Monte Carlo Fashions Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS REPORT</dhhead>

GLOBAL ECONOMY OUTLOOK:

The global economy continues to demonstrate resilience amidst evolving challenges, supported by strong macroeconomic fundamentals in both advanced and emerging markets, and steady consumer and government spending. However, the landscape is marked by significant disparities and persistent headwinds.

Global inflation, though still above central bank targets, is showing a downward trend at varying speeds. The IMF projects a decrease in global headline inflation to 4.3% in 2025 and further to 3.6% in 2026, a decline attributed to easing supply-side constraints, cooling commodity prices, and persistent monetary tightening by central banks worldwide. Notably, inflation in Asia has risen more moderately than in Western economies and is now decelerating more rapidly, prompting regional central banks to adopt more measured adjustments in interest rates, which could lead to less aggressive monetary policy responses across many Asian economies.

During 2025, global trade tensions escalated significantly due to a growing tariff war, primarily between the U.S. and China, impacting various sectors by disrupting global supply chains and reducing cross-border investment, which in turn led to increased production costs and reduced efficiency, prompting companies to actively reevaluate their supply chain strategies to mitigate these accumulating risks.

Despite prevailing disruptions, the IMF anticipates global economic growth at 2.8% in 2025 and a modest improvement to 3.0% in 2026, both below the pre-pandemic historical average of 3.7%. This subdued outlook reflects the cumulative impact of trade protectionism, elevated financing costs, and ongoing geopolitical tensions. Nevertheless, the underlying resilience of major economies supported by adaptive supply chain strategies and structural reforms continues to offer a measure of stability. Going forward, the persistence of high interest rates, demographic and productivity headwinds, and fragile geopolitical conditions will likely constrain near-term growth potential. To mitigate these risks and support a broad-based recovery, the IMF emphasizes the need for coordinated fiscal and monetary policies, enhanced multilateral cooperation, and targeted reforms aimed at boosting investment and productivity across regions.

 

INDIAN ECONOMY OUTLOOK:-

Indias economy demonstrated significant resilience in FY2024-25, navigating global headwinds and domestic policy shifts with steady momentum, as evidenced by a steady GDP growth for the full fiscal year. While external challenges such as evolving global trade dynamics and geopolitical tensions have posed uncertainties, robust domestic demand and proactive fiscal and monetary policy interventions have continued to support economic growth.

Indias real Gross Domestic Product (GDP) is projected to grow by 6.5% in FY2025 26, as reaffirmed by the Reserve Bank of India (RBI) in its June 2025 Monetary Policy Statement. Key growth drivers include strong household consumption, the expanding manufacturing sector benefiting from Production Linked Incentive (PLI) schemes, increased infrastructure investments, and a rapidly digitizing services sector. The governments sustained focus on capital expenditure, rural development, and support for MSMEs further bolsters this economic momentum.

Inflationary trends have shown clear signs of easing in recent months, with headline CPI inflation moderating to a nearly six-year low of 3.2% in April 2025. This moderation prompted the Reserve Bank of India (RBI) to adopt a more accommodating monetary stance, notably lowering the policy repo rate by 50 basis points to 5.50% on June 6, 2025, and shifting its monetary policy stance to "neutral." These actions, along with the RBIs downward revision of its CPI inflation forecast for FY2025-26 to 3.7%, indicate a supportive environment for economic growth.

The Union Budget for 2025 significantly strengthened the countrys growth agenda through comprehensive structural reforms and targeted fiscal support. Key initiatives include a simplified income tax system, which now eliminates tax liability for individuals earning up to 12 lakh under the new regime. Additionally, the budget announced increased investments in infrastructure, logistics, and innovation, alongside a substantial 20,000 crore fund to promote private sector-led research, and improved credit support for agriculture, clean energy, and micro, small, and medium enterprises. These measures are expected to boost productivity, create jobs, and enhance resilience in rural areas and various sectors, positioning India to maintain its robust growth trajectory, supported by favorable demographics, increasing investor confidence, and the ongoing formalization of the economy.

 

GLOBAL TEXTILE & APPAREL INDUSTRY

The global textile and apparel industry is poised for sustained growth, driven by evolving consumer preferences, increasing demand for sustainable and technical textiles, and the expansion of e-commerce. The global textile market, valued at USD 1.98 trillion in 2024, is projected to reach USD 4.02 trillion by 2034, at a CAGR of 7.35%. The global apparel market is expected to grow at 8% CAGR to USD 2.37 trillion by 2030, while global textile and apparel trade is anticipated to expand at 4% annually, reaching USD 1.2 trillion by 2030.

