Monte Carlo Fashions (NSE:MONTECARLO) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Monte Carlo Fashions Limited q one FY twenty seven earnings conference call hosted by MK Global Financial Services Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to mister Sandeep Hajra from MK Global Financial Services Limited. Thank you, and over to you, sir. Thank you, Anushka. Good morning, everyone.

0:45 I would like to welcome the management and thank them for this opportunity. We have with us today mister Risha Bouswar, executive director mister Sandeep Jain, executive director Mr. R. Sharma, Chief Financial Officer and Mr. Ankur Gawar, Company Secretary. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen. Very good morning to everyone, and thank you all for joining us for today's earnings call to discuss the performance for quarter ended 06/30/2026. Let me start by sharing the financial highlights and then the operational highlights. For the first quarter under review, the company reported revenue from operation INR 149 crore, registered a growth of 8% year on year. The first quarter remained a lean period, resulting in EBITDA loss of INR 13 crore and a net loss of INR 23 crore.

1:36 The quarterly performance was primarily impacted by higher product returns during this period, the impact of which will be offset in the subsequent quarters. Coming to the operational performance. We witnessed broad based growth across our key product categories. Cotton volumes grew by 23% year on year, home textile by 42% year on year, kids wear by 5% year on year, reflecting strong product acceptance. Our ROCCAT brand continued its growth trajectory, while the home textile segment maintained healthy momentum. Footwear sales also increased 38% Y o Y, and we remain optimistic about the continued growth of these emerging categories. Our retail expansion strategy remains on track with the target of opening 40 to 45 exclusive brand outlets during the year with a strategic focus on Western And Southern Region.

2:27 Our digital channel continued to gain traction with online sales growing by 15% Y o Y. We further strengthened our online presence through partnership with leading quick commerce platforms like Blanket, Swiggy, ZEPTO, enabling deliveries within thirty minutes. Additionally, our collaboration with sales force is helping us streamlining our operations, enhancing our customer experience and strengthening long term customer loyalty through digital transformation initiatives. We also successfully organized our prewinter and winter trade show in February and March 2026, which received an encouraging participation and supported order booking for the upcoming season. We remain confident in our long term growth strategy with strong traction across all our product portfolios, expanding retail and digital reach and encouraging customer response to our upcoming seasonal collection.

3:19 We believe we are well positioned to strengthen our market presence and deliver sustainable value for our stakeholders. With this, we now open the session for question and answer. Thank you very much. We will now begin the question and answer Anyone who wishes to ask a question may press star and one on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Sukrit D. Patel from EyeSight Pintree Private Limited.

4:07 Please proceed. Good morning,. I have two questions. The first question to mister is beyond the regular outlook, just want to understand the top two to three execution priorities you're focusing on in the next few quarters. And alongside that, what do you see as the biggest risk in consumer demand shifts, fashion cycles, or competitive pressures? And how are you preparing to manage them while strengthening Monte Carlo's position in the branded apparel space? That's my first question. I'll ask my second question after this. Thank you. Yes. Good morning. This is Sandeep Jain. And I would also ask Rishi also to support my answers. So the first question, as I clearly understood, our strategy for coming two quarters. If you have seen this quarter, the returns have been more because we basically plan to have better planning of our returns to dispatch it in times. That is why we have recorded as in the June quarter because last year, it was divided into first quarter and second quarter. So to plan better sales in the coming at our factory outlets also and also to better manage the return inventory, the returns have been more in this quarter.

5:18 And we believe that we are in well position to go for a strong year this year also, and we anticipate a double digit growth going forward. Yes, there have been some tension of geopolitical issues have been there. There have been inflation issues. There have been issues of freight and input cost is going up. But despite all that, we are well positioned to achieve our growth. I'd also ask Mr. Rishi Bhruh to report into this. So as Mr. Sandeep ji rightly said, so the increased returns that we see in our numbers in the first quarter is we've improved our operational performance, and we recall and processed the returns on time this time. So the total number of returns will average out in the second quarter. Secondly, we are focusing a lot on our digital channels as well, focusing on primarily our own website along with quick commerce.

6:07 And our focus has always been on outright sales, which ensures that we get the least amount of returns. Other than this, there's a lot of effort being put in in terms of stock planning that we send to our stores. Earlier, we were purely dependent on the orders that we received from our retailers. However, now each of the retailers' order is scrutinized by a back end team that we've created using multiple software so that we can get better at our sale through and in. Thank you. My second question is to mister mister. From a financial point of view, just want to understand, do you see any key risk or challenges in the coming quarters? And what specific measures have been taken to manage margins, steady the cash flow, and maintain the balance sheet strength, especially in areas like raw material cost volatility, receivables and compliances?

