Don't see any impact from rate hike: Tourism Fin Corp

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Tourism Finance Corporation reported a jump in revenues to Rs 20.3 crore versus 16.6 crore for Q1FY11. The net profit was up at Rs 7 crore versus Rs 5.8 crore.

In an interview with CNBC-TV18, Archana Capoor, chairperson and managing director, Tourism Finance Corporation spoke about the company's Q1 performance and the road ahead.

Below is a verbatim transcript of the interview. Also watch the video.

Q: There has just been a rate hike. How does this impact you all? Are you expecting to see any increase in the cost of funds? How is your borrowing and lending rate going to go ahead from this?

A: I will say that the rate hike is not going to impact us much because already the market has taken up this matter and there has been a talk about a rise in interest rates. What we are more concerned about is what is stopping up the base rates because that component is going to be fixed and the base rate is a flexible rate, variable rate, which we need to observe that how banks quarterly are going to set their base rates. My borrowing is very much closely linked to that particular aspect. I think market has already taken up these rate hikes.

Q: Just to take that question forward. Since the change in the base rate regime has come underway, how much would that really impact your cost of funds?

A: Our cost of funds should come down because up till now the transparency regarding how my pricing was done was not there. But with the base rate I do understand, which corporate like me, can negotiate and ask for a price which was not available earlier.

In that case the base rate transparency would definitely help corporate lenders like us. It will bring down the cost. I don't see the cost going up.

Q: Just coming back to your numbers then. You have announced numbers this time around-24% growth in your revenues, your net profits too have grown by about 20%. Take us through how the quarter looked for you?

A: Basically, my incomes have improved over the years because quarter-by-quarter we would be improving and if you see the incomes have gone up by 24%. The result is coming there. We have been able to control the loan portfolios. There are no new NPAs. We have 100% provided for the old, which we had suffered during the years when the markets and the tourism sector was not doing well.

My net NPA's have come down to 3%. The balance sheet size has grown. Net is now almost zero and my balance sheet size is growing. So that is definitely impacting my income figures and the results are an effort of the theme. I would say that TFCI is now reaching to those clients, which used to think that TFCI could lend only to three star sectors.

Q: How have the disbursements looked this quarter around?

A: The disbursements have improved over the last quarter. I would not say tremendously but the figure is on the positive side. Always the first quarters in the year is always a lean period because of two reasons. The monsoons impact their construction and last year the tourism sector was in not in good shape and thirdly our new financial year starts.

Q: Could you give us a figure of the disbursement for this particular quarter and what your target is for FY11?

A: For FY11, it is more than Rs 300 crores and the quarter we have achieved more than 12% in this quarter.

Q: And just a word on your net interest margins (NIM) for this quarter?

A: The spread is around 3.8% and NIMs are little lower than that. So we have been operating in an area between 3-3.5% by controlling our cost.