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Directors Report of Tourism Finance Corporation of India Ltd.

Mar 31, 2015

Dear Members:

1. Presentation of the Annual Report

The Directors have pleasure in presenting the Twenty Sixth Annual Report on the business and operations of the Company and the audited accounts for the financial year 2014-15.

2. Financial Results

The Company's financial performance for the year ended 31st March, 2015 is summarized below:

(Amount in Crore)

Particulars 2014-15 2013-14

Total Income 188.05 187.26

Total Expenditure 102.19 98.59

Provision for doubtful debts/invest- 4.00 4.60 ment

Profit before Tax 81.86 84.07

Provision for Tax 21.68 25.57

Profit After Tax 60.18 58.50

Less: Provision for doubtful debts u/s 2.95 3.70 36(1)(viia) of the Income Tax Act, 1961

Surplus Brought Forward 14.99 19.59

Profit Available For Appropriation 72.22 74.39

Special Reserve under Section 36(1) 14.47 16.37 (viii) of the Income Tax Act, 1961

Special Reserve u/s 45 IC of RBI Act 12.04 11.70

General Reserve 20.00 20.00

Proposed Dividend 14.53 9.69

Dividend Tax 2.91 1.64

Depreciation Adj for earlier years 0.11 -

Balance Carried to Balance Sheet 8.16 14.99

72.22 74.39

3. Operational Performance

The Company has recorded profit after tax of Rs. 60.18 crore during the year under review, as against that of Rs. 58.50 crore, during the previous year recording growth of 2.87% over the previous year. The Company had sanctioned project related loan assistance aggregating to Rs. 807.32 crore as compared to Rs. 680.86 crore in the corresponding period of previous year. The project related sanctions registered growth of 19% over the previous year whereas disbursements recorded growth of 43% over the previous year. TFCI had disbursed Rs. 508.02 crore as compared to Rs. 354.63 crore in the previous year. The growth in profit after tax is not commensurate with growth in business as the Corporation reduced its base lending rate from 13.5% to 12.75% during the current year with a view to attract new business and ensure balance sheet growth. The balance sheet size has increased from Rs. 1361.79 crore to Rs. 1500.87 crore during the year under review. Further, the company has approved a sum of Rs. 1.46 crore for meeting its Corporate Social Responsibility. Despite difficult business environment,the company has been able to achieve modest growth in terms of its book size, income from operations and net profit.

The company, during the year under review, deliberately decided to extend financial assistance to projects having sound fundamentals and increase its balance sheet size by concentrating on take-over financing for potentially viable projects so as to ensure quick disbursement. Further, TFCI decided to explore and exploit possibilities for diversification and expansion into adjacent and parallel financial areas to ensure continuous growth in business. TFCI has been in constant touch with its erstwhile customers who might have financial requirements for renovation, modernisation and/ or expansion. Further, TFCI is also on the lookout for providing short-term corporate loans to various borrowers having satisfactory financial background. Your Company, during the last few years, has been pursuing to expand its portfolio by not only extending financial assistance to hospitality projects but also actively pursuing consultancy assignments for private Sector and state governments and their agencies.

3.1. Asset Quality:

Your Company adhered to the prudential norms for Non-Performing Assets(NPAs) prescribed by the regulatory authority. During the year under review, with a view to reduce its NPAs, your Company sold its stake in one sub-standard asset to Asset Care Enterprise Ltd. (ACER). Further, your Company recovered an amount of Rs. 4.67 crore from other NPAs during 2014-15. Despite vigorous follow up, three accounts have slipped from standard to sub-standard category and recognized as NPA as on March 31, 2015. The Gross NPA's of your Company as on 31st March, 2015 were 3.29% of the total assets. Your Company is confident of realising the entire over-dues alongwith further interest/principal during the year. TFCI has adequate provisions in the books of accounts. The Net NPAs of the company were Rs.18.96 crore as on March 31, 2015.

4. Contribution to Tourism and Infrastructure Sector by TFCI

TFCI is the only institution in the country exclusively for funding tourism projects with more than 25 years of existence. The assistance provided by TFCI since its inception has catalysed the addition of 45910 rooms and provided direct employment to about 86465 persons in tourism industry. The assistance provided by TFCI has also led to catalysing investments to the tune of Rs. 25657 Crore in the tourism sector by providing assistance to more than 758 projects thereby contributing to the creation of required tourism infrastructure, which has direct bearing on the development of industry.

Awards and Recognitions

During the year under review, your Company was recognised in various ways by various Institutions and some of the awards presented to the Company are listed below:

1. Best Financial Institution to create Tourism Infrastructure by Today's Traveller Award 2014.

2. Indian Hospitality Award 2014 by Epicurus Hospitality.

3. Most Outstanding Financial Institution by Travel and Hospitality Award 2014.

4. MSME Banking Excellence Award 2014 to the Managing Director of the Company.

5. Dividend

Your Directors have recommended and paid interim dividend of Rs.1 per Equity Share i.e. @ 10% on March 27, 2015 for the financial year ended March 31, 2015. 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, 2015. The aggregate payout due to payment of final dividend, if approved, will be Rs.7.75 Crore inclusive of dividend tax of Rs.1.29 Crore.

The final dividend will be paid to those members holding shares in physical form, whose names appear in the Register of Members as on September 21, 2015 and in respect of shares held in dematerialized form, the dividend will be paid on the basis of beneficial ownership as per details to be furnished by the Depositories i.e National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL) as at the end of business on September 11, 2015.

6. Resource Mobilization

Your Company constantly monitors its resource base and taps the appropriate source in its endeavor to minimize the weighted average cost of funds. During the year, 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. Your Company redeemed high interest bearing loan aggregating Rs.80 crore during 2014-15 out of internal accruals and availed term loan of Rs.175 crores from banks. Further, your Company has tied up with various banks for financial assistance to meet its future disbursement obligations.

The Company has not invited any deposit from the public under Section 73 and 74 of the Companies Act, 2013 during the year under review. There was no public deposit outstanding as at the beginning or end of the year ended on March 31, 2015.

7. Regulatory Compliances

Your Company has been classified as Non-Deposit Accepting Non-Banking Financial Company. RBI has been issuing guidelines from time to time with regard to capital adequacy standards, income recognition, asset classification, provisioning and other related matters. The accounting policies of your Company conform to these guidelines. The capital adequacy for your Company stands at a very comfortable level of 37.65% as on the March 31, 2015 as against the prescribed norm of 15%.

8. Management's Discussion and Analysis Report

Management's Discussion and Analysis report containing Industry outlook, its environment, outlook for tourism and other details as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

9. Directors and Key Managerial Personnel

During the year under report, Ministry of Finance, Govt. of India appointed Shri M.M.Dawla as its nominee director on the Board of TFCI in place of Shri Sanjeev Kumar Jindal. Shri Subrahmoneyan Chandra Sekhar was appointed as additional director in the Independent category on March 18, 2015 by the Board of Directors for a period upto three consecutive years subject to the approval of the shareholders in the ensuing Annual General Meeting. Shri VP. Singh, Independent Director has resigned from the Board w.e.f. May 8, 2015 due to personal reasons. Shri Anup Sankar Bhattacharya was appointed as additional director in the independent category by the Board of Directors w.e.f. August 8, 2015 for a period of three years subject to approval of shareholders in the ensuing Annual General Meeting. The Board appreciates the contribution made by the outgoing directors viz. Shri Sanjeev Kumar Jindal and Shri V.P. Singh during their tenure. In terms of the provisions of the Companies Act read with Article 135 of the Articles of Association of the Company, Shri Malay Mukherjee would retire at the forthcoming Annual General Meeting. The Board recommends the reappointment of Shri Malay Mukherjee and appointment of Shri Subrahmoneyan Chandra Sekhar and Shri Anup Sankar Bhattacharya in the forthcoming Annual General Meeting.

During the year under review, the members approved the appointments of Shri Niraj Agarwal and Shri Malay Mukherjee as Non-Executive Non-Independent Directors who are liable to retire by rotation and of Shri Vivek Nair, Shri S. Ravi, Shri S. Sridhar, and Shri V. P Singh (since resigned w.e.f. 8.5.2015) as Independent Directors who are not liable to retire by rotation. The members had also appointed Shri S.K. Sangar as the Managing Director. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as required under Section 149 of the Companies Act 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.

