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Chairman Statement

Chairman’s Statement 2015-16

Dear Shareholders,

Ladies & Gentlemen,
It is my privilege to address the 27th Annual General Meeting (AGM) of the shareholders of Tourism Finance Corporation of India Ltd. On behalf of the Board of Directors, the Management and the Employees of the Company, I welcome all of you to this AGM.

I am sure that all of you have received the Directors Report and Audited Statements of Accounts for the year ended March, 31, 2016 and with your permission, I shall take them as read. Your Company has played a catalytic role in development of tourism infrastructure during the past 27 years of its eventful existence. I have pleasure in sharing with you some of the highlights of your Company’s performance and initiatives taken during the year, in the backdrop of prevailing economic environment.

Operating Environment

During 2015-16, the Indian economy recorded growth rate of 7.6% despite unfavorable global environment, recessionary trends in Chinese economy and slow investment cycle in the country. The GDP growth which had moderated to an average of 5.8% in the preceding two years increased to 7.6% in 2015-16, particularly on account of higher growth in manufacturing/service sector. There was softening in inflation on account of fall in international crude oil price and commodity prices. The landmark initiatives taken by Central Government like Make in India, Ease of Doing Business, Start Up India, Digital India, Smart Cities, Industrial Corridors, etc. will provide further impetus to the growth of industrial and services sectors and is expected to be the key driver of economic growth in the country. These initiatives would also help in transforming infrastructure sector which is essential for achieving and sustaining higher economic growth. India's real economy, as measured by the Gross Value Added (GVA), is likely to expand by 7.6 per cent in 2016-17 due to improvement in farm and industry sectors.

Tourism Industry

Tourism is an important sector of the economy and contributes significantly in the country’s GDP as well as foreign exchange earnings (FEE). With its backward and forward linkages with other sectors of the economy like infrastructure, including transport & construction, culture, handicrafts, etc., tourism has the potential to be a significant economic driver and also an effective tool for poverty alleviation. The availability of good quality and/or affordable hotel rooms plays an important role in boosting the growth of tourism in the country. The hotels are recording average occupancy of around 61%. In the long term, with the economy growing at an average rate of around 7.5% annually, it is expected that the demand for hotel rooms would grow further. As per Government estimates, the country would need additional 1,90,000 rooms in next six years to meet the demand for domestic as well as inbound tourists. The Government of India is encouraging tourism sector by means of fiscal incentives, supporting mega-tourism projects across the country, expanding visa-online scheme, strengthening tourism-oriented training & education infrastructure. The Government is promoting the country as a destination for heritage, wildlife, medical, wellness, rural, adventure and eco-tourism and the Hon’ble Prime Minister has become the “Brand Ambassador” for India. On account of sustained demand and increase in per capital income, the tourism sector is expected to show satisfactory growth in medium term. The growth in India’s tourism is expected to result in opportunities for TFCI to expand its business at a steady rate in near future.

Performance Highlights

TFCI is the only institution in the country for exclusively funding tourism projects with more than 27 years of existence. The assistance provided by TFCI since its inception has contributed the addition of 46588 rooms and provided direct employment to about 87235 persons in tourism industry. The assistance provided by TFCI has also led to catalysing investments to the tune of Rs.26200 Crore in the tourism sector by providing assistance to more than 787 projects thereby contributing to the creation of much needed tourism infrastructure.

TFCI has been having satisfactory operational performance and financial indicators despite depressed market conditions for the last three years. Despite difficult business environment during the year under review, your Company has recorded profit after tax of Rs.53.61 crore. The balance sheet size has increased from Rs.1500 crore to Rs.1590 crore during the year under review. However, the profit was impacted on account reduction in base rate, prepayment of loan by certain clients besides accretion of additional Non-Performing Assets as on March 31, 2016.


The Board of Directors have recommended and paid interim dividend of Rs.1 per Equity Share i.e. @ 10% on December 30, 2015 for the financial year ended March 31, 2016. The Board of Directors have further recommended final dividend of Rs.0.80 per Equity Share i.e. @ 8% on the paid-up Equity Share Capital for the financial year ended March 31, 2016.


