Kapil Wadhawan Offers Rs 43,000 Crore Family Assets To Repay DHFL lenders

Kapil Wadhawan, the jailed promoter of crisis-hit Dewan Housing Finance Corp. Ltd., has offered to put on the block family assets worth Rs 43,000 crore to repay lenders.

The offer would ensure maximum value for the assets, Wadhawan wrote to Reserve Bank of India-appointed administrator R Subramaniakumar on Oct. 17, 2020. He and his brother Dheeraj Wadhawan are currently lodged in Taloja jail near Mumbai.

"The erstwhile management of DHFL have made all the efforts to resolve the financial stress being faced by DHFL,” Wadhawan said in the nine-page letter. “This letter is one more effort in continuation of our resolve.”

Wadhawan has proposed transfer of right, title and interest in various projects to enable proper and complete resolution of DHFL and maximise value of the properties. The valuation of these projects, including Juhu Galli project and Irla project, is about Rs 43,879 crore, that too at 15% lesser market value, he said in the letter.

After the IL&FS crisis in September 2018, not only DHFL but all NBFCs faced a major financial crisis, Wadhawan said in the nine-page letter. According to him, DHFL took various steps and repaid Rs 44,000 crore of liabilities by monetising assets such as Aadhaar Housing Finance Ltd, Avanse Financial, DHFL Pramerica Asset Managers and DHFL Pramerica Trustee Ltd.

On June 7, 2019, RBI issued a circular on “Prudential Framework for Resolution of Stressed Assets", and the process of restructuring DHFL’s debt and resolution of its financial stress began. An Inter Creditor Agreement was executed on July 5, 2019, among the banks and some lenders. The exposure of the lenders who signed the ICA was Rs 39,000 crore. Even today, DHFL's collection has been between Rs 10,000 crore and 15,000 crore and are available to repay the lenders, Wadhawan said in the letter.

Last week, Adani Group, Piramal Enterprises and two other entities placed bids for DHFL, the first financial services player undergoing insolvency process, according to sources. The U.S.-based Oaktree Capital and Hong Kong-based SC Lowy submitted bids for DHFL on Oct. 17, the last date to submit final bids, the sources said.

RBI had in November last year referred DHFL, the third largest pure-play mortgage lender, to the National Company Law Tribunal for insolvency proceedings.

According to a filing last month, fraudulent transactions worth Rs 17,394 crore were reported at DHFL between 2006-07 and 2018-19, according to a report of transaction auditor Grant Thornton. Fund diversion by the promoters of DHFL resulted in lenders classifying DHFL account as "fraud".

Other fraudulent transactions worth Rs 12,705.53 crore were reported by the forensic audit, followed by the third one earlier this month. The third fraud worth Rs 2,150.84 crore, by way of undervaluing the company's insurance subsidiary, was detected by Grant Thornton.