CARE downgrades three NBFCs

MUMBAI, July 30: Credit Analysis amp; Research Ltd cARE has downgraded the rating on the fixed deposit programmes of three non-banking f...

MUMBAI, July 30: Credit Analysis amp; Research Ltd cARE has downgraded the rating on the fixed deposit programmes of three non-banking finance companies NBFC VLS Finance, Suri Capital amp; Leasing and Crystal Credits Corporation.It has downgraded the rating for the fixed deposit programme of VLS Finance Ltd VLS for a limit of Rs 1.5 crore from AA8217; to A8217;.

The revised rating reflects the downtrend in VLS8217;s operations, lower recovery performance, deterioration in asset quality, substantial depreciation in the portfolio of quoted investments and the general deterioration in the operating environment of NBFCs.

Care has downgraded its rating for the fixed deposit programme of Crystal Credits Corporation Ltd CCCL from BBB8217; to BB8217; for a limit of Rs 2.70 crore. Such instruments are considered to be speculative, with inadedquate protection for interest and principal payments.CCCL is primarily engaged in leasing and hire purchase business. It has also been active in short term lending.

For 1997 there was a decline in fund based income, which was more than made up by growth in fee based income. Overall, CCCL reported a 25 per cent increase in income for the year.CCCL8217;s assets quality deteriorated in 1997 as a substantial portion of the ICD portfolio turned into loss assets during the year.

8220;Recovery from fund-based activities was also unsatisfactory, with an overall recovery performance of 87 per cent,8221; Care said.Care has downgraded the rating for the fixed deposit programme of Suri Capital amp; Leasing SCL for a limit of Rs 2 crore from BBB8217; to BB8217;. SCL is a Delhi based NBFC, mainly engaged in leasing and HP financing. For 1997, SCL reported a decline of 52 per cent in total income and a 83 per cnet drop in net profit, over 1996.