption remained robust supported by strong agricultural performance. On the other hand, the services sector continued to be a key driver of growth.

Government-aided structural reforms, deregulation efforts and infrastructure investments are further strengthening market confidence and creating a conducive environment for businesses. With a flourishing services sector, digital growth and increasing financial inclusion, India continues to be a vibrant marketplace for consumer brands aiming to scale.

Outlook

Looking forward, Indias growth trajectory is expected to remain robust, where the GDP growth is projected to sustain at 6.5% in FY 2026 and to complement the growth targets, the Union Budget aims to stimulate consumption through strategic tax reforms and sector-specific support. By eliminating income tax for salaries up to INR 12.75 lakh for individuals, the budget will significantly increase disposable income for middle-class households⁷. Additionally, the RBIs back to back rate cuts by 100 bps including the 50 bps rate cut in June, 2025⁸ has lowered the repo rate to 5.5%, which will increase liquidity in the economy also, the 8^th Pay Commissions recommendations will further bolster disposable income, propelling discretionary spending and aiding consumption. The retail inflation is also showing signs of easing leading to anticipation of further rate cuts, which will strengthen the economy as a whole.

Additionally, there is an upturn in the private capital expenditure (CapEx) cycle, gradually improving business sentiments, healthy balance sheets of banks and corporates and the governments continued thrust on capital expenditure. Improvement in the outlook for global trade and rising integration in the global supply chain will support net external demand.

The governments emphasis on deregulation, infrastructure and private sector participation is vital for continued growth. Sectors such as retail, e-commerce and digital services are poised to expand with rising incomes and improved connectivity. Geopolitical changes and global economic shifts present both challenges and opportunities, requiring businesses to stay nimble. With stable inflation and robust forex reserves, Indias economy is well-positioned for sustained demand and growth.

Indian Economy

FY 2024	9.2%
FY 2025 (P)	6.5%
FY 2026 (P)	6.5%

P – Projected Source: RBI⁹

Industry Review

Health and Wellness Industry

Global¹⁰

The global health and wellness industry has achieved considerable growth, reaching an estimated USD 1.8 trillion in 2024. This expansion is propelled by consumers increasing prioritisation of wellness in their daily lives. 82% of U.S. consumers considered wellness to be of paramount importance which is 73% in United Kingdom and 87% in China. This trend is particularly pronounced among young adults who are purchasing more wellness products and services across varied dimensions such as health, sleep, nutrition, fitness, appearance and mindfulness. A common theme among consumers worldwide is the demand for effective, data-driven and empirically grounded health and wellness solutions.

Looking forward, several trends are poised to shape the wellness landscape. First, a growing interest in at-home health solutions, such as diagnostic kits for vitamin deficiencies and cholesterol levels, which offer seamless and frequent monitoring. Second, the notable elevation in the demand of wearable wellness products. These products focused on advanced bio-monitoring, allow the consumers to access detailed and accurate insights into their health metrics. Third, personalisation is gaining momentum, with consumers seeking products tailored to their unique biometric data, a process increasingly enhanced by generative AI. Additionally, there is a shift towards clinically validated products over those merely labelled as natural or clean, reflecting a preference for proven efficacy. Finally, recommendations by healthcare professionals are becoming more influential in swaying consumer decisions accentuating the importance of medical endorsements in the wellness sector.

Indian¹¹

The health and wellness industry in India has witnessed notable progress, reaching a market size of USD 156.0 billion in 2024. This expansion is driven by rising health consciousness among consumers, leading to heightened participation in physical activities such as yoga, running and cycling. Moreover, there is expanding favourability to nutritional diets abundant in fruits and vegetables. The market encompasses a wide variety of segments, which include functional foods and beverages, beauty and personal care and preventive and personalised medicinal products. Notably, beauty and personal care products currently hold the largest market share.

