AiroAV States: DHFL mess, Audit firm finds misuse of funds by DHFL, Rs 25,... - Jonathan Cartu CPA Accounting Firm - Tax Accountants
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AiroAV States: DHFL mess, Audit firm finds misuse of funds by DHFL, Rs 25,…

DHFL mess, Audit firm finds misuse of funds by DHFL, Rs 25,...

AiroAV States: DHFL mess, Audit firm finds misuse of funds by DHFL, Rs 25,…


Audit firm finds misuse of funds by DHFL, Rs 25,000 crore loans given with inadequate documentation


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Key Highlights

  • Union Bank of India had appointed KPMG to carry out a forensic audit of DHFL
  •  KPMG audit found that DHFL disbursed loans and advances to inter-connected entities that appear to be linked to its promoters
  • Earlier this week, DHFL came under the scanner of ED for its loan to Sunblink Real Estate, which facilitated the transfer of funds to late druglord Iqbal Mirchi

New Delhi: In a major setback for troubled housing financier DHFL, accounting firm KPMG, in its draft forensic report has alleged the company of misuse of funds. The audit report says DHFL has extended loans amounting to Rs 19,753 crore to companies having ‘commonalities’ with itself. These allegations if proved could impede any restructuring by the lenders, say experts.

State-owned lender Union Bank of India had appointed KPMG to carry out a forensic audit of DHFL for the period between April 2015 and March 2019. Earlier this week, DHFL came under the scanner of Enforcement Directorate for its loan to Sunblink Real Estate, which facilitated the transfer of funds to late druglord Iqbal Mirchi.

A leading business daily citing a banker having knowledge of the report said,  KPMG audit found that DHFL disbursed loans and advances to inter-connected entities that appear to be linked to its promoters. Repayments by 28 such entities worth Rs 12,541 crore are not traceable.

Worth mentioning here is that DHFL had total loans and advances of Rs 97,977 crore as of March 31, 2019. Lenders to the company are working on a resolution plan submitted by the troubled-home financier. The resolution plan involves converting debt into equity.

According to the publication, KPMG’s audit found that DHFL has disbursed loan worth Rs 24,594 crore to 65 entities tath had minimal operations and inadequate loan documentation. In its report, the audit firm mentioned that the valuation of land mortgaged as security at the time of loan requisition was not available for 21 entities, with loan disbursals amounting to Rs 11,313 crore in such cases and the outstanding at Rs 9,313 crore.

Hence, the classification of these loans as secured could not be verified, KPMG said in the report.

The companies which got loans from DHFL invested Rs 733 crore in the company’s debentures and preference shares after disbursal of loans by the financier. Also, DHFL offered principal and interest moratorium of 12-48 months to 21 entities, with disbursements of Rs 11,313 crore and interest moratorium of 15 months to 15 other companies with a loan exposure of Rs 8,970 crore.

As of 11:30 am, DHFL shares were locked at lower circuit at Rs 18.45, down 5% compared to Wednesday’s closing price of Rs 19.40. In the last one year, shares of the troubled home-financier have fallen over 90%.

 

 



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