MUMBAI, July 3: Credit rating agencies have downgraded the rating for four finance companies - Prudential Capital Markets, Enarai Finance, ITC Classic Finance and DCM Shriram Leasing and Finance - for various reasons.

Credit Analysis and Research Ltd (CARE) has downgraded its rating for the fixed deposit programme of Prudential Capital from CARE A (FD) to CARE (FD) BBB. Instruments with triple B rating are considered to be of investment grade. CARE has also decided to place this rating under `Creditwatch'.

``The company has substantial exposure to small and relatively less known corporate bodies in the form lease financing and loans. The quality of assets is not considered good and a further deterioration in asset quality cannot be ruled out.

Prudential also has considerable exposure to other group companies. The recent deterioration in the operational environment for NBFCs is likely to affect the operations of the company and with its substantial dependence on retail deposits, the company's liquidity position might come under pressure,'' CARE said.

The `A' rating assigned of ITC Classic Finance Ltd's (ICFL) Rs 50 crore non-convertilble debenture (NCD) programme has been downgraded to `BB' by the Credit Rating Information Services of India Ltd (Crisil). The FA rating assigned to the fixed deposit programme of the company has been downgraded to `FB'.

The revised ratings indicate inadequate safety with respect to timely payment of interest and principal on the instuments. The earlier ratings were put on `Rating Watch' with negative implications on account of the strained liquidity arising out of large scale premature withdrawal of fixed deposit and uncertainties associated with the restructing plan and the nature and form of support being proposed by ITC for ITC Classic.

Regular infusion of funds from the parent company, ITC Ltd has enabled ICFL to honour its fixed deposit obligations, however, these have not been adequate to restore stability in operations and financial position. Morover the deteriorating asset quality and large non-performing asets remain critical issues.

Crisil has also downgraded the rating of the FD programme of Enarai Finance Ltd (EFL) from `FA' to `FA-'. This rating indicates adequate safety of timely payment of interest and principal.

The revised rating reflects increased risk profile in the company's assets quality arising out of the exposures to corporate lease and hire-purchase and in the funding mix.

Meanwhile, ICRA has downgraded the rating of the fixed deposit programme of DCM Shriram Leasing and Finance (DSLF) from MA-to MB-. The revised rating indicates inadequate safety. The timely payment of interest and principal are likely to be affected by future uncertainties.

The downgrade takes into account the deterioration in the assets quality of DCM's asset portfolio, in 1996-97. The company witnessed a sharp increase in receivables in all the business segments and generation of high NPA levels.

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