Dear Shareholders,
We take pleasure in welcoming you to our first Annual Report as a listed enterprise. At
the outset, we would like to take this opportunity to thank all our investors for
participating in our Initial Public Offering launched in December, 2014. We are determined
to maintain the highest standards of corporate governance and to assure you all of our
commitment towards achieving value creation and growth.
A Differentiated Apparel Company
As you all are aware that our journey to establish the brand started way back in 1984
when your company was part of the parent company, Oswal Woollen Mills Ltd. The main Motto
of the management since the inception of the brand was to create quality product and as
well as achieve the standards of a good brand. The efforts put through at all levels,
because a stand alone effort can never create a valuable and acceptable brand. Thus our
endeavour was always to have a focused and concentrated approach at all levels, beginning
from input of raw material till the stage of ready to sell, over the years. As a result
Monte Carlo has emerged as one of the leading apparel brand, both in terms of revenue and
brand stature. Inspired by success and recognition or Monte Carlo Brand in the market the
company forayed into new territories in 2002, though identical and similar to the existing
business. This diversification by the company received overwhelming support from all
quarters and fulfilled the desire to have our presence in the market round the year.
Accordingly we expanded our horizon and diversified our business operations by introducing
cotton knitted t-shirts. The overwhelming response and acceptance of cotton t-shirts by
the market encouraged the company to introduce other cotton garments viz. shirts,
trousers, jackets, tracksuits etc. in 2006. With the passage of time and right efforts and
high imagery value of Monte Carlo brand earned by us, helped us in getting a good response
for our diversified product range consequently resulting in high growth rates. Encouraged
by the success the growth potential of the business was estimated to be manifold thus
inspired the management to have more focus on the business by forming a separate company,
which resulted in the birth of Monte Carlo Fashions Limited in 2011 i.e. your company,
within its folder lock, stock and barrel of Monte Carlo.
Over the years, we have successfully expanded our horizon and diversified our business
operations. We have travelled a long way in accomplishing our goals for becoming a
diversified apparels company, with a rich portfolio comprising of a wide range of woollen,
cotton and cotton blended knitted, woven apparels and home furnishings. Some of our
winning sub-brands under the umbrella brand Monte Carlo are: Platine, Alpha, Denim and
Cloak & Decker. The consistent growth in business is the Motto, but the brief is that
it should be at all levels, in other words to have a mindset of profitable growth. In
Monte Carlo, we go with a firm belief and commitment that the success will come as our
tradition and growth should be imperative.
The prime strength behind our leadership position in the domestic apparels industry has
been our robust distribution network and, for the most part, our differentiated business
model. We have a presence across India through 1,500-plus multi-brand outlets (MBO), 214
Exclusive Brand Outlets (EBO), and 89 national chain store outlets. A majority of our
revenues are contributed by these MBOs and Franchisee EBOs, where the merchandise is
primarily sold on a pre-ordered and outright basis. This has insulated us from major
inventory risks and keeps us adequately protected from the routine hazards faced by the
branded apparel business. Moreover our model of supplying Monte Carlo products to MBOs
through agents or distributors and to EBOs against bank guarantee or Post dated cheques
make the company credit risk free. Notably, Monte Carlo has repeatedly been recognised as
a "Super Brand" for woollen hosiery garments since September, 2004, by the
International Society for Super Brands.
FY2015 Performance
Our performance during the year under review has been quite satisfactory, given the
overall sluggish economic environment we experienced during FY2015. We countered the
challenges by focusing on continuous innovation; elevating our design variations; on good
consumer insights and by launching attractive new collections targeted at the youth. These
initiatives provided us with the requisite momentum to report a decent delivery on our top
and bottom line. Our revenues for the year FY2015 rose by 15.8% to Rs. 582 crore. Our
Profit After Tax (PAT) increased by 9.86% at Rs 59.7 crore. Notably, our EBITDA showed a
marked YoY improvement of 32.6% at Rs. 122 crore. Even more encouraging is the fact that
our margins on EBITDA increased 270 basis points from 18.4% to 21.1%.
It is important to note that our revenues and PAT recorded for FY2015 are not directly
comparable on a YoY basis due to a change in accounting method during the year under
review. According to the prudent accounting norms suggested by our auditors, we have
decided to net-off any expense incurred to propagate sales. These expenses mainly comprise
of discounts and rebates against the revenues from operations, which earlier formed a part
of other selling expenses. Our PAT has also been affected due to the provision of higher
depreciation, followed by a change in our depreciation policy, as per the new Companies
Act, 2013. As a result, our depreciation provisioning expanded by Rs. 7 Crore for FY2015.
On the upside, our Cash Profits swelled by 32% on YoY basis at Rs. 93 Crores.
FY2015’s performance was essentially the product of our strong brand positioning,
a better and more appealing product mix, aggressive marketing, lower cost of raw materials
and the reduction in other expenses through improving operational leverage. Going ahead,
we expect our revenues and profits to keep growing at a steady momentum. We expect our
operating metrics and return ratios to keep improving. Confident of our business model, we
will continue our focus on the execution of a well conceived business strategy in our core
business areas.
The Path Ahead
We have a concrete plan to scale our business within a competitive environment. We
intend to scale up our EBOs to 275 by FY 2016-17, primarily through the franchisee route.
We also wish to expand our presence by penetrating into the Southern and Western regions
of India. We have already made an encouraging beginning towards this goal. Going forward,
we are well placed to capitalise on growth opportunities within the branded apparel
industry. We remain squarely focussed on optimising the utilisation of our assets,
leveraging on our quality, improving efficiency and maintaining strong relationships with
stakeholders.
Besides your company and management beliefs in sharing the fortune with the family of
its shareholders. This philosophy is evident from the recommendation by the Board a maiden
dividend, of 100% on each equity share of Rs. 10.00.
We take this opportunity to thank our investors for their on-going belief in the
Company – and to our Board of Directors for their continued thoughtful advice and
good governance. We also thank our leadership team and our employees for their sheer
dedication and strong work culture that keeps us on the winning path.
Jawahar Lal Oswal