DHFL lenders hire real estate consultants to verify their loans
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MUMBAI : Lenders to Dewan Housing Finance Ltd (DHFL) hired three real estate consultants to review projects the troubled real estate financier had made loans to in order to determine the quality of their cash flow and financing needs, according to documents reviewed by Mint.
As part of the investigation, CBRE South Asia Pvt. Ltd reviews large project loans, Jones Lang LaSalle Realty Advisors reviews mortgages and Cushman and Wakefield review remaining loans, the documents say. “The projects are being analyzed for cash flow and any need for additional financing,” said a person with direct knowledge of the matter.
Hiring consultants to examine the health of projects to which DHFL has loaned and the quality of collateral held by it is part of a series of inquiries into the indebted financier before banks approve a debt restructuring proposal to relaunch DHFL.
Lenders have appointed several companies to perform due diligence in a variety of areas, including accounts, book valuation, loan title research and legal diligence, said a second person with first-hand knowledge of the business. case, requesting anonymity.
A forensic audit of DHFL’s accounts had previously revealed weaknesses in the assessment of projects for which DHFL had advanced funds.
The debt overhaul plan submitted by DHFL to lenders in August spares creditors from discounts on principal repayments.
The plan proposes that the debt owed to the lenders be converted to 51% equity in the house financier. Lenders are currently evaluating the resolution plan.
The lenders have also asked law firm Desai and Diwanji to do a due diligence on DHFL’s wholesale borrower’s book, the previously quoted person said on condition of anonymity.
A forensic audit by a consultant KPMG, according to an Oct. 23 report from the Mint, found that DHFL had lent ??14,000 crore to 25 group companies which had an average net profit of only ??1 lakh, raising suspicion of embezzlement.
In addition, about 37% of loans DHFL made to banks for subsequent loans to homebuyers were parked in mutual funds. Out of ??27,000 crore which was raised from banks, ??10,050 crore were parked in mutual funds.
In addition, loans worth ??7,000 crore at 15 companies were not classified as non-productive assets (NPA) by DHFL despite the delay in their refunds. KPMG also said it discovered that these group companies had invested ??4000 crore in the purchase of preferred shares of certain other entities.
As of July 6, DHFL had a debt of ??83,873 crores, of which ??38,342 crore is owed to the banks.
After a board meeting on Wednesday, the company told the stock exchanges it had seen KPMG’s draft report.
“The Board of Directors has requested the company to review the above key observations and also to provide a detailed response to said key observations to the Audit Committee. The board of directors also asked the company to share the responses with the lenders, ”he said.
DHFL also told the exchanges that it is committed to working with its lenders on the resolution process.
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