Beleaguered mortgage player Dewan Housing Finance Corporation (DHFL) said it is in the process of identifying a much-needed strategic investor to boost its capital base. DHFL said its board will meet in two weeks to look at the potential proposals. But, that comes along with the warning of the strained finances of the company and its ability to continue as a “going concern”.
DHFL said it is in advanced stages of submitting its resolution process under the inter-creditor agreement drawn up by banks. The resolution process is to be firmed up by July 25 and will become operational before September 25.
“The joint lender forum has also taken into account the need for recommencement of business by DHFL and commence originating new home loans. Banks would enable the infusion of necessary liquidity into the system. It is expected that DHFL will be able to restart its business in August 2019 and scale it up in months ahead,” it said while announcing one of the worst set of numbers ever, late on Saturday.
DHFL reported a loss of Rs 2,223 crore in the fourth quarter of 2018-19 fiscal after making a provision of Rs 3,280 crore, and also reported a loss of Rs 3,543 crore for the full year.
DHFL noted that it is under doing substantial financial stress since the second half of the current fiscal with a series of credit ratings raising doubts over the continued operations since February. “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,” DHFL said in the notes to accounts.
The company said that since September, it has repaid Rs 41,800 crore primarily through securitisation of assets, and ever since, the financials have become strained with slowdown in disbursements and loan growth.
Rating agencies had warned of potential defaults based on the high cash outflow of the firm, compared to its monthly loan collections.