Apple's FD programme has been downgraded to MAA from MAAA. The other ratings assigned to Apple's various medium-term debt programmes have also been scaled down to MAA. The revised ratings indicate high safety. However, the rating assigned to the Rs 50-crore commercial paper programme has been retained at A1+, indicating the highest safety.

The downgrade of Alpic's FD programme by Icra factors the current adverse economic conditions which have resulted in lower collection efficiencies by Alpic, the difficulties faced by NBFCs in the present scenario and the large fixed deposit repayments made by the company over the past year.

Icra believes that all these factors have resulted in liquidity pressures that arelikely to continue. The resource constraints are also likely to result in a slowdown in fresh disbursements. Icra is in the process of evaluating the recent performance of Alpic and the future prospects of its businesses. Pending this, the instrument has been placed under rating watch with negative implications.

The debt instruments of Apple Finance have been downgraded largely on account of the non-earning assets in the company's books and a fall in the yields in main business resulting in a strain on future profitability. This coupled with an increase in provisioning for NPAs could depress the profitability further. However, the rating continues to take into account the strong brand image and good retail network of Apple in the car finance segment, the well-diversified funding base and low gearing.

During 1997, hire-purchase business grew only marginally. It is expected that due to continued recessionary conditions prevailing in the economy, as well as taking into account the quality of certaincorporate exposures in the lease segment, additional provisioning may be required in the future. However, Icra feels that Apple's asset profile in the car finance segment would continue to be good in the medium term.

Credit Analysis & Research Ltd (CARE) has also downgraded the ratings assigned to two finance companies -- Mahaveer Finance and Dharani Finance -- to BB and BB- respectively.