Monte Carlo Fashions Ltd
NSE:MONTECARLO
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
585.25
870.55
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Monte Carlo Fashions Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day. And welcome to the Monte Carlo Fashions Limited Q1 FY '23 Conference Call hosted by Emkay Global Financial Services. We have with us today Mr. Dinesh Gogna, Director; Mr. Sandeep Jain, Executive Director; Mr. Rishabh Oswal, Executive Director; Mr. R.K. Sharma, CFO; and Mr. Ankur Gauba, Company Secretary.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Jigisha Kapoor from Emkay Global Services. Thank you, and over to you, ma'am.
Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity.
I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Yes. Good morning, everyone, and thank you for joining us for this earnings call of Monte Carlo Fashions to discuss the financial and the operating performance for Q1 financial '23.
I would like to highlight that certain statements made or discussed over the conference call today will be forward-looking statements, and a disclaimer to this effect has been included in the results presentation shared with you earlier. Result documents are available on company's website and also have been updated on our [indiscernible]. A transcript of this call would also be made available on the Investors section over the company's website.
And now let me share with you the financial and the operating performance for this quarter. The company reported revenues of INR 113 crores during Q1 financial '23 as against INR 42 crores in Q1 financial '22, thus registering a growth of 171% year-on-year. This quarter has been the best ever Q1 throughout the entire existence of this company. Operating EBITDA for this quarter was INR 4 crores as against loss of INR 8.6 crores in Q1 financial '22. Loss at PAT level lowered at INR 3.9 crores as against INR 10 crores in Q1 financial '22.
Our balance sheet continues to remain robust, and we continue to enjoy a net debt-free status. We have a cash balance of INR 275 crores, which comprises of cash and bank balances along with current and noncurrent investments. Long-term borrowing is INR 7.5 crores as of June 2022 as compared to INR 8.3 crores in March 22, which shows our efficacy in serving the debt.
Monte Carlo continues to -- continues with this endeavor to build a leading branded apparel company with a well-diversified portfolio such as cotton, woolen, kids and home furnishing. Apart from cotton segment, we also produce different other garments. We also produce cotton and cotton-blended T-Shirt in economy category under the brand Cloak & Decker. The ability to tap various segments over the market provides the company with tremendous opportunities for growth in coming years. The key strength is wide and growing distribution network with a diversified presence across India.
The company's product reaches the end users through different distribution channels. The company has presence through 1,363 MBOs, 323 EBOs, 268 national chain stores. With regard to our online sales, we are looking to focus more on selling to our own portal, but also our clothes are available on various e-commerce websites such as Ajio, Amazon, Flipkart, Myntra, First Cry, Jabong and Kapsons. Majority of our net revenues from the franchise, EBOs and MBOs where we primarily sell on preorder or outright basis, by virtue of this business model, there is no major inventory risk, and it's always remain insulated from the normal [ hazards in sales ] in the branded apparel business.
I would like to highlight that till date we have experienced almost 0 bad debts in our business, which stands as a testimony to our strong business model based on 0 credit risk policy for the company.
At Monte Carlo, we are blessed to provide our customers with the finest clothing through product innovations, high-quality and the launch of new collections from time to time. Moreover, we continually work towards changing the look and feel of our stores to give our customers best-in-class experience.
Setting up a new [indiscernible] blanket manufacturing unit by subsidiary company Monte Carlo Home Textiles Limited. Monte Carlo Fashions Limited is entitled under the PLI scheme for manufacturing home textile products like rugs, and mink blankets. Post the eligibility in the aforesaid PLI scheme, the management conducted a feasibility study on the product profile, competitive landscape and economic viability of the scenario above. The company's feasibility study concluded that the manufacturing of said products were not favorable even with the aid of PLI team. Thus the Board of Directors concluded to undertake other projects, which will be beneficial for the company and will also benefit our stakeholders.
Now under our subsidiary company, Monte Carlo Home Textile Limited, we are planning to set up a [indiscernible] blanket manufacturing unit with a project cost of INR 80 crores approximately in Jammu & Kashmir, which will align with the overall growth strategy of the company. The benefit of getting a plant in J&K are capital investment incentives, capital interest [ subvention ], GST-linked incentive, a low rate of electricity and other tax exemptions.
We are optimistic about our future growth and earnings potential. We believe that we have a strong foundation for the future, which can provide us sustainable and profitable growth for the longer term. While our focus will be to maximize revenue growth going forward, our large interest is to build profitability by maintaining cost control measures.
With this, now we can open the floor for question-and-answer session. If you have any queries post this earnings call, you may also contact us at investors@montecarlocorporate.com or through Dickenson World, our Investor Relations Advisers. Thank you.
[Operator Instructions] We take the first question from the line of Deepan Shankar [indiscernible] from Trustline.
