Mar 31, 2018
To the Members:
1. Presentation of the Annual Report
Your Directors have pleasure in presenting the Twenty Ninth Annual Report on the business and operations of the Company and the audited accounts for the financial year 2017-18.
2 Financial Results
The Companyâs financial performance for the year ended 31st March, 2018 is summarized below:
(Amount in Crore)
Sl. No. |
Particulars |
2017-18 |
2016-17 |
A. |
Operational Results |
||
1 |
Total Income |
227.17 |
208.54 |
2 |
Total Expenditure |
118.33 |
114.88 |
3 |
Operational Profit before provision and taxes |
108.84 |
93.66 |
4 |
Exceptional Income from the sale of property |
- |
23.36 |
5 |
(Provision) for doubtful debts/investment |
- |
(20.00) |
6 |
Profit before Tax |
108.84 |
97.02 |
7 |
Provision for Tax |
33.53 |
26.59 |
8 |
Profit After Tax |
75.31 |
70.43 |
B. |
Appropriation of Profit |
||
9 |
Opening Balance in Profit & Loss Account |
10.02 |
7.23 |
10 |
Less: Provision for doubtful debts u/s 36(1)(viia) of the Income Tax Act, 1961 |
4.10 |
|
C |
. Profit Available For Appropriation |
81.23 |
77.66 |
11 |
Special Reserve under Section 36(1)(viii) of the Income Tax Act, 1961 |
16.48 |
17.51 |
12 |
Special Reserve u/s 45 IC of RBI Act |
15.06 |
14.09 |
13 |
Transfer to General Reserve |
20.00 |
15.00 |
14 |
Proposed Dividend |
- |
16.14 |
15 |
Provision for Dividend Tax |
- |
3.28 |
16 |
TDS Credit Rejection for earlier years |
- |
1.62 |
17 |
Closing Balance in Profit and Loss Account |
29.69 |
10.02 |
81.23 |
77.66 |
3. Operational Performance
TFCI closed another year 2017-18, with good operational results having positive impact on the financials of the company with better future prospects. During 2017-18, TFCI achieved sanctions of Rs.1272.30 crore as against previous year sanctions of Rs.974.80 crore. TFCI made disbursement of Rs.692.98 crore as against previous year disbursement of Rs.487.37 crore. TFCI has major exposure in financing of tourism projects particularly hotels in 5-star and 3-star segments and shall strive to have a mix of portfolio by lending to other sectors for short/medium term without compromising its focus on tourism. TFCI has been selecting tourism projects for financing diligently resulting into low stress factor on its balance sheet. TFCI recorded total operational income of Rs.227.17 crore (PY: Rs.208.54 crore), profit before tax of Rs. 108.84 crore (PY:Rs.97.02 crore) depicting growth of 12.18% and profit after tax of Rs.75.31 crore (PY: Rs.70.43 crore). The balance sheet size has increased to Rs.2007.44 crore for the year under review as compared to that of Rs. 1700.30 crore depicting growth of about 18%. Your company has recorded gross NPAs of Rs.33.30 crore (1.63% of total assets) as on 31st March, 2018 despite stress recorded all over in the entire banking system.
Your company continues to explore possibilities for new businesses and has been on the look out for existing customers who might have financial requirements for setting up new projects, renovation, modernisation and or expansion. However, to ensure increase in its balance sheet size your Company decided to concentrate on take-over financing of potentially viable projects so as to ensure quick disbursement. Your Company expects ample opportunities in appraisal, advisory services, syndication of debts etc. resulting in non-fund based income for the Company. Besides, TFCI has been actively pursuing consultancy assignments for Private Sector and State Governments and their agencies.
3.1. Asset Quality:
The stressed assets posed continued challenges to the banking sector during the year. The subdued macroeconomic environment and tepid demand scenario in the past 7 years had also affected the tourism sector and thus adversely affecting TFCIâs sanctions and disbursements and recovery from assisted concerns. Your Company followed strict appraisal criteria based on cash flow generating capacity of the project and adhered to the prudential norms for Non-Performing Assets (NPAs) prescribed by the regulatory authority. During the financial year 2017-18, no new account was downgraded and TFCI has been able to recover Rs.27.52 crore from non-performing/ Written-off accounts (Principal: Rs.3.23 crore, Interest:Rs.23.87 crore & other charges: Rs.0.42 crore). Further, one NPA account of Rs.36.32 crore was upgraded to standard asset in view of satisfactory credit record post restructuring as per extant RBI norms. As a result the Gross NPA reduced from Rs.81.12 crore to Rs.33.30 crore as on March 31, 2018. 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 as on March 31, 2018 were Rs.1.22 crore (PY: Rs.43.02 crore) representing 0.06% of the total assets.
4 Contribution to Tourism and Infrastructure Sector by TFCI
Your Company is the only institution in the country exclusively funding tourism projects with more than 29 years of existence. It has effectively played its main objective of catalysing investment in tourism sector thereby assisting the nation in creation of tourism infrastructure besides generating employment through tourism. Since inception, TFCI has been instrumental for creation and addition of 50350 hotel rooms in the country representing almost equal to 30% of the room capacity as on date. With the financial assistance provided by TFCI, the tourism related projects has provided direct employment to about 93286 persons. The assistance provided to more than 863 projects by TFCI has also led to catalysing investments to the tune of Rs.30182 Crore in the tourism and other sectors.
5. Dividend
The Board of Directors have recommended dividend of Rs.2 per Equity Share i.e. @ 20% on the paid-up Equity Share Capital for the financial year ended March 31, 2018. The total payout on account of payment of dividend will be Rs.16.14 Crore besides dividend tax of Rs.3.32 crore subject to approval by the shareholders.
The dividend will be paid to those members whose names appear in the Register of Members as on August 10, 2018 in respect of shares in physical 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 August 3, 2018 in respect of shares held in dematerialized form.
6. Resource Mobilization
Your Company constantly monitors its resource base and taps the appropriate opportunity 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 by way of financial assistance from banks on short term basis and internal accruals. TFCI has tied up with various banks for financial assistance to meet its future requirement of resources. Further, your Company proposes to raise funds through issue of commercial paper or bonds depending upon the interest rate scenario in the market. Your Company is confident of meeting the funds requirements by raising resources at competitive rates. 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, 2018.
7. Regulatory Compliances
Your Company has been classified as Systematic Important 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 comfortable level of 42.28% as on the March 31, 2018 as against the prescribed norm of 15%.
8. Managementâs Discussion and Analysis Report
Managementâs Discussion and Analysis report containing Industry outlook, its environment, outlook for tourism and other details as stipulated in the SEBI (LODR) Regulation is presented in a separate section forming part of the Directorsâ Report.
9. Directors and Key Managerial Personnel
During the year, Shri Rudhra Gangadharan I.A.S. (Retd.) was appointed as an additional director(s) in the Independent Category on June 30, 2017 by the Board of Directors for a period upto 5 (Five) years. His appointment was approved by shareholders in the 28th Annual General Meeting held on September 25, 2017. Members also approved the re-appointment of Shri Niraj Agarwal as Non-Executive Non-Independent Director who is liable to retire by rotation and also reappointed Shri S.Ravi and Shri S.Sridhar as Independent Director(s) for second term of 5 (Five) years. During the year, Shri Sanjeev Kaushik, Non-Executive Chairman resigned as Director which was accepted by the Board of Directors w.e.f. September 22, 2017. Ministry of Finance, Department of Financial Services, Govt. of India vide letter dated November 29, 2017 advised that consequent upon disinvestment of majority stake of IFCI Ltd. in TFCI Ltd., the Government of India has decided to withdraw its nominee director Shri A.K.Dogra and he ceased to be director w.e.f. December 8, 2017. Shri B.N.Nayak, Director had resigned from the Board of Directors of the Company and his resignation has been accepted w.e.f. March 26, 2018. Shri Bapi Munshi was appointed as an Additional Director in Independent Category w.e.f. February 1, 2018 for a period of 5 years subject to the approval of the shareholders in the forthcoming Annual General Meeting by way of Special Resolution. The tenure of Shri S.C.Sekhar, Independent Director was upto 17th March, 2018. The Board of Directors has approved re-appointment of Shri S.C.Sekhar as Independent Directors for second term of 5 (five) years w.e.f. March 18, 2018 upto February 28, 2023 subject to approval of shareholders by way of Special Resolution in the next Annual General Meeting.
Further, as per the terms of appointment, the tenure of Shri Satpal Kumar Arora, former Managing Director was upto March 31, 2018 i.e. till he attained the age of 60 years. The Board of Directors at the meeting held on March 26, 2018 extended the tenure of Shri Satpal Kumar Arora, Managing Director for further period of 3 months i.e. upto June 30, 2018 subject to the approval of the shareholders in the forthcoming Annual General Meeting. However, Shri Satpal Kumar Arora submitted his resignation as Managing Director/Director of the Company which was accepted by the Board of Directors w.e.f. May 15, 2018. The Board of Directors appointed Shri B.M.Gupta, Executive Director as Manager of the Company w.e.f. May 16, 2018 till joining of the new Managing Director.
