Interview with Tourism Finance Corporation of India (TFCI)

"TFCI wants to play the role of an investment catalyst for Indian tourism sector"

In conversation with Anirban Chakraborty, Managing Director and CEO, Tourism Finance Corporation of India Ltd(TFCI).  

TFCI’s Q1FY22 net profit stood at Rs 21.20 crore, up by 27.96% from Rs 16.57 crore in Q1FY21. What factors have contributed the most to help you outperform?   

At TFCI, we have focused on expanding our well-diversified portfolio, which has continued to yield good results over the years. Our Net Interest Income increased by 10% YoY to Rs 32 crore from Rs 29 crore with an additional income of Rs 2.4 crore during the quarter, which had mainly driven the net profit of the company. A combination of a broad-based economic revival, substantial decline in active Covid-19 infections and a large segment of the population getting vaccinated across the country has helped in significant recovery for the hospitality sector. Though Q1FY22 was a challenging quarter, owing to partial lockdowns due to the second wave, the gradual reopening saw improvement due to pent-up demand, especially in leisure destinations during the latter part of the quarter.   

Can you throw some light on your plans to utilize the funds (Rs 65.18 crore) recently raised via preferential allotment to marquee investors?  

TFCI being a specialized institution and an industry leader in its segment, is well-positioned to witness a multi-year credit growth. Hence, the raising of Rs 65 crore via preferential allotment to promoter group and marquee investor entities led by Anurag Bagaria (Chairman & CEO, Kemwell Biopharma Private Limited) and P.S Jayakumar (ex-MD & CEO, Bank of Baroda) will go a long way in the strategic expansion of the company. This displays the confidence of the investor community in the business model of TFCI. These funds will be utilized to boost the company’s strong position in the lending ecosystem and to accelerate its strategic priorities. TFCI provides a long-term line of credit to projects in the hospitality segment and the company has the vision to play the role of an investment catalyst for the Indian tourism sector, while also diversifying into other promising segments.   

What are your top strategic priorities for business expansion?  

With the help of large-scale vaccination programs and relaxations being rolled out, the tourism sector is inching its way back to recovery. Various segments of the tourism sector are witnessing a surge in bookings due to pent-up demand from travellers. Also, events like weddings, etc, which were postponed due to lockdown are also driving revenues in a big way. Our foremost priority is to lend to those businesses which have a strong asset cover and steady cashflows which helps us to avoid delinquencies and ensures recovery, even during unexpected events like this pandemic. Also going ahead, the company plans to further diversify its book by lending to the education and healthcare sector as these sectors usually tend to face lesser disruptions in a situation like COVID. These initiatives will help TFCI in building a well-diversified loan book.  

What are your growth levers?  

As per the JLL’s Hotel Momentum India report, the hospitality industry in India witnessed a growth of 84.7% in terms of Revenue Per Available Room during Q2 2021 (April-June) as compared to Q2 2020. With several states across the country adopting relaxed lockdown measures and no quarantine requirements, we expect a further boost in demand for domestic travel.

During the last year, we have also witnessed a structural shift in demand from unorganized hoteliers to larger organized institutions. This was mainly driven by their inability to sustain their operations due to the long Covid-19 induced lockdown, a shift in consumer preferences towards better hygiene, and unavailability of extended credit lines to carry business as usual. These factors have created a demand-supply mismatch in the sector. We expect this supply gap to be met by the larger and steady players, and TFCI being one of the largest lenders to such organizations is poised to grow in the coming future.   

Furthermore, going forward, with economic activities gradually getting back to pre-covid levels we expect improved disbursements activity in various sectors. As of June 30, 2021, our CRAR stood at 41.95% and our recent fundraise will help us to boost our adequacies and aid in further credit dissemination.