Keerthi Industries Limited has received a credit rating reaffirmation from CARE Ratings Limited, maintaining its rating at 'CARE B; Stable' for bank facilities totaling ₹30.26 crore. The rating announcement, disclosed on January 8, 2026, under Regulation 30 of SEBI regulations, reflects the company's current operational challenges while acknowledging certain stabilizing factors.

Financial Performance Deterioration

The company experienced significant operational difficulties in FY25, with cement division capacity utilization declining sharply to 43% from 73% in FY24. This operational decline translated into substantial financial impact across key metrics:

Revenue from the cement division declined by 51.15% primarily due to reduced production volumes, though sales realization remained relatively stable at ₹4,592 per metric tonne in FY25 compared to ₹4,445 per metric tonne in FY24. The electronics division showed improvement, with revenue increasing to ₹23.07 crore in FY25 from ₹18.49 crore in FY24.

Rating Rationale and Key Factors

CARE Ratings' decision considers multiple factors affecting the company's creditworthiness. The rating reflects deterioration in operational performance, reliance on creditor stretching and promoter loans for debt obligations, and high working capital utilization of 99.54% for the twelve months ended October 2025.

However, several positive factors support the rating:

• Experienced management team led by Mrs. J Triveni and Mr. J S Rao with over 20 years of cement industry experience
• Integrated operations with captive limestone mines covering 271 acres with 34.50 million tonnes of reserves
• Promoter support through unsecured loans of ₹26.54 crore, subordinated to bank debt
• Recent debt repayment from electronics division sale proceeds

Operational Challenges and Market Position

Keerthi Industries operates with an installed cement capacity of 5.94 lakh tonnes per annum and clinker capacity of 5.28 lakh tonnes per annum. The company faces geographic concentration risk, primarily serving Andhra Pradesh and Telangana markets under the 'Suvarna Cements' brand.

The cement industry's cyclical nature and input price volatility continue to impact operations. Coal and pet coke price fluctuations significantly affect power and fuel expenses, with the industry experiencing elevated costs that peaked in August-September 2022 before moderating in FY24.

Liquidity Position and Debt Management

The company's liquidity position remains stretched, with negative gross cash accruals of ₹21.59 crore in FY25 against debt repayment obligations of ₹6.74 crore in FY26. Cash and bank balances stood at ₹0.30 crore as of March 31, 2025.

As of December 1, 2025, the company repaid outstanding term debt and working capital borrowings from Axis Bank using proceeds from the electronics division sale. Unsecured loans were reduced by ₹11.50 crore, with the outstanding balance at ₹20.97 crore as of November 30, 2025.

Outlook and Rating Sensitivities

The stable outlook reflects CARE Ratings' expectation of operational performance improvement with increased demand and selling prices. Positive rating factors include achieving total operating income above ₹200 crore while maintaining PBILDT margin at 10%, and sustaining PBILDT per tonne above ₹950.

Negative factors that could impact the rating include overall gearing deteriorating beyond 1x and any notable decline in operating income or profitability by more than 30% year-on-year. The rating agency continues to monitor the company's progress in addressing operational challenges while leveraging its integrated operations and experienced management team.

Keerthi Industries Limited has announced a delay in the completion of its slump sale of the Electronics Division to Hyderabad Bottling Co. Private Limited. The transaction, valued at INR 36.00 crore, was initially scheduled to conclude by November 30, 2025, but has now been extended to December 31, 2025.

Reason for Delay

The postponement is attributed to pending regulatory and operational documentation requirements. The company stated that the purchaser, Hyderabad Bottling Co. Private Limited, has indicated a slight delay in completing the transaction due to:

• Certain regulatory formalities
• Bank-related procedures
• Operational documentation requirements

Financial Impact

The Electronics Division has been a significant contributor to Keerthi Industries' revenue. Key financial details include:

Debt Repayment Plan

Keerthi Industries plans to utilize the proceeds from this slump sale to address its current debt obligations:

The company intends to use the sale proceeds primarily for repaying bank facilities, including term loans and cash credits. Any remaining balance will be allocated towards repayment or adjustment of unsecured loans.

Transaction Details

• Buyer: Hyderabad Bottling Co. Private Limited
• Nature of Transaction: Slump sale of Electronics Division
• Original Completion Date: November 30, 2025
• Revised Completion Date: December 31, 2025

Implications for Investors

This transaction represents a significant move for Keerthi Industries, potentially impacting its financial structure and future operations. The sale of a division contributing nearly 20% of total income signals a strategic shift, likely aimed at streamlining operations and improving the company's financial health through debt reduction.

Investors should closely monitor the completion of this transaction and its subsequent impact on Keerthi Industries' financial statements and operational focus in the coming quarters.

Note: All financial figures are based on FY2024-25 data as provided in the company's disclosure.