The company also mentioned that it had not provided for interest amount of Rs 527 crore on borrowings since insolvency commencement date (December 3, 2019) based on the opinion from legal advisors.
Dewan Housing Finance Corporation (DHFL) on Thursday reported a net profit of Rs 934 crore for Q3FY20, up from a profit of Rs 314 crore a year ago, on account of deferred tax adjustments, exemption from interest provisioning as it is under moratorium. The net profit was aided by deferred tax assets adjustment of Rs 1,102 crore, as it decided to move to the lower corporate tax rate announced by the government.
The company also mentioned that it had not provided for interest amount of Rs 527 crore on borrowings since insolvency commencement date (December 3, 2019) based on the opinion from legal advisors. Under the Insolvency and Bankruptcy Code (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, the company said in a release to stock exchanges. “If the interest was accrued on borrowings, the profit for the quarter and nine months would have been lower by Rs 392.39 crore,” it added. Total revenue from operations was down 26% at Rs 2,431.83 crore, compared to Rs 3,326 crore a year ago. However, total expenses came down 9% at Rs 2,605 crore, compared to Rs 2,860 crore a year ago.
The company is undergoing substantial financial stress since the second half of the previous fiscal. The company also mentioned that the ministry of corporate affairs had initiated a Serious Fraud Investigation Office investigation into the affairs of the company. Further, Enforcement Directorate had also initiated a probe in connection with the loans given by the company to certain borrowers. The company is fully co-operating with the investigating agencies, it added.
The auditors had identified Rs 5,652 crore in inter-corporate deposits outstanding as of March 31, 2019. Of these, Rs 1,129.36 crore has been repaid and Rs 1,306.6 crore have been converted into term loans. Outstanding ICDs stand at Rs 3,793.76 crore. The recoverability or otherwise of these is yet to be ascertained, the company said. There exists a mismatch to the extent of Rs 3,018 crore that is yet to identified and mapped to individual parties and the underlying securities available, if any, out of the available surplus security covers.
DHFL was admitted for insolvency proceedings at the NCLT, Mumbai, in December. The RBI, on November 20, superseded the board of DHFL and appointed R Subramaniakumar as its administrator. The company is said to have received expression for interests to bid fom at least 20 applicants.