Mumbai (Maharashtra) [India], Feb 20 (ANI): Debt-ridden mortgage lender Dewan Housing Finance Corporation Ltd (DHFL) on Thursday reported a standalone net profit of Rs 934 crore in the third quarter of current financial year as against a loss of Rs 6,705 crore in the same period of previous fiscal.
The company undergoing insolvency proceedings also posted total revenue from operations in Q3 FY20 at Rs 2,432 crore while total expenses were Rs 2,605 crore.
However, the results do not provide a fair picture as DHFL is under moratorium as per insolvency rules and has not paid interest on borrowings.
"The company has not provided for interest amount of Rs 527 crore on borrowings since insolvency commencement date (that is December 3, 2019) based on the opinion from legal advisers," it said in a statement.
Under the Insolvency and Bankruptcy Code 2016, 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," said the cash-strapped company.
The company is undergoing substantial financial stress since the second half of 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," said DHFL.
The Ministry of Corporate Affairs has initiated Serious Fraud Investigation Office (SFIO) investigation into the affairs of the company. Besides, the Enforcement Directorate has initiated an investigation in connection with the loans given by the company to certain borrowers.
DHFL Chairman and Managing Director Kapil Wadhawan is jailed in connection with a money-laundering probe against the late gangster and drug smuggler Iqbal Mirchi.
The company is fully cooperating with the investigating agencies, the company said.
DHFL was admitted for insolvency proceedings on December 2. On November 20, the Reserve Bank of India (RBI) superseded the board of DHFL and appointed Subramaniakumar as its administrator. (ANI)