So as per your synthesis, the fake loans were given to shell companies to pump up Dewanâs share price, however the pricing history of Dewan hardly shows any great pumping of price. In fact, since the NBFC bull run started from mid 2014, Dewan hardly moved till end of 2016 ( check this thread history to sense investor frustration), it had a compressed run in 2017 but even this did not take it beyond 2.5 book at a time when every NBFC from Canfin to L&T finance to Indiabulls had gone up multifold and were trading at twice the valuations of Dewan.
So, if pumping up the stock with stolen money was the intention , they could have certainly done a lot better, Vakrangee would have been a good role model.
What do you think?
The 3 holding companies are all inter-linked with each other. From where they got this amount of money to buy the shares would be a mystery, but then in the above post it shows how money from loan was diverted to these companies and which in turn bought back shares of DHFL.
Please try to read the above post carefully and you can see how the lines are joining to each other like a maze. Rather than quashing the scam as bogus, we can atleast try and dig deeper in such companies, to atleast protect ourselves from future losses.
Incidentally, Vakhrangee was also given a clean chit by SEBI inspite of all the allegations.
further progress , company trying to get investor confidence : " The Audit Committee Of The Board Of Directors Of The Company At Its Meeting Held Today, Has Appointed An Independent Chartered Accountant Firm To Verify The Allegations Made In The Complaint And Submit A Report In A Time Bound Manner." though time wasnt mentioned but if it happens before market open would be goodâŚ
Also pinpointed somebody named Vikas Shekhar as the one responsible for the mischief. A huge political angle cannot be ruled out.
Any one knows the name of CA firm? Why would they not disclose the name of firm.
In these moments we would want a reputable name to investigate and give clean chit.
Shouldnât joint auditor Deloitte say anything ?
You can see investors patience is running out.
I havenât seen one step yet which is really concrete.( conference call is not enough)
Every day grave is getting deeper and deeper. Company would die soon. I am sure they can see that.
How much people knew of DHFL shows in the thread.
When one buys a stock should study the biz. No1 knws where the lending is coming from and going. For sake of it justifyng DHFL or cobra post.
The question should be asked now how much haircut they taking on loan book sale. They have done biz in worst way. No doubt the promoters are very shoody, cobra has many documents which one can get by paying minimal fees to ROC. Those documents are genuine and scary.
Also no1 is lending to DHFL so how they going to grow is not a question, how they will survive is.
If they sell all loan book they will end up in zero or bankrupt with lot of debtor having cut in pocket. That is not a way to go.
Need to check what actions high exposure banks/ MF will take?
The loan sanctioned( retail loan) has stopped. What happens to recovery of EMI if u not paying for their house some has to 20%, 30%,60% loan given and suddenly stopped.
Many cases landing up in consumer court.
Promoters have made money for themselves and thought debt can be serviced by further debt and further debt can be serviced by further further debt. Now it is serviced by selling debt.
Good luck.
Study well.
I too would prefer that they name the CA firm and also that Deloitte Haskins give a statement to calm investor anger.
Also, why have the banks not given any statement on the situation? Why did MCA raid news turn out to be fake? Why have they not run away like other fugitives?
They are trying to make things right just like it happened in Welspun India. We need to wait and watch the situation. I might sound positive but I am equally critical of DHFL promoters. I will keep faith on the words of Deloitte Haskins More than DHFL promoters.
Can someone explain to me how securitization works? My questions might be silly and basic but trying to learn.
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If I have 100Cr of assets (repayments to be collected from home loan customers) lets say, at the rate of 10% interest in equal parts (10cr each year principal repayment) over the next 10 years and I borrow at 8%, at what price would I have to sell the securitised asset to show no gain or loss?
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Collection of loans would be whose responsibility?
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If Oaktree buys 2000 cr of securitized assets from Dewan Housing, is Oaktreeâs 2000cr contingent upon DHFL surviving this crisis?
I suggest you go thru this: https://en.wikipedia.org/wiki/Securitization
In simple English, any cash flow can be securitized. Once you sell a cash flow as an financial instrument (also called as special purpose vehicle), the risk associated with the collection is transferred to the investor. The collection responsibility typically resides with the originator.
Valuation of the cash flow (financial instrument) is same as valuation of bonds with the added complexity of default and interest rate risks.
I did mention this before as a minor point but did some digging and have come up with the following information.
Deloitte Haskins and Sells LLP is the Auditor for DHFL alongwith Chaturvedi and Shah.
Deloitte Haskins and Sells resigned as Auditors from Manpasand and Fortis Healthcare due to irregularities similar to those mentioned in DHFL case. Why are both Auditors SIlent on the whole issue?
Banks like Kotak Mahindra are very diligent and do their own homework before lending. How have 31 banks sanctioned loans even after PNB scam, ICICI Scam and IL&FS scam? Why have they not raised red flags till date? I am sure, it is not a tough job for those sanctioning the loans at Banks to not find the irregularities mentioned by Cobrapost.