Congratulations for good set of numbers. So firstly, I wanted to understand this INR 80 crore investments we are talking about in home textile. So will this CapEx be enough to replace our current trading volumes in home textile business to manufacturing. And what kind of margin improvement we can foresee from our own manufacturing?
Thank you, Mr. Deepan. Basically, in our home textile segment, it's not only the blanket, which we trade. We also do towels, bed sheets and quilts. So this plan is basically for blanket manufacturing, we are putting up at J&K. Out of that also there are some of the blankets, which we cannot produce in this unit. So some of that would keep on outsourcing from China. And 70% to 75% of this blanket, what we do right now can be produced in this blanket unit.
And as far as EBITDA is concerned, we have kept that as far as the stand-alone unit is concerned, the EBITDA, including the incentives are in the range of 20%, 22%, which is in line with the company's strategy. And also, when we start producing these blankets, it will definitely add in our profitability because right now, the EBITDA of the blanket trading is around 14% to 15%. So when we have higher EBITDA in our manufacturing, that benefit will definitely come to the company.
Okay. Okay, sir. And so what kind of persistence you'll have on this INR 80 crores investment?
Pardon?
What kind of revenues we can generate from this INR 80 crores investment?
See, if we see the stand-alone revenues from this unit should be in the range of INR 140 crores to INR 150 crores. But out of that, around INR 50 crores will be sourced in-house. So the additional revenue, which the company will generate is around INR 70 crores to INR 75 crores. And this plant, we hope that would be operational by second half of next fiscal.
Okay. And secondly, sir, how is the order of this pipeline for our winter goods? Have you taken any [ trade show ] for current season as well?
See, the order book is quite strong. As you already mentioned in our earlier conference call also, we had a very strong trade show where we have very good order booking. And another advantage we have is that a low level of stock at the retail level. So we are very optimistic and hopeful for this year going at.
So are we planning to increase our growth guidance for full year, sir?
Right now, we are -- we stand by the growth guidance of 20% to 25%, which we gave earlier in our last conference call. So if there is any change in the guidance during the course of the year, we'll definitely update you.
Okay. Okay. So lastly from my side, so last quarter, you have said that we are planning to add 20 to 25 new stores every year. But I think this quarter itself, we have added some 11 stores. So are we planning to do aggressive expansion of store?
Yes, we are on track to open around 30 stores this financial year. And I hope that we might even grow this figure going forward in this financial year.
We take the next question from the line of Vikas Khemani from Carnelian Asset Management.
Sandeep, congratulations on good set of number to the entire team. I think first time in the quarter Q1, you have reported a positive EBITDA, which I think is a very good sign of slowly reducing the seasonality. I have a couple of questions.
One is that what happens to our earlier run plant, have you scrapped that? Or is there any update on that? With last call, you said that you're viewing it. And of course, you have announced a new plant in the Jammu & Kashmir for the blanket. But what happens to that plant? Is there any decision you made on that?
Yes. So decision is already taken in the Board that it's not lucrative enough to go with the rugs manufacturing plant, seeing the global scenario and the overall EBITDA after making the detailed project report. So as of now, we have canceled the rugs manufacturing plants.
And now we are going ahead with the [indiscernible] blanket manufacturing plant in J&K and which the company has made a detailed project report and which is definitely EBITDA-accretive to the company and also in line with the company's existing blanket marketing.
Correct. But I think, see, given the size of our balance sheet and opportunity, I think there were lot of PLI [indiscernible] the investment side was far bigger than what we are currently doing it. So are there then any more projects of similar kind on the drawing board, which you are considering because we have a reasonably good amount of cash opportunities [indiscernible] especially on the export front. So are there any sort of projects on drawing board still?
See we are always in the lookout of good projects, which we have shared earlier also that it should be having the same kind of EBITDA level what the company may doing right now. In Monte Carlo, in the blanket manufacturing unit when we made the detailed project report. So the EBITDA level was coming at the same level. So it is not going to affect our EBITDA and will definitely add to the revenues.
So we are thinking of actually going into 2 phases. In 1 -- first phase, we are putting up our investment of INR 80 crores for this first line. And if everything goes well, then there's a second line, which will come up in the same area because we are taking the land according to 3 lines. So second, CapEx, we also expect of INR 70 crores, which will follow once the first line is commissioned, and it still as per the expected lines.
So I think the company is always open for future investments in the areas where it can have a good EBITDA, which is in the line of the company and also the company is open for higher dividends and buybacks in the future.
And this project is as only for domestic or replacing our demand, but our demand will not -- is that export element out there as well?
See most of it will go into the domestic market because of the benefits which we get by putting up this plant in J&K is [indiscernible], where we get the refund of all the duties, whatever we pay. So most of the products will go into the domestic market also. But I cannot rule out even small percentage can be done for the exports also.