9.1 Performance Evaluation of the Board

The Companies Act, 2013 and clause 49 of the Listing Agreement entered with the Stock Exchanges stipulates the performance evaluation of the Directors including Chairperson, Board and its Committees. Accordingly, your Company has devised the process and the criteria for the performance evaluation which has been recommended by the Nomination & Remuneration Committee and approved by the Board.

The process of evaluation has been stipulated for the entire Board for its own performance and that of its committees, independent directors and other directors based on the attendance; participation and contribution; responsibility towards stakeholders; exercised their duties with due and reasonable care, skill and diligence and have exercised independent judgment. The committee of independent directors will also evaluate the performance of non-independent directors including Chairman/Managing Director. On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment/ reappointment of the independent and other director(s).

9.2 Director Orientation Programme

The Company has established orientation program for its Independent directors (ID). The Directors are made aware on business models, nature of industry and its dynamism, the roles, responsibilities and liabilities of independent directors, etc. Further, business updates, legal updates and industry updates are made available to independent directors, especially to the Audit Committee members on an ongoing basis by internal teams, external consultants, statutory and internal auditors on a quarterly basis.

The details of programmes for familiarisation of independent directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link:http://www. tfciltd.com/policies.html

9.3 Details of Board meetings

During the year, 9 Board Meetings were held on April 9, 2014, May 9, 2014, May 27, 2014, July 7, 2014, August 5, 2014, September 22, 2014, November 13, 2014, February 12, 2015 and March 18, 2015. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. For the details of Audit Committee and other Committee meeting, please refer report on Corporate Governance of this Annual Report.

9.4 Appointments/Resignations of the Key Managerial Personnel

Shri S.K. Sangar was appointed Managing Director during the year under review; Shri B.M. Gupta, Chief Financial Officer and Shri Sanjay Ahuja, Company Secretary are the other Key Managerial Personnel as per the provisions of the Companies Act, 2013. None of the Key Managerial Personnel has resigned during the year under review.

9.5 Company's policy on appointment and remuneration

Your Company has constituted Nomination and Remuneration Committee of Directors and the Nomination and Remuneration Policy of your Company has been formulated in compliance of new guidelines and rules. The Nomination and Remuneration Committee undertakes a process of due diligence based on the criteria of qualifications, technical expertise, track record, integrity etc. for appointment of independent directors and other directors.The basic objective of ascertaining the fit and proper criteria is to put in place an internal supervisory process on a continuing basis and to determine the suitability of the person for appointment / continuing to hold appointment as a director on the board of the company.

Remuneration Policy

I. Board Level Remuneration Structure

(a) For Managing Director/Whole-Time Director -The remuneration is paid as approved from time to time, subject to the approval of the Board and Shareholders as the case may be and as per the applicable provisions of Companies Act, 2013 and any other Act/ Rules/ Regulations for the time being in force.

(b) In case of Non-Executive / Independent Directors The Non-Executive Directors (except Government Servants) were paid sitting fees of Rs.13,333/- (plus service tax) for attending a Meeting of the Board and Rs.6,667/-(plus service tax) for attending a meeting of the committee of directors. The sitting fees may be revised by the Board of Directors from time to time subject to the overall limits as prescribed under the applicable provisions. However, the sitting fee has been revised to Rs. 20,000 (plus service tax) and Rs. 10,000 (plus service tax) for the attending the meeting of Board and its committee respectively with effect from July 27, 2015.

No Director, who is a government employee is entitled to receive any remuneration except as authorized by the Government.

II. In case of Key Managerial Personnel and other Employees -

The pay structure, allowances, facility etc. of Key Managerial Personnel and all other regular employees are as per the pay scale, allowances and other facilities etc. as approved by the Board and its committee from time to time in line with the salary structure prevalent in other similar organization particularly IFCI Ltd. The Performance Linked Incentives both for the Managing Director/Senior Management / Other employees is as per the Board approved scheme.

10. Directors' Responsibility Statement

In compliance of Section 134(5) of the Companies Act, 2013, your Directors confirm:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

11. Dematerialization of Shares and nomination facility and listing at Stock Exchanges

As per the Securities and Exchange Board of India (SEBI) directives, the transactions of the Company's shares must be compulsorily in dematerialized form. Your Company had entered into agreements with National Securities Depository Ltd. and Central Depository Services (India) Ltd. to facilitate holding and trading of shares in electronic form. Shareholders holding shares in physical form are requested to convert their holding into dematerialized form.

Shareholders may utilize the nomination facility available by sending duly filled form prescribed to our Registrar and Share Transfer Agent, M/s MCS Share Transfer Agent Limited.

Your Company's equity shares are listed with Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). The Company has paid the annual listing fees to said stock exchanges for the financial year 2014-15 and 2015-16. The addresses of the said stock exchanges are stated elsewhere in the Annual Report.

12. Auditors

M/s VC. Gautam & Co., Chartered Accountants (Registration No 000365N) has been appointed by the Comptroller & Auditor General of India (C & AG) as Statutory Auditors of Your Company for FY 2015-16.

12.1 Auditors' Report

The Auditors' Report along with the Notes on Accounts referred to in the Auditors' Report is self-explanatory and does not call for any further comments or explanation. There are no adverse remarks or qualifications in the Audit Report.

12.2 Secretarial audit

In terms of Section 204 of the Act and Rules made there under, M/s Arun Kumar Gupta & Associates, Practicing Company Secretary, have been appointed as Secretarial Auditors for the year 2014-15. The report of the Secretarial Auditors is enclosed as Annexure 4 to this report. The report is self-explanatory and do not call for any further comments.

13. Particulars of Employees

In terms ofthe provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, no employees is drawing remuneration in excess of the limits set out in the said rules.

The ratio ofthe remuneration of each director to the median employee's remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 1.

Committee on Sexual Harassment Your company is fully committed to take appropriate measures against Sexual Harassment of Women at Workplace as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. No Complaints has been received about the sexual harassment cases during the year.

14. Energy Conservation, Technology Absorption and Foreign Exchange Earning and outgo

The particulars relating to energy conservation and technology absorption, as required to be disclosed under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is not required as your Company's operations do not involve in manufacturing or processing activities. However, while vetting the proposals received for sanction of financial assistance, the aspect of energy conservation, in case of assisted concerns, is given due consideration. The particulars regarding Foreign Exchange earnings and outgo are as follows:

i) Total foreign exchange outgo : Nil

ii) Total foreign exchange earnings : Nil

15. Transfer of amount to Investor Education and Protection Fund

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years as required under Section 124 of the Companies Act 2013.

Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF). The Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e September 22, 2014), with the Ministry of Corporate Affairs.

16. Corporate Social Responsibility

Your Company has constituted Corporate Social Responsibility (CSR) Committee of Directors and the CSR Policy of your Company has been formulated for implementation in Compliance with the provision of Section 135 of the Companies Act, 2013 and Rules made there under. The Corporate Social Responsibility Policy (CSR Policy) may be accessed on the Company's website at the link: http://www.tfciltd.com/policies.html

The Corporate Social Responsibility (CSR) policy has been approved with a philosophy:-

* To support activities aimed at development of human skills particularly needed for tourism sector.

* To support activities/projects which would promote tourism in the country including protection of national heritage of art and culture, restoration of building and sites of heritage importance, work of art, promotion and development of traditional art, handicraft etc.

* To support activities which help cleaner, greener and healthier environment and thereby enhancing TFCI's perception as a socially responsible entity.

Your Company during the year under review has undertaken CSR activities/projects amounting Rs. 1.46 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. 1.46 crore, Rs. 1.27 crore was spent and unspent amount of Rs. 18.63 lakh is linked with the progress of the projects wherein advance payment to implementing agencies was made and project progress is being monitored. The residual expenditure has also been provided for. The detailed report on the CSR contribution made during the year 2014-15 is annexed as Annexure 2.

