Mirza International Ltd Management Discussions.


The COVID-19 pandemic resulted in disruption of economic activities and global economic downturn, the most severe one since the Global Financial Crisis. The lockdowns and social distancing norms brought the already slowing global economy to a standstill. Governments and central banks across the globe deployed various policy tools to support their economies such as lowering policy rates, quantitative easing measures, among others.

India adopted a four-pillar strategy of containment, fiscal, financial and long-term structural reforms:

Calibrated fiscal and monetary support was provided, cushioning the vulnerable sections during the lockdown and boosting consumption and investment while unlocking of economic activity.

A favorable monetary policy_ ensured abundant liquidity and immediate relief to debtors while unclogging monetary policy transmission.

As per the estimates of Gross Domestic Product (GDP) for the first quarter (Q1) of FY 2020-21 released by the National Statistical Office (NSO), Ministry of Statistics & Program Implementation (MoSPI), the real GDP in India contracted to (-)24.4% during the first quarter of FY 2020-21 as against 5.4% growth in Q1 of FY 2019-20. Indias GDP growth rose to (-)7.4% in Q2 (as against 4.6% growth in Q2 of FY 2019-20), a sharp rebound from the pandemic induced decline in Q1.

The mining sector is estimated to contract by 12.4%, manufacturing by 9.4% and construction by 12.6%. The utilities sector has shown a sharp recovery and is set to register a positive growth of 2.7% in FY 2020-21. Within service sector, contact sensitive sectors like trade, hotels, transport & communication are estimated to contract by 21.4%.

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. With an improvement in the economic scenario, there have been investments across various sectors of the economy. In 2020, the total deal value in India stood at US$ 80 Billion across 1,268 transactions. Of this, M&A activity contributed 50% to the total transaction value. Private Equity - Venture Capital (PE-VC) sector recorded investments worth US$ 47.6 Billion across 921 deals in 2020.


The Indian footwear industry holds a distinguished reputation in the Indian economy owing to its potential for employment, especially for the economically weaker sections through foreign exchange earnings and its emergence as a champion sector in recently announced "Make in India 2.0" initiative by the Government of India.

The major production centers in India are Chennai, Ranipet, Ambur, Mumbai, Kanpur, Jalandhar, Agra, Delhi, Karnal, Ludhiana, Sonipat, Faridabad, Pune, Kolkata, Calicut and Ernakulam. About 1.10 Million are engaged in the footwear manufacturing industry.

The leather industry is bestowed with an affluence of raw materials as India is endowed with 21% of world cattle & buffalo and 11% of world goat & sheep population. Added to this are the strengths of skilled manpower, innovative technology, increasing industry compliance to international environmental standards and the dedicated support of the allied industries. The leather industry is an employment intensive sector, providing jobs to about 3.00 Million people, mostly from the weaker sections of the society. Women employment is predominant in the leather products sector with about 30% share.

India is the second largest producer of footwear and leather in the world. The leather industry is spread in different segments namely Finished Leather Footwear, Footwear Components, Leather Garments and Leather Goods including Bags, Saddlery, Harness and Leather Gloves.

Though India is already among the worlds top 10 largest footwear exporters, Mirza International Limited (Mirza) believes that India has accelerated potential available in the overseas markets to grow its share. Some of the largest importers from the Indian footwear industry include the USA, UK, Germany, France, Italy and UAE.

100% FDI is already permitted in the sector under the automatic route. The Government is implementing the Indian Footwear, Leather and Accessories Development Programme (IFLADP) with an outlay of Rs. 2,600 Crore wherein financial support is provided for core areas namely capacity augmentation and technological upgradation of production units, upgradation of CETPs, HRD, establishment of institutional facilities, etc. Thus, the huge market potential combined with support measures and ease of doing business measures of the Government have made Indian leather and footwear industry an attractive investment destination.

Indias Leather Exports

India is the second largest exporter of leather garments, third largest exporter of saddlery & harness and fourth largest exporter of leather goods in the world. According to the Council for Leather Exports (CLE), export of footwear, leather and leather products from India stood at US$ 3.68 Billion in FY 2020-21 as compared to US$ 4.6 Billion in FY_2019-20. Decline in exports can be attributed to the impact of the COVID-19 pandemic on the key markets of the European Union, the United Kingdom and the United States.

Share of Leather & Leather Products in FY 2020-21 (%)

The major markets for Indian leather & leather products are US with a share of 17.52%, Germany 13.08%, U.K. 8.88%, Italy 6.75%, France 6.67%, Spain 4.18%, Netherlands 4.22%, U.A.E. 2.17%, China 2.58%, Poland 2.34%, Belgium 2.17% and Australia 2.04%.

Key Strengths of Indian Leather Sector



The Indian footwear industry is underpenetrated with per capita consumption considerably lower than the global average and developed countries average of 3 pairs and 6-7 pairs, respectively, indicating scope for significant market growth. With rising disposable incomes and emergence of fashion conscious and aspirational consumers, the Indian footwear market is well positioned to achieve double digit growth over the next few years. Footwear, being a labor-intensive industry, also presents a unique ‘social opportunity with a potential to generate employment for over 20 Lac people over next few years.

