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Sheela Foam Ltd.

BSE: 540203 Sector: Industrials
NSE: SFL ISIN Code: INE916U01025
BSE 00:00 | 24 Apr Sheela Foam Ltd
NSE 05:30 | 01 Jan Sheela Foam Ltd
OPEN 1286.65
52-Week high 1770.00
52-Week low 1084.00
P/E 36.16
Mkt Cap.(Rs cr) 6,259
Buy Price 1250.00
Buy Qty 1.00
Sell Price 1403.00
Sell Qty 2.00
OPEN 1286.65
CLOSE 1301.15
52-Week high 1770.00
52-Week low 1084.00
P/E 36.16
Mkt Cap.(Rs cr) 6,259
Buy Price 1250.00
Buy Qty 1.00
Sell Price 1403.00
Sell Qty 2.00

Sheela Foam Ltd. (SFL) - Director Report

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Company director report

Dear Members

Your Directors have pleasure in presenting the 46th Annual Report on thebusiness operations and financial performance of the Company along with the ConsolidatedAudited Balance Sheet and Statement of Profit & Loss for the year ended 31 March2018.

Financial Information

(Rs. in Crores)



Particulars 2017-18 2016-17 2017-18 2016-17
Revenue from operations 2004.45 1894.50 1695.66 1590.36
Profit before Financial Charges Depreciation & Tax 237.40 219.24 216.03 188.26
Less : Financial Charges 8.67 10.97 5.75 7.40
Cash Profit 228.73 208.28 210.28 180.86
Less : Depreciation 35.24 30.39 27.78 23.58
Profit before Tax 193.49 177.89 182.50 157.28
Add/(Less) : Income Tax (58.93) (52.79) (55.93) (46.87)
Add/(Less) : Deferred Tax (0.85) 0.46 (0.63) 0.79
Profit after Tax 133.71 125.55 125.93 111.20
Other Comprehensive Income (0.57) (0.46) (0.88) (0.59)
Total Comprehensive Income for the year 133.14 125.09 125.05 110.61

During the current year Excise duty till 30 June 2017 is included in Revenue whereasin previous year the Excise duty for full year is included in the Revenue. Further afterimplementation of GST the Revenue excludes GST but includes outward freight. For properComparison of Growth & Profitability Ratios the comparable Revenue figures are givenhereunder:




Revenue from operations 2004.45 1894.50 1695.66 1590.36
Less: Excise Duty 39.13 161.65 39.13 161.65
Add: Freight 10.29 43.16 10.29 43.16
Net Revenue from operations 1975.61 1776.01 1666.82 1471.87

During the current year Net Revenue of the Company on standalone basis increasedfrom Rs.1471.87 Crores to Rs.1666.82 Crores registering a growth of 13.24% over lastyear. The Profit After Tax for the current year also increased by 13.24% to Rs.125.93Crores as against the Profit After Tax of Rs.111.20 Crores of last year.

First-time adoption of Ind AS

The Company has adopted Indian Accounting Standards (Ind AS) as notified by theMinistry of Corporate Affairs with effect from 1 April 2017 with a transition date of 1April 2016. These financial statements for the year ended 31 March 2018 are the firstfinancial statements the Company has prepared under Ind AS. For all periods up to andincluding the year ended 31 March 2017 the Company prepared its financial statements inaccordance with the accounting standards notified under the section 133 of the CompaniesAct 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014('Previous GAAPRs.).

The adoption of Ind AS has been carried out in accordance with Ind AS 101 First-timeAdoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards andinterpretations that are issued and effective for the first Ind AS financial statements beapplied retrospectively and consistently for all financial years presented. Accordinglythe Company has prepared financial statements which comply with Ind AS for year ended 31March 2018 together with the comparative information as at and for the year ended 31March 2017and the opening Ind AS Balance Sheet as at 1 April 2016 the date oftransition to Ind AS.

Present Status & Future Outlook

Your Company retains the leadership position in Mattresses and Foam Products. Its sharein the organised Mattress Market is more than 23%. The Foam production continues to bemore than double of its nearest competitor.

The Company registered a growth of more than 13% in turnover and in profits despite GSThurdles and continued increase in the price of major raw material (TDI).

As large part of Mattress industry is unorganised and around 70% of the populationstill does not use modern mattresses the growth potential for your company is immense.The share of organised market as well as of your Company is expected to increase with thefull implementation of GST. Various other factors like awareness about good sleep forhealth increase in disposable income ever increasing demand for housing due to nuclearfamilies and rapid Urbanisation will propel the demand of modern mattresses.

Similarly the potential for Foam Consumption continues to remain high. India has one ofthe lowest per capita foam consumption and with the development of Economy the demand ofFoam is bound to increase. Company expects to increase its Market Share on the strength of45 years of expertise and continuous Research & Development leading to sustained goodquality.

The Company continues to expand its dealer network to increase the penetration. Thefocus is on increasing Exclusive Brand Outlets (EBO) as well as Multi Brand Outlets (MBO)in new territories. Most of the Sleepwell products are to be sold through EBOs whereaslow and Mid level priced mattresses will be sold through MBOs.