7:06 Thank you. This is one. Yeah. Main challenge in our company is only there are only two factors, discounts and returns. If we can maintain the returns as per our trend, which is approximately 12% to 13%, we will definitely improve our margins. As far as metal cost increase is concerned, it is actually we already in a demand at the time of booking the prebook all the raw materials and all the other accessories. So there is hardly any impact to that extent for that. And as far as the working capital position is concerned, we are definitely monitoring quite tightly all our debtors outstanding collections and we hope that it will be improved in future also.

7:58 I would just like to add that because of slightly rise in the input, the packing cost, input prices, so there may be 100 basis point difference as far as last year margins are concerned in this financial Thank you and best wishes. Thank you. We take the next question from the line of Puneet Singh from Counter Cyclical PMS. Please proceed. Thank you for this opportunity, sir. I want to understand our sales volumes have gone up by 24% and home taxes were 40%, but our revenues have not increased by even 10% this quarter.

8:43 So can you help me understand in detail what exactly happened? And when you say sales returns, so... Which are higher this quarter, what was the number of sales returns in Q1 FY 'twenty six? And will we not see any sales returns in the next quarter? Rami, can you help elaborate? That's a good question. Definitely, if you have seen that the volume in cotton segment has grown almost 20%, as you rightly spoken about it, and even home textile also grow. So only reason for less sales is because we have got more returns. Normally, it is spread in first quarter and second quarter. But in this quarter, we got almost INR50 crore of more return as compared to last financial year. And that actually basically hurt this revenues part. So in second quarter and in third quarter, you would see that we would nullify this return as return would be less as compared to last year, and we will have the revenue growth in second quarter and third quarter.

9:43 Why were these returns high? Were these winter products? And how are the returns treated whenever we have the return? Is it subtracted from the revenues? No, no. What happens is that, so the winter returns basically comes some portion comes in March and the balance comes in first quarter and second quarter. So whenever we build the material, we build the material at WSP, but whenever we bring it back, we bring it at a cost. So that is why we have to incur loss also. So now it is this inventory is now positioned at a cost in our balance sheet. So when we will build it again, again, the profitability booked. Got it. And what was the reason for higher returns this quarter? And I mean, will we not see returns in the next quarter? How are you concerned about it? Yeah.

10:33 No, you will see returns in the second quarter also. But when you combine the first quarter returns and the second quarter returns, the percentage return to the total revenue will even out. So in this quarter, you will see INR 50 crores of extra return has been processed. Earlier, our capacity to invert returns were limited. We've increased that capacity. That is why we've been able to pull more returns in the first quarter. This has already been refinished, already been sent to new distribution channels like our online channel, brand factories and factory outlets. This will help us realize in achieving better realization of these products. The overall return is almost the same as per last year in percentage terms. Just to add what Rishi has said, see, the main reason for is that we wanted to refinish it as soon as we can so that we can dispatch it in time. Because normally, what happens is that then there's a lot of pressure when the returns comes late because the season starts in September, October. So we wanted to refinish it in time so that we can dispatch it on time.

11:33 And you mentioned that if processing of returns capacity has increased, what exactly did you do and when did it increase? We've just added more warehouse space and added more manpower. It is a very manual process that is involved during refinishing. So that is all that we've done. So there was space constraint earlier. So that have been now we got the space. So that is why the refinishing capacity also increased. Got it. By processing, you basically mean whatever is returned, you can process it quickly and then send it back to the store. That's what you mean, right? Yes. So just to give an example that if earlier we were doing 5,000 pieces a part day, now we can do 10,000 pieces a part day. So the refinishing capacity have been doubled. So that is helping us even to take return earlier so that we can finish it well on time and dispatch it on time.

12:22 So just to give you a figure of broad the total returns that we were supposed to get in first and second quarter, in last year, we had processed around 50% of total return in the first quarter, 50% in the second quarter. This year, we processed almost 65% of the total return that we're supposed to get. So next quarter, we will only get 35% of total returns. So if that gives a little more clarity. But returns, when you say returns, if a customer wants to come and return their products, I mean, you cannot refuse them. Right? So it's not our capacity to process it. It's basically customers coming and returning. Right? These are not customer returns. You are only referring to the online sale returns that happened. These are institutional returns that comes back to us from our retailers.

13:10 So these are B2B returns, and we can definitely stop our retailers from sending back goods to us if it is higher than what we've agreed. This is not B2C returns. This is B2C returns. Yes. And we have full control over how much we want to pick up from our retailers. Got it. And when you talk about sales returns, can you also elaborate, say, out of 50 here, how much is B2C returns wherein the customer 100% is B2B returns. These are all B2B. This is complete B2B returns. Got it. So my second question would be regarding the inflation in yarn price inflation in cotton prices. So have we taken any price hikes? And you mentioned that our margin will be impacted 100 basis points.