The Asia-Pacific region continues to lead the global market, with an estimated size of USD 1.07 trillion in 2024, projected to grow to USD 2.19 trillion by 2034 at a CAGR of 7.45%. Growth is underpinned by rising disposable incomes, urbanization, and an expanding middle class, fueling higher spending on fashion, apparel, and home furnishings.

The global textile markets growth is primarily driven by evolving consumer preferences for sustainable, functional, organic, and eco-friendly fabrics, alongside the transformative impact of e-commerce in expanding market reach. This is further supported by continuous innovation in materials like recycled polyester and organic cotton, as well as advancements in digital printing and 3D knitting, all of which enhance production efficiency and design flexibility, complemented by increased automation in manufacturing leading to improved efficiency and reduced costs. Despite these positive trends, the industry faces challenges from ongoing geopolitical tensions and volatile raw material prices, which can disrupt supply chains and impact profitability; nevertheless, the increasing demand for high-quality, sustainable, and technologically advanced textile products, combined with strategic investments in innovation and manufacturing, positions the global textile market for continued expansion.

 

THE INDIAN TEXTILE AND FASHION APPAREL INDUSTRY

The Indian textiles and apparel industry is poised for strong growth, likely to register a healthy CAGR and achieve a market value of USD 350 billion by 2030.The textile sectors contribution to Indias GDP remained steady at approximately 2.3%.The sector continues to be a significant employment generator, providing direct employment to over 45 million people.

To support this growth trajectory, the Indian government has significantly increased its budgetary allocation for the textile sector, projecting an outlay of 1,14,800 crore for FY26, more than doubling the previous years allocation. This investment underscores a robust policy-driven approach aimed at enhancing manufacturing capabilities, boosting exports, and generating employment.

Additionally, the implementation of the Mega Integrated Textile Region and Apparel (MITRA) Parks scheme is expected to provide world-class infrastructure, attract investments, and create a competitive textile ecosystem.

Looking ahead, the anticipated India-UK Free Trade Agreement (FTA), expected to come into effect in 2026, is projected to provide a substantial boost to Indias textile exports to the UK. This agreement has the potential to double trade volumes within five to six years, opening new avenues for market access and further solidifying Indias position in the global textile landscape. This strategic trade pact, combined with domestic policy support and inherent sector strengths, positions the Indian textile and apparel industry for sustained expansion.

 

Growth Drivers:

1) Rising disposable incomes, increasing urbanization, and the expansion of the middle class are fueling domestic demand for branded and fashionable apparel.

2) India is the 6th largest exporter of textiles and apparel; export competitiveness is improving due to schemes like PLI, RoSCTL, and FTAs with the EU, UK, and UAE.

3) A strong raw material base (cotton, jute, silk) and government support through Make in India, PM MITRA Parks, and the National Technical Textiles Mission are aiding sectoral growth.

4) Rising e-commerce penetration via platforms like Myntra and Flipkart is expanding market access, especially in Tier 2 and 3 cities. The shift to man-made fibres (MMF) is backed by government incentives; companies like Monte Carlo are also expanding to South and West India.

5) Growing demand for sustainable and technical textiles is encouraging investment in R&D and green technologies. India also benefits from a large skilled workforce and low labour costs.

 

Risks:

1. The Indian textile industry suffers from fragmentation and low-skilled labour, limiting productivity despite strong growth and job creation potential.

2. Increasing scrutiny over carbon footprint, water usage, and labour practices may raise compliance costs and affect global orders.

3. Prices of key inputs like cotton and synthetic fibres are highly volatile and influenced by weather, global demand, and policy changes, impacting margins.

4. Countries like Bangladesh, Vietnam, and China offer competitive pricing and better infrastructure, which can erode Indias market share.

5. The Indian textile industry lags in technology adoption and R&D, with benefits concentrated in spinning, while fragmentation and lack of scale hinder effective FDI utilization.

6. Global trade policy shifts and geopolitical tensions may disrupt supply chains, increase tariffs, and dampen export demand.

 

COMPANY OVERVIEW

Monte Carlo Fashion Limited stands as a prominent name in Indias apparel industry, recognized for its extensive range of woollen and cotton clothing across mens, womens, and kids segments, as well as a presence in home textiles. Alongside its flagship brand "Monte Carlo," the company has successfully launched other labels like Rock.it, Cloak & Decker, Luxuria, and Tweens, catering to a broad customer base. Esteemed as Indias pioneering organized lifestyle brand, Monte Carlo also holds the title of the nations top winter wear brand and is widely regarded as a Super Brand in woollen knitted apparel nationwide.

