FE: DHFL defaults again, this time to tune of Rs 48 crore

14 July 2019: Dewan Housing Finance Corporation (DHFL) on Saturday said it had made fresh defaults in two instances. On July 6, it failed to meet an interest payment obligation of Rs 19.59 crore on private placement NCD and of Rs 28.41 crore on July 8 towards another private placement NCD.

Since June, the company has either delayed or defaulted on interest payments of various instruments. On June 4, it missed interest payment on secured redeemable NCDs worth Rs 900 crore but later revealed it had made full payment within the cure period. Soon after, on June 25, it defaulted on maturing unsecured commercial paper to the tune of Rs 225 crore. More recently, on July 4, the company said it defaulted on interest payments on private placement secured redeemable NCDs to the tune of Rs 4.75 crore and of Rs 1.19 lakh on public issue of NCDs.

On Saturday, it announced fresh defaults in two instances. On July 6, it failed to meet an interest payment obligation of Rs 19.59 crore on private placement NCD and of Rs 28.41 crore on July 8 towards another private placement NCD. Lenders to the housing financier have since signed an inter-creditor agreement to resolve the account and DHFL is expected to present a resolution proposal next week.

The company also reported a net loss of Rs 2,223 crore for the March quarter on Saturday. In the same quarter last year the lender had posted a net profit of Rs 134.4 crore. DHFL deferred the announcement of financial results for the March quarter to Saturday, which was earlier scheduled for June 29, citing the unavailability of the management concerned.

Gross non-performing assets (NPA) stood at 2.74% as on March 31 against 0.91% in the previous quarter and 0.96% in the corresponding quarter last year.

Provisions in Q4FY19 rose to Rs 729.47 crore from Rs 373.13 crore in the corresponding quarter last year.

DHFL’s liquidity crisis has led to the downgrade of its debt of over Rs 1 lakh crore across various instruments including long-term borrowing and fixed deposits to D from AAA by various rating agencies like Crisil, CARE, ICRA and India Ratings.

“The company is taking active steps to monetise its assets and is in discussions with multiple Indian banks and international financial institutions to sell off its retail as well as wholesale portfolio. It is in discussions with the consortium of bankers/ lenders to restructure its borrowings and will take all the necessary steps to ensure that it meets’ its financial commitments,” notes to the result read.

It further stated, “In view thereof, the requirements in respect of creation of debenture redemption reserve and the corresponding deposit in liquid assets shall be assessed upon conclusion of the restructuring plan. The Company is in the process of submitting a resolution plan to the lenders and the lenders are expected to give an in-principle approval to the plan by end of July 2019.” It also referred to discussions for stake sale by the promoters to a strategic partner with further equity infusion and plan to monetise the wholesale loan portfolio.

The company also tabled a report in Saturday’s board meeting regarding an independent review of allegations against the management and promoters by a media portal revealing procedural lapses, documentation deficiencies and failure on monitoring end use of the funds loaned as per the mandate of loan sanction conditions.

“The statutory auditors posted their review of the independent chartered accountants report, provided their observations and suggestions on the scope, coverage and findings by the independent chartered accountants in the report, as well as additional areas that needed to be covered. The management is in the process of determining the action to address the comments of the statutory auditors,” the company said in a release.

Financial Express reported

TI: DHFL slips into the red

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. 

The TelegraphIndia reported