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Monte Carlo Fashions Ltd
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Good day, ladies and gentlemen. Welcome to the Q4 and FY '22 Results Conference Call of Monte Carlo Fashions, hosted by Emkay Global Financial Services. We have with us today, Mr. Dinesh Gogna, Director; Mr. Sandeep Jain, Executive Director; and Mr. Rishabh Oswal, Executive Director. [Operator Instructions] I now hand the conference over to Mr. Jigisha Kapoor from Emkay Global Financial 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 their opening remarks. Over to you, gentlemen.
Good afternoon, everyone. It's a great pleasure to brief you all on behalf of our Board of Directors. Thank you for joining this quarter earnings call of Monte Carlo Fashion Limited, to discuss the financial and operating performance for quarter 4 and financial '22. I hope one of your family members are keeping safe and healthy. I would like to highlight that certain statements made or discussed on this conference call today may be forward looking and actual results may vary from those contemplated by forward-looking statements. Result documents are available on company's website and also have been uploaded on the stock exchange as well. A transcript of this call would also be made available on the Investors section of the company's website. Before talking about our financial and operational performance, I would like to talk about the macro environment. The quarter started off with a minor disruptions due to omicron variant of COVID-19, but the impact of the same could not last long and situation has returned back to the normal. Branded apparel industry in India is ready for strong growth, with growing perspectives of people towards branded apparels. Moreover, India is witnessing clear change in demographics, in the form of large young populations, growing middle class, growth in disposable income and also the fact that more and more people are moving from rural to urban areas. Now, let me share with you the financial and operational highlights for the quarter and year ended March '22. In this challenging circumstances as well, we have delivered the best ever quarterly and yearly performance, while keeping our margins protected and that is a testimony to our strong brand positioning, superior product quality, operational excellence and a robust business model. The company reported its best ever 4th quarterly and yearly revenue was INR 62.5 crores and INR 904 crores respectively, growing by 45% year-on-year and our financial '21. And moreover, we were one of the only brand, who have grown more than 25% over the pre-COVID level. We continue to witness encouraging trends from our online channels, which stood at INR 62 crore now as compared to INR 37 crores in financial '21. So it's a growth of 67% year-on-year. The gross margin registered a growth of 49 basis points for the quarter and 149 basis points which file for the year. Operating EBITDA margin grew by 133 basis points for the year from 18.6% to 19.9% in financial '22. The PAT margin grew by 125 basis points from 10.7% to 12.6% during financial '22. The margins remain protected due to the post-control measures, and the calibrated price increase, to factor in the inflation and the steep rise in cotton prices. Our balance sheet continued to remain strong, with cash and cash equivalent of INR 266 crore and with zero debt, as far as 31st March '22 is concerned. The company continues to invest in brand building and brand promotion activities, with strategic focus on customer communication, acquisitions and retention. The advertising initiatives are targeted to reach every set of audience by the use of multiple channels like television, online, digital regional and national newspapers, sponsored events, hoarding in cinemas, malls, airports, airplanes roads and highways, et cetera. Apart from this, we are consistently working towards introducing the latest designs, wide variety and best quality product to our consumers. In line with the digital focus to build robust process and to enhance our customer experience, the company is in the process of implementing SAP S/4 HANA solution, which is an intelligent ERP, providing real-time and predictive consumer trend insights, to basically enhance our flexibility and agility to deliver end to end customer experience, and at the same time to achieve significant bottom line cost savings. As of 31st March, '22, our company has a presence through 315 EBOs, more than 2100 MBOs and distributors, 714 national chain stores, and 287 SIS, along with a presence across major online platforms like Amazon, Flipkart, Myntra, Jabong and Kapsons, in addition to our website. During financial '22, the company opened 35 new stores in different regions, at the same time closed few nonperforming stores also. I would like to highlight that, majority of our revenue comes from the franchise EBOs and MBOs, where we primarily sell on pre-order or outright basis, by virtue of this business. There is no major inventory risk and we remain adequately insulated from the normal hazards in the branded apparel business. I would like to highlight that, there will be an experienced almost zero bad debts in our business, which stands testimony to our strong business model, based on a zero credit risk policy for the company. We are confident of medium to long-term growth perspective in Indian apparel sector, and remain focused on delivering a consistent competitive, profitable and responsible growth. Lastly, I would like to inform you that, Board of Directors of the Company have recommended to pay a dividend of INR 20 rupees per share, which is 200% of the face value of INR 10 per share, and endeavor to create value for our shareholders and stakeholders. With this we open the floor for question-and-answer session. If any of you have any queries for this earning call, you may also connect us at investor@montecarlocorporate.com or Dickenson World, our Investor Relations Advisors. Thank you very much.