During the year under review, your Company met its fund requirements for disbursement as well as repayment/redemption of loans/bonds by way of financial assistance from banks and internal accruals. During the year, the Company raised Secured Non-Convertible Bond aggregating Rs.159.74 crore at coupon rate of 8.81% p.a. payable semi-annually having maturity period of 10 years. Your Company redeemed high interest bearing loan aggregating Rs.225 crore during 2015-16. Further, your Company has tied up with various banks for financial assistance to meet its future requirement of resources.

Asset Quality

The stressed assets issues affecting the banking sector continued during the year and resulted into increase in the NPAs of all the banks/financial institutions. The subdued macro-economic environment and tepid demand scenario had also affected the tourism sector and thus adversely affecting TFCI’s sanctions and disbursements and recovery from assisted concerns. Your Company adhered to the prudential norms for Non-Performing Assets(NPAs) prescribed by the regulatory authority. Your Company continuous to lay emphasis on timely recovery of its dues from the clients by taking necessary proactive measures as a results the NPA position remains within the controllable levels. As on March 31, 2016 only 9 accounts having total outstanding dues of Rs.158.85 crore were classified as NPA. As all these accounts are fully secured, your Company is confident of realising the entire over dues alongwith further interest/principal during the current year. However, TFCI has made adequate provisions in the books of accounts. The Net NPAs of the company were Rs.120.89 crore as on March 31, 2016.

Corporate Social Responsibility

During the year under review, your Company has undertaken CSR activities/projects during the year 2015-16 amounting Rs.1.59 crore (2% of the average net profit of the last three years) in compliance with CSR objectives and Policy of the Company Out of total CSR approved projects of Rs.1.59 crore, Rs.1.10 crore was spent and unspent amount of Rs.0.48 crore was linked with the progress of the projects wherein advance payment to implementing agencies was made and project progress is being monitored.

The way ahead

India is a fast growing market and sees a positive growth with respect to occupancy in hotels. The Indian hoteliers are very optimistic and tourist inflow is expected to increase in future. According to 2014 statistics published by the Ministry of External Affairs, Government of India, the Indian hospitality sector has been growing at a cumulative annual growth rate of 10 to 15 per cent every year, adding significant amounts of foreign exchange to the economy.

The availability of good quality affordable hotel rooms plays an important role in boosting the growth of tourism in country. A renewed energy is seen in the tourism industry and the efforts made by government are expected to boost it further. The Indian hoteliers are very optimistic and tourist inflow is expected to increase in future. Further, with both the state and central government and tourism industry players looking at domestic tourism for demand generation, the growth momentum is likely to improve in 2016-17. This is evident from the fact that the hotel chains which used to focus on business towns are looking at pilgrimage and other holiday destinations for expansion of their operations.

Your Company is well poised to take advantage of the growing opportunities in the tourism and hospitality sector by expanding and diversifying its operations in line with its business strategy of maintaining sustainable and continuous growth in operations and performance. In addition to the normal project financing activities, your Company will continue to explore possibilities for new businesses for short and medium term with the aim of establishing a niche market for itself in differentiated products. With the growth in the tourism sector, your Company expects ample opportunities in future where the Company can involve itself in appraisal, advisory services, syndication of debts etc. resulting in non-fund based income for the Company. Your company has formulated a vision and an action plan and is actively working for achieving its short, medium and long term goals for pushing the organization into high growth trajectory.


Last but not the least, I express our sincere gratitude to the various Ministries of the Central and State Governments, Reserve Bank of India, Securities Exchange Board of India, the All-India Financial Institutions and the Banks for their support and guidance during the year and we look forward to their continued support in the future. I am also grateful to all my colleagues on the Board for their valuable guidance, continued inspiration and wise counsel.

The Board of Directors appreciates the contribution made by the employees, who through their dedication and untiring efforts and enthusiasm have enabled the company to achieve a satisfactory performance till date.

Most importantly and above all, on behalf of Board of Directors, I gratefully acknowledge the support, patronage and encouragement given to us by you all and the investors, in all these years.

28st September 2016
New Delhi
(Malay Mukherjee)
Non-Executive Chairman