Fusion faces the risk of losing going concern tag, says Deloitte
Microfinance company Fusion Finance may cease to be a "going concern" if the lenders do not agree to its request for a moratorium on loans for at least a year or if it fails to raise resources, independent auditor Deloitte Haskins and Sells said.
«The company's ability to continue as a going concern is dependent on obtaining waivers from demand by lenders for immediate repayment of borrowings for a period of at least 12 months from the balance sheet and / or securing sufficient funds from other resources such as successful sale of loans, rights issue and refinancing of borrowings,» the audit firm said in its note.
The NBFC-MFI is negotiating with lenders to get a waiver from the right of immediate repayment for a period of at least 12 months from the balance sheet date. The lenders have so far not waived their right to demand immediate repayment.
«This condition results in material uncertainty which may cast significant doubt on the company's ability to continue as a going concern, and therefore the company may not be able to realise the assets and discharge its liabilities in its normal course of business,» Deloitte said.
Fusion has faced a net loss of Rs 305 crore for the quarter ending September 2024 against a net profit of Rs 126 crore in the year ago period, due to a surge in credit cost to 6.6% from 3.3% earlier. Its asset quality deteriorated sharply with gross non-performing assets jumped to 9.4% from 2.7% over the same period.
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