Brickwork assigns 'AA-' rating to Tourism Fina`s bond issue

Brickwork Ratings (BWR) has assigned "BWR AA-" with stable outlook and reaffirmed the outstanding ratings for the bond issues of Tourism Finance Corporation of India Limited (TFCI).

The rating "BWR AA-" stands for an instrument that is considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

The rating has factored, inter alia, TFCIs status as a development finance institution for the tourism industry, experience of the top management, strong capital position and low leverage, healthy asset quality and prudential accounting policies. The rating is constrained by the company's moderate scale of operations, reliance on wholesale funding, and concentration in the loan portfolio with high exposure to the tourism sector which is highly susceptible to the economic conditions.

BWR has essentially relied upon the audited FY12 Financials, projected financials, publicly available information and clarifications provided by the Company.

Tourism Finance Corporation of India Ltd. (TFCI) established in 1989, is a specialized All-India Development Financial Institution to provide financial assistance for development of the tourism industry.  TFCI has been notified as a Public Financial Institution under section 4A of the Companies Act, 1956. TFCI provides financial assistance for setting up of tourism-related projects, Hotels, Restaurants, amusement parks, multiplexes, amusement center etc. TFCI also provides high-quality research and consultancy services to central and state agencies, and investors for development of the tourism industry. Recently with a view to diversify its loan portfolio the company has also ventured into Infrastructure Financing.

TFCI's PAT increased 11.4% y-o-y to INR 49.5 crores for FY12, mainly on account of increased income from operations and write back of provisioning on account of recovery of bad debts. Income from operations increased 12.9% y-o-y to INR 121 crores. TFCI wrote back provisioning of INR 6crore in FY12 compared with provisioning write back of INR 13.5 crore in FY11. Asset quality is good with Gross NPAs at 0.41% and Nil NPAs at FY12. TFCI maintains good capital position with Total CAR of 40.47% and a Tier 1 capital ratio of 31.33% as of FY12.  Overall gearing is low at 3.03 times as of FY12.

Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.

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