17. Corporate Governance and other disclosures

Your Directors reaffirm their continued commitment to good corporate governance practices and endorse such practices in accordance with the provisions of Clause 49 of the Listing Agreement. Your company has complied with all the mandatory requirements. The Report on the Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from the M/s Arun Kumar Gupta & Associates, Practicing Company Secretary, confirming compliance with the conditions as stipulated under the aforesaid Clause 49 is attached to this report.

17.1 Vigil Mechanism

Pursuant to the requirement of the Companies Act 2013 and Listing Agreement, the Company has a Vigil Mechanism and Whistle Blower Policy under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. The reportable matters can be disclosed to the Audit Committee. Employees can also report directly to the Chairman of the Audit Committee. During the year under review, no employee was denied access to the Audit Committee. The policy on Vigil Mechanism and Whistle Blower Policy may be accessed on the Company's website at the link: http://www.tfciltd.com/policies.html

17.2 Related Party Transactions

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis.

There were no materially significant related party transactions entered by the Company with promoters, directors, key managerial personnel or other persons which may have a potential conflict with the interest of the Company during the year. The Company's related party transactions are generally with its associates. The related party transactions are entered into based on synergy in operations, long-term strategy for sectoral investments and profitability. All related party transactions are on an arms length basis, and are intended to further the Company's interests. Your Directors draw attention of the members to Note 24 to the financial statement which sets out related party disclosures.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Audit Committee and the Board may be accessed on the Company's website at the link: http://www. tfciltd.com/policies.html

17.3 Extract of Annual Return

Pursuant to section 92(3) of the Companies Act, 2013 ('the Act') and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is attached as Annexure 3.

17.4 Statement containing salient features of financial statements of subsidiaries

Your Company does not have any subsidiary or holding company.

17.5 Risk Management Policy

The Company has developed and implemented the Risk Management Policy and Asset Liability Management Policy and the Board/Audit Committee of the Board reviews the same periodically. Your Company has also constituted ALM Committee (ALCO) and Risk Management Committee for reviewing/implementing ALM policies and for managing the liquidity risk as well as interest-rate and other risks. ALCO meets every month and reviews the cash flows as well as the prevailing interest rate scenario, its likely impact on the profitability and the steps to be initiated for effectively meeting the liabilities on the due dates. ALCO is also responsible for ensuring adherence of limits set by the Board as well as deciding business strategies of TFCI in line with the overall budget and risk management policy. The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its planned objectives. The Company's management systems, structures, processes, standards, code of conduct and behaviours together form the system that governs how it conducts the business of the Company and manages associated risks.

17.6 Significant and material orders passed by the regulators

During the year under review, no significant and/or material orders were passed by the regulators or courts or tribunals impacting the going concern status and company's operations.

17.7 Internal financial controls

The Company has in place set of standards, processes and structure which enables it to implement internal control system and ensure that same are adequate and operating effectively. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

17.8 Particulars of Loans given, Investments made, Guarantees given and Securities provided

Your Company is a specialised financial institution registered as Non-Banking Finance Company (NBFC-ND-SI) with RBI. It provides financial assistance to tourism related/other projects in the ordinary course of business. The detailed particulars may be referred to in the financial statements.

17.9 Segment Reporting

Accounting Standard 17 regarding Segment-wise Reporting does not apply to your Company since revenues are primarily derived from only one segment i.e. financing of projects by way of loan or investments.

17.10 Material Changes and Commitment Affecting Financial Position of the Company

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. March 31, 2015 and the date of the Directors' report i.e. July 27, 2015.

18. Acknowledgements

The Board expresses and places on record their gratitude for the consistent support and guidance given by the promoter institutions namely IFCI Ltd., LIC, SBI and others Banks.

Your Directors wish to place on record their sincere gratitude to valued customers, bankers and members for their continued patronage.

The Board also acknowledges and appreciates the guidance and co-operation extended by the Ministry of Finance, Ministry of Tourism, Government of India, and Reserve Bank of India, Securities & Exchange Board of India, Stock Exchanges and Depositories.

The Board also appreciates and acknowledges the contribution made by the employees whose concerted efforts and dedicated services contributed to sustained growth and performance of the Company.

For and on behalf of the Board of Directors

Date : August 20, 2015 S. Ravi S.K. Sangar Place: New Delhi. (Director) (Managing Director)




Mar 31, 2014

Dear Members:

1. Presentation of the Annual Report

The Directors have pleasure in presenting the Twenty Fifth Annual Report on the business and operations of the Company and the audited accounts for the financial year 2013-14.

2 Financial Results

The Company''s financial performance for the year ended 31st March, 2014 is summarized below:

(Amount in Lakh)

Particulars 2013-14 2012-13

Total Income 18726.03 18240.00

Total Expenditure 9859.44 10396.54 Provision/(Written Back) for doubtful 460.00 600.00 debts/investment

Profit before Tax 8406.59 7243.46

Provision for Tax 2556.70 1690.89

Profit After Tax 5849.89 5552.57

Less: Provision for doubtful debts u/s36(1) 370.00 303.00 (viia) of the Income Tax Act, 1961

Surplus Brought Forward 1959.07 1417.75

Profit Available For Appropriation 7438.96 6667.32

Special Reserve under Section 36(1)(viii) 1637.00 1472.00 of the Income Tax Act, 1961

special Reserve u/s 45 IC of RBI Act 1169.98 1110.52

General Reserve 2000.00 1000.00

Proposed Dividend 968.60 968.60

Dividend Tax 164.61 157.13

Balance Carried to Balance Sheet 1498.77 1959.07

7438.96 6667.32

3. Operational Performance

The operational performance of your Company has improved over the previous year, despite difficult business environment. The project related sanctions registered a growth of 85.62% in the year 2013-14 over the previous year. The Company had sanctioned loan assistance aggregating to Rs.680.86 Crore as compared to Rs.366.80 Crore in the corresponding period of the previous financial year. The project related disbursement registered a growth of 23.81% over the previous year. TFCI had disbursed Rs.354.63 Crore as compared to the previous year figure of Rs.286.43 Crore. Your Company has achieved a modest growth of 5.35% in Net Profit After Tax (PAT) over the corresponding previous year figure. Due to slowdown in economic activities, the Company deliberately decided not to extend financial assistance to projects with weak fundamentals which might ultimately result in higher delinquencies. Accordingly, more emphasis was laid on consolidation & strengthening of monitoring mechanism to prevent slippages which helped in improving the bottom line, at a time, when most of the NBFCs were facing severe stress on their financials. However, the company has maintained a healthy growth in income from operations as well as in the profitability due to better recovery rate.

3.1. New Initiatives

In view of the prevailing challenging environment, TFCI decided to explore and exploit possibilities for diversification and expansion into adjacent and parallel financial areas to ensure continuous growth in business and financial parameters. TFCI is approaching its erstwhile good customers who may have financial requirements for renovation, modernization or expansion. TFCI is exploring corporates with satisfactory financial background for short-term loans to enable quick disbursements. Your Company, during the last few years has been pursuing to expand its portfolio by not only extending financial assistance to new hospitality projects for renovation, upgradation but also has been actively pursuing consultancy assignments for various state governments by drafting tourism policy, other project advisory services for tourism destination/ circuit development etc.

3.2 Contribution to Tourism and Infrastructure Sector by TFCI

The assistance provided by your company since its inception has catalyzed the addition of 44174 rooms and provided direct employment to about 83749 persons in tourism industry. The assistance provided by your Company has also led to catalysing investments to the tune of Rs.24581 Crore in the tourism sector thereby contributing to the creation of required tourism infrastructure, which has direct bearing on the development of industry.

3.3. Non-Performing Assets

Your Company adhered to the prudential norms for Non-Performing Assets(NPAs) prescribed by the regulatory authority. During the year 2013-14, your Company has been able to contain slippage in its loan portfolio by taking proactive steps and regular follow up with borrowers. However, despite vigorous follow up, one account has slipped from standard to sub- standard category and recognized as NPA as on March 31, 2014. Your Company hope to realise the entire overdues alongwith further interest/principal during the year. TFCI has adequate provisions in the books of accounts. During the year, amount aggregating Rs.18.22 Crore was recovered from NPA/written off cases and recognized as income. The Net NPAs of the company were NIL as on March 31, 2014.

