Deal street. When coir meets foam – How Kurlon and Sleepwell became bedfellows

Acquisitions are not that easy. It needs to be appropriate, it has to fit in culturally, it has to make business sense. I guess it only happens when both sides are ready.

We looked at the whole gamut of players, but some were very small, they would not have fitted well. Some were mid-level and would have been possible, but the fitment was just not working out. It just shows that the segment is reaching a point in the curve where consolidation has to happen or will happen.

India is an extremely diverse country and we have done well to have a good consumer brand with us, but for us to be able to cater to the entire country with just one brand is an impossibility. There are diversities of distribution, geography, price segment, and therefore an acquisition like this — a horizontal one, with another well established consumer brand who’s in fact older than us — augurs well and it fits well into our portfolio.

The other synergies will impact the cost part of it — when you procure materials, there would be extra volumes and therefore ability to get volume advantages will be there. The places of manufacturing which they have and which we have … there are no co-locations at all, they are in different cities.

At the front end, starting from supply, logistics and all that, it can definitely improve with innovations. As far as the channels of distribution are concerned, we can get a consolidated supplier, better terms and it will also be a cost savings for the supplier too.

The consumer is, of course, the best beneficiary of all this. Right now, if you look at any consumer who buys a mattress, the biggest pain area is finding the right product. Now the consumer will have a sharp, focused, positioned product and brand, and therefore, the choice-making will be easier.

The roots for Kurlon are on the rubberised coir side, and for Sheela Foam on the polyurethane foam side. However as both companies have progressed, everyone has tried to do everything, so Kurlon also makes foam, spring mattress. Similarly, we may have nothing to do with rubberised coir, we may not understand it, but we make them and also spring mattresses. The base segmentation exists, but we have tried to muddle it up, because everyone just wanted to do everything. But now, with this acquisition, we will be able to segregate them and give a sharper focus to the products.

In the Covid and post-Covid times, people looked for lower average purchase prices and therefore, the unorganised sector got a little impetus. But this is reversing. The other part is that demand for furnishing comes with a lag. As more homes are sold, the demand for mattresses will come in. Definitely, during the coming months, we would expect much better performance — lower input costs, easy availability of raw materials, markets getting buoyant, footfalls happening, plus the festival season around the corner — it should get better.

Furlenco deals in furniture. At the moment its presence is mainly in the rental part of it, although, they have started designing, manufacturing and even beginning to retail. For Sheela Foam, it will be a big step in the direction of making our presence felt in branded furniture. PUF and furniture are two big segments and that is the reason for the acquisition.