Money & Banking

Dewan Housing reports a loss in June quarter FY20

Our Bureau Mumbai | Updated on October 18, 2019

Auditor raises significant doubt on its ability to continue as a going concern

The independent auditors' review report on the quarterly unaudited consolidated financial results of the financially stressed Dewan Housing Finance Corporation Ltd (DHFL) has raised significant doubt on the ability of the company to continue as a going concern.

The report said DHFL, which incurred loss aggregating ₹224 crore (including comprehensive loss)against a net profit of ₹472 crore in the year-ago period, may be unable to realize its assets and discharge its liabilities including potential liabilities in the normal course of business.

The report prepared by audit firm K .K. Mankeshwar & Co carries disclaimer of opinion vis-a-vis recoverability of the inter-corporate deposits (₹4,012 crore outstanding as at June-end 2019), flags its inability to obtain sufficient appropriate evidence to support the values of the loans and not being provided sufficient appropriate evidence to validate the company's assessment about the carrying value of the deferred tax asset (of ₹465 crore as at June 30, 2019), among others.

Referring to DHFL’s credit rating being reduced to 'default grade' subsequent to the previous year-end, the audit firm said this may substantially impair its ability to raise or generate funds to repay its obligations.

The report said DHFL is in the process of monetizing its assets and has submitted a draft resolution plan to the consortium of bankers for restructuring its borrowings and also there have been discussions for stake sale by the promoters to a strategic partner with further equity infusion.

“The ability of the Company to continue as a going concern inter alia is dependent upon its ability to monetize its assets, secure funding from the bankers or investors, restructure its liabilities and recommence its operations, which are not wholly within the control of the company,” it added.

Published on October 18, 2019

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