Looking ahead, the industry is forecasted to reach USD 256.9 billion by 2033, exhibiting a Compound Annual Growth Rate (CAGR) of 5.3% from 2025 to 2033. This anticipated growth is attributed to several factors, such as the amplified adoption of traditional wellness practices like Ayurveda and Naturopathy, the proliferation of sports and fitness centres and the elevated popularity of wellness tourism. Technological advancements, such as health monitoring devices and mobile applications, are also playing a crucial role and are paving the way to active lifestyles and personalised health management among consumers. Regionally, West and Central India are leading the market, influenced by a higher concentration of health-conscious individuals seeking products and services that are aligned with their wellness goals.

Mattress Industry

Global¹²

The global mattress market was valued at approximately USD 46.48 billion in 2024 and is projected to expand at a Compound Annual Growth Rate (CAGR) of 6.5% from 2025 to 2030. This growth can be primarily credited to the heightened consumer awareness on the importance of sleep quality, leading to augmented demand for top-tier mattresses. Cutting-edge development in technology products such as memory foam along with hybrid and smart mattresses with sleep-tracking features have also played a pivotal role in attracting consumers seeking enhanced comfort and support. Moreover, the proliferation of e-commerce platforms has made a vast array of mattress options more accessible, further buttressing market expansion.

Looking ahead, the mattress industry is poised for continued growth, with projections estimating the market will reach USD 67.51 billion by 2030. The aging demographic, along with the emergence of wellness-oriented young adults, is expected to influence purchasing patterns. The elevated demand will create opportunities for products that cater to diverse needs ranging from enhanced support for seniors to eco-friendly materials for environmentally conscious buyers. Manufacturers are envisioned to focus on innovation, incorporating sustainable practices and materials to align with evolving consumer preferences. The elevated prevalence of e-commerce is poised to reshape distribution channels, offering the client a more convenient and personalised experience.

Indian¹³

The Indian mattress market is undergoing considerable expansion, powered by rising income levels, increased health consciousness and amplification in the real estate and hospitality sectors. Consumers are focusing more attention on health, comfort and functionality, leading to alteration in consumer behaviour. To cater to evolving preferences, manufacturers are diversifying their sales channels to incorporate both offline and online platforms. The market is forecasted to grow from USD 2.31 billion in 2025 to USD 3.48 billion by 2030, reflecting a Compound Annual Growth Rate (CAGR) of 8.54% during this period.

Looking ahead, the demand for bespoke and luxury mattresses is expected to amplify, prompting companies to explore innovative technologies. The substantial growth in the real estate sector coupled with evolving nuclear family structures in India open new avenues of opportunity for mattress manufacturers. In addition, the heightened inclination of the modern consumer towards mattresses that promote better posture, spinal alignment, and overall sleep health is set to further bolster growth in the market.

Growth Drivers for the Mattress Industry¹⁴

Advancing Sleep Health Standards

The heightened understanding of the importance of sleep has served as a major contributor of the expansion of the mattress industry. As people increasingly comprehend the significance of quality sleep and its effect on cognitive function, immune system health, mood regulation and physical performance, there is elevated demand for comfortable and supportive mattresses. Issues like back pain, stress-induced disorders and sleep deprivation have fuelled demand for orthopaedic and memory foam mattresses. This transition in consumer inclination towards mattresses that provide essential comfort, support and pressure relief is amplifying market growth. The understanding of the pivotal role of sleep in the overall well-being has led consumers to actively seek out top-tier mattresses, propelling the industry towards new heights.

Rising Disposable Income and Changing Consumer Preferences

The burgeoning middle-class, coupled with rising disposable income, has considerably influenced purchasing behaviour. Consumers are opting technologically superior alternatives that provide both elevated comfort levels and durability. The augmented purchasing power allows more people to invest in premium mattresses, reinforcing market expansion.