[Operator Instructions] The first question is from the line of Deepan Shankar from TrustLine PMS.
Congratulations for great set of numbers. So firstly, wanted to understand this gross margins of 53%. So this is mainly driven by low cost cotton inventory we had during the quarter, or we could do price increase higher than our raw material increase?
See the main reason for this is the price rise we have taken, and the raw material price have increased. So we increased almost, I think in summer products, we increased around 18% of our prices, and in winter we increased around 8% to 10% of the price. So that offsets all the raw material increase, which has happened in the last one year. There was operational efficiencies at various levels. Like there have been cutting costs. If you see that, the expansion case of -- most of the expenses remain same or are below last year's level. Even if we talk about -- even the increments after employee benefit expense, it has gone down to 8.98% as compared to 9.63%, and that finance will come down to 1.73% as compared to 2.17%. So the costs have also come down as compared to last year and that's added in to operational efficiencies and that is why the gross margins are more as compared to last year.
Okay. Okay. And so, what kind of price hikes we are looking for next year, given the price increase in raw materials are still looking higher?
See already we have taken, increase in the summer prices, which we have already told. We have increased almost 18% to 19% and summer goods have already gone to the stores. And even after the increase, we are seeing the good response. As far as retail level is concerned. And as far as winter products is concerned, we took a hike of around 8% to 10% in various categories, depending upon the raw material increase.
Okay. Okay. So how is the next winter season order book panning out, and overall outlook for growth for next year?
We have been very pleased to say that, we have recently conducted trade show at Delhi and where we have got very strong order booking, because of the low level of inventory last year at the retail level, and at our various other platforms. So we think they're seeing the order book and seeing the economy rebounding and also the COVID is now almost nil, as far as our India is concerned. And I think we can easily have a growth of 20% to 25% next year, based on the only large growth, which we achieved last year, and the base has also become large. So we are very pleased to announce that, we anticipate a growth of 20% to 25% in next financial year.
Okay, sir. And margins, this 18% to 20% is sustainable for us?
We hope to sustain our margins going forward, as we have already taken the increase in the prices.
The next question is from the line of Dhaval Shah from Svan Investments.
Great set of numbers. I think this is one of the best March quarters for our company, in such high inflationary environment. Sir, a couple of questions. Am I audible? Hello?
Yes, you're audible.
Yes, sir. Sir, a couple of questions from my side. Sir, post this price increase compared to pre-COVID, what would be our average selling price in the cotton and in the woolen segment, yes, compared to how much there would be an absolute amount of increase or -- sorry, a percentage increase in our ASP? Second question, we are hearing that since cotton is at around INR 1,05,000, lot of garment companies have shifted to a mix from being only pure cotton to more of the other synthetic material. So what is our thought process? How would that impact our positioning in the market, et cetera? And third would be, now at this revenue base, any sort of more operating leverage do we see going forward, given you are guiding a healthy double-digit growth rate. Yes, these are my 3 questions.
First, I'll come to the first question, which is you've said how much we have increased as compared to pre-COVID level. See, we are having 2 increases in the prices, as far as pre-COVID -- if we talk about summers, we took almost a 5% increase year '21 and 18% to 19%, we have taken an increase in year '22. So almost 25% we are above the prices of pre-COVID 2019 levels. And in case of winter garment, again it is around 14% to 15%. So as far as operational efficiencies are concerned, I think this is a continuous process. Definitely, company keeps on looking at various expenditures, which are incurred in course of business, and we always try to minimize it and depending upon the market scenarios.
Okay. Okay. And sir, what would be our average selling price on the cotton side, and on the woolen side?
