| Mirza International Limited | ||||||
| Ratings downgraded to 'Crisil BBB+/Negative/Crisil A2' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has downgraded its ratings on the bank facilities of Mirza International Limited (MIL) to ‘Crisil BBB+/Negative/Crisil A2’ from ‘Crisil A-/Negative/Crisil A2+’.
The rating action reflects the weaker-than-expected operating performance of MIL during fiscal 2026, with revenue and profitability declining compared with the previous fiscal as well as our expectations. The company reported operating income of Rs 425 crore in the first nine months of fiscal 2026, with revenue for the full fiscal estimated at Rs 525–530 crore, down ~9% on-year because of continued weak demand in key overseas markets such as the US and the UK, along with pricing pressure. Export order inflow is expected to continue to moderate in the near term, which will keep MIL’s business risk profile under pressure. While tariff developments in the US are currently favourable, there is limited clarity on the timing and extent of recovery in demand, and hence, the level of revenue growth from overseas markets remains monitorable. The decline in exports is being partially offset by the domestic business, supported by orders from group company, Red Tape. However, the segment’s contribution to overall revenue is less than 20%.
Operating margin fell to ~5.7% in the first nine months of fiscal 2026 (~6.6% in the corresponding period of fiscal 2025 and ~6.0% for fiscal 2025) and is expected to remain at 5.4–5.8%. The decline was primarily due to pressure on realisations amid higher discounting in the second half of fiscal 2026, particularly for US orders, along with operating deleverage. The tannery segment continues to incur losses due to low capacity utilisation, thereby weighing on overall profitability. Consequently, return indicators remain weak, with return on capital employed estimated below 5% for fiscal 2026.
The ratings continue to factor in MIL’s established presence in overseas markets, integrated manufacturing operations, and the extensive experience of the promoters in the leather and footwear industry. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of MIL and its subsidiaries as all the entities are engaged in the same business and have common promoters.
Please refer to Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Extensive experience of the promoters and integrated operations The promoters’ experience of four decades has enabled MIL to maintain its position in the international leather footwear market . MIL majorly sells private label footwear along with its own brands—Thomas Crick, Off The Hook London and Oaktrak—in the international market. It also undertakes made-to-order contracts for reputed brands in the overseas market. The operations are backward integrated with an in-house tannery enabling conversion of raw hide into finished hide, thus enhancing quality control. Though the tannery business has been incurring losses owing to low utilisation of large plant capacity, MIL is focusing on reducing the losses through cost cutting measures.
Adequate financial risk profile The financial risk profile remains adequate, supported by low leverage and estimated healthy networth of ~Rs 570 crore as on March 31, 2026. The company has negligible long-term debt, with total debt largely comprising working capital borrowings and bill discounting facilities. |
Key Rating Drivers - Weaknesses Sustained moderation in the business risk profile The business risk profile has weakened, reflected in sustained moderation in operating performance in fiscal 2026. The company reported revenue of ~Rs 425 crore in the first nine months of fiscal 2026 with revenue for the full fiscal estimated at Rs 525–530 crore, down from ~Rs 581 crore in fiscal 2025 because of subdued demand in key overseas markets such as the US and UK, and continued pricing pressures. Operating margin declined to ~5.7% in the first nine months of fiscal 2026 from ~6.6% in the corresponding period of the previous fiscal and ~6.0% for fiscal 2025, and is expected to remain at 5.4–5.8%, primarily due to operating deleverage and higher discounting, particularly in international markets. Additionally, the tannery segment continues to incur losses due to low capacity utilisation, thereby impacting overall profitability. Consequently, return indicators are expected to remain weak.
Vulnerability to fluctuation in foreign exchange (forex) rates MIL’s business operations involve import of key raw materials such as cowhide, while exports constitute a significant share of revenue (~83% in the first nine months of fiscal 2026), rendering the company vulnerable to fluctuations in forex rates. However, the company mitigates this risk through a policy of hedging its net forex exposure through forward contracts. |
Liquidity Adequate Liquidity remains adequate, supported by unencumbered cash and fixed deposits of ~Rs 10 crore as on September 30, 2025. The company has access to working capital limits of ~Rs 95 crore (at standalone level), which were utilised 14% on average for the 12 months through January 2026. The absence of any major debt-funded capex and low debt obligations support the liquidity position. |
Outlook Negative Crisil Ratings believes the business risk profile of MIL will continue to be under pressure due to lower ramp-up in order inflow from key overseas markets, though improvement is expected from fiscal 2027. Scale up of operations and improvement in operating margin remain monitorable. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company MIL was incorporated in 1979 as a private limited company and was reconstituted as a public limited company in fiscal 1994, following a public issuance of shares. The company manufactures footwear and finished leather and sells products under its private label brands—Thomas Crick, Off The Hook London and Oaktrak—in the international market and to various brands (white label). Around 85% of the revenue comes from exports. MIL exports to ~24 countries with the UK and the US constituting ~64% of revenue in fiscal 2025. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
&Includes packing credit and bill discounting as sublimit of Rs 21 crore each, letter of credit and bank guarantee as sublimit of Rs 10 crore each |
Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||
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^Includes bank guarantee as sublimit of Rs 0.5 crore
Criteria Details
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