Tourism Finance Corporation of India Ltd Management Discussions

I. Macroeconomic and Credit Business Segments Outlook

1. Global Economy

The global economic landscape underwent a significant shift in FY2025-26, driven largely by geopolitical tensions, policy uncertainty, persistent inflation and climate-related disruptions, all of which weighed on growth, investment and crossborder commerce. The International Monetary Fund estimates that global economic growth will moderate to 3.1% in CY 2026 from 3.4% in CY 2025, reflecting the impact of adverse trade policy changes and heightened geopolitical tensions. Although growth is expected to recover marginally to 3.2% in CY 2027, it is still likely to remain below the level achieved in CY 2025. Dissecting the global economic landscape, the advanced economies are projected to grow by 1.8% in 2026 and 1.7% in 2027, while emerging market & developing economies are expected to grow by 3.9% in 2026 and 4.2% in 2027. Global inflation in CY2026 is likely to remain high at 4.4% because of war-driven oil supply shocks. With easing of energy prices, global inflation may lower to 3.7% in CY2027, though disinflation will be uneven, faster in advanced economies and slower in emerging markets & developing economies due to persistent external and structural pressures.

FY2026-27 & FY2027-28, reflecting resilience of domestic demand and sustained public investment despite global economic uncertainties.

Indias nominal GDP is estimated at US$ 4.15 trillion in FY2025-26 with agriculture, industry and services accounting for 18%, 27% and 55% respectively of the total GDP, making it the 6th largest economy in the world. Although India had emerged as fourth largest economy during the fiscal, the temporary weakening of the Indian Rupee against the US Dollar has affected its nominal GDP ranking in US dollar terms, placing it behind the United Kingdom (US$4.26 trillion) and Japan (US$4.38 trillion). The average headline inflation dropped significantly touching a record low of 1.7% between April and December 2025 but it increased to 3.4% in March 2026 due to an uptick in food and fuel prices.

2. Indian Economy: India, in FY2025-26, emerged as the fastest-growing major economy in the world with GDP growth rate of 7.6% based on resilient domestic demand, strong public investment, healthy corporate & banking financial position, accelerating digitalization and continued structural reforms. While global geopolitical uncertainties, trade disruptions and commodity price volatility may moderate growth; however, IMF projects India among the fastest growing large economies in medium term. The Reserve Bank of India (RBI) has projected a GDP growth rate of 6.5% for

Indias growth has been shaped by a measured approach to economic liberalization and integration with the global economy. Consistent policy stability, alongside targeted initiatives such as production- linked incentives and efforts toward supply chain diversification, has strengthened the countrys appeal as an investment destination. Consequently, India continues to attract sustained interest from global corporations across a wide spectrum of sectors, including manufacturing, digital services, defence, space technology, semiconductors, and clean energy. With a significant proportion of the population in the working-age group, the country benefits from a growing consumption base and rapid adoption of digital technologies. Rural demand has shown encouraging signs based on normal to above-normal monsoon improving agricultural realizations and national rural employment guarantee scheme, strengthening rural incomes. Overall, Indias macroeconomic fundamentals remain robust, supported by stable domestic demand, prudent policy management and a clear reform orientation. These factors collectively position the country as a key driver of global growth, even as external uncertainties persist.

2.1 Outlook for Indian Economy

The Indian economy is expected to maintain its strong growth momentum in medium-term and transition from an emerging economy driven by consumption to a globally competitive investment & productivity led economy. Indias medium-term economic outlook remains favourable with average annual GDP growth rate normalizing between 6.5%-7% range, outperforming most major economies. The country is expected to become the worlds third-largest economy with GDP of around US$10 trillion by the early 2030s, laying the foundation for achieving developed economy aspirations by 2047. Manufacturing expansion & capabilities, improved infrastructure & services, digital transformation, employment creation, rising domestic consumption, fiscal prudence and continued policy reforms will be critical in countrys economic growth.