Urbanisation and Increased Residential Development

Rapid urban expansion has led to a surge in residential construction. With more people migrating to cities and adopting modern lifestyles, demand for premium and durable mattresses is on the rise. Urban consumers, particularly in metropolitan areas, prefer mattresses that cater to their personalised needs, leading to higher sales of specialised products like orthopaedic and memory foam mattress.

Real Estate and Hospitality Sector Growth

Rapid urbanisation and booming real estate sectors have led to increased housing projects, boosting demand for household furniture including mattresses. Furthermore, the hospitality industry, including hotels, resorts and service apartments—is thriving owing to a steady rise in tourism and business travel. Hotels and hospitality chains require top-tier mattresses for optimum guest comfort, further bolstering the demand for premium products.

Expansion of Online and Omni-channel Retailing

The rise of e-commerce and direct-to-consumer (D2C) brands has eased the purchasing process, allowing customers to explore a variety of options from the comfort of their homes. Online platforms offer competitive pricing, discounts, easy return policies and customer reviews, making them a preferred purchasing channel. Many established mattress brands are incorporating an omnichannel approach, integrating online sales with experience centres and exclusive stores to augment customer engagement.

Technological Advancements and Product Innovation

Innovation in mattress technology is reshaping the industry. Advanced mattresses equipped with smart features, such as, adjustable flexibility, sleep tracking sensors and temperature regulation are being increasingly favoured by consumers. Capitalising on this opportunity, brands are investing in eco-conscious and sustainable mattress materials like organic latex and plant-based memory foam to appeal and cater to environmentally conscious consumers.

PU Foam Industry

Global¹⁵

The global polyurethane (PU) foam market has seen remarkable expansion, reaching a size of USD 55.1 billion in 2024. This expansion is primarily linked to the versatility and widespread application of the materials in varied industries. In the construction sector, PU foam is valued for its superior insulation, enhancing energy efficiency in buildings. The automotive industry utilises PU foam in manufacturing lightweight components, such as armrests, dashboards and airbags, contributing to vehicle weight reduction and improved fuel efficiency. In addition, the furnishings industry relies on PU foam for its upholstery components. PU foams protective characteristics, ensure the safe transport of goods, thereby, contributing to packaging industry. Regionally, the Asia Pacific market dominates the PU foam landscape, bolstered by substantial investments in the packaging sector and the ample availability of various PU foam types.

Looking ahead, the PU foam market is projected to reach USD 89.8 billion by 2033, exhibiting a Compound Annual Growth Rate (CAGR) of 5.57% from 2025 to 2033. This envisioned growth is attributed to several factors, including the persistent expansion of the construction industry and the introduction of bio-based polyols, which offer sustainable production options. Innovations in recycling technologies, both chemical and mechanical, are expected to enhance the market by enabling the breakdown of foam waste into reusable raw materials, aligning with global sustainability trends. Furthermore, the development of lightweight automotive components continues to elevate demand, as manufacturers seek materials that contribute to overall vehicle efficiency. As industries increasingly prioritise energy efficiency and environmental responsibility, the demand for PU foam solutions is poised to rise, solidifying its role in modern manufacturing and construction practices.

Indian¹⁶

The Indian polyurethane foam market has experienced substantial growth, reaching a size of USD 4.0 billion in 2024. This versatile material is extensively utilized across various industries, including construction, automotive, and furniture manufacturing, due to its excellent insulation and cushioning properties. In the construction sector, polyurethane foam serves as an efficient thermal insulator, enhancing energy efficiency in buildings. The automotive industry benefits from its lightweight nature, which contributes to improved fuel efficiency, while the furniture industry relies on it for comfortable and durable seating solutions. However, environmental concerns associated with certain types of polyurethane foam have prompted ongoing research into more sustainable alternatives and recycling methods.

