Mortgage lender Dewan Housing Finance Limited (DHFL) has reported a pre-tax loss of Rs 10,296.91 crore in Q4FY20 compared to a pre-tax loss of Rs 2,907.56 crore in Q4FY19, owing to a huge rise in net loss on fair value changes to the tune of Rs 12,403.27 crore. The lender reported a net loss of Rs 7,634.89 crore in Q4FY20 compared to a net loss of Rs 2,223.41 crore in Q4FY19.

By opting for a lower tax regime, the mortgage lender has netted a sum of Rs 4,609.85 crore on account of deferred tax for FY20. It has seen serious drop in its loan assets with housing and other loans at the end of March quarter at Rs 66,202.68 crore compared to Rs 97,978.12 crore, a year ago.

The lender said, around 35 per cent of its loan portfolio (by value) have availed the moratorium facility of the RBI and the recovery from the moratorium accounts is forthcoming with the Unlock 1.0 and commencement of field visits. The recovery will further improve in moratorium accounts during the Q1FY21, the lender said.

According to the auditor’s report, DHFL has incurred loss aggregating Rs 13,575.15 crore in FY20, thus eroding the net worth of the company substantially. “.. the company’s ability to remain as a “going concern” depends upon the outcome of the ongoing corporate insolvency resolution process”, the report said.

In November 2019, DHFL became the first financial services company to be admitted into the insolvency process. The mortgage lender had received expression of interest from 24 entities. Some of them wanted to bid for the whole business while some of them wanted to bid for the company in parts. The committee of creditors have extended the deadline for submission of bids till July 24 due to the pandemic.

In the notes to accounts, the management said, an amount of Rs 3,018.68 crore have not been reconciled while analyzing the total assets as it could not be mapped to any any security against which this amounts was disbursed in the past. Hence the management decided to treat the amount as loss assets as per asset classification norms and also due to non-availability of any security and it has been fully provided for by the mortgage lender.

The auditor report also states that, multiple accounting entries were initially recorded in certain customer accounts for receipts despite the cheques or negotiable instrument not having been deposited in banks, as reported in 2018-19 and these were subsequently reversed. Such instances have now been informed to have been constantly reviewed by the present management.