MUMBAI, May 13: The Credit Rating Information Services of India Ltd (CRISIL) has downgraded the rating of Standard Industries and VST Industries.

The Rs 16.25 crore non-convertible debenture programme of Standard Industries (SIL) has been downgraded from `A' to `BBB+'. The revised rating indicates moderate safety regarding timely payment of interest and principal.

According to Crisil, the downgrade reflects the deteriorating operating and financial performance of the textile division. The high cost structure and a product mix which competes with the unorganised sector has made it increasingly difficult for the company to pass on cost increases. This coupled with high raw material prices, primarily cotton, during the last two years led to further deterioration in the division's profitability. The company is in the process of finalising the sale of its Dewas unit which is likely to improve the cost structure. In the medium term, the textile division is expected to be a drag on the profitability of the company.

Besides, the rating of VST's fixed deposit programme has been downgraded from FAAA to FAA+. The revised rating indicates that the degree of safety regarding timely payment of interest and principal is strong. ``The downgrade reflects VST's declining market position in cigarettes mainly because of the unprecedented state luxury tax levies and poor performance in its financial service activities.

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