Looking ahead, the Indian polyurethane foam market is projected to reach USD 7.1 billion by 2033, exhibiting a compound annual growth rate (CAGR) of 6.1% during the forecast period of 2025-2033. This anticipated growth is driven by the increasing demand for flexible polyurethane foam in applications such as furniture, bedding, and automotive seating, which are influenced by consumer trends, fashion, and design preferences. Additionally, the market is propelled by the rising need for lightweight and high-performance materials across diverse industries, including automotive, construction, and packaging. Stringent energy efficiency regulations are also steering the construction sector toward adopting polyurethane foam as an excellent insulation solution. Furthermore, the automotive industrys focus on lightweight materials to enhance fuel efficiency and reduce emissions serves as another driving force for the polyurethane foam market. The growing awareness and emphasis on sustainable practices among consumers contribute to the surge in demand for polyurethane foam, given its recyclability and eco-friendly features.

Opportunities and Threats

Opportunities in the Indian Mattress Market

Rising Residential Spaces: Indias expanding population is bolstering the demand for residential spaces and facilitating an environment conducive to the business of mattress manufacturers. Metropolitan cities with augmented housing sales, are amplifying the demand for mattresses. This urban expansion and the rise in residential construction projects provide ample growth opportunities for the mattress industry.

Health Consciousness: Heightened health consciousness is buttressing the growth of the Indian mattress market. Consumers are growing more cognizant of their sleeping habits and the impact of quality sleep on overall health. Consequently, manufacturers are incorporating smart AI features for sleep monitoring and adjustable features to support varied sleeping positions. This health-driven trend is propelling consumer demand for state-of-the-art ergonomic mattresses.

Untapped Market Potential: While metropolitan cities are primary sales regions, there is significant growth potential in states like West Bengal, Bihar and Orissa. These regions are predicted to witness a surge in demand for mattresses in the near future. Targeting these emerging markets can provide lucrative opportunities for mattress manufacturers to expand their footprint and cater to a broader clientele.

Evolving Consumer Preferences: Indian consumers are increasingly prioritising comfort and quality of life leading to an alternation in their perception of mattresses. This trend is stimulating the demand for personalised and luxury mattresses, encouraging companies to innovate and optimise their resources to meet diverse consumer needs. The desire for tailored sleeping solutions is pushing manufacturers to focus on product differentiation and quality enhancement.

Growth in Organised Sector: The organised sector of the mattress industry is expanding due to the rising demand for superior mattresses. Organised brands are envisioned to outperform unorganised players owing to their competitive edge in pricing, elevated health consciousness among consumers and diverse product portfolios. The transition towards organised retail is enhancing product visibility and credibility, further reinforcing market growth.

Expansion of Sales Channels: Mattress companies are adapting to the changing consumer landscape by offering products through both offline and online channels. This omnichannel approach is facilitating the client to select their preferred mattresses, driving up sales. E-commerce platforms, in particular, are playing a pivotal role in widening the reach of the companies and easing the process for the client.

Smart Home Innovations: The rising prominence of smart home technologies and personalised decor solutions is opening new avenues in convenience and personalisation in the mattress industry. Consumers are increasingly seeking smart mattresses with integrated features that enhance sleep quality and provide personalised comfort. This trend is paving the way for innovation and product development in the mattress market.

Competition from Unorganised Sector: The Indian mattress market is predominantly controlled by unorganised players. These businesses often offer cut-rate alternatives, creating intense competition for organised brands. The prevalence of the unorganised sector poses a challenge for established companies aiming to capture a larger market share.

Retail Challenges: The domestic mattress industry is highly dependent on the retail business, making it vulnerable to supply chain disruptions and economic instability. Retail challenges can lead to a steep decline in sales and impact the overall growth of the market. Companies need to develop resilient strategies to mitigate these risks and ensure business continuity.

Evolving Trends: Heightened consumer awareness about evolving global trends and conscious purchase decisions can encourage demand for advanced and premium products. However, it also poses a challenge for manufacturers to stay ahead of evolving consumer expectations and deliver cutting-edge solutions.