Vikas, one thing -- there is Gogna here. Yes. In fact, like this is basically -- part of it is for the [ captive ] use also. We can say so because we have been trading. We have been giving the textile trading in our results, like you must have noticed this and textile trading includes [ trading ] in blankets. And hitherto, we have been importing all the blankets from China and only some portion of the [ gear ], like we have taken the blanket from Panipat and other places because of some problems with China.
So now when this unit is put up, basically, some portion of that will be sold to Monte Carlo main unit, I mean, a holding company. And from there, they will, I mean, do as usually like they used to do earlier hesitating in that. And that will certainly increase our EBITDA margin in Monte Carlo also.
And secondly, so far the expansion process is concerned, as I mean, Mr. Jain has already explained to you, see that this is a beginning. Now to begin with, we cannot -- we are very careful, and we have been always going ahead with the expansion, which actually earns company at profitable growth.
That is the reason, like, to begin with, we are going ahead with the INR 80 crores of the total project. And thereafter, this project will go to INR 150 crores. And we will not stop there. If we find a good opportunity, we'll go further ahead.
Sure. I think that's good. And one more, sir, only suggestion or observation other than any question. I think while we are expanding about 20, 25-odd stores, and I guess, this quarter, you've done very well -- but given the fact that we are a very category leader and there is no other any meaningful brand which is there to compete with us.
I thought probably and right now, demand environment across the board is very, very strong. So using this opportunity to scale up the growth slightly faster would be a great idea according to me. Of course, I know that you guys are conservative and generally, you follow a very conservative policy. But I think the environment right now, sir [indiscernible] capturing the white space would be a great sort of idea. That's my observation. But any comment on that?
Only, I think, Vikas, we're aligned with what you were saying. As you know that the company has grown 45% last financial year. So on the larger base, we are projecting a growth of 20% or 25%. That shows our aggressive nature as compared to last few years where we were growing at 10% to 15%. So I think we are in line with what you were saying. And definitely, we noted your points also.
Take the next question from the line of [ Naresh Katariya ] from [indiscernible] Investments.
My question is on the long-term growth. So very [ relieved ] to know that you are reiterating this 20%, 25% growth [indiscernible]. I'm hoping that the growth momentum continues. I'm thinking what's changed structurally to give us this growth confidence because our last 5-year growth is more like 10%, 12% CAGR. Of course, we had COVID, but is it that we have reached a scale where we are able to grow or [ is it ] the previous year's focus on?
If I clearly understood your question, you wanted to ask that -- how we are very confident of assuming the growth of 20%, 25%...
Exactly, exactly.
See, what happens is that. So we have different areas in Monte Carlo. We have -- are basically in our distribution channel also -- we have 4 basically different channels, which is large-format stores; then SIS, which is shop-in-shop; then EBOs and MBOs.
So it takes time when you like consolidate all the areas as well as when they start complementing each other rather than competing with each other. So we were doing a lot of exercise in the last few years so that all these channels complement each other.
And also, we are keeping a strategy of almost setting the same price at all the levels. So that is helping the company to grow and giving the confidence among the retailers and the consumers as far as when they go to an any channels. So I think besides that, we have been doing well in our economy range, Cloak & Decker. We are doing well in our blanket section, which is home textile section and our Rock It brand is also picking up in this financial year. So I think all these things which company was doing efforts on the last 3, 4 years, it's actually giving us the fruits and that is why we are confident over giving this growth.
Perfect. Good to know. And of course, you mentioned in the last call and interview also on -- and even on this call on the winter visibility to [indiscernible] what -- the winter is still away? What gives us the confidence that winter will work out to be good? Is it the economy is opened or is it our retailers and MBOs and EBOs are [ billing ] that inquiries are good or what's the [indiscernible] status over here?
See, basically, when we say that our winter would be good, it depends on our order book. In the recently conducted trade show, we have got a very strong order book. Now the second benefit, which we get in this financial is a lower inventory at the retail level and those [indiscernible] level. So that gives us another confidence that when the inventory is low, the order book is strong, the economy is doing well as far as [indiscernible] is concerned. I don't see any issues as far as any forthcoming recession is concerned. So we are very confident there. If the economy is performing, so definitely, all the brands, including us will definitely perform.
Thank you, sir. We take the next question from the line of Nikhil Jain from Galaxy International.
Just a couple of questions. First was about just reconfirming that the new clients that you are setting up in J&K so that is primarily for domestic client and we will be using it for under the Monte Carlo brand, right?
So the product that will be out from the blankets and all, they will be under the Monte Carlo the brand, right?
See, basically, if we do our current business and the kind of capacity we are putting up in J&K as of now, I think we should be able to use around 50% to 60% of the capacity of that particular unit and rest I think we can sell in the open market in blankets so that is how we perceive.
Okay. And as the requirement grows when you go out with Phase 2 of expansion as you suggested, right?
Pardon ?
As the demand grows...
