Press Release March 27, 2026 FRATELLI WINES PRIVATE LIMITED Rating Downgraded

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	114.50	ACUITE BB+ | Stable | Downgraded	-
Total Outstanding	114.50	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuité has downgraded its long-term rating to ‘ACUITE BB+’ (read as ACUITE double B plus) from ‘ACUITE BBB-’ (read as ACUITE Triple B minus)  on the Rs 114.50 crore bank facilities of Fratelli Wines Private Limited (FWPL). The outlook is revised to ‘Stable’ from ‘Negative‘ Rationale for rating downgrade and revision in outlook The rating downgrade considers the subdued operating performance of the company is current fiscal which is expected to continue in near to medium term and average financial risk profile along with the stretched liquidity position of the company. The rating is also constrained by the working capital-intensive operations and exposure to regulatory risk. Nevertheless, the rating derives comfort from the experienced management and the company’s established operational track record of over a decade.

About the Company

Delhi based Fratelli Wines Private Limited (FWPL) was incorporated in 2007 and commenced its operations in 2011. The company is engaged into processing of wine with European technological expertise for all stages of production from fermentation to bottling. FWPL is operating through its three wineries based in Maharashtra and Karnataka. FWPL currently has a production capacity of over 5.4 million litres per annum. The company has become wholly owned subsidiary of Fratelli Vineyards Limited (FVL) in FY2024-25 through share swap transaction. The Company's directors are Mr. Gaurav Sekhri, Ms Puja Sekhri, Mr. Mayank Singhal, Mr. Alessio Secci, Mr. Sanjay Jain,  Mr. Aditya Sekhri and Mr. Sanjay Banati.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has taken a standalone view of the business and financial risk profile of Fratelli Wines Private Limited (FWPL).

Key Rating Drivers

Strengths

Experienced Management and long operational track record The promoters are seasoned players in the wine processing industry. Further, Fratelli has been a brand across Karnataka, Maharashtra, Delhi, Telengana and Andhra Pradesh since 2011. Moreover, having around a decade of operational track record has helped the company to maintain strong relations with its customers as well as with suppliers. The company has a presence in Hospitality as well.  Acuité believes that the promoters' experience and healthy relations with its customers will continue to benefit company over the medium term.

Weaknesses

Subdued operating performance The company reported subdued operating performance with revenue of Rs. 154.99 crore in FY2025 as against Rs.184.98 crore in FY2024, Further, the company reported net revenue of ~Rs. 124 Crore in 9MFY2026. The decline in revenues was primarily due to regulatory disruptions that prevailed in Telangana and Maharashtra. The profitability also declined sharply wherein FWPL reported operating level losses of Rs. 0.57 Cr. in FY2025 as against profit of Rs. 27.99 Cr. in FY2024, primarily due to the impact of the newly implemented Labour Codes and increased strategic expenditure towards brand building, talent expansion, and infrastructure development initiatives. Further, the EBITDA margin improved to an extent and stood at ~3 percent in 9MFY2026, due to controlled expenditure & saving in electricity expenses due to solar installation, however expected to remain at a lower side as compared to previous years. The PAT level also company reported losses of Rs. 12.84 Cr.  in FY2025 as against profit of Rs. 9.30 Cr. in FY2024, primarily due to higher finance costs arising from borrowings undertaken for capacity expansion, along with increased depreciation expenses following the commissioning of new assets. Acuite believes, the operating performance would remain subdues in near to medium term on the back of challenging regulatory environment.   Average financial risk profile  The company has an average financial risk profile marked by average net worth, low gearing and weak debt protection metrics. The tangible net worth of the company increased and stood at Rs. 140.61 crore as on March 31, 2025, as against Rs. 96.35 crore as on March 31, 2024, primarily driven by an increase in share capital and share premium following Fratelli Vineyards Limited’s acquisition of 100 percent equity in FWPL. Consequently, the company’s gearing (Debt/Equity) improved to 0.82 times as on March 31, 2025, as compared to 1.09 times as on March 31, 2024. The total debt of the company consists of long-term debt of Rs. 49.81 crore, unsecured loans from promoters/directors of Rs. 1.97 crore and short-term debt of Rs. 63.25 crore as on March 31, 2025. The interest coverage ratio (ICR) significantly deteriorated and stood at 0.04 times as on March 31, 2025, as against 2.96 times as on March 31, 2024. The Debt service coverage ratio (DSCR) stood at 0.28 times as on March 31, 2025, as against 1.68 times as on March 31, 2024.  Intensive working capital operations  The company’s working capital operations are intensive marked by high gross current assets (GCA) of 455 days as on March 31, 2025, as against GCA of 367 days as on March 31, 2024, majorly due to increased debtors and inventory days. The inventory days stood at 194 days for FY2025 as against 153 days for FY2024. The company needs to do ageing of the wine due to which the inventory levels are high. Also, the grapes procurement season is from December to March, therefore, the creditors days stood high at year end at 206 days for FY2025 against 223 days for FY2024. The debtors’ days increased and stood at 206 days for FY2025 as against 172 days for FY2024 majorly due to overdue amount from TSBCL (Telangana State Beverages Corporation Limited). However, Government payments may take time but there is no default risk. The average utilization of the bank limits is high at around 93 percent for twelve months ending December 2025. Acuite believes that the working capital management of the company will continue to remain a key rating sensitivity going ahead. Exposure to regulatory risk The Indian alcohol industry is highly regulated at almost every stage in the value chain. Moreover, every state has its set of regulations with respect to distribution and retail channels, registration, taxation, and pricing of alcohol. The industry is expected to remain highly regulated by the government going forward exposing the business risk profile to adverse regulatory changes. Furthermore, players within the industry are susceptible to high excise duties; any adverse change in excise duties can weaken profitability, and consequently, affect its credit risk profile.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