The Board appreciates the contribution made by the outgoing directors viz. Shri Sanjeev Kaushik, Shri A.K.Dogra, Shri B.N.Nayak and Shri Satpal Kumar Arora. In terms of the provisions of the Companies Act read with Article 135 of the Articles of Association of the Company, Shri Niraj Agawal would retire by rotation at the forthcoming Annual General Meeting and is eligible for reappointment. The Board recommends the reappointment of Shri Niraj Agawal and Shri S.C.Sekhar in the forthcoming Annual General Meeting. The tenure of Shri K.B.N.Murthy is upto January 21, 2019 and the Board of Directors has recommended re-appointment of Shri K.B.N.Murthy as Independent Director for second term w.e.f. January 22, 2019 till December 31, 2023 subject to approval of shareholders by way of Special Resolution in the next Annual General Meeting.
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 the SEBI (LODR) Regulation.
9.1 Performance Evaluation of the Board
The Companies Act, 2013 and SEBI (LODR) Regulation stipulate 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 parameters such as the attendance; participation and contribution; responsibility towards stakeholders; exercise their duties with due and reasonable care, skill and diligence and exercise of independent judgment. The Committee of independent Directors evaluated the performance of NonIndependent Directors including Chairman, Managing Director. Similarly, the NonIndependent Directors evaluates the performance of Independent directors. On the basis of the report of performance evaluation, it is determined whether to extend or continue the term of appointment/reappointment of the Independent and other Director(s).
9.2 Director Orientation Program
The Directors on regular basis are made aware of the 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. A special programme for Directors was organised on 28th June, 2018 to familiarise them with the implementation of Ind AS through the outside consultants.
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, 6 Board Meetings were held on May 29, 2017, July 31, 2017, November 1, 2017, January 9, 2018, February 7, 2018 and March 26, 2018. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. The details about the meetings of Audit Committee and other Committees are provided in the report on Corporate Governance which forms part of this Directorsâ Report.
9.4 Appointments/Resignations of the Key Managerial Personnel
During 2017-18, Shri Satpal Kumar Arora, former Managing Director; Shri Anoop Bali, Chief Financial Officer and Shri Sanjay Ahuja, Company Secretary were the Key Managerial Personnel as per the provisions of the Companies Act, 2013. Shri Satpal Kumar Arora submitted his resignation as Managing Director/Director of the Company which was accepted by the Board of Directors w.e.f. May 15, 2018 and Shri B.M.Gupta, Executive Director was appointed as Manager of the Company w.e.f. May 16, 2018 till joining of the new incumbent. There is no change in other Key Managerial Personnels.
9.5 Companyâs 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 applicable 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. The Nomination and Remuneration Policy may be accessed on the Companyâs website at the link:http://www.tfciltd.com/policies.html 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 under any other Act/ Rules/ Regulations for the time being in force.
(b) In case of Non-Executive / Independent Directors
During FY2017-18, the Non-Executive Directors (except Government Servants) were paid sitting fees Rs.20,000 and Rs. 10,000 (plus service tax) per meeting upto January 8, 2018 for attending the meetings of Board and its Committees respectively. The Board revised the sitting fee w.e.f. January 9, 2018 to Rs.40,000 and Rs.20,000 (plus tax) per meeting for attending the meetings of Board and its Committees respectively. The Sitting Fees may be revised by the Board of Directors, subject to the overall limits as prescribed under the applicable provisions. No Director, who is a Government Servant, is entitled to receive any remuneration except as authorized by the Government.
II. In case of Key Managerial Personnel and other Employees -
1. The pay structure, allowances, facilities etc. of Key Managerial Personnel and all the regular employees are as per the pay scale, allowances and other facilities etc. as may be approved by the Board and its committee from time to time in line with the salary structure prevalent in other similar organization such as RBI/NABARD/ IFCI. The Performance Linked Incentives both for the Managing Director/Senior Management / Other employees is as per the Board approved scheme.
10. Directorsâ 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.
10.1Your Directors confirm compliance of the applicable Secretarial Standards issued by The Institute of Company Secretaries of India by the Company.
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 Companyâs 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 Companyâs 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 2017-18and 2018-19. The addresses of the said Stock Exchanges are stated elsewhere in the Annual Report.
11.1 Change in Shareholding
During September, 2017, IFCI the original promoter shareholder, sold 24% shares and Redkite Capital Pvt. Ltd. alongwith Person Acting in Concert (PAC) namely Koppara Sajeeve Thomas, India Opportunities III Pte. Limited, Centrum Capital Ltd. and others had acquired approx. 21% shares in TFCI. Your Company has received communication dated May 18, 2018 from IDFC Bank Ltd. (Manager to open offer) regarding public announcement for making open offer by Redkite Capital Pvt. Ltd. (Acquirer) alongwith India Opportunities III Pte. Limited (PAC 1), Koppara Sajeeve Thomas (PAC 2) for acquisition of up to 20,986,355 equity shares of Rs.10 each of TFCI, constituting 26% of the voting equity share capital at a price of Rs.157.20 per Equity Share (âOffer Priceâ). The Acquirer alongwith PACs have filed the draft letter of offer (DLoF) with SEBI on 1st June, 2018. As per the DLoF, the Acquirer alongwith PACs propose to acquire upto 26% of the Voting Share Capital of the Company under the Open Offer. Accordingly, the Acquirer shall become the promoter of the Company and have management control over the Company subject to approval from SEBI, RBI and other regulatory authorities. The Company shall continue to be managed by the Board of Directors which shall have representative of acquirer alongwith PAC. The Board of Directors considered and approved the proposal for submitting an application with RBI regarding intention to change control/ management as per the recommendation of the Nomination and Remuneration Committee and for publishing public notice subject to the necessary approval of the Reserve Bank of India, SEBI or any other necessary approval and also upon Acquirer/PACs acquiring minimum 26% equity shares of the Company.
12. Auditors
In terms of the provision of Section 139(1) of the Companies Act 2013, the Board of Directors on the recommendation of the Audit Committee of the Board subject to its confirmation by the members/ shareholders in the Annual General Meeting approved appointment of M/s Suresh Chandra & Associates, Chartered Accountants as Statutory Auditors of TFCI for a period of five years effective from the financial year 2017-18 for a fee of Rs.5 lakh plus applicable tax, subject to review every year by the Board of Directors and ratification by the members/shareholders at every Annual General Meeting of the Company. However, Companies Amendment Act, 2017 read with notification dated 7.5.2018 deleted provision of annual ratification of appointment of Auditors. As such, no resolution for approving the ratification of appointment of Statutory Auditors has been proposed in the notice.
12.1 Auditorsâ Report
The Auditors Report alongwith notes to accounts referred to in the Auditors Report is self-explanatory and there are no qualifications in the 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, were appointed Secretarial Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure 3 to this report. The report is self-explanatory and do not call for any further comments.
13. Particulars of Employees
In terms of the 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 of the remuneration of each director to the median employeeâs 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.
13.1Committee 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 in this regard 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, 2013read with the Companies (Accounts) Rules, 2014 is not required as your Companyâs 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 has transferred unclaimed/unpaid dividend and shares to Investor Education Protection Fund (IEPF) as required under the provision of the Companies Act, 2013 upto and including financial year 2009-10.
Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, 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 25, 2017), 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 thereunder. The Corporate Social Responsibility Policy (CSR Policy) may be accessed on the Companyâs 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 TFCIâs perception as a social responsible entity.
Your Company during the year under review has undertaken CSR activities/projects during the year 2017-18 amounting Rs.169.70 lakh (2% of the average net profit of the last three years) in compliance with CSR objectives and Policy of the Company and the total CSR approved amount of Rs. 169.70 lakh was spent. The detail report on the CSR contribution made during the year 2017-18 is annexed as Annexure 2.
17. Corporate Governance and other disclosures
Your Directors reaffirm their continued commitment to good corporate governance practices and endorse Corporate Governance practice in accordance with the provisions of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. Your company has complied with all the mandatory requirements of the said clause. The Report on the Corporate Governance as stipulated under SEBI (LODR) Regulation 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 of Corporate Governance as stipulated under the aforesaid SEBI (LODR) Regulation is attached to this report as Annexure 4.
17.1 Vigil mechanism
Pursuant to the requirement of the Companies Act 2013 and SEBI (LODR) Regulation, 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 may be disclosed to the Audit Committee. Employees may 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 Companyâs 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 armâs 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 Companyâs 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 Companyâs 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 Companyâs 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 (âthe Actâ) and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is may be accessed on the Companyâs website at the link: http://www.tfciltd.com as per 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 Documents placed on the Website
Pursuant to the provisions of the Companies Act, 2013, SEBI (LODR) Regulations, the Company is required to place various Policies/Documents/ Details on the website of the Company. The Company has a functional website and all the requisite information is being uploaded thereat.
17.6 Risk Management Policy
The Company has developed and implemented the Risk Management policy and Asset Liability Management Policy and the Risk Management 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 Companyâs 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.
17.7 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 companyâs operations. Your Company is registered with RBI as NBFC-ND-SI and not registered with any other financial sector regulators. No penalties were levied during FY2017-18 by any regulators.
