Monte Carlo Fashions Limited (MONTECARLO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q3 FY '21 Results Conference Call of Monte Carlo, hosted by Emkay Global Financial Services Limited. We have with us today from the management, Mr. Dinesh Gogna, Director; Mr. Sandeep Jain, Executive Director; and Mr. Rishabh Oswal, Executive Director. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Devanshu Bansal from Emkay Global. Thank you, and over to you, Mr. Bansal.

Hi, good morning, everyone. I would like to welcome the Monte Carlo management team and thank them for giving us this opportunity. I shall now hand over the call to the management team for their opening remarks. Over to you, gentlemen.

Very good morning, and Happy New Year to everyone joining us on this earning call. It's a great pleasure to welcome you all on behalf of our Board of Directors and our senior management to this earning conference call to discuss our financial performance for the third quarter and 9-month of financial '21. Thank you all once again for sparing your valuable time in joining us here today. Before sharing the recent developments and strategies undertaken for growth going forward, let me provide the 3 financial indicators reported during the quarter 3 of financial '21. Revenue during the quarter stands at INR 403 crore as against to INR 403 crore in Q3 financial '20. The company reported gross margins of 41.8% in quarter 3 of financial '21. The operating EBITDA margin during the quarter stood at 28.8% vis-à-vis 26.4% in Q3 of financial '20. So revenue for the 9 months for financial '21 stands at INR 513 crores as against INR 616 crores last year. The company reported gross margins of 46.5% in 9 months of financial '21. The operating EBITDA margin for 9 months of financial '21 stood at 22.8% vis-à-vis 20.2% in 9 months of financial '20. So we have strategically eyed for increased revenue contribution from online sales, and I'm happy to share that the increased traction from this channel, online sales for quarter 3 stood at INR 18.1 crore against INR 13.3 crore during the same period last financial year. With regards to online sales, we are looking to focus more on selling through our own portal. The company's performance during the quarter was encouraging. With the easing of COVID restrictions in most parts of the country, the company was able to operate with full capacity. The company remained focused on stimulating customer demand with various strategic tie ups. Monte Carlo continues to enjoy a comfortable net cash position and its medium-term liquidity needs are well covered. With adequate banking limits in place, its ability to service debt and financial obligations on times remains unaffected. Monte Carlo has 0 reliance on export and as a presence in domestic market across India with an extensive distribution network. The good credit terms with our suppliers help us operate the business smoothly. No major CapEx is planned for the next 2 financial years. Therefore, positive operating leverage expected as the production gains scale. We are strongly focused towards enhancing our shareholders' value and the foreign and asset-like model in this endeavor, we are focusing on optimizing our asset utilization, quality, efficiencies and relationships. While our focus will be to maximize revenue growth going forward, large interest is to build profitability by maintaining cost-control measures. If any of you have any queries for this earning call, you may connect us or Dickenson World, our Investor Relation agency. We can now open the floor for a question-and-answer session. Thank you very much.

[Operator Instructions] The first question is from the line of [ Zaki Nasser, ] an individual investor.

Hello? Hello?

Hello, sir, you're audible.

Yes. Sir, congratulations on a great set of numbers for the third quarter. Sir, as we realized that it is mid of February, what would your outlook for the full year be sir? Would you be able at least on a revenue basis to the last year? This is my question number one. And question number two is, in the budget, there was a 10% increase in import of cotton. So would this affect Monte Carlo because I think we use the high end cotton, sir?

Thank you. The first question you asked for the revenues for this financial year. Am I right?

Yes, sir. Yes, sir.