4. Dividend

Your Directors have recommended a dividend of Rs.1.20 per Equity Share i.e. @ 12% on the paid-up Equity Share Capital for the financial year ended March 31, 2014 which will be paid after approval at the ensuing Annual General Meeting. The aggregate payout due to payment of dividend, if approved, will be Rs.11.33 Crore inclusive of dividend tax of Rs.1.64 Crore. The dividend will be paid to those members holding shares in physical form, whose names appear in the Register of Members as on September 22, 2014 and in respect of shares held in dematerialized form, the dividend will be paid on the basis of beneficial ownership as per details to be furnished by the Depositories i.e National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL) as at the end of business on September 15, 2014.

5. Resource Mobilization

Your Company constantly monitors its resource base and taps the appropriate source in its endeavor to minimize the weighted average cost of funds. During the year, 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. Your Company redeemed high interest bearing bonds aggregating Rs.102.08 crore during 2013-14 and availed term loan of Rs.100 crore from a bank.

Public deposit

The Company has not invited any deposit from the public under Section 58A of the Companies Act, 1956 during the year under review. There was no public deposit outstanding as at the beginning or end of the year ended on March 31, 2014.

6. RBI Guidelines

Your Company has been classified as Non-Deposit Accepting Non-Banking Financial Company. RBI has been issuing guidelines from time to time with regard to capital adequacy standards, income recognition, asset classification, provisioning and other related matters. The accounting policies of your Company conform to these guidelines. The capital adequacy for your Company stands at a very comfortable level of 39.86% as on the March 31, 2014 as against the prescribed norm of 15%.

7. Management''s Discussion and Analysis Report

Management''s Discussion and Analysis report containing Industry outlook, its environment, outlook for tourism and other details as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, is presented in a separate section forming part of the Annual Report.

8. Directors

During the year under report, Shri S.K. Ganguli retired by rotation in the last Annual General Meeting. Shri S. Ravi was appointed as an additional director on November 6, 2013.

Shri S.B. Nayar, Chairman of the Board resigned vide his letter dated December 11, 2013 and Shri Malay Mukherjee was appointed as an additional director and Chairman of the Board w.e.f January 3, 2014. Smt. Shashi Sharma resigned as Director/Managing Director vide her letter dated April 3, 2014. The Board of Directors in its meeting held on April 9, 2014, accepted her resignation and appointed

Shri Satpal Arora as an additional director and Managing Director of the Company consequent to resignation of Smt. Shashi Sharma. Shri S. Sridhar has been appointed as an additional director in the independent director category in their meeting held on May 27, 2014 for a period of 3 years subject to approval in the ensuing Annual General Meeting. Shri Satpal Arora has resigned as Director/Managing Director w.e.f. August 7, 2014 and the Board of Directors has appointed Shri Surender Kumar Sangar as an additional director and Managing Director for a period of 3 years w.e.f. August 7, 2014 or till he attains the age of 60 years whichever is earlier. The Board appreciates the contribution made by the outgoing directors during their tenure. In terms of the provisions of the Companies Act read with Article 135 of the Articles of Association of the Company, Shri Niraj Agarwal would retire at the forthcoming Annual General Meeting. The Board recommends the re-appointment of Shri Niraj Agarwal in the forthcoming Annual General Meeting. Your company proposes to amend Article 123 of the Articles of Association in view of the new Companies Act, 2013 and corporate governance practices.

9. Directors'' Responsibility Statement

In compliance of Section 217(2AA) of the Companies Act, 1956, your Directors confirm:

(i) That in the preparation of the annual accounts for the year ended March 31, 2014, the applicable accounting standards read with the requirements set out under Schedule VI of the Companies Act, 1956 have been followed and there are no material departures from the same;

(ii) That they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the profit of the Company for the year ended on that date;

(iii) That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) That they had prepared the annual accounts on a ''going- concern'' basis.

10. Dematerialization of Shares and nomination facility and listing at Stock Exchanges

As per the Securities and Exchange Board of India (SEBI) directives, the transactions of the Company''s shares must be compulsorily in dematerialized form. Your Company had entered into agreements with National Securities Depository Ltd. and Central Depository Services (India) Ltd. to facilitate holding and trading of shares in electronic form. Shareholders holding shares in physical form are requested to convert their holding into dematerialized form.

Shareholders may utilize the nomination facility available by sending duly filled prescribed Form No. 2B to our Registrar and Share Transfer Agent, M/s MCS Share Transfer Agent Limited.

Your Company''s equity shares are listed with Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). The Company has paid the Annual Listing Fees to said Stock Exchanges for the financial year 2013-14 and 2014-15. The addresses of the said Stock Exchanges are stated elsewhere in the Annual Report.

11. Auditors

M/s V.C.Gautam & Co., Chartered Accountants (Registration No 000365N) has been appointed by the Comptroller & Auditor General of India (C&AG) as Statutory Auditors of Your Company for FY 2014-15.

12. Auditors'' Report

The Auditors'' Report along with the Notes on Accounts referred to in the Auditors'' Report is self-explanatory and does not call for any further comments or explanation.

13. Particulars of Employees

In terms of the provisions of the Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, we hereby confirm that there is no employee in respect of which information is required to be furnished.

14. Energy Conservation, Technology Absorption and Foreign Exchange Earning and outgo

The particulars relating to energy conservation and technology absorption, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is not required as your Company''s operations do not involve in manufacturing or processing activities. However, while vetting the proposals received for sanction of financial assistance, the aspect of energy conservation, in case of assisted concerns, is given due consideration. The particulars regarding Foreign Exchange earnings and outgo are as follows:

i) Total foreign exchange outgo : Nil

ii) Total foreign exchange earnings : Nil

15. Transfer of amount to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A of the Companies Act, 1956, your Company has transferred unclaimed/unpaid dividend to the Investor Education and Protection Fund.

16. Segment Reporting

Accounting Standard 17 regarding Segment-wise Reporting does not apply to your Company since revenues are primarily derived from only one segment, financing.

17. Corporate Governance

Your Directors reaffirm their continued commitment to good corporate governance practices and endorse Corporate Governance practice in accordance with the provisions of Clause 49 of the Listing Agreement. Your company has complied with all the mandatory requirements of the said clause. The Report on the Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this report.

18. Corporate Social Responsibility

Ministry of Corporate Affairs has notified Section 135 and Schedule VII of Companies Act 2013 along with the Companies (Corporate Social Responsibility Policy) Rules, 2014 to come into effect from April 1, 2014 onwards. Your Company has constituted CSR Committee of Directors and the CSR Policy of your Company for the year 2014-15 is being formulated for implementation for compliance of new guidelines and rules.

19. Declaration

The Board has formulated a code of conduct for the Board members and senior management of the Company. All Board members and senior management personnel have affirmed their compliance with the code.

20. Acknowledgements

The Board expresses and places on record their gratitude for the consistent support and guidance given by the promoter institutions namely IFCI Ltd., LIC, SBI and others Banks.

Your Directors wish to place on record their sincere gratitude to valued customers, bankers and members for their continued patronage.

The Board also acknowledges and appreciates the guidance and co-operation extended by the Ministry of Finance, Ministry of Tourism, Government of India, and Reserve Bank of India, Securities & Exchange Board of India, Stock Exchanges and Depositories.

The Board also appreciates and acknowledges the contribution made by the employees whose concerted efforts and dedicated services contributed to sustained growth and performance of the Company.

For and on behalf of the Board of Directors

V.P. Singh Surender Kumar Sangar (Director) (Managing Director)

Date: August 7, 2014 Place: New Delhi.


Mar 31, 2013

To the Members:

1. Presentation of the Annual Report

The Directors have pleasure in presenting the Twenty Fourth Annual Report on the business and operations of the Company and the audited accounts for the fnancial year 2012-13.

