|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 950.00 | ACUITE A+ | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 159.74 | ACUITE A+ | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 450.00 | Not Applicable | Withdrawn | - |
| Non Convertible Debentures (NCD) | 75.00 | PP-MLD | ACUITE A+ | Stable | Reaffirmed | - |
| Total Outstanding | 1184.74 | - | - |
| Total Withdrawn | 450.00 | - | - |
|
Rating Rationale |
|
Acuité has reaffirmed its long-term rating of ‘ACUITE A+’ (read as ACUITE A plus) on the Rs. 950.00 Cr. bank facilities of Tourism Finance Corporation of India Limited (TFCI). The outlook is 'Stable'
Acuité has reaffirmed its long-term rating of ‘ACUITE A+’ (read as ACUITE A plus) on the Rs. 159.74 Cr. secured redeemable Non-convertible debentures issued by Tourism Finance Corporation of India Limited (TFCI). The outlook is 'Stable' Acuité has reaffirmed its long-term rating of ‘ACUITE PP-MLD A+’ (read as ACUITE Principal Protected Market Linked Debentures A plus) on the Rs. 75.00 Cr. principal protected market linked debentures of Tourism Finance Corporation of India Limited (TFCI). The outlook is 'Stable' Acuité has withdrawn the long-term rating on the Rs. 200.00 Cr. proposed non-convertible debenture issued by Tourism Finance Corporation of India Limited (TFCI) without assigning any rating. The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating is being withdrawn on account of request received from the company. Acuité has withdrawn the long-term rating on the Rs. 250.00 Cr. proposed secured redeemable non-convertible debenture issued by Tourism Finance Corporation of India Limited (TFCI) without assigning any rating. The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating is being withdrawn on account of request received from the company. Reason for rationale The rating continues to factor in TFCI’s long track record in financing tourism and other sectors, experienced management, resourceful promoters coupled with comfortable capital raising ability. The rating also takes into account its healthy capitalization with CAR levels of 59.01 percent coupled with low gearing levels of 0.90 times as on March 31, 2024 (CAR 62.65 percent and gearing 0.98 times as on March 31, 2023). The rating is, constrained due to TFCI’s high exposure to tourism and related sectors coupled with wholesale nature of portfolio. The rating is further constrained on account of modest asset quality. TFCI has witnessed rise in level of stressed assets (incl. GNPA and security receipts); stressed assets as a percentage to its earning assets rose to 7.67 percent as on Mar 31, 2024 from 7.14 percent as on Dec 31, 2023. Going forward, continued promoter support, ability to scale up/ diversify its business, contain slippages while maintaining operating metrics will be key monitorable. |
| About the company |
|
TFCI is a Delhi-based NBFC-ML, incorporated in 1989, as a Public Financial Institution (PFI) to cater to the financial needs of the tourism industry. The company is listed on Bombay Stock Exchange and National Stock Exchange. TFCI has seen change in promoter shareholding since September 2017 with IFCI Limited diluting its, stake, LIC reducing its stake and Redkite Capital Private Ltd.(Redkite) alongwith India Opportunities III Pte Ltd. (IOPL)& Tamaka Capital (Mauritius) Ltd.(TC) and Mr. Koppara Sajeeve Thomas joining as promoter/promoter group in March 2019. Thereafter, Redkite diluted its stake and was classified as public shareholder in July 2020, IOPL & TC exited as shareholders in September 2022 and Mr. Koppara Sajeeve Tomas has sold his stake in February 2024. Now, Mr. Koppara Sajeeve Thomas and his company Pransatree Holding Pte Ltd. have requested for reclassification as public shareholder subject to regulatory approval.
As on March 31, 2024, Life Insurance Corporation of India, the Oriental Insurance Co. Ltd., as promoters & Pransatree Holdings Pte. Limited as promoter group, hold 8.04 percent stake in the company. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone financial and business risk profile of TFCI to arrive at the rating. |
| Key Rating Drivers |
| Strength |
| Established track record of long term funding; moderate business volumes along with gradual efforts to diversify into other sectors
TFCI is promoted by Life Insurance Corporation of India (LIC), the Oriental Insurance Co. Limited, and Pransatree Holdings Pte. Limited. Mr. Anoop Bali, Managing Director, is experienced financial personnel with over three decades of experience Credit appraisal, Monitoring & Recovery, NPA/Stressed Asset Management, Legal Matters, Risk Management, Accounts & Finance, Treasury and Resource Management, Corporate Advisory, etc. TFCI’s loan book stood at Rs. 1588.92 Cr. as on Mar 31, 2024 as compared to Rs. 1621.48 Cr. as on Mar 31, 2023. TFCI disbursed Rs. 762.71 Cr. during FY2024 as compared to Rs. 560 Cr. in FY2023. During FY2023-24, TFCI has also invested in Rs.90 crore in high yielding corporate NCDs and the outstanding investment was Rs.82.50 crore as on 31st March 2024. Acuité believes that TFCI will continue to leverage its established position, proven underwriting skills in financing and expertise of management to consolidate their position in the domestic lending sector. Prudent funding profile underpinned by low gearing and mix of medium term and long term borrowings TFCI’s gearing reduced to 0.9 times as on Mar 31, 2024 from 0.98 times as on Mar 31, 2023 and 1.36 times as on March 31, 2022. Networth of TFCI, mainly comprised accumulated reserves and stood at Rs. 1089.62 Cr. as on March 31, 2024 from Rs. 1017.10 Cr. as on March 31, 2023. TFCI's Capital adequacy ratio has slightly reduced to 59.01 percent as on Mar 31, 2024 from 62.66 percent as on Mar 31, 2023 (March 31, 2022: 54.59 percent), with Tier-1 at 58.46 percent, providing enough headroom to scale up its loan book. Since most of TFCI’s assets are long term loans, TFCI’s borrowing profile is largely constituted of medium to long term borrowings. The total borrowings stood at ~Rs. 978 Cr as on Mar 31, 2024. The company has a positive mismatch in asset liability mismatch statement as on Mar 31, 2024. The bank borrowings contributed ~60 percent and the rest is funded through other capital market instruments. Notwithstanding the wholesale lending, TFCI continued to be conservatively geared and has adequate headroom to meet near term business requirements. |