Yes. So actually, in the beginning of the financial year, we have given the guidance that our revenue will be down 20% to 25% as compared to last year, seeing the circumstances at that point of time. But we further revised our guidance, seeing the pleasant surprises in the economic recovery, which has happened in last 6 months, and seeing the trends which is -- the economy has gained momentum. So we are revising our guidance to degrowth of 10% to 15% as compared to last financial year, particularly for this financial year. And your second question was the imposing of 10% of import duty on the cotton. See cotton prices in the domestic markets have already risen and it is almost in comparison to the prices which is there in the international market. So anyhow, the prices are almost 15% to 20% up as compared to last year. And even if the import duties imposed, the price remains around 15% to 20% higher as compared to last year. Yes, definitely, there will be pressure on the input costs, which is going to rise, but not in this financial year, it may affect the prices in the next financial year, as now the cotton purchase for this financial year has been done in September, October. But for the purchase for the next financial year will be done in the March, April and May. So it may increase price in the next financial year, not in this financial year.

And sir, what would your -- what your opinion be on the rise in yarn prices? Because I believe the yarn prices have risen more than the cotton prices. So does that affect Monte Carlo in any way, sir?

See, again, I reiterate what I said that in this financial year, we'll not be going to affected because we covered our all cotton, yarn basically in September and October for the summer production. For next year, yes, there will be increase in prices, as the yarn price have risen more as compared to cotton prices, the reason being is that the demand is more as compared to last year. So as the economy opened up and demand has come from export region as well as domestic region also. So the cotton, yarn prices have rapidly risen from last year's levels. And I think the next year, it will definitely increase the input cost. And subsequently, we need to increase our brand wear prices also.

Okay. So you expect them to remain some time to come, sir?

See, we cannot say that the price really sustain because normally, we have seen there [Foreign Language] even anything rises very suddenly, so there are some tractions also. So I'm not sure that whether these increased prices will remain there for next 3 to 4 months, but we need to see very cautiously how this pricing movement happens.

Okay, sir. And if I may, just 1 last question, sir. This is regarding your mix between casual wear and winter wear, how do you see that mix panning out, sir? Do you see any change post COVID?

See, you are talking about the casual wear and winter wear or cotton or winter?

Cotton and winters.

Cotton. See, as we have seen in the last few financial years, the cotton segment has been growing in double digits and the woolen segment has been growing single digits. So we anticipate that this trajectory will continue and will keep on continuing a double-digit growth of cotton garments. But in the last financial year, we are very optimistic about our woolen garments also because we have seen that the stocks are very less at the retail level and also at the company's level. So that may help us gaining a good growth in coming financial year for the woolen segment also.

Excuse me, I just want to add 1 thing more, this is Dinesh Gogna. As Mr. Jain had informed you that there is a degrowth to the extent of, say, 10% to 15% in this year, this is revised guidelines, which we -- which he has given. So probably, he would like to convey to you this thing also, but irrespective of that thing, we are very, very conscious to control our expenditure at all levels. Resulting thereof, though there is a degrowth in the revenue, nevertheless, our profits are as comparable or rather better than the last year, and this endeavor will continue.

The next question is from the line of Deepan Shankar from Trustline Portfolio Management Service.

Congrats for good woolen growth. Sir, what is the key reason for 14% drop in cotton revenues during Q3? So is this due to lower jacket sales or other cotton goods?

See, basically, the first and foremost reason is there have been drop in productions because we could not produce as we have limited time for the production of our -- some of the jacketing material also. The major drop is in jackets. The reason being is that, also, we are not able to get some fabrics from China, Korea and Italy as they are having some restrictions. And also, we have not been able to produce because of labor and other disruptions. As woolen sweaters are in-house, so we didn't face much difficulties in producing the woolen sweaters. But yes, as we had outsourcing of jackets and other garments, they have definitely affected our cotton segment in this financial year.

Okay. Okay. In this extended winter, so we could see some amount of growth in woolen in Q4 also than compared to last year?

See, basically -- Q4 is basically end of season sales period and also the Q4 is basically more of summer sales. So we would say, the cotton garments just picking up in Q4. And yes, [ USS, ] whatever stocks we have left, we need to clear this in this quarter also.

Okay. Okay. And sir, higher woolen contribution would have increased our gross margins during Q3, but slightly gross margins have reduced by some 52 bps. What is the reason?