13:56 So I did not exactly get what you were saying there. So we... Our margin will be 100 basis points lower this year because of this? So I'll break it into two parts. So one is the winter trade show, which has happened four months back, as Rishi rightly said. At that time, the trade show was good, and we've taken a hike of around 6% to 7% depending upon the raw material price increase. And now when we come to the summers, again, we are having a trade show next year. So we are taking another hike of approximately around 8% to 10% depending upon the cotton price increase. So that is one area. But second area is that the input post, the other post pressure because of inflation, the freight, those things have also gone up. And it's not that we can completely pass on each and every hike because there are some material left, which we procure little later also. So I assume that most of the things will be covered. But again, there may be a slight difference of around 100 basis points as compared to last year's margins, if we go into this financial year.

14:58 Got it. We saw this hit in Q1 as well? Pardon? We saw this 100 basis point hit in Q1 as well? When I talk about hit, it is a full financial year. I'm not talking about particular quarter. So whenever we give guidance, we give guidance for full financial year. What were the same growth in Q1? It was around 7%. 7%. And for FY 2027, can you give a breakdown of, I mean, what kind of SSSG are we looking at? And we are adding 40 new stores. So would you like to give some guidance for FY twenty twenty seven in terms of growth and EBITDA margins?

15:44 So already we have indicated that we'll be going double digit growth. Except double digit growth, I cannot quantify how much in but it will be low double digit. Yes, there will be a slightly reduction in the margin, 100 basis point, we assume. And SSG, as far as our in house targets are concerned, we are targeting 10% of SSG for this financial year as well. We grew 11% last year also. On above that, we'll be growing 10% SSG in this financial year also. And 40 to 45 stores, which we did earlier in our presentation also, we'll continue to open that those stores in this financial year as well. Got it. And in terms of EBITDA margins, I mean, are we looking at, say, last year, we did about 18%, if I'm not wrong? Yeah. So are we looking at about, say, 17% or lower than that?

16:32 215%. First of all, I cannot give you exact numbers, but we assume that seeing the inflation, seeing the input cost which is going up, it can be same as last year's margin, but we are safely saying that it can be lesser 100 basis points going forward because we don't want to commit anything which we cannot achieve. But again, if the upcoming quarter is very good, as we have seen there, the geopolitical tensions have eased and also the prices have gone down for oil also and input cost is coming down. So there may be a chance that we can have the same margin or the above revision of margins. Also, it all depends on the coming three to four months. We can give you a clear guidance in second quarter comp call. Got it. Thank you very much. All the best. I'll join back the queue. Thank you.

17:20 We take the next question from the line of Amit Kumar from Determined Investments. Please proceed. Yeah. Thank you so much, sir. Actually, you know, I picked up the data from your, you know, presentation on the sales returns, you know, numbers. I just wanted to sort of get a sense that, you know, given that you already had an opening provision of sales return of about 180 crores, and you had an actual of about 130 crores. So, you know, why is it that, you know, this entire, you know, number is getting, you know, booked in your P and L? Shouldn't this be adjusted against, you know, the provisions which you already have in the balance sheet? This is Rakesh Sharma. Actually, the same way what you are saying is rightly saying that it is adjusted against the opening provision itself only. But what happens is that our returns arise, we receive returns in two financial years. So some portion we get in this year, some portion we get in next year. So this the remaining portion will be received in second and third quarter.

18:25 So the returns pertaining to the last year. So accordingly, INR180 crores of of free provision will be adjusted according in that only. So this is just the first quarter only. INR 180 of opening provision is for the full year. Got it. Okay. Understood. Got it. Got it. Got it. Thank you. Thank you so much. Thank you. We take the next question from the line of Mahindra Jain from Way to Wealth. Please proceed. Hi, sir. Thanks for giving me a question. Sir, I want to... I'm audible? Yes. Yes. You're audible. Yeah. Thank you, sir. Sir, I just need to understand road map for the next three years. Like, in quarter, we are growing. So where the margin will improve in quarter in future because because of so much unorganized sector or tough competition.

19:23 And as we are, like, offsetting this winter with quarter and home textiles. So where you see in next three years, we will be in margin in cotton plus contribution in cotton, like what will be the ratio of contribution of home textile and cotton in next three years? I think if you witness it trend from last two, three years, it is clearly visible that the cotton sales have been increasing as far as total sales are concerned as a percentage of total sales. So we almost have read, I think, around 45% of cotton and 55% of winter wear sales. So we also have said that in next two to three years, we will even out in summer and winter sales. And eventually, the cotton sales will surpass the winter sales. So that is the ultimate target and we are basically set for this kind of target.

20:15 And as far as what was the second question? Margin what is the margin scenario in three years, like in quarter? Being in tough competition or unorganized sector. So how do you see the margin as our brand is reputed? So where do you see the margins in this business? I'll be pleased to we hear have a better margin in cotton products on winter products as of now. If I it is almost 100 basis points up as compared to winter wear products in Cotton segment. So there is no worry about the margins in Cotton segment. Already, the margins are equal or better in Cotton segment. And we anticipate that we will maintain the margin in Cotton segment as we have certain advantages. We are number one in T shirts in India.

