DHFL says remains strong and solvent, resolution plan underway

Mumbai: Despite the financial crisis at Dewan Housing Finance Corporation Limited (DHFL), the company said on Monday that it has withstood intense pressure and continues to remain strong and solvent.

“While the sectorial stress is well known for months, DHFL has withstood intense pressure and continues to remain strong and solvent. DHFL has also cleared a significant amount of obligation to the tune of Rs 41,800 crore since September 2018,” it said in a statement.

“We are closely working with the stakeholders and creditors to ensure that there is a comprehensive resolution without any hair cut to the lenders,” it added as its stock traded 27.5 percent down at Rs 49.65 per share around 1:45 pm.

DHFL has been dealing with a liquidity crisis like other non-banking financial companies. This follows a series of defaults by infrastructure lender IL&FS on its debt payments since June 2018.

“Since September 2018, DHFL has managed to make repayments of over Rs 41,800 crore primarily through securitization of assets and repayment collections,” said it’s Chairman and Managing Director Kapil Wadhawan in a statement last week.

In the backdrop of a significant slowdown in disbursement and loan growth post-September 2018, the company’s financials have been quite strained for the quarter, impacting the overall performance of the year. 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 fourth quarter of 2018-19 and a net loss of Rs 1,036 crore for the whole year.

“DHFL has had a strong history and standing with more than 30 banks in the country — whether it is in terms of term-loan borrowings or selling loans to them which has been much appreciated by the participants since the quality of assets has been of a high order,” it said.

The company said it is in an advanced stage of submitting its resolution process under the inter-creditor agreement as entered into by banks. This will examine and firm up the terms of the resolution process by July 25 and make it operational before September 25.

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.

The joint lender forum has also taken into account the need for recommencement of business by DHFL and

commence originating new home loans. Banks will enable the infusion of necessary liquidity into the system. “It is expected that DHFL will be able to restart its business in August and scale it up in the months ahead,” said the company statement.

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