17.8 Internal financial controls
The Company has in place set of standards, processes and structure which enable to implement internal control system and ensure that same are adequate and operating effectively.,
17.9 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 against the mortgaged security. The details particulars may be referred to in the financial statements.
17.10 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.
17.11 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, 2018 and the date of the Directorsâ report i.e. June 29, 2018.
18. Acknowledgements
The Board expresses and places on record their gratitude for the consistent support and guidance given by the promoter and other shareholders and Banks. Your Directors wish to place on record their sincere gratitude to valued customers, bankers, investors 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
S. Ravi B.M. Gupta
(Non-Executive Chairman) (Executive Director)
Date : 29.6.2018
Place : New Delhi
Mar 31, 2017
DIRECTORSâ REPORT
To the Members:
1. Presentation of the Annual Report
Your Directors have pleasure in presenting the Twenty Eighth Annual Report on the business and operations of the Company and the audited accounts for the financial year 2016-17.
2 Financial Results
The Companyâs financial performance for the year ended 31st March, 2017 is summarized below:
(Amount in Crore)
Sl.No. |
Particulars |
2016-17 |
2015-16 |
A. Operational Results |
|||
1 |
Total Income |
208.54 |
185.64 |
2 |
Total Expenditure |
114.88 |
107.96 |
3 |
Operational Profit before provision and taxes |
93.66 |
77.68 |
4 |
Exceptional Income from the sale of property |
23.35 |
- |
5 |
(Provision) for doubtful debts/investment |
(20.00) |
(2.00) |
6 |
Profit before Tax |
97.01 |
75.68 |
7 |
Provision for Tax |
26.59 |
22.06 |
8 |
Profit After Tax |
70.42 |
53.61 |
B. Appropriation of Profit |
|||
9 |
Opening Balance in Profit & Loss Account |
7.23 |
8.16 |
10 |
Less: Provision for doubtful debts u/s 36(1) (viia) of the Income Tax Act 1961 |
2.81 |
|
C. Tot Approve |
al Profit Available For privation |
77.65 |
58.96 |
11 |
Special Reserve under Section 36( 1)(viii) of the Income Tax Act 1961 |
17.51 |
13.52 |
12 |
Special Reserve u/s 45 IC of RBI Act |
14.09 |
10.72 |
13 |
Transfer to General Reserve |
15.00 |
10.00 |
14 |
Proposed Dividend |
16.14 |
14.53 |
15 |
Provision for Dividend Tax |
3.28 |
2.96 |
16 |
TDS Credit Rejection for earlier years |
1.61 |
- |
17 |
Closing Balance in Profit and Loss Account |
10.02 |
7.23 |
77.65 |
58.96 |
3. Operational Performance
TFCI has been having satisfactory operational performance and financial indicators despite depressed market conditions for the last three years. During 201617, TFCI achieved sanctions of Rs.974.80 crore as against previous year sanctions of Rs.640.70 crore. TFCI made disbursement of Rs.487.37 crore as against previous year disbursement of Rs.380.56 crore. The subdued macroeconomic environment and tepid demand scenario had affected the tourism sector in general and hotel industry in particular. This also caused slowdown/ deferment and even cancelation of already announced tourism/hotel projects as also lack of interest for new tourism/hotel project developments. TFCI selected tourism projects for financing diligently and as a cautious approach did not take up projects having high capital cost time/cost overruns, market constraints and/or where operational performance has not stabilized. Despite difficult business environment during 2016-17 TFCI recorded total operational income of Rs. 208.54 crore (PY: Rs. 185.64 crore), profit before tax of Rs. 97.01 crore (PY: Rs. 75.68 crore) after considering one time income on sale of property amounting Rs. 23.35 crore and profit after tax of Rs. 70.42 crore (PY: Rs. 53.61 crore).
The balance sheet size has increased to Rs.1700.30 crore for the year under review as compared to that of Rs.1590.20 crore depicting an increase by 6.92%.
Your company continues to explore possibilities for new businesses and has been on the lookout for customers who might have financial requirements for setting up new projects, renovation, modernization and or expansion. However, to ensure increase in its balance sheet size your Company decided to concentrate on take-over financing of potentially viable projects so as to ensure quick disbursement. Your Company expects ample opportunities in appraisal, advisory services, syndication of debts etc. resulting in non-fund based income for the Company. Besides, TFCI has been actively pursuing consultancy assignments for Private Sector and State Governments and their agencies.
3.1. Asset Quality:
The stressed assets issues affecting the banking sector continued during the year and resulted into increase in the NPAs of public sector banks. The subdued macroeconomic environment has also affected the tourism sector and thus adversely affecting TFCIâs sanctions and disbursements and recovery from assisted concerns. Your Company adhered to the prudential norms for Non-Performing Assets (NPAs) as prescribed by the regulatory authority. During the financial year 2016-17, TFCI made robust recovery of Rs.42.33 crore (Principal: Rs. 14.68 crore and Interest/other charges: Rs.27.65 crore) from non-performing accounts. As a result the Gross NPAs of the Corporation reduced from Rs.158.85 crore as on March 31, 2016 to Rs.81.12 crore as on March 31, 2017. Further two accounts have been restructured during the year involving a sum of Rs.47.54 crore which are likely be upgraded during 2017-18 after lapse of one year of satisfactory performance which will further reduce the gross NPAs of the corporation. As all these accounts are fully secured your Company is confident of realizing the entire over dues along with further interest/ principal during the current year. However, TFCI has made adequate provisions in the books of accounts. The Net NPAs of the company as on March 31, 2017 were Rs.43.02 crore (PY Rs.120.89 crore).
4. Contribution to Tourism and Infrastructure Sector by TFCI
Your Company is the only institution in the country exclusively funding tourism projects with more than 28 years of existence.
Since inception, TFCI has been instrumental for creation/ addition of 48450 hotel rooms in the country. With the financial assistance provided by TFCI, the tourism related projects have provided direct employment to about 90035 persons in tourism industry. The assistance provided by TFCI has also led to catalyzing investments to the tune of Rs.27602 Crore in more than 822 projects thereby contributing to the creation of required tourism infrastructure, which has direct bearing on the development of the industry.
5. Dividend
The Board of Directors have recommended dividend of Rs.2.00 per Equity Share i.e. @ 20% on the paid-up Equity Share Capital for the financial year ended March 31, 2017. The total payout on account of payment of dividend will be Rs.16.14 Crore excluding dividend tax of Rs. 3.28 Crore subject to approval by the shareholders. The final dividend will be paid to those members whose names appear in the Register of Members as on September 25, 2017 in respect of shares in physical 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, 2017 in respect of shares held in dematerialized form.
6. Resource Mobilization
Your Company constantly monitors its resource base and taps the appropriate opportunity 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. TFCI has tied up with various banks for financial assistance to meet its future requirement of resources. Further, your Company proposes to raise funds through issue of commercial paper and bonds depending upon the interest rate scenario in the market. Your Company is confident of meeting the funds requirements by raising resources at competitive rates.
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, 2017.
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 39.08% as on the March 31, 2017 as against the prescribed norm of 15%.
8. Managementâs Discussion and Analysis Report
Managementâs Discussion and Analysis report containing Industry outlook, its environment, outlook for tourism and other details as stipulated in the Listing Regulation is presented in a separate section forming part of the Directorsâ Report.
9. Directors and Key Managerial Personnel
During the year Justice (Retd.) Ms. Rekha Sharma was appointed as additional director in the Independent category June 14, 2016 by the Board of Directors for a period upto three years and her appointment was approved by the shareholders in the 27th Annual General Meeting held on September 28, 2016. Shri Malay Mukherjee Non-Executive Chairman resigned as Director w.e.f. December 12, 2016. Shri Sanjeev Kaushik and Shri B.N.Nayak were appointed as Additional NonExecutive Director w.e.f. February 8, 2017. Shri Sanjeev Kaushik has also been appointed as Non-Executive Chairman of the Board.
Further, as per the existing terms of the appointment the tenure of Shri S.Ravi and S.Sridhar was up to 31.3.2017 and 26.5.2017 respectively. The Board of Directors have approved re-appointment of Shri S.Ravi and Shri S.Sridhar as Independent Director for Second Term of 5 (Five) years w.e.f. 1.4.2017 and 27.5.2017 respectively subject to the approval of the shareholders in the ensuing Annual General Meeting. Shri Vivek Nair, Independent Director has since retired on 31.3.2017 as per the terms of his appointment.
Shri Rudhra Gangadharan I.A.S. (Retd.) has been appointed as additional director(s) in the Independent Category on June 30, 2017 by the Board of Directors for a period upto 5 (Five) years subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board appreciates the contribution made by the outgoing directors viz. Shri Malay Mukherjee and Shri Vivek Nair 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 Agawal would retire at the forthcoming Annual General Meeting. The Board recommends the appointment of Shri Sanjeev Kaushik, B.N.Nayak and Shri Rudhra Gangadharan I.A.S. (Retd.) and reappointment of Shri S.Ravi, Shri S.Sridhar and Shri Niraj Agarwal in the forthcoming Annual General Meeting.