The Union Budget 2026-27, presented under the theme Yuva Shakti as part of the Viksit Bharat vision, outlines a comprehensive roadmap to accelerate economic growth, generate employment, strengthen manufacturing, promote rural prosperity and enhance Indias global competitiveness. The Budget marks a strategic shift towards a balanced Employment-Led Growth model while continuing to prioritize infrastructure creation and fiscal prudence. Key policy initiatives announced in the Budget include:

• Infrastructure and Capital Expenditure: Capital expenditure has been increased to Rs.12.22 lakh crore, equivalent to approximately 3.4% of GDP, reaffirming the Governments commitment to creating world-class infrastructure. The launch of Viksit Cities 2.0, with an allocation of Rs.50,000 crore, aims to strengthen urban governance, digital infrastructure and circular economy initiatives, including waste-to-energy projects.

• Technology and Energy Transition: The

Government has significantly strengthened its focus on technology-led growth through Semiconductor Mission 2.0, with an additional allocation of Rs.45,000 crore. Investments in green hydrogen, small modular nuclear reactors (SMRs) and renewable energy infrastructure are expected to accelerate Indias clean energy transition. A new Green Shipping Policy also aims to transition all major Indian ports to renewable energy by 2030.

• Employment-Led Growth: The Budget introduces an expanded Employment-Linked Incentive (ELI) scheme covering labour intensive sectors such as textiles, leather and construction. Companies expanding their workforce by over 10% annually will receive wage subsidies, while the Government aims to facilitate nearly two million apprenticeships annually in partnership with leading corporates.

• Taxation and Middle-Class Support: Continued tax rationalization under the new tax regime, the roadmap for GST 2.0, inflation-linked relief measures and the extension of the concessional 15% corporate tax rate for new manufacturing MSMEs until March 2028 are expected to strengthen consumption and support entrepreneurship.

• Fiscal Consolidation: The Government remains committed to fiscal prudence, targeting glide path for fiscal deficit of 4% or below in medium- term.

RBI continues to pursue a balanced monetary policy approach, reflecting its commitment to preserving macroeconomic stability and supporting economic growth amid evolving domestic and global economic conditions. RBIs policy framework provides for a stable interest-rate environment, supports credit growth, investment activity and financial system resilience while ensuring inflation remains aligned with its medium-term target. Such monetary policy stability is expected to strengthen business confidence and provide a conducive environment for sustainable economic expansion in medium-term.

3. Tourism and Hospitality Sector Outlook:

The global tourism surpassed pre-pandemic levels in CY2025, reaching 104% of CY 2019 levels globally. According to UN Tourism, an estimated 1.53 billion international tourist arrivals (overnight visitors) were recorded worldwide in CY 2025, representing an increase of 5% over CY 2024, or nearly 72 million additional international tourists. Total export revenues from tourism, including passenger transport, were estimated at US$2200 billion in CY 2025, reflecting 3% increase from CY 2024 and 6% above 2019 pre-pandemic levels. The global tourism and hospitality sector is likely to witness a cautious yet continued recovery as per projections by United Nations World Tourism Organization (UNWTO). Though the ongoing geopolitical tensions, including instability linked to the Middle East and Gulf region are likely to influence travel patterns, investor sentiment and regional performance across key markets, international tourist arrivals are expected to register a growth of around 4% in CY2026 as compared to CY2025. This outlook is driven by the continued recovery of Asia and the Pacific, and consistent growth in most other regions.

The travel & tourism sector in India contributed around US$231.6 billion (6.6%) to the countrys GDP and 42 million employments in CY2025. The World Travel & Tourism Council (WTTC) estimates that Indias travel & tourism sector is likely to contribute nearly US$467 billion to the countrys economy and support around 64 million jobs by 2035, underscoring its strong long-term growth potential. India is also now worlds third largest aviation market, with 164 operational airports which handled about 412 million passengers in CY2025. The aviation traffic is expected to increase to 665 million passengers by CY2031.