[indiscernible] has increased because we have been growing at 30% to 35% per year in our blankets and Home Textile. So going forward, we think that the demand will keep on rising. And definitely, the outsourcing will be more from our blanket units rather...
And expansion would also be there.
And we are planning expansion also in the second phase, once this is -- we start in the second half of this next fiscal.
Okay. Great. My second question is with respect to the third quarter. So as compared to the last year first quarter, our top line has settled, right? So almost like some INR 40-odd crores, INR 130-odd crores is a great achievement on the EBITDA side also. So we are not positive. But I'm just trying to understand what could make us a net positive on this particular quarter.
So because our sales have done 3x, but it's still on the net profit side, our we are not positive. So what is it that actually would make us positive. So is the product mix different which we actually sold in this quarter, which is having less margin as compared to a regular product finance.
See basically, this is historically a weak quarter for us. The reason for this weak quarter as far as PAT is concerned. The biggest things [indiscernible] we start manufacturing of our sweaters, jackets and other winter goods in the month of February, March itself.
So all the production expense in making those garments are actually in this quarter, but the product gets sold only in the second and third quarter. So that is why they are -- we showing some loss in this quarter. But otherwise, if you see that all the manufacturing expense when we enter in this quarter, we don't take note of other than we book it when we sell it, then it can turn into profits over. So that is basically a reason why we're showing growth in this quarter.
And just a last question. So the 11 stores that we have opened so can you just, let's say, advise which zones or which states have you opened the these new stores, sir?
Your voice is not clear. Can you please repeat it?
So I was saying that the stores that we have opened 11 stores in this quarter. So are those -- which states are those stores in -- opened in?
Yes. The 2 were opened in Southern state, which is 1 is in Bangalore and 1 is in Hyderabad and rest 1 is open in the Eastern region, then [indiscernible] are opening in the Northern and Central region.
Right. And can you also highlight what is your strategy for expansion because of winter, if we say privately, we are setting the winter wear, so we have a very strong brand on the winter-wear side so are we looking to open it more on the stage where the winters are much stronger as compared to, let's say, other states where winters cannot be [indiscernible].
We are opening pan-India as I said just now that we have opened in Hyderabad also we have opened in Bangalore also. So we're making a very conscious movement to these states as and when we get a good location and good rentals and definitely, because being a tropical country, we know that there are 9 months of summer.
And in those states where we have very less winters. We have to be present only because of summer wear products. So that is why we are making growth in Southern states and in Western states. And I'm glad to say that we have been growing in both states also. If we just compare the first quarter number of Southern states. Last year, the sale was INR 2 crores in South and others. It is INR 8.9 crores in this financial year. And in case of West also it grew from to [indiscernible]. So they are having a growth in Western and Southern states also and also a plan of opening retail outlet in these states going forward.
We take the next question from the line of Zaki Naser Retail Investor.
Can you hear me?
Yes, yes, we can hear you.
Congratulations on a phenomenal first quarter as you had commented last year and thanks for opening late in Hyderabad [indiscernible] for it for a long time.
Sandeep [Foreign Language] My question number one is regarding raw material prices. Cotton and yarn has been pretty volatile. So how does this affect you? Does it affect your product pricing in the season?
Number 2 is. This year, more or less, you have given a growth guidance of 20% but do you think a year after that, you will be able to maintain that momentum? Or if you get back to more of a normalized growth?
Yes. Thank you. As far as raw material price are concerned, See, we remain -- we may passes insulated whenever we go for a ratio, we normally cover all around [indiscernible] depending upon the availability and depending upon the like order book we expect.
So I don't think any variation in the raw material price going forward after the trade show would affect us because already we have covered the material whichever we require for the winter products.
But going forward, now you see that the cotton prices are coming down. So going forward, we see that the market didn't come down once we fix it in the last season also and this season also, we don't see that the MRP goes down. So if the MRP don't go down and there is a reduction in the raw material prices, definitely benefited the company going forward in the summer [indiscernible] and as far as growth rate is concerned, see, even though last year, we grew at 45% and we gave a very strong guidance 40% to 45% and we are very optimistic about the economy of this country as we see that there has been many steps taken by the government, which is pushing the economy to grow at 7.5% in this crystal. And as per the RBI report going forward, also, we don't see any recession which is coming to India therefore we remain strong going forward. So we don't see any problem or any issues that we [indiscernible] growth going forward also.
And if I may just ask one more thing, sir, in regards to your digital marketing what is the share of your sales on the online networks right now? And how do you plan to -- how do you plan to push this up going forward, sir?
I would request Mr. Rishabh to answer this question.
So -- so currently, this year around 4% of our sales have come from online channels. This is less as there were some supply constraint from our side towards supplier to the online channel.
And our website is undergoing maintenance in this quarter, but we are confident of making it up in the coming quarters or financial year. So at the end of the financial year, we'll be in a growth mode in online as well.
