Tourism Finance Corporation of India Ltd Management Discussions

1. Global and Indian Economy

The world economy is projected to grow at 3.2 percent during CY 2024 and CY 2025, as per the forecast of the International Monetary Fund (IMF). The advanced economies are expected to grow at 1.7 percent in 2024 and 1.8 percent in 2025 while emerging market and developing economies expected to grow at 4.2 percent in CY 2024 and CY 2025. Indian economy was the fastest-growing economy of the world, with GDP growth of 7.2 percent in FY23, 7.6 percent in FY24, and expected growth rate of 7.0 percent in FY25.

Global inflation is forecast to decline steadily from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies.

deficit has come down to less than 1 percent of GDP, in FY24 on account of a lower merchandise trade deficit. Globally, Indias G20 presidency has demonstrated the countrys important role in advancing multilateral policy priorities.

The business environment in India is also being shaped by several social and demographic trends for example, the country has a young and growing population, with around half of the population under the age of 25. This youthful demographic is driving demand for a wide range of products and services and is also contributing to the growth of the countrys digital economy. Another important trend in the Indian business environment is the growing importance of sustainability and social responsibility. As the Indian economic and social development

India has undergone significant changes in recent years leading to a profound impact on the business landscape. The countrys economy has moved on after its encounter with the pandemic, staging a full recovery ahead of many nations and positioning itself to ascend to the pre-pandemic growth path. Indias economic growth also has been resilient against global headwinds, because of policy & regulatory support from government and gradual reinvigoration of private sector. Indian economy reached to USD 3.6 trillion in FY24 with agriculture, manufacturing and services having 14.5 percent, 17.2 percent and 54.7 percent share in GDP respectively. The CPI inflation has been 5.5 percent in FY24 which is expected to moderate to 4.5 percent in FY25.

Employment has surpassed the pre-pandemic level and, while the informal sector continues to dominate, formalization has progressed. The financial sector has been resilient strongest in several years and largely unaffected by global financial stress. The current account continues, there is increasing pressure on businesses economic and to consider social the environmental and social impacts of their operations. is leading to a growing focus on sustainability and corporate social responsibility, which is shaping the business landscape in several ways.

The other significant pointers of economy growth in FY24 were:

Moderation of consumer price inflation to 5.

Foreign Exchange Reserve reaching to the US$ 645 billion covering 11 months of imports.

GST collection crossing20 lakh crore.

Public sector spending on capital investment rising to 18 lakh crore.

Reduction in fiscal deficit to 5.8% of GDP.

Current account deficit remained in check at 1% of GDP.

Healthier banks and corporate balance sheets.

Large (97 crore) working age group population.

Significant exports.

1.1 Outlook for Indian Economy

The Interim Budget 2024-25 is focused on growth and job creation backed by stable macro-economic environment with increased capital investment by 11 percent to 11.11 lakh crore by FY25 to further shore up demand and consumption economy. The Government increased allocation for MSMEs, agriculture, education, healthcare, housing, and urban development. Continuous government reforms for trade liberalization, privatization, tax reforms, labour reforms are needed towards a balanced growth path and employment generation. the Marginal Indian economy is expected to reach to USD 7 trillion by FY31. India then will also be the third largest economy and an upper middle-income country. The rising per capita income (US$ 4500) will result in higher domestic consumption support discretionary spending. Capital spending, by both government & private, will shape countrys growth path alongwith productivity improvement. As per estimates, private sector will need debt of about 35 lakh crore to fund capex over next 6-7 years.

1.2 Government Initiatives

The Indian government is taking several measures to support economic growth and job creation in the country. One key area of focus is the expansion of public digital platforms, which can enhance efficiency and accessibility across various sectors. Additionally, initiatives like PM Gati Shakti, National Logistics Policy, and Production Linked Incentive Schemes are being implemented to boost manufacturing output and encourage investment. These measures reflect the governments commitment to fostering economic growth, creating employment opportunities, and strengthening various sectors of the Indian economy. Further, the measures would provide nstitutional framework for sustainable tourism, medical/wellness tourism, rural tourism, eco-tourism and adventure tourism in India.