Your Company is always keen to experiment with new ideas and activities and feel appreciative to fulfil the expectations of consumers. Recognizing the growth of the footwear industry over the years, Mirza strives to innovate not only in its products, but also in the way of presenting the brand to the consumer and the same has become a part of brand identity. The Company ensures to stand by its values which is its inherent strength.

Threats and Challenges:

Economic and political factors, both national and global, which are beyond control may affect the footwear industry and performance of the Company.

These factors include interest rates and its impact on availability of retail space, rate of economic growth, fiscal and monetary policies of governments, inflation, defiation, consumer credit availability, consumer debt levels, tax rates and policy, unemployment trends, terrorist threats and activities, worldwide military and domestic disturbances and conflicts, pandemics and other matters that influence consumer confidence and spending. The Company is subject to risks arising from material price and exchange rate fluctuations which may adversely affect our financial performance. During the normal course of business, the competition is ever increasing from domestic and international brands. The availability and retention of talent, tackling counterfeit goods, product quality management, innovation and new product development, rapidly changing consumer preferences, impact of strategic and marketing initiatives, data security, etc. may affect the Company. Major challenges faced by the Company across its manufacturing units include labor availability and management, technology developments, among others.

Your Company monitors its major risks and concerns at regular intervals. Appropriate steps are taken in consultation with all concerned including the Risk Management Committee and the Audit Committee of the Board to identify and mitigate such risks.


Risks are an integral part of business environment and it is essential that the Company should have suitable processes in place which are capable of identifying and alleviating the risks concerning its business. Mirza believes that adequate risk management ensures controls and monitoring mechanism for the smooth and uninterrupted running of the Companys business. The Board is responsible for reviewing the risk policy of the Company, whereas the Audit Committee of the Board is responsible for evaluating the risk management systems in the Company. The identified risks and concerns before the Company are competitive business environment, varying consumer preferences, import of cheap complete shoes, showroom/office occupancy cost, foreign currency fluctuations and the fragmented structure of the industry.

During the normal course of business operations, the Company has been subjected to several legal cases in connection with or incidental thereto. These litigations include civil matters, direct and indirect tax related cases, old labor matters and infringement of intellectual properties like Trade Mark and Designs etc. filed by and against the Company. These cases are being pursued with due importance and in consultation with outside legal experts wherever required in respective areas.

Your Directors believe that the outcome of these cases is unlikely to cause a materially adverse effect on the Companys profitability or business performance. Your Company has a contingent liability of Rs. 8,609 Lac as on 31st March, 2021 as compared to the previous year

Rs. 19,056 Lac as on 31st March, 2020.


Internal Control System serve multiple needs in any organization. Well-designed internal control systems lay down the framework for day-to-day operations and provide guidelines for employees and, most importantly, provide a certain level of security against a variety of risks such as fraud and misappropriation. The primary responsibility for the development and maintenance of internal control rests within an organizations management. The internal control evaluation involves everything management does to control the organization in the effort to achieve its objectives. Your Companys control system and procedures are regularly reviewed for relevance and effectiveness and modified as per business needs.

The Company has an ef_cacious Audit Committee consisting of Independent Directors, the details of which have been given in the Corporate Governance Report. An independent Chartered Accountant firm has been appointed as Internal Auditors and effectiveness of internal control mechanism is reviewed by these Internal Auditors at regular intervals. The Audit Committee reviews audit reports submitted by the Internal Auditors from time to time. Suggestions for improvement are considered by the Audit Committee and its decisions are followed by the Management through implementation of the corrective actions and improvements in business processes. The Committee also meets, from time to time, the Companys Statutory Auditors to ascertain, inter alia, their views on the adequacy of internal control systems and also keeps the Board of Directors informed of its major observations on a regular basis.


For Mirza, people are its strongest asset. The Company invests in building best-in-class teams, led by exceptional professionals. Over the years, the Company has nurtured a meritocratic, empowering and caring culture that encourages excellence. Mirza encourages the development of talent by providing its people with the opportunities to sharpen their capabilities, encouraging innovation, lateral thinking and developing multiple skills. Through this approach, Mirza prepares its people for future leadership roles.

The management of Human Resources (HR) at Mirza is focused on transformational HR processes and HR policies, which support the constant reinforcement of its competitive advantage. The Companys HR strategy aligns its HR policies, standards and roles & responsibilities with the overall business strategy, giving the department the ability to process the requests of different business units successfully.

Human capital is one of the key resources for Mirza which ensures business sustainability and continuous growth. Cognizant of the importance of human resources, the Company constantly works towards building a safe, conducive and productive environment for all its employees at all operations. Regular and periodic skill and personnel development trainings are provided to all employees. The Companys open-door policy ensures a transparent and engaging work environment. The employees are encouraged to directly communicate with the management and express their views. Ensuring high productivity, employee satisfaction and persistent motivation are the key focus areas of the HR team. The management records its sincere appreciation of the efforts of all its employees.