I can give you the category-wise details, because we don't have a complete detail of each and -- clubbing the -- altogether. Like in t-shirts, average selling price is INR 800, denim and trouser, it is around INR 1,332, in shirts, it is INR 846, in jacket is INR 2,222, in tracksuit it is INR 1,700, in other garments -- sorry, in Cloak & Decker we have around INR 500.
Okay, So this will be, this will be to the consumer, right?
This is a gross sale average price to retailers.
To the retailers, okay.
The retailers add their margins and then they sell the products. [indiscernible] retailers, because we sell to consumers and retailers in various channels.
Meaning, the minimum 25% we have to add on this?
No, the markup is approximately 50%, 55% to 60% in case of even garments which are priced above INR 1,000, there is a 70% markup.
INR 1,000, okay. So after this 25%, 26% increase over 2-year period, you are being a very -- there is a very good response for your products in the market?
We have not seen any lack of demand because of increase in prices. Because recently we conducted a trade show, where the prices were increased, we actually got a strong booking. So that shows that the price has been accepted, and price only gets accepted, when the brand has a pricing power. So I think we are a established brand which has a pricing power, and we can absorb the raw materials hike, as far as the quarter is concerned, which already been absorbed by the market.
Got it. And sir, one more question, now you mentioned the inventory risk is -- given your model is more franchisee driven, the inventory risk is not on the company, but isn't the brand risk also get diluted, because the inventory is now with the franchisee, and now if they want to liquidate the inventory, so they can do at their own will? Or do you have a company wise policy for the franchisee, where they cannot sell at below certain price, and just to maintain the brand -- the pricing point of the brand?
See as far as EBOs, SIS, and large format stores and online channels are concerned, the pricing policy is decided by the company. And what discount to be given in which period, is also decided by the company. And in case of EBOs, it is centrally controlled. Like if I want to give 20% discount starting from next week, so it is 20% discount across the channels. In case of LFS, we discuss with the LFS partner, and whenever there is any discount policy change, they Intimate us and we keep the same discount level in our SIS and other channels also. So everything is decided by the company, and communicated to respective channels.
And sorry, the franchisee is part of which?
Franchisee is part of EBOs, exclusive business outlets.
Exclusive brand outlet, yes. So there you -- so the company decides the pricing, even for all the discounting side, once they want the liquidity inventory or are they going to ship the inventory. So would you have access, live access to the inventory, the EBOs and across the -- your across distribution channel, what is -- what each one of them is holding. Would you have a real-time access to that?
Yes, we have a POS point of your system, which is integrated with the SAP system. So we get real-time information from the stores, in EBOs.
Okay. So this could this could help you to shift the unsold product from one region to the other, depending on the demand and the pricing and extra?
We are already doing this.
Yes. Okay. Okay, great sir. And you remain confident of maintaining these operating margins?
Yes, of course.
The next question is from the line of [ Zaki Nasir ], an individual investor.
Congrats, Sandeep bhai and team Monte Carlo for the phenomenal performance during a tough period, and I'm actually very happy at the confidence you have -- the confidence in your voice, that you will grow 20%, 25% in the current year. Sir, if I may ask sir, this 20%, 25%, what percentage would you expect it to come from cotton and woolen? And you find any pull in the last stage of demand, because cotton prices have gone up, the way they have sir, that is question number 1. Question number 2 is, sir, does this stage of our PLI scheme of our [indiscernible] and blanketing materials. How is that panning out, sir? Thank you.
Yes, the growth, which we are talking about 20% to 25%, is definitely across the categories and we expect a little more growth in our cotton categories and industrial business, and -- but it will be double-digit growth for our woolen garments and other garments also. So at this moment, I cannot quantify a specific number of each and every category-wise growth, but we are sure of including all the categories will be going to grow around 20% to 25%, as far as this financial year is concerned. And as far as the second question about the PLI. So still discussions are going at the management level, that what to do and when to start it, because there are certain questions which remains to be unanswered. So unless and until we have the clear information from all the channels, as far as our profitability of this project is concerned, we are still holding it and once we have the complete information, we will share with the investors and all our shareholders.
Fantastic, sir. So that it may take another 2 to 3 quarters for your PLI -- or manufacturing on the PLI to get frozen? Is that correct, sir?
