MUMBAI, July 24: Credit rating agencies have downgraded the debt instruments and fixed deposit programmes of six companies - Flex Industries, Flex Engineering, Core Healthcare, Pontiac Leasing, Dover Credit and Western India Securities - for various reasons.

CARE has downgraded the FD programme of Western India Securities from CARE BBB (FD) to CARE D (FD). This indicates the instruments are either in default or likely to be in default soon. ``With large investments in the companies of Gadgil-Western group, sticky investments in ICDs and real estate and losses incurred in its capital market and international trading operations, the company has been facing severe liquidity problems, leading to delays in meeting its commitments on deposits,'' CARE said.

CARE has also downgraded the FDs of Pontiac Leasing from `BBB+' to `BB'.

Instruments carrying this rating are considered as speculative with inadequate protection. ``Collection efficiency in respect of lease and HP rentals declined sharply to 51 per cent in 1997 from 82 per cent in 1996 indicating erosion in asset quality,'' it said.

It also downgraded the FDs of Dover Credit from `BBB' to `BB+'.

ICRA, another leading rating agency, downgraded the rating of the long term instruments of Core Healthcare from `LA-' to `LBB'. The ratings of the medium term instruments have been downgraded from `MA-' to `MB'. The revised ratings indicate inadequate safety. ICRA has also placed these ratings under "rating watch". ICRA decided to downgrade Core's instruments in view of the tight liquidity position of the company, primarily caused by the time and cost overruns suffered by the project.

Crisil downgraded the rating assigned to the non-convertible and partly convertible debenture programmes of Flex Industries (FIL) from `A+' to `A', indicating adequate safety of timely payment of interest and principal. The existing fixed deposit programme of the company has also been downgraded from `FAA' to `FA+' indicating that the degree of safety regarding timely payment on the instrument is adequate.

The revised rating for FIL's debenture and fixed deposit programmes reflects Crisil's concern that the company is unlikely to retain profit margins at the past level. The revised rating also reflects Crisil's concern at FIL's capital structure and weak coverage ratios given the high levels of high cost borrowings and pressures on profitability. The company has traditionally relied on debt as a major source of finance to fund its growth. As a result, the gearing (total debt/networth) for this company has been high at more than 1.5 times.

Crisil has also downgraded the `AA-' rating assigned to the non-convertible debenture programme of Flex Engineering (FEL) to `A' indicating adequate safety of timely payment of interest and principal. The revised rating of FEL reflects Crisil' concern at the deterioration of the company's financial structure. The original rating for Rs 50 crore NCD issue was given taking into account an equity infusion of Rs 50 crore through a right issue.

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