Monte Carlo eyes expansion, IPO

Rs 100 cr investment to be made by the company for starting a new manufacturing unit in Ludhiana to make sweaters

After raising close to Rs 175 crore from US-based private equity player Samara Capital four months back, Rs 5,500-crore Nahar Group company, Monte Carlo Fashions, is now planning expansion in both capacity as well as retail footprint. Moreover, the company is also mulling an initial public offering next year.

The Rs 380-crore company is all set to start a new manufacturing unit 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. He added 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.

• Rs 100 crore investment to be made by the company for starting a new manufacturing unit in Ludhiana to make sweaters
   
• 1.8 million pieces per annum target set by Monte Carlo for its sweaters capacity from 1.2 million pieces per annum
   
• 180 outlets to be opened by March 2013
   
• 60% of its sales are from non-woollen garments

“The northern market is our stronghold, 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 this market 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 imports its entire requirement of raw wool from Australia and New Zealand, and has increased prices by four-five 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 woollens essentially mean seasonal sales. Non-woollen garments currently account for nearly 60 per cent of its sales. The woollen garments industry is pegged at around 50 million sweaters a year and is estimated to be around Rs 2,500 crore in value.