I can't comment if it will take 2 quarter, but I think by the next quarter, we'll be able to share complete information about this project.
And sir, last financial year it's your -- as you had promised a couple of years back, you have kind of ironed out the quarter discrepancy. So going forward, do you expect this to sustain sir?
Sir, can you please repeat it?
The quarter discrepancy sir, we generally have a loss in the last quarter. I mean, this year very clearly it's been a turnaround. So going forward, do you expect this to sustain?
See, we -- actually, in the last conference call, we have already told all our shareholders there. Now we started taking the provision for the discounts, which happens in the 4th quarter. So that provision was already taken in the 3rd quarter. That is why the profitability was a little less in 3rd quarter. So the company has taken a policy, where they are taking the adequate protection, as far as discount provisions are concerned, and they take and divide it in the quarter, so that the profitability can be maintained in all the quarters. As per accounting standards.
Okay. But sir, also as your cotton grows, I think the product discrepancies will get ironed out automatically?
Pardon?
As your cotton business grows, the discrepancy will get ironed out automatically also to a certain extent?
Yes, you're right. That is why the [indiscernible] in the 4th quarter, because the cotton sales have been at least 50% more as compared to last quarter, in financial '21. That -- it is into the profitability.
The next question is from the line of Keshav Garg from CCI IPL.
Well, first of all, many congratulations on behalf of all the shareholders for tremendous performance and for showing profits in March quarter as well. So can we now expect the June quarter also, which is our worst quarter seasonally to -- for the company to breakeven on operating level?
See, I cannot comment on quarter-on-quarter performance, because there are variations in the dispatches which happened from our level. So in some quarters, we have more sales, in some quarters we have less sales, depending upon the season. But what I can comment is that, definitely we are going to grow, [indiscernible] annual basis. So please see our company on annual basis, don't see our company as a quarterly basis. We have said repeatedly many times in our other conference call also. So as far as annual guidance is concerned, we stand committed to that.
Sure, sure, sure. And sir, also over the past few years, the proportion of home textile and kidswear has been growing in our total revenue as a percentage. So is the profitability of these 2 segments higher than the quarter the cotton and woolen segment, or is it more or less the same?
No, it is not higher than the cotton or woolen segment, but it is one segment where the profitability is increasing every year. So I think in next 2 to 3 years, profitability will match the parent company's woolen cotton cost profitability also, because these segments have been growing very fast -- in terms of textiles, it has grown almost 50% as compared to last year, and if I talk about kids, it has grown almost 60% as compared to last year. And we don't see that the growth will come 50% to 60% next financial year also, but it will be growing, higher than the average of the company's growth, as far as next year is concerned. But definitely the profitability is improving, as the volume is increasing.
And when we are dealing with the modern retail organized retailers, so are we dealing with them on the same terms that we are dealing with other standalone stores that we have?
So Hi, this is Rishabh of the side. So as far as these modern retailers are concerned, obviously the margins are different and are negotiated depending on retailer to retailer. But we maintain a form of parity in our discounting policy. So whatever discount is being offered in our EBOs or online, that will be offered in our modern retail as well.
Yes sir, but basically our margins and realizations would be lower, while selling through modern retailers, is that correct statement?
Yes. It's slightly lower when we sell through modern retail.
So like going forward, as the share of modern retail and online retail grows as a percentage of our sales sir, do you foresee a structural challenge to our margin?
So even so when it comes to modern retail, over there also we have different sections of customers. So some customers are more profitable. Some customers are less profitable. So we try to maintain a balance, so that the profitability of the company is not affected, and the profitability in our online channel is not lower than the other channels, it is at par with our EBOs and MBOs. It is just the large format stores, where our profitability is a bit less. In online we maintain the profitability.
Okay, sir. Thank you very much and best of luck and sir, just one request sir that instead of dividends, if we can do regular share buyback, so then it will be better for everyone, because our earnings per share will increase permanently for all times to come, and as stock is still very undervalued. So you can kindly consider that position.
The next question is from the line of Vivek Ganguly from Nine Rivers Capital Private Limited.
I had one question, on the proposed rugs business investment, while you all have not finalized it earlier, and you have not spoken about it, can you all indicate or [ repeat ] what is the kind of investment that you are looking on, and as and when it were to come through, and if you all -- to go ahead with that, what would be the timeline for the same?
