Excelsior Correspondent
JAMMU, Aug 29: Sheela Foam Limited, largest manufacturer of mattresses and foam has made one more global acquisition.
In the past, it has acquired a Company in Australia, Joyce Foam Private Limited, which is running successfully for the past 14 year. The Spanish Company, Interplasp SL produces around 11000 tons (capacity 22000 tons) of Polyurethane Foam for bedding and furniture application. Interplasp also exports the foam to other European and North African countries.
The acquisition will result in reduction in raw material pricing for all Sheela Foam Group Companies in India, Australia and Spain. The acquisition would give Sheela Foam a presence in Europe, the largest Market of PU Foam in the World. The Company expects to grow Spanish operations by higher capacity utilization. There is sufficient headroom for growth for Interplasp, as its market share in Europe is only around 1%. The manufacturing cost in Spain is also one of the lowest in Europe.
The technology being used in Spain (Variable Pressure Foaming-VPF) is most advanced and is common with the one used in Joyce, Australia. In fact Sheela Foam/Joyce have helped Interplasp to stabilize this technology. Sheela Group has exclusive rights to this technology.
The success story of Australia is expected to be replicated due to unique Management style of Sheela Foam. The Company does not disturb the existing structure of the overseas company and the entire operations including Production, Sales, and Finance and HR are managed by the continuing teams of the overseas Company. The integration is achieved through a robust IT system and regular interactions. The other big advantage is that the focus on the Indian operations remains intact.
Interplasp, is being acquired for a total consideration of Euro 42 Million, to be financed by Debt and Internal Accruals. Interplasp sales for the last year were Euro 32 Million with Profit Before Tax of more than 10%. Due to the rationalization of critical raw material prices like TDI and Polyol, the EBITDA for the first half of 2019 is in excess of 14%. Hence this acquisition will be EBITDA accretive from the first year of the acquisition.
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