21:02 Almost we sell 2,000,000 pieces in India, which is growing at a very good rate. At the same time, other categories also, if you have seen the volume growth of shirts, trousers, denims, all the categories are growing. So this is giving us confidence that we'll be able to maintain margins going forward And overall, for next three to four years, we said earlier also that we're looking for a double digit growth going forward. Even in this financial year, earlier, indicated that we might grow at around 20%. But seeing the geopolitical conditions and also to save ourselves, we planned less inventory so that in case something goes wrong, so we are not trapped at the retail end or at the our consumer end. So that is why some of the inventory has been cut. Still, we are very confident of growing double digit in this financial Sir, where we stand in home textile in general scenarios in market tech?

21:53 Are our products very well accepted and yes. Yes. I'll be pleased to share that last year we grew around 12%, and this year we anticipate a growth of approximately 20% to 25% in Home Texture segment. So the revenue wise, it was around, I think, 170% last year. So this year, we should be ending at around 215%. So that would translate into a growth of 20% to 25%. So we are well positioned and brand is have a very good recall and also our summer beer collection in home furnishing is growing at 60% to 70% as compared to last financial year. So I think we'll be doing approximately 20% to 25% in Home Textile sales in this financial year as far as growth is concerned. Sir, what is our CapEx plan? Like you have mentioned, like we are modernizing our plant. This is just I mean, working CapEx or something you are adding or and what cash we have on books now after solar and all this? No, no, we are very asset light business. The CapEx only goes in warehousing, which already we are building this financial year. And there are some modernization of machine, which is not beyond INR 10 to 15 crores. So it's a very CapEx light business, and we'll maintain that CapEx guidance of INR 30 crores also for next financial year.

23:15 Okay. Sir, what is the cash in books right now? And what we are planning with that in the future? As the market cap is quite, I mean, to the network of the company. So are you, sir, planning anything to like planned visits or analyst meet or something like that you are planning to just make aware people about the valuations? The cash is INR 305 crore in books and we always invite all our analysts and stakeholder to visit us and to see us how we have been doing here. And everybody is welcome to visit us. And even after this phone call, if there are any questions which are left unanswered, you can always give a query to our program advisers, and we'll be happy to answer it.

24:02 Sir, it is 305 crore. No? Yes. Yes. And how is the solar things that work? I mean, when the... We are expecting return on that to start? Solar projects have not yet started. It will be... We are under the stage of land aggregation. And so I think in the next nine to twelve months, we should be commissioning the plants, and we should start the billing from next financial year. Sir, any further you plan to do more CapEx in solar, I mean, investment in solar as Yes. We are we would first want to implement and commission these projects so that we get the confidence and... But yes, so we are putting around 50 megawatts in DC, around INR 150 crores of investment. So we will we would want to complete this investment first, commission, start the billing of the project and then move on to new tenders. But we are very optimistic about this segment.

24:56 But if something interesting comes up, we will be more than happy to... And also... Yeah. So... Any other vertical, I mean, you are planning in mind, like, something like like, we are in footwear. So any any any other vertical as we are planning to go into that in future? Like, or you are right now. Own business. So footwear is a category which is... Which belongs to the lifestyle segment also. And we, as a brand, when we move into lifestyle, we have to cater to all categories. So category addition will keep on happening, whereas also solar is a different vertical that we've undertaken. For now, we're just focusing on retail and solar. No other segment have been looked at. Okay, sir. Okay. Thank you. And sir, would like to visit plan, so I will request, I mean, your RSVP and the next one.

25:44 Sure. So I'll... We'll ask our company secretary, Ankur Gaba, to coordinate with you, and we'll get back to you. Thank you. Thank you. We take the next question from the line of Neeraj, an individual investor. Please proceed. Yeah. So so my question was on the overall sales. How much is the component which is from a b to b sales perspective, and how much is that which is being filed directly by the company? So if I look at last year sales for 1,300 crores of the year, so roughly, what is the percentage? More than 90% is b two b sale only. It's only online sales, which is directly from our website to consumers. So that contributes, I think, 3% to 4% of the... Even online, only 20% of the total online sales comes from our own website, yes, and around 45 company owned EBOs. That is the direct sales that we do.

26:41 No. So basically from the company's own EBO, how much is the sales that is coming across? Is it like only 10% and the remaining is coming from the B2B vendor? We can check back and we can write back to you. I don't have a figure right now, but it's approximately it should be around 20% of the sales of total EVO, I think. So that is company owned. So the sales would be like that only. But exact sales, we can you can separately write to us, and we will answer it. Okay. And just coming on the sales return part, it is it is comparatively quite high. If I look at the overall sales and the sales return, it is coming to be around almost like 25 to 30 percentage of the sales which we do. How how is it that... I mean, this this basically basically adds an additional burden on the P and L as well. How do we plan to reduce this amount of sales return?

