Crisil downgrades DCM Shriram, Videocon Itnl

MUMBAI, Dec 30: The Credit Rating and Information Services of India Ltd (CRISIL) has downgraded the Rs 28 crore and Rs 50 crore (Rs 11.09 cr...

MUMBAI, Dec 30: The Credit Rating and Information Services of India Ltd (CRISIL) has downgraded the Rs 28 crore and Rs 50 crore (Rs 11.09 crore redeemed) secured convertible bond issue of Videocon International Ltd (VIL) to `A’ from `AA-‘. Crisil has also downgraded the ratings of five other companies, including DCM Shriram Consolidated Ltd (DSCL), MCS Ltd, Pacific Pearl Finance and Leasing Ltd, Punjab Alkalies and Chemicals Ltd (PACL) and Vardhan Properties & Investment Ltd (VPIL).

Accordingly, the rating of DSCL’s outstanding non convertible debenture issues have been downgraded to `A’ from `A+’. The revised rating indicates that the degree of safety regarding timely payment of interest and principal, on the instruments, is adequate.

The revision in ratings is due to a change in the company’s risk profile due to the setting up a chlor-alkali project as the industry is passing through a downward trend resulting in lower overall profitability and coverage ratio in the short term, Crisil said.

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The revised rating of VIL’s instruments indicates that the degree of safety regarding the timely payment of interest and principal, is adequate.The Crisil has also downgraded the rating of MCS’ Rs 6 crore non-convertible debenture programme to `BB-‘ from `A-‘. Further, the rating of Rs 1.7 crore non-convertible debentures programme has been downgraded to `BB-‘ from `A-‘.

The revised rating indicates that the degree of safety regarding the timely payment of interest and principal, on the instruments is inadequate.The revision in the rating reflects strained liquidity, weaker business performance in the Registrar & Transfer industry characterised by increased competition in a depressed capital market scenario, and sharp deterioration in the financial performance.

The rating of Pacific Pearl Finance and Leasing’s fixed deposit programme has been downgraded to `FB+’ from `FA-‘. The revised rating indicates that the degree of safety regarding the timely payment of interest and principal on the instrument is inadequate.

The downgrade reflects Crisil’s concern at the declining spreads in the company’s asset financing business and predominance of fixed deposits in the company’s overall resource base.

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The rating of PACL’s Rs 5 crore flating rate bond issue has been downgraded to `A’ from `AA’. The revised rating indicates that the degree of safety regarding timely payment of interest and principal, on the instruments, is adequate.

The rating of VPIL’s fixed deposit programme has been downgraded to `FC’ from `FB+’. The rating indicates that the degree of safety regarding the timely payment of interest and principal on the instrument is doubtful. The downgrade reflects that high level of NPAs in VPIL’s ICD portfolio, losses from share trading activity and decline in overall business prospects on account of greater competition and reducing spreads in asset financing business.

Crisil’s downgrading is a continuation of the trend set by various rating agencies to closely monitor the outstanding rating of various companies in the background of general slowdown in economic growth and industrial stagnation which has affected many corporate houses. Videocon has been one of the groups which has diversified into many unrelated areas like power and real estate with borrowings at high cost. The outlook of the group has been affected by the dip in demand in the consumer durables sector and the depressed real estate market.