Board of Directors do not recommended any dividend for the year FY 2016-17. The entireprofit being ploughed back in the business.


As on 31 March 2018 the Company has three subsidiaries and one step down subsidiary.As required under the provisions of Section 129 of the Companies Act 2013 read withCompanies (Accounts) Rule 2013 a statement containing salient features of the financialstatements of subsidiaries is provided in the prescribed format AOC-1 as Annexure-A ofthe Board Report.

The Company has one 100% subsidiary in Australia Joyce Foam Pty. Ltd (Joyce Foam).Joyce Foam is the largest producer of Foam in Australia and supplies its high quality Foamto Global Mattresses and Furnishing Companies. Joyce recorded a turnover of 63.28 MillionAustralian Dollars (AUD) in FY 2017-18 as compared with 61.76 Million AUD in FY 2016-17recording a growth of more than 2% and has posted pretax profit of 2.28 Million AUD in2017-18 as against 4.27 Million AUD in FY 2016-17. Joyce Foam passed on around 50%increase in TDI prices to its customers and retained its customer base sacrificing somemargins. Joyce Foam deploys most modern technology-Variable Pressure Foaming (VPF) forproducing best quality of Foam. Since full scale introduction of VPF technology therevenues and profitability of company have improved.

Joyce Foam Pty. Ltd has one wholly own subsidiary Joyce W C NSW Pty Ltd.

Your Company has two other wholly owned subsidiaries as under:

1) Divya Software Solutions Private Limited

2) Sleepwell Enterprises Private Limited.

Material Subsidiaries

In accordance with Regulation 16 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) none ofthe subsidiaries is a material non-listed subsidiary. The Company has formulated a policyfor determining material subsidiaries. The policy has been uploaded on the website of theCompany at

Consolidated Financial Statements

In accordance with Section 136 of the Companies Act 2013 and the applicable AccountingStandard on the Consolidated Financial Statements your Directors have attached theconsolidated financial statements of the Company which form a part of the Annual Report.

The financial statements including consolidated financial statements and the auditedaccounts of each of the subsidiary are available on the Company's

Directors' Responsibility Statement

In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:

a) In the preparation of the annual accounts the applicable accounting standards havebeen followed.

b) The directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that were reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financial year andof the profit or loss of the Company for the year under review.

c) The directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

d) The directors have prepared the annual accounts on a going concern basis.

e) The directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

f) The directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

Corporate Governance

In accordance with SEBI Regulations a separate report on Corporate Governance is givenin Annexure-B along with the Auditors' Certificate on its compliance. The Auditors'Certificate does not contain any qualification reservation and adverse remark.

Related Parties Transactions

The particulars of Contracts or arrangements with related parties in the prescribedform are attached as Annexure-C.

Risk Management

The Company has formulated a Risk Management Policy duly reviewed by the Board ofDirectors. The policy includes risk identification analysis and prioritization of riskand development of risk mitigation plans.

Internal Financial Controls

The Company has in place adequate Internal Financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operations were observed. The report on the InternalFinancial Control issued by M/s. S.P. Chopra & Co. Chartered Accountants StatutoryAuditors of the Company in view of the provisions under the Companies Act 2013 is givenelsewhere in this report.

Directors and Key Managerial Personnel (KMP)

As per the provisions of the Companies Act 2013 Mr. Rakesh Chahar will retire byrotation at the ensuing Annual General Meeting (AGM) of the Company and being eligibleseek re-appointment. The Board has recommends his re-appointment.

The Board also recommends the appointment of Lt. Gen(Dr.) V. K. Ahluwalia as anIndependent Director who was appointed as Additional Director by the Board of Directorsand whose term shall be expiring at the ensuing Annual General Meeting:

As required under the provisions of Section 203 of the Companies Act 2013 the KeyManagerial Personnel namely Chairman and Managing Director Executive Directors ChiefFinancial Officer and Company Secretary continue to hold that office as on the date ofthis report.


M/s. S.P. Chopra & Co. Chartered Accountants were reappointed for 5 years in theAnnual General Meeting held on 2016 subject to ratification at every AGM. The Company hasreceived letter from the Auditors to the effect that the ratification if made would bewithin the prescribed limits under Section 141 of the Companies Act 2013 and that theyare not disqualified for re-appointment.

The Board recommends the ratification of the appointment M/s. S.P. Chopra & Co. asStatutory Auditors for FY 2018-19 for the audit of the Company.

Auditors' Report

There is no adverse observation of Auditors' on financial statements of the company.The Auditors' Report read with the relevant notes to accounts are self-explanatory andtherefore does not require further explanation.

Cost Auditor

As per section 148 read with Companies (Audit and Auditors) Rule 2014 M/s Mahesh Singh& Co Cost Accountants are appointed to conduct the cost records of the Company forthe FY 2018-19 by the Board of Directors and it seeks ratification of remuneration fromthe members of company at ensuing Annual General Meeting.

