Monte Carlo eyes expansion, IPO

Will take number of retail outlets from 160 to 180 by March 2013, set up new plant in Ludhiana

After raising close to Rs 175 crore from US-based private equity player Samara Capital around four months ago, Nahar Group company Monte Carlo Fashions is now planning to expand both its manufacturing capacity as well its retail business. The company is also mulling an initial public offering next year.

The Rs 380-crore company is all set to start a new manufacturing set up in Ludhiana to make sweaters for an investment of around Rs 100 crore. "The new factory would commence operations in the next three months", informed Sandeep Jain, executive director, Monte Carlo Fashions Ltd. He added that Monte Carlo planned to expand its current sweaters capacity from 1.2 million pieces per annum to 1.8 million pieces per annum.

With an eye to touch Rs 450 crore turnover in 2012-13, the company is also working on expanding its retail footprint. It plans to take the number of retail outlets from a current 160 to 180 by March 2013. It has also recently started two stores in Dubai as well as one in Nepal.

"The northern market is our strong-hold where we are present since the last 25 years, we have entered the western Indian market recently, and within the next three to four years we plan to have a strong presence in the west as well", Jain said. From a present count of five stand-alone outlets in Gujarat, Monte Carlo plans to add at least another 15 such exclusive stores in the next two years. It also sells through at least 30 multi-brand stores in the state.

Monte Carlo is currently exporting to Dubai and some African countries in small quantity.

"We are doing test marketing in these markets, and depending on demand, we can scale up our export operations", Jain explained.

As for the IPO plans, he said that the company has plans to go public in 2013, but finer details would depend on the market conditions. "We have already prepared a draft red herring prospectus (DRHP) for the IPO, but we are yet to file it. The timing would depend on market conditions", Jain said.

Monte Carlo currently imports its entire requirement of raw wool from Australia and New Zealand, and has increased prices by around 4-5 per cent this year owing to rise in input costs.

The company is also no longer dependent on woolen garmets to drive its revenue, as woolens essentially mean seasonal sales. Non-woolen garments currently account for nearly 60 per cent of its sales.

The woolen garments industry is pegged at around 50 million sweaters a year and is estimated to be around Rs 2500 crore in value.