Ladies & Gentlemen,

It gives me immense pleasure in welcoming you all on behalf of the Board of Directors of Tourism Finance Corporation of India Ltd., to this 22nd Annual General Meeting of your Company. The Report of the Directors and the audited results for the year ended March 31, 2011 have been with you for sometime; with your permission, I shall take them as read.

I am delighted to be addressing this august gathering and sharing my views on the industry scenario and discussing the highlights of your Company.

Operating Environment:

Our economy in the financial year 2010-11 represented a mixed outcome of growth while facing the challenge of high inflation. India’s GDP growth for 2010-11 has been recorded at 8.5%, against estimated  growth of 6.6% for 2011-12. The fiscal deficit has been reduced to 4.7% in 2010-11 lower than the revised estimates of 5.1%. The first two months of the current fiscal, saw exports registering a growth of around 45% against a growth of 33% in imports. The wholesale price index based inflation has remained high in 2011 and with further hikes in oil prices not ruled out, it is expected to remain elevated at least for some more time. RBI in its latest policy announcement in July 2011, raised the repo and reverse repo rates by a further 50 basis points to 8.00% and 7.5% respectively. The pace of industrial activity has been slowing due to the impact of past monetary policy actions and higher input prices. External demand too may slow if global recovery slackens. Inevitably, the progress of the monsoon, inflation and the consequential impact on interest rates and domestic demand will all have a major bearing on India’s economic growth prospects in 2011-12.

Tourism Industry :

The hotel and tourism industry’s contribution to the Indian economy by way of foreign direct investments (FDI) inflows were pegged at US$ 2.35 billion between 2000 to 2011, according to the Department of Industrial Policy and Promotion (DIPP). Further, the major global hospitality chains are expected to expand their  foot prints in India which will envisage investment of over US$ 11 billion by 2012.

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 traveler now accounts for nearly 74% of the total demand (across all segments) and 53% of the luxury segment. Affordable flights 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. Foreign tourist arrivals to India are forecasted to grow at a rate of 9% - 10% in the next few years.
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 cent per annum (p.a.) to US$ 76.65 billion (2 per cent of GDP) for 2011-2021 period.

Performance Highlights:

Your Company recorded a total income of  Rs.109.53 crore for the year 2010-11 and recorded a net profit of Rs.44.41 crore in 2010-11. The Capital Adequacy Ratio (CAR) of your Company stood at 50.74% as on 31st March 2011.

The total sanctions during 2010-11 were Rs.738.16 crore (previous year Rs.570.36 crore). The total disbursement during 2010-11 were Rs.378.75 crore (previous year Rs.293.28 crore).

Dividend:

On behalf of the Board I am pleased to inform that your Board of Directors has recommended a dividend @ 12% for the year 2010-11.

Corporate Governance Policies:

Your Company has an effective and transparent system of Corporate Governance driven by a professional Board. Your Company maintains high ethical standards in accounting and general governance, to stay in tune with its tradition of high quality and proud history. For this purpose the Company has in place systems for assessment and management of risks through a process of continuous monitoring. As in the past the Company has been proactive in conforming to statutory requirements and regulatory compliances. Your Company adopts transparent policies with an objective to enhance shareholders’ value in the long term.

It’s a continuous journey. We, in the Management Team, are conscious of what we have inherited and are dedicating ourselves to craft an organisation for the Next Century. I and my Team are putting together a concrete agenda to pursue this goal - deploying most modern technology, reskilling the employees, reaching out to the chosen markets and customers and continually innovating Business Models, constantly looking at, processes and structures to redesign them to modern day’s requirements to respond to the emerging needs of the tourism industry. 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.

Acknowledgements

I take this opportunity to express my thanks to all the shareholders for their continued trust in the Board and management of the Company. I would like to place on record our gratitude to the Government of India, various Ministries of the Central and State Governments. Departments, Reserve Bank of India, Securities Exchange Board of India, the All-India Institutions and the Banks for their  support and guidance  during the year and we look forward  to their continued support in the future.

I would like to conclude by commending the employee commitment and contribution which has been the cornerstone of the Company’s growth over the years. I am sure that TFCI in the coming years will continue to receive the inspiration, help and co-operation from all concerned, as has been hitherto. This would help the Company to grow still further in the years to come

Thank you,
(CHAIRMAN)
13th September, 2011
New Delhi