The ongoing liquidity crisis in the shadow banking sector, triggered by the collapse of India’s largest shadow lender Infrastructure Leasing and Financial Services Ltd, has taken a heavy toll on the earnings of non-banking mortgage lender Dewan Housing Finance Corporation Ltd and put a question mark on its survival.

In its fourth quarter, it reported a loss of 22.24 billion rupees (US$324.4 million), as against profit of 1.34 billion rupees ($19.55 million) in the same quarter last year. For the full year 2018-19, net loss stood at 10.36 billion rupees ($151 million), while in 2017-18 it had posted a profit of 12.4 billion rupees ($181 million).

The company has been facing financial stress since the second half of this year and has undergone many downgrades by rating agencies. The company’s defaults and its inability to raise funds has raised significant doubt about whether it will continue to operate as a going concern.

“The company’s ability to raise funds has been substantially impaired and the business has been brought to a standstill with there being minimal/virtually no disbursements,” Dewan Housing said in the notes to accounts while declaring the quarterly results.

These developments may raise a significant doubt on the ability of the company to continue as a going concern. The management is looking to monetize its assets and is in discussions with banks and international financial institutions to sell off its retail as well as wholesale portfolio. Private Equity firms Oaktree Capital, Cerberus Capital and AION Capital are reportedly keen to buy stakes in DHFL, Mint newspaper reports.

It is also holding discussions with its consortium of bankers and lenders to restructure its borrowings. Dewan Housing claimed it held a meeting on July 1 with its lenders, who agreed to enter into an inter-creditor agreement for a potential restructuring of its liabilities.

Dewan Housing’s survival hinges on additional capital inflows. Unless it finds fresh money, many lenders, especially banks, will be reluctant to give fresh loans.

Established in 1985, Dewan Housing provides housing finance to lower and middle income groups in semi-urban and rural parts of India. The company also leases commercial and residential premises.

The company’s promoter, Wadhawan group, holds nearly 40%, while 18% is being held by foreign portfolio investors. Among Indian investors, state-owned Life Insurance Corporation and noted stock investor Rakesh Jhunjhunwala hold 3% each. Since March 31, Dewan Housing shares have fallen 67% or 102 points and this slump has caused a loss of nearly 1.02 billion rupees ($14.88 million) to Jhunjhunwala.