CRISIL downgrades surge on slowing economy

02 April 2009

The ratings of several major Indian companies including Tata Motors, Ashok Leyland, Citibank, DLF, Mahindra and Mahindra and Suzlon came under CRISIL 's hammer during the year 2008-09, says a study released yesterday,

A slowing economy, and a sharp downturn in the investment environment, particularly during the second half of 2008-09 have affected the credit quality of Indian companies; CRISIL  downgraded ratings on 84 entities in 2008-09, while upgrading those on only 2. In contrast, there were 14 downgrades and 9 upgrades in 2007-08.

As many as 68 of the 84 downgrades were driven either by inadequate funding, or by a sharp decline in demand, or both.

Of these, 15 were from the automobile and automotive ancillaries industries, 14 from the financial sector, 8 from the textiles industry, and 7 each from the metals and mining industry and the construction and real estate industry.

Some were downgraded only by a few notches, while some others like Arvind Ltd, Decolight Ceramics, Krypton Tyres, Soma Textiles, and Marck Bio Sciences were downgraded to default category 'D', CRISIL  says in its latest Ratings Round-up.

Moreover, after three years with no defaults, CRISIL 's rated portfolio registered as many as 13 defaults in 2008-09, albeit on a much larger base: as on March 31, 2009, CRISIL  had ratings outstanding on about 1600 entities, up significantly from about 400 a year ago.