See, basically, the textile sales have gone up. So that has affected the gross margins. Yes, the textile sale is up as compared to last year. So that is the main reason for this.

Okay. Okay. Okay. And also, in the first...

Gross margins overall.

Yes, understandable. Okay. Okay. Also, in the presentation, for MBO and distributors, you have mentioned that it has gone down to 1,572 as compared to last year of 2,500 plus. So any specific reason?

The reasons are same because of pandemic, most of the MBOs did book the same quantities, which they booked at pre-COVID levels. Everybody is very apprehensive. But as far as our LFS, online and EBOs are concerned, as they are -- most of them are owned by us. So they were very confident. But not all the MBOs are confident enough to have the same level of inventory, which we used to carry in last -- in 2019. So there is a reason, there the sales for MBO and SIS have gone down and also retail have also gone down. Because the reason being is that at that point of time and the booking happened in April and May, not everybody is pretty confident about how this economic recovery will take place in the coming 6 months.

Okay. Okay. No, my question was actually related to number of MBOs which you have mentioned, that is around 1,572 MBOs and distributors as compared to 2,500 plus MBO and distributors last year...

Yes. It's clearly evident that the number of MBOs, which purchased the winter garments, are down as compared to last year. But still the sales are almost same. So that means that the existing MBOs or the MBOs which are bought, they have more -- bought more quantities as compared to last year which have balanced the sales.

Okay. Okay. Okay. So we have not lost touch with them, but they have not build during this year, that's the only idea, right?

Pardon?

We have not built for the remaining MBO and distributors during this year, that's why we have not taken them into account.

No, no. They have not bought any goods in winters in this financial year, that is why they have not included. They are our existing MBOs, but they have not booked for the winter quantities. Because everybody was very confident about the economic recovery, which happened in the last 6 months.

[Operator Instructions] The next question is from the line of Devendra Pandey from DP Financial Services.

Congratulations on good set of numbers. Sir, can you throw some light on our blended realizations for this quarter versus the same quarter last year and compared to the previous quarter?

You're talking about cotton segment or winter segment -- woolen segment?

I'm talking about the blended, but if you wish to give the numbers separately, that would be better?

I didn't understood. What you're saying, blended means what?

The overall net realization.

Okay. The gross margin is 47%. And last year, it was 48%. So it's a drop of around 100 basis points in the gross margin level?

No, no, no. I'm talking about the realization per piece?

See, we don't have a separate realization per piece as of now.

Okay. Okay. Okay. So do you have segment-wise realizations, by any chance?

Yes. We can definitely ask our finance department to send you the email -- to email you all the realizations of all the segments, cotton and winter segments.

Sure. Sure, sir. And my last question would be on our expansion plan. So can you give us some guideline on our CapEx plans for next 2, 3 years?

See, CapEx, we have already given the guidance, it should be around INR 10 crore to INR 15 crores for -- going forward for next 2 financial years. And this year, CapEx was, I think, around INR 12 crore as of date, and we expect INR 2 crores to INR 3 crores more in this 3 months. So it should be INR 15 crores. And going forward, the expansion plans, I think we're going to open another 25 EBOs in next last financial year. And this year, we've added around 17 as of date, and there are 3, 4 more are in the opening process in the next 1 quarter. And we are focusing a lot on the online sales, which I think Rishabh can talk about for LFS and online sales. I'll give this mic to Rishabh.

So as you've seen the online sales have grown, if you compared 9 months of this year with the last year, and we are continuing to focus on the online segment. We expect to grow by 35% to 40% next year also. And in terms of national chain stores, we're continuously adding stores, and we've also added some new partners. With the existing partners also, who are dealing only with the men's category, we've agreed to pilots with women and the kids categories as well. So these 2, and we are also increasing our focus on the corporate segment because over there good pricing power is there with us along with good payment terms. So that is one more segment where we are focusing our attention towards.

