Mumbai, Apr 6 Leading ratings agency, Crisil, on Wednesday said that India Inc’s credit quality is peaking and the number of upgrades outnumbered downgrades in FY 11.

Crisil upgraded the ratings of 605 companies and downgraded 269 last fiscal on a base of around 6,200 companies it rates, a statement issued here said.

This had led to an improvement in CRISIL’s modified credit ratio (MCR, an indicator of the relative frequency of upgrades and downgrades) to 1.10 times in 2010-11 from 0.93 times in 2009-10.

However, Crisil feels that going forward, the MCR may not improve further as a number of pressure factors are at play. The pressures from rising commodity prices and interest rates witnessed in the last six-months are expected to continue in the medium-term, which could also see competition intensifying, it said.

“The vulnerability of corporates on this account is indicated by the proportion of negative outlooks - 7.6 per cent of total outlooks as of March 31, 2011,” it said, specifying cement, chemicals, construction, automobile and textile spinning as the sectors where the pressures can be witnessed.

The things to watch out for among the external factors will be the rising oil prices due to unrest in the Middle-East and North Africa, and interruption in trade and investments due to unexpected developments in stimuli-supported developed economies, it added.

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