During the year under review, the members approved the re-appointments of Shri Niraj Agarwal as NonExecutive Non-Independent Director who is liable to retire by rotation and appointment of Shri Satpal Kumar Arora as Managing Director and Shri K.B.Nagendra Murthy, Justice (Retd.) Ms. Rekha Sharma as Independent Director(s) who are not liable to retire by rotation.
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 the Listing Regulation.
9.1 Performance Evaluation of the Board
The Companies Act 2013 and Listing Regulation stipulate the performance evaluation of the Directors including Chairperson, the Board and its Committees. Accordingly, your Company has devised the process and the criteria for the performance evaluation duly 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 evaluated the performance of Non-Independent Directors including Chairman/Managing Director. The Non-Independent Directors evaluated the performance of Independent Directors and on the basis of the report of performance evaluation, it is determined whether to extend or continue the term of appointment/reappointment of the Independent and other Director(s).
9.2 Director Orientation Program
The Directors on regular basis are made aware of the business models, nature of industry and its dynamism the roles, responsibilities and liabilities of Independent directors, etc. Further, business updates, legal update and industry updates are made available to Independent Directors, especially to the Audit Committee member on an ongoing basis by internal teams/external consultants Statutory and Internal Auditors.
The details of programmes for familiarization of Independent Directors with the Company, their roles rights/responsibilities in the Company, nature of th industry in which the Company operates, business model of the Company and related matters are put u on the website of the Company at the lhnkp://www. tfciltd.com/policies.html
9.3 Details of Board meetings
During the year, 4, Board Meetings were held on May
16, 2016, August 10, 2016, November 10, 2016 and February 8, 2017. The intervening gap between the meetings was within the period prescribed under the Companies Act 2013. The details about the meetings of Audit Committee and other Committees are provided in the report on Corporate Governance which forms part of this Directorsâ Report.
9.4 Appointments/Resignations of the Key Managerial Personnel
Shri Satpal Kumar Arora Managing Director; Shri Anoop Bali, Chief Financial Officer and Shri Sanjay Ahuja Company Secretary are the Key Managerial Personnel as per the provisions of the Companies Act 2013.
9.5 Companyâs 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. The Nomination and Remuneration Policy may be accessed on the Companyâs website at the link: http://www.tfciltd.com/policies.html
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 under 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.20,000 and Rs. 10,000 (plus service tax) per meeting for attending the meetings of Board and its Committees respectively during FY2016-17. The Sitting Fees may be revised by the Board of Directors subject to the overall limits as prescribed under the applicable provisions.
No Director, who is a Government Servant, 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, facilities etc. of Key Managerial Personnel and all the regular employees are as per the pay scale, allowances and other facilities etc. as may be approved by the Board and its committee from time to time in line with the salary structure prevalent in other similar organization such as RBI/NABARD/ IFCI. The Performance Linked Incentives both for the Managing Director/Senior Management / Other employees is as per the Board approved scheme.
10. Directorsâ Responsibility Statement
In compliance of Section 134(5) of the Companies Act 2013, your Directors confirm that:
(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 Companyâs 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 Companyâs 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 2016-17 and 2017-18. The addresses of the said Stock Exchanges are stated elsewhere in the Annual Report.
12. Auditors
Pursuant to decrease in shareholding of Government 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 of the 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 of the remuneration of each director to the median employeeâs 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.
13.1 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 in this regard 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 Companyâs 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 has transferred unclaimed/unpaid dividend to Investor Education and Protection Fund (IEPF) as required under Section 124 of the Companies Act 2013.
Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, 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 28, 2016), 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 B5 of the Companies Act 20B and Rules made there under. The Corporate Social Responsibility Policy (CSR Policy) may be accessed on the Companyâs 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 TFCI3 perception as a social responsible entity.
Your Company during the year under review has undertaken CSR activities/projects amounting to Rs.161.10 lakh (2% of the average net profit of the last three years) in compliance with CSR objectives and policy of the Company. Out of the same, Rs.130.60 lakh was spent during the year and unspent amount of Rs.10.50 lakh is linked with the progress of the projects. The detail report on the CSR contribution made during the year 2015-7 is annexed as Annexure 2.
17. Corporate Governance and other disclosures
Your Directors reaffirm their continued commitment to good corporate governance practices and endorse Corporate Governance practice in accordance with the provisions of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. Your company has complied with all the mandatory requirements of the said clause. The Report on the Corporate Governance as stipulated under Listing Regulation forms part of the Annual Report as Annexure A. The requisite Certificate from M/s Arun Kumar Gupta & Associates, Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Listing Regulation is attached to this report.
17.1 Vigil mechanism
Pursuant to the requirement the Companies Act 20B and Listing Regulation, 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 may be disclosed to the Audit Committee. Employees may 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 Companyâs website at the linkhttp//www.tfciltd com/policies.html
or tribunals impacting the going concern status and companyâs operations.
17.7 Internal Financial Controls
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 armâs 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 Companyâs 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 Companyâs 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 Companyâs website at the link: http://www.tfciltd.com
17.3 Extract of Annual Return
Pursuant to sectioning 2(3) of the Companies Act 20B (the Act) and rule 12(1) of the Companies (Management and Administration) Rules, 204, 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 R isk Management policy and Asset Liability Management Policy and the Audit Committee of the Board reviews the same periodically. Your Company has also constituted ALM Committee and Risk Management Committee for reviewing/implementing ALM policies and for managing the liquidity risk as well as interest-rate an< 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 over 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 Companyâs management/ systems/structures/processes/ standards, code of conduct and behaviors 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 court
The Company has in place, set of standards processes and structure which enable it to implement internal control system and ensure that same are adequate and operating effectively. With a view to enable effectiveness of such internal control measures a third party verification was entrusted to M/s K.G.Somani
& Co. Chartered Accountants who after verification confirmed the effectiveness of various control measures. Their report dated May, 207 in this regard is enclosed as Annexure B to the Directors Report.
17.8 Particulars of Loans given Investments made Guarantees given and Securities provided
Your Company is a specialized 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 details 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, 2017 and the date of the Directorsâ report i.e. July 31, 2017.
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 : July 31, 2017 S.Ravi Satpal Kumar Arora
Place : New Delhi (Director) (Managing Director)
Mar 31, 2016
To the Members:
1. Presentation of the Annual Report
The Directors have pleasure in presenting the Twenty Seventh Annual Report on the business and operations of the Company and the audited accounts for the financial year 2015-16.
2. Financial Results
The Companyâs financial performance for the year ended 31st March, 206 is summarized below:
(Amount in Crore)
Particulars |
2015-16 |
2014-15 |
Total Income |
85.64 |
188.05 |
Total Expenditure |
107.96 |
188.05 |
Provision/(Written Back) for doub debts/investment |
2.00 |
4.00 |
Profit before Tax |
75.68 |
8186 |
Provision for Tax |
2206 |
2168 |
Profit After Tax |
53.61 |
60.18 |
Less: Provision for doubtful debts 36()(viia) of the Income Tax Act, 96 |
2.81 |
2.95 |
Surplus Brought Forward |
8.6 |
14.99 |
Profit Available For Appropriation |
58.96 |
72.22 |
Special Reserve under Section 36 (viii) of the Income Tax Act, I96I |
13.52 |
14.47 |
Special Reserve u/s 45 IC of RBI . |
10.72 |
12.04 |
General Reserve |
10.00 |
20.00 |
Proposed Dividend |
4.53 |
4.53 |
Dividend Tax |
2.96 |
2.91 |
Depreciation Adj for earlier years |
- |
0.11 |
Balance Carried to Balance Sheet |
7.38 |
8.16 |
58.96 |
72.22 |
3. Operational Performance 3
TFCI has been having satisfactory operational performance and financial indicators despite depressed market conditions for the last three years. The aggregate assistance sanctioned during the year was Rs.708.05 (project related sanctions Rs.640.70 crore and average investment in mutual funds Rs.67.35 crore) as compared to Rs.883.70 crore during corresponding previous year (project related sanctions Rs.807.32 crore and average investment in mutual funds Rs.76.38 crore). The aggregate disbursement during the year was Rs.447.91 crore (project related disbursements Rs.380.56 crore and average investment in mutual funds Rs.67.35 crore) as compared to Rs.584.40 crore during the corresponding previous year (project related disbursement Rs.508.02 crore and average investment in mutual funds Rs.76.38 crore). 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.E0O.87 crore to Rs.IB90.20 crore during the year under review. However, the profit was impacted on account of interest reversal of six downgraded accounts (Rs.12.18 crore), lower profit from sale of investment (Rs.4.63 crore lower than previous year), loss of interest on prepayment of loans aggregating Rs.60.37 crore and reduction in base rate by 50 basis from 2.75% to 2.25% during the current year with a view to retain the existing clients and to attract new business to ensure balance sheet growth. Further, the company has spent a sum of Rs.159 crore in meeting its Corporate Social Responsibility for the first time.
