HYDERABAD/THIRUVANANTHAPURAM: The structural failure in Kooriyad, Malappuram, a key national highway project in Kerala has put infrastructure major KNR Constructions Ltd (KNRCL) under regulatory scrutiny and prompted rating agency Crisil to place its loan facilities under “Rating Watch with Developing Implications.”
The damage that had made headlines in Kerala had also triggered long-dawn debates in the political circles in the state with Congress party, the main Opposition, pointing fingers at the Centre and State governments for the damage.
The incident involves the settlement of an embankment and failure of a reinforced earth wall on the Ramanattukara–Valanchery section of National Highway 66, a crucial corridor running through Kerala’s Malabar region.
KNRCL served as the engineering, procurement and construction (EPC) contractor on the project.
The failure has drawn the attention of both the National Highways Authority of India (NHAI) and the Ministry of Road Transport and Highways (MoRTH).
NHAI issued a show-cause notice to KNR Constructions Ltd on May 21, demanding a response within 15 days. A day later, MoRTH released a press statement saying KNRCL would be barred from participating in current and future bids, although the company has not yet received official written communication to this effect.
The ministry has since appointed a three-member expert committee to investigate the failure and recommend remedial measures. Until the findings of this report are released, the full financial and reputational impact on KNRCL remains uncertain.
For KNRCL, the Kerala project was expected to be a showcase of its execution capabilities in South India. Instead, it has become a flashpoint, potentially affecting future business from both central and state authorities.
KNR financials strong
Despite the setback, the company’s financial fundamentals remain sound. KNRCL reported a profit of Rs650 crore on revenue of Rs2,507 crore for the first nine months of fiscal 2025, supported by one-time income from arbitration settlements.
It continues to maintain a debt-light balance sheet with net worth of Rs3,945 crore and minimal reliance on external borrowing.
The company’s liquidity is also healthy, with over Rs700 crore in net cash accruals expected in the current fiscal, and low bank line utilisation.
Its order book, however, has moderated to Rs5,517 crore as of December 2024, down from Rs6,505 crore in March. KNRCL has emerged as the lowest bidder for projects worth Rs8,500 crore, largely in the mining and state roads segments, but conversion into firm orders will depend on clarity from the central government.
Crisil has stated that it will resolve the rating watch once the impact of the Kerala incident is clearer, including any penalties, remedial costs, or changes to KNRCL’s eligibility for national highway bids.
The incident in Kerala highlights the risks infrastructure firms face not only in project execution but also in reputation management.
For KNRCL, which has built its profile over 25 years through timely execution of road and irrigation projects, this episode marks a critical test of resilience, regulatory engagement, and long-term strategy.
