IFCI has merely cut 2% stake in co: Tourism Finance

A: IFCI is not exiting out of this company, it is only a small stake which has been sold by IFCI but otherwise IFCI is going to retain that share what they are holding as of now.

Nigel: Can you confirm that they have sold roughly around 2 percent odd just in the last one month approximately and what is your holding currently in the company?

A: Yes they have sold off about 2 percent and present holding in the company is 40 percent.

Reema: Are you aware if they would look to sell some more stake even if they don’t completely exit?

A: No I don’t think that IFCI has any plans to exit and IFCI according to me will continues to hold this quantum of stake holding in the company.

Reema: Who are the buyers?

A: That I cannot comment, I think it has been sold in the market and buyers may be public at large.

Nigel: Last quarter your operating margins were roughly around 42 percent. I want clarity on a couple of costs, there is finance cost that is higher only by around 3 percent, you account for that in your operating performance itself. Also your provision for standard assets and doubtful debts, that is down from Rs 6 crore to around Rs 2 crore. Could you give us clarity on both these two items?

A: Yes I would say that as far as the provision is concerned we have made a provision of Rs 2 crore in this quarter and in the first quarter we had another provision of Rs 2 crore. Put together Rs 4 crore of provisions we have made in the first half. This is because the requirement of provisioning has not been much because our NPAs are quite under control and as of now also we are holding much more provisions than what is required according to the outstanding level of NPAs. We are as on date having less than 1 percent of net NPAs.

Reema: What were the total loans disbursed in this quarter as well as the margins?

A: Loans disbursed till now is Rs 237 crore approximately in the first half and our NIMs is about 3.65.

Reema: Generally we have seen a lot of deposit rate cuts, we have seen even if the base rate by the RBI is not changed, generally the interest rate in the system has been declining. What is your call on net interest margins in the coming two quarters?

A: Regarding this net interest margin in the coming two quarters, first of all I will say that we are reducing our base rate by 25 bps that is to make us more competitive because this year in the business model we are giving more thrust on the marketing of the new business and we have till now done more than 50 percent of what we have done in the last full year. We are hopeful that by the end of this year we will be able to have sanctions of almost Rs 1000 crore in this financial year. Looking at the base rate reduction of 25 bps, it is not going to affect us much because remaining 4.5 months, our total balance sheet size of Rs 1400 crore it is going to have an impact of around Rs 1 crore which comfortably we will be able to make much more than that with the growth in the top line of the company.

Reema: What does the base rate currently stand at and how much will it come down to?

A: We have base rate of 13 percent and we have reduced to 12.75 percent.

Reema: Your tax rate has been all over the place for this quarter, even with the first half of the year if I take the effective tax rate, it is down to around 23 percent and the total tax outgo as well for the first half of the year is down 28 percent if I look at it on an year-on-year basis. What is causing this fluctuation in tax rate?

A: That is because a component of our income this year we had which is on account of the sale of stocks where the tax is not applicable. So we had an income of about Rs 7 crore on which we are not to pay the tax so that is the reason the provision for the tax is slightly less than what it should be otherwise.