Auditor Report of Gujarat State Financial Corporation

Mar 31, 2025

We have audited the financial statements of GUJARAT STATE FINANCIAL CORPORATION
(‘the Corporation’), which comprise the balance sheet as at 31st March,2025 and the statement of
Profit and Loss and statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory
information.

In our opinion and to the best of our information and according to the explanation given to us,
except for the possible effects of the matter described in Basis for Qualified Opinion paragraph, the
aforesaid financial statement give the information required by the Act in the manner so required and
give a true and fair view in conformity with accounting principles generally accepted in India of the
state of affairs of the corporation as at 31st March, 2025, and its loss and its cash flow for the year
ended on that date.

Basis for Qualified Opinion

a. The financial statements of the corporation are prepared on a going concern basis,
notwithstanding the fact that its net worth is completely eroded and defaulted in repayment
obligations due to liquidity problems. This is not in accordance with Accounting Standard
(AS) - 1 “Disclosure of Accounting Policies”. The effect of the same on the financial
statements is not ascertainable.

b. Dues payable to Government of Gujarat is subject to confirmation and adjustment, if any,
required upon such confirmation. Pending such confirmation, the effect thereof on interest
and penal interest is not ascertainable.

Information other than the financial statements and auditors’ report thereon

Management is responsible for the preparation of the other information. The other information
comprises the information included in the Board’s Report including Annexures to Board’s Report
but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained during the course of our audit or otherwise
appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this
other information; we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone
Financial Statements

Management is responsible for the matters stated the preparation of these financial statements that
give a true and fair view of the financial position, financial performance and cash flows of the

Corporation in accordance with the accounting principles generally accepted in India, including the
Accounting Standards specified under section 133 of the Act. This responsibility also includes
maintenance of adequate accounting records in accordance with the provisions of the Act for
safeguarding of the assets of the Corporation and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting policies; making judgments and
estimates that are reasonable and prudent; and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from material misstatement, whether
due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Corporation’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Corporation or to cease operations, or has no realistic alternative but to do so.

Those management is also responsible for overseeing the Corporation’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances. We are also responsible for expressing our
opinion on whether the corporation has adequate internal financial controls system in place and
the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Corporation’s ability to continue as
a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Corporation to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.

Reports on Other Legal & Regulatory Requirements

a. We have sought and, except for the matters described in the Basis for Qualified Opinion
paragraph, obtained all the information and explanations which to the best of our knowledge
and belief were necessary for the purpose of our audit;

b. Except for the possible effects of the matter described in the Basis for Qualified Opinion
paragraph above, in our opinion proper books of accounts as required by law have been kept
by the Corporation so far as appears from our examination of those books.

c. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this
Report are in agreement with the books of account;

d. Except the possible effect of the matter described in the Basis for Qualified opinion
paragraph, in our opinion, the aforesaid financial statements comply with the Accounting
standards issued by ICAI.

e. Based on our examination carried out in accordance with the Implementation Guidance on
Reporting on Audit Trail under Rule 11(g) of the Companies (Audit and Auditors) Rules,2014
(Revised 2024 Edition) issued by the Institute of Chartered Accountants of India, which
included test checks, we report that the company has used an accounting software for
maintaining its books of account which has a feature of recording audit trail (edit log) facility
and the same has operated throughout the year for all relevant transactions recorded in the
software. Further, during our audit we did not come across any instance of audit trail feature
being tampered with. Additionally, the audit trail has been preserved by the company as per
the statutory requirements for record retention. Our examination of the audit trail was in the
context of an audit of financial statements carried out in accordance with the Standard of
Auditing and only to the extent required by Rule 11(g) of the Companies (Audit and Auditors)
Rules,2014. We have not carried out any audit or examination of the audit trail beyond the
matters required by the aforesaid Rule 11(g) nor have we carried out any standalone audit or
examination of the audit trail.

For and on behalf of

M/s Pankaj R. Shah & Associates

Chartered Accountants

(Registration No. 107361W)

CA Nilesh Shah
Partner

Membership No. 107414
UDIN: 25107414BMGIRS7869
Place: Ahmedabad
Date : 27-05-2025

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Mar 31, 2024

We have audited the financial statements of GUJARAT STATE FINANCIAL CORPORATION (‘the Corporation’), which comprise the balance sheet as at 31st March,2024 and the statement of Profit and Loss and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanation given to us, except for the possible effects of the matter described in Basis for Qualified Opinion paragraph, the aforesaid financial statement give the information required by the Act in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India of the state of affairs of the corporation as at 31^st March, 2024, and its loss and its cash flow for the year ended on that date.