See, again I said earlier also, this is still under discussion at the management level. So there are certain questions which are unanswered as of now, so I might not be able to give you complete clarity about this project, but the projected investment was INR 350 crores. But there are certain questions of profitability, because of -- we have seen the recent crash in the cotton prices -- sorry, the cotton yarn prices. And also we have seen, the exports have come down in case of rugs to Europe and the U.S. So the company is considering each and every possibility of how this project will remain, and the profitability has been decided when the project report was conceived. So I'm not able to give any clarity at this point of time, but I think in next 2 to 3 months, we will have the complete clarity and we share with our shareholders and investors.
The next question is from the line of Vikas from Carnelian Asset Management.
I think sort of performance over the last couple of years. Few questions on the growth of our traditional. I think our sort of outlet expansion, we've been adding about deal purchase every year, right. Of course last 2 years have been difficult, but can you give some color about how are we looking at some of the non-conventional geographies, you have opened outlets and it has been received very well. So what is our plan for next couple of years, and then how many outlets we'll add, with the geographical expansion, we will have, especially when you have sort of core business?
As far as outlet expansion is concerned, we have internal plans about opening almost 2 to 3 EBOs every month. So it means we are approximately talking about 25 to 30 EBOs in a year. And out of that, 80% will come in the northern market, Northern and Eastern market, and we plan that around 10% should come in Southern and Western market and 10 in Central and Eastern markets. So that is a plan which we have like made last year also, and we're going to continue this plan. And this is actually helping us to increase our range in -- basically in Southern and Western regions. If you would see in this. I think the statement, which we have sent to -- presentation which we have sent to our investors, our South and West market because of our expansion in SIS and EBOs have grown from -- if I say West has grown from 20 crore to 33 crore, which is almost a jump of around 60% and in case of South. It has grown almost from 12 crores to 21 crores. So I think this strategy is helping us and we will keep on like adding some of the stores in south and west, and west expansion of EBOs in Northern and Eastern region will continue.
But if you look at, Sandeep, even in the bad time like COVID and all, we have this kind of expansion. So why not too -- specially when we have a good success, we have been seeing where our brand is well-recognized and competition is weak, why not to have a bit more aggression in terms of store expansion? Do we have to [indiscernible]
See, our intention is to grow our sales and complement all the channels. So it's not the EBOs which we are adding, we are adding SIS also. So SIS is shop-in-shop business. So there are areas, where we think that EBO might not be profitable, we open our SIS, we are already and we have established channels and definitely given these sales, which is almost half of the EBO. So our intention is to take all the channels together, so that the profitability of the company is not hurt, at the same time, the margin is also not disturbed.
Right. And secondly, I think generally of course, because of -- a lot of focus of winterwear. We always have some amount of volatility or lumpiness in revenue, and which we are trying to diversify away with the summer collections and all. So what is -- can you share something around in this year, as you sort of look at '23, how do you see that steadily playing out in Q1 and Q2? I mean how -- what would be the proportion of summerwear and [indiscernible]?
I think it's clearly evident from these 4th quarter results, where the revenues have increased almost 50% as compared to last summer quarter. So that shows that the summer sale is actually picking up very fast, and it is adding in the revenues as far as total revenues are concerned, even if we see there, normally it used to be around -- 70% of the sales used to come from the 3rd quarter, which has come down to almost 50%. And going forward again, as you see share of 1st quarter, 2nd quarter and 3rd quarter is actually improving. So, the share of winter products are actually coming down and the share of cotton products, and the share of Q1 and Q2 and Q4 actually is increasing, and it will keep on doing -- it will keep on increasing in the next financial year as well.
Right. So let me ask a slightly broader question then. So it's less -- this is a year-on-year and I know broadly, we are walking in -- working on a strategy of diversifying in terms of geography, diversifying into multiple seasons. If you were to look at, let's say, next 3 to 5 years, how do you see Monte Carlo evolving? What would it look like in the next, let's say 5 years' time?
