Kurlon Enterprise Limited

Company Background:

The evolution of Kurlon Enterprise dates back to 1962 in the form of Karnataka Consumer Products Limited. The company was established for manufacturing accessory products for the purpose of relaxing and sleeping. The company got renamed to Kurl-on limited. Born out of organization restructuring in 2014, Kurlon Enterprise Limited (KEL), is a part of Manipal Group which has diversified interest across financial services, manufacturing, education, electronic commerce, software services etc.

KEL manufactures and sells a wide range of home comfort solutions and high- end soft furnishings such as pillows, cushions, bed lines/sofa to ergonomically designed furniture etc. KEL manufactures mattresses in 126 different configurations. Within mattresses segment the company manufactures mattresses (Spring, Foam, Coir and Therapeutic) and foam (Memory, Eloquence, Heera and Polycool). The promoter of Kurlon Enterprise Limited (KEL) is Kurlon limted and it holds 85.06% share of the company. Other noteable investors in Kurlon Enterprise Limited include International Finance Corporation (IFC), Washington (Part of World Bank Group) and Motilal Oswal Private Equity (MOPE) together owns nearly 10-12% stake in the company.

Competitive Position:

KEL has a strong distribution network as indicated by a pan-India network of 7000+ Dealers/Retailers along with 1500+ Exclusive stores under 3 different formats (namely Kurl-On Home Komforts, Kurl-On Mattress Xpress and Kurl-On Korner), 70 Area Sales office with local godowns & 4 centralized warehouses located in Delhi, Pune, Bengaluru and Bhubaneshwar. It also sells products through 3,450+ multi-brand outlets. There are 90 Company owned and Company Operated stores (“COCO”) as of FY19.

The organized market for mattress is nearly 36%, out of which KEL has a market share of nearly 17%, making it the largest organized player. Additionally, as the market share of organized sectors grows in comparison to the share of unorganized sector owing to reforms carried by government (GST, demonetization and so on), KEL has a very compelling growth path ahead.

Financial Performance:

Growth in revenue was flat at 0.73% owing to the challenging environment. Expenses increased owning to higher spends in Advertisement, Promotion & Selling Expenses (6% increase over FY18 to Rs. 140 crs) and opening of new stores added to lease rental costs and associated costs.

During FY18, KEL received one time income in the form of insurance claim received against the fire in its Uttaranchal Plant few years back amounting to Rs. 778.24 Lakhs excluding this one-time income, the profit after tax would reflect a growth of 5.96%. EPS declined as a result of decline in profits and issue of bonus shares during FY19.

Given below is a snapshot of the financial performance of KEL: (Figures in Rs. Lakhs)

For details financial performance and notes, kindly click here.

Future Prospects: Some of the key growth drivers ahead include:

1. As the organized sectors takes market share from the unorganized sector, which currently constitutes nearly 65% of the total market, KEL stands to grow. Further, the overall market is projected to grow near 7-8%, this will give added momentum to the company.
2. Launch of STRB8 Series mattresses are supposed to garner huge volumes and market share to the company. These mattresses are light in weight, easy to handle, sag free & affordable.
3. Regional license of US based mattress company called “Spring Air” is being acquired by KEL. It will greatly fortify KEL’s presence in the premium segment to tap the fast growing demand from 5 star hotels to retail consumers. This will add to its profitability and accelerate top line growth. The license will be for India, Bangladesh, Nepal and Pakistan.