Cash-strapped DHFL seeks Rs15,000-cr bail-out from banks
12 August 2019
Dewan Housing Finance (DHFL) has sought Rs15,000-crore immediate funding from banks for on-lending to retail customers as well as to project developers amidst a squeeze on its financials, say reports.
Lenders are reported to have initiated independent verification of crisis-hit DHFL's financials after the troubled home finance company last week submitted a draft resolution plan to move out of the present crisis.
Beleaguered home financier DHFL has defaulted on multiple times on payment to bondholders since June and owes an estimated Rs 90,000 crore to banks, National Housing Bank and other creditors.
Lenders will meet on Thursday to discuss the resolution plan and reports said creditors are favourably disposed on the issue of extending fresh line of credit to the mortgage lender.
"The company has asked for an additional funding of Rs 15,000 crore. The money will be used to fund viable projects that are stuck due to lack of money," reports cited one of the sources as saying.
The company is reported to have sought funds from banks/NHB for restarting retail funding which was stopped after last year’s liquidity crisis.
According to sources, the decision on any additional or the quantum of funding will be taken only after due deliberations by lenders.
Last month, lenders had signed an inter-creditor agreement (ICA), as mandated by the Reserve Bank in the new NPA resolution/recognition framework effective 7 June.
However, the company had said one of its debenture - trustees Catalyst Trusteeship Services is in the process of seeking consent from the debenture holders to be a party to the ICA.
In a separate filing to exchanges on 8 August, the company said it may not be able to meet its financial obligations in the near future.
"Given the ongoing discussions on the resolution plan with the lenders who have signed the ICA, we believe that our payment obligations falling due in the immediate future, may not be met as per their existing schedule," the company informed the exchanges.
DHFL has been under financial stress since September last year and the Wadhawan family, which owns a little over 39 per cent, has been looking at various options to come out of the stress which first came to light late last year following the IL&FS bankruptcy.
The company has been looking at selling stakes in group entities, including in the flagship to the extent of giving up half of their stake.
DHFL has seen a rash of rating downgrades in June after it defaulted on Rs1,150 crore of bonds due on 4 June. This led to a downgrade of its Rs850-crore commercial papers to 'default' by three rating agencies.
DHFL saw a reduction in annual after-tax loss from Rs1,240 crore in FY18 to Rs1,036 crore in FY19 even as its revenue for the year increased by 19 per cent to Rs12,900.6 crore for the year ended 31 March 2019 against Rs10,864.4 crore in the corresponding quarter of previous year.
The company’s total assets under management (AUM) stood at Rs1,19,992 crore as of end-March 2019 against Rs1,11,318 crore as on 31 March 2018.
DHFL managed to make repayments of over Rs41,800 crore primarily through securitisation of assets and repayment collections.
In the backdrop of a significant slowdown in disbursement and loan growth post September 2018, the financials of the company have been quite strained for the quarter impacting the overall performance of the year.
Operating profit for the April-June 2019-20 quarter was Rs372 crore and Rs2,378 crore for the whole year. However, due to the additional provisioning of Rs3,280 crore (Incl. net loss on fair value), the company reported a net loss of Rs2,223 crore for the quarter and net loss of Rs1,036 crore for the whole year.