1.3 RBI Monetary Policy

The Reserve Bank of India (RBI) in its monetary policy has kept repo rates unchanged at 6.5 in the percent. The RBI also retained GDP growth forecast of 7 percent for FY 2024-25, with June quarter growth at 7.1 percent, September quarter at 6.9 percent and in the third & fourth quarter at 7 percent each. This is lower than the 7.6 percent expansion estimated for FY24. The RBI MPC also Standing Facility (MSF) and left Standing Deposit Facility (SDF) rates unchanged at 6.75 percent and 6.25 percent respectively. While inflation is moving closer to target, the last mile of inflation is turning out to be challenging. As a result, the central bank has left and will Price Inflation (CPI) forecast unchanged at 4.5 percent.

2. Tourism and Hospitality Sector

The United Nations World Tourism Organisation (UNTWO) has predicted a resilient future for the tourism sector with recovery of the Asian markets, small and emerging destinations, increased air connectivity, increased employment opportunities communities on the economic contribution of tourism, measured in tourism direct gross domestic product (TDGDP) point to USD 3.3 trillion in 2023, or 3 percent of global GDP. Global occupancy rates in accommodation establishments reached 65 percent in 2023 slightly above 62 percent in 2022. The Middle East led recovery in relative terms as the only region to overcome pre-pandemic levels with arrivals 22 percent above 2019. Europe, which is also the worlds most visited region, reached 94 percent of 2019 levels, Africa recovered 96 percent of pre-pandemic visitors and America reached 90 percent. Asia and the Pacific reached 65 percent of pre-pandemic levels following the reopening of several markets and

The World Travel and Tourism Council (WTTC) predicts India is on the way of becoming the third-most influential market owing to factors like leisure travel, business travel and higher disposable incomes. Indian Governments vision is to become a USD 1 trillion tourism economy by 2047 and is focussing to enhance countrys tourism, cultural, economic and social richness by strategic tourism infrastructure development, destination fostering local entrepreneurship, complemented by robust global branding and marketing efforts.

The travel & tourism industry in India contributed to around USD 199 billion to the countrys GDP in 2023 experiencing a remarkable revival marked by escalating hotel prices, soaring airfares and increased travel expenditures which translated into a promising year for tourism and hospitality. The remarkable growth can be attributed to domestic corporate & leisure demand, considerable recovery in foreign tourist arrivals, thriving landscape of meetings, incentives, (MICE) events, increased hosting of major sports events, and burgeoning destination of rail, road and air connectivity besides the desire to travel to lesser-known tourist locations of the country significantly contributed to growth of domestic tourism in the country. The foreign tourist arrivals in India were ~9.24 million and domestic tourists were ~1930 million in CY23. The 149 airports in the country handled total airline passenger traffic of 190.6 million (Domestic:136 million & International:54.6 million) in CY23. India currently has inventory of 1.80 lakh branded hotel rooms, with about 44 percent in midscale & economy segment and balance 56 percent in luxury & upscale segment. The branded hotels in India achieved average occupancy of 68 percent and ARR of 7,400/- in CY23 as against average occupancy of 66 percent and ARR of 6,900/- in CY22. Consequently, the branded hotels average gross operating margin has improved in the range of 35 percent - 40 percent. The domestic corporate & leisure segment, major sports events, G20 Presidency, destination and MICE were the major demand generators for the Indian hospitality sector. India has also seen a notable surge in religious tourism, with destinations like Char Dham, Ayodhya Ram Temple, Kashi Vishwanath, Mahakal Temple, Tirupati Temple, Vaishno Devi Temple, and many other religious landmarks. The estimated flow of over 100 million religious tourists across India is adding to the growth of hospitality industry.

As per sectoral reports, ~ 45,000 room inventory has been signed by the hotel brands in CY23 and some of these have come under development. The new inventory is primarily coming up in Tier-II & III cities with limited supply growth in key cities. Besides, India is witnessing steep growth in branded homestay market of villas and/or bungalows, particularly at leisure locations. Investments in port & air connectivity, infrastructure projects, hospitality projects and tourism amenities shall not only stimulate domestic tourism and foreign tourist arrivals demand but also create credit opportunities for your company.