And I would like to add here that there is definitely -- we're seeing a good growth in coming up in textiles also, which I think this was the only segment in whole our Monte Carlo, which has grown despite the pandemic, and we see a good growth coming up in next financial year as well.

The next question is from the line of [ Mihir Desai from Desai Investments. ]

Sir, my first question would be on a macro strategy front. So I just wanted to know that, sir, from, say, 2 years down the line, how do we see our product or category diversification, sir?

I think this we have mentioned in our previous con calls also, that focus should be on the cotton segment, which is growing double digit. And also, it is one area which is present around the year. And geographically, also, we are present throughout like which can give us good traction in the coming 2, 3 financial years. But again, woolen is from where we started, and we're fundamentally very strong as far as our woolen segment is concerned. And this is also 1 segment which has grown despite pandemic in this financial year as well as we have seen the sales, which is -- which was 147; last year, it has grown to 153. So growth of around 5%, despite there is a production hiccups, despite labor disruptions. So I think the existing segments, which are woolen, which is our core business, will definitely keep on adding growth to the company's business and the newer segments, which is like kids, the Cloak & Decker, Rock It and our textile segment and the cotton segment will keep on giving the growth to the company. So all this combined together, we see that we should grow double-digit in next financial year as well on this basis.

Okay. So basically, the dependability on woolen would considerably decrease going forward, and kids and home textile should become double digit in, say, next 2 to 3 years?

I don't think that woolen will go down. Woolen will definitely grow, but it will grow less faster than the cotton segment and other segments. So definitely, the growth pillars would be the cotton segment, textiles and other areas, which have been growing faster than the woolen segments because the trend is becoming more and more casual. People are preferring more sweaters, sweatshirt and jackets, so that is why it is giving us more growth in winters as well. So minding all these factors, I think it should help us -- help the company to grow in the coming 2 financial years as well.

Understood. Sir, and just 1 on accounting questions, which I wanted to ask you that if I see the current quarter, that is Q3 FY '21, the cost optimization has been very much good. So if I want to compare this cost sequentially, like for coming quarters, should I believe that -- so basically, I'm asking this because now we are moving towards a normality or the normal business core. So how do you see this expenses increase? Like what can be a normalized expenses going forward, sir?

Thank you. It's a very good question. Definitely, I think in the COVID times, there have been some deduction of the salaries. There have been cut in the traveling cost. There have been cut in the advertising cost. There have been cut in other expenses, which was a need of the time -- need of the hour at that point of time. But I don't think that all these benefits will continue in the coming times. So there are some benefits, which are going to stay with us, which has taught us how to manage the business without traveling in some of the places. And there are some areas in advertising and business promotion, where we used to spend a lot. We used to have a trade shows twice in a year where we used to spend around INR 4 crores to INR 5 crores, which we have cut down in this financial year. And I think we'll have some savings in the coming years as well. So there are some areas, which will definitely continue in the future as well, and there are some areas where we don't have savings in the going forward. And also, I would say that [Foreign Language] in this time, there are a lot many things, which we have learned in 9 months, which has given a savings to the company, and those will also continue.

Correct, sir. And so sir, basic EBITDA margin, what we can assume, sir?

See, I think this quarter's EBITDA is exceptional. I don't think that it's easy to manage by cutting each and every cost, which we used to cut in this financial year. I think if we see the pre-COVID level EBITDA, that is very much possible, and improvement of EBITDA from pre-COVID level is definitely very much possible.

Okay. And just last question, sir, that the finance cost also would be at similar levels only?

Finance cost will be similar level. I don't see a much significant change in this level.

[Operator Instructions] The next question is from the line of Vipul Shah from RW Equity Advisors.

Sir, what we have seen is in a lot of companies, the working capital cycles have really benefited a host of companies. I presume for Monte Carlo also seems it's a fairly tightly run ship. The benefits of working capital would have flown in terms of increased cash flow from operations. Is that understanding correct, sir, for the 9-month period?

Yes, you are correct. Absolutely, correct.

