Our liquidity profile is pretty strong, says DHFL's Kapil Wadhawan

We are strong fundamentally, and extremely liquid to take care of our day-to-day operations, says Wadhawan

Kapil Wadhawan, chairman and managing director of DHFL, speaks to Advait Rao Palepu on the sharp fall in the company’s stock price on Friday. He says the fundamentals of the company are strong, with adequate liquidity to tide over its immediate obligations, if any. Edited excerpts:

Why do you think there was considerable selling pressure on DHFL’s stock?

I am equally shocked by the developments on the stock market after 12 pm. More important, we continue to be fundamentally strong be it on the liquidity front, our asset quality, or the business we do on a monthly basis. I am sure this has to do with the contagion effect in the market because of IL&FS. 

Unfortunately, irrational behavior has led to everybody being painted with the same brush, literally.

The stock initially recovered after your public statement, but fell again. How do you view the movement?

How do I intervene in the stock market? We are doing what we can to allay concerns people might have, by talking to the investor community and the media. 

This is something that is beyond my control so all I can say is that we are strong fundamentally, and extremely liquid to take care of our day-to-day operations.

Do you have exposure to IL&FS and has the company invested in DHFL?

There is no exposure to IL&FS. We have invested in MFs and are keeping our money in liquid funds, so if they have an exposure to the company it has nothing to do with DHFL. 

A lot of wealth erosion has happened which could impact your business. Do you have any fundraising lined up?

Our business is fairly granular in nature; we are mainly focused on the retail segment and will continue doing business as usual. 

Hopefully, the dust settles over the next couple of days.

Could you give us picture of the liquidity profile of the company?

Our liquidity profile is pretty strong. Commercial papers are less than 5 per cent of our total liability, which is spread over the next six months’ time. In terms of meeting obligations, we are well-covered, because these are granular flows that keep coming. We are expecting a lot of flows on a monthly basis that surely adds to my total liquidity pool. At present, commercial paper outstanding is Rs 75 billion against a total liability pool of over Rs 1 trillion.

Have you heard from the stock exchanges or the market regulator?

No, at the end of the day we are not the only one singled out. We have seen a sharp correction but it is all happening out there in the market.

Have any of your lenders recalled their loans? 

No, we borrow from all financial institutions depending on the size of our operations. But no, there is absolutely no recall of loans from anyone.

While institutional investors understand the market movement, DHFL had recently issued NCDs as well. How will you convince the retail investors? 

That is a separate exercise which we will get into. But unfortunately, some of the challenges that few other companies are facing will surely have a small impact. We will see how we can tide over that impact and make sure that we address their concerns.