Crisis-ridden non-banking finance company DHFL on Sunday said fraudulent transactions of Rs 1,058.32 crore by way of undervaluation, fraud and preferential treatment to certain entities have been detected by transaction auditor Grant Thornton (GT). The company is undergoing resolution process under the Insolvency and Bankruptcy Code (IBC).
The company, which is now being run under an administrator, had engaged Grant Thornton earlier this year to conduct an investigation into the affairs of the mortgage lender. The administrator of the company received additional report from professional agency (Grant Thornton), indicating that there are certain transactions which are undervalued, fraudulent and preferential in nature, Dewan Housing Finance Company Ltd (DHFL) said in a regulatory filing.
Basis this report, DHFL said the administrator has filed three applications before the Mumbai bench of the National Company Law Tribunal (NCLT), adding this is the company's fourth filing based on the report submitted by the auditor.
Further findings may be undertaken, in case of further findings by the transaction auditor, it added.
The nature of the fraud, as per the latest findings, relates to disbursements to certain entities in the form of loans against property and utilisation of the same towards premature redemption of certain NCDs undertaken by DHFL in the past (first case).
Diversion of excess funds from the account of the company for purchase of NAPHA Building (second case); and fraudulent and undervalued advancement of ICDs (Inter Corporate Deposits) by DHFL to certain entities and subsequent creation of pledge over the non-convertible debentures (NCDs) issued by the company (third case).
"The preliminary estimation included in all the three applications combined, places the monetary impact of the concerned transactions at approximately Rs 1,058.32 crore (which includes Rs 18.47 crore towards notional loss of interest on account of charging lower rate of interest)," said the filing.
The auditor has estimated a total impact of Rs 648.02 crore in the first application; Rs 330.31 crore in second case as the excess amount paid for purchase of NAPHA building and in third case, the estimated impact has been calculated at Rs 79.99 crore.
The first case pertains to disbursements to El Dorado Biotech, Fortune Broking Intermediary, Fortune Gilts and Black Rock Financial Services and the third is in relation to ICDs advanced by DHFL to Shrem Investments and Shrem Construction (Shrem entities).
In the first case, an application has been filed with NCLT against 12 respondents including former DHFL promoter Kapil Wadhawan, his brother Dheeraj, all the entities involved and ceratin others. In the second application, as many as 16 respondents are named including the Wadhawan brothers, Cloud Nine Realtors, Aahna Infracon, Wadhawan Holdings, RKW Developers and certain others.
While in the third case, the application to the NCLT names six respondents including the brother duo, Shrem entities, Nitin Chhatwal and one more entity.
As per the transaction auditor report, the first transaction occurred during 2019-20 (April-August 2019); second during 2009-10 to 2016-17 and third during 2018-19.
"The application has been filed before the NCLT...on December 12, 2020," the company said.
All relevant details regarding these proceedings have been included in the application before the NCLT, Mumbai and is presently pending consideration, DHFL said in the filing.
Last year, the Reserve Bank of India (RBI) referred troubled DHFL for bankruptcy proceedings, making it the first financial services player to be sent to the NCLT (National Company Law Tribunal) for resolution.
As of July 2019, the beleaguered home financier owed Rs 83,873 crore to banks, National Housing Bank, mutual funds and bondholders/ retail bondholders.
Of the total, the secured debt stood at Rs 74,054 crore and Rs 9,818 crore was unsecured debt. Most banks have declared DHFL accounts as non-performing assets.