Yes, Rishabh. But let's say 2025, what is your aspiration for this figure or 4% would become 7%, 8% in '25?
So our target is 7% to 8% of our overall sales will come from online channels.
We take the next question from the line of Riya from Aequitas Investments.
Congratulations on a good June quarter from [indiscernible]
[Foreign Language] Please continue.
So my first question would be we are expecting this kind of growth in online presence as well as we have a lineup for new stores to be open, what kind of brand and marketing expense can we see coming forward? Are we going to invest in that? Or how is the outlook?
So see, as far as Monte Carlo brand is concerned, I think the brand recognition and brand pull is good enough that we can maintain our advertisement spend at 2% to 3% of our turnover. And that is what we are spending currently and that is our guidance going forward. However, there is a shift between the composition of the spend that we do.
So we are shifting more from offline towards online ad spent However, the total ad spend will remain at 2% to 3%. So we are focusing more on digital advertisement and performance-based advertisement when it comes to this point.
Okay. Because I think for increasing penetration and online channel, we'll need a much more brand presence because in other parts of the country it's less eminent.
It can cross 3%. But overall, overall, it will be at the same level, but obviously, we can increase our exposure towards Southern states and Western states when it comes to digital advertisement.
But as you know, that revenue is almost growing from INR 900 crores to INR 1,100 crores. So even that 3% become INR 30 crores as compared to INR 20 crores in this financial year.
Yes, qualitative quantitative...
Right, right. And in terms of store network, do you want to give any guidance for the current year? How many stores you want to open up and what kind of sales from the stores do we look forward to?
We have given a guidance of 30 stores to open up in this financial year. And normally, we see that 1,000 scattered stores should do a [indiscernible]
Okay. And all these 30 stores will be more than 1,000 square feet, right?
Pardon?
All these 30 stores...
Yes. Yes. More than 100 square feet. Sometimes we get -- definitely also depending upon the location when it is not available, but mostly it is around 1,000 and more 1,000 square feet.
So can you comment on broader outlook and from demand point of view, could you give me a sense of how is the demand looking? I was recently reading about some articles where the demand is going down.
So the one region wise as well as product wise. [indiscernible] cotton.
We are very glad to say that we are not seeing any downfall in the demand as far as any growth is concerned. We are having very strong demand coming from the retail outlet also and also our other channels like our MBO [indiscernible] LFS channel, we have seen a very strong demand coming up. And we don't see any quarterly demand in the near future..
This is for both North regions as well as South regions, right?
Yes in both the regions.
Okay. And what percentage of product is not booked for the order book? And can you give me a time line how much -- how many months before the order book is placed? And what is the exact procedure like if [indiscernible]
See we do a ratio almost 6 to 7 month in advance. So like for winter, we do a ratio in the month of March, and then we start producing our goods and the goods goes normally after 5 months, like they start dispatching in August.
And returns in October basically 90% of the goods. And then again, in summer, we do a ratio around August and September and the dispatches start in January, February, and it ends in April.
Okay. Okay. And what percentage of our products are non-order book oriented?
That is very small. There are some repeats, which comes once the quarter goes into the retail store. But that percentage is not that much. So mostly, we produce on the order-based goods only. But there are some corporate inquiries, which is -- comes as and when it is demand for that. So that is separate from the normal trade business.
[Operator Instructions] We take the next question from the line of Sachin Kasera from Svan Investment.
Congrats for a good set of numbers. I had a few questions. One, if you could tell us what is our currently mix of revenue between economy goods and luxury segment? And what is the type of gross margin difference that we enjoy there [indiscernible] suppose?
We have only a Cloak & Decker brand, which is an economy segment, and rest everything is upper premium only. And the Cloak & Decker revenue is basically -- if I talk about the overall revenue of the company, it should be around 5% to 6% of the turnover, not more than that.
Otherwise, everything is a premium only. And the gross margins at both the brands are in Monte Carlo, it is little higher and Cloak & Decker is a little lower, 100 basis points.
Sure. So if you could tell us a little bit about the initiative that you're trying to do in terms of x of Monte Carlo, which is primarily your winter segment, in the cotton segment, what we are trying to do to improve the realization or more of the chain in terms of the presence?
See cotton realizations are even more than the winter realizations. So at PBT level, we are having the more PBT at cotton segment rather than in the winter wear segment.
So you mentioned that we are trying to increase the quarter-on-quarter missing flavor of cotton. You also mentioned that you're planning to have an expansion of footprint more into Western, Southern region, where it is more of cotton based.
So does it mean that going forward as the share of this cotton keeps increasing overall EBITDA margin should increase in that case? Because you mentioned that margins in cotton are higher than...
Yes. I think the cotton segment is growing faster than the woolen wear segment and winter segment. Being a tropical country and the cotton product are sold 9 months in a year. So definitely, it has more growth rate as compared to winter wear products.
