Housing lender DHFL fears it may not continue as a going concern; posts loss of Rs 2,223 cr in Q4
First Post
July 15, 2019
Press Trust Of India
Housing finance firm DHFL has said the developments in last few quarters threaten its ability to continue as a going concern, as the company posted biggest-ever quarterly loss of Rs 2,223 crore for the fourth quarter ended 31 March.
The debt-ridden company had reported a profit of Rs 134.35 crore in the same quarter previous fiscal.
"In the backdrop of a significant slowdown in disbursement and loan growth post-September 2018, the financials of the company have been quite strained for the quarter impacting the overall performance of the year," the company said in a late evening regulatory filing on Saturday.
The operating profit was Rs 372 crore for the quarter and Rs 2,378 crore for the whole year.
"However, due to the additional provisioning of Rs 3,280 crore (including net loss on fair value), the company reported a net loss of Rs 2,223 crore for the quarter and net loss of Rs 1,036 crore for the whole year," it said.
It further said that the company is undergoing substantial financial stress since the second half of the last financial year.
Dewan Housing Finance Ltd (DHFL) has suffered consistent downgrades in its credit ratings since February 2019. On 5 June, 2019, its credit rating was reduced to 'default grade' despite no default till that date.
"The Company's ability to raise funds has been substantially impaired and the business has been brought to a standstill with there being minimal/virtually no disbursements. These developments may raise a significant doubt on the ability of the Company to continue as a going concern," it said.
DHFL is in an advanced stage of submitting its resolution process under the inter-creditor agreement as entered into by banks.
As already announced, the inter-creditor agreement will examine and firm up the terms of the resolution process by 25 July 2019 and make it operational before 25 September 2019, it said.
"The process of identifying a strategic investor is also nearing completion which will bring in an equity investor into DHFL to bolster its capital base. The board will be reconvening in the next two weeks to look through the potential proposals and will decide accordingly on the way forward," it said.
Promoters of mortgage lender are in talks with private equity firms and are expecting to garner $1 billion (about Rs 6,900 crore) by selling nearly 50 percent of their holdings, sources said.
The Wadhawan family, the promoters of the company, currently holds close to 40 percent stake in the company.
Private equity firms Lone Star, AION Capital and KKR are in talks with promoters for the strategic stake, sources said.
The company said it had defaulted on interest payments Rs 28.41 crore and Rs 19.59 crore on non-convertible debentures, due on 6 July and 8 July respectively.
The company is in discussions with its bankers for restructuring its liabilities and is working on a resolution plan to be submitted to the lenders, it added.
The joint lender forum has also taken into account the need for recommencement of business by DHFL and commence originating new home loans, as per the company.
The company has appointed Asish Saraf senior vice president as the Chief Risk Officer of the firm for a period of three years.
Reference:-https://www.firstpost.com/business/housing-lender-dhfl-fears-it-may-not-continue-as-a-going-concern-posts-loss-of-rs-2223-cr-in-q4-6993741.html
July 15, 2019
Press Trust Of India
Housing finance firm DHFL has said the developments in last few quarters threaten its ability to continue as a going concern, as the company posted biggest-ever quarterly loss of Rs 2,223 crore for the fourth quarter ended 31 March.
The debt-ridden company had reported a profit of Rs 134.35 crore in the same quarter previous fiscal.
"In the backdrop of a significant slowdown in disbursement and loan growth post-September 2018, the financials of the company have been quite strained for the quarter impacting the overall performance of the year," the company said in a late evening regulatory filing on Saturday.
The operating profit was Rs 372 crore for the quarter and Rs 2,378 crore for the whole year.
"However, due to the additional provisioning of Rs 3,280 crore (including net loss on fair value), the company reported a net loss of Rs 2,223 crore for the quarter and net loss of Rs 1,036 crore for the whole year," it said.
It further said that the company is undergoing substantial financial stress since the second half of the last financial year.
Dewan Housing Finance Ltd (DHFL) has suffered consistent downgrades in its credit ratings since February 2019. On 5 June, 2019, its credit rating was reduced to 'default grade' despite no default till that date.
"The Company's ability to raise funds has been substantially impaired and the business has been brought to a standstill with there being minimal/virtually no disbursements. These developments may raise a significant doubt on the ability of the Company to continue as a going concern," it said.
DHFL is in an advanced stage of submitting its resolution process under the inter-creditor agreement as entered into by banks.
As already announced, the inter-creditor agreement will examine and firm up the terms of the resolution process by 25 July 2019 and make it operational before 25 September 2019, it said.
"The process of identifying a strategic investor is also nearing completion which will bring in an equity investor into DHFL to bolster its capital base. The board will be reconvening in the next two weeks to look through the potential proposals and will decide accordingly on the way forward," it said.
Promoters of mortgage lender are in talks with private equity firms and are expecting to garner $1 billion (about Rs 6,900 crore) by selling nearly 50 percent of their holdings, sources said.
The Wadhawan family, the promoters of the company, currently holds close to 40 percent stake in the company.
Private equity firms Lone Star, AION Capital and KKR are in talks with promoters for the strategic stake, sources said.
The company said it had defaulted on interest payments Rs 28.41 crore and Rs 19.59 crore on non-convertible debentures, due on 6 July and 8 July respectively.
The company is in discussions with its bankers for restructuring its liabilities and is working on a resolution plan to be submitted to the lenders, it added.
The joint lender forum has also taken into account the need for recommencement of business by DHFL and commence originating new home loans, as per the company.
The company has appointed Asish Saraf senior vice president as the Chief Risk Officer of the firm for a period of three years.
Reference:-https://www.firstpost.com/business/housing-lender-dhfl-fears-it-may-not-continue-as-a-going-concern-posts-loss-of-rs-2223-cr-in-q4-6993741.html
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