The Indian hospitality sector experienced strong growth in CY2025 with key demand generators for hotels were corporate, MICE, domestic leisure & wedding segments. Though the Foreign Tourist Arrivals at ~9.02 million in CY2025 were 9.4% lower than CY2024, the Domestic Tourist Visits were at ~4132 million reflected a surge by 40.2% compared to CY2024. Indias branded hotel sector continued its growth momentum during CY 2025, with the total branded room inventory reaching 2.16 lakh rooms following an addition of approximately 15,500 rooms during the year. Of the existing hotel room inventory, around 54% is concentrated in the luxury and upscale segments, 38% in the mid-scale segment, and the remaining 8% in the budget and economy segments. The branded hotel development pipeline & signings has expanded to an aggregate about 1.11 lakh rooms in the last two years and about 0.76 lakh room signings are expected in CY2026, which subject to timely project development will take the branded hotel inventory to nearly 4 lakh rooms by early 2030s.

During CY2025, the hotel demand grew by approximately 9.6%, which continued to outpace supply resulting in a demand-supply gap of around 8-9%. During CY 2025, branded hotels recorded an average annual occupancy of ~65% with Average Room Rate (ARR) of ~Rs.8,600 and Revenue per Available Room (RevPAR) of ~Rs.5,500, reflecting sustained demand and healthy operating performance across the organised hospitality sector. While Mumbai and Delhi NCR continued to anchor national occupancy and rate leadership; Jaipur, Pune, Chennai, Bengaluru & Ahmedabad recorded steady growth in occupancy and rates. With favourable demographics, increasing disposable incomes and expanding connectivity, the Indian hospitality sector is well-positioned for sustained growth in medium-term.

The Central Government vision is to promote sustainable, responsible, and holistic growth of tourism in the country. Strategic government initiatives, such as the Swadesh Darshan scheme, PRASHAD scheme, Dekho Apna Desh programme, e-Visa programme, enhanced regional connectivity through the UDAN scheme and improved road & rail infrastructure are expected to fuel growth in the tourism & hospitality sector. The Government has allocated Rs.2541 crore in the Budget 2026-27 for development of tourism sector aimed at enhancing infrastructure, skill development, and travel facilitation. The Union Budget has further proposed to develop 50 iconic destinations and 15 cultural heritage sites in partnership with states through a challenge mode, ensuring world-class facilities and connectivity. The overall public infrastructure capex is increased to Rs.12.2 lakh crores which will help improve the connectivity of various tourism spots. These initiatives will encourage greater investments in the tourism & hospitality sector, which would translate into credit opportunity for TFCI.

4. Infrastructure Sector Outlook

Indias infrastructure sector as a key driver of economic growth emphasizes the need for continued investment and focus on demographic expansion, urbanisation, integrated urban ecosystem development, multi-modal transport, digital infrastructure and modernization of existing assets to improve efficiency. India has consistently prioritized large-scale investment in infrastructure as a driver of inclusive progress and competitiveness, with the World Bank ranking it among the top five countries worldwide for job creation in infrastructure among low and middle- income economies. The countrys infrastructure sector market size estimated at US$206 billion in 2026 is expected to reach US$ 350 billion by 2030, growing at a CAGR of 9.57% during the forecast period. The Union Budget 2026-27 has emphasised on sustaining the momentum on infrastructure development by increasing capital outlay to Rs.12.2 lakh crore and announcing expanding public capital expenditure and introducing new measures such as the Infrastructure Risk Guarantee Fund and City Economic Regions in Tier-II & III cities, reinforcing infrastructure-led long-term economic growth and balanced urban development. As India continues to strengthen its infrastructure, it is focussing on several infrastructure sub-segments, as outlined below:

4.1 Renewable Energy

India ranks 3rd in the world for total renewable energy installed capacity at 283 GW (Solar Power: 150 GW, Wind Power: 56 GW; Bio Energy/Hydro: 68 GW & Nuclear Power:9GW), trailing only China and the USA. The Government of India has targeted to achieve 50% of cumulative electric power capacity from non-fossil fuel sources thereby reducing emission intensity by 45% by 2030. The Union Budget 2026-27 marked the largest-ever fiscal push for decentralized and specialized green energy, with allocation of Rs.32,914 crore towards new renewable energy development. The Government has set target of 500GW installed non-fossil or clean energy capacity by 2030, out of which solar & wind energy target is 300GW and 100 GW respectively. Further, Indias residential rooftop solar energy capacity is projected to cover above 10 million households with aggregate installed capacity of ~40GW under PM Surya Ghar Bijli Yojana by 2030 (with ~Rs.7,000 crore of capex required per 1 GW). Further, MSME in India holds an estimated 18-20GW of untapped rooftop solar potential. The captive solar investments in rooftop solar offer payback periods of 3-5 years, while falling module prices and innovative financing models are accelerating adoption across manufacturing and services sectors. Additionally, in the household segment, the PM Surya Ghar Yojana is driving growth in the residential rooftop solar market.

4.2 Healthcare

The Indian Healthcare industry continued its healthy growth, and is valued at approximately US$ 372 billion, currently on a trajectory to reach US$ 610 billion by 2030 driven by both the private sector and the government. The Indian healthcare sector is witnessing unprecedented growth, with private equity and venture capital investments. In the Union Budget 2026-27, the government has allocated Rs.1.06 lakh crore to the healthcare sector for the development, maintenance, and enhancement of the countrys healthcare system. As of FY26, the Indian healthcare sector is one of Indias largest employers, employing close to 9 million people. Progress in telemedicine, virtual assistants, and data analytics is expected to create 2.7-3.5 million new tech jobs. However, this represents only the beginning, as the sector is anticipated to experience substantial growth, with over 6.3 million additional jobs expected by CY30. India is among the global leader destinations for international patients seeking advanced treatment. Indian medical tourism market was valued at US$

20.4 billion in 2026 and is expected to reach US$ 65 billion by 2036. This reflects strong capex demand from healthcare segment resulting in credit opportunities for your Company.

4.3 Education

Education has always been a key priority for the Government which has laid out a vision to make India a global education hub. With a record allocation for school and higher education, emphasis is on digital learning, AI integration, and skill development. The Economic Survey highlights Indias education sectors growth, with a focus on expanding higher education institutions and achieving a 50% Gross Enrolment Ratio (GER) by 2035, while also emphasizing on foundational learning and digital education. The National Education Policy (NEP) 2020s vision is for a paradigm shift in the higher education system with emphasis on institutional autonomy for innovation. India has seen a dramatic rise in student enrolment which reflects in growth in number of schools, colleges, technical institutes and public/private universities. The Union Budget 202627 allocated Rs.1.39 lakh crore to the education sector out of which Rs.0.55 lakh crore is specifically allocated for higher education. This reflects strong capex demand from education sector.

Your company is actively providing financial assistance through term loans to infrastructure projects in renewable energy, healthcare, education & other resilient infra sub-segments. These segments have been witnessing a steady growth and offer ample financing opportunities.

5. Real Estate Sector Outlook

Indias real estate sector stands at a pivotal junction backed by accelerating urbanisation, deepening capital and evolving consumer preferences. The sector is the second highest employment generator in India, after agriculture, and contributes nearly 7.3% to the countrys GDP. Government initiatives, particularly implementation of the Real Estate (Regulation and Development) Act (RERA), have significantly enhanced transparency, strengthened regulatory oversight, and improved homebuyer confidence. Increased adoption of digital technologies across the sector has further supported market efficiency and demand. The real- estate sector is expected to grow at 9.63% CAGR in next five years and with residential segment (sales of Rs.6.65 lakh crore in FY2026) continuing as backbone of real-estate growth, largely driven by urbanization, middle class expansion, and housing demand. However, geopolitical tensions & its overhang and higher project launches have caused moderation in residential sales volume in Q4FY2026 and the pan-India residential inventory overhang has increased to around 18 months in FY2026 compared with 14 months in the previous fiscal. However, in medium-to-long term, real-estate is expected to contribute 13% of the countrys GDP and reach to a size of US$ 1 trillion by FY2030. The sector offers construction finance opportunities albeit with risk mitigation and structured financial controls.