Company Overview

Sheela Foam Limited was established in 1971. With a distinguished legacy of over five decades, the Company is one of the eminent names of the industry. As the largest manufacturer of flexible slab stock polyurethane (PU) foam in India, Sheela Foam stands out with a remarkable ~29% market share in the Branded Indian mattress segment and a ~40% market share in Australia. Under the renowned brands—Sleepwell, Kurlon and Furlenco—the Company offers a diverse product portfolio that includes an extensive range of mattresses, comfort foam, home care products, technical foam and furniture foam. The Companys ethos of innovation plays a central role in its business operations with continuous product launches making the Company relevant and competitive in this dynamic market conditions.

~29%

Market Share in India

~40%

Market Share in Australia

With a robust distribution network spanning over 10,000 multi-brand outlets and 6,000 exclusive brand outlets, Sheela Foam ensures its products are highly accessible in both domestic and international markets. The Company operates 18 manufacturing units across India, Spain and Australia, with a total production capacity of 187,000 MTPA. Sheela Foam is committed to excellence and is focused on strategic capacity expansion, expense optimisation bolstering its marketing and digital presence. The Companys vision is to expand its reach to over 5,000 towns, bolster its presence in Tier 1 and Tier 2 cities and grow exports targeting Europe and North America. Through its resolute dedication to quality and customer satisfaction, Sheela Foam continues to lead and innovate in the foam and mattress industry.

Product Portfolio

Category	Products
Mattresses	Spring Range, Technology Range, Custom Cell Range, Back Support Range, Flexi PUF Range, etc.
Comfort Foam and Home Care	Foam Sheets, Foam Blocks, Comfort range accessories, Foam Cores, Furniture Cushions,
Products	Pillows, Bed sheets, etc.
Technical	Automotive Foams, Reticulated Foams, Ultraviolet
Foam	Stable Foams, etc.
Furniture Foam	Sleepwell Resitec, Sleepwell Cool Gel, Primo.

Key Strengths

Key Strength	Description
Multi-location Manufacturing	10 manufacturing units across India facilitate nationwide service and efficient supply chain management.
Extensive Distribution Network	A robust network of 100+ distributors and 13,000+ touchpoints ensures product availability across India.
Global Export Relations	Products exported to 25 countries, showcasing global reach and competitiveness.
Dedicated Customer Care	A specialised customer care cell ensures prompt and efficient service.
Advanced IT for Business Operations	An award-winning IT platform facilitates real-time communication and informed decision-making.
Innovative Product Range	Offers technologically advanced consumer and industrial foam products.
Strong R&D Commitment	A dedicated team of engineers and scientists work on new foam products and enhancements.
Focus on Quality & Customer Satisfaction	Committed to delivering top-quality products and services for customer satisfaction.

Financial Overview

In FY25, the Companys net revenue from operations on a standalone basis was H 2588 crore as compared to H 1880 crore in FY24. Profit after tax for the current year was H 112 crore in contrast to H 168 crore in FY24. Net revenue from operations in Australia was AUD 73.09 million as compared to AUD 74.63 million in the previous year. The net loss after tax was AUD 2.71 million compared to AUD 0.22 million in FY24. The net revenue from operations in Spain was Euro 37.62 million as compared to Euro 36.48 million in FY24. The net profit after tax was Euro 0.64 million in contrast to Euro 1.12 million in FY24. On a consolidated basis, net revenue from operations stood at H 3439 crore compared to H 2982 crore in the previous year. Consolidated net profit after tax stood at H 97 crore from H 184 crore registered in FY24.

Key Financial Ratios

Particulars	Standalone		Change
	FY 2025	FY 2024
Interest Coverage Ratio (Earning before interest, tax and expectational items /Finance cost)	2.43	5.68	-57%
Current Ratio	0.91	0.63	44%
Debt Equity Ratio	0.34	0.37	-8%
Operating Profit Margin (%)	33%	37%	-4%
Net Profit Margin (%)	4%	9%	-5%
Return on Net Worth (%)	4%	6%	-2%
Debtors Turnover Ratio	12.09	11.49	5%
Inventory Turnover Ratio	10.06	6.61	52%

Reason for variances > 25%: Interest Coverage Ratio - Due to increase in finance cost, Current Ratio - Increase in current Assets - Investments in Mutual Funds, Inventory Turnover Ratio - Due to increase in inventory.