Consistent growth in revenues and profitability Improvement in debt service coverage ratio (DSCR) above 1.5 times

Potential triggers (individual or collective) for a downward rating action:

Continuous deterioration in profitability Deterioration of financial risk profile on the back of higher-than expected debt funded capex or lower profitability impacting debt servicing ability Elongation in working capital cycle with GCA above 500 days

Liquidity Position

Stretched

The company has a stretched liquidity position as reflected by the insufficient net cash accruals as against the maturing debt obligations. The company generated negative cash accruals of Rs.5.59 crore in FY2025 as against maturing debt obligations of Rs. 5.50 crore over the same period, however, the deficit was bridged by promoter support. The promoters are expected to extend support to bridge any similar deficits in the future. The average utilization of the bank limits is high at around 93 percent for twelve months ending December 2025. The company’s cash and bank balance stood at Rs. 1.50 crore as on March 31, 2025. The current ratio stood at 1.59 times as on March 31, 2025. Acuite believes that the company’s ability to improve its liquidity position will continue to remain a key rating sensitivity going ahead.

Outlook: Stable

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Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	154.99	184.98
PAT	Rs. Cr.	(12.84)	9.30
PAT Margin	(%)	(8.28)	5.03
Total Debt/Tangible Net Worth	Times	0.82	1.09
PBDIT/Interest	Times	0.04	2.96

Status of non-cooperation with previous CRA (if applicable)

­Not Applicable

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 31 Dec 2024 Term Loan Long Term 7.50 ACUITE BBB- | Negative (Reaffirmed) Term Loan Long Term 25.00 ACUITE BBB- | Negative (Reaffirmed) Proposed Long Term Bank Facility Long Term 2.00 ACUITE BBB- | Negative (Reaffirmed) Cash Credit Long Term 23.00 ACUITE BBB- | Negative (Reaffirmed) Term Loan Long Term 7.00 ACUITE BBB- | Negative (Reaffirmed) Proposed Cash Credit Long Term 10.00 ACUITE BBB- | Negative (Reaffirmed) Cash Credit Long Term 1.37 ACUITE BBB- | Negative (Reaffirmed) Cash Credit Long Term 10.00 ACUITE BBB- | Negative (Assigned) Cash Credit Long Term 28.63 ACUITE BBB- | Negative (Assigned) 04 Oct 2023 Cash Credit Long Term 16.04 ACUITE BBB- | Stable (Upgraded from ACUITE BB+ | Stable) Cash Credit Long Term 1.26 ACUITE BBB- | Stable (Assigned) Working Capital Term Loan Long Term 3.50 ACUITE BBB- | Stable (Upgraded from ACUITE BB+ | Stable) Proposed Long Term Bank Facility Long Term 1.40 ACUITE BBB- | Stable (Upgraded from ACUITE BB+ | Stable) Term Loan Long Term 0.32 ACUITE BBB- | Stable (Upgraded from ACUITE BB+ | Stable) Cash Credit Long Term 16.56 ACUITE BBB- | Stable (Upgraded from ACUITE BB+ | Stable) Cash Credit Long Term 6.44 ACUITE BBB- | Stable (Assigned) Working Capital Term Loan Long Term 5.07 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 6.68 ACUITE BBB- | Stable (Assigned) Proposed Long Term Bank Facility Long Term 6.10 ACUITE BBB- | Stable (Assigned) Proposed Cash Credit Long Term 12.50 ACUITE BBB- | Stable (Assigned)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating State Bank of India Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.00 Simple ACUITE BB+ | Stable | Downgraded | Negative to Stable ( from ACUITE BBB- ) SVC Co-Op Bank Limited Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 33.00 Simple ACUITE BB+ | Stable | Downgraded | Negative to Stable ( from ACUITE BBB- ) State Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 30.00 Simple ACUITE BB+ | Stable | Downgraded | Negative to Stable ( from ACUITE BBB- ) State Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE BB+ | Stable | Downgraded | Negative to Stable ( from ACUITE BBB- ) SVC Co-Op Bank Limited Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Oct 2030 7.00 Simple ACUITE BB+ | Stable | Downgraded | Negative to Stable ( from ACUITE BBB- ) SVC Co-Op Bank Limited Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Nov 2032 25.00 Simple ACUITE BB+ | Stable | Downgraded | Negative to Stable ( from ACUITE BBB- ) SVC Co-Op Bank Limited Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 03 Nov 2031 7.50 Simple ACUITE BB+ | Stable | Downgraded | Negative to Stable ( from ACUITE BBB- )

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Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Nidhi Gala Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.