The downgrade of the NBFC's FD programme reflects the decline in disbursements in the corporate and truck financing businesses, difficult business conditions and the consequent pressures on TCFC's profitability. Moreover, there has been a continued decline in the asset quality in the corporate finance segment and increasing delinquencies in truck financing.

TCFC's market position has also been affected on account of the non-competition agreement in the car financing business with General Motors Acceptance Corporation (GMAC). The rating continues to reflect the strengths of the company arising out of its well-diversified resources base, the strength from strategic investments and the relatively better asset quality of the retail car portfolio.

TCFC has outlined a restructuring plan for transferring its operating business (including operating assets and liabilities) to Centurion Bank. However, this proposal is subject to a number of regulatory clearances. Consequently, the rating revision does not factor the proposed restructuring exercise. At the time TCFC made the announcement regarding the transfer of its operating business to Centurion Bank, Crisil had put the finance company on rating watch.

Crisil has said that it will be willing to factor in the impact of the restructuring exercise once the necessary regulatory and other clearances are obtained and there is a clarity on issues regarding the valuation of the business.

Crisil has meanwhile reaffirmed the triple-A rating assigned to the company's FD programme and three NCD programmes of Larsen & Toubro Ltd amounting to Rs 900 crore. The rating agency has also assigned a triple-A rating to a fresh Rs 250 crore NCD plan of the company. A P1+ rating has been assigned to its Rs 650 crore CP programme. The rating factors in the company's diversified revenue stream, strong business position in both the engineering and construction and cement business, the steady financial performance at the corporate level and the advantages arising from a strong professional management setup.

The rating also factors in the pressure on the engineering and construction division revenues caused due to the ongoing slowdown in the investment environment and the company's moves to adopt an increased level of gearing to maintain its competitive position.

Crisil has also reaffirmed the A+ rating assigned to the Rs 10.5 crore debenture issue of Can Fin Homes Ltd. The rating reflects the support enjoyed by Can Fin Homes from its parent Canara Bank, the favourable long-term prospects for housing finance and the company's established track record in the industry. The positive factors are offset, to an extent, by the pressure on the company's profitability as well as sluggish recoveries in loans to the builder segment, wherein the company has a small exposure.