2. Financial Results (Amount in Rs. Lakh) Particulars 2012-13 2011-12

Total Income 18240.00 13032.33

Total Expenditure 10396.54 7324.12

Provision/(Written Back) for 600.00 (600.00) doubtful debts/investment

Proft before Tax 7243.46 6308.21

Provision for Tax 1690.89 1361.25

Proft After Tax 5552.57 4946.96

Less: Provision for doubtful debts u/s36(1)(viia) of the Income Tax 303.00 199.00 Act, 1961

Surplus Brought Forward 1417.75 755.91

Proft Available For 6667.32 5503.87

Appropriation

Special Reserve under Section 36(1)(viii) of the 1472.00 971.00

Income Tax Act, 1961 Special Reserve u/s 45 IC of RB 1110.52 989.39 Act

General Reserve 1000.00 1000.00

Proposed Dividend 968.60 968.60

Dividend Tax 157.13 157.13

Balance Carried to Balance Sheet 1959.07 1417.75

6667.32 5503.87

3. Performance

The operational proftability of your Company has improved over the previous year despite diffcult business environment. The total income has gone up by 39% during the year under review, due to increase in interest earnings with increase in loan portfolio. Your Company has achieved a growth of 12.25% in Net Proft After Tax (PAT) over the corresponding previous year fgure. During the year, the Company had sanctioned Rs.393.48 Crore as compared to Rs.779.98 Crore in the previous fnancial year. Similarly, TFCI had disbursed Rs.343.11 Crore as compared to the previous year fgure of Rs.563.24 Crore.

Your Company, due to slow down in economic activities and the prevailing diffcult business environment, deliberately decided to fnance such projects wherein the fundamentals are strong and the security position was relatively comfortable. Further, TFCI put more emphasis on consolidation and strengthened its monitoring mechanism to prevent slippages which improved the bottomline at a time when most of the projects in tourism sector are facing severe stress in terms of the revenue earnings and the overall proftability. TFCI has been able to contain slippages into non-performing assets which has helped in maintaining a healthy growth in income from operations as well as overall proftability.

3.1 TFCI, in view of the prevailing challenging environment, decided to explore and exploit possibilities for diversifcation and expansion into adjacent and parallel fnancial areas to ensure sustained growth momentum in business and fnancial parameters. The Board of Directors, after detailed deliberations, decided to create an Asset Management Company (Tourism Sector) for mutual fund operations where TFCI will act as a sponsor. This business would help in diversifcation of the company''s business model as well as act as a marketing tool to establish the brand ''''TFCI''''. Similarly, the Board, with a view to allow TFCI to raise foreign currency borrowings at a cheaper rate, decided to set up an NBFC – IFC (Infrastructure Finance Company) as a subsidiary of TFCI.

The Reserve Bank of India, in the meanwhile, allowed setting up of banks in private sector and invited applications for the same. This created an opportunity for TFCI to diversify and if permitted, raise resources at a cheaper rate. TFCI pursued this opportunity and has submitted its application for the banking licence on 20th June 2013. The Board of Directors are confdent that RBI would consider our application and the possibilities of getting banking licence seems real.

Your Company, during the last few years has been pursuing to expand its portfolio by not only extending fnancial assistance to new hospitality projects for renovation, upgradation but also has been actively pursuing consultancy assignments for various state governments by drafting tourism policy, other project advisory services for tourism destination/circuit development.

3.2 Industry Outlook

Travel & Tourism(T&T) is one of the most important industries in terms of absolute size of employment and output, and industrial linkages are strong and widely dispersed. The Industry can also drive domestic investment and attract foreign direct investment as well, all of which create employment, generate income and provide additional quality–of-life benefts to local residents. On a comparative scale, Travel & Tourism makes a larger economic contribution to the global economy than some notable high profle sectors. It is an important industry to support as a potential tool for economic development.

Although the global economy is showing signs of fragile recovery, the world is becoming increasingly complex and interconnected. In this context, it is notable that the T&T sector has remained resilient in a number of ways. The number of travelers have increased consistently over the past year, notwithstanding the diffcult economic climate and shrinking budgets. Indeed, the UNWTO reports that international tourist arrivals grew by 4% in 2012, and forecasts that they will continue to increase by 3-4% in 2013. Although this trend is primarily driven by increasing demand from the emerging markets, the picture has also been brightening for many developing economies.

Yet despite many positive developments, the need for greater openness remains one of the major trends impacting the T&T sector, especially with regard to the freer movement of people. The importance of efforts in this area has been highlighted specifcally by the G20 Los Cabos communique in June 2012, in which the group recognized the importance of tourism ''''as a vehicle for job creation, economic growth and development'''' and furthermore committed to ''''work towards developing travel facilitation initiatives in support of job creation, quality work, poverty reduction and global growth.''''

During the year 2012, the number of Foreign Tourist Arrivals (FTAs) in India reached the level of 6.65 million, registering a growth of 5.4% over the FTAs of 6.31 million in the year 2011. The growth rate of tourist arrivals in India is much higher as compared to growth in tourist arrivals worldwide. The tourism sector in India, therefore, has fared better vis-à-vis the world. Foreign Exchange Earnings (FEE) from tourism in India during 2012 were USD17.74 billion as compared to USD16.56 billion in 2011, registering a growth of 7.10%. FTAs during the period January-April 2013 were 2.48 million with a growth of 1.9% over the corresponding period of January- April 2012. FEE from tourism during January–April 2013 were USD 6.878 billion with a growth of 14.7% over the corresponding previous year fgure at USD 6.275 billion during January–April 2012.

3.3 Overall Contribution to Tourism and Infrastructure Sector by TFCI

The assistance provided by your company, since its inception, has catalyzed the addition of 43534 rooms and provided direct employment to about 82735 persons in tourism industry. The assistance provided by your Company has also led to catalysing investments to the tune of Rs.24208 Crore in the tourism sector thereby contributing to the creation of need-based tourism infrastructure, which has direct bearing on the development of tourism in the country.

3.4 Outlook for Tourism

Tourism sector is one of the crucial sectors of the Indian economy. It is not only a signifcant contributor to GDP and foreign exchange earnings (FEE) for the country, but also provides widespread employment opportunity. Tourism sector can also be considered the backbone for allied sectors like hospitality, civil aviation, and transport. The tourism and hospitality industry contributes about 6.23% to the national GDP and 8.78% of the total employment in the country. As per WTO estimates, Travel and tourism is expected to grow at 8.8% during the period of 2010-2019 and India is projected to become the world''s ffth largest business travel destination. Further, investment in Travel and Tourism in India is expected to reach USD109.30 billion by 2020. Acknowledging the potential of tourism sector, Government of India has budgeted an expenditure of Rs.35,000 Crore for tourism sector in its 12th fve year plan period (2012-17) as against a budget of Rs.12,000 Crore in the 11th plan.

Encouraging the development of the Travel & Tourism Sector(T&T Sector) is all the more important today in view of its potential to earn foreign exchange to reduce current account defcit (CAD) as also its important role in job creation, at a time when many countries are suffering from high unemployment. The sector already accounts for 9 % of the GDP, a total of USD6 trillion, and it provides 120 million direct jobs and another 125 million indirect jobs in related industries. This means that the industry now accounts for one in eleventh jobs on the planet, a number that could even rise to one in ten jobs by 2022, according to the World Travel & Tourism Council.

The availability of good quality and affordable hotel rooms plays an important role in boosting the growth of tourism in the country. The accomodation segment of the industry, however, is facing tough patches during the past 2-3 years. The net income for the hotels in the country dipped by 3.1% in 2012-13, despite top line growth of 7% over previous year, on account of increased overhead costs and high borrowing costs. The increase in occupancy, which began its upward curve in the second half of 2009, after plummeting in 2008-09 fscal, stagnated during 2011-12 at around 60%. India''s hospitality industry saw a 15%-20% drop in tariffs in 2012-13 due to the global economic slowdown and an expansion in supply, further hammered down by increase in air fares. However, in the long term, the demand-supply gap in India is very real and there is need for more hotels in most cities. The shortage is especially true within the budget and the mid-market segment. There is an urgent need for budget and mid- market hotels in the country as travellers look for safe and affordable accommodation. Various domestic and international brands have made signifcant inroads into this space and more are expected to follow as the potential for this segment of hotels becomes more obvious. As per a Ministry of Tourism estimate, the foreign tourist arrivals in India are expected to double to 12 million during 2012-17. Presently, India has about 1,30,000 rooms in classifed hotels and it needs additional 1,50,000 rooms, out of which 1,00,000 rooms would be needed the mid- market/budget segment, over next fve years to meet the gap. The Government of India is encouraging tourism sector by means of fscal incentives, supporting mega- tourism projects across the country, initiating visa-on- arrival scheme, strengthening tourism-oriented training & education infrastructure and promoting the country as a destination for heritage, wildlife, medical, wellness, rural, adventure and eco-tourism.