And going forward, we think that as overheads are also becoming less -- when you increase your turnover, definitely, it should help us in increasing our margins going forward. But it also depends on the economy and kind of discounts and [ USA ] sales of other brands.
But we are very positive of sustaining our margins [indiscernible] margin of 18% to 20% of EBITDA.
That's fair. So that's something that we've been maintaining, but my sense was that the type of crores we're talking and the way we are talking of increasing mix of cotton, should be from a 2 to 3 perspective, aspire the range to move like 22% to 24% from 18-20 that we have there today.
I can't say at this moment that we can increase the EBITDA to 20% to 24%. But what we can say with confidence is that we will be able to sustain our margins but [indiscernible]
What is the difference in margin between this cotton and non-cotton if you could tell us at least that could help us model as how the share of cotton moving in help in terms of the margins?
At EBITDA level, I would say that it is around 50-100 basis points more than the non-winter set.
How much is, sorry?
50, 100 basis points more than the non-winter segment -- winter segment, sorry.
Sure. Secondly, sir, on the capital allocation policy and how do we look at the company. So from what I understand, we primarily be more of a branded and a [ international ] company. Now we announced this manufacturing thing. So is it that most of the manufacturing that we plan to allocate would primarily be mainly based on addition if we have it has for a [indiscernible], like, for example, this new plant that you mentioned 50% will be kept in a [indiscernible]
So how do we look at in terms of allocation of funds for manufacturing would always be primarily driven by the [indiscernible] large portion should be capital consumption? Or we may look at independent manufacturing opportunities also where there will not be anything see it over retailing.
See, if I clearly understand the question, you wanted to ask that how much we are doing captive and how much we are doing outlook?
No, sir, my question is that going forward, when you had to allocate any large CapEx for any manufacturing plant. Will it be mainly for segments where we have a good portion of capital consumption? Or is manufacturing also an independent profitable so for example, you may look at an opportunity where the IR is good.
And we may have to invest [indiscernible], but we did not have any capital consumption. We're also able to the opportunity. So how should we look at the company -- is it that it's more of a branded retail lateral company? Or is the manufacturing income [indiscernible]? How do we see [indiscernible]
See we will do captive only where we think that there are some roadblocks for outsourcing like in sweater, it's a very complex process. So we have completely 100% captive-like production. But in case of branches, again, there are bottlenecks from importing from China and a lot of variations in the dollars and also the freight and also other sourcing commodity.
So we are putting up a J&K sweater manufacturing plant but as far as T-shirts, shirts and trousers are concerned, so it's not that margin accretive as we see that. It's not like, in our case, we're going to put up more of captive production in case of shirts, trousers and T-shirts.
As the margins in this is not that much as we compare to Jackets and the sweaters so we don't see much CapEx coming up in [indiscernible] or in shirts, and trousers and denims. But yes, if there is any demand for sweaters, we might do some CapEx in that.
Okay. So majority of the manufacturing CapEx will be primarily the main purpose would be for capital consumption. It's not like, for example, some of these plays that we are like into account or on which primarily do [indiscernible] example home textile.
Yes. So to answer your question, going forward, even if we invest in more CapEx it will be primarily, we will be focusing for our capital consumption where we already have a presence. So like Lantis, you already have a presence and 50% of the production will be consumed by our brand itself.
So going forward, we would prefer putting up manufacturing for products where we already have our brand presence.
Sure. And the last question...
Can I say something different? So far, both the colleagues, they have said so, so far, the captive -- so far the captive consumption is concerned. We are the people we have 2 categories. One is a cotton and other is woolen. So when a woolen is concerned, we have got the all manufacturing facilities available with us.
In case there is an increasing demand of the woolen then in that case, the balancing machine and other things we will install, but that will not be for capital consumption. That will be only to meet out the demand of the market. And so far, as cotton is concerned, we are normally outsourcing because that is more profitable for us.
So expansion in our area would be only fully as for the market demand of our product. Yes, it is not that -- like in-house consumption means is that to increase our sales and other things.
It is not something like that byproduct, that product will be used for making any production in our own house or something.
Sure. And then lastly, sir, on the payout and the capital allocation again. So in that case, are we looking at further incur? I think we have a lot of cash and that would be in that may not be more than like INR 1,800 crores CapEx a year. would we look in terms of further increase in terms of return to shareholders either by dividend or buyback from what we will [indiscernible]?
I have already said the same thing that we're going for some CapEx for the plant. And definitely, when Board decides, it can increase the dividend, so it can go for buyback also in the future. [indiscernible] cash which is available on the books.
We take the next question from the line of Viraj Parekh from [indiscernible].
