WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT & RESEARCH
SUMMER INTERNSHIP PROJECT REPORT
PREPARATION OF A DETAILED PROJECT REPORT (DPR) FOR THE SETTING UP RUBBERISED COIR MATTRESS PLANT
PGDM 2017 – 19 TRIMESTER IV
ROLL NO – 38
The objective of this summer internship project is to prepare a detailed project report for a client entailing mattress industry overview, rubberised coir mattress industry overview, its manufacturing process and related investments involved, competition profile and their SWOT analysis to understand best competition practices, so as to facilitate setting up a Rubberised coir mattress manufacturing plant in Kerala. The product of interest here is rubberised coir mattress, geography of interest is pan India and other countries, and stakeholders in this project are rubberised coir mattress plants, end users, channel partners, consultants, and government departments. The key insights presented in this report are nature and size of opportunity, where it exists- segments, products, regions, as a contract manufacturer, insights on current market conditions and how the industry is likely to evolve in the future and what to expect in next 5 years. All of this study and data collection for this project is carried under Feedback Business Consulting Services Private Limited, Bengaluru and serves the purpose of understanding this highly competitive landscape of Indian mattress market comprising both organised as well as unorganised sector, with the latter enjoying more than 60% market share.
The topic of this project is to prepare a detailed project report involving profiling of the major mattress manufacturing companies in Indian market through primary and secondary research to facilitate the new entrant in this market segment, based on the following parameters:
•Types of Mattresses and other products produced
•Production in last 6 years
•Sales of different mattresses in last 6 years
•Raw materials consumed
•Advertising and Promotional expenses
•Other Miscellaneous Details
1.1 About the Company
Feedback Consulting has grown from a market research firm (B2B, Consumer, Customer satisfaction) to a full services firm with a business advisory focus. Feedback Consulting also represents overseas firms for their business interests in India. The cornerstone of Feedback’s offering rests on its 4iFramework (Information, Insights, Ideas and Implementation) which consists of uncovering ‘hard to find’ relevant data for its clients, connecting the various data points to generate ‘meaningful and decisive’ observations and then taking into consideration Macro/Micro Economic conditions to provide a strategic road map for clients. Feedback also assist clients in implementing the road map to ensure that business and marketing goals are met. This has resonated extremely well with our clients.
Feedback’s leadership and credibility stems from its experience (over 600 person years) diverse sector record (over 36 sectors), extensive experience (4000 engagements), tangible results (over US$7 billion investments in India) and exposure to leading firms (over 600). Feedback has worked with various NGOs on ideation and business plans on a pro bono basis (livelihoods, education). Currently, our 150 resources (many of them science, engineering and MBA graduates) operate out of 4 offices in India (Bangalore, Mumbai, Delhi, Chennai). Feedback has partner networks in all major markets around the world. Feedback has delivered market research led advisory services in over 28 countries.
1.2 Mattress Industry
The Indian mattress market size is estimated as INR 11,000 Cr in FY’18 growing at CAGR of 8-10% as shown in Fig. 1. The organized segment holds 35 % of the market share valued ~INR 3500-4000 Cr in the year FY’18 growing at a rate of 15% whereas the unorganized segment with 65% of market share is growing with growth rate of 10%. Top manufacturers like Sleepwell, Duroflex and Centuary have good hold in south India, whereas Kurl on and Springwel have good hold of north India market. Around Rs 100 Cr – 120 Cr worth of mattress imported into market (primarily from China, Malaysia and Sri Lanka). Exports of mattress (includes of all type of mattress) worth Rs 80 – 100 Cr to various countries including Asia and UAE countries.
Mattress industry is a highly unorganized market, however a shift towards the organized is being witnessed recently. Few large players like Kurl-On, Springwel and Sleepwell are capturing good hold of the market. There is a stiff competition across players in the market – mid-sized players and imported brands compete on price and customer relationships. Major players aim to target bulk orders across projects, especially high-end projects. Major differentiating factors are – quality, design, compatibility, price and service support. Small scale players are sustaining through cost effective product range. Increasing number of nuclear families and growing residential segment are the key growth drivers.
Increasing customer preference towards quality due to back and spine problems has boosted the demand of branded orthopaedic type mattress. Presently, the market is dominated by PU foam followed by coir type mattress. Mind set of consumers in India to invest in one-time over a preferred mattress is influencing the growth of the king size mattress, as the maintenance and repair of the product do not happen often.
Fig.2 Player wise Product Presence
Indian mattress industry has 20+ large players on national level like KurlOn, Sleepwel, Duroflex, Centuary, Nilkamal, Aerocom Cushion, Fibroflex, Godrej, PEPS, Real Innerspring, Springfit, Springwel, Urbanladder, FabFurnish, Pepperfry etc. having characteristics like In-house input component manufacturing units, 2-3 manufacturing facilities, all India presence through own and franchised showrooms. Coming to regional level, it has 150+ players across India like Serta India, Tempur, Pedic International, King Koil India, Sleepzone India, Peps Industries, Sealy, Snoozer, Casper, Emirates etc. and has 10,000+ players across India in unorganized sector. They bear minimal or nil facilities to support product manufacturing, sell hand stitched mattresses under own brand names, basically made by constructing mattresses out of cotton or cloth, procure RC bare blocks, PU foam sheets and cotton tapestry/ finished quilted tapestry covers.
