Insolvent DHFL shows Q3 net profit of Rs934.35 crore
21 February 2020
Debt-laden housing finance company Dewan Housing Finance Corporation Ltd (DHFL), which is in the insolvency resolution process, has reported a standalone net profit of Rs934.35 crore in the third quarter of fiscal 2020 against a loss of Rs6,705.35 crore in the same quarter of the previous financial year.
The mortgage lender, which is under a insolvency resolution process, reported total revenue from operations of Rs2,431.83 crore for fiscal third quarter ended 31 December 2019, while is total expenses stood at Rs2,604.70 crore.
Dewan Housing, which is going through the insolvency process under the Insolvency and Bankruptcy Code, has not provided for interest amount of Rs527.62 crore on borrowings since the commencement of insolvency on 3 December 2019as per the opinion of legal advisors.
Under the IBC, the treatment of creditors under the resolution plan is as per debts due as on the insolvency commencement date and therefore no interest is accrued and payable after this date.
If the interest was accrued on borrowings, the profit for the quarter and nine months would have been lower by Rs392.39 crore, the company said.
The company is undergoing substantial financial stress since the second half of the previous financial year.
“The company has suffered consistent downgrades in its credit ratings since February 2019. On June 5, 2019, the credit rating was reduced to 'default grade'. As a result, 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,” DHFL said in a regulatory filing.
The ministry of corporate affairs has initiated an investigation by the Serious Fraud Investigation Office (SFIO) into the affairs of the company. Further, the Enforcement Directorate has also initiated investigation in connection with the loans given by the company to certain borrowers.
The company said it is fully co-operating with the investigating agencies.
DHFL was admitted for insolvency proceedings on 2 December. The Reserve Bank of India (RBI) on 20 November 20 10, superseded the board of DHFL and appointed Subramaniakumar as its administrator.