Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  DHFL reports net profit in Q3, but auditors wary
BackBack

DHFL reports net profit in Q3, but auditors wary

Stressed lender posts ₹934 cr stand-alone net profit, primarily on a tax adjustment
  • During the Dec quarter, DHFL gains from a deferred tax adjustment of ₹1,102 crore
  • For the nine months to December 2019, DHFL reported a loss of ₹5,977 crore, as against a profit of ₹1,187 crore in the year earlier.Premium
    For the nine months to December 2019, DHFL reported a loss of 5,977 crore, as against a profit of 1,187 crore in the year earlier.

    MUMBAI : Stressed mortgage lender Dewan Housing Finance Corp. Ltd (DHFL) on Thursday reported a surprise standalone profit of 934 crore for the December quarter, thanks primarily to a one-time tax adjustment.

    The company, now in bankruptcy court, had posted a net profit of 314 crore in the same period last year.

    During the quarter, DHFL benefitted from a deferred tax adjustment of 1,102 crore, without which it would have posted a loss of 168 crore.

    On 20 November 2019, the central bank had superseded DHFL’s board and, on 3 December, referred it to the National Company Law Tribunal (NCLT). RBI named R. Subramaniakumar as administrator for the company, assisted by a team of consultants and legal experts.

    As it stopped disbursing new loans amid a liquidity crunch, DHFL’s interest income declined 28% year-on-year to 2,384 crore, while income from fees and commission crashed to 43 lakh from 41 crore a year ago. DHFL’s total revenues fell 27% y-o-y to 2,432 crore.

    For the nine months to December 2019, it reported a loss of 5,977 crore, as against a profit of 1,187 crore in the year earlier.

    The company said the wholesale loan portfolio of 48,347 crore has been “fair valued" as on 31 December 2019 at 42,361 crore and the resulting fair value loss of 5,986 crore has been accounted for. Of this, the fair value loss 4,852 crore has been accounted for up to 30 September and balance has been charged to the profit and loss statement in Q3 FY20.

    In the notes accompanying the financial results, Dinesh Kumar Bachchas, partner at audit firm K K Mankeshwar and Co. said there exists a mismatch of 3,018 crore in loans, yet to be identified and mapped to individual parties and the underlying securities available.

    “The provisions have been made in the financial results for the same due to non-availability of internal confirmations. These provisions may undergo changes upon the actual realization on case to case basis," said Bachchas.

    Bachchas also said the company has not made any provisions since its admission to NCLT towards interest on its borrowings on the basis of an opinion from legal advisers. This interest (including penal interest) not provided for amounts to 527 crore.

    The profit for the quarter and the losses for nine months ended as on 31 December 2019 are accordingly overstated and understated, respectively to that extent, the auditor said.

    DHFL’s assets under management stood at 1.19 trillion, of which 63,690 crore is in retail loans and the rest in wholesale.

    The total amount of creditor claims verified by the administrator, so far, was 86,035 crore, of which 5,015 crore was towards 60,717 fixed deposit holders.

    Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

    ABOUT THE AUTHOR
    Shayan Ghosh
    Shayan Ghosh is a national editor at Mint reporting on traditional banks and shadow banks. He has over 12 years of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
    Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
    More Less
    Published: 20 Feb 2020, 06:00 PM IST
    Next Story footLogo
    Recommended For You
    Switch to the Mint app for fast and personalized news - Get App