Your company has been in constant look out for New Business & customers who might have financial requirements for setting up new projects, renovation, modernisation and/or expansion. However, in view of the persistent decline in room rentals due to oversupply in major metro markets, the new projects have either been shelved or deferred for the time being. TFCI accordingly decided to extend financial assistance to projects having sound fundamentals and to ensure increase in its balance sheet size it was decided to concentrate on take-over financing of potentially viable projects so as to ensure quick disbursement. 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 products like short and medium term loans. Further, TFCI decided to explore and exploit possibilities for diversification and expansion in infrastructure and other related areas. Besides, TFCI has been actively pursuing consultancy assignments for Private Sector and State Governments and their agencies.
Asset Quality:
The stressed assets issues fearing the banking sector continued during the year and resulted into increase in the NPAs of public sector bank. The subdued macro-economic environment and tepid demand scenario had also affected the tourism sector and thus adversely affecting TF CIs 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. During the year under review, your Company recovered an amount of Rs.2147 crore from NPAs account. However, despite vigorous follow up, 6 account with an aggregate outstanding of Rs.316â crores have slipped from standard to substandard category and recognized as NPA as on March 3} 206. As all these accounts are fully secured, your Company is confident of realising the entire over dues 7 along with 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 B1, 20B.
4. Contribution to Tourism and Infrastructure Sector by TFCI
TFCI is the only institution the country exclusively for 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 8725 8 persons in tourism industry. The assistance provided by TF CI has also led to catalysing investments to the tune of 26200 Crore in the tourism sector by providing assistance to more than 787 projects thereby contributing to the creation of required tourism infrastructure, which has direct bearing on the development of the industry.
5. Dividend
Your Directors have recommended dividend @ B% including the dividend of Rs.â per Equity Share i.e. @ 10% paid on December 30, 2015 for the financial year ended March 31, 2016. The final dividend of Rs.0.80 per Equity Share i.e. @ 8% on the paid-up Equity Share Capital, if approved, will be Rs.7.77 Crore inclusive of dividend tax of Rs.1.31 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 28, 206 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 16, 2016
6. Resource Mobilization
Your Company constantly monitors its resource base and taps the appropriate opportunity 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. During the year, the Company raised Secured N on-Convertible Bond aggregating Rs.59.74 crore at coupon rate of 8.81% p.a. payable semi-annually having maturity period of D years. Your Company redeemed high interest bearing loan aggregating Rs.225 crore during 205-16. Further, your Company has tied up with various banks for financial assistance to meet its future requirement of resources.
The Company has not invited any deposit from the public under Section 7B and 74 of the Companies Act, 20B during the year under review. There was no public deposit outstanding as at the beginning or end of the year ended on March B1, 20B
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 B7.82% as on the March B1, 20B as against the prescribed norm of 5%.
Managementâs Discussion and Analysis Report
Managementâs Discussion and Analysis report containing Industry outlook, its environment, outlook for tourism and other details as stipulated in the Listing Regulation is presented in a separate section forming part of the Annual Report.
Directors and Key Managerial Personnel
During the year under report, SAS . Bhattacharya resigned as Independent Director w.e.f. 5.120B and the Ministry of Finance, Govt. of India appointed
ShriA.K.Dogra as its nominee director on the Board of TFCI in place of Shri M.M.Dawla w.e.f. 29.120B. Further, the Ministry of Tourism, Govt. of India appointed. Shri Suman Billa as its nominee director in place of Smt. Usha Sharma w.e.f. 53.20B. Shri S.K.Sangar resigned as Managing Director w.e.f. B1120B and Shri Satpal Kumar Arora has joined as Managing Director w.e.f. March B, 20B. Shri K.B.Nagendra Murthy and Justice (Retd.) Ms. Rekha Sharma were appointed as additional director(s) in the Independent category on January 22, 2016 and June
14, 2016 respectively by the Board of Directors for a period up to three years subject to the approval of the shareholders in the ensuing Annual General Meeting.
The Board appreciates the contribution made by the outgoing directors viz. Shri S.K.Sangar, Shri M.M.Dawla and Smt. Usha Sharma during their tenure. In terms of the provisions of the Companies Act read with Article B5 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 and appointment of Shri Shri K.B.Nagendra Murthy and Justice (Retd.) Ms. Rekha Sharma in the forthcoming Annual General Meeting.
During the year under review, the members approved the re-appointments of Shri Malay Mukherjee as NonExecutive Non-Independent Directors who is liable to retire by rotation and of Shri S.C.Sekhar and Shri A.S.Bhattacharya (since resigned w.e.f. 5.L20B) as Independent Directors who are not liable to retire by rotation.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as required9.4 under Section 49 of the Companies Act 2013 and the Listing Regulation with the Stock Exchanges.
9.1 Performance Evaluation of the Board
The Companies Act, 203 and Listing Regulation 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 evaluations 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, 9.5 skill and diligence and have exercised independent judgment. The Committee of independent Directors evaluated the performance of Non-Independent Directors including Chairman, Managing Director.
The Non-Independent Directors evaluated the performance of Independent directors and on the basis of the report of performance evaluation, it is determined whether to extend or continue the term of appointment/reappointment of the Independent and other Director(s).
9.2 Director Orientation Programme
The Directors on regular basis are made aware of the business models, naturof 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.
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, 8 Board Meetings were held on May 8, 205, July 27, 205, September 2, 205, November 6, 205, December 8, 205, January 22, 206, March 9, 206 and March 28, 206 The intervening gap between the meetings was within the period prescribed under the Companies Act, 203.
The details about the meetings of Audit Committee and other Committees are provided in the report on Corporate Governance which forms part of this Annual Report
Appointments/Resignations of the Key Managerial Personnel
Shri Satpal Kumarrora, Managing Director; Shri Anoop Bali, Chief Financial Officer and Shri Sanjay Ahuja, Company Secretary are the Key Managerial Personnel as per the provisions of the Companies Act, 203.
Consequent upon the elevation of Shri B.M .Gupta (the then CF O) to Executive Director, Shri Anoop Bali was appointed as Chief Financial Officer (CFO) of the Company with effect from September 2, 205, Shri S.K.Sangar resigned as Managing Director w.e.f 31,2016 and Shri B.M .Gupta, Executive Director was appointed as Manager of the Company w.e.f. February , 206 till March 31, 206. Shri Satpal Kumar Arora has joined as Managing Director w.e.f. March 31 206
Companyâs 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. The Nomination and Remuneration Policy may be accessed on the Companyâs website at the link: http://www.tfciltd.com/policies.html.
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, 203 and under 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) are being paid sitting fees of Rs.2Q000 and Rs.D,OO0 (plus service tax) per meeting for attending the meetings of Board and its Committees respectively (Rs.13,333/- and Rs.6,667/- plus service tax till July, 205). The Sitting Fees may be revised by the Board of Directors, subject to the overall limits as prescribed under the applicable provisions.
No Director who is a Government Servant, 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, facilities- of Key Managerial Personnel and all the regular employees are as per the pay scale, allowances and other facilities etc. as may be approved by the Board and its committee from time to time in line with the salary structure prevalent in other similar organization such as RBI particularly IFCI Ltd. The Performance Lioke( Incentives both for the Managing Director/Seniori Management / Other employees is as per the Board approved scheme.
10. Directorsâ Responsibility Statement
In compliance of Section B4(5) of the Companies Act, 2013, your Directors confirm: 1
(a) in the preoperational 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 i 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 j 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 director 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 i facility and listing at Stock Exchanges
As per the Securitised Exchange Board of India (SEBI) directives, the transactions of the Companys 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 2015-16 and 2016-17. The addresses of the said Stock Exchanges are stated elsewhere in the Annual Report.
. Auditors
M/s V.C.Gautam & Co., Chartered Accountants (Registration No 0JB65N) has been appointed by the Comptroller & Auditor General of India (C&AG) as Statutory Auditors of Your Company for FY 206-7
.1 Auditorsâ Report
The Auditors â Report along with the Notes on Accounts referred to in the Auditors â 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..
.2 Secretarial audit
In terms of Section 14 of tAct and Rules made there under, M/s Arun Kumar Gupta & Associates Practicing Company Secretary were appointed Secretarial Auditors of the Company. 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.
. Particulars of Employees
In terms of the provisions of Section P7(2) of the Act read with Rules 5(2) and 5(B) 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 of the remuneration of each director to the median employees remuneration and other details in terms of sub-section 2 of Section P7 of the Companies Act, 20B read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure .
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, 20B. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. No Complaints has been received in this regard during the year.
14. Energy Conservation, Technology Absorption and Foreign Exchange Earning and outgo
The particulars elating to energy conservation and technology absorption, as required to be disclosed under Section 134 of the Companies Act, 203 read with the Companies (Accounts) Rules, 204 is not required as your Companyâs 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 1'' 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 24 of the Companies Act 203.
Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).
Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) 1 Rules, 2012, 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 2\ 205), 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 35 of the Companies Act 2013 and Rules made there under. The Corporate Social Responsibility Policy (CSR Policy) may be accessed on the Companyâs website at the link: http://www.tfciltd.com/policies.
The Corporate Social Responsibility SR) 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 TFCIs perception as a social responsible entity.
