One of India's biggest housing lenders warns it may not survive
NEW DELHI: One of India's biggest housing finance companies, Dewan Housing Finance (DHFL), warned on Saturday that its financial situation was so grim that it may not survive.
The company said it was "undergoing substantial financial stress" and its ability to raise funds was "substantially impaired and the business has been brought to a standstill with there being minimal/virtually no disbursements".
"These developments may raise a significant doubt on the ability of the company to continue as a going concern," it said in notes accompanying results for the fourth quarter ending March 31, signed by chairman and managing director Kapil Wadhawan.
DHFL posted a net loss of 22.23 billion rupees (S$440 million) during the quarter compared with a profit of 1.34 billion rupees in the same period a year earlier.
DHFL separately said on Saturday that it had defaulted on interest payments worth 285.8 million rupees on non-convertible debentures, due on July 6 and July 8.
The results are the latest sign of stress in India's banking and shadow lending sectors. The nation's state-owned banks have been burdened with bad debts for several years.
Reforming and restructuring banks and shadow lenders so they can do more to finance economic growth is a major challenge for the government of Indian Prime Minister Narendra Modi, who recently secured a second term in an election landslide.
India's economic growth slipped to 5.8 per cent in the January to March quarter, the lowest quarterly figure in more than four years.
DHFL said it was talking to bankers and other lenders on restructuring its borrowings, was in discussions over the sale of its retail and wholesale portfolio, and had also had talks with a potential strategic partner to take a stake. - REUTERS