Growth Strategy and Outlook

Expanding in Rural India with Tailored Products: Sheela Foam has aimed to unlock the potential of small towns and rural India, where traditional cotton mattresses have continued to dominate. Through the Small Town India (STI) initiative, the Company has introduced value-driven products such as Sleepwell Tarang and Kurlon Aaram. These affordable and foldable PU mattresses have been designed to suit compact homes, enabling modern comfort to reach emerging consumers and strengthening the Companys presence in semi-urban and rural regions.

Strengthening Distribution with a Rural-Focused Model: To effectively penetrate these markets, Sheela Foam has implemented a specialized rural distribution model. This approach has helped deeper market access and increased brand visibility in both rural areas and selected urban locations, allowing the Company to build stronger and more consistent connections with consumers.

Empowering the Ecosystem through Financial Initiatives: The Company has strengthened its business ecosystem by launching initiatives such as Channel Financing for dealers and Early Payment Solutions for vendors. These financial programs have improved liquidity across the value chain and enabled partners to scale their operations more efficiently. By empowering its partners, Sheela Foam has built resilient relationships that support sustainable and long-term growth.

Enhancing Retail Presence and Customer Experience: Sheela Foam has expanded its network of branded retail outlets, including Sleepwell Worlds and Kurlon Homes, to deliver an immersive brand experience. These showrooms have offered interactive displays, product trials, and personalised guidance from trained staff, ensuring a seamless and engaging customer journey. This devotion to Customer Delight has helped enhance brand loyalty and contributed meaningfully to the Companys growth trajectory.

B2B Business Overview

Sheela Foam Limiteds B2B segment continues to serve as a key driver of value creation, reinforcing the Companys reputation as a trusted solutions partner across a diverse range of industries. The Company offers a wide and advanced portfolio of high-performance polyurethane (PU) foams tailored for critical applications in automotive, acoustics, furniture, apparel, footwear, whitegoods, packaging, and sports. These foams are recognized for their superior comfort, durability, and adaptability, consistently meeting the stringent quality and performance standards required by original equipment manufacturers (OEMs) and large-scale industrial clients.

The product range spans specialized grades, including polyether, polyester, reticulated, UV-stable, high-resilience, and flame-retardant foams, enabling the Company to address a broad spectrum of functional and industry-specific requirements. This extensive offering underscores Sheela Foams commitment to providing precise, value-driven solutions to its B2B partners.

Focus on High-Performance Segments

In alignment with its long-term growth strategy, Sheela Foam is enhancing its footprint in high-performance segments such as railways, aerospace, and ventilated car seat systems in the automotive sector. The Company is also actively contributing to the Government of Indias "Make in India" initiative by developing indigenous alternatives to imported components. This not only supports national self-reliance in critical sectors but also strengthens domestic manufacturing capabilities.

Performance and Growth

During FY 2025, the B2B division achieved robust growth, fuelled by steady demand from core industries like automotive and furniture, coupled with sustained innovation in application-specific and lifestyle-oriented foams. Looking ahead to FY 2026, Sheela Foam anticipates continued upward momentum, underpinned by deepening strategic partnerships, an expanded and diversified product range, and increased presence in emerging industrial segments.

Sustainability and Future Readiness

In response to evolving global expectations and the rising importance of Environmental, Social, and Governance (ESG) standards, Sheela Foam is proactively aligning its B2B operations with long-term sustainability goals. The Company is making significant investments in key areas such as the integration of recycled materials, adoption of Variable Pressure Foaming (VPF) technology for reduced emissions, and the development of bio polyol-based foams to minimize reliance on fossil fuel derivatives. These efforts reflect Sheela Foams commitment to innovation with purpose and its readiness to meet the rising demand for sustainable materials.