Their products are made widely accessible through a comprehensive distribution network, spanning exclusive brand outlets (EBOs), multi-brand outlets (MBOs), shop-in-shop formats, distributors, and major national retail chains. Additionally, Monte Carlo products are easily available across leading e-commerce platforms such as Amazon, Flipkart, and Myntra. The companys distribution footprint extends across 23 states and 4 union territories.

With a skilled in-house design team of over 26 professionals, Monte Carlo crafts approximately 900 SKUs monthly, offering a diverse selection of products that include T-shirts, shirts, linen shirts, denim, trousers, dresses, shorts, tunics, and sportswear, staying attuned to the fast-evolving fashion trends. Ensuring high-quality standards and fulfilling customer expectations are key priorities for the brand. To achieve this, Monte Carlo has dedicated R&D units equipped with advanced technology and staffed by expert technocrats who meticulously ensure timely production and delivery.

 

BUSINESS OVERVIEW

Product Categories Overview:

The Company offers a diverse selection of products under the "Monte Carlo" brand:

Luxuria caters to the premium menswear segment.

Denim features a dedicated line of denim apparel.

Alpha represents the exclusive collection for womenswear.

Tweens offers a specialized range for kidswear.

Cloak & Decker serves as the budget-friendly option for menswear.

Rock.it provides high-end sports and fitness wear.

Monte Carlo Home offers a comprehensive range of home textiles products.

 

REGION & CHANNEL WISE REVENUE BREAKUP

The Company maintains a broad product range spanning categories like cotton, woollens, home furnishings, and kids apparel. At present, cotton products account for approximately 54% of the Companys total revenue. Traditionally, the brand has held a strong market presence in the Northern and Eastern regions of India.

 

THE MONTE CARLO ADVANTAGE

Marketing Initiatives

Monte Carlo has adopted a range of strategic marketing efforts to boost its brand visibility and reach. The company has formed alliances with airlines and multiplex chains like PVR Cinemas, Carnival Cinemas, INOX, Indigo, Vistara, AirAsia, among others. Additionally, it has partnered with the film and entertainment industry as a clothing sponsor for movies and reality shows. The brands digital presence is extended through platforms like AajTak, Times Now, ABP News, India TV, India Today, TATA Sky, Airtel Digital TV, and more. To engage with younger audiences, Monte Carlo consistently collaborates with bloggers and influencers on social media. The decision to handle marketing in-house has provided the company with better control, flexibility, and cost effectiveness, enabling them to execute more targeted and responsive campaigns. These initiatives highlight Monte Carlos dedication to growing its customer base and solidifying its reputation as a top fashion and lifestyle brand.

 

Distribution Centres

A major strength of the company lies in its extensive and expanding distribution network that is spread across India. The company has a presence in approximately 1,949 Multi-Brand Outlets (MBOs), 471+ Exclusive Brand Outlets (EBOs), and over 1,468 +NCS & SIS model outlets. In the 2025 financial year, Monte Carlo opened a total of 65 exclusive brand outlets, surpassing its target for the year of 50. Presence across NCSs include likes of Shoppers Stop, Pantaloons, Trends, Lifestyle, Globus and many more.

 

Online Presence

Recognizing the shift of younger consumers towards online shopping, Monte Carlo has emphasized selling through its own e-commerce platforms, including Monte Carlo and Rock It. Additionally, the brands products are widely available on major online marketplaces like Amazon, Flipkart, Myntra, Jabong, and Kapsons. There is also notable demand for its products in international online markets. The company has observed promising growth through its digital channels, with sales from its own website reaching INR 151.4 million, representing approximately 9.66% of total revenue.

 

Technology Upgradation

In order to stay up to date with technological advancements and modernize its operations, the company has introduced an advanced automatic whole-garment manufacturing facility at its existing unit in Ludhiana. This state of the art technology allows for the seamless knitting of entire garments, providing a level of comfort and fit that surpasses traditional knitwear. By utilizing this technology, the company eliminates the need for multiple manufacturing processes, resulting in reduced waste and improved efficiency. Currently, the company has a team of 26+ professionals dedicated to closely monitoring global fashion trends.

 

OPPORTUNITIES

Increasing brand awareness and scaling-up potential

With the increasing frequency of purchases, particularly in the fast fashion realm, there is a growing sense of fashion and brand consciousness among consumers, rendering them more aspirational and discerning. We prioritize creating products that align with evolving trends to foster brand loyalty and connect with consumers. By expanding product offerings that resonates with the price sensitive Indian consumer, Monte Carlo aims to capture a larger market share and establish a strong presence in the value fashion segment. This initiative aligns with the companys objective of meeting the evolving needs and preferences of customers while further expanding their brands reach and scaling up potential in the Indian fashion industry.

