Credit Rating

September 08, 2026 The BSE Limited The National Stock Exchange India Limited Phiroze Jeejeebhoy Towers Exchange Plaza, Bandra Kurla Complex Dalal Street, Mumbai-400001 Bandra(E), Mumbai-400051 Scrip Code: 540203 NSE Symbol: SFL Subject: Credit Rating - India Ratings and Research (Ind-Ra) Dear Sir/Madam, Pursuant to Regulation 30 read with Para A of Part A of Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby inform you that India Ratings and Research (Ind-Ra), the Credit Rating Agency, has vide its communication dated September 08, 2026, reaffirmed the Company's credit rating for its debt instruments at IND AA/Stable. We further confirm that there has been no change in the rating from the previous rating disclosed by the Company on September 10, 2025. A copy of the Credit Rating Letter received from Ind-Ra is enclosed herewith for your information and record. The details required under SEBI Circular No. SEBI/HO/DDHS/DDHS- PoD/P/CIR/2025/0000000137 dated October 15, 2025 are enclosed herewith as Annexure A. This is for your information and record. Thanking you, Yours truly, For Sheela Foam Limited Md. Iquebal Ahmad Company Secretary & Compliance Officer SHEELA FOAM LTD. #14, Sleepwell Tower , Sector 135, Noida- 201301 Ph: Int-91-120-4868400 •Email: investorrelation@sheelafoam.com • contactus@sheelafoam.com Regd. Office: 1002 to 1006 The Avenue, International Airport Road, Opp Hotel Leela Sahar, Andheri East, Mumbai, Maharashtra, India, 400059 • Ph: Int-91-22-28265686/88/89 Toll Free: 1800 103 6664 • www.sleepwellproducts.com • www.sheelafoam.com CIN- L74899MH1971PLC427835 Annexure A A) Current Rating Details: ISIN Name of the Credit Outlook Rating Date of Verification Date of CRA rating action credit status of verification (new, rating CRAs upgrade, (verified/ downgrade, not reaffirm) verified) INE916U08012 India Ratings IND IND Affirmed 08.09.2026 Verified 08.09.2026 and Research AA/Stable AA/Stable B) Earlier Rating Details: ISIN Name of the Credit Outlook Rating Date of Verification Date of CRA rating action credit status of verification (new, rating CRAs upgrade, (verified/ downgrade, not reaffirm) verified) INE916U08020 India Ratings IND IND Affirmed 09.09.2025 verified 09.09.2025 and Research AA/Stable AA/Stable INE916U08038 India Ratings IND IND Affirmed 09.09.2025 verified 09.09.2025 and Research AA/Stable AA/Stable INE916U08012 India Ratings IND IND Affirmed 09.09.2025 verified 09.09.2025 and Research AA/Stable AA/Stable SHEELA FOAM LTD. #14, Sleepwell Tower , Sector 135, Noida- 201301 Ph: Int-91-120-4868400 •Email: investorrelation@sheelafoam.com • contactus@sheelafoam.com Regd. Office: 1002 to 1006 The Avenue, International Airport Road, Opp Hotel Leela Sahar, Andheri East, Mumbai, Maharashtra, India, 400059 • Ph: Int-91-22-28265686/88/89 Toll Free: 1800 103 6664 • www.sleepwellproducts.com • www.sheelafoam.com CIN- L74899MH1971PLC427835 India Ratings Affirms Sheela Foam’s Bank Loan Facilities and NCDs at ‘IND AA’/Stable; Withdraws Issuer Rating. Sep 08, 2026 | Sheela Foam Limited | Furniture | Home Furnishing India Ratings and Research (Ind-Ra) has affirmed Sheela Foam Limited's (SFL) bank loan facilities and non-convertible debentures at ‘IND AA’/Stable, while withdrawing the Long-Term Issuer Rating as follows: Details of Instruments Size of Coupon Instrument Regulator of Date of Maturity Issue Rating Assigned along Rate Rating Action Description Instrument Issuance Date (INR with Watch/Outlook million) Long Term # - - - - - Withdrawn Issuer Rating^ Bank loan RBI - - - 7,000 IND AA/Stable/IND A1+ Affirmed facilities Non- Refer ISIN - - - 1,812.50 IND AA/Stable Affirmed convertible annexure (reduced debentures* from 7,250) # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. ^Issuer ratings have been withdrawn basis specific request from Issuer. This is consistent with Ind-Ra’s Policy on Withdrawal of Rating. *Details in annexure Analytical