2.1 Hospitality Sector Future Outlook:

As per estimates, tourism & hospitality sector will show strong revenue growth of 9-10 percent per annum in the medium term. The demand generators for the hospitalityglobal travel sector would be domestic commercial & leisure, foreign commercial & leisure, MICE and social segments. Growing aspirations, affluence and willingness to spend are likely to support growth of hospitality & tourism sector. The demand for hotels is expected development,toexceed availableand upcomingsupply,which manpower development and will result in higher occupancy & ARR of hotels going forward. Major capex will be witnessed in the hospitality sector, particularly in emerging cities & tourist/religious locations. Indian Government vision is to promote sustainable, responsible, and holistic growth of tourism in the country. The growth in tourism & travel industry has to be led by Private Sector with enabling & facilitating role undertaken by the Government. IndiantourismvisionaimstoachievetourismGDP conferences, and exhibitions of US$248 Bn, Foreign Tourist Arrivals of 13Mn, DomesticTouristVisits of4BnandEmployment wedding market. A thumping growth Capability of 88Mn by FY31. India has about 1.80 lakh branded hotel rooms, which is miniscule as compared to branded hotel rooms in developed countries. Considering that India is aiming to become a large-developed economy, vast scope exists for the growth in hospitality sector. It is estimated that about 1 lakh branded hotel rooms might get added to inventory in medium term, which indicates that Capex in hotel sector will remain robust translating for your company.

3. Social Infrastructure outlook

Besides financing in tourism/hospitality sector, your company is actively providing financial assistance by way of term loans to social infrastructure projects in HealthcareandEducation,whicharegrowingsteadily weddings and offers ample financing opportunities. The social infrastructure in India is estimated to grow at a CAGR of approximately 7 percent during the period 2022-2027 and the planned investment in the segment over next five years is about 100 lakh crores. social infra sub-segments are as under:

3.1 Healthcare:

The Indian healthcare sector has become one of Indias largest sectors, both in terms of revenue and employment. It has experienced rapid change in recent years and has become significantly more visible over the last decade, with a renewed focus from the government and growing market demand for healthcare services and products. The Indian population is growing at a rate of 1.6 percent per year and has an elderly population of over 100 million. Rapid economic growth, rising middle-class incomes, and increased market penetration of health insurance providers are fuelling growth in the industry. In addition, changing demographics and a shift from chronic to lifestyle diseases have led to a boom in government healthcare spending across India.

The size of the Indian Healthcare Industry was 5.96 lakh crore at the end of March 2022 and is expected to grow by CAGR of 30.7 percent to be at par with global standards. This increase in market size is due to an increasing demand for specialized and higher-quality healthcare facilities. growth include hospitals, medical devices, clinical trials, telemedicine, medical tourism, health insurance, and medical and diagnostic equipment. The industrys rapid development is fuelled by large investments from existing corporate hospital chains and new entrants backed by private equity investors. The factors Indicating scope for further capex and growth include India having a low bed density of 1.5 on the population of 1000 persons as against the world average of 3 beds/1000 persons, Indian Expenditure on Healthcare is 3 percent of GDP as against 11 percent of the world. It is much lower from 19 percent of USAs GDP, population mix of 60+ will increase as Indias population become older. As expenditure in the Indian healthcare sector increases, corresponding growth in the medical equipment sector is anticipated

3.2 Education:

India has most extensive education systems in the world with 30.35 crore students, 0.95 crore teachers and 14.9 lakh schools & 0.56 lakh high education institutes/universities. Being worlds most populous a remarkable demographic advantage with a substantial every four individuals falls between the ages of 15 and 29, fuelling the demand for a highly skilled and capable workforce across a wide range of industries and sectors.

The governments implementation of the National Education Policy (NEP), 2020 marks a groundbreaking step towards reforming the Indian education system. The NEP focuses on curricular changes to build strong foundational skills with primary focus on holistic development of students. Further, it envisions making India a preferred destination and thus, promotes internationalization fostering collaborations and exchange programs between Indian and foreign institutions. On account of growing education and Govt. impetus on education, sector is projected to grow from USD 180 billion in 2020 to an impressive USD 313 billion in FY31. 100 percent FDI (automatic route) is allowed in the education sector in India.

Soon, foreign universities and higher education institutions may be allowed to set up physical campuses in India.

4. Real Estate Sector Outlook:

This sector contributes 7.3 percent of GDP and is the second highest employment generator in India, after Agriculture. The residential real-estate market witnessed robust sales of 4.92 lakh units (rise of 30 percent over last year) in FY24 with 20 percent y-o-y increase in new The products and services driving this launches. The Pan India inventory is at its lowest in last 10 years at 15 months. Government initiatives played a pivotal role in bringing transparency, instilling greater confidence in homebuyers and rise in adoption of tech and smart cities Estate. In FY2025, Real Estate is expected to continue the growth driven by both demand and supply in the industry. Real Estate is expected to contribute 13 percent of the countrys GDP from an existing share of 7.3 percent in next fiscal year. India Real-estate sector is expected to expand and reach USD 1 trillion by FY31.