6. Manufacturing/Industrial & Service Sectors Outlook

6.1 Manufacturing/Industrial

Indias manufacturing sector continues to emerge as a key driver of economic growth, supported by the expansion of priority sectors, favourable demographic and consumption trends, and policy-led reforms. The sector has diversified across new geographies and industries, further strengthening Indias position as an attractive global manufacturing and investment destination. Flagship initiatives such as Make in India, Digital India, and Start-up India have provided significant impetus manufacturing ecosystem and accelerated the development of a robust domestic manufacturing base. Moreover, Production Linked Incentive (PLI) Scheme, with an incentive outlay of Rs.1.91 lakh crore, represents a strategic reform initiative aimed at strengthening Indias manufacturing base. The manufacturing sector currently contributes ~18% of GDP and employs ~11-12% of the workforce. The share of manufacturing is expected to increase to 20%-22% of GDP by 2031. The manufacturing sector is also witnessing an increased inflow of capex, particularly in semiconductors, electronics, solar module manufacturing, electric vehicles & batteries, defence equipment, space equipment, leading to a surge in credit opportunities.

6.2 Service Sector

Indias services sector has been the steadily contributing to the Gross Value Added (GVA) with its contribution to total GVA at current prices increasing from 50.6% in FY14 to about 56.4% in FY26. The growth in the service sector, as measured by YoY change in the real GVA, has been above 9% in FY26 and has accelerated from a growth of 7.2% in FY25. The service sector also provides employment to approximately 30% of the workforce. Over the past six years (leading into 2026), the sector added approximately 40 million jobs, largely in the retail, healthcare, and IT-enabled services (ITeS) segments. India has solidified its position as a global hub for technology and professional services, attracting record-level foreign capital.

Services Exports reached an all-time high of US$ 387.5 billion in FY25 (13.6% YoY growth) and crossed US$ 348 billion in just the first ten months of FY26. Services exports now contribute roughly 10% to Indias GDP. Growth in the services sector is expected to remain robust, driven by healthy activity in financial, real estate, professional services, public administration, defence, and other services. In 2026, India emerged as the worlds seventh-largest exporter of services. Its share in global services trade has more than doubled from 2% in 2005 to 4.3% in 2026, reflecting a shift toward high-value professional and management consulting.

7. NBFC including MFI, HFC and ARC Sector Outlook

The Non-Banking Financial Company (NBFC) sector continues to play a pivotal role in enhancing financial inclusion and meeting the diverse credit requirements of MSMEs, infrastructure projects, retail borrowers and wholesale lending. About 9,000 NBFCs are registered with RBI with a combined AUM of approximately Rs.48.38 lakh crore, which are expected to witness a 10-13% growth over medium term. The Housing Finance Company (HFC) sector accounts for an aggregate AUM of around Rs.7 lakh crore and is expected to witness a growth of 10-12% over the medium term. The NBFC & HFC sectors incremental funding requirement is estimated at around Rs.5 lakh crore annually, reflecting sustained credit demand across key sectors of the economy.

India has 27 Asset Reconstruction Companies (ARCs) registered with RBI, having AUM of Rs.1.32 lakh crore. The stressed assets industry has evolved over the years in tandem with changing business landscape and regulations. Transition towards higher supply of retail bad loans and higher proportion of cash deals will drive growth strategies for the sector. The ARCs segment in India has registered a healthy growth over the last few years. ARCs primarily generate revenues through recoveries from acquired stressed financial assets, appreciation in investment value, management fees and recovery-linked incentives. In a significant regulatory development, the Securities and Exchange Board of India (SEBI) has permitted NBFCs, including HFCs, to invest in Security Receipts (SRs) issued by ARCs, thereby broadening the investor base and facilitating greater participation in the stressed asset market. The ARC business generally targets returns in the range of 18%-24%, commensurate with the underlying credit and recovery risks. Since ARCs have limited access to bank credit, this segment provides an opportunity to your Company to lend at higher yields.