So then, sir, from a stakeholder perspective, what Monte Carlo had done in 2019, and it is a stated objective of the company to consistently improve return ratios. So sir, is there any thought process or plans of another buyback right now with the Board, so that with the excess cash, which is there in the books consistently improving working capital and objective of improving return ratios, it should be a sort of win-win situation for all the stakeholders. So is the company planning to institute another buyback, sir?

To be very honest, this year has been a year for seeing a lot of changes which is happening in the company, and we were all discussing and deliberating on the issues how to survive this financial year, with definitely better than others than our peers. So I think focus was definitely on cutting the cost and also to make this company standout as compared to our peers in this financial year. So no thought has been given particularly in any Board meeting about the buyback or about any other area. I think because this was the year where we are just finding and accessing ourselves how we can move ahead in this pandemic. So definitely now -- I think most of the problems have been sorted out, and the country is progressing. Economic recovery is happening. Vaccination is continuing. So these things may come up in the Board meetings in the next financial year, as definitely there will be positive cash flows in the company. So company will do anything which is best in the interest of shareholders and its investors.

[Operator Instructions] The next question is from the line of [ Zaki Nasser, an individual investor. ]

See, this quarter, we -- our advertising expenses have come down notably. So would this be the difference -- would be the trade show expenses, which was not held in this quarter, sir? And my second question, again, would be, we were importing some blankets for retail into the Indian markets from China. So that import is still on? Or I mean that has become slightly difficult to do, sir?

So the first question was about advertising costs and what was the second question? Import of blankets?

About import of blankets from China...

Okay. So see, as far as advertising cost is concerned, definitely, it has come down in this financial year as compared to last year because effort was to cut down the cost. And I think it will rise in the next financial year. There have been no trade shows also in this financial year. We usually used to have for our booking and most of the time online booking has been done, which has saved the cost. So that has saved almost around INR 4 crores to INR 4.5 crores in this financial year. And there is a possibility of trade show coming in the future as well, so it can increase the cost at that point of time. In advertisement, we have gone more for digital advertising as the theaters were closed. We used to spend around INR 5 crore to INR 6 crore on theaters in full financial year, but no movies have been released, and there have not been any advertising as far as cinemas are concerned. So that has also saved the cost. So going forward, we think that we should be around 2% to 3% of advertising spend we'll be doing on the turnover, which we used to do 3% to 4% in the last 2, 3 years. So as far as import of blankets is concerned, definitely, it is on. We are importing blankets, and we have imported more blankets as compared to last year as demand was more, as rural area was never effected. So's that is 1 area where people give blankets in the marriages and wedding season, which was still on. And so we were not affected as far as our textile sales are concerned. Even though we improved from last financial year, it has improved by around 5%, even though every segment was down, but the blanket segment was one, which has actually improved as compared to last year.

[Operator Instructions] The next question is from the line of Mihir Desai from Desai Investment.

Sir, just a follow-up question. I just wanted to ask regarding the health care segment, sir. I think we had mentioned something in quarter 1 or something?

See, health care segment, we have started seeing the need of the masks and the PP kit by a medical fraternity. It was more of a social service from our end. I won't say that it was a proper business proposition at that point of time. The need was to make available masks to the hospitals and to the medical fraternity. So we did imported some machines, and we produced, I think, around 40 lakh, 50 lakh masks. I think only 3 lakh to 4 lakh masks are pending, which we already sold out. And now the demand for masks and PP kit is almost 0. There is no demand right now. So that segment we already closed.

The next question is from the line of Devanshu Bansal.

Sir, our relative performance has been much better than the industry. The industry players have reported 20%, 30% decline, and we have kind of reported flattish quarter. So obviously, we are gaining market share here. So what according to you has held if you can categorize in terms of key things that we have done in terms of channels like EBO, MBO?

