Tower cranes operate at a residential construction site, developed by Omkar Realtors and Developers Pvt., next to a slum, center, in the Parel area of Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

DHFL Says Voluntary Action By Rating Agencies Came As “Surprise”

Kapil Wadhawan, the chairman and managing director of Dewan Housing Finance Ltd. is surprised by Care Ratings’ decision to downgrade the non-bank lender’s financial products worth over Rs 1.2 lakh crore.

The decision “actually came as a big surprise to us”, he told BloombergQuint. The company was marred by the liquidity crisis late last year and allegations of siphoning over Rs 31,000 crore of bank loans by an investigative news report.

Care Ratings placed DHFL’s ratings under “credit watch”, saying it “will continue to monitor the situation”. Meanwhile, the government announced that it’s examining the company’s accounts following the investigative news portal Cobrapost’s allegations of financial irregularities. Shares of DHFL have tanked nearly 53 percent this year.

Wadhawan claimed DHFL has strong fundamentals, adequate liquidity and asset liability management. “How can the rating agencies, purely on the basis of yield spreads and market volatility, take actions that are detrimental to the company going forward?”

He denied the allegations made by Cobrapost, terming them “extremely unfounded”. Wadhawan urged bond holders as well as DHFL’s creditors to focus on facts the company lays out and said its audit committee will address the allegations within three weeks.

Watch the full interaction here: