After its shares tumble, DHFL plans reducing exposure to commercial paper

DHFL on Sunday said it proposes to reduce exposure to commercial paper (CP) as part of overall borrowing plan and increase hedging activity, days after the shares of the company tumbled up to 42 per cent on massive selling over fears of a liquidity crisis.

Besides, the company said it will raise resources and focus on borrowings from banks and international markets and through direct assignment, said a DHFL note on 'approach to liquidity management' filed with stock exchanges.

It expects liquidity to remain tight in second half with volatility in rates, it said.

"Surplus would be in excess of Rs 120 billion at any point of time after meeting all contractual obligations if undrawn bank lines are included," it said.

In its assessment, interest rates started hardening after a prolonged pause and contrary to expectations the liquidity started tightening in first half of 2018-19.

On companies "action plan/taken" for the second half of the current fiscal, the DHFL filing said it will "raise resources through direct assignment" and "reduce exposure to commercial paper as part of overall borrowing plan", among other steps.

The company also said that it achieved planned capital market borrowings for 2018-19 and "as market is pricing in rate hike, initiated hedging activity of fixed rate liability".

The scrip of Dewan Housing Finance Corporation Friday went into a tailspin, nosediving 42.43 per cent to end at Rs 351.55 on the BSE. Intra-day, it tanked 59.67 per cent to Rs 246.25 -- its 52-week low.

Following the slump in share price, Kapil Wadhawan, CMD of DHFL, had said the market movement has come as a big surprise to not only the company but also to the industry at large.

"We wish to categorically state that DHFL has not defaulted on any bonds or repayment nor has there been any single instance of delay on any of its repayment of any liability. We do not have any exposure with IL&FS," he said.

He said company's fundamentals are strong.

Wadhawan further said promoters of DHFL have neither pledged any of their shares nor have availed loan against shares of the company.

The company said ICRA has re-affirmed its credit ratings for its commercial paper of Rs 150 billion.

The filing also said there was net of repayment of Rs 575 crore of CP and Rs 200 crore of bank loan on September 21, 2018.