Monte Carlo Fashions Ltd Management Discussions.


Given the dynamic nature of the Indian garment industry, the impact of high crude oil prices and global challenges were particularly strong. The economy has achieved improvements in macro-economic stability, mainly on the strength of ongoing structural reforms, fiscal discipline and financial inclusion.

The full-year GDP growth rate is pegged at 7% for FY 2018-19, due to the waning effects of the demonetisation and the disruption in supply chains following the implementation of the Goods and Services Tax (GST). Consumer sentiments remained suppressed for most part of the year with urban consumers feeling the overhang of inadequate job/income growth and high oil prices. At the same time, persistent deflation in food prices and lack of Minimum Support Price (MSP) realisations adversely impacted rural demand. In addition, credit growth was severely affected in the second half of the financial year with the non-banking financial sector under stress from defaults by a few large players in the sector

FY2019-20 is likely to start on an uncertain note. Good monsoon seasons might only add to the possibility of upward & positive expectation in the economy as the rural economy still depends to a great extent on rains. Recent round of policy rate cuts announced by the Reserve Bank of India are expected to alleviate the credit conditions and thus expect to provided a boost to the industrial sector.

The growth of Indian economy is expected to remain upward for the year ahead.high consumer spending, rising disposable income and increasing share of organized retail the domestic garmenting and retailing industry has favorable growth prospects over the long term.


India is the worlds second largest exporter of textiles and clothing. Domestic Textile and apparel industry contribute 2% to Indias GDP and accounts for 14% of industrial production, 27% of the countrys foreign exchange inflows, and 13% of countrys export earnings. The textile and apparel industry can be broadly divided into two segments - yarn and fiber, and processed fabrics and apparel. The domestic textile industry in India is estimated to reach US$ 223 billion by 2021, while cotton production in India have reached 36.1 million bales in FY19. In FY20, growth in private consumption is expected to create strong domestic demand for textiles.

The urban metro market is the biggest market for Apparels in India comprising cities such as Delhi NCR, Mumbai, Bengaluru, Chennai, etc. contributing over 20% to the Indian apparel market. Considering that less than 20% of Indias population lives in these cities indicates the higher purchasing power in urban areas and frequency of purchases. The metros also witness huge penetration of womens western wear as compared to Tier -I or Tier -II cities of the country.

The rural apparel market in India is still primarily catered by unbranded and unorganized local players. High real estate costs, competition among branded players and saturation in metro cities of the country have driven big brands to move towards the smaller cities. The increasing purchasing capacity and awareness of fashion and trend in small cities has also resulted in providing a huge market to the organized players of the country.

The domestic apparel market can also be broadly divided on basis of how premium the products are — in likes of super premium, premium, medium, economy, and value segments. The medium price segment holds majority of the share among apparel segment followed by economy segment. The price sensitive rural population forms a major part of the value and economy price segments of apparel market. Further, driven by the twin trends of premiumization and value consciousness, the mid-market segment is being squeezed on both sides by the value and the premium segments. Due to the low investments required for setting up a garment unit, many small players have entered the industry making it highly fragmented.

The growth in the industry can be attributed to:

• rising per capita disposable income

• changing fashion trends

• growing consumer class

• rising urbanization

• increasing retail penetration

• growing service class

• increasing share of the designer wear.

Source: IBEF


The domestic Indian apparel market can be broadly classified into mens wear, womens wear and kids wear. Currently, mens wear holds the largest share in the apparel market. It accounts for 41% of the market. Womens wear contributes almost 38%, while kids wear contributes the balance 21% of the market.

Source: Care Ratings - Indian Readymade Garments (Apparel Industry) - April 2019.


Monte Carlo Fashions Ltd. (Monte Carlo) has pushed the envelope on high street fashion. The products offered under brand Monte Carlo — apart from Woollen knitted garments — include T-Shirts, Shirts, Linen Shirts, Denim, Trousers, Dresses, Shorts, Tunics, Sportswear and much more, for men, women, tweens (8-14 years age group). The main objective of the Company is to stand up to the buyers expectations with consistent quality, backed by fashion designing division equipped with the latest technology, and a team of highly qualified technocrats and adhering to timely schedules.


The Company has a well-diversified presence across various categories such as Cottons, Woollens, Home Furnishings and Kids etc. Currently, cotton wears contribute around ~58% of the Companys total revenues. Historically, the Companys presence has been strong in the Northern and Eastern regions of India. However, your Company remained focused on improving its presence in Southern and Western regions too, by increasing the share of "all season" cotton product categories. Our core competency lies in our clear understanding of the specifications across products.Our long standing relationship with our customers has been one of the most significant factors in our growth.


Strong Retail & Distribution Network

As on date of report, your company is strongly positioned across all sales channels with its focused multi distribution strategy. Our product is sold through 262 Executive Brand Outlets (EBOs), 2500+ Multiple Brand Outlets (MBOs) and 306+ National Chain Stores (NCS).