Mirza is committed to carrying out its operations free from accidents and occupational illnesses. It strives for implementation of the best possible practices for ensuring the safety of all its stakeholders, including employees and contractors. The Company firmly believes that providing safe working conditions to its workforce is not only the statutory requirement, but also its moral responsibility.


A team of highly qualified, experienced and skilled professionals has been deputed to provide the required support to the management on occupational health, safety and fire-related matters. The Company ensures the latest in-built safety technologies and systems in all new projects and expansions to safeguard its operations. State of-the-art fire prevention and mitigation technologies are in place across its operations. These standards address General Safety, Occupational Health, Process Safety and Emergency Preparedness.


The Companys operations conform to the International Occupational Health & Safety Management Standard ISO 45000, which is certified by the worlds renowned external accredited agencies. Continued certifications is subject to periodic surveillance audit by external accredited agencies for ensuring the consistency of health and safety considerations in the Companys operations.


Health and safety of employees is paramount to the Company and part of the management responsibility, particularly in the light of the COVID-19 pandemic. The Company has implemented several safety measures as prescribed by the Government including wearing of masks and gloves, sanitization of workplaces and facilities, social distancing, among others. In addition, the Company conducted training workshops and programs to create awareness among its employees and customers and engage the line management in the safety activities.

Towards this, the Company has initiated a number of safety training programs for its workforce and engaging the line management in the safety activities.


The key indicators of the financial performance of the Company for the Financial Year 2020-21 are as under:

Sl. No. Particulars FY 2019-20 FY 2020-21
1 Total Revenue 1,26,185 1,04,806
2 Total Expenses including Finance Cost & Depreciation 1,19,746 1,03,760
3 Profit/Loss before Exceptional items (1-2) 6,439 1,046
4 Add: Exceptional Items [Gain (+)/ Loss(-)] - -
5 Profit/Loss from Continuing Operations Before Tax (3-4) 6,439 1,046
6 Tax Expense 1,673 308
7 Profit/Loss from Continuing Operations After Tax 4,766 738
8 Profit/Loss from Discontinued Operations After Tax - -
9 Profit/Loss for the year after Tax 4,766 738
10 Other Comprehensive Income (2) 113
11 Total Comprehensive Income (9+10) 4,764 851
12 Basic EPS (per share of Rs. 2/-) (in Rs.) 3.96 0.61
13 Diluted EPS (per share of Rs. 2/-) (in Rs.) 3.96 0.61


SEGMENT REVENUE FY 2019-20 FY 2020-21
a Shoe Division (Footwear) 91,296 61,763
b Tannery Division (Leather) 18,953 12,719
c GAR & ACC Division 27,940 34,258
d Unallocated 167 124
TOTAL 1,38,356 1,08,864
Less: Inter-segment Revenue 12,171 4,058
Total sales/Income from operations 1,26,185 1,04,806
Add: Other Income - -
Total Revenue 1,26,185 1,04,806
SEGMENT RESULTS FY 2019-20 FY 2020-21
a Shoe Division (Footwear) 10,042 5,179
b Tannery Division (Leather) (1,966) (2,036)
c GAR & ACC Division 4,172 2,843
d Unallocated 167 124
TOTAL 12,415 6,109
Less: Finance Cost 4,557 4,100
Add: Exceptional items 1,420 963
Profit from continuing operations before Tax 6,439 1,046


In compliance with the requirement of the Listing Regulations, the key financial ratios of the Company along with explanation for significant changes (i.e. for change of 25% or more as compared to the immediately previous financial year will be termed as ‘significant changes), has been provided hereunder:

Sl. No. Particulars As on 31.03.2020 As on 31.03.2021 % Change
(i) Debtors Turnover (times) 6.33 7.05 11.37
(ii) Inventory Turnover (times) 3.05 2.46 (19.34)
(iii) Interest Coverage Ratio (times) 3.80 2.87 (24.47)
(iv) Current Ratio (times) 1.53 1.89 23.53
(v) Debt Equity Ratio (times) 0.45 0.22 51.11
(vi) Operating Profit Margin (%) 8.71 7.32 (15.96)
(vii) Net Profit Margin (%) 3.78 0.81 (78.57)
(viii) Return on Net Worth (%) 7.59 1.16 (84.72)


The Company has, in the preparation of its financial statements, followed the treatment as prescribed under the applicable Accounting Standards (IND AS) in line with the provisions of the Companies Act, 2013. If and when a treatment is different from that prescribed, the Accounting Standard would be followed, the fact would be disclosed in the financial statements, together with the managements explanation as to why it believes such alternative treatment is more representative of the true and fair view of the underlying business transaction.


Statement in this Management Discussion and Analysis describing the Companys objective, projects, estimates and expectations may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. Several factors could make a significant difference to the Companys operations. These include economic conditions, government regulations and tax laws, political situation, natural calamities, among others, over which the Company does not have any direct control.