Internal Auditor

The company has engaged M/s S. S. Kothari Mehta & Co. Chartered Accountants asInternal Auditor to conduct internal audit for the year 2018-19. The Internal Auditor willreport to Board of Directors. The internal audit will help company to review theoperational efficiency and assessing the internal controls. It also reviews thesafeguarding of assets of the Company.

Secretarial Auditor

The company has engaged M/s AVA Associates Company Secretaries as Secretarial Auditorto conduct Secretarial audit for the year 2017-18. The report on secretarial audit isannexed as Annexure-D to the Board's Report. The report does not contain anyqualification reservation or adverse remark.

Corporate Social Responsibility (CSR)

In terms of Companies Act 2013 your company is to undertake Corporate SocialResponsibility programme. The disclosure as per Rule 9 of the Companies (Corporate SocialResponsibility Policy) Rule 2014 is attached as Annexure-E

Audit Committee

The composition of Audit Committee is provided in the Corporate Governance Report thatforms part of this Annual Report.

Vigil Mechanism

The Company has established a vigil mechanism through a Whistle Blower Policy. TtheCompany can oversees the genuine concerns expressed by the employees and other Directors.The Company has also provided adequate safeguards against victimization of employees andDirectors who may express their concerns pursuant to this policy. The policy is uploadedon the website of the Company at

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

The Company has in place an Anti-Sexual Harassment policy in line with the requirementsof sexual harassment of women at Work place (Prevention Prohibition and Redressal) Act2013. The Internal Complaint Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. During the period under review no complaint wasreceived by the ICC.

Meetings of the Board

During the year 5 meetings of the Board of Directors were held.

Particulars of Loans Guarantees or Investments

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 forms part of the Financial Statements.

Conservation of Energy Technology Absorption and Foreign Exchange Earning and Outgo

A. Following measures were taken by company for energy conservation in the year:

1) Completed replacement of conventional lights with Energy efficient LED lights.

2 Sky light is now being used in Production shed in Rajpura Plant.

3) Significant saving of energy due to much less pumping of water as the water is nowreused in Fire Hydrants.

4) Second Looper machine at Talwara modified to dispense the peeled rolls withoutstopping it hence reduction in energy lost during start/ stop of machine.

5) Other measures introduced to save the energy viz. increase in standard ACTemperature to 25.5 degree Auto switch on/switch off the lights through sensorsinstallation of sensor monitored curtains to use natural light etc.

B. The expenses incurred on Research and Development have been included in respectiveexpense heads.

C. The Company has perfected the technology of producing foam and is continuouslyinnovating new products/techniques to improve the quality of its product. It had alsostarted compression of some grades of foam resulting in savings on freight. Further it hascommissioned Vertivac Variable Pressure Foaming Machine for better grade foam at reducedcost. It has also started Comfort Cell Mattresses to provide extra comfort to itsconsumers.

D. The earnings from exports were Rs.20.43 Crores (Previous Year Rs.20.28 Crores) andpayments in foreign exchange were Rs.274.86 Crores (Previous Year-Rs.304.76 Crores).

Listing Agreements

Your Company has entered into Agreements with BSE Limited and NSE Limited incompliance with Regulation 109 of the Listing Regulations.

Particulars of Employees

The information as required under Section 197 of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is provided in Annexure-F to the Board's Report.

Management's Discussion and Analysis

In terms of provisions of Regulation 34 of the Listing Regulations the Management'sdiscussion and analysis is set out in this Annual Report.

Public Deposits

The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.

Extract of Annual Return

Extract of Annual Return as provided under Sub Section 3 of Section 92 is annexed as Annexure-G.

Significant and Material Orders

There are no significant and material orders passed by regulators or courts ortribunals impacting the going concern status and Company's operations in future.

Board Evaluation Mechanism

Pursuant to the provisions of Companies Act 2013 and the Listing Regulations theBoard has carried out annual performance evaluation of its own performance those ofdirectors individually and of various committees.

The performance of individual directors was evaluated on parameters such as number ofmeetings attended contribution in the growth and formulating the strategy of the Companyindependence of judgement safeguarding the interest of the Company and minorityshareholders time devoted apart from attending the meetings of the Company activeparticipation in long term strategic planning ability to contribute by introducing bestpractices to address business challenges and risk etc. The directors expressed theirsatisfaction with the evaluation process.

Business Responsibility Report

Business Responsibility Report is annexed as Annexure-H.


Your Directors wish to express and place on record their thanks to the Company'sDistributors Dealers and Business Associates for their excellent effort and the customersfor their continued patronage of the Company's products. Your Directors also wish to placeon record their appreciation for the devoted services of the Executive Staff and Workersof the Company at all levels enabling the Company to achieve the excellent performanceduring the year.

Your Directors also appreciate the valuable co-operation and continued support receivedfrom Company's bankers and all the government agencies and departments.

The Directors also express their sincere thanks to all the Shareholders for thecontinued support and trust they have reposed in the Management.

By Order and on behalf of the Board
of Sheela Foam Limited
Place: Noida (Rahul Gautam)
Date : 18 May 2018 Chairman and Managing Director