II. Companys Performance & Outlook:

8. Performance

Your Company has maintained satisfactory operational performance and financial indicators, as detailed in para 3 of the Directors Report.

8.1 Events occurring after Balance Sheet date

No Significant events occurred between the end of the financial year and date of the Boards report 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 disclose details of significant changes, defined as a variation of 25% or more compared with the immediately preceding financial year, in key sector-specific financial ratios. Accordingly, the Company has identified the following ratios as key financial ratios for the period:

Particulars	FY26	FY25
Total Income	276.83	260.06
Net Interest Income	145.16	106.69
Profit Before Tax (PBT)	155.78	128.02
Profit After Tax (PAT)	123.46	103.81
Tangible Networth	1304.84	1207.28
Total Borrowings	1083.46	866.09
Total AUM & Investments	2336.80	1952.57
Net Interest Margin (%)	6.43	5.07
Gross Non-Performing Assets (%)	0.37	3.22
Net Non-Performing Assets (%)	Nil	1.61
Interest Coverage Ratio	2.68 times	2.29 times
Debt Equity Ratio	0.83:1	0.72:1
RoAA (%)	5.47	4.93
RoAE(%)	9.83	9.10
EPS(Rs.)	2.67	2.24
Book Value per share (Rs.)	28.18	26.08
Capital Adequacy Ratio (%)	55.53	69.70

During FY2026 the Indian economy witnessed strong growth, allowing our company to expand its total AUM by 23% to Rs.2088.14 crore. The net interest income (NII) for FY2026 grew by 36% to Rs.145.16 crore. The net interest margin (NIM) witnessed expansion to 6.43% in FY2026 from 5.07% in previous year. Your Companys PAT was

Rs.123.46 crore for FY 2025-26 as against PAT of Rs.103.81 crore for FY 2024-25, depicting 18.9% growth on y-o-y basis. The tangible networth of your Company increased to Rs.1304.84 crore as on 31.3.2026. compared to Rs.1207.28 crore in the previous year. The GNPA were contained at 0.37% and NNPA stood at Nil as on 31.3.2026. The CRAR stood at 55.53% as on 31.3.2026, much above the RBI mandated regulatory minimum of 15%. Further, your Company maintained surplus liquidity profiles in the form of HQLA to comfortably overcome any sudden systemic liquidity squeezes in the banking and debt markets.

8.3 External Credit Rating Upgrade

Your Companys long-term bank loans and Bonds/ NCDs ratings have been upgraded to AA-/ (Stable) by Infomerics Valuation & Ratings in March, 2026. Your Companys long-term Bonds/NCDs rating have been upgraded to AA-/ (Stable) by Brickwork Ratings in July, 2026. The upgrade underscores TFCIs strong capital & financial position, healthy asset portfolio and disciplined credit approach.

9. Companys Outlook

Business plan and growth approach: Considering the prevailing domestic and global economic and business environment, the Board of Directors have approved a Business Plan aimed at supporting growth through prudent resource utilisation. While TFCI will continue to maintain a diversified portfolio, it will leverage its long-standing expertise in the hospitality and tourism sector, which will remain a key focus area in FY2027. The Company will focus on financing greenfield projects, last-mile funding for projects under implementation, brownfield projects, takeover/refinancing opportunities, acquisition finance, corporate finance, structured finance and special situation funding. TFCI will also actively pursue lending opportunities in resilient and performing sectors such as manufacturing, healthcare, education, renewable energy, social infrastructure, warehousing, logistics and real estate, with particular emphasis on affordable and middle-income residential housing. TFCI will also extend lending for onward financing to NBFCs, HFCs and ARCs, and explore opportunities in structured credit, special situation credit, loan against property and lending against listed securities. TFCI will also engage in joint-lending and/or co-lending arrangements with banks and established NBFCs for secured MSE and LAP products. In addition to financing, TFCI will undertake fee-based activities in areas such as tourism advisory, corporate advisory and loan syndication. By combining financing with advisory capabilities, your Company is positioned to participate across multiple stages of project and enterprise development.

