DCL Fin defaults; downgraded

DCL Fin defaults; downgraded
ENS ECONOMIC BUREAU

MUMBAI, FEB 20: The saga of defaults and downgrading of finance companies is continuing. Credit rating agency ICRA has downgraded the rating of the fixed deposit programme of DCL Finance Ltd from MB to MD, indicating default. The downgrade in rating factors the recent order passed by the Company Law Board rescheduling the repayment by the company over a period of 27 months depending on the size of the deposit, an ICRA statement said.

DCL Finance has been able to gradually reduce outstanding deposits from around Rs 32 crore in July 1999 to less than Rs seven crore currently. The strained liquidity position of the company is on account of a tenure mismatch aggravated by deterioration of collections of recievables which resulted in delays in repayments of the company’s fixed deposits, it added.

A host of finance companies like Prudential Capital, CRB Capital, JVG Finance, Helios, Kuber finance, DSJ Finance and scores of plantation companies had collected funds from investors and defaulted on repayment. MCL Finance, belonging to the associates of the AC Muthiah group also defaulted recently.

“The most important point is that investors have not yet got back their funds from the these companies. It’s unlikely that they will get back their money from the promoters of these companies,” said an investor, adding that the government has also not done enough to recover funds from erring companies. On the contrary, these companies are being helped by allowing reschedulement of repayments.