All the information in the preparation of DPR to facilitate B2B consulting to the client is being prepared through primary research involving visiting manufacturing facilities in Bengaluru, conducting telephonic interviews with the people related to the industry and other stakeholders, developing questionnaires (details can be found in Annexures) for seeking information from suppliers and also through secondary research by going through the annual reports of the leading mattress manufacturing companies, and company websites.
3. ANALYSIS AND INTERPRETATION
The current market trend in mattress in India is witnessing a shift from sales of rubberised coir to spring mattress as shown in fig.5. PU foam mattress continues to dominate with 50% market share. PU Foam and its value added variants like Visco Elastic Foam, High resilience Foam, Extra firm/soft PU Foams, Memory Foams are the highest selling in India. The value added variants have the advantages of being more flexible, breathable and odourless, light weight, durable and can also be treated with an anti-bacterial treatment. Spring Mattresses on the other hand, are gaining popularity amongst customers, largely owing to international exposure and affordability and for those who prefer higher thickness and bounce. Rubberised coir mattresses dominated the market in earlier years as they have been affordable and eco-friendly but their popularity is now slowly shrinking mainly due to lesser comfort factor and availability of other options.
Fig. 5 Mattress Market Trends in India
3.1 Buying Process of Mattress
Based on the information collected through telephonic interviews and questionnaire circulated among mattress suppliers, the buying process of mattress can be understand in the following way from consumer behaviour point of view-
Fig.6 Buying Process of Mattress
Uncomfortable beds due to long periods of usage
Bored with using one type of bed
Health issues, backaches
Expiry of warranty
Purchases post marriage
Word of mouth (friends, relatives)
Showroom sales persons
Ad content on TV/ radio/ print media
Location of the advertisements/stores
Type of bedroom (master vs. others)
Type of mattress best suited
Comfort (support + thickness)
Product life and warranty
Colours and visual appeal
Best places/stores to purchase products
Typically take 1 week – 15 days from initiation to final purchase
Decision taken by both husband and wife
Involves 2-4 store visits (both multi brand and single brand); Offers/Price comparison
Buyer comes with the type of mattress to purchase
Store sales guy recommends the brand
Touch ; feel to check age ; comfort
Offers with the product evaluated
Warranty and delivery
Price compared online again
Visit the store to make purchase
Product is delivered to the address
3.2 Rubberised Coir Mattress Market
The Rubberised coir mattress is valued at INR 1200 Crores for the year FY’18 and has been growing at a CAGR of 8-10%. The market is driven by middle class economies, and there is consistent demand for properties in mattress such as longevity, low priced and highly durable. The market is growing very slowly due to the availability of alternate products especially the shift in customers preferences from coir to spring or hybrid type mattresses.
The stakeholders involved in this industry are-
Raw Material Supplier- It includes suppliers of Raw materials like coir rope / coir fibre / latex / other chemicals and machinery suppliers for manufacturing.
Rubberised Coir Manufacturers- It includes companies involved in rubberised coir mattress manufacturing who are contract manufacturers for the major brands like Kurl-on, Coir-on etc.
Distributors/Stockists- Distributor is who buys non-competing product lines, warehouses them, and resells them to other channel partners. Institutional customers (like hotels/hospitals/hostels) do purchase from distributors or directly from manufacturers.
Retailers- It includes Exclusive brand outlets (EBOs) – company owned or franchisee owned, Multi brand outlets (MBOs) includes of organized furniture store, hyper market and unorganized stores.
End-Users- It consists of residential/household customers as well as institutional customers like hotels, hospitals, hostels/homestay etc.
Fig. 9 Current Distribution Structure of Companies
Here, companies, of late, have started to tie-up with furniture manufacturers and large format retail outlets to promote products.
In this market segment, direct sales to customers accounts for 15-20% of the total market where hospitals and hotels are major customers. Also, there is a new trend of sales to large builders providing fully furnished homes, in select cities.
Fig. 10 Product Type Wise Presence in End Use Segments
To get the sense of pricing structure of the competition in rubberised coir mattress market, the following data was collected through telephonic interviews of the below listed companies-
Fig. 11 Pricing of Rubberised Coir Mattress by Competition
3.3 Competition Snapshot
Impact of GST-
The implementation of Goods and Services Tax (GST) can impact the low priced segment like rubberized coir mattress. This would provide opportunity for shift from unorganized to organized. Mattresses including coir mattresses, cotton pillows, quilts, etc., would fall under the 18% tax bracket.
Transportation and Warehousing-
Mattresses being voluminous in nature pose significant handling, warehousing and cost-related challenges making long distance transportation practically unviable.