4. Non-Performing Assets

Your Company adhered to the prudential norms for Non- Performing Assets (NPAs) as prescribed by the regulatory authority. During the year 2012-13, your Company has been able to contain slippage in its loan portfolio by taking proactive steps and regular follow up with borrowers. However, despite vigorous follow up, 2 accounts slipped from standard to sub-standard category and recognized as NPA as on March 31, 2013. The recovery proceeding have been initiated and we expect to realise the entire overdues alongwith further interest/principal during the year and the account might be upgraded to standard category as on 31/3/2014. TFCI has adequate surplus provisions to cover the entire principal outstanding against these loans even though the prudential guidelines stipulates provisioning to the extent of 10%. During the year, an amount of Rs.8.56 Crore was recovered from NPA/written off cases and recognized as income during the year. Your Company has maintained net NPAs at zero as on March 31, 2013, whereas the gross NPA''s are less than 1% of the total assets.

5. Resource Mobilisation

Your Company constantly monitors its resource requirements and taps the appropriate source in its endeavor to minimize the weighted average cost of funds. During the year, your Company met its fund requirements for disbursement as well as repayment/redemption of loans/bonds through bond issue, fnancial assistance from banks and from its internal accruals. During the year, your Company raised Rs.375.00 Crore (WAIR: 9.80% p.a. with a tenure ranging between 10-20years), in tranches, by way of issuing unsecured bonds. During the year under report, your Company repaid high interest bearing medium term loan of Rs.250.00 Crore.

6. RBI Guidelines

Your Company has been classifed as Non-Deposit Accepting Non-Banking Financial Company. RBI has been issuing guidelines from time to time with regard to capital adequacy standards, income recognition, asset classifcation, provisioning and other related matters. The accounting policies of your Company conform to these guidelines. The capital adequacy for your Company stands at a very comfortable level of 37.21% as on the March 31, 2013 as against the prescribed norm of 15%.

7. Dividend

Your Directors have recommended a dividend of Rs.1.20 per Equity Share i.e. @ 12% on the paid-up Equity Share Capital for the fnancial year ended March 31, 2013 which will be paid after approval at the ensuing Annual General Meeting. The dividend will be paid to those members holding shares in physical form, whose names appear in the Register of Members as on September 12, 2013. Further dividend will be paid in case of demat shares, on the basis of benefcial ownership as per details to be furnished by the Depositories i.e National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL) as at the end of business on September 6, 2013.

8. Directors

During the year, Dr. Raju Sharma, Shri Shivendra Tomar and Shri Sujit K Mandal ceased to be Directors of the Company. Shri Rakesh Kapoor also resigned from the Directorship of the Company w.e.f. April 23, 2013. Further, the Ministry of Tourism, Govt. of India had appointed Smt. Usha Shama as their nominee director in place of Shri Devesh Chaturvedi. The Ministry of Finance, Govt. of India appointed Shri Amrik Singh as its Nominee on the Board of TFCI in place of Shri Sanjeev Kumar Jindal. Further, the Central Government vide its dated May 29, 2013 re-appointed Shri Sanjeev Kumar Jindal, Director, Department of Financial Services, Ministry of Finance, Government of India as Government Nominee Director on the Board of TFCI in place of Shri Amrik Singh. Shri. Atul Kumar Rai was appointed as Additional Director and Chairman of the Board on August 8, 2012 and submitted his resignation vide letter dated May 31, 2013. Shri R.R. Rai resigned as Director w.e.f. May 27, 2013 and Shri Niraj Agarwal was appointed as Additional Director on June 17, 2013. Shri S.P. Arora and Shri R.P. Singh have also resigned as Directors vide their letter dated July 17, 2013 and July 29, 2013 respectively Shri S.B. Nayar has been appointed an Additional Director and assumed Chairmanship of the Board on July 31, 2013. The

Board appreciates the contribution made by the outgoing directors during their tenure.

In terms of the provisions of Section 256 of the Companies Act, 1956 read with Article 135 of the Articles of Association of the Company, Shri Samir Kumar Ganguli and Shri Vivek Nair would retire at the forthcoming Annual General Meeting. As Shri Samir Kumar Ganguli did not offer himself for reappointment, the Board only recommends the re-appointment of Shri Vivek Nair in the forthcoming Annual General Meeting and recommend not to fll the resultant vacancy caused by retirement of Shri Ganguli for the time being.

The Board of Directors in its meeting held on September 20, 2012, appointed Smt. Shashi Sharma, as Managing Director of the Company as an interim arrangement consequent to resignation of Shri Shivendra Tomar. The Board recommends the appointment of Smt. Shashi Sharma as Managing Director of the Company till the appointment of regular incumbent.

9. Public Deposits

The Company has not invited any deposit from the public under Section 58A of the Companies Act, 1956 during the year under review.

10. Directors'' Responsibility Statement

In compliance of Section 217(2AA) of the Companies Act, 1956, your Directors confrm:

(i) That in the preparation of the annual accounts for the year ended March 31, 2013, the applicable accounting standards read with the requirements set out under Schedule VI of the Companies Act, 1956 have been followed and there are no material departures from the same;

(ii) That they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the proft of the Company for the year ended on that date;

(iii) That they had taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) That they had prepared the annual accounts on a ''going-concern'' basis.

11. Dematerialisation of Shares and nomination facility and listing at Stock Exchanges

As per the Securities and Exchange Board of India (SEBI) directives, the transactions of the Company''s shares must be compulsorily in dematerialized form. Your Company had entered into agreements with National Securities Depository Ltd. and Central Depository Services (India) Ltd. to facilitate holding and trading of shares in electronic form. Shareholders holding shares in physical form are requested to convert their holding into dematerialized form.

Shareholders may utilize the nomination facility available by sending duly flled prescribed Form No. 2B to our Registrar and Share Transfer Agent, M/s MCS Limited.

Your Company''s equity shares are listed with Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). The Company has paid the Annual Listing Fees to said Stock Exchanges for the fnancial year 2012-13 and 2013-14. The addresses of the said Stock Exchanges are stated elsewhere in the Annual Report.

12. Auditors

M/s S. S. Kothari & Co., Chartered Accountants (Registration No.302034E), the Statutory Auditors of the Company, holds offce until the conclusion of the ensuing Annual General Meeting. Consequant to aquisition of stake by Central Government in IFCI Ltd. (the largest shareholder of the Company), your Company has to comply with section 619 B of the Companies Act, 1956 requiring the appointment of Statutory Auditors by Comptroller and Auditor General of India (CAG). Accordingly, CAG conveyed regarding appointment of M/s. V.C. Gautam & Co. Chartered Accountants (Registration No. 000365N) as Statutary Auditors of the Company. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224(IB) of the Companies Act, 1956 and they are not disqualifed for appointment within the meaning of Section 226 of the said Act. Your Directors recommend their appointment as Statutary Auditors.

13. Auditors'' Report

The Auditors'' Report along with the Notes on Accounts referred to in the Auditors'' Report is self explanatory and does not call for any further comments or explanation.

14. Particulars of Employees

In terms of the provisions of the Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, we hereby confrm that there is no employee in respect of which information is required to be furnished.