Basis for Qualified Opinion

a. The financial statements of the corporation are prepared on a going concern basis, notwithstanding the fact that its net worth is completely eroded and defaulted in repayment obligations due to liquidity problems. This is not in accordance with Accounting Standard (AS) - 1 “Disclosure of Accounting Policies”. The effect of the same on the financial statements is not ascertainable.

b. Dues payable to Government of Gujarat is subject to confirmation and adjustment, if any, required upon such confirmation. Pending such confirmation, the effect thereof on interest and penal interest is not ascertainable.

Information other than the financial statements and auditors’ report thereon

Management is responsible for the preparation of the other information. The other information comprises the information included in the Board’s Report including Annexures to Board’s Report but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with

the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

Management is responsible for the matters stated the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Corporation in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Corporation and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.

Those management is also responsible for overseeing the Corporation’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detectinga material misstatement resulting from fraud is higher than for one resulting from error, as fraud mayinvolve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. We are also responsible for expressing our opinion on whether the corporation has adequate internal financial controls system in

place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Corporation to cease to continueas a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Reports on Other Legal & Regulatory Requirements

a. We have sought and, except for the matters described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion proper books of accounts as required by law have been kept by the Corporation so far as appears from our examination of those books.

c. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. Except the possible effect of the matter described in the Basis for Qualified opinion paragraph, in our opinion, the aforesaid financial statements comply with the Accounting standards issued by ICAI.

e. Based on our examination carried out in accordance with the Implementation Guidance on

Reporting on Audit Trail under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (Revised 2024 Edition) issued by the Institute of Chartered Accountants of India, which included test checks, we report that the company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during our audit we did not come across any instance of audit trail feature being tampered with. Additionally, the audit trail has been preserved by the company as per the statutory requirements for record retention. Our examination of the audit trail was in the context of an audit of financial statements carried out in accordance with the Standard of Auditing and only to the extent required by Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014. We have not carried out any audit or examination of the audit trail beyond the matters required by the aforesaid Rule 11(g) nor have we carried out any standalone audit or examination of the audit trail.

For and on behalf of M/s Pankaj R. Shah & Associates Chartered Accountants (Registration No. 107361W)

CA Nilesh Shah Partner

Membership No. 107414 UDIN: 24107414BJZXAN1666 Place: Ahmedabad Date : 28-05-2024

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Mar 31, 2014

We have audited the accompanying financial statements of Gujarat State Financial Corporation ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management Responsibility for the Financial Statements :

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility :

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our audit opinion.

Opinion :

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act and the State Financial Corporations Act, 1951 as amended by the State Financial Corporations (Amendment) Act, 2000 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

a) in the case of the Balance Sheet, of the state of affairs of the Corporation as at March 31, 2014;

b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on other Legal & Regulatory Requirements :

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that :

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

c) the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

e) on the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notifcation as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

SYSTEM OF ACCOUNTING, INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT

(I) The day to day transactions of the Corporation are recorded on cash system of accounting in order to account for income and expenses on mercantile basis, at the year end provisions are made for income and expenses on the basis of information and estimates available. (Refer note no. A (2) (a) of Note (16).

(II) The value of securities under possession is accounted on realization instead of adjusting at the time of writing off bad debts. (Refer note no. A (2) (d) of Note (16).

(III) The Corporation has incurred cash losses during the year and in the immediately preceding 5 years. For the time being it has discontinued the business of lending and due to the liquidity problems defaulted in repayment obligations and its networth is completely eroded. Inspite of that accounts of the Corporation have been prepared on going concern basis (Refer note no. A (1) of Note 16) which is not in accordance with AS-1 "Disclosure of Accounting Policies", where in one of the fundamental accounting assumption is going concern, and since the quantifcation of the same on realization and settlement basis is not done, it is not possible to ascertain its impact on Profit and loss and balance sheet of the Corporation.

(IV) As per information given by the management, details of default position as on 31-03-2014 are as under :

Principal Interest & Total Default Default Penalty default

Loan from Government Rs. 4,618,083,000 Rs. 11,435,682,000 Rs. 16,053,765,000 Guarantee fees payable - - Rs. 35,60,39,833

(V) Reconciliation of General Ledger and Subsidiary Ledgers :

Refer Note No. B (4) Note 16, regarding non reconciliation of the general ledger balances with the balances of the subsidiary ledgers and differences of Rs. 9,28,746/- found. In few cases, credit balances are also disclosed in the accounts. Hence, we are unable to express our opinion as to correctness of these balances.

