Financial performance analysis of tourism finance corporation of India limited

Abstract

Introduction Travel and tourism has acquired an unparalleled position worldwide. Tourism is the industry of this century. This smokeless industry’s vast capacity to support the economy, generate employment opportunities and many other unique features makes it stand out from other industries. Countries all over the world have acknowledged the importance of tourism and its scope in the development of a nation. India has yet to realise its full potential from tourism. The Travel and Tourism industry holds tremendous potential for India's economy. It can provide impetus to other industries, create millions of new jobs and generate enough wealth to help pay off the international debt. That is why we have included Tourism amongst the Core Sectors of the Indian Economy. A striking feature of Indian tourism is the average length of stay of foreign tourists in the country. The estimated average length of stay for tourists is 31 days, which is extraordinary when compared to international average. The long length of stay indicated the character of the average foreign visitor as serious minded and exploratory; vindicating the fact that India has a vast variety of offer to the tourists. The Government of India has extended the benefits of Section 10(23G) of the Income Tax Act, 1961 to institutions financing hotels of three-star category and above. A top-level executive of Travel Finance Corporation of India (TFCI) is all smiles as he says, "This has benefited TFCI as the company has a major part of its portfolio in the exempted category." And this smile is now strongly percolating down to all tourism industry players in the country. In India the first financial institution was established in 1948 i.e. Industrial Finance Corporation of India Limited (IFCI) and this was followed by the establishment of State Financial Corporations, Life Insurance Corporation, Industrial Development Bank of India (IDBI), Unit Trust of India (UTI), Industrial Reconstruction Corporation of India (IRCI) and Tourism Finance Corporation of India Limited (TFCI) to finance medium and long term credit to medium and large scale industries. With the specified, purposive and directional efforts made by Government of India and RBI, Financial Institutions were emerged and in present era, we have a very authentic and wide network of Financial Institutions. But the problem faced by Tourism Sector was still same, i.e., those financial institutions didn’t give much importance to tourism and tourism related projects and this sector had given less priority by financial institutions till that time and main emphasis was given to Industrial development in Country due to which tourism sector suffered adversely and Financial institutions used to show less interest in providing the long term finance as well as promotional services to tourism Industry. This type of impersonal attitude adopted by financial institutions created serious challenges to Tourism Industry. This was resultant into under development of this sector. Recognizing this vital role of finance in overall industrial development and tourism promotion, the Government of India decided to establish a specialised tourism financial institution to cater the financial requirements of the fastest growing travel and tourism industry. Therefore on 27 January, 1989 the Government of India established Tourism Finance Corporation of India Limited to provide financial assistance to the travel and tourism industry in the country. The present study is focusing towards the financial appraisal of the financial institution which established to provide the finance to a specific sector (tourism). The analysis is done by financial statement analysis Objectives Of The Study The present study is conducted to achieve the primary objective of appraising the financial performance of Tourism Finance Corporation of India Limited during the period of 1995 to 2009. Otherwise, the secondary objectives to carry out the study are as follows: