Press Release October 11, 2024 KRISHNA CONSTRUCTIONS Rating Downgraded and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	8.00	ACUITE D | Downgraded	-
Bank Loan Ratings	6.00	-	ACUITE A4 | Reaffirmed
Bank Loan Ratings	7.00	-	ACUITE D | Downgraded
Total Outstanding	21.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuité has downgraded its long-term rating to ‘ACUITE D’ (read as ACUITE D) from ‘ACUITE B’ (read as ACUITE B) on the Rs 8.00 Cr. bank facilities of Krishna Constructions (KC). Acuité has downgraded its short-term rating to ‘ACUITE D’ (read as ACUITE D) from ‘ACUITE A4’ (read as ACUITE A four)  on the Rs. 7.00 Cr. bank facilities of Krishna Constructions (KC). Acuité has reaffirmed its short-term rating of ‘ACUITE A4’ (read as ACUITE A four)  on the Rs.6.00 Cr. bank facilities of Krishna Constructions (KC). Rationale for downgrade : The rating is downgraded on account of recent overdrawals in cash credit accounts (March 2024, April 2024, May 2024, continuous till 26th June 2024) by KC and irregular account conduct as per the banker's feedback and other information reports. The account is currently marked SMA-2 by the banker.

About the Company

KC was established in 2008 as a partnership firm by Mr. Chidipothu Krishna Murthy along with his son, Mr. Chidipothu Karthik. The firm is a Special Class I civil contractor for executing government Works of Roads and Buildings R&B, Panchayat Raj, and National Highways Development Road works of Andhra Pradesh and Telangana states. Its registered office is located in Vijayawada (Andhra Pradesh). The firm participates in tenders issued by Public Works Department PWD and other government departments of Andhra Pradesh and Telangana. The contracts awarded are related to cement concrete (CC) roads and bituminous surface treatment (BT), culverts, and bridges.

Unsupported Rating

­Not applicable

Analytical Approach

­Acuité has considered the standalone business and financial risk profile of KC to arrive at the rating

Key Rating Drivers

Strengths

­Experienced management and established relationships with its key principals KC is a partnership firm started by Mr. Chidipothu Krishna Murthy and his son in Mr. Chidipothu Karthik in 2008. Managing partner, Mr. Chidipothu Krishna Murthy has been in this line of business for over three decades through his association with other individual firms. The longstanding presence in the industry, continuous execution, and timely deliverables have supported regular orders, though modest. Acuité believes that KC will continue to benefit from partners’ extensive experience in the civil construction industry, which is expected to keep the business risk profile moderate over the medium term.

Weaknesses

­Instance of delay and irregularities account conduct There have been recent overdrawals in cash credit accounts (in the months of March, April, and May 2024 and continued till 26th June 2024) by KC and irregular account conduct as per the banker's feedback and other information reports. The account is currently marked SMA-2 by the banker.

Rating Sensitivities

­Regular servicing of debt obligations

Liquidity Position: Poor

­The liquidity position of the company is marked poor on account of recent past instances of overdrawals in cash credit account for 86 days.

Outlook: Not applicable

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Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 23 (Actual)	FY 22 (Actual)
Operating Income	Rs. Cr.	37.16	18.81
PAT	Rs. Cr.	1.97	1.03
PAT Margin	(%)	5.31	5.47
Total Debt/Tangible Net Worth	Times	1.09	1.31
PBDIT/Interest	Times	2.95	1.83

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 • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.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 30 Mar 2024 Bank Guarantee/Letter of Guarantee Short Term 7.00 ACUITE A4 (Downgraded from ACUITE A4+) Proposed Short Term Bank Facility Short Term 6.00 ACUITE A4 (Downgraded from ACUITE A4+) Cash Credit Long Term 8.00 ACUITE B | Stable (Downgraded from ACUITE BB- | Stable) 02 Jan 2023 Cash Credit Long Term 8.00 ACUITE BB- | Stable (Downgraded from ACUITE BB | Negative) Bank Guarantee/Letter of Guarantee Short Term 9.00 ACUITE A4+ (Reaffirmed) Proposed Short Term Bank Facility Short Term 4.00 ACUITE A4+ (Reaffirmed) 07 Oct 2021 Cash Credit Long Term 8.00 ACUITE BB | Negative (Reaffirmed) Proposed Short Term Bank Facility Short Term 4.00 ACUITE A4+ (Reaffirmed) Bank Guarantee/Letter of Guarantee Short Term 9.00 ACUITE A4+ (Reaffirmed) 20 Sep 2021 Bank Guarantee/Letter of Guarantee Short Term 13.00 ACUITE A4+ (Reaffirmed) Cash Credit Long Term 8.00 ACUITE BB | Negative (Reaffirmed)

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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 Bank of Maharashtra Not avl. / Not appl. Bank Guarantee/Letter of Guarantee Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 7.00 Simple ACUITE D | Downgraded ( from ACUITE A4 ) Bank of Maharashtra Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 8.00 Simple ACUITE D | Downgraded ( from ACUITE B ) Not Applicable Not avl. / Not appl. Proposed Short Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 6.00 Simple ACUITE A4 | Reaffirmed

Contacts

Mohit Jain Senior Vice President - Rating Operations Moparthi Anuradha Devi 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.