 

Diversification across various Product Categories

Monte Carlo Fashions has successfully diversified its product portfolio to include Cottons, Woollens, Kids, and Home Furnishing categories. Their offerings encompass both woollen and cotton/cotton blended apparel, available at various price points, allowing them to serve the economy, mid-premium, and premium market segments effectively.

 

Changing consumer preferences

With ever changing consumer needs and demands, today consumers are looking for a complete package with good quality product and design. Additionally, with rising income and urbanization, increases consumers purchasing power where lies the huge growth potential for comprehensive range that Monte Carlo offers to its diversified audience, spanning different age groups and segments.

Strong Policy Support

Monte Carlo Fashions Limited is well-positioned to leverage the emerging opportunities as India aims to strengthen its global presence in the textile market. India is targeting an expansion of its presence in the global textile market, and the Indian government is set to propel the apparel and textile industry forward in the coming years through various initiatives such as:-

 

a) Foreign Trade Agreements (FTAs): To boost the countrys exports, the Indian government is actively negotiating bilateral trade agreements with various nations.

 

b) Production-Linked Incentive (PLI) Scheme: This initiative offers incentives for the production and export of certain textile products made from man-made fibers.

 

c) Foreign direct investment (FDI): The textile sector permits Foreign Direct Investment (FDI) of up to 100% through the automatic route.

 

d) Mega Integrated Textile Region and Apparel (MITRA) Parks Scheme: The government has approved the development of seven integrated textile parks across greenfield and brownfield sites with a total outlay of

4,445 crore till FY 2028. These parks aim to boost global competitiveness, attract investment, and generate large-scale employment. Notably, in February 2023, 1,000 acres were allocated for a park in Lucknow.

 

e) National Technical Textiles Mission: The government has authorized the establishment of the National Technical Textiles Mission for a four year period (FY 2021 to FY 2026), with a budget of INR 14.8 billion. The mission aims to promote the application of technical textiles in sectors such as agriculture, aquaculture, dairy, and poultry.

 

f) Budget Allocation:The new budget for 2025-26 contains a sizeable increase, the Indian government has raised the budget allocation by 19 percent to 5,272 crore for FY26, with a significant focus on the textile sector.

 

RISKS & CONCERNS

Risk Management is an ongoing process within the organisation. Your Company has a robust risk management framework to identify, monitor, and minimise risks. The Board has a policy to oversee the risk mitigation performed by the executive management which includes identification, assessment, monitoring and reporting of risks.

 

Regulatory risk Legal and tax compliance

Changes in the regulatory and tax environment can lead to increased costs, erosion of margins & cash flows and potential fines or reputational damage. However, your Company has a zero-tolerance approach towards compliance with all regulatory requirements the Company closely monitor upcoming regulations to prepare itself well in advance and avoid business disruptions.

 

Discounts

All the leading brands, both Indian and International, are going for early discounts/sales. People are getting used to the discounting trend both online and offline. In such a scenario, to keep the walk-ins intact, every brand has to offer a discount and no brand can survive without discounts. The company expects that going forward also the discounting sales will continue in the same fashion or may rise.

 

Seasonal nature of business

Woollen knitted garments contribute around one-third of total sales. This leads to the highly seasonal nature of the business, with most of the yearly turnover accruing during the third quarter of the financial year. However, the Company has been focusing on cotton and cotton-blended apparel and diversifying the product range to include home furnishings and kids apparel. With this, the seasonal nature of business is expected to reduce over the coming years.

 

Input cost risk

The companys profitability and cost effectiveness are vulnerable to the impact of fluctuating prices in raw materials, power, and other input costs. These external factors can significantly influence the companys production expenses, potentially leading to increased operational costs and reduced profit margins. It is crucial for the company to closely monitor and manage these cost drivers, implementing effective procurement strategies, exploring alternative suppliers, and optimizing operational processes to mitigate the potential risks and maintain a competitive position in the market.

 

Competition risk

The entry of foreign brands in the Indian market has led to intensified competition and increased costs for our company in maintaining market visibility. Continuous product innovation is crucial in the branded apparel industry to stay ahead of fashion trends and changing consumer preferences. However, it is important to manage inventory effectively and closely monitor consumer tastes to mitigate the risk of potential unsold inventory or markdowns that could impact the value of our stocks.

