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TFCI’s Healthy Financials Make Them Well-Positioned For Achieving Sustained Growth Momentum
With a CAR of 39.87%, the company is well capitalised to grow its books exponentially in future.
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It has undoubtedly been a challenging year for businesses across various sectors, especially with recent partial lockdowns. Tourism and Hospitality business was also hit adversely due to this. However, despite the challenges, Tourism Finance Corporation of India (TFCI), a premier institution catering to the financing needs of hospitality industry demonstrated resilient performance during the previous Financial Year. It reported a PAT of Rs. 81 crores in FY21 with a loan book at Rs 1977 crores.
TFCI was able to show a growth in AUM, stable earnings and asset quality, primarily on account of its prudent selection of assets, stringent monitoring and recovery mechanisms and appropriate structuring.
With a CAR of 39.87%, the company is well capitalised to grow its books exponentially in future. The company was also able to maintain its NIM to 5.31% even during these trying times. TFCI has focussed on building its books by leveraging the opportunities presented in the MSME segment. As on March 31, 2021, 84% of its AUM was in MSME segment. Various supports and thrust given by Government of India (GOI) to this segment of economy, has helped TFCI maintain growth in its loan book.
Further, though the initial period of FY21 witnessed complete lockdown, with virtually no mobility, the latter half witnessed travel and tourism demand picking up substantially. It led to the rise in demand for the domestic tourism industry which also resulted in improved occupancy rates for the hotel with certain segments of the industry running in almost full capacities. Most of TFCI’s assisted entities also saw ARRs and Occupancies improving considerably during October 2020 to February 2021.
However, an unprecedented surge in Covid-19 cases in the ongoing second wave, has slowed down the economic growth trajectory and will have some impact in Q1 FY22. However, one positive indicator is that, in comparison to last year, the present lockdowns are lesser stringent and more business friendly. As Mr Anirban Chakraborty, Managing Director, TFCI has to say: “One positive indicator is that, in comparison to last year's calamity, the recent dip in mobility has not been as sharp as seen during the lockdown in March 2020 and we expect that the travel and tourism sector will show recovery and return to normalcy with a bang on the back of a pick up in consumption, as the vaccination rate improves and the local restrictions start to ease out in the coming quarters”
Certain measures by the GOI viz., broadening the inoculation drive for 18+ aged population, extension of the scope of ECLGS for the Travel & Tourism Sector, liquidity measures for NBFCs and last-mile lenders, shall yield positive results over the next few quarters. Though the second wave slowed down the recovery rate, we are already witnessing reopening in various pockets of the country. With large scale vaccinations, it is expected that business-as-usual is not going to be a distant dream.