5. NBFC (including MFI & HFC) Sector Outlook:

Over 9,000 NBFCs are registered with the RBI. The combined AUM under NBFCs was 40 lakh crore as on March 2023 including retail, MSME, infra and wholesale loans. The overall growth of NBFC sector has moderated to 13-15 percent in FY24 vis-a-vis the 16 percent growth witnessed in FY23. Retail credit (Personal & consumptions loans, MFI loans) contributes AUM of 14 lakh crore which has grown at 18- 20 percent in FY24 on account of high growth (27 percent CAGR in last 5 years) in unsecured retail loans. MFIs contributes 9 percent of retail credit. HFC retail AUM is 7 lakh crore (Home Loan & LAP) growing at the rate of 12- 14 percent. Infrastructure accounts for 24 percent, Wholesale 8 percent and Auto ~12 percent of total NBFC credit. The sectors future appears promising, youthpopulation. with a projected CAGR of 17.5 percent in medium term i.e. next five years. The sectors incremental fresh funding requirement is estimated at4.7-5.0 lakh crore for FY25.

6. Manufacturing/Industrial, Service Sectors Outlook: 6.1 Manufacturing/Industrial:

Propelled by growth in priority sectors and driven by favourable megatrends, Indias manufacturing sector has opened itself into new geographies and segments. India has become one of the most attractive destinations for investment in the manufacturing sector. Initiatives for higher education India, Digital India and Startup India have given the much-needed thrust to the Electronics System Design and Manufacturing (ESDM) sector in India. Manufacturing sector currently contributes ~17 percent of the GDP and employs ~ 20 percent of the workforce. The share of manufacturing is expected to increase to 20 percent of GDP by 2031. The annual growth rate of manufacturing is expected to increase to 9.1 percent in medium term i.e. next five years from current growth rate of 5.0 percent. The key drivers for growth in manufacturing are:

PLI Scheme (~ 2.2 lakh crore schemes) and of the industry increased competitiveness on account of investment in Roads & Logistics infrastructure.

Supply chain diversification beyond China

Expected Free Trade agreement with EU, UK, Canada & Australia (under negotiations)

Increased FDI in manufacturing sector in current decade compared to FY11- FY20.

Building on the competitive skilled workforce and lower cost of labour, the manufacturing sector is also witnessing an increased inflow of capex and heightened M&A activity, leading to a surge in manufacturing output and resultant increased contribution to exports. Major focus on technology driven sectors/products Semiconductors, Electronics, solar module manufacturing, Electric Vehicle and batteries, besides other industries.

6.2 Service Sector:

Service sectors significance in the Indian economy has been steady, with the sector now accounting for over 54 percent of the economy and almost four-fifths in India dominant in terms of GDP contribution ahead of manufacturing and agriculture and is also an important source of Foreign Direct Investments into the country. India is a unique emerging market in the globe due to its unique skills and competitive based services. The countrys service industry includes several markets, largely classified under financial and non-financial are one of the key contributors to services boosting the countrys GDP clocking higher than estimated demand and export of telecom and IT services, in addition to business services. The sector has the potential to open up a multi-trillion dollar opportunity that might stimulate symbiotic growth for all nations. Service providers in India continued to signal positive demand trends which underpinned a stronger increase in new business volumes and further job creation.

. Key Challenges across the Industry

While the opportunities landscape is promising, following threats could dampen the growth of financial services in India:

Though global economic activity is expected to grow at a stable pace, any downtrend in global growth rate may spillover slowdown in the country and financial services sector.

The prolonged geopolitical tensions and the tightening of monetary policy by advanced economies may heighten risk-off sentiments among foreign investors, potentially capital outflows from emerging markets such as India.

High domestic inflation and a wider Current Account deficit pose challenges to the countrys economic stability and could exert pressure on the IndianRupee,potentiallycausingdepreciation

The Indian finance sector operates within a dynamic regulatory environment characterized by evolving policies and frequent regulatory advantage of a changes. Uncertainties surrounding regulations, tax regimes, and compliance requirements pose challenges for businesses, hindering long-term planning and investment decisions. Achieving regulatory clarity and fostering a stable policy framework are imperative to foster investor confidence and sustain growth in the finance sector.