15 Energy Conservation, Technology Absorption and Foreign Exchange Earning and outgo

The particulars relating to energy conservation and technology absorption, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is not required as your Company''s operations do not involve in manufacturing or processing activities. However, while vetting the proposals received for sanction of fnancial assistance, the aspect of energy conservation, in case of assisted concerns, is given due consideration. The particulars regarding Foreign Exchange earnings and outgo are as follows:

i) Total foreign exchange outgo : Nil ii) Total foreign exchange earnings : Nil

16. Transfer of amount to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A of the Companies Act, 1956, an amount of Rs.9.52 Lakh has been transferred to the Investor Education and Protection Fund towards the unclaimed/unpaid dividend for the fnancial year 2003-04.

17. Segment Reporting

Accounting Standard 17 regarding Segment–wise Reporting does not apply to your Company since revenues are derived from only one segment, fnancing.

18. Corporate Governance

Your Directors reaffrm their continued commitment to good corporate governance practices and endorse Corporate Governance practice in accordance with the provisions of Clause 49 of the Listing Agreement. Your company has complied with all the mandatory requirements of the said clause. The Report on the Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certifcate from the Auditors of the Company confrming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this report.

19. Management''s Discussion and Analysis Report

Management''s Discussion and Analysis report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

20. Declaration

The Board has formulated a code of conduct for the Board members and senior management of the Company. All Board members and senior management personnel have affrmed their compliance with the code.

21. Acknowledgements

The Board expresses and places on record their gratitude for the consistent support and guidance given by the promoter institutions namely IFCI Ltd., LIC, SBI and others Banks.

Your Directors wish to place on record their sincere gratitude to valued customers, bankers and members for their continued patronage.

The Board also acknowledges and appreciates the guidance and co-operation extended by the Ministry of Finance, Ministry of Tourism, Government of India, Reserve Bank of India, Securities & Exchange Board of India, Stock Exchanges and Depositories.

The Board also appreciates and acknowledges the contribution made by the employees whose concerted efforts and dedicated services contributed to sustained growth and performance of the Company. For and on behalf of the Board of Directors

Date : July 31, 2013 (V.P. Singh) (Shashi Sharma)

Place : New Delhi. Director Managing Director


Mar 31, 2012

1. Presentation of the Annual Report:

The Directors have pleasure in presenting the Twenty Third Annual Report on the business and operations of the Company and the audited accounts for the financial year 2011-12.

2. Financial Results:

(Rs in Lakh)

2011-12 2010-11

Total Income 13032.33 10952.94

Total Expenditure 7324.12 5422.97

Add: Excess provision

written Back 600.00 1350.00

Profit before Tax 6308.21 6879.97

Provision for Tax 1361.25 2438.93

Profit After Tax 4946.96 4441.04

Less: Provision for doubtful debts u/s36(1)(viia) of the

Income Tax Act, 1961 199.00 269.49

Surplus Brought Forward 755.91 327.39

Profit Available for _ _

Appropriation 5503.87 4498.94

Special Reserve under

Section 36(1)(viii)

of the Income Tax Act, 1961 971.00 1229.09

Special Reserve u/s 45 IC 989.39 888.21

of RBI Act

General Reserve 1000.00 500.00

Proposed Dividend 968.60 968.60

Dividend Tax 157.13 157.13

Balance Carried to B/S 1417.75 755.91

5503.87 4498.94 3.Performance

The operational performance of your Company has improved over the previous year despite difficult business environment. The gross income has gone up by 19% during the year under review as compared to corresponding previous year. Your Company has achieved a growth of 11.40% in Net Profit After Tax (PAT) over the corresponding previous year figure. It is worth mentioning that the Company has achieved this performance without any extra-ordinary income as against a substantial amount of Rs 16.20 Crore during the previous financial year 2010-11. The total sanctions of Rs 779.98 Crore were made during the financial year 2011-12 comprising of project-related sanctions of Rs 718.80 Crore and average investment in liquid funds amounting to Rs 61.18 Crore (previous year Rs 738.16 Crore comprising of project-related sanctions of Rs 671.05 Crore and average investment in liquid funds amounting to Rs 67.11 Crore). TFCI has made disbursement of RS 563.24 Crore during the financial year 2011-12 comprising of project-related disbursements of Rs 502.06 Crore and average investment in liquid funds amounting to Rs 61.18 Crore (previous year Rs 378.75 Crore comprising of project-related disbursements of Rs 311.64 Crore and average investment in liquid funds amounting to Rs 67.11 Crore) registering a remarkable growth of around 49% over the previous year. In order to avail opportunities in sectors other than tourism, hospitality and infrastructure, the Object Clause of the Memorandum of Association of the Company was amended/enlarged with your approval. This amendment enabled the Company to venture into financing of projects in other sectors also.

3.1 Industry Outlook

Tourism is one economic sector in India that has the potential to grow at a high rate and to ensure consequential development of the infrastructure at the destinations. It has the capacity to capitalize on the country's success in the services sector and to provide sustainable model of growth. Tourism is not only an economic growth engine but also an employment generator. The Planning Commission has identified tourism as the second largest sector in the country in providing employment opportunities to a wide spectrum of job seekers from the unskilled to the specialized one. The Indian tourism industry experienced a strong period of growth fuelled by sustained economic growth, strengthening of ties with developed world via opening of sectors. During the year 2011, the number of Foreign Tourist Arrivals (FTAs) in India reached the level of 6.29 million, registering a growth of 8.9% over the FTAs of 5.78 million in the year 2010. The growth rate of 8.9% in tourist arrivals in India was almost double the growth of 4.4% in tourist arrivals worldwide. The tourism sector in India, therefore, has fared better vis-a-vis the world. Foreign Exchange Earnings (FEE) from tourism in India during 2011 were USD16.56 billion as compared to USD 14.19 billion in 2010, registering a growth of 16.7%. FTAs during the period January-April 2012 were 2.43 million with a growth of 8.3% over the corresponding period of January-April 2011. FEE from tourism during January-April 2012 were USD 6274 million with a growth of 14.6% over the corresponding previous year figure at USD 5474 million during January-April 2011.

Your Company, during the last few years has been pursuing to expand its portfolio by not only extending financial assistance to new hospitality projects for renovation, upgradation but also has been actively pursuing consultancy assignments for various state governments by drafting tourism policy, other project advisory services for tourism destination/circuit development.

3.2 Overall Contribution to Tourism and Infrastructure Sector by TFCI

The assistance provided by your company since its inception has catalyzed the addition of 43184 rooms and provided direct employment to about 82281 persons in tourism industry. The assistance provided by your company has also led to catalysing investments to the tune of Rs 23916.00 Crore in the tourism sector thereby contributing to the creation of need-based tourism infrastructure, which has direct bearing on the development of tourism in the country.

3.3 Outlook for Tourism

India being a land of rich natural diversity has consistently been on the tourists' radar and tourism has been on a growth trajectory. India is presently considered as a provider of low cost medical treatments which has given impetus to the growth in medical tourism. These factors have contributed to the growth of tourism which is a powerful driver for growth of the hospitality sector. The opening up/expansion of the aviation sector has provided the needed thrust. The hotel industry in India thrives largely due to the growth in tourism and travel. Due to growth in foreign tourist arrivals and domestic tourists, hospitality sector is also growing. Emergence of budget hotels in India to cater to the majority of tourists seeking affordable stay, has materialized into an effective driver for growth. The business travel and MICE are also expected to be the possible growth segments.

India's travel and tourism sector is expected to be the second largest employer. The sector creates large scale employment, both direct and indirect, for diverse sections of society i.e. from the most specialized one to un-skilled workforce. It provides 6-7 percent jobs directly and millions more indirectly through a multiplier effect as per World Tourism Organization (WTO) estimates. By 2021 the Tourism industry will account for 30.44 million jobs directly, an increase of 5.51 million (22.1 per cent) over the next ten years. This includes employment by hotels, travel agents, airlines and other passenger transportation services.

According to the latest Tourism Satellite Accounting (TSA) research, released by the World Travel and Tourism Council (WTTC), the demand for travel and tourism in India is expected to grow by 8.2 % between 2010 and 2019. This will place India at the third position in the world. Capital investment in India's travel and tourism sector is expected to grow at 8.8 % between 2010 and 2019. The report forecasts India to get more capital investment in the travel and tourism sector and is projected to become the fifth fastest growing business travel destination from 2010 through 2020.