Your Company has adopted a measured diversification strategy by participating in Category- II Alternative Investment Funds (AIFs) registered with the Securities and Exchange Board of India (SEBI), to provide structured and growth-oriented credit to emerging and established businesses. Presently, TFCIs key AIF commitments include:

• Holystone TFCI Hospitality India Fund 1: Your Company is a co-sponsor of this hospitality- focused hybrid (equity & debt) fund and has committed to invest 5% of the target fund, subject to a maximum of Rs.25 crore.

• Certus TFCI Real Estate Fund: Your Company is an anchor investor in this real-estate debt fund and has committed to investing 10% of the fund corpus, subject to a maximum amount of Rs.50 crore.

• Oxyzo Credit Fund I: Your Company is an investor in diversified sectors debt fund and has committed maximum investment of Rs.15 crore.

The AIF investments are aligned with the Companys strategy of supporting medium-to-long term credit creation across high-growth sectors. These also complement the Companys expansion beyond tourism related infrastructure into broader areas of economic activity. Through selective participation in professionally managed AIFs, the Company aims to diversify its investment portfolio, strengthen income streams and support long-term value creation.

Your Company remains focused on systematic credit & investment growth across tourism and other sectors with prudent risk management.

9.1 Core Competencies

• Deep Industry Expertise: TFCI possesses specialized knowledge and extensive experience in financing-cum-advising Indias diverse tourism and hospitality sector, allowing it to truly understand the sectors unique credit requirements and challenges.

• Broad Sectoral Reach: Beyond tourism, TFCI have a proven track record of providing financial assistance to diverse sectors, including real estate, manufacturing, social and urban infrastructure (education, healthcare, affordable housing), renewable energy (solar and wind), logistics and other diverse sectors. TFCI also offers credit to NBFCs, HFCs for onward secured lending to MSE & retail segment, credit to ARCs for resolution-cum- value creation of stressed assets, loan against listed securities and properties.

• Robust Network & Partnerships: TFCI has cultivated a vast network and strong partnerships across tourism and other sectors. These relationships give us enhanced access to crucial resources, market intelligence and collaborative opportunities. These strategic partnerships, together with its growing associations and collaborations with Alternative Investment Funds (AIFs), banks, NBFCs and other financial institutions, provide the Company with enhanced access to quality business opportunities, market intelligence, diversified funding and co-investment platforms. This collaborative ecosystem strengthens TFCIs ability to originate and structure transactions, expand its business reach and deliver innovative financing solutions across diverse sectors.

• Comprehensive Financial Solutions: TFCI offers a wide array of financial products and services, including project loans, term loans, corporate loans, working capital loans, acquisition financing, refinancing, takeover financing, structured and special situation financing.

9.2 Opportunities

• Growing Tourism Market: Indias tourism sector continued to demonstrate strong growth, driven by rising domestic travel, a steady recovery in international tourist arrivals, and supportive government initiatives. This expansion offers a prime opportunity for TFCI to broaden its customer base and offer a wider array of financial services to meet the escalating demand.

• Infrastructure Development & Real Estate Development: The Government of India continues to accord high priority to infrastructure development through sustained investments in highways, expressways, railways, airports, ports, power, water supply, social infrastructure, logistics and warehousing. TFCI is well-positioned to capitalize on this by providing crucial financing for these projects, thereby contributing to Indias overall economic growth. Real estate is expected to contribute 15% of the countrys GDP by 2047, up from the current 7.3%. The growth shall be driven by emerging smart cities, rapid urbanisation, housing demand & supply gap and favourable home loan interest rates.

• Manufacturing: The manufacturing sector is in expansion-cum-modernisation mode, creating avenues for lending. The services sectors are undergoing a rapid digital transformation, creating new avenues for innovative financial solutions. TFCI can explore these advancements to reach a wider lending customer base within these evolving sectors.

