MUMBAI, July 10: Olympia Capitals Ltd (OCL) has challenged the downgrading of its fixed deposit (FD) programme by the Credit Analysis & Research Ltd (CARE). Care downgraded the rating for Olympia Capitals' FD programme from Care BBB+ (FD) to Care C (FD). The new rating indicates high risk with a likelihood of default in the payment of interest and principal.

In a release issued on Thursday, Olympia accused Care of unfairness. "In spite of all positive steps taken ... to protect the interests and monies of the depositors, Care downgraded the rating of the company which is a totally unjustfiable, harsh and negative judgement," the company said. It has dubbed Care's act as a knee-jerk reaction to the CRB fiasco.

Care downgraded the FD programmes as well as NCDs and bonds of four NBFCs on Thursday. They are Olympia Capitals, DCM Financial, Srei International and Suraj Securities.

This is the second instance in the recent past when a finance company has accused the rating agency of unfairness and challenged its "opinion". Earlier, in October 1996, Lloyds Finance dragged both Care and Credit Rating Information Services of India Ltd (Crisil) into controversy. Care had rated the FD programme of the company with a triple-A (AAA) while Crisil refused to ratify the Care rating and instead offered it a new rating which was one notch below. Lloyds Finance refused to accept the Crisil rating and mobilised FDs on the strength of the Care rating.

Reacting to the OCL developement, Care sources said that the rating is justified "and we stand by our rating". The financials of the company had deteriorated due to high interest burden and there was fear that the company might default, they pointed out. "The performance of the company has been poor and the asset quality has deteriorated," the rating agency said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.