Congratulations, sir, on a great set of numbers. I just have 1 question. On the growth front, I mean, we have grown, as you said, 170% on a year-on-year basis and close to 88% on pre-COVID levels. So last year, on an annual basis, we've taken close to 18% to 20% price hike and the market has absorbed that price that should sustain our margins.
So could you provide me with a breakup for pre-COVID volume growth? How much have we grown on pre-COVID levels on volume? And how much has it been on price hikes, if you have the number handy.
We need to check there. Pre-COVID level sales, actually, I'm not having right now. We have the pre-COVID sales which is with us. If we compare the T-shirt sales of pre-COVID, it was around 762,000 pieces in a quality and which we did in the March '22. It Is almost in market it -- so the total volume, which we did in pre-COVID level in March '19, it was 4,760,000 in quarter segment, which has grown to 57.67 lakhs in March '22 full year.
All right. All right. And sir, what will be the number as on FY '22 -- Q1 FY '22 based on that?
In Q1 financial '22, I just shared with some of the volumes, which we did in last quarter was, it was [ INR 740,000 and in this financial, it is 1,143,000.]
All right. All the best going ahead, great set of numbers.
We take the next question from the line of Anil Jain from Equipassion Capital.
Yes. Congratulations on the -- for the great first quarter in the company's history, we have EBITDA positive in the first quarter. I just wanted to know if you open a store, what is your experience or historical experience, the store income EBITDA positive in how much time at the store level?
Can you please repeat it?
Yes, I just wanted to know from your past experience, when you open a store, how much time it takes to become the store EBITDA positive?
2 to 3 years.
2 to 3 years. And how much time it takes to come at the company level EBITDA.
No. See, you cannot compare this store level EBITDA with company level EBITDA because we have normally franchises with too many stores. So in this case, we see that ROI is around 16% to 18% to sometimes 20% on the investment events.
But in case of company-owned stores, we only opened the stores in areas where we don't find franchisee is the entrants are very high. So it's mostly for brand fairness and brand awareness. It's not for like what -- increasing the profits in those areas.
Okay. So you mean to say it takes 2-3 years to reach company level EBITDA approximately?
Company level EBITDA. See there's no comparison in that because most of the stores are owned by the franchisees. So we just primarily, we sell them out rightly.
Immediately...
Franchisees don't share their balance sheet with us there. How much [indiscernible]
So we have become EBITDA-positive from [indiscernible] Okay.
So that's why [indiscernible]
We take the next question from the line of [ Shaksi Somalia ] from SE Associates.
Am I audible?
Yes.
Congratulations for your results. I have one small question. My question is how is our sport brand social [indiscernible] performing. Can you put a light on it?
So the brand Rock It was launched 1 year before the COVID season. And once COVID hit, we took a conscious decision to make it online only. In the past 2 years, we sold it only online while going forward from next financial year, we are having -- we are building up a completely independent team for Rock It with the independent design team, independent marketing team.
So we forsee from the next financial year, you will see good numbers in Rock It.
And like when you're saying that it was available only online. So how it performed online and what is your expectation when you are going ahead with in the main market? So what are you expecting for that?
Online the response was good. There were some feel that we got from the customers related to pricing and discounting policies which we've incorporated now I think majority of sales for this brand will be coming from offline channel, which is much more profitable for us as well.
So we've got good learnings from our online sales and now we're focusing on the on implementing these changes in the offline segment.
And then you're putting it from online to off-line, are we doing any specific or any major modification or amendment in the strategy or design or something? Or in the same way?
So there will be almost a 360-degree change in terms of what the product we are making, the pricing strategy and the packaging that we're using to promote it. Also, in terms of our advertisement efforts towards the brand the exposure and expenditure towards the brand will increase as it goes offline.
And so we are right now in the process of making an independent distribution channel for this brand, which is independent from the distribution channel of Monte Carlo or Cloak & Decker our textile segment.
We take the next follow-up question from the line of Riya from Aequitas Investments.
My question was in regards to what percentage as far raw materials do we import or outsource.
See, we don't import much of our requirement as far as woolen yarns are concerned. It's our sister company where we prepare our woolen yarn. And only yarn is actually available [indiscernible] actually available in India, -- various companies to make cotton fabrics and cotton garments. And then yes there are some blankets which we import from China and yes there are some fabrics -- specialty fabrics which are not available in India, we import from China and from other countries.
What percentage that base?
And I think in blanket, it is approximately around 15% to 20%, if I see the total turnover of the home textile segment. And in case of jackets, approximately 30% to 35% of the fabrics comes from overseas.
Okay. Are you seeing any issues right now with China or shutting down or something?
No, we are not much depend on -- dependent on the overseas fabric is the percentage is very small. But yes, there are some delays as China has zero-COVID policy. So some of the areas get closed in the last 2 months. But I think now it is normal. So we don't expect any delays as far as our procurement is concerned.
Okay. Did you have any impact on the delay in this quarter by any chance?
