Dinesh Gogna – Director and Sandeep Jain – Executive Director addressed the call:

Highlights of the call:

For the quarter ended June 2018, it registered a 27% rise in sales to Rs 90.93 crore. PAT grew 20% to Rs 6.25 crore.

The management is confident of growth visibility and thinks that the company is well positioned to deliver strong growth for the current year.

Effect of GST is now behind.

Long term benefit of transitioning from unorganized to organized should happen over a period of time. .

MBOs (Multi Brand outlets) contributes major portion of overall revenue. It contributed 57% in Q1.

In FY 2018 Cotton sales went past 60% of total revenue reflecting shift towards Cotton from Woollen segment.

In June 2018 quarter focus on cotton products in summers took contribution of cotton at 87%.

Strong summer sales will lead to strong growth and reduce dependence upon winter sales for Monte Carlo.

The company is now focusing on new markets and new product offerings.

The company is making strong inroads in western and southern markets in India.

Sales outside North & East India constitute at 23% of overall sales.

The management does not foresee any major capex requirement for next two years.

Average sustaining capex will be in the range of Rs 8-10 crore for the next two years.

Short term growth will be achieved from higher capacity utilization.

In FY 2018 dividend was increased by 20%, with pay out ratio of 43.7% before dividend distribution tax.

During the quarter EBITDA margins grew from 13.2% to 16.5%.

The company is positioning itself as all fashion brand to reduce seasonality impact.

Summer sales volumes grew 7.3% and pricing grew 7%. Summer sales happen from Feb-July-August.

Monte Carlo T-shirts have undergone strong price increase of 9% including value mix increase

Bermuda & Capri volume grew in the range of 20-25% and Shirts volume is growing in the range of 15-20%.

Strategic focus is to build a pan India presence and achieve regional diversification.

In addition to 236 EBO's (exclusive brand outlets) in India, company has 3 Overseas EBOs in Nepal

Focus on branding and promotion will further increase visibility and market share across India.

The company will give focus on a comprehensive range of cotton and cotton-blended products which cater to all seasons in-order to expand all-season product range and strengthen pan-India operations.

As the company grows without any major capex, return ratios will improve.

Going forward, the company will focus on online sales through own portal as well as Tie-ups with e-commerce portals such as Flipkart, Jabong, Myntra, Amazon and Kapsons.

As on June 2018, the company had 236 Exclusive Brand Outlet (EBOs), 2,500+ Multi Brand Outlet (MBOs) and 207 National Chain Stores (NCS).

Still product mix is tilted towards Winter products both in terms of cost and revenues. Winter products are sold during October to January. Q3 generates highest quarterly revenues in any fiscal year.

The company is expanding presence in western and southern markets as well as expanding its product offerings in home furnishing and kids segments in order to reduce the overall seasonality impact

Till date the company has had zero bed debts.

T shirt constituted almost 50% of summer sales.

Debt equity ratio is 0.11. Cash balance stands at Rs 146.5 crore.

Last year March quarter saw heavy discount and so growth looked down. Or else there was no major change.

Debtor level has come down as the company is now focusing on reducing the debtor level.

Woolen accounts for 30% of sales.

The company does not see any inventory gains due to woolen price increase as the company has minimal inventory.

Woolen has capacity of 1.80 lakh units but it also depends on design.

The company has become more aggressive on acquisitions due to its high cash balance. However there is nothing to disclose. The management hopes that it will able to announce something on it soon.

The company has never been so optimistic before. The order book is high, monsoon is good and whenever monsoon is good winter also comes good.

The guidance is 15% sales growth in FY 2019 with FY 2018 margins.

Rocket brand was launched only online till last year but now it has tied up with Pantaloons. With the combination of online and offline sales, it should see good growth this year.

Last year was a period of stabilization due to GST.

Discounting has become a norm and is faced by every player in the industry.

The company is targeting sale growth of 30% in Kids segment.

Q1 is very insignificant for the company. Major sales will happen in second and third quarters for all the categories.