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By Neha Dasgupta
NEW DELHI (Reuters) – Dewan Housing Finance Corp. (DHFL), one of the largest housing finance companies in India, warned Saturday that its financial situation was so gloomy that it might not survive. not.
The company stated that it "was under significant financial pressure" and that its ability to raise funds was "significantly impaired and that the business was paralyzed with little or no disbursement".
"These developments could give rise to significant doubt about the company's ability to continue as a going concern," said the press release accompanying the fourth quarter results ended March 31, signed by Chairman and CEO Kapil Wadhawan.
DHFL recorded a net loss of 22.23 billion rupees ($ 324.3 million) during the quarter, compared with a profit of 1.34 billion rupees in the same period of the previous year.
DHFL announced on Saturday that it had defaulted on interest of 285.8 million rupees on non convertible debentures, due on 6 and 8 July.
The results are the latest sign of tension in the banking and shadow banking sectors in India. The state banks of the country are burdened with bad debts for several years.
Reforming and restructuring banks and parallel lenders so that they can better finance economic growth is a major challenge for the government of Prime Minister Narendra Modi, who recently got a second term in a landslide electoral.
India's economic growth dropped to 5.8% in the quarter from January to March, the lowest quarterly figure in more than four years. DHFL said it had discussed with bankers and other lenders the restructuring of its loans, discussed the sale of its retail and wholesale portfolio and also discussed with a potential strategic partner to take a stake.
PROVISIONS
"The company's ability to continue its business depends on its ability to monetize its badets, obtain banker / investor financing, restructure its liabilities and resume operations," he said in the notes.
Results published late Saturday were not audited. We did not know immediately why his listeners had not signed.
The Audit Committee had asked the Board to submit its audited consolidated and consolidated financial results by July 22. The firm had previously indicated that it had delayed the announcement of the fiscal year ended March 31 due to "unforeseen operational missions".
The loss reported is largely due to additional provisions related to an badessment of the fair value of its portfolio and an expected credit loss, the company said.
ICRA, a subsidiary of Moody's Investors Service, and the local Standard & Poor's, Crisil, last month ranked the DHFL's commercial paper at its default level for missing payments.
The shadow banking sector has been in turmoil since September: ILD, one of the largest non-bank financial institutions in India, went bankrupt, raising fears of a contagion risk. The series of defaults of IL & FS last year showed that a large part of the sector was heavily indebted.
The Reserve Bank of India, the country's central bank, plays a more active role in controlling the sector. Last month, he said the bankruptcy of a large nonbank financial corporation could cause as much damage as the collapse of a large bank.
In response to concerns about bad debts, Allahabad Bank on Saturday became the second largest bank in the Indian state to report a large alleged fraud committed by steel producer Bhushan Power & Steel Ltd. in bankruptcy.
Last week, the government announced a new capital injection of about $ 10 billion in state-owned banks and credit guarantees to support ghost lenders. Tens of billions of taxpayer dollars have been paid to banks over the past four years. ($ 1 = 68.5500 Indian rupees)
(Edited by Martin Howell, Edmund Blair and Jonathan Oatis)
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