Sleep Tight

When Rahul Gautam '76CE was working towards his undergraduate degree in chemical engineering at the Indian Institute of Technology, Kanpur—some 250 miles from the corporate headquarters of Sheela Foam, the polyurethane foam manufacturer he went on to found with his mother, Sheela Gautam, in 1971—he probably couldn't have imagined that he would one day be managing director of India's largest foam producer. But then, he might not have imagined that he and his mother would go into business together at all, much less pioneer the development of a product that was almost entirely new to the Indian market.

"We didn't have a business background," Gautam explained by phone from his firm's offices in Ghaziabad, an industrial town just outside New Delhi. "My father was in the Army, and my mother was a housewife."

Nonetheless, when his father, Lt. Col. H.S. Gautam, died in 1969, the government granted his mother a license to manufacture foam. (In addition to her business career, Sheela Gautam would go on to serve four terms as a representative in the Indian parliament.) In what was then a largely state-run economy, such business licenses were highly prized. But this one turned out to be a mixed blessing.

Gautam certainly had the knowledge and skills to build a foam manufacturing line from the ground up: after earning his bachelor's in chemical engineering from one of India's top technical schools, he seized the opportunity to acquire a graduate degree in the same field from a leading foreign university—NYU-Poly.

"I knew about the chemical engineering program at Poly, and they offered me a tuition waiver and an assistantship," he recalls. "The impact was absolutely huge. I had the opportunity to study with some excellent professors, and to teach undergraduates. The teaching part turned out to be the biggest learning experience, because I had to prepare first."

Despite his engineering skills, however, establishing a market for what was at the time a novel commodity in India was no small challenge. "No one knew about foam; it was completely unknown to the market," says Gautam. "So it was a bit of a struggle for the first 10 to 12 years."

Yet when the Indian economy began to expand in the 1980s, so did Sheela Foam. At first, the company produced foam exclusively for industrial applications such as sound and heat absorption. In the 1990s, as the Indian government moved to liberalize the economy, the firm moved into foam mattresses. Today, 60 percent of its revenues come from bedding, and its Sleepwell brand leads the Indian mattress market. (Sheela Foam also owns Joyce, the largest foam manufacturer in Australia.)

That growth was hard-won. Transporting foam is expensive: the material is both voluminous and fragile, and in a large developing country with relatively poor infrastructure, the Gautams quickly realized they would need to manufacture their product as close as possible to local markets in order to minimize costs and maximize distribution. As a result, Sheela Foam now has seven of its own factories, and approximately 4,000 distributors, around India.

More recently, Gautam and his head of IT determined that the firm's legacy enterprise resource planning (ERP) system was hampering its performance. That led to a tech overhaul that resulted in greatly improved operating efficiency and earned the company plaudits from regional media.

The company is also ahead of the curve when it comes to health and safety. Isocyanates, a key ingredient in the manufacture of polyurethane, can be highly hazardous; and despite improvements, production standards in India remain patchy.

"As far as the laws of the land are concerned, they are similar to those of any developed country—but the implementation is very poor," says Gautam.

Sheela Foam, which is ISO-certified, has sought to improve its own practices for dealing with hazardous chemicals and to invest in the latest, most environmentally sound equipment. "We do a little more than what is necessary from our end," says Gautam, adding that "we have the technology, and we have the know-how." Some of the firm's products, most notably the ones manufactured by its Australian subsidiary, Joyce, and those it makes in collaboration with Woodbridge, a Canadian company with which it produces car seats, are also considered environmentally friendly.

The recent global economic downturn has not left India untouched, and the company's distributors have long found it difficult to reach the smaller towns and villages that comprise so much of the Indian market. But Gautam is currently working to build a larger fleet of trucks that can travel directly into those harder-to-reach areas, and he expects to see a strong return on that investment within the next few years.

"The need for the product is there," he says. "We just need to make it available and affordable.