DHFL Q4 pre-tax loss rises to Rs 10,296.91 crore on fair value changes

Firm has seen huge drop in loan assets, with housing and other loans at the end of Q4 at Rs 66,202.68 cr from Rs 97,978.12 cr a year ago

Mortgage lender Dewan Housing Finance (DHFL) reported a pre-tax loss of Rs 10,296.91 crore in the fourth quarter of the last financial year (Q4FY20), as against a pre-tax loss of Rs 2,907.56 crore in Q4FY19. This was on account of a Rs 12,403.27-crore net loss on fair value changes. The lender reported a net loss of Rs 7,634.89 crore in Q4FY20, compared to a net loss of Rs 2,223.41 crore in Q4FY19.

By opting for a lower tax regime, the mortgage lender netted a sum of Rs 4,609.85 crore on account of deferred tax for FY20. It witnessed a serious drop in its loan assets, with housing and other loans at the end of the March quarter at Rs 66,202.68 crore, as against Rs 97, 978.12 crore a year ago.

The lender said around 35 per cent of its loan portfolio (by value) had availed of the moratorium facility extended by the Reserve Bank of India.

The recovery from the moratorium accounts is forthcoming with Unlock 1.0 and commencement of field visits, it said, adding, the recovery will further improve in moratorium accounts during Q1FY21.

According to the auditor’s report, DHFL incurred loss aggregating Rs 13,575.15 crore in FY20, thus eroding the net worth of the company substantially. “... the company’s ability to remain as a 'going concern' depends on the outcome of the ongoing corporate insolvency resolution process," the report said.  

In November 2019, DHFL became the first financial services company to be admitted into the insolvency process. The mortgage lender had received expressions of interest from 24 entities; some of them wanted to bid for the whole business, while a few others sought to bid for the company in parts.

The committee of creditors has extended the deadline for submission of bids until July 24 due to the Covid-19 pandemic. In the notes to accounts, the management said Rs 3,018.68 crore has not been reconciled while analysing the total assets, as it could not be mapped to any security against which this amount was disbursed. Hence the management decided to treat the amount as loss assets according to the asset classification norms. This has been fully provided for by the mortgage lender.