The fixed deposit (FD) programme of the company has also been downgraded to FAA from FAA+. However, the P1+ rating assigned to TFL's Rs 100-crore commercial paper programme has been reaffirmed.

The revision in the ratings reflects pressures on the asset quality on account of the economic slowdown and the difficult business conditions faced by TFL, in line with other NBFCs. This has resulted in an increase in delinquencies in the various businesses of TFL.

The rating also factors the increased pressures on profitability and the high gearing of the company.

TFL has recognised the increased asset quality pressures and has initiated steps to reduce the level of delinquencies. The company is also in the process of raising compulsorily convertible preference shares whichis expected to partly reduce the risk of high gearing.

In a parallel development, Credit Analysis & Research Ltd (CARE) and Icra have downgraded the FD programmes of four NBFCs. The list of companies downgraded by CARE includes Pioneer Overseas Finance Ltd, Vijay Hemant Finance & Estates Ltd and Mukunda Industrial Finance Ltd.

CARE has also withdrawn the BB rating assigned to the FD programme of Sierra Investments Ltd at the request of the company and has suspended the BBB+ rating assigned to the FD programme of Trident Finance since the company has not furnished the information required by CARE for monitoring the rating.

Icra has downgraded the FD programme of Kinetic Fincap Ltd from MAA- to MA indicating adequate safety. The rating takes into account the sharp drop in profitability in 1997-98 on account of a slowdown in disbursements and a deterioration in collection efficiencies.

The new management has discontinued lending to the corporate sector and focused on two-wheelers where the yields arehigher. However, Icra feels that the corporate portfolio would continue to impact profitability in the medium term. Icra has said that a low gearing, a strong branch and dealer network and support from a strong parent provide operational and financial flexibility.