Corporate India saw more of a downside than an upside in 2001-02 as far as rating action was concerned. As many as 38 companies were downgraded by Crisil, against just four upgrades during the financial year.
Several industries witnessed a shake-out. Companies with strong parentage or group backing and a competitive business position became stronger while weaker players were weeded out, Crisil said in its annual study, Crisil Ratings Round-up.
Dabur India, Reliance Petroleum, Tata SSL and The Ahmedabad Electricity Company were upgraded by one notch each during the year. A host of downgrades included Apollo Tyres, Birla Global Finance, Escorts, Forbes Gokak, IDBI, Larsen & Toubro, Mukand, SAIL, Tata Engineering and Tata Finance.
The companies downgraded by more than one notch included Indian Organic Chemicals, Automobile Corporation of Goa, KDL Biotech, Lok Housing Construction, and Mukund.
According to the Crisil study, the entry of several multinational companies had increased competition across a wide spectrum of sectors in the Indian economy. This had contributed to the sharp polarisation in the long-term rating spectrum, it stated.
This trend is more pronounced in the cement and pharmaceuticals industries, where companies with moderate ratings (A/BBB) have deteriorated and/or consolidated with stronger entities. Those with superior business and operational efficiencies, favourable plant locations and strong parent support have exhibited better credit quality.
The number of lower rated entities have continued to fall and the proportion of entities rated AA and AAA to all ratings has increased from 33 per cent in March 2000 to 43 per cent in March 2001 and further to 48 per cent in March 2002. This increase was mainly on account of a high number of withdrawals in the A and BBB categories, according to the study.
The number of defaults in Crisil
