Dewan Housing Finance Limited

Once a chor always a chor that is y pe should be looked in conjecture growth and also mgt pedegree

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Sir I donā€™t know if law will catch up or not . Even if it were to after how many years? Recently an auditor was fined after 20 years.
Also in this case they will mostly declare the loans given to the promoter entities or their benamis as NPAs very soon. So it will all be within the proper legal framework.
Now what will be interesting is who will be buying a company like this and at what valuations. What would that investor be looking for in the business (other than financials)?

IMO, all this smokescreen of stake sale is to delay the inevitable. They are just buying time before a big bust when they start defaulting. One needs to discount that they are politically connected with erstwhile rulers of their home state. They might want to wait out till May 2019 for any potential help. Can any investor who was deeply invested here describe its competitive advantage? Looking back, the only convincing argument I heard that it is trading cheap and promoters are ā€œbecomingā€ investor friendly. This is despite the fact they short changed minorities in their stake sale in insurance venture. Offlate loan growth was going bombastic as builders were crying for funds. Despite of all these it generated princely 1% RoA. This was the single biggest factor that kept me away as margin of safety was too small. Nobody can claim that there were no warning signs.

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@sumi00 as much as I condone the concept of risky propositions/investments when there is always a quality expensive company that can do 12% cagr I must defend the investors in DHFL in this case.
There were no signs.
They were cheap for the type of growth that they were showing. Gruh at 10x made them look even cheaper
Promoters had shown that they were trying to clean up. It was quite evident from the tone surrounding the company and the mgmt itself.
Yes there was no moat. But is there a moat for wholesale lenders anyway? Everyone knew there was no moat. The idea was opportunity size and growth. It does not help when people like kedia come in and say lakh crore ki kahani in housing finance sector.
DHFL was a perfect bull market story. Vakrangee got caught slightly too early but DHFL seem to have got it just right. Post election all will be forgotten and they will happily exit to a PEL or something. There is definately some value in terms of distribution and client base/data. Plus DHFL have some sort of a brand recall in the country. It is only investors who are aware of the fraud we must remember this that the public and DHFL customers perhaps have no clue that wadhawan group runs the company.
I must defend the investors in DHFL. It was a genuine mistake and an excusable one. But the markets are down and you have a chance to make up the lost capital.

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Assuming they siphoned of 31000cr and this will subsequently be converted to NPA, i still have the following doubts :

  1. We are talking about 30% of their AUM turning into NPA. can such a humungous fraud happen without any missed payments or defaults of any kind ?
    if this money was siphoned off, where is the loan repayment money coming from ?
  2. if 30% of the AUM is ought to be NPA, how did such large siphoning off go unnoticed with Auditors, SEBI etc ?
  3. Mgmt clarified in one of the concalls that the project loans were given to SPVā€™s. Can someone clarify here about the SPVā€™s and their working relationship with the parent company because i have a doubt that these SPVā€™s are being labelled as Shell companies.
  4. No action or any sort of follow up by SEBI, MCA post the cobra post expose. why ?
  5. Yes, as someone said before, the point now is on the quantum of the fraud weather it is 31000cr or 31cr, but i quite believe that corporate governance in India is a myriad shades of grey rather than just black and white.
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Hi ,
There was a warning by one of the Gems of valuepikr way back in 2012. Though it gave some 4-5X returns from there but eventually fell now to the same levels of 2012.

There was also some accusations on Company in Oct 2017 regarding Benami Transactions. It was too discussed here but then management issued a clarification that it was a general tax inquiry by the department. Though they did mention that they have given loans to the mentioned entity which was formed recently. It was a period of bull run and thus such stories are forgotten easily in the midst of few UCsā€¦

https://www.business-standard.com/article/companies/dhfl-loan-to-manpreet-estates-under-tax-scan-117101200954_1.html

I believe , the forum is a great initial source of understanding most of the Businesses. One can know important events of last 5-6 Years at a single place as many things are widely been discussed in the forum from time to time. It also helps in understanding lots of different different viewpoints of members and improve our competence. It truly helps in separating wheat from the chaff.

I think , before buying any business , complete reading of the specific company thread will be extremely helpful especially for new investors. Also rather than following or cloning widely discussed market Superstars , better to follow our great Gems of valuepikr.

Regards

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Certificate regarding payment of interest amount in respect of
Non-Convertible Debentures as per Regulation 57(1) of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015

Institutions held 2.2cr shares of DHFL in August, now it has come down to mere 6k shares.

Winder who bought these shares. Entire lot is absorbed and it did not collapse like the vakrangees and manpasandā€¦may be itā€™s a positive.

There are still buyers of this business.

Not invested

Finally the audit report for cobrapost allegations

056dd43c-0af4-47b9-a4d1-cc0ad949a91a(1).pdf (322.0 KB)

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It doesnā€™t answer many questions that cobrapost raised like common address and directors for many of these companies to whom loans were issued. Doesnā€™t address question on how such large loans were given to companies with such poor net worth.

And the tone of ā€œinvestigationā€ is of an explanatory note intended to satisfy read rather than actually find answers.

If this investigation was paid for by DHFL, then Iā€™m not surprised.

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#Gary24- I think the auditor has staked his reputation to give this report.I am sure there will be a rejoinder from Cobrapost which will cause more damage. Despite attempting to camouflage the many wrongs,the auditor has been forced to accept misdemeanour like buying shares of company, not creating charge etc.The last word is not yet said.

To me, real action will be taken by stake buyer. He is putting money on the table. This action may say that there are issues but not a permanent damage.( if we donā€™t see stake sale in 90 days I.e in next 40 days then assume few due diligence has happened and buyer is not comfortable)

Would be interesting to see the forensic audit findings by BoB

update regarding rating
http://www.careratings.com/upload/CompanyFiles/PR/Dewan%20Housing%20Finance%20Corporation%20Ltd.-03-06-2019.pdf

Update on rating by BrickWork Ratings

DHFL themselves have clarified that there was no clean chit

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Another director has resigned -
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=c7019969-ce37-4d72-a547-cb490f4843bb

Avanse financial services sold by DHFL and WGL. Seems like the funds are finally being routed back alongwith reorganization. This is being done to bring a partner promoter on board. Looking to the deals this can be a global major and that can finally give peace to small investors.

@devarshi84 Do you have information on the capital raised in this deal & equity infusion into DHFL ?