Sandeep Jain, Executive Director at Monte Carlo Fashions Ltd., talks about the expected performance of the company in 2021, areas of focus, strategy, expansion plans, CapEx and export market among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: The textile sector has seen momentum and the government also has a focus on the sector. So, do you think that the momentum will continue in 2021 or it can be better than this?
A: The government has a focus on the textile industry and it is paying a little more attention to it than before. Actually, the textile industry is the largest employment provider after agriculture. So, I feel, the way China has done a good business by increasing employment in the textile sector, if the government comes with a good policy, like the performance-linked incentive (PLI) scheme, and going forward there is any simplification in the GST and other things, then definitely, the sector will be able to perform in the coming time, if we talk about the next year starting from April in the financial year 2021-22.
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Q: Tell us about the area where your company is focusing, what are going to be the important growth drivers and what is your product pipeline? Also, update us about the company’s target in terms of top line and bottom line?
A: In our guidance provided at the beginning of this year and said that we will degrow by 25-30% because of the COVID. But we have revised the guidance due to the economic recovery and the pace at which it has come. But I have seen the economic recovery and its speed. If we will talk about October, November and December and the winters are also going well, so, we have revised our guidance and it seems that the degrowth will stand around 25% and our EBITDA margins will be much better than the last year. I think, the coming year, as you are talking about financial 21 and the vaccine is also being launched and the sentiment is positive, so our company on the base of this year will grow by around 40% in the next financial year.
Q: What are the segments where good performance is expected and the company will increase its focus there? Do you have any plans to enter diversified products or segments and what strategy will you have following the product and changing consumer behaviour?
A: Winter wear is our strength and approximately 55% of our revenue comes from winter wear, like woollen sweaters, winter wear, jackets and thermals. So, we will definitely have a focus on it but in the coming time, our focus will slightly shift towards summer. Summer has a contribution of around 25-30%, which is growing at a double-digit rate annually. So, in the coming year during the summer, we will focus on T-shirrs, trousers and shirts among others. Along with this, we also have a segment Cloak & Decker, which is our economy brand and works during summer and winters. We also have a Rock-It brand of sportswear. So, the company will also focus on these brands.
Q: What are your expansion plans do you have and what kind of CapEx will be lined-up? Also, update us about the debt situation and how will you reduce it?
A: Our company is almost a debt-free company and our long-term debt stands at just Rs 18 crore, which is nothing as our last year’s top line stood at Rs 725 crore. So, if we look at it from that perspective then it is almost a debt-free company. We have a cash reserve of around Rs 150 crore, which is available in form of cash in our books. As far as CapEx is concerned, then CapEx is not huge in the hosiery industry. Our CapEx is around Rs 10-15 crore for the next two years.
Q: What is your outlook on export markets and how promising they look to you? The government also has a focus on manufacturing in India and then sells it in other countries. So, what kind of participation you will have in it?
A: Our Company, at present, is 100% catering to domestic markets only but we are closely monitoring the policies of the government and if there is some policy that will benefit us, especially in the terms of export, then definitely we will pay attention to it.