Cash-strapped DHFL says working closely with creditors to avoid any haircut

Crisis-hit property finance firm Dewan Housing Finance Corp Ltd (DHFL) said on Monday it was working closely with its creditors and stakeholders on a resolution plan that would not require its lenders to take a haircut.

The statement comes after the shadow bank warned on Saturday it might not survive as a going concern and reported a net loss of Rs 22.23 billion ($324.19 million) for the March quarter.

"While the sectoral stress is well known for months, DHFL has withstood intense pressure and continues to remain strong and solvent," the company said in a statement on Monday.

"DHFL has also cleared significant amount of obligation to the tune of Rs 418 billion since September 2018."

Also Read: DHFL share price hits 10-year low on Q4 net loss, grim financial outlook

Investors dumped the stock on Monday, with shares tumbling as much as 32.6 per cent to an over 10-year low in heavy trading volumes.

DHFL's results and commentary on its financial health are the latest sign of growing stress in India's finance sectors as state-owned banks grapple with bad debts and a recent liquidity crunch in the shadow banking industry.

The company said on Saturday it expected to restart its business in August and scale it up in the months ahead.

Sources have told Reuters that DHFL will submit a resolution plan shortly, which may include extending the tenure of loans, converting debt into equity, seeking additional working capital and inducting a new management team and financial investors.

Also Read: DHFL collateral is worth just Rs 500 crore against Rs 40,000 crore lent by banks