Tourism Finance Corporation of India

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Tourism Finance Corporation of India

  1. 1. INTRODUCTION The government of India established “The Industrial Finance Corporation of India (IFCI) on July 1, 1948, as the first Development Financial Institution in the country to cater to the long-term finance needs of the industrial sector. Subsequently, the Government of India in its pursuit to provide financial assistance to tourism-related activities/projects came up with an idea of Tourism finance corporation of India ltd. In accordance with the above decision, the IFCI Ltd. along with other All-India Financial/Investment Institutions and Nationalized Banks promoted a Public Limited Company under the name of "Tourism Finance Corporation of India Ltd. (TFCI)" to function as a specialized All-India Development Financial Institution to cater to the financial needs of tourism industry. The institutes involved behind setting up of TFCI are IFCI, SBI, LIC, Bank of India, United India Assurance company.
  2. 2. TFCI was incorporated as a Public Limited Companyunder the Companies Act, 1956 on 27th January1989 and became operational with effect from 1stFebruary 1989 on receipt of Certificate of theCommencement of Business from the Registrar ofCompanies. TFCI has been notified as a PublicFinancial Institution under section 4A of theCompanies Act, 1956, vide Notification No S.O 7(E)dated the 3rd January 1990 issued by the Ministry ofIndustry, Department of Company Affairs. TFCIsRegistered office is situated at 13th Floor, IFCITower, 61, Nehru Place, New Delhi - 110 019.
  3. 3. OVERVIEW TFCI provides financial assistance to enterprises, for setting up and/ or development of tourism related activities, facilities and services, which inter-alia include hotels, restaurants, holiday resorts, amusement parks and complexes for entertainment, education and sports, safari parks, rope-ways cultural centers, convention halls, all forms of transport industry, air-taxis, travel and tour operating agencies, tourism emporia, sports facilities etc. besides, TFCI also co-ordinates and formulates guidelines and policies related to financing of such projects. TFCI has pioneered and innovated various products in financing the diverse needs of the industry such as the first Amusement-cum-Water Park at Mumbai, the first Water Sports Complex at Goa, the Palace on Wheels, the highly acclaimed spa The Ananda at Himalayas, the restoration of heritage resorts namely the Devigarh Palace at Udaipur, conversion of Umaid Bhawan Palace into a resort hotel etc. As a developmental role, TFCI organizes seminars /participates in tourism-related activities organized by Ministry of Tourism, Government of India and by the trade bodies /associations etc. Since its inception, TFCI has also provided high-quality research and consultancy services to the tourism industry in general and to the investors in tourism industry in particular. TFCIs range of activities in the Consultancy Division covers tourism-related studies, surveys and project-related services. TFCI has been providing specific project- related services to various clients. It has also undertaken appraisal of individual projects for various state government agencies/individual clients. Today, TFCI is truly Helping Tourism Grow by taking proactive steps in providing financial assistance for the growing industry and thereby improving its own margin, profitability and other important financial parameters.
  4. 4. FINANCIAL SERVICES OFFERED BY TFCI
  5. 5.  Rupee Loan TFCI provides financial assistance to projects with capital cost of Rs. 3 crore and above. In respect of projects costing between Rs. 1 crore and Rs. 3 crore, TFCI will consider financial assistance to the extent of unavoidable gap, if any, remaining after taking into account assistance from State Level Institutions/Banks. Unique projects, which are important from the tourism point of view and for which assistance from State Level institutions/ Banks is not available, may be considered on exceptional basis even though their capital cost is below Rs. 1 crore. Promoters Contribution The minimum promoters contribution for the projects is 30%. Relaxation may, however, be allowed in respect of large projects involving capital cost exceeding Rs. 50 crore. Debt Equity Ratio TFCI extends term-loan assistance based on debt-equity ratio not exceeding 1.5:1. However, in case of hotels in seasonal locations/ multiplexes/ entertainment centers, amusement parks and other tourism- related projects, the debt-equity ratio would be stipulated in the range of 1:1 to 1.25:1.