No, no, no. We will not have any impact on any -- in this quarter or going forward also.
Okay. Okay. And for the current FY '23 can you give us the breakup of what kind of segmental will we see from woolen and cotton, like the breakup, if any?
We can give you last year's breakup. This year...
Yes, I have the last year's breakup. What kind of -- I would like to see your guidance actually.
It will be almost same. There might be some more cotton garment added to it. Otherwise, it will remain same.
[Operator Instructions] We take the next question from the line of Sachin Kasera from Svan Investments.
You shared the volume number for cotton segment FY '19 versus FY '22. Can you also share the same for the woolen segment?
Almost stable -- prices are stable. I don't see any [indiscernible] in the prices. And as far as our margins are concerned, I think we'll be sustaining our margins of last year also in woolen side.
No, no. My question is the volume in the woolen segment for FY '22 versus FY '19?
Yes, it will definitely grow double digit in this financial year.
'19 versus '20.
It was INR 1,300,000 in case of financial '19 and it was INR 1,500,000 in case of March '22 last year.
Sure. So next thing is if I see your presentation. The share of kids and home textile has grown from 15% to almost 23%, 24% in the last 3 years. So can you just tell us what is the reason for this sharp [indiscernible] share of kids and home textile why are they growing so fast? Is there a special focus we are putting there.
Yes, I think there is enough competition on textile segment, which is helping it to grow more than the company growth rate as they have been -- last year, we grew at 50% this year, we undeclared a growth of around 30%, 35%. So because of less competition in the segment, home textile segment is growing faster than the other segments.
And similarly in the kids, as not many brands are present in the kids segment so that is why it is having a less competition from other brands and the growth is faster as compared to the overall brand. So that is why the share has increased.
And the margin in home and kids is line with company revenue -- is higher or lower case.
Kids margins are lesser as compared to parent brand because in kids garments, we don't get that much price as you get in men's and women's wardrobe. And in case of home textile segment also, the margins are lesser than the parent brand [indiscernible].
Sure. And can you give us some sense on the market share trends for our brand in the last -- to see is how the market sheet has moved, if you have [indiscernible]
See we don't have a exact data because it's an unorganized market. But we see that in premium section in Monte Carlo [indiscernible] we control of approximately more than, I think, 50% share in the premium segment as we don't see other brands which are competing with us in that price range.
But it is very difficult to estimate the exact market share of our brand in Indian apparel section because not most of the companies are listed, and there is a lot of unorganized players which are available. So very difficult to quantify if they take market share of Monte Carlo.
We'll take the next question from the line of Deepak Mehta, Individual Investor.
Great set of numbers. I want to ask about the breakup of -- right now traditionally, Monte Carlo is known for the woolen wear. So right now, what is the mix of woolen and [indiscernible] T-shirt and non-woolen kind of stuff.
I can share the last year's figure, the year which has gone by -- in that case, this sweater contribution was INR 151 crores. And the cotton contribution, including jackets and other garments who are around INR 576 crore. And in case of textile, it was -- sorry, it is INR 49 crores -- INR 489 crores in case of cotton section, which includes jackets also and in case of textile, it was INR 127 crores. And in case of kids, cotton were INR 58.39 crores and kids woolen were INR 11.64 crores total INR 70 crore.
Okay. So right now, what is your focus area, sir?
See, focus, we just -- we won't that -- we should grow 20% to 25% in this financial year and going forward also in all segments, as we -- I think we are on the right track to achieve this growth rate going forward also.
And what's your expectation for Q2, prices in terms of revenue growth and margins, sir?
Pardon? See again, we say that the company is basically focusing on year-by-year. And this year, we have projected a growth of 20% to 25%. And going forward, the company is maintaining the same strategy of growing at these kind of growth rates.
And what's your expectation on margins?
[indiscernible] Margins of last year margins.
And I think the inflation pressure is now like high cotton prices and all input cost is behind us. We can [indiscernible] that, right, sir?
Yes, cotton prices have come down from its peak, but still it is 10 to 15x higher as compared to last summer prices. But we expect that these prices should remain stable or it might come down a little a few percentages, but very difficult to say unless and until we see next 2 months. [indiscernible] about the demand for cotton yarn.
One last question, sir. Do you have the breakup of online and retail sales like right now, what is the online sales contribute to total sales?
Last year, it contributed to 6% to 7% as compared to the total overall revenue of the company. And going forward, we'll maintain this kind of share in the online sales.
Okay. So by last year, you mean FY '22 right?
Financial '22.
Thank you very much. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments. Thank you, and over to you, sir.
Thank you very much for all the participants. And if there is any question, which remains unanswered or if there is any query, which you want to ask, you can definitely mail us at our montecarlocorporate.com or Dickenson World IR [indiscernible] thank you very much.
Thank you. On behalf of Emkay Global Financial Services, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.