DHFL Auditor Reports Fair Value Loss Of ₹18,853 Cr, Mismatch Of ₹3,018 Cr, ICD Dues Of ₹3,786.24 Cr
Companies
According to the recent auditing report of Dewan House Finance Corporation (DHFL), a company which is under a moratorium, DHFL has a fair value loss of Rs 18,853 crore as of March 2020, mismatch of Rs 3,018 crore.
The auditor further noted that the recoverability of inter-corporate deposits (ICDs) of Rs 3,786.24 crore “is yet to be ascertained,” Indian Express reported.
According to the auditor, KK Mankeshwar & Co, DHFL’s wholesale loan portfolio aggregating Rs 49,585 crore (after classification of this portfolio to “held for sale” in the previous year ended March 2019) has been “fair valued” as of March 2020 at Rs 30,732 crore, which reflects the fair value loss of Rs 18,853 crore.
“Out of this, fair value loss aggregating to Rs 5,986 crore has been accounted up to December 2019 and balance loss of Rs 12,867 crore has been charged to the statement of profit and loss for the quarter ended March 2020,” it said.
On November 20, 2019, the Reserve Bank of India (RBI) took over DHFL’s board of directors, managed by the Wadhawans. The supersedure was carried out owing to governance concerns and defaults in meeting various payment obligations. RBI then appointed an Administrator to run the company.
Subsequently, the National Company Law Tribunal (Mumbai Bench) admitted the application filed by the RBI and initiated the corporate insolvency resolution process of the company under the IBC.
The auditor said there’s a mismatch amounting to Rs 3,018 crore that is yet to be identified and mapped to individual parties. “The process of identifying and mapping of this amount to any scheme under which they were disbursed and further steps to be taken basis findings, are being addressed as a part of CIRP and the same is underway,” it said.
DHFL has reported a loss of Rs 13,575 crore (including comprehensive income) during the year ended March 2020. This has rendered it unable to comply with regulatory requirements of the National Housing Bank (NHB) in respect of the net owned fund (NOF), which also resulted in multiple contraventions of the provisions of NHB Act, 1987 and guidelines, as per the Indian Express report.
“Although the non-compliance may in ordinary course result in potential action against the company by NHB in this regard, we are not commenting on the same since the company is presently under a moratorium imposed by the NCLT which prevents any actions against the company,” it said.
According to the auditor, investments/advance by way of unsecured ICDs aggregating Rs 5,652 crore were outstanding as of March 2019. Of these, ICDs of Rs 938 crore have since been repaid by the borrowers and ICDs of Rs 1,306 crore have been converted during the period of previous management into term loans prior to November 2019, resulting in an outstanding of Rs 3,786 crore under ICDs, including interest receivable as of March 2020, the Indian Express report further added.
“The recoverability or otherwise of the remaining amount is yet to be ascertained, and hence the appropriate provision amounting to Rs 2,250 crore has been made as a prudent measure,” it said.
Published on
June 24, 2020
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According to the recent auditing report of Dewan House Finance Corporation (DHFL), a company which is under a moratorium, DHFL has a fair value loss of Rs 18,853 crore as of March 2020, mismatch of Rs 3,018 crore.
The auditor further noted that the recoverability of inter-corporate deposits (ICDs) of Rs 3,786.24 crore “is yet to be ascertained,” Indian Express reported.
According to the auditor, KK Mankeshwar & Co, DHFL’s wholesale loan portfolio aggregating Rs 49,585 crore (after classification of this portfolio to “held for sale” in the previous year ended March 2019) has been “fair valued” as of March 2020 at Rs 30,732 crore, which reflects the fair value loss of Rs 18,853 crore.
“Out of this, fair value loss aggregating to Rs 5,986 crore has been accounted up to December 2019 and balance loss of Rs 12,867 crore has been charged to the statement of profit and loss for the quarter ended March 2020,” it said.
On November 20, 2019, the Reserve Bank of India (RBI) took over DHFL’s board of directors, managed by the Wadhawans. The supersedure was carried out owing to governance concerns and defaults in meeting various payment obligations. RBI then appointed an Administrator to run the company.
Subsequently, the National Company Law Tribunal (Mumbai Bench) admitted the application filed by the RBI and initiated the corporate insolvency resolution process of the company under the IBC.
The auditor said there’s a mismatch amounting to Rs 3,018 crore that is yet to be identified and mapped to individual parties. “The process of identifying and mapping of this amount to any scheme under which they were disbursed and further steps to be taken basis findings, are being addressed as a part of CIRP and the same is underway,” it said.
DHFL has reported a loss of Rs 13,575 crore (including comprehensive income) during the year ended March 2020. This has rendered it unable to comply with regulatory requirements of the National Housing Bank (NHB) in respect of the net owned fund (NOF), which also resulted in multiple contraventions of the provisions of NHB Act, 1987 and guidelines, as per the Indian Express report.
“Although the non-compliance may in ordinary course result in potential action against the company by NHB in this regard, we are not commenting on the same since the company is presently under a moratorium imposed by the NCLT which prevents any actions against the company,” it said.
According to the auditor, investments/advance by way of unsecured ICDs aggregating Rs 5,652 crore were outstanding as of March 2019. Of these, ICDs of Rs 938 crore have since been repaid by the borrowers and ICDs of Rs 1,306 crore have been converted during the period of previous management into term loans prior to November 2019, resulting in an outstanding of Rs 3,786 crore under ICDs, including interest receivable as of March 2020, the Indian Express report further added.
“The recoverability or otherwise of the remaining amount is yet to be ascertained, and hence the appropriate provision amounting to Rs 2,250 crore has been made as a prudent measure,” it said.
Published on
A letter from the Editor
Dear Readers,
The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill.
In these difficult times, we, at BusinessLine, are trying our best to ensure the newspaper reaches your hands every day. You can also access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute.
But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.
I appeal to all our readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. You can help us by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section.
Our subscriptions start as low as Rs 199/- per month. A yearly package costs just Rs. 999 – a mere Rs 2.75 per day, less than a third the price of a cup of roadside chai..
A little help from you can make a huge difference to the cause of quality journalism!
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