A longstanding challenge plaguing Indian Banks/ Financial Institutions/NBFCs is the burden of non-performing assets. High levels of NPAs weaken banks/institutions balance sheets, constrain lending capacity, and pose systemic risks to the financial sector. Resolving this challenge with financial institutions demands robust mechanisms of totalFDIinflows.Theservice sector for asset quality recognition, effective loan recovery framework, enhanced corporate governance and risk management practices.

The rise of fintech innovations traditional advantage created by knowledge-avenues for financial services delivery and enhancing customer experiences. However, this digital transformation brings inherent risks, segments. IT services including cybersecurity threats, data privacy concerns, and regulatory compliance challenges. Strengthening cybersecurity infrastructure, promoting collaboration between fintech firms and regulators, and implementing robust regulatory frameworks are essential to harnessing mitigating associated thebenefitsoffintechwhile risks.

The social infrastructure sector particularly healthcare and education requires continuous enhancement of skills and adoption of innovative technology to remain competitive. The manufacturing sector may find it challenging to stay competitive due to the intense competition, uncertainties of raw material prices, taxes/duties, technological innovations, etc.

The growth of the hospitality sector, manufacturing sector and real estate sector in the country may be hindered by a shortage of skilled and competent workers.

8. Performance

Your Company has been having satisfactory operational performance and financial indicators despite challenging market conditions in the past few years as detailed in para 3 of the Directors Report.

Considering the business environment and current domestic & global cues, the Board of Directors has approved Business Plan for your Company to ensure growth with optimum utilization achieve product and sectoral diversification stakeholders value. Your Company would focus on exploring credit opportunities across hospitality/tourism sector, social/urban Infra, manufacturing, real-estate sectors, NBFC, HFC & MFI for onward lending to MSE & housing segment and through secured co-lending opportunities with other established NBFCs/banks. In view of TFCIs expertise in the hospitality/tourism segment, lending to hospitality would continue to remain a thrust area for financing with emphasis on financing green-field implementation projects, brownfield projects, takeover/ refinancing/ upgradation projects, corporate financing to entities engaged in activities overall cash flows/ tourism-related long-term working capital requirements, structured finance, acquisition finance, special situation financing (turn-around cases) and ARC exit for cases facing bunching of repayments but having stable future cash-flows. a view to diversify the portfolio in other resilient/strong performing sectors, your Company would continue to seek lending opportunitiesin manufacturing, social-infra, real-estate with focus on residential income housing, finance companies viz. NBFC, HFC, MFI

& ARC sectors and co-lending with established NBFCs in secured MSE & LAP products besides fee-based tourism advisory business.

8.1 Events occurring after Balance Sheet date

No Significant of the financial year and date of the Boards report except allotment of equity shares and change in directors as detailed in the Directors Report.

8.2 Key financial ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, the Company is required to give details of significant changes (change of 25 percent or more as compared to the immediately previous financial year) in key sector-specific Company has identified the following ratios as key financial ratios: (Amount in crore)

Particulars	FY24	FY23
Net Interest Income	94.96	106.55
Other Operating Income	4.50	2.57
Net Profit (PAT)	91.11	87.95
Tangible Networth of the resources, and increase	1,074.85	1,001.32
Total Borrowings	983.04	1,004.73
Net Interest Margin (%)	4.58%	4.97%
Interest Coverage Ratio	2.15	2.22
	times	times
Debt Equity Ratio	0.91:1	1:1
RoAA (%)	4.39%	4.10%
RoAE (%)	8.78%	9.08%
projects, last-mile funding	for	under-
EPS()	10.08	9.73
Book value per share ( requirements of ) 118.94 operational 110.80

Your Companys PAT was 91.11 crore for FY 2023-24 as against PAT of 87.95 crore in FY 2022-23. The tangible networth of your Company increased to 1074.85 crore as on 31.3.2024 compared to 1001.32 crore in the previous year With and return on networth was 8.78% (previous year 9.08%). There has been no significant changes in the key sector-specific financial ratios.