(VI) Fixed Assets :

(a) (Refer Note No. A (3 & 4) of Note 16) Till year ended on 31-3-2002, in case of disposal of fixed assets, the Corporation neither eliminated the assets from financial statements nor recognized gain or loss arising from disposal of fixed assets in Statement of Profit & Loss, which practice was contrary to the Accounting Standard 10 "Accounting for Fixed Assets" issued by ICAI. Due to this practice followed by the Corporation, both the gross block and the net block are over stated/under stated to the extent of loss/gain on disposal of assets. As a result, the depreciation provision during the year is also erroneous, which is not in accordance with AS-6 "Depreciation Accounting". In absence of suffcient information, effect of this practice on the value of assets and the correct depreciation is not quantifed by the management. Moreover, estimated life of assets is not ascertained by the Corporation hence correct depreciation could not be ascertained, hence due to the lack of details, quantifcation and its impact on the Profit and loss and balance sheet of the Corporation could not be ascertained.

(b) Corporation has not properly maintained the record of fixed assets to exhibit complete details of gross and net value, item wise original cost, accumulated depreciation and depreciation for the year including quantitative details and location of fixed assets.

(c) There is no Specific programme for physical verifcation of fixed assets as compared to the book records.

(VII) INVESTMENTS :

To fulfill its underwriting liability, Corporation acquired shares for Rs. 2,18,86,000/- of various companies which have not been disposed off, though the period of 7 years has been expired, that extent provisions of SFCs Act, 1951, have not been complied with.

(VIII) UNCLAIMED/UNPAID DIVIDEND :

There is an outstanding of Rs. 14,07,151/- in unclaimed and unpaid dividend account which should have been transferred to Investor Education and Protection Fund.

(IX) LOAN & ADVANCES AND NPA PROVISION :

The provision for NPA is subject to the note no. B (4) of Note 16, regarding non reconciliation of difference in general ledger balance and subsidiary ledger balance in the case of advances.

The effect of our observation in foregoing paras and consequential effect of the above on the Loss/Assets/Liabilities as on business ratios for Capital, asset quality and credit, liquidity, operating results and disclosure requirements of SIDBI has not been ascertained by the management and are subject to consequential adjustment.

Date : 29-05-2014 For Mahendra N. Shah & Co. Place : Ahmedabad Chartered Accountants FRN 105775W

Chirag M. Shah Partner M. No. F 045706

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Mar 31, 2013

We have audited the accompanying financial statements of Gujarat State Financial Corporation ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management Responsibility for the Financial Statements :

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility :

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion :

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act and the State Financial Corporations Act, 1951 as amended by the State Financial Corporation''s (Amendment) Act, 2000 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

a) in the case of the Balance Sheet, of the state of affairs of the Corporation as at March 31, 2013;

b) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on other Legal & Regulatory Requirements :

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

c) the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

SYSTEM OF ACCOUNTING, INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT

(I) The day to day transactions of the Corporation are recorded on cash system of accounting in order to account for income and expenses on mercantile basis, at the yearend provisions are made for income and expenses on the basis of information and estimates available. (Refer note no. A (2) (a) of Note (16).

(II) The value of securities under possession is accounted on realization instead of adjusting at the time of writing off bad debts. (Refer note no. A (2) (d) of Note 16).

(III) The Corporation has incurred cash losses during the year and in the immediately preceding 5 years. For the time being it has discontinued the business of lending and due to the liquidity problems defaulted in repayment obligations and its net worth is completely eroded. In spite of that accounts of the Corporation have been prepared ongoing concern basis (Refer note no. A (1) of Note 16) which is not in accordance with AS-1 "Disclosure of Accounting Policies", where in one of the fundamental accounting assumption is going concern, and since the quantification of the same on realization and settlement basis is not done, it is not possible to ascertain its impact on profit and loss and balance sheet of the Corporation.

(IV) As per information given by the management, details of default position as on 31/03/2013 are as under:

Principal Interest & Total Default Default Penalty default

Loan from Government 4,096,059,000 10,056,092,000 14,152,151,000

Guarantee fees payable - - 35,60,39,833

(V) Reconciliation of General Ledger and Subsidiary Ledgers :

Refer Note No. B (4) Note 16, regarding non reconciliation of the general ledger balances with the balances of the subsidiary ledgers and differences of Rs. 13,36,268/- found. In few cases, credit balances are also disclosed in the accounts. Hence, we are unable to express our opinion as to correctness of these balances.

