Murky allegations continue to pile up against debt-ridden Dewan Housing Finance Limited. India's fourth largest housing financier, currently being probed by the Enforcement Directorate in connection with its alleged link with global terrorist Dawood Ibrahim's aide Iqbal Mirchi, is now suspected of fund diversion.
A forensic audit of the company by KPMG found that DHFL had lent Rs 14,000 crore to about 25 group companies, which had posted an average profit of about Rs 1 lakh, Mint reported. The draft report of the audit was shared with the members of DHFL's committee of creditors (CoC) last week and will be presented to the board of the mortgage lender once it is finalised.
In February, the Finance Ministry had directed DHFL's top three lenders - Bank of Baroda, State Bank of India and Union Bank of India - to initiate a forensic audit following allegations of fund diversion by investigative news portal Cobrapost in the previous month.
The portal alleged that the housing financier had sanctioned and disbursed large loans without filing any charge documents with the Ministry of Corporate Affairs (MCA) in most of the cases. The promoters, the Wadhawan family, were accused of siphoning off funds through a network of shell companies to create personal wealth. The expose pegged the size of the scam at Rs 31,000 crore.
The forensic audit further revealed that current outstanding loans and ICDs (inter-corporate deposits) to the above-mentioned 25 entities from DHFL totalled Rs 13,000 crore. Loans amounting to Rs 7,000 crore to 15 of them were not classified as non-performing assets (NPAs) by DHFL despite their repayments being overdue. The report added that these group companies had invested Rs 4,000 crore in purchasing preference shares of some other entities. Moreover, some of DHFL's related-party transactions were not approved by its audit committee.
Another significant finding was that of the Rs 27,000 crore worth of loans raised by DHFL from banks for on-lending to home buyers, around Rs 10,050 crore was invested in mutual funds.
This development may not only throw a spanner into the company's debt resolution plans, including debt-equity swap, but also prompt its lenders to push for a change in the management. A price of Rs 54 per share was assumed for conversion of debt into equity by lenders to acquire 51% in the company, DHFL said last month.
"The resolution process may now take a different direction. The system will have to spend its energies and bandwidth in investigating the matter. It is important that in the midst of all of that, we do not forget the resolution and asset recovery," Ashwin Parekh, managing partner at Ashwin Parekh Advisory Services, told the daily.
As of July 6, DHFL had a debt of Rs 83,873 crore, of which over Rs 38,000 crore was owed to banks. The company was the worst hit by the liquidity crisis in the NBFC sector in the wake of the IL&FS debacle, and has defaulted on its obligations several times. Meanwhile, its stock continues to take a hammering on the bourses. DHFL's stock price fell 4.9% intraday to Rs 19.4 on the BSE on Wednesday - after a similar drop the previous day - as the Enforcement Directorate (ED) turns up the heat on it.
Edited by Sushmita Agarwal