Investment Juggernaut

December 5, 2019

For more than three decades, the Tourism Finance Corporation of India has been the financial backbone of India’s Tourism Industry, playing the role of an investment catalyst in this sector

 

 

Throughout the world, investment bodies and financial institutions act as investment catalysts, providing long-term credit support to growing industries. They promote economic growth and provide financial support for various capacity-building programmes undertaken by both private and public bodies. One such sector in India that has contributed a lot to the growth of the country is the Tourism Industry and propelling the growth of the industry is the TFCI or the Tourism Finance Corporation of India (TFCI).
 
THE BACKGROUND
Set up as an all-India financial institution, pursuant to the recommendations of the National Committee of Tourism under the aegis of the Planning Commission in the year 1988, the body has expedited the growth of the tourism sector in India by funding long-term projects. It has truly played the role of an investment catalyst in India by sanctioning a cumulative amount of Rs 10,887 crore rupees for 863 projects till 2018. With a view to diversify in other related sectors, TFCI has financed infrastructure projects, Real Estate projects and even manufacturing projects. The assistance sanctioned so far has helped in creating over 46,000 rooms in approved category of hotels that represent approximately 1/3rd of the total room capacity in the country. The assistance sanctioned by TFCI has helped in catalysing investment to the tune of Rs 30,182 crore in the tourism sector, till March 31, 2018, over a period of time.

 

TFCI’S MISSION
Taking the company forward is Anirban Chakraborty, Managing Director & CEO, TFCI, who spoke extensively to Today’s Traveller Coffee Table Book, 2019, extolling the company’s initiatives in bringing about a sea change in the Tourism Industry. Chakraborty says, “TFCI is the only institution in the country that exclusively funds tourism-based infrastructure projects and has, therefore, been able to play the role of an investment catalyst in this sector.” He added, “TFCI provides a unique business model, which offers services like tourism project financing, tourism advisory services, etc. Other financial services include financial assistance in urban infrastructure (hospitals, education, etc.), industrial and manufacturing, along with RE and BFSI on a selective basis, services sector and allied activities. Tourism advisory services include consultancy and project-related services for the private sector and institutional services for State and Central government.”

 

THE JOURNEY SO FAR
However, the journey so far has not been easy for TFCI. BM Gupta, Whole Time Director, TFCI, says that initially, the period after the institution of TFCI, the banks were reticent to sanction term-lending. At that time (in the 1980s), banks were providing the working capital finance, and financial institutions were dependent upon banks to subscribe to the bonds issue. As such, financing a hotel was a tough proposition before the TFCI came along. Gupta informs, “An average hotel project typically takes about 10 to 15 years. This is because a hotel is perhaps the most capital-intensive project and typically requires funding for about 10 to 15 years before it can become fully independent. However, banks were not in a position to finance a project for that long. Therefore, with a view to provide long-term financial support to the sector, the need was felt for a dedicated financial institution.” No doubt, the body has a competitive edge over others in the tourism sector. It provides financial assistance for new projects in the tourism sector, their diversification, renovation and modernisation, as well as in the infrastructure sector, industrial/manufacturing sector, real estate sector, services sector and related activities. It also refinances NBFCs/HFCs in the form of rupee loans, corporate loans, subscription to equity/debentures, refinancing of loans, takeover financing, etc.”  Another feather in TFCI’s cap is that it can proudly take credit for the creation of many successful home-grown brands and chains of hotels in the country. It has successfully launched projects in the tourism sector, including Essel World, the first water sports complex at Goa, the first Dolphinarium near Chennai, Indian Railways’ ultra-luxurious Palace on Wheels, the first meditation spa resort in the country, called Ananda in the Himalayas, etc. It has also undertaken restoration of old forts, palaces and monuments throughout the country. These include UmaidBhawan Palace, Devigarh Fort, KhimsarFort, JehanNuma Palace, just to name a few. 

 

THE FUTURE AHEAD
Anirban Chakraborty spoke at length about the future trajectory of the company. He pointed out that going ahead, the focus should be solely on product diversification, with an aim to bringing about overall efficiency in the system that would lead to better results for all the stakeholders. 
“We will try to leverage the sector expertise of travel and tourism and try to expand in other sectors in India. New avenues of growth and foray into sectors such as acquisition, financing, investment banking, MSME segment area are also in the pipeline,” Chakraborty says, adding that TFCI is also going through a transformation. The company is planning to restructure its workforce. “We are investing in new resources and focussing on building a new leadership team, along with strong experience to drive growth.” 

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