I think the first and foremost thing which has helped us to have the flattish quarter rather than a decline as it happened in other brands was the confidence we have in our brand. I think when we were in March and April, when everybody was cutting down their production, we were just thinking of how we can increase our production and how we can continue our operation and how we can start the operation despite the difficulties which we were facing in labor disruptions and other areas. So I think that was a plus we have in our brand, and most of the brands basically could not produce the winter garments. And also, they were very apprehensive of the fact that [Foreign Language] how this COVID will last and how this will affect. So we took a risk. We just streamlined our production lines, and we just did what our best we could do to produce the required garments, which were required for our EBOs and LFS. So I think that has helped the brand to have the pre-COVID level sales, which we did in last financial year. So that was -- I think definitely, I would say that [Foreign Language] this has been our best quarter till date as far as Monte Carlo is concerned. And I have seen the results of our other apparel brands also. You are right, there have been decline from 20% to 30% and also there have been decline in EBITDA and margins as well. I think this has helped us planning in advance about the production and also about the demand prospects, which is coming up on the way.

Right. And sir, if we take only about MBO channel, obviously, that remains impacted as you also highlighted like only about 1,500, 1,600 distributor placed orders with us. So just on this, how our secondary sales in the MBO channel, maybe that may help in the primarily sales in the coming quarters?

I would ask Rishabh to answer this.

See for the -- in MBO, we have 2 segments. One is the outright MBO sales and the second is SIS sales. It is -- we don't track the secondary sales of the MBO market. It is just through the information that we hear from agents and retailers. As far as SIS sales are confirmed, it is at par with last year. So we are having the same sell-through rate as we had last year, so -- and we are expecting a good growth in the booking for next year as well. For MBOs, unfortunately, we do not have the secondary sales data, but the feedback has been good in that segment as well.

Outright sales.

That is an outright sale for us.

The next question is from the line of C. S. Chaudhry from CFS Financial Services.

I have a question on competition. I have noticed that there have been some international brands, international chains, which are into winter garments, things like Uniqlo and all very well-established products, very well-established brands, how do they affect you?

See, Uniqlo has come up in last 2 financial years. And if we see Zara and H&M, they're almost 6 to 7 years back. Definitely, they are present in the market. But I think that we have our own niche as compared to some of our loyalty customers, some of our regular customers and loyal customers to Monte Carlo brand. We have been there in this market from last 30 years. So we have a very loyal base of customers, so which is going -- which is continuing to support the brand. Even in this pandemic also, we have seen that the customers are definitely supporting the Monte Carlo brand vis-à-vis other brands. So yes, those brands are definitely providing a competition to us, but they are not present in all the cities. They are only present in some of the metros. And we are present almost, I think, every nook and corner in northern, eastern and central region. So that is the base we have as compared to those brands. But definitely, yes, the competition is still there and competition can only help us to improve our service and our products as well.

Yes. Just to press on a little bit, I do appreciate the management, as Monte Carlo brand is a very, very strong brand. So what I was actually looking at was the positivity that once you have a strong brand and other brands also who have strong brands in the international market, when they come in, they make an impact. So same way in the innovative marketing like digital and online, I think Monte Carlo, looking at it positively, should endeavor to make much a better mark and give a run for the money to these international brands. Do you have a comment?

We're doing that. We have been doing our best to whatever you said that [Foreign Language] you can run for a money. So we are trying our best. There are areas where I think these brands have not reached the many cities in India as well as in many other parts of the country. So we are present there, and we welcome them to come over there and give us the competition. At the same time, they are present in metros, and we have seen that they are present in Delhi or in some other areas, our sales have actually grown, even in the same mall, where they are present, like they were not there before. If we compare our peers of last 2, 3 years, actually, we have grown even if those brands have come up. So definitely, every brand has its own advantages and disadvantages. We have our loyal base of customers, which is supporting us. And definitely when the new brands comes like Uniqlo, H&M and Zara, they also give us more things to work harder on our products and our designing team is actually working harder on them so that we can definitely compete with them in the future.