27:30 We are one of the best company in in in whole space, where we don't have around 11% overall at a company level. So if you compare with any company which is listed or which is unlisted, it is around 15% to 16% or maybe more than 20 So we are one of the few companies in India, which have a return of 11% of overall sales, if you see that. But the only thing is that third quarter is very heavy, so it starts reflecting in the first quarter itself. But when you see our second quarter and third quarter results and fourth quarter results, you would see that this doesn't come up the return issue doesn't come up. It's only the first quarter we have to face some difficulties because of heavy third and fourth quarter. But overall, please see us as a full financial year performance as compared to last year financial year. So that you would see that our returns, our profitability, our revenues, so that would sync in line what we are committing.

28:26 And this sales return is primarily on the VULEN part? Or is it like across for the quarter and then as well as No. All the other every category has a returns. But VULEN is being higher ASP, so it shows more in the balance sheet in the first quarter, but all the categories have some returns. But the percentages overall is the same, which I indicated earlier, around 11% as a company level. Because I was looking at this number, 80 crore rupees is the total sales return for the current quarter. And what I understand is that is 65% of the overall return which is there. And 35%, if you said, that is a maybe in the quarter two. So if I take it out with with total sales return, it can go around $2.50 to 60 crore rupee.

29:12 Sorry. So 65% of the winter returns. So this time, we are processing winter returns. Summer returns will be in addition to this, which will come in the third and fourth quarter. So in terms of quantum, how much is it going to be estimated? And I don't know the exact figure, but just a ballpark figure like now, this is 100,000. So I'll just tell you, in the first quarter, we've inverted almost one lakh extra pieces as returns. And in the next quarter, we will invert around 70,000 lesser in quantity as compared to last year. So if you see overall the in first and second quarter combined, the overall return will increase by 35,000 to 45,000 pieces, which is in line with the growth in dispatch. Okay. And and and we are trying to... And what I understand is there's no way if you reduce this particular amount of return. This is an industry practice, and this is something that is expected of us. And then when our sales increase, this sales return will also increase in that percentage point of sales. Sales return is our is the number one KPI that we track in the company because this is one thing that can impact our margins as well as profitability.

30:17 So as Mr. Sandeep ji said, because of all these efforts, we have one of the lowest returns in the industry as compared to any other company. These are part and parcel. These can never go out. Our best effort is to minimize them as low as possible. Okay. Nothing further, Thanks. Thank you. Thank you. We take the next question from the line of Amit Sanghvi from an individual investor. Please proceed. Hello? Yes. Am I audible? Yes. Yes. We are audible. Yes. See, if I see this P and L, advertisement and business promotion expenses is lower by INR $3.62 crore.

31:06 And in spite of that, the losses are higher by INR 10 crore. So how do we read about it, about the sales, which we expect in future, whether the sales will be lower comparatively as compared to last year, last Q2 and Q3? Or how we should read about it when the expenses are lower in case of advertisement and business promotion? Please don't see advertisement expense in quarterly basis. On a yearly basis, the guidance is around 3% of sales, which will remain there. So there have been changes in sometime quarterly variations, sometimes the quarter one is having a lesser advertising expense, quarter two is having a more expense. So sometimes the bills are good in the second quarter. So overall, it will remain same at a financial year level. Okay.

31:53 But you are sure that there will be a double digit growth in top line revenue and more or less or less by 1% in EBITDA growth? Yes, you're right. That's what we have said. Okay. Okay. And what is the total expenses incurred on this energy project so far? So far, none of the there has been no investment that has been done. It will be to that INR 147 crores to INR 150 crores, but none of this amount has been invested so far. It will be invested in the next quarter. But I think we have announced this a year before. So even in... After lapse of new year, we haven't incurred any expenses? No. Because when we had announced, we had got the LOA, then we... It got converted into an LOA, then there was a PPA process that had to be undertaken, which took another three months to be signed. Now because it's a rainy season, we are right now aggregating land. And in the next quarter, you will see because it's a very short term project, so the disbursement will happen within two quarters. So you will see this entire amount being disbursed in the next two quarters.

33:00 So the time taken is for, you know, compliance getting agreement signed. Okay. That's everything from my side. Okay. Thank you very much. Thank you. We take the next question from the line of from Equity. Please proceed. Good morning, sir. Ramon, considering the company's healthy cash position, is management evaluating the possibility of share buyback? Yes, definitely. It is always under the Board's discussion. So whenever there is any plan, we'll definitely let our stakeholders know about this. Okay. And so when you say the double digit growth you are looking for, so are you looking to closer to 10% to 12% or higher rating to 90% growth?

33:50 See, we indicated low double digit growth. Thank you. You. We take the next question from the line of Shital Shah, an individual investor. Please proceed. Hello. Am I audible, sir? Yes. You're audible. Hi. Good morning, sir. Pardon me. I joined the call late. So if my question is repeated, do pardon me, sir. Sir, q three is always the joyous quarter for a v shareholder, but the joy fades away as we enter q four, q one, and it's turning to shorrow when we enter q one of next year, sir. Sir, management has taken the step to overshadow this impact by diversifying into cotton and leather products.

