Directors Report of Tourism Finance Corporation of India Ltd.

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 Company’s financial performance for the year ended 31^st 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 31^st 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 TFCI’s 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. 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 in the SEBI (LODR) Regulation is presented in a separate section forming part of the Directors’ 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 28^th 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 17^th 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 28^th 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 Directors’ 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 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 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 Company’s 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. 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.

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 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 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 (“Offer Price”). The Acquirer alongwith PACs have filed the draft letter of offer (DLoF) with SEBI on 1^st 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 Auditors’ 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 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.

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 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 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 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 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 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 may be accessed on the Company’s 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 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.

17.7 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 company’s 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 Directors’ 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

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Mar 31, 2017

DIRECTORS’ 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 Company’s financial performance for the year ended 31^st 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 TFCI’s 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. 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 in the Listing Regulation is presented in a separate section forming part of the Directors’ 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 27^th 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 Directors’ 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 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. The Nomination and Remuneration Policy may be accessed on the Company’s 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. Directors’ 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 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 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 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.

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 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 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 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 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 Company’s website at the linkhttp//www.tfciltd com/policies.html

or tribunals impacting the going concern status and company’s 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 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

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 Company’s 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 Directors’ 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 Company’s financial performance for the year ended 31^st 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.316’ 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.” 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%.

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 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

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. The Nomination and Remuneration Policy may be accessed on the Company’s 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. Directors’ 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 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..

.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 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 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 Company’s 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 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 sect oral investments and profitability. All related party transactions are on an arm’s length basis, and are intended to further the Company’s 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 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, 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 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 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 ’report 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)

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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.

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Mar 31, 2013

To the Members:

1. Presentation of the Annual Report

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

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

Total Income 18240.00 13032.33

Total Expenditure 10396.54 7324.12

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

Proft before Tax 7243.46 6308.21

Provision for Tax 1690.89 1361.25

Proft After Tax 5552.57 4946.96

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

Surplus Brought Forward 1417.75 755.91

Proft Available For 6667.32 5503.87

Appropriation

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

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

General Reserve 1000.00 1000.00

Proposed Dividend 968.60 968.60

Dividend Tax 157.13 157.13

Balance Carried to Balance Sheet 1959.07 1417.75

6667.32 5503.87

3. Performance

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

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

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

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

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

3.2 Industry Outlook

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

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

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

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

3.3 Overall Contribution to Tourism and Infrastructure Sector by TFCI

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

3.4 Outlook for Tourism

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

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

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

4. Non-Performing Assets

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

5. Resource Mobilisation

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

6. RBI Guidelines

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

7. Dividend

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

8. Directors

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

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

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

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

9. Public Deposits

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

10. Directors'' Responsibility Statement

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

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

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

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

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

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

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

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

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

12. Auditors

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

13. Auditors'' Report

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

14. Particulars of Employees

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

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

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

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

16. Transfer of amount to Investor Education and Protection Fund

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

17. Segment Reporting

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

18. Corporate Governance

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

19. Management''s Discussion and Analysis Report

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

20. Declaration

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

21. Acknowledgements

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

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

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

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

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

Place : New Delhi. Director Managing Director

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Mar 31, 2012

1. Presentation of the Annual Report:

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

2. Financial Results:

(Rs in Lakh)

2011-12 2010-11

Total Income 13032.33 10952.94

Total Expenditure 7324.12 5422.97

Add: Excess provision

written Back 600.00 1350.00

Profit before Tax 6308.21 6879.97

Provision for Tax 1361.25 2438.93

Profit After Tax 4946.96 4441.04

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

Income Tax Act, 1961 199.00 269.49

Surplus Brought Forward 755.91 327.39

Profit Available for _ _

Appropriation 5503.87 4498.94

Special Reserve under

Section 36(1)(viii)

of the Income Tax Act, 1961 971.00 1229.09

Special Reserve u/s 45 IC 989.39 888.21

of RBI Act

General Reserve 1000.00 500.00

Proposed Dividend 968.60 968.60

Dividend Tax 157.13 157.13

Balance Carried to B/S 1417.75 755.91

5503.87 4498.94 3.Performance

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

3.1 Industry Outlook

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

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

3.2 Overall Contribution to Tourism and Infrastructure Sector by TFCI

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

3.3 Outlook for Tourism

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

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

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

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

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

4. Non-Performing Assets

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

5. Resource Mobilisation

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

6. RBI Guidelines

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

7. Dividend

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

8. Directors

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

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

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

9. Public Deposits

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

10. Directors' Responsibility Statement

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

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

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

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

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

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

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

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

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

12. Auditors

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

13. Auditors' Report

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

14. Particulars of Employees

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

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

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

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

ii) Total foreign exchange earnings : Nil

16. Transfer of amount to Investor Education and Protection Fund

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

17. Segment Reporting

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

18. Corporate Governance

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

19. Management's Discussion and Analysis Report

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

20. Declaration

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

21. Acknowledgements

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

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

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

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

For and on behalf of the Board of Directors

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

Place: New Delhi. Director Managing Director

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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 ‘Incredible 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 ‘going-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.

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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 “Centre of Excellence in Tourism and Hospitality” 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 “Non-Performing Assets”.

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 ‘Visit 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 ‘Incredible India and ‘Atithi Devo Bhava – 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