 

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

A properly designed and consistently enforced system of operational and financial control helps the Companys Board of Directors and management to safeguard the resources, produce reliable financial reports, and comply with laws and regulations. Effective internal control also reduces the possibility of significant errors and irregularities and assists in their timely detection when they do occur. The internal Auditors regularly monitor and evaluate the efficiency and adequacy of internal control systems in the Company, its compliance with operating systems and accounting procedures, and ensures that the internal control systems are properly followed by all concerned departments of the Company. Significant audit observations and corrective actions are taken thereon and are presented to the Audit Committee of the Board.

 

HUMAN RESOURCE & INDUSTRIAL RELATIONS

The Company has an excellent track record of cordial and harmonious industrial relations, and over the years not a single man day was lost on account of labour unrest. In view of its aggressive growth plans, the Company enhanced its focus on improving human resource productivity and efficiency. The Company is of the firm belief that human resource is the driving force that propels a Company towards progress and success. The Company is committed to the development of its people. The Industrial relations were cordial and satisfactory.

 

OPERATIONAL PERFORMANCE & FINANCIAL REVIEW

For the financial year ending 2025, the company reported consolidated revenues of INR 1,10,041 Lakh, reflecting a year-on-year increase of 4%. The Gross margin stood at 47.93% in FY2025 as against 42.55% in FY2024. PAT for the year stood at INR 8,117 Lakh as against INR 5,994 Lakh in FY 2024.

On the Balance Sheet front, the Company holds a cash balance of INR 28,117 Lakh which comprises cash and bank balance along with current and non-current investments. Long-term borrowings remain at zero, consistent with FY2024, reaffirming the companys debt-free status and reflecting strong financial discipline and efficient capital management. The net debt-to-equity ratio is 0.30 for FY 2025. ROCE and Cash Adjusted ROCE are 14.92% and 15.43% respectively, for the year.

The Company has strong track record and proven expertise to generate healthy, predictable and sustainable returns for its stakeholders. The Company is committed to wealth creation for all its stakeholders. The Company aims to maintain a consistency in giving dividend to its stakeholders and aims to ensure sustainable and consistent returns to stakeholders. Since 2016 the Company has been committed to paying 100% dividend and in 2019 the Company did a buyback as well.

 

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

As per SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to provide details of significant changes (change of 25% or more as compared to immediately previous year) in key financial ratios. Accordingly, the Company has identified the following ratios as key financial ratios:

Ratio	Unit	FY 2024-25	FY 2023-24	% Change
Debtors Turnover	Times	2.80	2.83	-1.06%
Inventory Turnover	Times	1.22	1.36	-10.29%
Interest Coverage Ratio	Times	3.92	3.81	2.88%
Current Ratio	Times	1.84	1.87	-1.60%
Debt Equity ratio	Times	0.34	0.27	11.11%
Operating Margin	%	16.95%	13.36%	26.87%
Net Margin	%	7.38%	5.64%	30.85%
Return on Net Worth	%	9.73%	7.66%	27.02%

 

The Reason for significant change:

Operating Margin, Net Margin and Return on Net Worth: Price hike and lower discounting resulted in an increase in Margins.

 

FUTURE OUTLOOK

The companys future looks promising as it strategically shifts its focus towards cotton and cotton-blended products suitable for all seasons. With a strong presence in the northern and eastern regions, the company plans to extend its reach into the southern and western parts of India. Despite its nationwide footprint, the company acknowledges the untapped potential in these areas and aims to seize emerging opportunities.

To align with changing consumer behaviors, the company is significantly enhancing its online presence. It is concentrating on its website as a primary platform to engage customers and boost sales. By prioritizing online channels, the company seeks to broaden its audience and offer a smooth shopping experience.

In response to diverse consumer needs, the company has launched several brands, each targeting specific market segments. This approach allows for effective market capture and fosters customer satisfaction and loyalty. Additionally, the company has entered the home textile sector, establishing a dedicated plant to meet the increasing demand in this area.

As part of its strategic shift, the company has transitioned its entire online team in-house from an outsourced model. This change provides greater control over online operations, leading to more efficient execution and a better customer experience. Furthermore, the company is moving its focus from offline to online advertising, recognizing the critical role of digital marketing in engaging its target audience.

 

CAUTIONARY STATEMENT

This document contains statements about expected future events, financial and operating results of Monte Carlo Fashions, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that the assumptions, predictions, and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as several factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of Monte Carlo Fashions Limited for the financial year ended March 31, 2025.

	For and on behalf of Board of Directors
	Jawahar Lal Oswal
Place: Ludhiana	Chairman & Managing Director
Date: 06.08.2025	(DIN: 00463866)