9. Companys Outlook affordable/middle The strong domestic demand and increasing foreign tourist arrivals is projected to be the driver of growth in tourism sector in FY 2024-25. To meet the growing demand for tourism/hospitality, a sustained capital expenditure is envisaged, particularly towards addition of new hotels or upgradation events occurred between the end India. The social infrastructure sector viz. healthcare, education, affordable housing, solar power for homes is expected to grow steadily in FY2024-25. The real-estate sector is witnessing robust sales, new projects are being launched and the sector is expected to reach USD 1trillion by FY2030-31. The manufacturing sector is also showing promising trends in FY2024-25 due to Make in India, PLI and other Government initiatives. The NBFC/HFC segment is also moving deep to provide credit to unserved population and its incremental funding requirement is estimated 5 lakh crore in FY2024-25. Overall, the Indian Economy is well-positioned your Company is well-positioned to opportunities and achieve sustained growth.

9.1 Core Competencies:

Expertise in tourism specialized knowledge and experience in providing financial assistance and services for the tourism/hospitality industry in India. This expertise allows us to understand the unique needs and challenges of the sector.

In-depth knowledge in other sectors financing: TFCI has experience in providing financial assistance to social/urban infra viz. education, healthcare & affordable housing, real-estate, manufacturing, other resilient sectors and for onward lending to NBFC/HFC/MFI sector.

Extensive network and partnerships: TFCI has established a wide network of connections and partnerships with various stakeholders in the tourism and other sectors.Suchrelationshipsenhance managing risks while striving for sustained TFCIs ability to access resources, market intelligence, and opportunities for collaboration.

Diverse financial products: TFCI offers a range of financial products and services, including project loans, term loans, corporate loans, working capital loans, acquisition financing, refinancing, financing, special situation financing, etc.

9.2 Opportunities:

Growing tourism market: Indias tourism industry has shown consistent growth over the years, with increasing domestic and international travel. This presents an opportunity for TFCI to expand its customer base and provide more financial services to meet the rising demand.

Infrastructure development: The Indian government has been emphasizing the development of infrastructure, such as for growth and highways, expressways, rail network, on these airports, ports, power, water works, schools, colleges, hospitals, logistics, warehouses, etc. TFCI can leverage this opportunity by providing financing for such financing: TFCI has projects, contributing to the overall growth of Indian economy.

Technological advancements: The manufacturing and services sector is witnessing digital transformation which opens avenues for innovative financial solutions. TFCI can explore these opportunities to reach a broader lending customer base in these sectors.

The NBFC sectors annual growth is projected at ~17.5 percent in medium term which presents an opportunity for TFCI for lending and co-lending in this sector.

10. Risks and concerns:

The companys risk management philosophy and policy embody its commitment to understanding, measuring, and effectively growth of a healthy asset portfolio. To achieve this, the company adopts a leadership approach in products and segments that it thoroughly understands. In areas with higher risk, an innovative approach is taken, which involves limited exposure and optimizing returns. A robust credit risk framework is in place, enabling the company to scientifically assess the credit risk rating of clients. This framework includes the mapping of internal rating grades to external rating agencies grades, providing a comprehensive view of credit risk. The output of rating model plays a crucial role in the companys decision-making process. Furthermore, the company maintains portfolio regular distributionmonitoring acrossof low-risk, medium-risk, and high-risk categories. This monitoring helps ensure a well-balanced and diversified portfolio, enhancing risk management capabilities. Your Company has been managing the following risk effectively:

Type of Risk	Description	Mitigation
Credit Risk	Credit risk arises when a borrower or counterparty is unable to fulfill its contractual obligations. This risk extends beyond loans and encompasses various on and off-balance sheet exposures, including guarantees, acceptances, and investments in securities. project lending, inherent risks are present, particularly in developing economies where efforts toward long-term macroeconomic stability are still ongoing. Projects under implementation are susceptibleto potential delays and cost overruns, often influenced by factors beyond the borrowers control.	Your Company has established a Credit Policy that has been approved by the Board of Directors. This policy is developed after taking into account inputs from Senior Management. It outlines a comprehensive set of credit procedures and guidelines, aimed at facilitating effective credit risk management and maintaining a robust portfolio. The credit policy is reviewed annually and amended periodically to ensure compliance with guidelines of regulatory bodies. Your Company is actively engaged in the by conducting regular reviews and enhancing appraisal In the context of includes conducting sensitivity resilience to withstand potential changes. The Company also considers the expertise and experience of borrowers in dealing with adverse situations. Credit appraisal remains a top priority for your Company, and TFCI place significant emphasis an ongoing basis.
Operational Risk	The risk of loss arises from insufficient or ineffective identifying, assessing, mitigating,internal processes, personnel, and systems, as well as external events.	Operational risk business operations. and systems, or external, like natural disasters or regulations. The primary objective of ORM is to protect value creation and shareholder/stakeholder confidence by managing operational risks arising from business activities while seizing opportunities Operational Risk controls measures, systems and procedures across its business operations in commensurate with its complexity & nature to minimize operational disruptions and to includes adoption of well-defined delegation of power, segregation with dual check mechanism for authorisation of each transaction, regulation& their accountability, contingency of insurance coverage, data storage & its retrieval arrangements i.e making system operational integrity in case of some exigencies.
		The Companys controls over its business operationsare managed effectively by implementing well-defined policies & standard operating procedures
		The obligations of employees to conduct/perform the duties in compliance of Companys policies and as per standard operating procedures are well defined. The adequate supervision & reviews are undertaken on regular basis to ensure that the internal control systems are adequate to protect the Company against any business disruptions & losses.
		Recently Reserve Bank of India came out with guidance note on Operational Risk Management & Operational the Operational resilience of its regulated entities. TFCI is in process to implement guidance note of RBI on Operational Risks to further strengthen its ORM Framework.