If the book value was less than half, How did ICRA, CRISIL and CARE re-affirm top ratings to DHFL bonds?
If there is a scam. This will tantamount to breach of trust by the whole Financial sector and not just DHFL including the auditors, all the banks and credit rating agencies whose very existence needs to be questioned. The MCA should
Penalize the Auditors for not doing their job.
Penalize the banks and their Direttors for lending without due diligence?
Penalize the Credit rating agencies for colluding with DHFL?
Penalize Promoters of DHFL by Dissolving their shares and control being given to similar group of individuals as done in IL&FS case.
Ironically, SEBI does not work with MCA and both do not have the power to execute such a decision.
Deloitte Haskins and Sells is the auditor for 8k miles and they havenât spoken up there either as far as I know. It is bit strange Deloitte is an auditor is so many of these cases and is still considered a âreputedâ agency.
Not if your commissions/fee depended on you not finding it.
Whose bread I eat, his song I sing - Munger
The key to skimming is to not make it too obvious. I wont be surprised if something like happens in most financial institutions at (much) smaller levels. If it is at 2-5% of total book growing at a much higher rate, it will never be discovered/penalised.
Securitisation in simple terms means, protecting the lender from the borrowers default.
In this particular case, even if dhfl may be close to a default, the home loans that they hold are not default grade. So a lender may ask DHFL to SECURITZE the borrowing by ownership rights and interest on the home loans which are not defaulting.
This protects the lender completely in case of DHFL defaulting since the home loans are still investment grade.
There is a strong notion that if there are big 4s on the table then things canât go wrong . However, little bit of uncovering history across world is full of various stories how big 4 were involved with companies doing massive financial manipulations of high probability . One can watch the china hustle on Netflix (https://www.forbes.com/sites/markhughes/2018/03/30/review-the-china-hustle/#1b1e2fdc3357).
Also , attaching few screenshots from a book on global bubbles n financial manipulations. Enough examples to not trust any auditor on face value but do own research
Edit: Due to copyright violation issues, i am removing book clips but providing basic summary of frauds where reputed auditors were auditing the accounts and in some cases, even the auditors ended up paying heavy fine (my simple logic, auditors are also human and among 100, few might get greedy):
Global Crossing,haliburton, Dyenegy, Enron, CMS Energy, Merc and Co, Peregryne Systems, Waste Management (mgmt lived up to name of company :P), worldcom, Quest Communications : Arthur Anderson : Falsified topline and earnings, numerous scandelous operations, Sham trades and inflating revenues, Finanical manipulation, multiple financial manipulations
IMClone Systems, Computer Associates : KPMG : Multiple frauds and Insider trading, falsifying financials
Kmart, El Paso, Bristol Mayers, Mircrostrategy, Tyco : PWC : Securities fraud and misleading investors, Price Manipulation, Inflating sales
Adelphia Communication, Duke Energy, Rite Aid : Deloitte : Bank securitya and wire fraud,Financial fraud
AOL Time Warner, Cendant Corp, Dollar General Corp, PNC Financial Services : Ernst & Young : Financial fraud,insider trading whereeven auditor ended up paying heavy fine,accounting missteps
To read in detail please check âBubbles, booms and bustsâ by Donald Rapp
To be sure, the FY 18 consolidated accounts were audited by Chaturvedi and Shah, and not Deloitte. Neither Chaturvedi and Shah nor Deloitte audited the subsidiaries, not associates and nor joint ventures. This is not to say Chaturvedi and Shah are bad, on the contrary, in my view better than Deloitte. But the auditor did not audit any of the other entities in question, just put them together.
Blackstone pips Baring, Hero Fincorp to buy Aadhar Housing Finance for Rs 2,700 crore
via The Economic Times App(Download Now):
http://ecoti.in/1bhLVY
What does this mean for DHFL ?
News also confirmed by the filings to the exchange
To me these are desperate measures to raise cash to meet the liabilities. Almost 32000Cr liabilities till Dec 2019 as per the investor presentation. I doubt if they will be able to raise any more money from banks or debt capital markets given the loss in credibility.
What more non-core assets are left? Aadhar gone, Insurance and AMC gone. Avanse education NBFC will also be gone soon I guess.
What I understand that , in the event of default, SBI may securitze its loan by taking housing loan portfolio from DHFL. This is temporary problem facing by NBFCs and they will overcome. In the process Bad NBFCs will be punished by market.
Just check how ILFS issue created liquidity issues for entire NBFC sector. There will be implication for the whole sector including real estate. Another round of temporary hike in cost of funds is around the corner. Do you think in this tough market DHFLâs clients will return money? will it find a ready buyer for the loan? I think controlled and organised liquidation is critical here.
A research report dated Sep 2019 states that , The company has nearly Rs 100bn due for repayment till March 2019, whereas the recoveries due from assets are worth nearly Rs 250bn.
Need to validate the authenticity of the numbers thoughâŚ