The rating for the Rs 50 crore NCD issue of Flex Engineering Ltd has also been revised downwards to `D', as a fallout of the stagnation/downturn in the domestic packaging industry that has affected the sales of this company.

The company, which is largely dependent on the sale of capital goods for the packaging sector, has reported a cash loss in the first half of the current year and the outlook remains weak, CRISIL said in a statement here.

Flex Foods Rs 32 million NCD issuehas also been downgrade to `D' from `BB' due to its failure in stabilising production and marketing of mushrooms. FFL is engaged in the production of freeze dried mushroom, mostly for the export markets. The project has been facing difficulties since inception and the company had problems in the past in production stabilisation and marketing of mushrooms. Though the company could rely on support from the group in the past, difficult fund position for the group has resulted in drying up of this support as well. For the 15 months ended March 1998, the company reported a net loss of Rs 18 lakh on a turnover of Rs 18.3 crore. The company is presently in a strained liquidity position which could adversely affect its ability to honour its repayment obligations on a timely basis, said Crisil.

In a similar move, the rating assigned to Escorts Finance Limited (EFL) Rs 2 crore NCD programme has been downgraded to `A-' from `A' by Crisil. The rating assigned to EFL's fixed deposit programme has also been downgraded to`FA' from `FAA-' reflecting the difficult business environment and stiff competitive pressure in the NBFC industry resulting in stagnation of disbursements. The firm's existing funding profile and the impact on the same as a consequence of the recent RBI guidelines and sharp decline in profitability due to write-offs.