Strategic Outlook

In the context of shifting global manufacturing dynamics, geopolitical changes, and supply chain realignments, Sheela Foam sees considerable opportunities ahead. With India emerging as a preferred alternative manufacturing hub, especially in sectors like electronics, textiles, footwear, and apparel, the Companys B2B division is strategically positioned to capitalize on this structural shift. Its proactive approach and market agility place it at the forefront of this evolving industrial landscape.

Conclusion

Sheela Foams B2B business remains firmly anchored in innovation, sustainability, and responsiveness to market needs. Backed by a diversified product portfolio, a robust R&D pipeline, and enduring customer relationships, the division is well-equipped to deliver sustained value and contribute significantly to the Companys long-term growth journey.

E-Com Segment Growth

The e-commerce business of Sheela Foam Limited (SFL) grew strongly in FY25, as the Indian online mattress market reached new highs in FY 25. At the beginning of FY25, SFLs brands, Sleepwell and Kurlon had a smaller market share in E-com segment. The Company re-caliberated its strategy and took smart steps to improve, like building a warehouse system based on demand, keeping popular products ready in stock, fixing pricing, and creating a strong product catalogue. Which helped it to scale up, even from a smaller base.

SFL sees e-commerce as a very important part of its business and has plans to grow it even more in FY26. The key focus areas would be new products, new market segments, and improving its direct-to-customer (D2C) websites by focusing on customer experience along with premiumization of mattresses. All these efforts will help SFL increase its market share and continue its strong growth in online sales.

Risks Management

Risks	Description	Mitigation
Shifts in Consumer Preferences	Consumers increased inclination towards innovative, eco-friendly and diverse mattress options, along with shifting purchase patterns to e-commerce.	With continuous R&D, the Company caters to a wide audience and captures significant market opportunities.
Raw Material and Supply Chain Risks	Interruptions in the supply chain can disrupt manufacturing and logistics, impacting production efficiency and quality.	The Company mitigates this by bulk procurement at cost-effective rates, optimising its logistical network and diversifying acquisition strategies.
Inventory Management Challenges	Accumulating surplus inventory can lead to financial setbacks due to quality deterioration and high storage expenses.	Through consistent branding and strong market presence, the Company ensures balanced inventory and steady sales via retailers and distribution channels.
Threats from Market Saturation	Surging competition and new market entrants could drive down prices, impacting profitability and making it difficult to retain market share.	The Company has secured a strong position by focusing on acquisitions and innovation while utilising advanced technology to optimise costs and enhance quality.
Regulatory Compliance and Counterfeits	Meeting regulatory standards for product safety, labelling and environmental norms can be complex and financially burdensome. Non-compliance may result in penalties and reputational damage.	The Company invests in testing, security features like serial numbers and holograms and conducts market surveillance to prevent counterfeiting risks.

Marketing and Branding Strategy

Sheela Foam Limited (SFL) has crafted its marketing strategy around two foundational pillars, which are driving the penetration of modern mattresses and accelerating premiumization. Through this dual approach, the Company aims to emphasize the essential role that a high-quality mattress plays in enhancing consumers lives by ensuring better sleep and overall well-being.SFL has observed a notable shift in consumer behaviour, particularly in the growing awareness and discourse surrounding sleep health. Todays consumers are increasingly proactive in seeking information about how quality sleep can positively impact various facets of their lives, including physical health, cognitive performance, and emotional resilience.

In FY2025, SFL significantly scaled up its digital marketing initiatives to connect with consumers across the entire purchase journey, from building awareness to facilitating conversion. The Company partnered with a diverse range of content creators, including medical professionals, wellness experts, and popular entertainment personalities, to deliver compelling and trustworthy communication. This strategy enabled the brand to foster deeper, more interactive relationships with its audience and strengthen emotional brand affinity.

