Press Release February 29, 2024 GADDALA FINANCIAL SERVICES PRIVATE LIMITED Rating Downgraded and Issuer not co-operating

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	9.75	ACUITE C | Downgraded | Issuer not co-operating*	-
Bank Loan Ratings	2.25	ACUITE D | Downgraded | Issuer not co-operating*	-
Total Outstanding	12.00	-	-

Rating Rationale

­Acuité has downgraded the long-term rating to ‘ACUITE D' (read as ACUITE D) from ‘ACUITE B+’ (read as ACUITE B plus) on Rs.2.25 Cr. and also downgraded the long-term to ‘ACUITE C' (read as ACUITE C) from ‘ACUITE B+’ (read as ACUITE B plus) on the Rs. 9.75 Cr. bank facilities of Gaddala Financial Services Private Limited. The rating continues to be flagged as “Issuer Not-Cooperating” and is based on the best available information. The downgrade is on basis of bankers feedback.

About the Company

­­Telangana based Gaddala Financial Services Private Limited(GFSL) is promoted by Mr. John Gaddala and he has acquired this company from Mr. Poorna Chandra Rao in 2009. Earlier the company was called 'Vanki Neni' and this company operated as a hire purchase company. Mr. John Gaddala post acquisition of this company started its operations as an MFI in 2010. The company is a MFI regulated by Sa-Dhan offering unsecured loans to individuals. However, unlike the other MFI they do not operate in SHG or JLG business models. The company directly lends to individuals.

Unsupported Rating

­Not Applicable

Non-cooperation by the issuer/borrower:

­­­Acuité has been requesting for data, information and undertakings from the rated entity for conducting surveillance & review of the rating. However, the issuer/borrower failed to submit such information before the due date. Acuité believes that information risk is a critical component in such ratings, and non-cooperation by the issuer along with unwillingness to provide information could be a sign of potential deterioration in its overall credit quality. This rating is, therefore, being flagged as “Issuer not-cooperating”, in line with prevailing SEBI regulations and Acuité’s policies.

Limitation regarding information availability:

­­The rating is based on information available from sources other than the issuer/borrower (in the absence of information provided by the issuer/borrower). Acuité endeavored to gather information about the entity/industry from the public domain. Therefore, Acuité cautions lenders and investors regarding the use of such information, on which the indicative credit ratingis based.

Rating Sensitivity

­­"No information provided by the issuer / available for Acuite to comment upon."

Liquidity Position

­­"No information provided by the issuer / available for Acuite to comment upon."

Outlook: Not Applicable

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Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 22 (Actual)	FY 21 (Actual)
Operating Income	Rs. Cr.	0.90	0.91
PAT	Rs. Cr.	0.01	(0.06)
PAT Margin	(%)	1.62	(6.76)
Total Debt/Tangible Net Worth	Times	0.93	0.95
PBDIT/Interest	Times	4.63	1.13

Status of non-cooperation with previous CRA

­­­­Not Applicable

Any other information

­None

Applicable Criteria

• Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.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 14 Feb 2023 Proposed Long Term Bank Facility Long Term 8.85 ACUITE B+ | Not Applicable (Reaffirmed & Issuer not co-operating*) Term Loan Long Term 2.00 ACUITE B+ | Not Applicable (Reaffirmed & Issuer not co-operating*) Term Loan Long Term 0.25 ACUITE B+ | Not Applicable (Reaffirmed & Issuer not co-operating*) Term Loan Long Term 0.30 ACUITE B+ | Not Applicable (Reaffirmed & Issuer not co-operating*) Term Loan Long Term 0.30 ACUITE B+ | Not Applicable (Reaffirmed & Issuer not co-operating*) Term Loan Long Term 0.30 ACUITE B+ | Not Applicable (Reaffirmed & Issuer not co-operating*) 16 Nov 2021 Term Loan Long Term 0.30 ACUITE B+ | Not Applicable (Downgraded & Issuer not co-operating*) Term Loan Long Term 0.30 ACUITE B+ | Not Applicable (Downgraded & Issuer not co-operating*) Term Loan Long Term 0.30 ACUITE B+ | Not Applicable (Downgraded & Issuer not co-operating*) Term Loan Long Term 0.25 ACUITE B+ | Not Applicable (Downgraded & Issuer not co-operating*) Term Loan Long Term 2.00 ACUITE B+ | Not Applicable (Downgraded & Issuer not co-operating*) Proposed Long Term Bank Facility Long Term 8.85 ACUITE B+ | Not Applicable (Downgraded & Issuer not co-operating*)

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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 Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 8.85 Simple ACUITE C | Downgraded | Issuer not co-operating* ( from ACUITE B+ ) Habitat for Humanity India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.00 Simple ACUITE D | Downgraded | Issuer not co-operating* ( from ACUITE B+ ) Habitat for Humanity India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.25 Simple ACUITE D | Downgraded | Issuer not co-operating* ( from ACUITE B+ ) Usha Financial Services Private Limited Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.30 Simple ACUITE C | Downgraded | Issuer not co-operating* ( from ACUITE B+ ) Usha Financial Services Private Limited Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.30 Simple ACUITE C | Downgraded | Issuer not co-operating* ( from ACUITE B+ ) Eclear Leasing & Finance Private Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.30 Simple ACUITE C | Downgraded | Issuer not co-operating* ( from ACUITE B+ )

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Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Abhishek Singh Analyst - Rating Operations Tel: 022-49294065 abhishek.s@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@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.