(V!) Fixed Assets :

(a) (Refer Note No. A (3 & 4) of Note 16) Till year ended on 31.3.2002, in case of disposal of fixed assets, the Corporation neither eliminated the assets from financial statements nor recognized gain or loss arising from disposal of fixed assets in Statement of Profit & Loss, which practice was contrary to the Accounting Standard 10 "Accounting for Fixed Assets" issued by ICAI. Due to this practice followed by the Corporation, both the gross block and the net block are over stated/under stated to the extent of loss/gain on disposal of assets. As a result, the depreciation provision during the year is also erroneous, which is not in accordance with AS-6 "Depreciation Accounting". In absence of sufficient information, effect of this practice on the value of assets and the correct depreciation is not quantified by the management. Moreover, estimated life of assets is not ascertained by the Corporation hence correct depreciation could not be ascertained, hence due to the lack of details, quantification and its impact on the profit and loss and balance sheet of the Corporation could not be ascertained.

(b) Corporation has not properly maintained the record of fixed assets to exhibit complete details of gross and net value, item wise original cost, accumulated depreciation and depreciation for the year including quantitative details and location of fixed assets.

(c) There is no specific programme for physical verification of fixed assets as compared to the book records.

(VII) INVESTMENTS :

To fulfill its underwriting liability, Corporation acquired shares for Rs. 2,18,86,000/- of various companies which have not been disposed off, though the period of 7 years has been expired, that extent provisions of SFCs Act, 1951, have not been complied with.

(VIII) UNCLAIMED/UNPAID DIVIDEND :

There is an outstanding of Rs. 14,07,151/- in unclaimed and unpaid dividend account which should have been transferred to Investor Education and Protection Fund.

(IX) LOAN & ADVANCES AND NPA PROVISION :

The provision for NPA is subject to the note no. B (4) of Note 16, regarding non reconciliation of difference in general ledger balance and subsidiary ledger balance in the case of advances.

The effect of our observation in foregoing paras and consequential effect of the above on the Loss/Assets/Liabilities as on business ratios for Capital, asset quality and credit, liquidity, operating results and disclosure requirements of SIDBI has not been ascertained by the management and are subject to consequential adjustment.

Date: 25/07/2013 For Mahendra N. Shah & Co.

Place: Ahmedabad Chartered Accountants

FRN 105775W



CHI RAG M. SHAH

Partner

M. No. F 045706

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Gujarat State Financial Corporation Ltd, Gandhinagar as at March 31, 2010, Profit and Loss Account and the cash flow statement annexed thereto for the year ended on that date.

2. These financial statements are the responsibility of the Corporations management. Our responsibility is to express an opinion on these financial statements based on our audit.

3. We conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reason- able assurance about whether the financial statements are free from any material misstatements. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

4. On the basis of our audit, subject to audit limitations indicated in paragraph 3 above and further to our comments in the Annexure attached herewith, we report that:

a) We have obtained all the information and explanations, which, to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of accounts have been kept by the Corporation so far as appears from our examination of those books;

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon as given in the Schedule 16, and in particular subject to our observation in Annexure attached herewith give the information required by the State Financial Corporation Act, 1951 as amended by the State Financial Corporation (Amendment) Act, 2000 and are properly drawn up in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India:

(a) In case of the Balance Sheet, of the state of affairs of the Corporation as at March 31, 2010 and,

(b) In case of Profit and Loss Account of the Loss for the year ended on that date.

(c) In the case of cash flow statement, of the cash flow for the year ended on that date.

SYSTEM OF ACCOUNTING, INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT :

(I) The day to day transactions of the corporation are recorded on cash system of accounting in crder to account for income and expenses on mercantile basis, at the year end provisions are made for income and expenses on the basis of information and estimates available. (Refer note no. A (2)(a) of Schedule (16).

(II) The value of securities under possession is accounted on realization instead of adjusting at the time of writing off bad debts. (Refer note no. A (2)(d) of schedule 16).

