Rating Downgrade May Hit Dsj Fin

The Crisil downgrading of DSJ Finance Corporation fixed deposit to "inadequate safety" is expected to trigger off an investor run on the company. Crisil has been downgrading fixed deposit programmes of DSJ Finance for some time.

It downgraded the fixed deposit programme of DSJ Finance Corporation to FB from FA. The revised rate indicates inadequate safety on timely payment of interest and principal amount, a Crisil release said.

The rating agency has cited "the increased delinquency on the company's lease portfolio and the sharp decline in the income from share trading activity" as the main reason for the revised rating. Further, the printing division, which could have acted as cushion, has been spun off as a subsidiary.

 

The rating also suggests a "significant decline" in the company's financial results during 1996-97. This would constrain the liquidity of the company and it would be dependent on sale of real estate, infusion of funds from the promoters and fresh borrowings for repayment of its debt obligations. The rating agency had also cited the declining fortunes of the DSJ Group, thanks to a lacklustre stock market. The inability of DSJ to bring in equity also led to the downgrading, Crisil official said.

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