| Weakness |
| Modest asset quality
TFCI’s loan book comprises long term loans (including project loans) majorly to tourism and tourism related sector having sectoral exposure of ~61% and 39% in other sectors. Since these loans are usually for activities such as the construction of hotels, etc. the average ticket size is high with individual exposures going beyond Rs. 75 Cr in certain cases. TFCI's loan book is highly concentrated to company’s top 20 borrowers. Given that wholesale exposures are chunky in nature, slippages in few accounts can lead to significant asset quality deterioration. GNPA of TFCI remained moderate though improving from 3.92 percent as on March 31, 2023 to 2.75 percent as on Mar 31, 2024 and NNPA was 1.51 percent as on Mar 31, 2024 on account of selling off of two accounts to ARC. TFCI’s stressed assets as a percentage to its earning assets increased to 7.67 percent as on Mar 31, 2024 from 7.14 percent as on Dec 31, 2023. While Acuite takes cognizance of TFCI’s asset quality stress, the company is expecting resolution of few high ticket stressed assets during FY2025 which might ease asset quality/ profitability pressures. TFCI has made provisions of Rs.19.69 Cr. for its Gross NPA that stood at Rs. 43.66 Cr. as on Mar' 24. Acuité believes that the ability of the management to curtail incremental slippages in asset quality and maintain the growth momentum in its loan book will remain key monitorable. Moderation in AUM TFCI has witnessed a down trend in its AUM in the past two years where total loan portfolio of TFCI declined to Rs. 1,588.92 Cr. as on Mar 31, 2024 from Rs. 1,621 Cr. as on March 31, 2023 and further from Rs. 1,834 Cr. as on March 31, 2022. The decline in AUM was majorly on account prepayment of loans. This in-turn has affected their top line and the company has seen a decline in its Interest Income and Net Interest Income in FY2024. The exposure of TFCI is mostly associated with established and reputed brands, which partly mitigates the risk. Any further slowdown in economic activities will impact the business, thereby affecting the cash flows of borrowers and impeding their ability to meet their commitment in a timely manner. |
| ESG Factors Relevant for Rating |
| Tourism Finance Corporation of India Limited (TFCI) belongs to the Non-Banking Financial Companies (NBFC) sector which complements bank lending in India. Some of the material governance issues for the sector are policies and practices with regards to business ethics, board diversity and independence, compensation structure for board and KMPs, role of the audit committee and shareholders’ rights. On the social aspect, some of the critical issues for the sector are the contributions to financial inclusion and community development, sustainable financing including environmentally friendly projects and policies around data privacy. The industry, by nature has a low exposure to environmental risks. TFCI has maintained adequate transparency in its business ethics operations as it can be inferred through its disclosures regarding its policies on related party transactions, vigil mechanism, grievance redressal committee and whistle blowing. Additionally, the company has defined a Code of Conduct to deter wrongdoings and to promote ethical practices. The company’s board has six directors out of which three are independent directors and one female director. The Audit Committee of the board comprises four directors, majority of whom including the Chairman are independent. TFCI has adequate transparency with respect to its shareholders rights, which can be inferred by way of its disclosures in this respect. Since TFCI is engaged in funding tourism infrastructure projects, it needs to formulate policies to invest in green and sustainable projects and also have a negative screening mechanism in its credit policy. Further, it also needs to assess its lending portfolio from an ESG perspective. As regards the social factors, the projects financed by TFCI are expected to boost tourism in the country and generate employment in the sector. |
| Rating Sensitivity |
|
| Liquidity Position |
| Adequate |
| As per the asset liability management statement as on Mar 31, 2024, TFCI has positive cumulative mismatch in near to medium term bucket. TFCI maintained unencumbered cash balance of ~Rs. 33.55 Cr. and has liquid investments of ~Rs 233 Cr. as on March 31, 2024 |
| Outlook: Stable |
| Acuité believes that TFCI will maintain a 'Stable' outlook over the medium term supported by its established presence in the wholesale finance along with demonstrated ability to grow its AUM while maintaining healthy asset quality. The outlook may be revised to 'Positive' in case of higher than expected growth in AUM while maintaining key operating metrics, asset quality and liquidity. The outlook may be revised to 'Negative' in case of any headwinds faced in scaling up of operations or in case of any challenges in maintaining its asset quality, profitability metrics and capital adequacy parameters around existing levels |
| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
|
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm |
| Note on complexity levels of the rated instrument |
| In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in. |
|
| |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Contacts |
|
|
|
About Acuité Ratings & Research |
