Informist, Monday, Apr 26, 2021

By Bhakti Tambe and T. Bijoy Idicheriah

MUMBAI – The resurgence of COVID-19 has all but snuffed out the brief spark of recovery in India's travel and hospitality sectors, but the government's latest push for vaccination has brought hope and the sector could be back to pre-pandemic levels in a year's time, says Anirban Chakraborty, managing director and chief executive officer of Tourism Finance Corp of India Ltd.  

"Once the present wave of COVID infections is controlled and large population is vaccinated, we expect that hospitality and travel sector to grow and reinvent itself," says Chakraborty in an interview to Informist. "...with the steps initiated to control it by treatment and vaccination, the sector should be back to pre-COVID levels by the end of this fiscal or latest by Apr-Jun 2022." 

Pinning his hopes on the availability of vaccine for all above 18 years from May, Chakraborty expects his company's loan book to grow 10-15% in the current financial year started this month. Tourism Finance primarily lends to the travel and allied sectors.

During Oct-Dec, the company's gross loan book grew 8.2% on year and 5.4% on quarter to 19.9 bln rupees. The non-bank lender is yet to declare its earnings for the March quarter.

Apart from the vaccination drive, he expects measures including liquidity support for non-bank lenders and inclusion of hospitality and travel sector in the implementation of Emergency Credit Line Guarantee Scheme to support growth.

Chakraborty says additional support could be considered through waiver of Goods and Services Tax and various licensing fees for at least a year to provide some further relief to the sector, which is among those worst hit by the pandemic.  

RECOVERY PATH
The travel sector's performance in the March quarter was almost similar to that of a year ago, the pre-COVID level. However, localised lockdowns and curbs on movement to tackle the sudden surge in COVID-19 cases since February are now likely to delay the sector's recovery, Chakraborty says.
After the impressive V-shaped recovery seen in the hospitality industry due to a pick-up in leisure and discretionary leisure travel in Oct-Mar, the initial expectation was that the performance will reach pre-COVID levels by Jul-Sep. This view needs to revisited now due to the surge in COVID-19 cases since March, he says.

The travel and hospitality sectors' recovery largely hinges on how well the rise in COVID-19 cases is controlled, and how quickly a large section of the population is vaccinated.

Asked about the likely impact of the delay in tourism sector's recovery on the company's performance, Chakraborty says Tourism Finance has done well despite the challenges. 

The company's disbursements during Apr-Dec were at 3.8 bln rupees. 

Disbursements in the year ago period were way higher at 4.4 bln rupees, but the figures are not comparable due to the extended nationwide lockdown early in the last fiscal. During Oct-Dec, the company made disbursements of 2 bln rupees, as against 1.4 bln rupees disbursed a year ago.

The company reported net profit of 240 mln rupees in Oct-Dec, 12% lower on year but 9.6% higher on quarter, showing a sequential improvement.

The managing director says Tourism Finance did not recast any assets under the COVID-19 one-time restructuring scheme, which suggests that most of its borrowers were less impacted or better able to withstand the hit caused by the pandemic.

ASSET QUALITY
Chakraborty says the company did not face any issues with repayments though a bulk of its customers come from the more affected micro, small and medium enterprises sector. This was on account of the MSME sector already being eligible under the Emergency Credit Line Guarantee Scheme, which helped manage short-term liquidity needs. 

As on Dec 31, the company's gross and net non-performing loan ratios were at 0.87% and 0.63%, respectively. These ratios would have been 3.49% and 2.52%, respectively, without the Supreme Court's stay order on asset classification, which has since been lifted.

He attributes the increase in bad loan ratio to one account that is in resolution under the Insolvency and Bankruptcy Code and the lender has already provided in excess of regulatory norms for the account. "Considering the ample security cover and interest for resolution by way of EOIs (expression of interest) received, we are confident of full recovery in the current fiscal." 

With capital adequacy ratio at 37.59% as on Dec 31 and tier-I capital at 36.80%, Tourism Finance is keen to look at growth opportunities on the inorganic front, with primary focus on buying loan pools.

"We are a growing organisation and hence are in continuous lookout of appropriate opportunities to grow our books both organically and inorganically... by inorganically, we mean portfolio buyouts," he says adding that his company remains open to mergers and acquisitions at an appropriate time.

On plans for diversification beyond tourism, Chakraborty said Tourism Finance has already entered the investment banking space through advisory, debt syndication, special situation funding and arranging private equity deals.

While the company is not looking at equity, the non-bank lender is actively in the process of raising growth capital through long-term instruments such as non-convertible debentures, term loans, portfolio refinancing and structured bond through intrinsic credit enhancement.