Your Company during the year under review has undertaken CSR activities/projects during the year 2015-16 amounting Rs.159 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.159 crore, Rs.)0.50 lakh was spent and unspent amount of Rs.48.50 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 detail report on the CSR contribution made during the year 2015-16 is annexed as Annexure 2,
. Corporate Governance and other disclosures
Your Directors reaffirm their continued commitment to good corporate governance practices and endorse Corporate Governance practice in accordance with the provisions of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 205. Your company has complied with all the mandatory requirements of the said clause. The Report on the Corporate Governance as stipulated under Listing Regulation 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 of Corporate Governance as stipulated under the aforesaid Listing Regulation is attached to this report.
.1 Vigil Mechanism
Pursuant to the requirement the Companies Act 203 and Listing Regulation, 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 may be disclosed to the Audit Committee. Employees may 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 Companys website at the link: http//www.tfciltd. com/policies.html
.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 armâs 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 Companyâs related party transactions are generally with its Associates. The related party transactions are entered into based on synergy in operations, long-term strategy for sect oral investments and profitability. All related party transactions are on an armâs length basis, and are intended to further the Companyâs interests. Your
Directors draw attention of the members to Note 25 to the financial statement which sets out related party disclosures.
The Policy on materiality related party transactions and dealing with related party transactions as approved by the Audit Committee and the Board may be 1 accessed on the Companyâs website at the link: http:// www.tfciltd.com/policies.html
17.3 Extract of Annual Return
Pursuant to section 92(3) of the Companies, 203 (the Act) and rule 2(1) of the Companies (Management and Administration) Rules, 20)4, extract of annual return is attached as Annexure 3.
17.4 Statement containing salient features of financial 1 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 Audit Committee of the Board reviews the same periodically. Your Company has also constituted ALM Committee 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 Companyâs 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 companyâs operations.
17.7 Internal financial controls D
The Company has in place set of standards, processes p and structure which enable 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
7.8 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 details particulars may be referred to in the financial statements.
7.9 Segment Reporting
Accounting Standard 7 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 investment.
7.10 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 3} 206 and the date of the Directors âreport i.e. August 0, 206.
8. 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 appreciate she 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 appreciate 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 10, 2016 S. Ravi Satpal Kumar Arora
Place: New Delhi. (Director) (Managing Director)
1. Business and Economic Environment
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 Â 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
qualityÂof-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-Ã -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 JanuaryÂApril 2013 were USD 6.878 billion with a growth of 14.7%
over the corresponding previous year fgure at USD 6.275 billion during
JanuaryÂApril 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 SegmentÂwise 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
Mar 31, 2011
To the Members:
1. Presentation of the Annual Report:
The Directors have pleasure in presenting the Twenty Second Annual
Report on the business and operations of the Company and the audited
accounts for the financial year 2010-11.
2. Financial Results:
(Rs. in Lakh)
2010-11 2009-10
Total Income 10952.94 8149.62
Total Expenditure 5422.97 4142.47
Less: Excess provision
written Back (1350.00) (600.00)
Profit before Tax 6879.97 4607.15
Provision for Tax 2438.93 1199.48
Profit After Tax 4441.04 3407.67
Less: Provision for doubtful
debts u/s36(1)(viia) 269.49 -
of the Income Tax Act, 1961
Surplus Brought Forward 327.39 648.96
PROFIT AvAILABLE
FOR APPROPRIATION 4498.94 4056.63
Special Reserve under
Section 36(1) (viii) of the
Income Tax Act, 1961 1229.09 914.49
Special Reserve u/s 45I of
RBI Act 888.21 681.54
General Reserve 1000.00 1000.00
Proposed Dividend 968.60 968.60
Dividend Tax 157.13 164.61
Balance Carried to
Balance Sheet 755.91 327.39
4498.94 4056.63
3. Operations:
3.1 New Business in 2010-11:
The tourism industry in India is vibrant, and the country is fast
becoming a major global destination. India's travel and tourism
industry is one of the most profitable industries in the country, and
also credited with contributing a substantial amount of foreign
exchange. This is illustrated by the fact that during 2010, 5.58
million foreign tourists visited India as compared to the foreign
tourist arrivals (FTAs) of 5.17 million during 2009, showing an
impressive growth of 8.1% over the previous year.
Your Company, during the last few years has been pursuing to expand its
portfolio not only by extending facilities to existing hotel properties
for renovation, upgradation and setting up of new projects, but also
has been actively pursuing consultancy assignments for various state
governments for drafting the tourism policy and other projects for
tourism development. Your Company with a view to diversify its
business has also ventured into infrastructure financing business with
a cautious approach. However, the development and growth in the
hospitality business will pose new challenges for the industry. There
will be an urgent need of human capital to cater to the new supply.
Continued shortage of good talent could be a major bottleneck.
The total sanctions during 2010-11 were 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 (previous year Rs.570.36 Crore
comprising of project-related sanctions of Rs.521.27 Crore and average
investment in liquid funds amounting to Rs.49.09 Crore). The total
disbursement during 2010-11 were 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 (previous year Rs.293.28 Crore
comprising of project- related disbursements of Rs.244.19 Crore and
average investment in liquid funds amounting to Rs.49.09 Crore). During
the year your company sanctioned Rs.138.00 Crore in the infrastructure
related projects which also led to catalyzing investment to the tune of
Rs.4011.00 Crore in the infrastructure sector.
3.2 Overall Contribution to Tourism and Infrastructure Sector by TFCI:
The assistance provided by your company since its inception has enabled
to add 41556 rooms and to provide direct employment to about 78225
persons in tourism industry. The assistance provided by your company
has also led to catalysing investments to the tune of Rs. 20944 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 Non-Performing Assets:
During the year 2010-11, 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, several measures such as restructuring of debts in viable
projects and reaching negotiated settlement/pursuing recovery
proceedings in DRT, invoking the provisions of The Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (SRFAESI Act) have been initiated. No new NPA has been
generated during the year under review. TFCI has realized Rs.13.00
Crore by selling a property acquired under SARFAESI Act, 2002 which has
resulted in extra- ordinary one time income. Further, during the year,
the total amount of Rs.12.55 Crore was recovered from NPA cases through
auctions/settlements, which enabled your Company to reduce the gross
NPAs substantially and improve profits for the year. The Gross NPAs
stand reduced to less than 0.4% of the total assets as on March 31,
2011 whereas the net NPAs are zero for the last 3 years.
4. Outlook for Tourism:
The hotel and tourism industry's contribution to the Indian economy by
way of foreign direct investments (FDI) infows were pegged at USD 2.35
billion from April 2000 to February 2011, according to the Department
of Industrial Policy and Promotion (DIPP). Foreign tourist arrivals to
India are forecasted to grow at a rate of 9% - 10% in the next few
years.
Several reasons are cited for the growth and prosperity of India's
travel and tourism industry. Economic growth has added millions
annually to the ranks of India's middle class, a group that is driving
domestic tourism growth. Disposable income in India has grown and much
of that is being spent on travel. Domestic travel visits have
registered compounded growth rate of 7% in the past 10 years. Domestic
travelers now account for nearly 74% of the total demand (across all
segments) and 53% of the luxury segment. Affordable fights with better
connectivity, improved road network (a lot still needs to be done),
increase in inventory of hotels in Tier I and II cities resulting in
user-friendly rates, and better upkeep of monuments have contributed to
the spurt in numbers along with the overpowering belief that India
deserves not just a curious stare but a serious look.
The Tourism Ministry has also played an important role in the
development of the industry, initiating advertising campaigns such as
the ÃIncredible India', which promoted India's culture and tourist
attractions in a fresh and memorable way. The campaign helped create a
colorful image of India in the minds of consumers all over the world,
and has directly led to an increase in the interest among the tourists.
The tourism industry has helped growth in other sectors as diverse as
horticulture, handicrafts, agriculture,
construction and even poultry. Both directly and indirectly, increased
tourism in India has created jobs in a variety of related sectors.
Travel and tourism is expected to generate 24.93 million jobs directly
in 2011 (5 per cent of total employment). This includes employment by
hotels, travel agents, airlines and other passenger transportation
services. By 2021 industry will account for 30.44 million jobs
directly, an increase of 5.51 million (22.1 per cent) over the next ten
years.
India is currently ranked 12th in the Asia Pacific region and 68th
overall in the list of the world's attractive destinations, according
to the Travel and Tourism Competitiveness Report 2011 by the World
Economic Forum (WEF).
According to the Tourism Satellite Accounting (TSA) research, released
by World Travel and Tourism Council (WTTC), the direct contribution of
travel and tourism to GDP is expected to grow by 8.1% per annum to USD
76.65 billion (2 % of GDP) for 2011-2021 period, while the total
contribution is forecasted to rise by 8.8% p.a. for 2011-21,
accounting for 4.9% of GDP.
India's hotel pipeline is the second largest in the Asia-Pacifc region.
The Indian hospitality industry is projected to grow at a rate of 8.8
per cent during 2007- 16, making the country as the second-fastest
growing tourism market in the world.