Our target is to become a number 1 apparel brand in India and we are definitely, I think in last 2-3 years, we have made lot of efforts. We have worked a lot on our SIS channel. We have worked a lot on our online and MBO and LFS channel. Definitely work is going on EBO channels also. We are paying attention to our Western and Southern market. We are paying attention to our textile home furnishing business. So, I think last 2-3 years, we have been establishing and strengthening our existing channels and existing business. Now the time has come, where we actually have started performing. If you see this year's results after COVID, we are the only company if you compare the COVID sales of 2019. See, we grew almost 25%, as compared to financial '19 COVID sales. No other brand had actually closed even 10% also. I have the data available with me, which I can share if anybody wants. See what happened is, when the COVID came, most of the brands degrew by 40% to 50% and we degrew only by 15%. So this growth looks little less, but if you compare the financial '19 numbers, this growth becomes more clear, it's around 25% as compared to financial '19. So that is happening, because the brand has acceptability and the brand has the strength, which actually is transforming into the business. So we are very confident that going forward, not only geographically, but given the category-wise growth which is definitely evident, as just a few moments back I told about, kids business which is growing very fast, our home furnishing and textile business, which is contributing almost higher growth than company's average growth. So all these factors will definitely, I would say that we make this company a definitely a number 1 apparel company in coming 5, 6 years, and we are putting every effort on all the areas, wherever we see any weakness, like you already -- people have mentioned about the south and west, where we have visited -- we have guests like making lot of efforts. And also if you see online sales, which has grown 6% to 7%, it has reached to INR 62 crore from INR 37 crore. So that was one area there, we were not doing much and Rishabh has already like answered in the last question that, the margins in EBO -- margin in online sales is actually better than the offline sales. Why? Because the company has a policy of making the same discounts in all the channels. So I think all these efforts, we will definitely put us in a leading position in coming years.
Right. No, absolutely, I totally agree with you that -- I think in the difficult period, our brand saliency and the way we've conducted our business, is far better than many of the competition. So there is no question in that and complements to you. And I see a lot more promise. Last 2 questions, and I see lot of promise in the brand. So, and I think probably you are being a little bit more conservative in expansions. I always believe that probably, you should have [ a little ] more store expansion in a more aggressive geographical growth. But I mean that, I will leave it to you. 2 questions, one is that our -- I mean we are an old brand. Our advertisement expense has remained only around 3%. Do you think, given you have your decent margin and you are looking -- will step up on that [indiscernible] advertisement side?
You won't -- whether we are increasing the advertising base? No, but percentage wise will remain same, percentage wise, it will not go up. On absolute terms, it will go up.
Okay, because we will grow at 20%, 25%, but to that extent, advertisers [indiscernible] don't grow that much?
Yes.
And lastly I think this question keeps coming repeatedly on the [indiscernible] business which you know. So if we are not clear, then why did we go ahead and announce, that we're going to get into this? I mean it looks like, once we were kind of very clear that they will -- but why did you announce, and not so clear about it?
Yes, I think as said earlier also, that we will announced in next 1 to 2 months. I will definitely inform all our shareholders and investors and will come up with detailed presentation.
No, what I was asking was that -- Sandeep, what I was asking was that, is there uncertainty, whether we will do it or not, that's the sense I'm getting from what your commentary is? Or there is some tweak happening, because of the government policy?
It is because of the government policy. What was the question actually?
My question is, let me repeat that, are we at a stage, whether we may not do the process at all, or there is some tweak happening around?
Project -- already, we have got the project report and, but there were certain areas, where we are not confident of. These are actually happen in reality or it is just the presentation, which has come to us. So that has created a confusion. So because of that, we are taking little more time, because once we've taken a decision, we cannot go back. So we have ample amount of time before we take a decision. So that is why I think in a month's time, we'll be having a clear position or a stand on our PLI scheme and the project, and will definitely -- it will be in the interest of shareholders and all the investors.
So, but I understand that. I think you guys are conservative, you will do whatever is right. So I don't have any doubts on that. I'm just wondering, is there a small probability that you might not do the project at all?
Yes, there might be probability.
Okay. So you are reconsidering the whole project?
Yes.