 

Type of Risk	Description	Mitigation
Interest Rate Risk	Interest-rate risks arise out of mismatches between interest- rate-sensitive assets liabilities.	To manage such risks, your Company adopts a strategy of aligning lending interest rates with its average cost of borrowings. This approach helps in and maintaining a balanced and sustainable interest rate structure. Additionally, your Company diligently monitors the maturity pattern of its assets and liabilities. This proactive monitoring ensures a prudent management of cash flows and minimizes any potential maturity mismatch risks. By employing these measures, your Company strives to effectively its interest rate risks.
Liquidity Risk	Liquidity risk is the inability of a financialinstitutetomeetits Policy. This policy encompasses various risk management measures aimed at obligations without adversely affecting the financial condition liquidity in the short term. Furthermore, your Company emphasize sufficient	Your Company has implemented a robust Integrated Risk Management maintaining a healthy liquidity position. These measures include conducting astheybecomedue, short-term liquidity forecasts to identify and address any potential gaps promptly. Immediate actions are taken to correct such gaps and ensure the diversification of funding sources to enhance flexibility funding requirements. This diversification allows us to adapt to changing market conditions and mitigate liquidity risks. Additionally, maintaining strong capital adequacy is a key aspect of the risk management approach, providing a solid foundation to manage unexpected liquidity needs effectively. Through the diligent implementation of these measures, your Company aims to proactively financial position.
Compliance & Regulatory Risk	The risk of legal or regulatory sanctions, significant financial a robust framework that is closely monitored by the senior management loss, or damage to reputation arises when a company fails to comply with laws, regulations, rules, self-regulatory organization standards, and applicable codes of conduct.	To mitigate compliance and regulatory risk, your Company has established team. This framework incorporates various measures to ensure adherence to applicable laws, regulations, and standards. Your Company emphasizes coordination and clear communication among departments, particularly when there are inter-dependencies. This collaborative approach ensures that all departments are aligned in meeting their compliance obligations and effectively managing regulatory risks.

11. Discussion on financial performance/ Internal control systems and their adequacy:

The Financial and other operational performance of your Company has been discussed in detail in the Directors Report.

12. Material Developments in human resources/industrial relations front, including number of people employed

One of the most important and critical assets and foundation of the operations is human capital. Your Company strive to create a conducive environment for growth and development of the employees. The Financial Services sector heavily relies on the expertise and skills of its employees, making their role crucial in delivering high-quality services. Your Companys dedication to nurture and retain top talent, regular sponsorship of employees for training programs organized by professional institutions has been a priority. These programs aim to enhance skills and knowledge in various functional areas, ensuring that employees are equipped to excel in their roles. To ensure effective and timely client service, as well as consistent support to assisted units, facilitate efficient communication and follow- officesinDelhiandMumbai.Thesestrategic locations theCompanymaintains up with clients and units in these regions. As of March 31, 2024, the Company had a workforce of 35 employees including contractual employees. Their expertise and commitment contribute significantly to the Companys

13. Cautionary Statement

This document contains statements about expected future events, financialand operating results of the Company, which are forward looking. By its nature, forward-looking statements require the Company to make assumptions to inherent risks and uncertainties. There is a significant risk statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as several factors could cause assumptions, actual future results, and events to differ materially from those expressed in the forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward- looking statements based on any subsequent developments.