• NBFC/HFC/ARC Sector Growth: The NonBanking Financial Company (NBFC) sector continues to register strong growth. This presents a significant opportunity for TFCI to expand its lending and co-lending activities within this sector. ARC sector is engaged in value creation by resolving stressed assets and generates return by way of fee & incentive in the range of 18%-24%. Since ARCs have limited access to bank credit, this sector provides lending opportunity to TFCI.

10. Risks and concerns

The Companys risk management philosophy and policy embody its commitment to understanding, measuring and effectively managing risks while striving for sustained growth of a healthy asset portfolio. To achieve this, the company adopts a leadership approach in products and segments that it thoroughly understands and collaborative approach in other diverse segments, based on a comprehensive credit risk evaluation matrix. Furthermore, the company maintains regular monitoring of portfolio distribution across 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 risks 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. In the context of project lending, inherent risks are present, particularly in developing economies where efforts toward long-term macroeconomic stability are still ongoing. Projects under implementation are susceptible to 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 identification of risks and factors by conducting regular reviews and enhancing appraisal techniques. This includes conducting sensitivity analysis and evaluating the projects 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 on intensive monitoring and supervision of projects on an ongoing basis.
Operational Risk	The risk of loss arises from insufficient or ineffective internal processes, personnel and systems, as well as external events.	Operational risk management (ORM) is the process of proactively identifying, assessing, mitigating and monitoring risks that disrupt/affect its business operations. These risks can be internal, such as people, processes 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 that they create.
		TFCI has put in place a sound Operational Risk Management framework in form of inbuilt strong internal controls measures, systems and procedures across its business operations in commensurate with its complexity & nature to minimize operational disruptions and to ensure business continuity & operational resilience.
		This includes adoption of well-defined delegation of power, segregation of duties with dual check mechanism for authorisation of each transaction, staff regulation & their accountability, contingency planning, ensuring availability of insurance coverage, data storage & its retrieval arrangements i.e. making system operational by backup data in real time basis while maintaining data integrity in case of some exigencies.
		The Companys controls over its business operations are 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 Resilience to further improve & strengthen the Operational Risk Management Framework and to enhance 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.
Interest Rate Risk	Interest-rate risks arise out of mismatches between interest- rate- sensitive assets and 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 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 manage and mitigate its interest rate risks.
Liquidity Risk	Liquidity risk is the inability of a financial institution to meet its obligations as they become due, without adversely affecting the financial condition	Your Company has implemented a robust Integrated Risk Management Policy. This policy encompasses various risk management measures aimed at maintaining a healthy liquidity position. These measures include conducting shortterm liquidity forecasts to identify and address any potential gaps promptly. Immediate actions are taken to correct such gaps and ensure sufficient liquidity in the short term. Furthermore, your Company emphasizes the diversification of funding sources to enhance flexibility in meeting the 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 manage liquidity risk and maintain a stable financial position.
Compliance & Regulatory Risk	The risk of legal or regulatory sanctions, significant financial loss, or damage to reputation arises when a company fails to comply with laws, regulations, rules, selfregulatory organization standards and applicable codes of conduct.	To mitigate compliance and regulatory risk, your Company has established a robust framework that is closely monitored by the senior management 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

To ensure efficient services across the country, the Company operates from offices in Delhi and Mumbai. Further, one of the most important and critical assets and foundation of the operations is human capital. Your Company strives 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 Company is dedicated to nurture and retain top talent and sponsors employees for relevant training programs organized by professional institutions. These programs aim to enhance skills and knowledge in various functional areas, ensuring that employees are equipped to excel in their roles. As of March 31, 2026, the Company had 46 employees and their expertise & commitment had a significant role in the satisfactory performance for the year.

13. Cautionary Statement

This document contains statements about expected future events, financial and operating results of the Company, which are forward looking. By its nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that the assumptions, predictions and other forwardlooking 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.