There is also an urgent need to understand tourism needs with far more
understanding, importance, and sensitivity than it currently has, and
the tourism authorities at both levels need to be given more power and
authority for a healthy growth of this wholesome activity which is
still not considered an industry. Granting more power will ensure
systemic studies are carried out, statistics analyzed, research
undertaken, and pragmatic measures adopted to ensure that tourist sites
are not "overgrazed," a healthy balance is maintained between
unrestricted growth and open spaces, and genuine concerns of tourists
are addressed, all contributing to overall growth.
5. Resources:
During the year, your Company met its fund requirements for
disbursement as well as repayment of loans/bonds through bond issue,
credit/loan from banks and from internal accruals. During the year,
your Company raised Rs.50.00 Crore by way of 8.90% unsecured bonds and
borrowed Rs.75.00 Crore as term loans from banks. The Company also
repaid term loan of Rs.15.00 Crore during the year.
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 very comfortable figure of 50.74 %
as on the 31st March, 2011 as against the 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, 2011 amounting to Rs. 11.26 Crore inclusive of dividend
tax of Rs.1.57 Crore. The dividend will be paid to members whose names
appear in the Register of Members as on September 7, 2011. In respect
of shares held in dematerlised form, it will be paid to members whose
names are furnished by National Securities Depository Limited and
Central Depository Services (India) Ltd., as beneficial owners.
8. Directors:
As per Section 256 of the Companies Act, 1956 and the provision in the
Articles of Association, Shri S. K. Mandal, Shri R. R. Rai, Shri Javed
Yunus and Shri Vivek Nair would retire at the forthcoming Annual
General Meeting. The Board recommends the reappointment of Shri S. K.
Mandal, Shri R. R. Rai and Shri Vivek Nair in the forthcoming Annual
General Meeting. The Board of Directors in its meeting held on August
13, 2011 decided not to recommend re-appointment of Shri Javed Yunus as
Director and not to fll the vacancy caused by his retirement for the
time being. During the year under review, the members of the Company in
an Extra-ordinary General Meeting of the Company held on January 17,
2011 appointed Smt. Shashi Sharma, Shri Shivendra Tomar, Shri R. P.
Singh, Shri V.P. Singh and Shri Samir Kumar Ganguli as Directors of the
Company, liable to retire by rotation. In the same meeting, members
also removed Shri O. N. Singh, from the directorship of the Company in
terms of the provions of Section 284 of the Companies Act, 1956. All
these appointments and removal of directors became effective from May
16, 2011 as per the decision of the Hon'ble High Court of Delhi. During
the year, the Board of Directors appointed five additional directors on
March 22, 2011, namely Shri Arjun Sharma, Shri Sachit Kumar Sahijpal,
Dr. P.S. Rana, Shri Sujit Banerjee and Shri S.K. Misra, whose
appointments were set aride as per the decision of the Hon'ble High
Court of Delhi dated May 16, 2011. Similarly, the members of the
Company in other Extra- ordinary General Meeting of the Company held on
May 18, 2011 also appointed Shri Satpal Arora, Shri Rakesh Kapoor & Dr.
Raju Sharma as Directors liable to retire by rotation and approved the
proposal for removal of three Directors which was not given effect
pursuant to order of Hon'ble High Court of Delhi dated May 16, 2011.
Hon'ble High Court of Delhi appointed Hon'ble Justice (Retd.) Shri R.C.
Chopra as Chairman of the Board.
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, 2011, the applicable accounting standards read with the
requirements set out under Schedule VI to 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, 2011 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 Ãgoing-concern'
basis.
11. Securities:
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. The shares
of your Company are tradable compulsorily in demat form.
12. Auditors:
M/s S. S. Kothari & Associates, Chartered Accountants (Registration
No.305147E), the Statutory Auditors of the Company, holds offce until
the conclusion of the ensuing Annual General Meeting and is eligible
for reappointment. 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 disqualifed 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 are self explanatory and do not call for any
further comments or explanation.
14. Listing
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 2010-11. The addresses of the said stock exchanges are stated
elsewhere in the Annual Report.
15. 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.
16. 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. 1,93,276
ii) Total foreign exchange earnings : Nil
17. Transfer of amount to Investor Education and protection Fund
No amount of unpaid or unclaimed dividend is due/ outstanding to be
credited to the Investor Education and Protection Fund in terms of the
provisions of Section 205A(5) of the Companies Act, 1956.
18. Corporate Governance
Your Directors reaffirm their continued commitment to good corporate
governance practices. 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 affrmed their compliance with the code.
21. Acknowledgements:
The Board expresses and places on record their gratitude for valuable
assistance, co-operation, guidance and support received by the Company
from the Ministry of Finance and Ministry of Tourism, Government of
India, Reserve Bank of India, Securities & Exchange Board of India,
other All-India Financial Institutions particularly from promoter
institutions viz. IFCI Limited and other Banks. The Board thanks to all
our stakeholders, who have reposed faith in our Company and extended
their constant support.
The Board also places on record their sincere appreciation of the
concerted efforts and dedicated service of all employees which
contributed to the continuous growth and performance of the Company.
For and on behalf of the Board of Directors
(S.K. Mandal) (Shivendra Tomar)
Director Managing Director
Date : August 13, 2011
Place : New Delhi.
Mar 31, 2010
The Directors have pleasure in presenting to you the Twenty First
Annual Report of your Company together with the Audited Statement of
Accounts for the year ended 31st March, 2010.
2. Financial Results:
(Rs. in lakh)
2009-10 2008-09
Total Income 8149.62 7095.93
Total Expenditure 4142.47 3672.99
Provision for doubtful debts/ (600.00) (500.00)
investments (written
back)
Profit Before Tax 4607.15 3922.94
Provision For Tax 1199.48 1025.75
Profit After Tax 3407.67 2897.19
Surplus Brought Forward 648.96 254.11
PROFIT AVAILABLE FOR
APPROPRIATION 4056.63 3151.30
Special Reserve under
Section 36(1)
(viii) of the Income Tax
Act,1961 914.49 558.00
Special Reserve u/s 45I of
RBI Act 681.54
General Reserve 1000.00 1000.00
Proposed Dividend 968.60 807.16
Dividend Tax 164.61 137.18
Balance Carried to
Balance Sheet 327.39 648.96
4056.63 3151.30
3. Operations:
3.1 New Business in 2009-10:
Travel & tourism industrys contribution to Indian industry is immense.
Tourism is the largest service industry in India, with a contribution
of 6.23% to the national GDP and 8.78% of the total employment in
India. According to the latest data released by the Ministry of
Tourism, foreign tourist arrivals (FTAs) during 2009, were 5.11 million
with a negative growth rate of 3% as compared to the FTAs 5.28 million,
with a growth rate of 4 % during 2008. Though the growth rate for 2009
was negative, it was still better than UNWTOs projected negative
growth rate of 6% to 4% for the world. However, during January 2010 to
June 2010, the FTAs were 26.32 lakh depicting a growth rate of 10.77%
over the last years arrivals of 23.76 lakh. The foreign exchange
earnings
also showed a negative growth rate of 3% during 2009 with US$11.39
billion as compared to US$11.75 billion in 2008. With the growth in
arrivals, the foreign exchange earnings are also expected to show a
positive trend in the coming months with the earnings during the period
January to June 2010 already showing an upward trend to US$6.84 billion
as compared to US$5.07 billion during same period of 2009.
Your Company, during the last few years has been pursuing to expand its
portfolio not only by extending facilities to existing hotel properties
for renovation, upgradation and setting up of new projects, but also
has been actively pursuing consultancy assignments for various state
governments for drafting the tourism policy and other projects for
tourism/ circuit development etc.
The development and growth in the hospitality business will pose new
challenges for the industry. There will be an urgent need of human
capital to cater to the new supply. Continued shortage of good talent
could be a major bottleneck. Realizing this fact, your company is
examining proposal for starting a ÃCentre of Excellence in Tourism and
Hospitalityà for filling the shortage of trained manpower for tourism
sector. In order to cater to the increasing business and leisure
tourist flows, your company is also examining the proposal for starting
a travel and tourism intermediary.
Your Company has ventured into infrastructure project financing
business viz., power, ports, airports, roads and bridges etc., which is
expected to give a fillip to tourism and hospitality projects. In this
regard, the Special Resolution as contained in the notice dated
February 12, 2010 was passed by the members of the Company on March 31,
2010 through Postal Ballot relating to alteration of the Main Object
Clause of the Memorandum of Association of the Company by inserting new
sub- clauses 12 and 13 relating to infrastructure financing and related
activities/services.
The total sanctions during 2009-10 were Rs.570.36 crore comprising of
project-related sanctions Rs.521.27 crore and average investment in
mutual funds Rs.49.09 crore (previous year project-related sanctions
Rs.510.65 crore and average investment in mutual funds Rs.69.83 crore).
The total disbursement during 2009-10 were Rs.293.28 crore comprising
of project-related disbursements Rs.244.19 crore and average investment
in mutual funds Rs.49.09 crore (previous year project-related
disbursements Rs.205.97 crore and average investment in mutual funds
Rs.69.83 crore).