Shares of Tourism Finance today ended 1% lower at 58.10 rupees on the National Stock Exchange.  End

Edited by Maheswaran Parameswaran

Informist, Monday, Apr 26, 2021

By Bhakti Tambe and T. Bijoy Idicheriah

MUMBAI – The resurgence of COVID-19 has all but snuffed out the brief spark of recovery in India's travel and hospitality sectors, but the government's latest push for vaccination has brought hope and the sector could be back to pre-pandemic levels in a year's time, says Anirban Chakraborty, managing director and chief executive officer of Tourism Finance Corp of India Ltd.  

"Once the present wave of COVID infections is controlled and large population is vaccinated, we expect that hospitality and travel sector to grow and reinvent itself," says Chakraborty in an interview to Informist. "...with the steps initiated to control it by treatment and vaccination, the sector should be back to pre-COVID levels by the end of this fiscal or latest by Apr-Jun 2022." 

Pinning his hopes on the availability of vaccine for all above 18 years from May, Chakraborty expects his company's loan book to grow 10-15% in the current financial year started this month. Tourism Finance primarily lends to the travel and allied sectors.

During Oct-Dec, the company's gross loan book grew 8.2% on year and 5.4% on quarter to 19.9 bln rupees. The non-bank lender is yet to declare its earnings for the March quarter.

Apart from the vaccination drive, he expects measures including liquidity support for non-bank lenders and inclusion of hospitality and travel sector in the implementation of Emergency Credit Line Guarantee Scheme to support growth.

Chakraborty says additional support could be considered through waiver of Goods and Services Tax and various licensing fees for at least a year to provide some further relief to the sector, which is among those worst hit by the pandemic.  

RECOVERY PATH
The travel sector's performance in the March quarter was almost similar to that of a year ago, the pre-COVID level. However, localised lockdowns and curbs on movement to tackle the sudden surge in COVID-19 cases since February are now likely to delay the sector's recovery, Chakraborty says.
After the impressive V-shaped recovery seen in the hospitality industry due to a pick-up in leisure and discretionary leisure travel in Oct-Mar, the initial expectation was that the performance will reach pre-COVID levels by Jul-Sep. This view needs to revisited now due to the surge in COVID-19 cases since March, he says.

The travel and hospitality sectors' recovery largely hinges on how well the rise in COVID-19 cases is controlled, and how quickly a large section of the population is vaccinated.

Asked about the likely impact of the delay in tourism sector's recovery on the company's performance, Chakraborty says Tourism Finance has done well despite the challenges. 

The company's disbursements during Apr-Dec were at 3.8 bln rupees. 

Disbursements in the year ago period were way higher at 4.4 bln rupees, but the figures are not comparable due to the extended nationwide lockdown early in the last fiscal. During Oct-Dec, the company made disbursements of 2 bln rupees, as against 1.4 bln rupees disbursed a year ago.

The company reported net profit of 240 mln rupees in Oct-Dec, 12% lower on year but 9.6% higher on quarter, showing a sequential improvement.

The managing director says Tourism Finance did not recast any assets under the COVID-19 one-time restructuring scheme, which suggests that most of its borrowers were less impacted or better able to withstand the hit caused by the pandemic.

ASSET QUALITY
Chakraborty says the company did not face any issues with repayments though a bulk of its customers come from the more affected micro, small and medium enterprises sector. This was on account of the MSME sector already being eligible under the Emergency Credit Line Guarantee Scheme, which helped manage short-term liquidity needs. 

As on Dec 31, the company's gross and net non-performing loan ratios were at 0.87% and 0.63%, respectively. These ratios would have been 3.49% and 2.52%, respectively, without the Supreme Court's stay order on asset classification, which has since been lifted.

He attributes the increase in bad loan ratio to one account that is in resolution under the Insolvency and Bankruptcy Code and the lender has already provided in excess of regulatory norms for the account. "Considering the ample security cover and interest for resolution by way of EOIs (expression of interest) received, we are confident of full recovery in the current fiscal." 

With capital adequacy ratio at 37.59% as on Dec 31 and tier-I capital at 36.80%, Tourism Finance is keen to look at growth opportunities on the inorganic front, with primary focus on buying loan pools.

"We are a growing organisation and hence are in continuous lookout of appropriate opportunities to grow our books both organically and inorganically... by inorganically, we mean portfolio buyouts," he says adding that his company remains open to mergers and acquisitions at an appropriate time.

On plans for diversification beyond tourism, Chakraborty said Tourism Finance has already entered the investment banking space through advisory, debt syndication, special situation funding and arranging private equity deals.

While the company is not looking at equity, the non-bank lender is actively in the process of raising growth capital through long-term instruments such as non-convertible debentures, term loans, portfolio refinancing and structured bond through intrinsic credit enhancement.

Shares of Tourism Finance today ended 1% lower at 58.10 rupees on the National Stock Exchange.  End

Edited by Maheswaran Parameswaran