Approach Ind-Ra continues to fully consolidate SFL and its subsidiaries while arriving at the ratings because of the strong operational and strategic linkages among them. List of Key Rating Drivers Strengths Improved scale of operations, likely to improve further Strengthened market position; increase in online branded mattress sales during FY26 Improved credit metrics in FY26, likely to improve further Strong base of distribution network Strong record of acquisitions historically Weaknesses Exposure to cyclicality and economic downturns Susceptibility to volatility in raw material costs; forex risk Detailed Description of Key Rating Drivers Improved Scale of Operations, likely to Improve Further: SFL’s consolidated revenue increased to INR38,208 million in FY26 (FY25: INR34,392 million; FY24: INR29,823 million), largely supported by 65% yoy growth in U20 mattress’s volumes, coupled with 49% yoy growth in e-commerce sales volume. The performance remained largely in line with Ind- Ra’s expectations. The management expects the revenue run-rate to grow 10%-12% yoy in the Indian operations for FY27, led by improving brand presence and same stores sales. Ind-Ra expects the consolidated revenue to increase to INR42,000 million-43,000 million in FY27 and rise 8%-9% yoy in FY28. In 1QFY27, SFL’s consolidated EBITDA margins remained at 10.6% (FY26: 10.3%; FY25: 8.3%; FY24: 10.1%), supported by better absorption of fixed costs overheads and improved profitability at foreign subsidiaries. This was achieved, despite a moderation in consolidated gross margins, primarily due to an increase in raw material prices following adverse geopolitical conditions. The company’s gross consolidated margins declined to 40.6% in 1QFY27 (FY26: 43.7%; FY25: 41.7%; FY24: 41.3%). The management expects the EBITDA margins to improve further during the seasonal months, backed by higher absorption of fixed costs and its cost control measures. Ind-Ra expects the EBITDA margins to be 10%-11% in FY27. SFL’s consolidated net working capital cycle remained stable at 60 days in FY26 (FY25: 60 days; FY24: 63 days), despite increase in inventory days to 67 days in FY26 (64 days; 71 days), on account of stretch in payable days to 49 days (40 days; 53 days), following working capital efficiencies. Ind-Ra expects the cycle to remain stable over the near-to-medium term. Strengthened Market Position; Increase in Online Branded Mattress Sales in FY26: SFL is the largest manufacturer of polyurethane foam (PU) foam and mattresses in India with its well-established brand, Sleepwell and Kurlon. The company has a dominant position in other industries such as automotive, footwear, lingerie, and furniture, among others, apart from mattresses. According to the management, SFL has a market share of around 30% in the overall branded modern mattress segment in India along with the acquisition of KEL. Ind-Ra opines SFL’s market share will continue to benefit from a gradual shift to the organised sector from the unorganised one, supported by increasing consumer awareness about the health benefits of quality mattresses. Also, with the launch of the affordable mattress brands, Tarang and Aaram, SFL’s market share will improve in the unorganised segment. Furthermore, SFL holds around 40% market share in Australia, being a flexible PU foam player through its subsidiary, Joyce Foam PTE (Australia). Improved Credit Metrics in FY26; likely to Improve Further: SFL’s gross debt decreased to INR7,137 million in FY26 (FY25: INR12,165 million; FY24: INR12,813 million), largely on account of the repayment of NCD, which was taken for acquiring KEL. The NCDs are likely to be fully paid off by mid-FY27. The consolidated gross adjusted debt (including leases) reduced to INR9,079 million at FYE26 (FY25: INR14,624 million; FYE24: INR14,931 million). The company’s consolidated net levera [Showing first 8,000 characters — download PDF for full document]