34:38 But the, sir, impact is somehow not visible, sir. Sir, my question is, what the management is thinking of how to reduce the impact or overshadow this impact so that it it does not distort the whole year figure, sir? See, first of all, all quarters please have letters because when we indicate in our phone call in the beginning of the year, so we indicate for annual performance. We don't guide for quarterly performance. We have rightly said that third quarter and fourth quarter there is some pain in the fourth quarter and first quarter. But if you see this fourth quarter, we have taken adequate measures, and this fourth quarter was positive. Second quarter was positive. Third quarter was positive. Only there have been loss in the first quarter.

35:23 So this year also, the same practice will be followed. The first quarter is again having a loss because of returns. And second, third and fourth quarter definitely will be followed as we are following last financial year. But the good thing is that we have been known as a winter view player. You see that there have been a volume growth of 27% in first quarter in summer season sales. So that shows that summerwear categories have been accepted and being established in the market as far as Monte Carlo brand is concerned. So that is a very good sign for us. And going forward also, because otherwise, we were having we were planning to have higher double digit growth, but we curtailed our production, seeing the geopolitical tension, seeing the inflation.

36:13 So there might be some risk of some higher returns and there have been some issues with monsoon also. Otherwise, we would have indicated more than one different growth. But we try to be very safe and we try to protect our margins also. That is why we have curtailed down the growth a little, but we are not compromising much on the margins and much on other areas. Sir, just add on, sir. So is there any measure which we can do to curtail this sales return? Because because that is the only horror thing in her financials, sir. If it it reduces our whole... Your profit figures look decent, sir. So can we do anything or management has any game plan to reduce this sales return figure, sir?

37:01 See, this question has been answered repeatedly in this phone call. We clearly indicated this is part and parcel of the business. What we only can do is that we can minimize it and we are already at a very low level, 11% to 12% as far as industry related figures are concerned, they are more than 15% to 20%. But we are always trying to have more efforts to reduce the returns, but that would be in percentages wise. It cannot be very high. If I'm at 12%, I can be 11.5 but I cannot bring it down to 9% or 8%. That is not possible at all. But what we are trying to do is that always have a lesser return as compared to last financial year, maybe in the 30 basis point, 40 basis point, 50 basis point. That is what we are trying to do always.

37:49 Okay. Okay. The reason was that, sir, our stock is quoting at only 10p, where other retailers are quoting at 30 plus fees, sir. That was the main reason for this asking. And sir, the second question is, in two last two con call bank, you were told that while we maintain this type of margin, we can only grow by this amount, sir. So my question is, earlier you had told that we can go easily by 15, 20%. So due to geopolitical tension, you are saying that our sales revenue guidance is reduced to low double digit. So if geopolitical tension is it, do you see see any other headwind for us not growing by 15, 20%, sir?

38:44 Yes. Yes. Can you please just repeat it? Was not able to listen. Sorry. Sorry, sir. Two call back, you had told that if we keep revenue this, I asked you, why would we increase our revenue? Then you told that for keeping this type of margin, we can only grow by this amount. So 15, 20%, we can easily grow by keeping this type of margin. But... So so that we are not increasing our revenue to keep our margins safe. Now due to geopolitical tension, sir, you are telling that we can grow at low double digit. So only geopolitical tension is a headwind to us for not growing 15, 20, 20%, Or any other headwinds do you foresee?

39:32 Partly, you have answered your question. So balance, I will answer it. So first of all, yes, we clearly indicated that we would like to grow 15% to 20%, I think, in the fourth quarter when we were like having a corn call, and we were having a clear visibility of 15% to 20% growth because our order book was at that level. But now consciously, we have cut down the production. So it's not that the order book is not there. Just to see that there have been some issues because of geopolitical tensions, inflation has gone up, which is already integrated in the RBE also. And there have been some monsoon deficit news also, which is, I think, everybody knew that India is highly agriculture economy and dependent on monsoon also. So we don't want to take undue risk on our margins. So that is why we have cut down our production a little so that we can grow at around double digit, but not aggressive growth in case there have been this war prolongs or there are some more issues of monsoon inflation.

40:32 So then it may hurt the sale and it may then have more discounts and also it can push more returns. So just to safeguard ourselves, we have indicated that we will be growing low double digit. Otherwise, the initial plan was as per the order booking and the from trade show we had was 15% to 20% only. But again, this is just to safeguard our production, safeguard our margins, we have taken this decision. Okay, sir. Thank you, sir. And the last suggestion, sir, our stock is quoting at a very low pace. Sir, In future, please consider the proposal of buybacks, sir. That's all from my side. Thank you, sir, and best wishes. Thank you. Thank you. We take the next question from the line of Ritika Pahawar from Pahawar Securities Private Limited. Please proceed.