3.2 Overall Contribution to Tourism Sector by TFCI:
The assistance provided by your company since its inception has enabled
to add 39815 rooms and to provide direct employment to about 75570
persons in tourism industry. The assistance provided by your company
has also led to catalysing investments to the tune of Rs.19250 crore in
the tourism sector thereby contributing to the creation of need-based
infrastructure, which has direct bearing on the development of tourism
in the country.
3.3 Non-Performing Assets:
During the year 2009-10, 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, several measures such as restructuring of debts in viable
projects and reaching negotiated settlement/pursuing recovery
proceedings in DRT, invoking the provisions of The Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (SARFAESI Act) have been intitiated. Out of 3 hotels projects
located at Mukundgarh, Bikaner & Jaisalmer which were taken over by
your Company under the SARFAESI Act during 2008-09, 2 projects located
at Mukundgarh & Bikaner were successfully auctioned for an amount of
Rs.13.76 crore. During the year, the total amount of Rs.23.81 crore was
recovered from NPA cases through auctions/settlements, which enabled
your Company to reduce the gross NPAs substantially and improve profits
for the year. Further, your Company maintained net NPAs at Zero.
4. Resources:
During the year, your Company met its fund requirements for
disbursement as well as repayment of loans/bonds though internal
accruals, bond issue and credit/loan from banks. During the year, your
Company raised Rs.100 crore by way of term loans from Banks at cost of
9% (floating rate linked to PLR) for a tenure of five/six years.
During the year, your Company allotted Tier II Subordinated Unsecured
Bonds of Rs.25 crore bearing interest @ 9.50% p.a. payable half-yearly.
Bonds aggregating Rs.54.46 crore carrying interest ranging from 9.75%
p.a. to 12% p.a. were redeemed during the year (Rs.44.35 crore on
redemption date and Rs.10.11 crore by way of prepayment).
5. 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 was comfortable at 58.24 % as on the 31st
March, 2010 as against the norm of 12%. Your Company has made 100%
provision for all ÃNon-Performing AssetsÃ.
6. Dividend:
Your Directors are pleased to recommend, subject to the approval of the
members, payment of dividend of Rs.1.20 per share i.e. @ 12% on the
paid-up equity Share Capital for the year ended 31st March, 2010.
7. Outlook for Tourism:
The travel and tourism sector which accounted for 6.4 per cent of total
employment in 2009 is expected to generate 40,037,000 jobs i.e. 7.2 per
cent of total employment by 2019. The year 2009 was challenging for the
entire industry because of recession, Mumbai terror attack and swine
flu, but now things are turning for the better. Airlines are
registering higher load factor from October 2009 onwards and hotels are
witnessing better occupancies and ARRs. There is noticeable growth in
all segments of travel, be it inbound, outbound or domestic. The
campaign ÃVisit India Year 2009 was launched at the International
Tourism Exchange in Berlin, aimed to project India as an attractive
destination for holidaymakers. The government joined hands with leading
airlines, hoteliers, holiday resorts and tour operators, and offered
them a wide range of incentives and bonuses during the period between
April and December, 2009.
Report of Euromonitor International on Travel and Tourism in India
states that the Government of India increased spend on advertising
campaigns (including for the campaigns ÃIncredible India and ÃAtithi
Devo Bhava à guest is like God) to reinforce the rich variety of
tourism in India. The ministry promoted India as a safe tourist
destination and undertook various measures, such as stepping up
vigilance in key cities and at historically important tourist sites. It
also deployed increased manpower and resources for improving security
checks at key airports and railway stations.
Tourism is primarily the result of discretionary income and the
increase in disposable income would encourage more and more people to
travel, thereby giving a boost to the sector. There has been a marked
change in the pattern of domestic tourism in the country. Earlier
people used to undertake one long holiday, but now they are looking for
two-to-three short holidays apart from a long holiday which they
usually undertake during the summers or winters.
The Indian hospitality industry, over the last three years, has been
witnessing a remarkable phase in performance and has continued the same
in the early part of the year 2008/09. One of the key reasons for the
increase in demand for hotel rooms in the country was the boom in the
overall economy and substantial growth in sectors like information
technology, telecom, banking and finance, insurance, construction,
retail and real estate. However, the global economic downturn and the
Mumbai attacks adversely affected the performance of the industry in
the latter part of the year. This has been, to a large degree,
mitigated by a steep increase in domestic travel and it is expected to
be one of the major drivers of growth in the short to medium term.
With the economy of the country improving and a simultaneous effort by
the government to upgrade and improve the existing roads, airports and
other infrastructure, we can expect tourism in India to recover faster
than most countries across the globe. We also expect India to become
one of the most favoured investment destinations in the world and all
these bode very well for our industry. The coming years are expected to
see a large supply of hotels entering the Indian market. A substantial
proportion of these hotels are expected to be branded and of
international quality in product and service offerings. Indian hotel
operators would need to prepare themselves for this coming competition
by improving their operational efficiencies and also their products and
service offerings. According to World Travel and Tourism Council, India
will be a tourism hotspot during 2009-2018, having the highest 10-year
growth potential. India has a growing medical tourism sector.
The Commonwealth Games 2010 in Delhi are expected to significantly
boost tourism in India. Foreign tourists and domestic tourists are
likely to arrive in Delhi on the eve of the Commonwealth Games. There
is no doubt that the event will be great hit for the Indian tourism
industry. Along with that Indian hospitality, aviation and hotel
industry will also be equally beneficial with the event. Commonwealth
Games are likely to push Indias foreign exchange earnings through
tourism alone in 2010 to an estimated level of over 16.91 billion
dollar according to officials from ASSOCHAM. According to the
estimates, India epitomizes one of the most potential tourism markets
in the world.
In the last few years, it has expanded rapidly and due to the
unprecedented and unbound support from all levels of government,
upgraded income level and inauguration of various international sports
events (Cricket 20/20 and Commonwealth Games), the Indian tourism
industry will surely be benefited and will continue to grow at high
level in the years to come. It is believed that in the next few years,
Indian tourism industry will gain new heights and the percentage of
Indias share in the global tourism will grow to 1.5% by 2010.
8. Public Deposits:
Your Company has not accepted any deposit from public during the year.
9. Directors Responsibility Statement:
In compliance of Section 217(2AA) of the Companies Act, 1956, your
Directors report:
1. That in the preparation of the annual accounts, the applicable
accounting standards have been followed;
2. That they had selected such accounting policies and applied them
consistently and made judgements 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 or loss
of the Company for that period;
3. 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
4. That they had prepared the annual accounts on a going-concern
basis.
10. Securities:
Your Company has entered into agreements with National Securities
Depository Ltd. and Central Depository Services (India) Ltd. to
facilitate holding and trading of shares in electronic form. The shares
of your Company are tradable compulsorily in demat form.
Your Companys equity shares are listed with Bombay Stock Exchange Ltd.
(BSE) and National Stock Exchange of India Ltd. (NSE). The Company is
regular in paying the listing fees. The addresses of the said stock
exchanges are stated elsewhere in the Annual Report. The cash-flow
statement in the prescribed format is annexed to this report in
compliance of the listing agreements executed by the Company with the
stock exchanges.
11. Organisation:
As on 31st March, 2010, your Company had a complement of 35 staff
members. Your Company continues its efforts to strengthen its
human-resource base by arranging requisite training and varied exposure
to its
existing staff to enable to keep their skills updated. None of the
employees is in receipt of remuneration for whole/ part of the year
exceeding the limit prescribed u/s 217 (2A) of the Companies Act, 1956.
12. Board of Directors:
As per the provision in the Articles of Association, S/Shri
S.S.H.Rehman, U.C.Pandey and Javed Yunus would retire at the
forthcoming Annual General Meeting. Shri Javed Yunus being eligible,
have offered himself for reappointment. However, S/Shri S.S.H.Rehman,
U.C.Pandey did not offer themselves for reappointment. Your Company
has received notices u/s 257 of the Companies Act, 1956 from members
proposing the candidatures of S/Shri C.M. Vasudev and Prem S. Khamesra
as director(s). The Board recommended the appointments of S/Shri
C.M.Vasudev and Prem S. Khamesra as director(s) in place of S/Shri
S.S.H. Rehman, U.C. Pandey and also recommended the reappointment of
Shri Javed Yunus in the forthcoming Annual General Meeting. The Board
records it deep appreciation of the valuable contribution and guidance
extended by S/Shri S.S.H. Rehman and U.C. Pandey as directors of your
Company.
13. Auditors:
M/s S.S.Kothari & Associates, Chartered Accountants (Registration.
No.305147E), the Companys Auditors will retire on conclusion of the
ensuing Annual General Meeting and are eligible for reappointment.
14. 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.
15. Acknowledgements:
The Board expresses and places on record its sincere gratitude for
co-operation, guidance and advice received from Banking Division,
Ministry of Finance and Ministry of Tourism, Government of India;
Reserve Bank of India, other All-India Financial Institutions and
Banks. The Board also thanks the shareholders and subscribers to the
bonds issued by your Company for extending their valuable support.
The Board also places on record its appreciation for the dedication,
commitment and team- work of staff at all levels.
For and on behalf of the Board of Directors
(Archana Capoor)
Chairman and Managing Director
Place: New Delhi
Date: July 27, 2010
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