MUMBAI, July 10: Mumbai-based non-bank finance company Olympia Capitals Ltd (OCL) has challenged the downgrading of its fixed deposit programme by the Credit Analysis & Research Ltd. Care downgraded the rating for Olympia Capitals' FD programme from Care BBB+ (FD) to Care C (FD). The new rating indicates high risk with a likelihood of default in the payment of interest and principal.

In a release issued on Thursday, Olympia accused CARE of unfairness. "In spite of all positive steps taken...to protect the interests and monies of the depositors, CARE downgraded the rating of the company which is a totally unjustfiable, harsh and negative judgement," the company said. It has dubbed Care's act as a knee-jerk reaction to the CRB fiasco.CARE downgraded the FD programmes as well as NCDs and bonds of four NBFCs on Thursday. They are Olympia Capitals, DCM Financial, Srei International and Suraj Securities.

This is the second instance in the recent past when a finance company has accused the rating agency of unfairness and challenged its "opinion". Earlier, in October 1996, Lloyds Finance dragged both CARE and Crisil into controversy over its rating.

Reacting to the OCL developement, CARE sources said that the rating is justified "and we stand by our rating". The financials of the company had deteriorated due to high interest burden and there was fear that the company might default, they pointed out. "The performance of the company has been poor and the asset quality has deteriorated", the rating agency said.CARE sources said: "The rating is just one notch above default grade which amply shows that the company is not on sound ground. We just want to inform investors that under the present circumstances, the rating of BBB+ for the FD programme of Rs 2.5 crore does not stand." According to the OCL release, it had stated to CARE that it would not increase the debt any further and that it had already stopped fresh collections and renewals. The company also planned to repay total outstanding sums amounting to Rs 1.05 crore crore within two months. "The unclaimed amount would be deposited in a bank account," the release said. CARE has been held responsible by investors for the CRB Capital Markets crash. It had assigned an A (adequate safety) to the CRB Caps FD programme.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.