Okay, got it. Understood. So I think that's fine. And lastly on the home textile, which is I think again, probably according to me, very not so spoken about business of yours and this is again a very promising business and there is no permanent strong home textile brand. So would you -- can you give us some idea about, let's say, in 3-5 years, how large that business can become for us, especially the [ queries ] and the towers and all the things which you or the Board may take their time?
In our own assessment, which we have made internally. So, we are targeting a sale of around INR 500 crores in next 5 to 6 years in home furnishing business, which is currently INR 130 crores.
Okay. So about 4, 5 years comes in that. Superb. I think that's a very, very, in my opinion, apart from -- I mean whatever people know about it, that's a very sort of less understood business, let's appreciate you. There's no brand in the country. So you should probably overinvest in that, according to me, and which is good, I think targeting [ INR 500 crores ], that's superb.
[Operator Instructions] The next question is from the line of [ Danesh Mistry ] from Investor First Advisors.
Sandeep, congratulations on the growth and your strategy panning out. I had 2 questions regarding 2 segments of yours. So one I remember a few calls ago, you had mentioned on the t-shirts segment, and you actually said, that was something that you were focusing on, and if I'm not mistaken, you had kind of mentioned number INR 110 crores of revenue. So are we looking at that as well to kind of grow? I know, it's going to be a part of Cloak & Decker. And number 2 is, especially in the kids segment which is there, what have we been doing, that has given us this kind of growth that we are seeing?
Can you repeat the first question?
The first question is, if you remember a few quarters ago, you had touched upon the t-shirts segment, and you said that you know that's a large market, which generally has -- which doesn't have too many brands, especially in the lower end, and you were doing about a INR 100 crore to INR 110 crore top line in that, if I remember correctly, this was a few quarters ago. So what is that, is that continuing to drive our growth and what are we doing differently over there. And number 2 is in the kids segment, what have we been doing so much, that has -- it does well for us and how are we trying to sustain that growth for ourselves?
See, you have answered my first question, second question also, is that definitely we have less competition in kidswear as well. If you recall that, say in kids category also, there are not many brands, which are available. It's the same in t-shirts, when I talked about INR 100 crores of sales. So it's a less branded competition is helping us in our kids segment to grow and same is happening in our textile businesses. The branded competition is less. And even in t-shirts also, most of the brands have not put much focus earlier on the t-shirt segment. So these, less focused by other brands and less branded competition, and we have a better product, better design in our category, so that is helping us.
Are the discounts lesser in this category?
Discounts basically, when we go for a discount, it is for all the products. It's not that we have lesser discounts in the kids category or we have lesser discounts in the t-shirt categories. It is normally across the categories.
Got it, got it. And are these t-shirts and kids available across all our EBOs and the entire distribution network? Or are we still rolling that out and is limited to few stores only?
T-shirts are available across all the areas EBOs, across all the channels. But in case of kids, we are not actually having more than 1,000 square feet store everywhere. So wherever we have more than 1,000 square feet store, kids are available. And where we have a less than 1,000 square feet store, we don't have kids on those stores.
Got it. And what about the shop-in-shop? That's something again that will not be there for kids, because...
No. Not in all shop-in-shops we have the kids. But yes in some of shop-in-shops, we have the kids.
Got it, got it, got it. And in terms of future pricing, let's say now for example if cotton prices remain where they are, you are saying that we have passed on all the price increase, already in the market, and it's been well absorbed. To that extent, we are covered?
Yes, I think the best thing about the brand is that, if there is any increase in [ cotton ] prices, does the brand have the power to increase the prices? Yes. So Monte Carlo has the power to increase the prices and that has been accepted by the market as well. So in their front, we are adequately protected, because we know that if there is a certain increase in the raw material prices, we have the power to pass on increase. And that is why when the price of cotton was up, price of all the commodities was up, we have been able to even improve our margin, as compared to last financial year. Where most of the other I think competitive players, they actually got their margin reduced because of increasing costs. So I think we are doing well, as far as increasing in price, when there is an increase in raw material price and it's accepted by our customers as well.
The next question is from the line of Nitin Kumar, an individual investor.
I just wanted a confirmation that you have guided a 20% to 25% growth. I think that's in volume terms?
No, that is the sales growth I'm talking about. The revenue growth.
Total growth in top line revenue?
Revenue top line growth, yes.