One last question that during this COVID times, there has been a general perception that there has been a very tough time for small and medium enterprises. And in the kind of -- in every product line, in every manufacturing activity, there are suppliers who are in the small and medium sector as well as end product industry is also there in the small and medium sector. So do you think that in terms of competitive intensity, you would have been better off because of the small and medium sector has been very seriously affected as far as your end product line is concerned, has the competitive intensity decreased in any way? And also, in terms of your supply chain, any vendors, did you have any problems that some of the small and medium people perished or went down and were not able to recover? That's my last question, sir.

Yes. Thank you. I think first, I will come with the first -- second part, the vendor part. I think it was our responsibility and our duty to support the vendors in the pandemic. So at that point of time, there has been a crunch in the liquidity. The small manufacturers, our vendors, they didn't have money for -- to pay the labors. So we paid them in advance. We also paid them the cash payments, whenever they supply the goods just to support our vendor base because they were the one who were supporting us from last so many years, so it was our duty and responsibility to help them in this time of pandemic so that they can also survive and supply us in time, and that actually happened. So when we supported them in the March and April, so they supplied us the goods in time. And it didn't happen with some other small vendors who were there with other brands as they have delayed the payments. So those vendors also approached us, "Sir, please give us the goods, as Monte Carlo is helping their vendors." So I think these kind of gestures and these kind of things we need to do even as a humanity also and as well as in the interest of business also. If you are not supporting your vendors and partners, definitely, you won't be supported in your business as well. So that's what we have learned that in the time of difficulties, we have support each other to get things going. So the second question was like -- what was the second question?

Reduction in competitive intensity at the end product side.

Yes. So what happened is that [Foreign Language] at that point of time, when the pandemic happened, so one problem was the lockdown. So okay, that many people knew that [Foreign Language] lockdown is coming. But the second biggest problem which was coming was going back of the labor. So the government has not done anything at that point of time that how to stop the labor, immigrate labor, which was staying in -- like in various cities, industrial city like in Ludhiana also. And the industrialists were not paying the money to them. So the workers didn't have any options except to go back to their homes and have their living over there. But we -- what we did is that we paid the labor. We knew that this pandemic is not going to last for months. So it's only a question of 15 days, 20 days or 1 month of time. It doesn't bother us to -- because they were working with us from last so many years. So we helped them to stay. And that is one area, which has helped to resume the production in April itself. Most of the, I think, companies, they could not start their production in July as well because of labor production. But we could start the production by April end itself, which was, I think, one of the few in industry. And yes, there were many small and medium enterprises, as you've rightly said, because labor was not there, because finances were not there, so they could not start the operations till July. So that has affected them badly. And that's also one of the reasons that some of the industry could not produce the required goods in time, and they could not supply timely goods to various brands and to the retailers also.

The next question is from the line of Devanshu Bansal.

So how is the discounting trend in the market as of now, which you're seeing in the month of January?

It has not changed. It's same as last financial year. People knew that the discounts are coming every year. And so normally, what happen is that after 20th of December, the sales normally go down because they knew they have the brand, particularly international brands because they don't have patience at all. So they just start the discount in the mid-December as well. So we need to -- when everybody else is on the discount season, so we just cannot say that we cannot go for the discount. So we have also given a discount in last week of December. And January is, as usual, everybody is giving 40%, 30% discount. In February, first week, everyone is giving a flat 50% discount, which is still continuing in Monte Carlo as well. So discount season is almost same as compared to last year.

Okay. And 1 last question from my side. So you mentioned that we do not have much presence in exports currently. But with Government of India announcing this textile parts, 7 textile parts. Any benefits then we -- that we can derive out of these incentives?

We need to see -- read the policy thoroughly. Unless and until we go through it thoroughly, I think it's not prudent on my part to comment on this policy.

[Operator Instructions] As there are no further questions, I will now hand the conference over to the management for closing comments.

Once again, thank you all on behalf of Monte Carlo's management. And please feel free to write if there is any query, which we can definitely, have not been answered in this conference call. Thank you very much.

Thank you very much. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.