27 November 2014

IPO Note of “Monte Carlo Fashions Ltd”:: SMC

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 IPO Note of Monte Carlo Fashions Ltd

Issue Details

Company
Monte Carlo Fashions Limited IPO
Offer Period
Offer Opens On :  Wednesday, December 03, 2014
Offer Closes On :  Friday, December 05, 2014
Price Band
INR 630 – INR 645
Bid Lot
23 Equity Shares and in Multiples thereafter
Lead Manager
Edelweiss Financial Services Limited, SBI Capital Markets Ltd., Axis Capital Ltd., and Religare Capital Markets Ltd.
Registrar
Link Intime India Private Limited
Issue Size at Lower Band:
342.28 Crs.
Issue Size at Upper Band:
350.42 Crs.
Offer Structure
Offer
5,433,016 Equity Shares
QIB
Not less than 2,716,507 Equity Shares - 50% of Net Issue Offer
NIB
Not less than 814,953 Equity Shares - 15% of Net Issue Offer
Retail
Not less than 1,901,556 Equity Shares - 35% of Net Issue Offer

Issue Highlights

   Monte Carlo Fashions Ltd (‘MCFL’) was incorporated on 1st July, 2008  as a subsidiary of Oswal Woollen Mills Ltd (‘OWML’).  ‘Monte Carlo’ has been recognized as a ‘Superbrand’ for woollen knitted apparel in each edition of Consumer Super-brands in India.
   The company primarily cater to the premium and mid-premium branded apparel segment for men, women and kids, offering a comprehensive line of woollen, cotton and cotton-blended knitted and woven apparel and home furnishings through their ‘Monte Carlo Exclusive Brand Outlets’ and multi brand outlets (“MBOs”), including a network of national chain stores under the ‘Monte Carlo’ brand.
   Leader in Woollen Apparel (40% of revenue); increasing presence in Cotton Apparel (38% of revenue) and forays into high growth Kids Apparel (3% of revenue) at the same time entering into niche category like Home Furnishing (7% of revenue) will aid MCFL to increase penetration in metros and expand presence in tier I & tier II cities in India.
·     The shares will be listed on BSE and NSE.

Background – Company & Promoters

Launched as an exclusive woollen brand by Oswal Woollen Mills Limited (“OWML”), Monte Carlo is one of the leading Indian apparel brands based on revenue.  ‘Monte Carlo’ has been recognized as a ‘Superbrand’ for woollen knitted apparel in each edition of Consumer Super-brands in India since its first edition in September 2004.

In June 2012, Samara Capital, a Mauritius based India focused private equity firm, through its affiliate, KIL (Kanchi Investments Limited, Mauritius), acquired a stake in the Company and currently holds 18.51% of the pre-Offer capital of the Company.

The company is led by the Promoter Shri Jawahar Lal Oswal, currently Chairman and Managing Director of the company has over 50 years of experience in the textile and apparel industry.

Business Overview

The ‘Monte Carlo’ brand was launched by OWML, which was engaged in spinning of woollen, cotton and other blended yarns, weaving denim fabric and manufacture of apparel. With effect from April 1, 2011, the woollen and cotton apparel business of OWML under the brand ‘Monte Carlo’ was demerged into the Company.

The company primarily cater to the premium and mid-premium branded apparel segment for men, women and kids, offering a comprehensive line of woollen, cotton and cotton-blended knitted and woven apparel and home furnishings through their ‘Monte Carlo Exclusive Brand Outlets’ and multi brand outlets (“MBOs”), including a network of national chain stores under the ‘Monte Carlo’ brand.

As on 30th June, 2014 there were 196 ‘Monte Carlo Exclusive Brand Outlets’ in India, two ‘Monte Carlo Exclusive Brand Outlets’ in Dubai and one ‘Monte Carlo Exclusive Brand Outlets’ in Kathmandu, Nepal. Out of the 196 ‘Monte Carlo Exclusive Brand Outlets’ in India, 18 are owned and operated by the Company and the rest are operated by different franchisees. Most of the ‘Monte Carlo Exclusive Brand Outlets’ are located in high street locations, lifestyle centres and malls that position them as a premium and mid-premium segment brand in the branded apparel industry.

The company utilise the services of their exclusive commission agents who facilitate compilation of orders from various MBOs and collection of payment, and also act as the interface between the Company and the MBOs.

As on June 30, 2014, company had supplied their products to over 1,300 MBOs through their commissioned agents. The company also entered into distribution agreements with some of the leading Indian digital commerce platforms. Additionally, one of the group company - Vanaik Spinning Mills Limited operates an online shopping website www.montecarlocollections.com through which they sell company products online.

Company operate two manufacturing facilities in Ludhiana, Punjab, one for their woollen apparel products and one for the cotton apparel products. The manufacturing facilities include facilities for product development, a design studio and sampling infrastructure. Almost all the woollen knitted products are manufactured in-house at their manufacturing facility.

The company has recently commenced in-house manufacturing of some of the cotton t-shirts and thermals. For the remaining cotton and cotton-blended products, company follow an asset-light model by outsourcing the production to a network of third-party manufacturers, also known as job work entities.


Brief Financial Details*                                                                  (Rs. In Crs)
Particulars
Jun’14^
Mar’14
Mar’13
Mar’12
Share Capital
  21.73
  21.73
  21.73
  18.86
Reserves
366.49
358.24
302.94
131.91
Net Worth
388.22
379.97
324.67
150.77
Revenue from Operations*
  74.77
  503.73
404.44
372.17
Revenue Growth
--
   24.55%
     8.67%
--
Profit Before Tax
12.80
83.76
72.46
  72.57
EBITDA
18.03
94.13
70.95
81.85
EBITDA Margin
  24.11%
   18.69%
  17.54%
   21.99%
Profit After Tax (PAT)
8.52
55.30
48.90
49.45
PAT as % to revenue
11.39%
  10.98%
   12.09%
  13.29%
Earnings Per Share
3.92
25.45
23.05
27.25
Return on Networth
  2.19%
  14.55%
   15.06%
32.80%
Net Asset Value per share(Rs.)
  178.64
  174.84
   153.06
    83.08
Source: RHP   *Net Revenue   ^3 Months ending June 30,2014

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