Okay. So that should be around 10% to 15% in volume and 10% to 15% is due to price increase?
Approximately.
And secondly, now this -- the expansion project is now uncertain, and you have now INR 260 odd crores lying with you, so what do you plan to do with that? Any plans for that?
There are some plans, which are being discussed, they are internal management meeting, and I think -- give us 1 or 2 months' time, we'll come out with clear, I would say, views on this upcoming project.
Excuse me this is Dinesh Gogna here. So far this project is concerned, when government -- in case you can recollect, when government introduced the PLI scheme, at that time we tried to identify similar type of line, like where we can't venture out. And rugs were identified as one of the product. So we thought we will float a wholly-owned subsidiary. But later on, when we collected all the datas from all centers. Now the position is changing. So we are again revisiting those datas, and we are trying to calculate whether, because it is just like growth of the company, whether the growth will be profitable and we have been doing in past. If it is not, then in that case also, the company will identify some other project, because the company has got surplus and company is committed to use that surplus for the purpose of growth. So, the company at the moment -- the Board is considering various aspects and Board is considering this rough palette also, collecting all the information, thereafter we will come to conclusion, and as Mr. Sandeep Jain has informed you, that during the period of one 1.5 months, we will be able to take a final decision. But it is sure that, if this project is sell and we are not going ahead with this project, then some other project will be there.
The next question is from the line of Keshav Garg from CCIPL.
We appreciate your caution before proceeding with the large CapEx. We really appreciate that. And sir, wanted to understand that, whether we are planning to get into some other categories, like socks and underwear, et cetera?
So we're already doing -- and is doing very well. But in case of underwears and briefs, we are not pursuing it as of now.
Okay, sir. And lastly, wanted to understand, sir, what do you think is the main differentiating factor in terms of -- since the market is so cluttered, so sets Monte Carlo apart from the competition?
I think we have a designing strength. Because we are one of the few brands, who make have almost 3,000 designs every year. No other brand in India has that kind of variety of designs in each and every category. So that is actually setting us apart, as compared to other brands. And we are very, at the same time, we are very committed to our deliveries also; because what we have seen in last financial year, many brands have only winter articles, but they didn't go for a production. So retailer depended on us, because they knew that Monte Carlo is one company which delivers on time, and whatever it books, it remains committed to deliver on time, as far as our products are concerned. So that was one area, which is actually making confident, as far as retailers are concerned.
Sure sir. And sir, also wanted to understand whether our in-house capacity is enough for the kind of growth that we are looking at, or will we have to do some CapEx on the cotton wear side?
Cotton, most of the products are outsourced. So we are not dependent on the house capacity. In house, just thermals and some of the T-shirts, and rest everything is outsourced. And we are happy to outsource it, because it actually saves lot of hassles, as far as some constraints are concerned. So wouldn't be completely in-house, where all these -- sweaters, we make it in-house, and already CapEx is being done last year also.
Quality is under our control.
And, sir, please consider a share buyback.
The next question is from the line of [ Komal Arora ] from Global Investments.
Yes, I wanted to understand few things, like I could see that the revenues from online channel is growing very fast. So what is your plan to further penetrate better via online sales? Another thing like, do you want to hire any brand ambassadors?
This is Rishabh this side again. So as you've rightly said, we've grown by a good multiple, as far as our online channels are concerned and we continue to maintain this growth rate for the upcoming year also. It is -- so we've reached INR 62 crores of net sales as against INR 37 crores, and we maintain the same growth rate for this year as well.
Okay. And would you be able to give any outlook or guidance on the revenue expansion?
Of the online segment?
Overall, and of course if you can highlight more on the online sales also?
Sure. Overall, Sandeep-ji has already mentioned, we are targeting a 20% to 25% growth on the topline of the company. As far as online is concerned, we will be targeting around 40% to 45% growth.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for their closing comments.
Thank you very much for holding this conference call. I think most of the questions have been answered. So if there is anything which have not been answered, please mail us to our montecarlocorporate.com email address or to Dickerson World. We will be happy to address those questions as well. Thank you very much.
Thank you. Ladies and gentlemen, on behalf of Emkay Global Financial Services, that concludes this conference call. We thank you for joining us and you may now disconnect your lines. Thank you.