With rise of the middle tiers and smaller towns & cities we believe your company has ample opportunity to expand its presence in these towns as growth rate is higher than urban town and metro cities.

The company has established an e-commerce presence through its own portal and by way of tie-ups with digital platforms such as Amazon, Flipkart, Myntra, Jabong and Snapdeal etc.


The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand. India is the largest exporter of cotton yarn and is ahead of China in cotton yarn exports, however, in case of cotton fabric, although India in the second largest exporter of cotton fabric its share in world exports is 6% while the leading player China has 51% share. This amounts to 8.5 times the share of India. The gap in the exports of cotton fabric between China and India is glaring. This reflects that while India has a commanding position in the low end of the value chain, there is an opportunity for India to introspect and come up with innovative ideas thereby, becoming leaders in the higher end of the value chain in cotton and its related products. In addition to that urbanisation is expected to support higher growth due to change in fashion and trends. Government initiatives such as the proposed hike in the FDI limit in multi brand retail will bring in more players in the sector, thereby providing more options to consumers. It will also bring in greater investments along the entire value chain from agricultural production to final manufacturing goods. with global retail brands assured of a domestic foothold outsourcing will also rise significantly.

Source : IIFT Textile Project Report (March18)


Many major international apparel brands have commenced operations in India realizing that Indian markets likely to emerge as one of the largest markets in the world in the next few decades which creates competition in the industry. Changing demographic shift has resulted into varying consumer preferences for fashion and clothing. Company may observe significant deterioration in sales if the company fails to cope up with latest trends in fashion and clothing. Seasonality in the Business can also be considered as one of the risk in case of Monte Carlo Fashion as third quarter generates highest quarterly revenue in the year and woollen knitted garments contributes one third of the total sales. To mitigate that risk company is expanding its products offerings in other segments like home furnishing and kids in order to reduce the overall seasonality impacts.


We are very positive on the growth of the company in years to come, customer addition, geographical diversification, ideal product mix, will improve the revenue and margins in years ahead without any major capex.

With a positive outlook of Indian economy and expected rise in consumption your company is well positioned to deliver strong performance in FY20.The company has significantly expanded its presence in the Indian market by opening many Exclusive Brand Outlets (EBOs) MBOs taking the brands to consumers across the entire length and breadth of the country. The focus will be improving existing quality of existing products and forecasting fashion trends which help to be on profitable growth with increasing ROCE and also whenever markets offers good opportunity, in response the company develop new product in its range.


The company has a proper and adequate internal control system to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition and those transactions are authorised, recorded and reported correctly. The internal control is exercised through documented policies, guidelines and procedures. The internal auditors regularly monitor and evaluate the efficiency and adequacy of internal control system in company, its compliance with operating systems accounting procedures and also ensures the internal control systems are properly followed by all departments.


We have diverse workforce of 1727 employees as on 31st March 2019. Given the repute we hold in the market we have been able to consistently attract the best talent and skill set from the industry. Here, our people feel respected and valued, creativity and excellence are encouraged.

The industrial relations remained cordial throughout the year and the board records its appreciation for the contribution of all employees towards the growth of the company without which the achievements made would not have been possible.


During the year, the Company achieved a total income of Rs. 65,637.47 Lakhs with a net profit before tax of Rs. 5,959.6. The detailed performance has already been discussed in the Directors Report under the column Performance Review. The production of the Company increased from 2,467,312 pcs to 3,223,038 pcs during the year 2018-19 showing an increase of 30.62%


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 financial year) in key financial ratios. Accordingly, the Company has identified the following ratios as key financial ratios:-

Ratio Unit FY 2018-19 FY 2017-18 % Change
Debtors Turnover times 3.20 3.42 -6.55
Inventory Turnover times 2.48 2.26 9.54
Interest Coverage Ratio times 8.86 11.87 -25.37
Current Ratio times 2.08 2.76 -24.55
Debt Equity ratio times 0.10 0.11 -9.83
Operating Margin % 12.10 16.03 -24.52
Net Margin % 9.10 11.81 -22.95
Return on Net Worth % 12.32 13.28 -7.23

The Interest coverage ratio is lower by 25.37% and Return on Net worth is lower by 7.23% due to decrease in profit before interest, depreciation and tax and increase in finance cost. The major reasons for decrease in profit of the company is rise in advertisement costs and CSR Expenditure for the previous years 2016-17, 2017-18 and current year 2018-19 being paid during the year. Your management is quite optimistic that the performance will improve in the near term.


Though the statement and views expressed in the above said report are on the basis of best judgment but the actual future results might differ from whatever is stated in the report.

For and on the behalf of Board of Directors
Jawahar Lal Oswal
Place: Ludhiana Chairman & Managing Director
Date : 05.08.2019 DIN: 00463866