  6. 6.  Rate of Interest Interest on loan is flexible and linked to the PLR of TFCI which is presently 12.5% p.a. (since 1st Augus2008). TFCI, while considering loans to the borrowers, evaluates each concern individually on various parameters such as Industry/ Business Risk, Environmental Risk, Project Risk, Management Risk, Security available, Income value to TFCI, etc. and accords rating ranging from AAA to B category. Loan is priced according to the prevalent PLR High Risk Projects are charged interest at PLR+3% per annum Security First charge on movable and immovable fixed assets. Personal Guarantees of the Promoters and Corporate guarantee of the group concern, if necessary. Pledge of promoters share-holding. Repayment Schedule This would depend on the period required for completion of the project and stabilization of operations as also the projected cash-flows available for debt-servicing. The general norm of repayment is 8 years allowing moratorium of 2 years after full commercial operations. In case of multiplexes/ entertainment centers the cash-flows in the initial years are satisfactory; as such, the repayment of the loans to this sector could be made in 6-7 years allowing moratorium of 1-1½ years after full commercial operations.
  7. 7.  Norms for Takeover Financing TFCI may consider financing well-established, assisted concerns having over 3 years satisfactory track record for takeover of tourism-related project/company. Norms for Working-Capital Financing The Working Capital assistance would be provided to concerns in the tourism sector with proven track record of at least 3 years and assisted concerns of TFCI with satisfactory credit record. The working capital limit would be calculated based on the turnover method as may be considered appropriate.
  8. 8. ADVISORY SERVICES OFFERED BY TFCI
  9. 9. INCLUDES :  Project-Related Services Tourism-Related Studies/ Services  Government Sector  Private Sector  Other Activities /Programs
  10. 10. PROJECT RELATED SERVICES
  11. 11.  Site evaluation studies  Market-potential assessment for tourism projects  Techno- economic feasibility studies  Loan / Equity syndication services  Financial restructuring of project proposals, review and appraisal  Project implementation and monitoring services  Pre-opening technical and facility planning services  Property evaluation including determination of terms for transfer / lease, preparation of related RFQ & RFP & transfer / lease documents etc. Other project related services include assistance in finalization of arrangements for lease / transfer of management, franchise tie-ups, selection of design / project / architectural consultants etc.
  12. 12. TOURISM RELATED SERVICES
  13. 13.  Undertaking tourism-potential studies and identification of tourism circuits.  Preparing tourism-development Master Plans for state/ travel circuit / destination.  Undertaking tourist profiles and image-rating studies.  Undertaking Tourist-flow surveys to assess destination draws, infrastructure gaps and defining agenda for development.  Carrying out accommodation and other infrastructure assessment, augmentation improvement studies.  Undertaking studies for sustainable tourism development, environment impact assessment and determining carrying capacity of tourism activities in wild-life sanctuaries, national parks and other sensitive / critical areas.  Assessing need for and identifying specific policies and other promotional measures for tourism development in any State. Undertaking appraisal of various Government programs relating to tourism promotion, development and making suggestions for improving effectiveness.  Assistance in marketing projects identified by State Govt. including drawing up of bankable project profiles
  14. 14. SOME OF TFCI’S CLIENTS FROM THEGOVERNMENT SECTOR
  15. 15. SOME OF TFCI’S CLIENTS FROM THE PRIVATE SECTOR
  16. 16.  Nehru Place Hotels Ltd., New Delhi Asian Hotels Ltd. (Owners of Hyatt Regency, New Delhi) Amir Parks and Amusement Pvt. Ltd., Bombay ITC Hotels Limited, New Delhi Hotel Leela Venture Limited, Mumbai Paramount Water Sports & Resorts Ltd, Mumbai Ltd., Mumbai. Chandras Green Project Ltd., Kolkata. Chandras Hotels & Resorts Ltd., Kolkata Dolphin Adventure Sports Pvt. Ltd., Goa Other medium sized hotel/resort projects at Pune, Varanasi, Dehradun, Hardwar, Goa, Rajahmundry etc.
  17. 17.  Study of Security and Safety aspects of the hospitality industry Study of need for and devising of suitable programs for the promoters entrepreneurs from the hospitality industry. Organized & coordinated National Seminar on Hotel Project Management for entrepreneurs venturing into Hotel Industry.
  18. 18. TOURISM FINANCE CORPORATION OF INDIA KEY DATA 2011 Sales1,095,294,873 (Year Ending Jan 2012) Employees:35 Market Cap:2,034,062,050 Fiscal Yr Ends :March Shares Outstanding :80,716,748 Share Type: Ordinary Closely Held Shares: N/A
  19. 19. TOURISM FINANCE CORPORATION OF INDIA GROWTH RATE

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