DHFL auditors discover fraudulent transactions worth Rs 14,046 cr

The administrator of DHFL - R Subramaniakumar - has moved an application in the National Company Law Tribunal (NCLT) based on the findings of the of transaction auditor

Transaction auditors appointed by the administrator of Dewan Housing Finance Corporation Ltd (DHFL) to investigate the affair of the company in its initial report has found certain transactions were fraudulent in nature.

According to the report, the monetary impact of the fraudulent transaction in the books of the company is to the tune of Rs 14,046 crore and the notional loss is Rs 3,348 crore, because of charging lower rate of interest to certain entities fraudulently.

“The total impact of such transactions as detailed in the transaction auditor’s report has been sought from the relevant entities involved, along with the interest for the relevant period, through the said application filed with the National Company Law Tribunal (NCLT)," the company said in an exchange notification.

The administrator of DHFL — R Subramaniakumar — has moved an application in the NCLT based on the findings of the transaction auditor. The application has been moved under Section 60(5) and Section 66 of the Insolvency and Bankruptcy Code (IBC) on August 30, 2020, against the erstwhile promoters of the company, Kapil and Dheeraj Wadhawan, and 85 other entities and people that include Township Developers India, Wadhawan Holdings, Dheeraj Township Developers, Wadhawan Consolidated, Wadhawan Global Hotels & Resorts, Wadhawan Lifestyle Retail, and certain other entities.

“The administrator has filed an application in respect of disbursements made to certain entities, referred to as the Bandra Books Entities, before the Mumbai Bench of the NCLT," read an exchange notification by the company. According to the report prepared by the transaction auditor, the concerned fraudulent transactions occurred from FY06-07 to FY18-19. The administrator had appointed professional agency Grant Thornton to conduct investigation of the affairs of the company.

DHFL is the first financial services company to be admitted under the IBC. The mortgage lender has reported a pre-tax profit of Rs 92.81 crore in the quarter ending June 2020 (Q1FY21) compared to a loss of Rs 198.85 crore in the same period last financial year. 

Its net for the period came in at Rs 70 crore, compared to a loss of Rs 206 crore. Its total income for the period stood at Rs 2,328.86 crore (Q1FY21), compared to Rs 2,399.87 crore. It has said that almost 28 per cent of its book is under moratorium as of June 30.

According to the auditors of the company, the firm had accumulated losses exceeding the share capital and reserves and its net worth has been fully eroded; and it is now under Corporate Insolvency Resolution Process.