41:24 Yeah. Hi, sir. I have two questions. One is about your store expansion. I saw in the presentation that you're planning about 40 to 45 store addition this year. Just want to understand the broad, you know, investment in Walgreens store, what will be payback period, if you could elaborate a bit on how you go about it? And the second question would be about exports. Is the company focusing on exports in any manner? I'll come to the first question, so which is the CapEx. CapEx is only of the franchise. We do CapEx only in the company owned stores. So that is only, I think, the 10% to 15% of the stores which opens in a financial year. That is only the CapEx we do. Rest CapEx is done by the franchisees, and we expect to have ROI of three to four years.

42:16 Okay. Got it. Three to four years, typically. Exports, we don't have any exports as of now, but we have been doing some like online exports. These are all Mr. Rishi will explain. Yes. So as a company, we are not an exporter, we are a retailer brand. So our focus is not on export. Our focus when it comes to selling overseas is only if it sells under our own brand. For this, we've tied up with a few Middle Eastern, you know, quarters where there is some sale, but it is not that much that, you know, we can we can have a discussion about it. But as a company, our focus is on the domestic market and not exports. Understood. Sir, you do not benefit from any of the FTAs in there entering into, be it, UK or Europe, not in this entity. You don't see any benefits from the FTAs, right?

43:01 Because as a company, we don't own a lot of manufacturing units. We outsource most of our production, and the only manufacturing that we have is to service our own demand. So as we said, we are an asset light company. So in order to export, we need to have that manufacturing capabilities in house. Otherwise, we can't work it in a trading model. Okay. And just an add on, what is your capacity utilization right now? And what do you think? What is the maximum turnover? Can you expand to with the given capacity, or would you need further capital? So for Vuulan, we've added almost 15 to 17 new machineries, and our cotton plants are running at full capacity. We don't we don't have any spare capacity available with us. And all the other demand that is there, we outsource to third party vendors, and that will be our plan going forward.

43:51 So no further CapEx is planned. Whatever incremental demand you're talking of, like, double digit growth for next fiscal year, this will all be your own plant Out of cost. Yeah. So we spend around INR 10 crores to INR 15 crores every year on our internal plants in modernizing and adding a couple of new machineries, but that is at no major CapEx when it comes to production. Alright. Thank you so much, sir. Thank you. Thank you. Thank you. We take the next question from the line of Gunit Singh from Counter Cyclical PMS. Please proceed. Thank you for the follow-up. So, sir, in 2015, our share was trading at $5.67. And now after eleven years, our share is trading at the same price or lower than that. And despite being one of the oldest brands in in India, our share is trading only near its book value. Whereas if you look at other branded companies, they they have multiples of, say, two x, four x of of the book value.

44:54 So, sir, I would just request you rather than putting money in commoditized businesses like solar where returns are miniscule, why don't we consider investing in the company itself by buying back the shares and taking up the promoter shareholder into 75% because I think at this... These levels, there's not any investment that's better than, I mean, buying back the shares of the company since we have cash also. And it will be a long term benefit for the longest standing shareholders by permanently increasing the EPS. So I would just like to understand if the board is considering anything of this sort. Is anything of this sort on the books? And if not, kindly request you to consider it. Thank you, Puneet. And definitely, I can understand the pain as far as and we're also, you know, having the same pain that the share price have not performed even though the company have almost multiplied the turnover from 2015 to this financial year. And definitely, we have noted down your suggestions.

45:53 Perfect, sir. Thank you very much. And I mean share buyback will also show our confidence in our own business and will give us give a good signal to the market as well. So thank you very much for considering it, and I hope that something gets done in that direction. Thank you. Thank thank you. Thank you. We take the next question from the line of, an individual investor. Please proceed. I would request mister to unmute and then speak. Due to no response from side, we'll just move with the next question. We take the next question from the line of Amit, an individual investor. Please proceed.

46:46 Yes, sir. As you say that sales return is... For this Monte Carlo is based in the industry, which is around 12% as against 15 to 20% as per industry standard. So I don't think there is any more possibility to reduce this percentage of 12%. As you say that it can be 11.5% or maximum at 11%, but not lower than that. So what I feel then, what I suggest that if we can make this is the last two years average sales return, if we can make a higher provision in Q3, where our sales is on a very high side, then the EBITDA margin or EBITDA level will be even out and this type of distorted Q1 or Q4 will not be there. So I just wanted to have a suggestion on it.

47:38 That's a good suggestion. But this year, we have taken a good provisioning. That is why our fourth quarter was positive, which was negative last financial year. But definitely, we have noted down your point. Okay. Thank you, sir. Thank you from my side. Thank you. A reminder to the participants, in order to ask a question, you may press star and one on your touch tone telephone. We take the next from the line of, an individual investor. You may proceed. Morning, sir. Thank you for the opportunity. Sir, my first question is regarding the store economics. You plan to open 40 to 45 stores this year. So what is the average payback period and mature store EBITDA margin?

