14 July 2019: Cash-strapped DHFL has suffered a fourth-quarter net loss of Rs 2,223.41 crore as provisions jumped. The housing finance company had clocked a net profit of Rs 134.35 crore a year ago.
The loss came as provisions surged to around Rs 3,280 crore, which included Rs 729.47 crore set aside for expected credit loss and a “net loss on fair value change” of Rs 2,550.17 crore.
In its notes to accounts, DHFL said it is under substantial financial stress since the second half of 2018-19. Moreover, its credit ratings have been consistently downgraded since February this year. In June, the credit rating was reduced to default grade.
The company added that its ability to raise funds has been impaired and the business has been brought to a standstill amid minimal or virtually no disbursements.
DHFL said that these developments may raise questions about its ability to continue as a going concern, but despite these adverse conditions, it had repaid Rs 41,800 crore since September 1, 2018, part of which was prepayment of its liabilities.
The company added that it was in an advanced stage of submitting its resolution process under the inter-creditor agreement (ICA) with banks. The ICA will examine and firm up the terms of the resolution process by July 25 and it would be made operational before September 25.
DHFL said it was taking steps to monetise assets and was in discussions with domestic banks and international financial institutions to sell its retail and wholesale portfolio. It is also in discussions with the consortium of banks to restructure its borrowings.
There has been discussions of a stake sale by the promoters to a strategic partner with further equity infusion.
“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 re-convening in the next two weeks to look through the proposals and will decide on the way forward… Banks would enable the infusion of liquidity into the system. It is expected that DHFL will be able to restart its business in August 2019 and scale it up in the months ahead,’’ the firm said.
In 2018-19, its total assets under management stood at Rs 1,19,992 crore against Rs 1,11,318 crore as on March 31, 2018. During the March quarter, total income declined to Rs 3,057 crore from Rs 3,255.89 crore in the preceding three months, though it was higher than Rs 2,846 crore a year ago.
Gross NPA rose to 2.74 per cent from 0.96 per cent a year ago.
“In the last nine months, we have met all our financial obligations and are looking to return to normal business soon,” chairman & managing director Kapil Wadhawan said.