A key part of SFLs execution was the launch of a 360-degree campaign for non-metro cities, promoting the adoption of modern mattresses through the Sleepwell Tarang series. In parallel, Kurl-On was supported through region-specific vernacular campaigns, designed to drive growth in targeted geographies. Throughout these efforts, the Company continued to reinforce its core brand propositions "Did you Sleepwell" for Sleepwell and "Life banegi Hula Hula" for Kurl-On, to build strong recall and brand identity.

Looking ahead to FY26, SFL remains committed to deepening category penetration and advancing premiumization. The Company plans to engage with its audience through personalized media strategies and further enhance its digital dominance across the marketing funnel, ensuring a seamless and impactful consumer experience at every touchpoint.

Internal Controls

The Companys internal control structure emphasizes solid governance, a diligent finance team, and independent internal as well as external assessments. Risk evaluation activities prioritize the key risks of the business, shaping strategic planning. The Audit Committee frequently reviews and takes necessary actions based on deviations, observations, or recommendations from internal auditors. The Company is dedicated to maintaining the highest standards of corporate governance, supported by well-documented policies and procedures to ensure adherence to all relevant regulations. Advanced IT systems are implemented to safeguard sensitive data and enhance the audit process. Accounting standards are strictly followed when documenting transactions. Alongside comprehensive Management Information Systems (MIS), the Company utilizes various methods for real-time expense reporting to maintain control. Any deviations from budget allocations are promptly detected and addressed to ensure strict compliance.

Human Resources

The Companys Human Resources (HR) strategy supports its overall business goals by helping attract, retain, and grow the right talent while focusing on sustainability, digitalization, and future-ready work practices. It is built around three main pillars which are driving growth, building employee capabilities and promoting a positive workplace culture.

To support growth, the Company has updated its organizational structure and is building leadership strength through a mix of internal development and external hiring. For building capabilities, the Learning & Development (L&D) strategy for FY 2025-26 emphasizes training employees with future-ready skills. Training programs are personalized using data to address individual skill gaps and offer diverse learning methods like micro-learning, gamification, and virtual reality. Leadership development is a major focus with special programs for new managers and senior leaders, along with forums for people managers. A culture of continuous learning is encouraged through peer learning, knowledge sharing, and internal learning communities. Senior leaders are given structured orientation programs for better integration, and the impact of L&D is tracked to ensure improvement in skills and performance.

The Companys culture is deeply rooted in its core values, which are reinforced at every stage of the employee lifecycle. Leaders communicate these values regularly, achievements are recognized, and training programs are based on a values and behaviour framework. Employee engagement is promoted through regular surveys, help lines, celebrations of cultural festivals and milestone recognitions, fostering a sense of belonging.

Employee and industrial relations are built on principles of inclusion, transparency, empowerment, and ethical behaviour. The Company ensures all labour laws are followed, encourages two-way communication through forums like safety and works committees, and resolves wage agreements amicably through discussions. Employee well-being is a top priority with health check-ups, medical camps, and mandatory safety training. It is an inclusive and equal opportunity employer, fully compliant with the POSH Act. Employees are given continuous training and development opportunities to boost motivation and job satisfaction. Potential issues are addressed early through open dialogue to avoid conflict, and community initiatives help improve the lives of people in surrounding areas, creating goodwill beyond the Companys workforce.

Total Employee Strength

FY 2024	3241
FY 2025	4628

Cautionary Statement

The statements provided in the Management Discussion and Analysis Report outlining your Companys forecasts, assessments, and anticipations are considered forward-looking statements as per relevant securities laws and regulations. Actual outcomes may vary from those indicated or suggested based on economic factors influencing demand and supply, pricing trends in both local and global markets where the Company operates, changes in government policies, tax regulations, and other laws. The Company assumes no obligation to publicly update, modify, or revise any forward-looking statements based on subsequent developments, information, or occurrences.