The downgrade takes into account the sharp fall in profitability of KMF in 1996-97 due to fall in earnings and increase in interest expenses. There was a drop in disbursements and deterioration in asset quality during the year. ``The company does not follow the RBI provisioning norms for NPAs which has resulted in overstatement of profits,'' ICRA said. The rating has been put under rating watch pending certain clarifications yet to be received from the company regarding the financial results for 1997-98 and status of repayment of contractual obligations.

Oriental Housing rating lowered
MUMBAI: ICRA has downgraded the fixed deposit rating of Oriental Housing Development Finance Corporation Ltd(OHDFC) from `MB' TO `MC'. It also put the instrument under rating watch with negative implications. The new rating indicates that chances for default are high. ``Adverse changes in business conditions could result in inability/unwillingness to service debts on time and as per terms,'' ICRA said. It has assessed the performance of the company based on available information from secondary sources. The downgrade takes into account OHDFC's poor financial performance over the last two years caused by a significant increase in expenses and depressed yields in its housing finance business. The company's investments have also depreciated significantly.