Icra has recently downgraged KND Engineering's non-convertible debentures (NCDs) from `A-' to `BB-', implying inadequate safety. Torrent Gujarat Biomedical's partly convertible Debentures (PCDs) have been scaled down to `BB-' from 'BBB+' (moderate safety).

Similarly, Crisil has downgraded debts of Timex Watches (partly convertible debentures), Usha Beltron and Ashok Leyland to inadequate and marginal safety levels from moderate safety. Companies hit by Care downgrades are Garware Polyester, Ceat Finance and Peerless Abasan Finance.

In contrast to the earlier trends,more manufacturing companies now figure in the downgrades list. Rating agencies say they are paying more attention to the corporate sector, which is raising funds through public deposits. FDs are a favourite mode of raising finances for the manufacturing sector -- as they offer liquidity within one year at attractive interest rates, investors also prefer to park their funds here.

Bank FD rates vary from 9 per cent per annum to 12.25 per cent on a one-year deposit, corporates offer coupon rates between 11 per cent to 15 per cent while the actual yields vary from 11.3 per cent to as much as 17.8 per cent. Sources said with the Reserve Bank of India tighting its grip on NBFCs, it has led to the companies restricting their exposure to risky securities. "They have a much better and more mixed portfolio," said a source.

While the downgrades reflect the general economic slowdown, NBFCs were hit harder because of non-payment of dues by their borrowers, say sources in the Investment and Credit Rating Agency(Icra). Sources estimate that dues to NBFCs from the corporate sector is in excess of Rs 500 crore.