India presently has an estimated 114000 hotel rooms spread across hotels in various categories. The various research reports and survey carried out by the Ministry of Tourism, Govt. of India as well as by the associations associated with the tourism industry, suggest a shortfall of about 150000 rooms in different segments. The hotel industry universally is sensitive to economic cycles and does face it troughs as well as highs based on the supply and demands of the rooms at any point. The mid-market and budget hotels in India have the maximum potential given the domestic demand from business and tourism sector. Domestic tourism plays an important role in overall tourism development in the country.

In spite of low rankings on the competitiveness scale, it is clear that India can leverage its higher rankings in certain other categories to exploit its tourism potential over the next decade with proper planning. This potential, exploited in an intelligent and sustainable manner, can prove to be the engine of growth for India. This can be achieved only with active cooperation from the States/UTs.

4. Non-Performing Assets

Your Company scrupulously adhered to the prudential norms for Non-Performing Assets(NPAs) prescribed by the regulatory authority. During the year 2011-12, your Company has taken proactive steps to reduce the non performing assets by vigorously following up with defaulting concerns. As a part of NPA management and optimization of recovery, suitable and effective steps have been taken. During the year, an amount of Rs 1.56 Crore was recovered from NPA/written off cases. Your Company has maintained net NPAs at zero as on March 31, 2012.

5. Resource Mobilisation

Your Company constantly monitors its resource base and taps the appropriate source in its endeavor to minimize the weighted average cost of funds. During the year, your Company met its fund requirements for disbursement as well as repayment/ redemption of loans/bonds through bond issue, financial assistance from banks and from its internal accruals. During the year, your Company raised Rs 256.50 Crore, in tranches, by way of issuing unsecured bonds at coupon rate ranging between 9.65% to 10.20 % p.a., payable semi annually, with a maturity period of 10 years. During the year under report, your Company has borrowed Rs 100.00 Crore as term loan for a period of 2 years from a bank and also repaid a high interest bearing term loan of Rs 25.00 Crore.

6. RBI Guidelines

Your Company has been classified as Non-Deposit Accepting Non-Banking Financial Company. RBI has been issuing guidelines from time to time with regard to capital adequacy standards, income recognition, asset classification, provisioning and other related matters. The accounting policies of your Company conform to these guidelines. The capital adequacy for your Company stands at a very comfortable level of 40.47% as on the March 31, 2012 as against the prescribed norm of 15%.

7. Dividend

Your Directors have recommended a dividend of Rs 1.20 per Equity Share i.e. @ 12% on the paid-up Equity Share Capital for the financial year ended March 31, 2012 which will be paid after your approval at the ensuing Annual General Meeting. The aggregate payout due to payment of dividend, if approved, will be Rs 11.26 Crore inclusive of dividend tax of Rs 1.57 Crore. The dividend will be paid to those members holding shares in physical form, whose names appear in the Register of Members as on July 18, 2012 and in respect of shares held in dematerialized form, the dividend will be paid on the basis of beneficial ownership as per details to be furnished by the Depositories i.e National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL) as at the end of business on July 13, 2012.

8. Directors

During the year under report, Smt. Archana Capoor and Shri Javed Yunus ceased to be Directors of the Company. The Board appreciates the contribution made by both these directors during their tenure.

In terms of the provisions of Section 256 of the Companies Act, 1956 read with Article 135 of the Articles of Association of the Company, Smt. Shashi Sharma, Shri R. P. Singh and Shri V. P. Singh would retire at the forthcoming Annual General Meeting. The Board recommends the re-appointment of Smt. Shashi Sharma, Shri R. P. Singh, and Shri V P. Singh in the forthcoming Annual General Meeting.

The Board of Directors in its meeting held on February 27, 2012 having regard to the recommedation of the Selection Committee, appointed Shri Shivendra Tomar, the existing Managing Director of the Company, as Managing Director of the Company for a period of 5 years w.e.f. February 27, 2012 pursuant to the order dated 16.12.2011 of the Hon'ble High Court of Delhi. The Board recommends the appointment of Shri Shivendra Tomar as Managing Director of the Company as proposed.

9. Public Deposits

The Company has not invited any deposit from the public under Section 58A of the Companies Act, 1956 during the year under review.

10. Directors' Responsibility Statement

In compliance of Section 217(2AA) of the Companies Act, 1956, your Directors confirm:

(i) That in the preparation of the annual accounts for the year ended March 31, 2012, the applicable accounting standards read with the requirements set out under Schedule VI of the Companies Act, 1956 have been followed and there are no material departures from the same;

(ii) That they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profit of the Company for the year ended on that date;

(iii) That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) That they had prepared the annual accounts on a "going- concern" basis.

11. Dematerialisation of Shares and nomination facility and listing at Stock Exchanges

As per the Securities and Exchange Board of India directives, the transactions of the Company's shares must be compulsorily in dematerialized form. Your Company had entered into agreements with National Securities Depository Ltd. and Central Depository Services (India) Ltd. to facilitate holding and trading of shares in electronic form. Shareholders holding shares in physical form are requested to convert their holding into dematerialized form.

Shareholders may utilize the nomination facility available by sending duly filled prescribed Form No. 2B to our Registrar and Share Transfer Agent, M/s MCS Limited.

Your Company's equity shares are listed with Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). The Company has paid the Annual Listing Fees to said Stock Exchanges for the financial year 2011-12 and 2012-13. The addresses of the said Stock Exchanges are stated elsewhere in the Annual Report.

12. Auditors

M/s S. S. Kothari & Associates, Chartered Accountants (Registration No.305147E), the Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received letter from the Statutory Auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(IB) of the Companies Act, 1956 and they are not disqualified for re- appointment within the meaning of Section 226 of the said Act. Your Directors recommend their re-appointment.

13. Auditors' Report

The Auditors' Report along with the Notes on Accounts referred to in the Auditors' Report is self explanatory and does not call for any further comments or explanation.

14. Particulars of Employees

In terms of the provisions of the Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, we hereby confirm that there is no employee in respect of which information is required to be furnished.

15. Energy Conservation, Technology Absorption and Foreign Exchange Earning and outgo

The particulars relating to energy conservation and technology absorption, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is not required as your Company's operations do not involve any manufacturing or processing activities. However, while vetting the proposals received for sanction of financial assistance, the aspect of energy conservation, in case of assisted concerns, is given due consideration. The particulars regarding Foreign Exchange earnings and outgo are as follows:

i) Total foreign exchange outgo : Rs 1,91,962

ii) Total foreign exchange earnings : Nil

16. Transfer of amount to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A of the Companies Act, 1956, an amount of Rs 9.52 Lakh has been transferred to the Investor Education and Protection Fund towards the unclaimed/unpaid dividend for the financial year 2003-04.

17. Segment Reporting

Accounting Standard 17 regarding Segment-wise Reporting does not apply to your Company since revenues are derived from only one segment financing.

18. Corporate Governance

Your Directors reaffirm their continued commitment to good corporate governance practices and endorse Corporate Governance practice in accordance with the provisions of Clause 49 of the Listing Agreement. Your company has complied with all the mandatory requirements of the said clause. The Report on the Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this report.

19. Management's Discussion and Analysis Report

Management's Discussion and Analysis report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

20. Declaration

The Board has formulated a code of conduct for the Board members and senior management of the Company. All Board members and senior management personnel have affirmed their compliance with the code.

21. Acknowledgements

The Board expresses and places on record their gratitude for the consistent support and guidance given by the promoter institutions namely IFCI Ltd., LIC, SBI and others Banks.

Your Directors wish to place on record their sincere gratitude to valued customers, bankers and members for their continued patronage.

The Board also acknowledges and appreciates the guidance and co-operation extended by the Ministry of Finance, Ministry of Tourism, Government of India, Reserve Bank of India, Securities & Exchange Board of India, Stock Exchanges and Depositories.

The Board also appreciates and acknowledges the contribution made by the employees whose concerted efforts and dedicated services contributed to sustained growth and performance of the Company.

For and on behalf of the Board of Directors

Date: May 16, 2012 (S.K. Ganguli) (Shivendra Tomar)

Place: New Delhi. Director Managing Director

 
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