DHFL posts net profit of Rs 934.35 crore in Q3FY20

Debt-ridden mortgage lender Dewan Housing Finance Corporation Ltd (DHFL), which is also facing a corporate insolvency resolution process, on Thursday reported a standalone net profit of Rs 934.35 crore in the third quarter of fiscal 2020 as against a loss of Rs 6,705.35 crore in the same period last year.

Total revenue from operations in Q3FY20 stood at Rs 2,431.83 crore, while total expenses came in at Rs 2,604.70 crore.

Undergoing insolvency process within the Insolvency and Bankruptcy Code, the company has not provided for interest amount of Rs 527.62 crore on borrowings since insolvency commencement date (December 3, 2019) based on the opinion from 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 Rs 392.39 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 Serious Fraud Investigation Office (SFIO) investigation into the affairs of the company. Further, Enforcement Directorate has also initiated investigation in connection with the loans given by the company to certain borrowers.

The company is fully co-operating with the investigating agencies, it added.

DHFL was admitted for insolvency proceedings on December 2. The Reserve Bank of India (RBI) on November 20, superseded the board of DHFL and appointed Subramaniakumar as its administrator.

Earlier, CNBC-TV18 had reported that at least 24 suitors have already submitted an expression of interest (EoI) to acquire troubled mortgage lender under the Insolvency & Bankruptcy Code.