48:25 Also, how many stores can India ultimately absorb over the next five years? See, first of all, I have already said that the ROI for franchisees is three to four years when they open the store. So secondly, how much how many stores India can accommodate? I might not be able to answer that, but definitely, we have a plan of around 45 to 50 in this financial year, and we may increase it once we have all this situation normal as far as inflation, geopolitical tensions are concerned. We might open more store next financial year. And it is a huge market, and it is a country of countries. We have a population of INR 140 crores to score. And where the middle class income is rising every year and where the lower middle class is shifting into middle class and poor are shifting into lower middle class. So definitely, there's a lot of space for organized players like Monte Carlo to increase their sales.

49:17 As still, we are we have only adding 20%, 20% of organized sales as compared to if 100 crores sales is happening, it is INR 20 crores only organized sales. So a lot of potential from for INR 20 crores to go to INR 50 crores as it's in other developed markets we have seen like America, Europe and China, their organized sales contributes almost 35% to 40% or 50% even. So a lot of scope for brands like Monte Carlo to grow in this space. Okay. And my second question is regarding the revenue guidance, sir. Sir, you have already guided for low double digit revenue growth revenue growth, I mean. So can you help us understand the contribution expected from store additions versus same store sales growth versus price increase? Yes, I don't have a ready made data available with me. We can just write back to you. You please give your e mail to our welcome adviser. They will reply back to you.

50:09 Okay. Thank you, sir. Thank you. We take the next question from the line of Mahindra Jain from Way to Wealth. Please proceed. Yes, sir. Sir, I'm repeating my question. Like like on solar contract, can you elaborate detail about that? Are we making investment into land, or what is the exit clause if suppose in future we don't like this business as we are doing only investment as per you said in last call also? So what is the contract clause like that? We buying land on ourselves or something like this? Can you please look at that in this? As a margin is around EBITDA is 15% as you said in last call. So are this liquid investment or what kind of investment, please? So the land for all these projects are being leased.

50:59 We are not buying these land. These are long term leases spanning from twenty five to thirty years. The agreement that the PPA that we signed with the Madhya Pradesh government is for twenty five years. So we are responsible to sell them these units for the next twenty five years. We are not allowed to exit this investment for the period of one year after investment, after commissioning. But post that, we are okay if we want to monetize this asset, we want to exit this business. There are enough buyers in the market, enough funds, which buy these recurring revenue assets, and these are sold at a basic discount rate of cash flow. That is the whole reason that this is being established in an SPV and not in the mother company itself. That is why... Because it it will be an easy transfer if you want to exit this business in the future. So are we buying even solar panel and all this installation will be done by us or it will be EPC contractor and their things like?

51:51 So it will be given to an EPC, and they will do the installation and everything. The government will be like. Okay. Yeah. That's how all solar installations work. There are professional EPC companies which install. We have around... Even our in house solar capacity is outsourced to EPC companies. We don't have an in house team of engineers that can install. Correct. Correct. Correct. Correct. So it's almost like anytime we can take exit if we don't need to go into that business in future like? Post one year of commissioning as per the agreement. Okay. So the SPV will SPV will give exact return what you'll get in... It will be merged into parent company only. Yes. Yes. Yes. It's a wholly owned subsidiary of the parent company. Okay. Okay. But in case, as you said, in... For the next twenty five years, if you want to exit this business, it is a much easier easier process to just transfer an SPV to a new investor rather than trans... Doing an asset sale.

52:44 Yes. Yes. But because everybody is trying to understand why our valuations are low. I'm not talking about the stock price. I'm sorry. It's not reflecting exactly the valuation of the business, the brand. Right now, we are seeing new IPOs. Any company, they're they're cooking their books, whatever they are doing, but we are very reputed company. So it should be it should be, I mean, noticed by investors and all this. So we have to exercise. Not exactly. I'm not advising any buyback, nothing like that. But we should put our investment into high growth areas and which especially in our core strength like in textile or in woolen or whatever. So the expansion you are doing in the right path. So we hope to increase. And anything regarding to restore confidence of the investors, we have to do service. So this is Right, sir. We take your point. And, you know, as promoters, we gain to we get to gain the most in terms of if we increase the multiple, which is in our best interest to do that. And... But we've seen, you know, a lot of queries regarding this, and we, you know, promise to be more proactive about it, and we'll take steps.

53:49 And by next quarter, you should see something. Yes. Yes. Thank you. Thank you, Ashish. Thank you. Thank you. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. Over to you, sir. Yeah. Thank you so much. I hope we have been able to answer all the questions satisfactory. Even if you have any further questions or anything which you would like to know about the company, please reach out to our IR advisers, well known advisers. Thank you so much. Thank you. On behalf of MK Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.