Mirza International Merger Approved by NCLT, Tax Bill Looms

Mirza International Ltd's merger with RTS Fashion Ltd has received NCLT approval, though overshadowed by an outstanding tax demand of ₹7,26,66,323 and recent quarterly losses.

NCLT Approval Granted

The National Company Law Tribunal (NCLT), Allahabad Bench, has approved the merger of RTS Fashion Limited with Mirza International Limited. The merger will officially take effect on April 1, 2025.

Why the Merger Matters

This merger is a key step in Mirza International's strategy to streamline its business. By merging a wholly-owned subsidiary, the company aims to combine resources for greater operational synergy and improved business efficiency. The move points towards a more integrated model, potentially simplifying management and compliance.

Company Background

Mirza International Limited is an established name in the leather footwear and leather products market, known globally for brands like Thomas Crick. This merger is part of a larger, multi-stage restructuring. Previously, a scheme was approved that included this amalgamation and the demerger of Mirza International's branded business (Redtape) into a separate company, Redtape Limited. RTS Fashion Limited, the subsidiary being merged, is based in Dubai.

Merger Effects

Once the merger is effective:

• All assets, rights, and powers of RTS Fashion Limited will transfer to Mirza International Limited.
• All liabilities and obligations of RTS Fashion Limited will be assumed by Mirza International Limited.
• Employees of RTS Fashion Limited will become employees of Mirza International Limited.
• Any ongoing legal proceedings involving RTS Fashion Limited will continue under Mirza International Limited.

Key Risks

A significant financial risk stems from an outstanding tax demand of ₹7,26,66,323, noted by the Income Tax Department. Mirza International has stated it will discharge any future liabilities related to this demand. Recent financial performance has also been challenging, with declining sales and net losses reported in recent quarters. Additionally, the company faced a search and seizure operation by tax authorities in September 2025, the implications of which are still developing.

Competitive Landscape

Mirza International operates in the competitive Indian footwear and leather goods market. Key competitors include Bata India Ltd, Relaxo Footwears Ltd, Metro Brands Ltd, and Liberty Shoes Ltd. These companies often face similar challenges such as raw material costs, shifting consumer preferences, and broader economic factors.

Financial Snapshot

For the financial year ending March 31, 2025, Mirza International reported revenue of ₹583 crore, with a -9% CAGR. In the quarter ending December 2025, the company posted a consolidated net loss of ₹7.31 crore.

Next Steps for Investors

Mirza International must file a certified copy of the NCLT order with the Registrar of Companies within 30 days. The company also needs to complete filings for its revised memorandum and articles of association. Crucially, it must ensure compliance with income tax return filings within six months of the order. Investors will watch how the company integrates RTS Fashion's operations and handles its tax liabilities.