The implementation of various taxes makes products from the organized segment costlier and uncompetitive compared to unorganized segment.
Availability of Alternate Products-
With the advent of new technology and understanding consumer needs in a better way with ever changing lifestyle of consumers new types of mattresses have come into the picture like hybrid mattresses, orthopaedic mattress, gel foam mattress etc.
4. FINDING AND INFERENCES
Industry witnessing shrinking growth from 8% – 10% between FY 15 and FY 18 to 7% – 8% between FY 18 and FY 23.
By FY 2023, Coir mattress share will be around 20 – 25% (reduced from present 30%).
Rise in middle income households
Awareness about the health benefits of using coir mattress among urban population
Shift from cotton to coir mattress witnessed among rural population
Based on the information collected in this report, due to forecasted shrinking market size for rubberised coir mattress in India, the client is recommended not to go purely for rubberised coir mattress manufacturing from a long term lookout but to go for manufacturing of hybrid and orthopaedic mattresses which has rubberised coir as well as spring and foam combination to cater to more varied consumer needs and overcoming the disadvantages of a single mattress type. This will be cost effective because of availability of raw material near point of manufacturing (coconut coir from coconut plantation in Kerala where factory will be located) and will be better equipped to the shifting change in market trend.
The main objective of this project report is to provide B2B consulting to the client in understanding the Indian mattress industry structure and market so as to facilitate the decision making process regarding the location of manufacturing plant, understanding competition, product to be manufactured as per the current market trend etc. As per the findings, due to shrinking demand for rubberised coir, it will be unfruitful to step in the manufacturing of product, the market of which is already in the declining stage in Product Life Cycle but further avenues can be explored like exporting rubberised coir mattress when global awareness is increasing regarding usage of eco-friendly products and where coconut coir manufacturing is not profitable due to unavailability of coconut trees. Also, by using combination of materials in mattress alongwith rubberised coir, new varieties of mattresses can be created so as to better cater to consumer needs and capturing market share in this highly competitive market segment.
Questionnaire for Supplier-
Years in business
Type of holding
PRODUCTS OF INTEREST – RANGE & APPLICATION AREAS
Product range offered (Mattress Types)
Fast moving range (Mention type and specification)
Capacities, Production, Capabilities, Infrastructure
Any technology collaborations
Specifications of product – size, material, etc.
Expansion plans if any
Capacities Production Fast moving range
Type -1 Type – 2 Type – 3 Type – 4 Please mention type of mattress manufactured against each type
If product is imported and sold get the source of procurement
Import logistics – commercial terms, lead times, etcDuties and landed price in India
Price range – by products
Price build up – from raw material to end product
Duties and taxes involved
Price lists wherever possible
SALES & MARKETING
Manufacturer to direct consumers (B2B) total sales
Total Sales through retailers
Total sales through wholesalers, agents, e-commerce websites.
No. of distributors__________
No. of Retailers____________
Sales by product types
Share of Rubberized coir mattress by Sizes (in %)______
King, Queen and Single
Domestic vs Export
Domestic (% )________
Export (%) __________
Sales by segment
% share of B2B sales (Hotels, home stays, PG and others)____________
% share of B2C sales_____________
Sales by region (in %)
Commercial terms with Distributors
Minimum order quantity (MOQ)
After sale support
Discounts on payments
Roles and responsibilities at each level
Reach by region – North, South, East, West
Price build up at each level
Support at each level
Margins & Discounts
Marketing & Sales activities
Turnover splits by POI
Type of Mattresses Total sales – in nos Total Sales
(in Rs. Crs.) % splits by customer segments % splits by Region
North South East West
Rubberised Coir Spring Foam Others (if any) Split by direct vs. channel sales
Past growth rates – over the last 2 years
Size of the rubberized coir mattress market
Contribution by segments like industrial, commercial, residential, etc.
Changing trends in these markets, new products, technologies which are impacting business
Key suppliers for each of the products
Segments of future growth
Probe for shift in product usage over the next few years
Future growth rates by products over the next 3 years
Future trends in the mattresses business
Regional pockets of growth
Any government regulations, Coir board regulations that is going to impact the sales of the industry.
Type of Machinery, total work floor space (L*W*H), cost, total no of staff and no of days required for below manufacturing process steps.
Raw material sourcing, storing (other environmental standards to be taken care)
RC Pad manufacturing (coir untwisting, sheeting, Vulcanizing, cooling, pad cutting
And bonded foam making
Mattress fabrication (Quilting and tape edging)
Production output per day, per month and last year total no of units produced.
Total no of workers currently working in the rubberised coir mattress unit, (all the plants)?
What are the RC mattress manufacturing guidelines, BIS standards and ISO certifications (if any other certifications) in place?
Technology used in the manufacturing of RC coir mattress (any automated machinery used in case of mass production)
What other products are made of the RC coir in the same production line, parallelly or any by product/ scrap utilization methods followed?
Any investment, expansion, tie-up etcStrength and weaknesses
Current Business focus and practices