Crisis- Hit DHFL May Head For More Trouble, Board Likely To Decide To Resign

Almost 48 hours are left for the DHFL board of directors to ratify the fourth quarter numbers and 2018-19 financial account. With this, the crisis- hit company could be heading towards more trouble.

The meeting of board of directors is scheduled for July 13. However, sources said the two statutory auditors — Deloitte Haskins & Sells, and Chaturvedi & Shah — are yet to complete the process of auditing the company’s FY19 financial accounts. In June, DHFL got the market regulator’s nod to postpone announcing its financial results by two weeks. 

Sources say the auditors may decide to resign ahead of the board meeting. This follows unsatisfactory response to auditors’ queries related to fund deployment by DHFL.

According to the Companies Act, 2013, statutory auditors are supposed to inform the ministry of corporate affairs, and the Securities and Exchange Board of India (Sebi) before resigning. Facing pressure to meet repayment obligations, DHFL is in the midst of a lender-monitored restructuring and is set to sign an inter-creditor agreement on Thursday. 

A DHFL spokesperson refused to comment on whether the auditors have signed on the financial results. Sources aware of the developments said the auditors are yet to ask for a further extension to sign the final accounts. A Deloitte spokesperson said they do not comment on market speculation. There have been several instances of auditor resignations following the IL&FS crisis. Recently, Price Waterhouse & Co (PWC) resigned as an auditor of Eveready Industries. The auditor of Reliance Capital and Reliance Home Finance, PWC, quit both the accounts. 

According to sources, auditors are under pressure to ensure there are no discrepancies in DHFL’s annual reports following allegations of fund diversion by the company through shell companies. DHFL, however, has refuted these allegations.