(III) The Corporation has incurred cash losses during the year and in the immediately preceding 5 years. For the time being it has discontinued the business of lending and due to the liquidity problems defaulted in repayment obligations and its networth is completely eroded. Inspite of that accounts of the Corporation have been prepared on going concern basis (Refer note no. A (1) of Schedule 16) which is not in accordance with AS -1" Disclosure of Accounting Policies", where in one of the fundamental accounting assumption is going concern, and since the quantification of the same on realization and settlement basis is not done, it is not possible to ascertain its impact on profit and loss and balance sheet of the corporation.

(IV) As per information given by the management, details of default position as on 31-3-2010 are as under: :-

(Rs. in lacs)

Principal Interest Total

Default Default Default Aggregate Non Guaranteed Borrowings 117.00 94.19 211.19

Loan from Government 22454.63 47542.25 69996.88

Guarantee fees payable - - 3535.96

As explained, management is in the process of rescheduling/restructuring the repayment obligations and future viability of Corporation can still be maintained with proper financial management and assets restructuring of Corporation.

(V) Interest provision of Rs. 13.46 lacs due on PSB Bonds is not made in the accounts resulting in understatement of loss for the year to that extent.

(VI) Reconciliation of General Ledger and Subsidiary Ledgers : Refer Note No.B (4) Schedule 16, regarding non reconciliation of the general ledger balances with the balances balances of the subsidiary ledgers and differences of Rs 85.32 lacs found. In few cases, credit balances are also disclosed in the accounts. Hence, we are unable to express our opinion as to correctness of these balances.

(VII) Corporation has not made provision for Leave Encashment payable on retirement which is not in accordance with AS-15 " Employee benefits", since corporation has not obtained actuarial valuation as per Project Unit Credit Method, its impact on actual increase in loss could not be ascertained.

(VIII) Corporation has charged amount paid o LIC towards Gratuity Fund Contribution and shortfall between gratuity received from LIC and actual amount paid to employees as expenses. However Corporation has not obtained actuarial valuation as per Project Unit Credit Method as required by AS-15 "Employee benefits", as well as gratuity paid account is unreconciled and hence its impact on the loss could not be ascertained.

(IX) Fixed Assets:

(a) (Refer note No. A (3&4) of Schedule 16) Till year ended on 31.3.2002 in case of disposal of fixed assets the Corporation neither eliminated the assets from financial statements nor recognized gain or loss arising from disposal of fixed assets in Profit & Loss Account, which practice was contrary to the Accounting Standard 10 "Accounting for Fixed Assets" issued by ICAI. Due to this practice followed by the Corporation till 31.3.2002, both the gross block and the net block are over stated/under stated to the extent of loss/gain on disposal of assets. As a result the depreciation provision during the year is also erroneous, which is not in accordance with AS -6 "Depreciation Accounting". In absence of sufficient information, effect of this practice on the value of assets and the correct depreciation is not quantified by the management Moreover estimated life of assets is not ascertained by the corporation hence correct depreciation could not be ascertained, hence due to the lack of details, quantification and its impact on the Profit and loss and balance sheet of the corporation could not be ascertained.

(b) Corporation has not properiy maintained the record of fixed assets to exhibit complete details of gross and net value, itemwise original cost, accumulated depreciation and depreciation for the year including quantitative details and location of fixed assets.

(c) There is no specific program for physical verification of fixed assets as compared to the book records.

(X) GSFC TOWER AT SURAT :

Corporation had obtained the lease of land admeasuring 4000 sq.m. for 99 years from Surat Municipal Corporation for the purpose of construction of GSFC tower at Surat, at premium price of Rs.240.00 lacs plus legal/incidental expenses. In terms of Board resolution, Chairman and Managing Director were authorized to dispose off surplus property in the said property on commercial lines. Accordingly Corporation has allotted majority portion of the assets to various parties and entered into the Memorandum of Understanding (MOU) on 12.12.2001 for joint construction and development of above plot of land with various parties on commercial lines. The Corporation has also executed deed of assignment dated 5.9.2002 in favour of various parties.

As per information and explanation given to us, whatever amount received against the tower and the construction bills for development of above property are separately accounted for, for which no entries pertaining to same are passed in books of accounts of the corporation. Hence, we are unable to verify the accounting transactions pertaining to the above project. However amount of Rs.414.87 lacs received as advance against the sale is credited in books of accounts of Corporation is shown in Schedule 4 under the head sundry (other liabilities) and legal & incidental expenses of Rs.38.85 lacs in connection with the above property are shown in schedule 8 as capital work in progress under the head fixed assets.

As explained to us, pending the completion of legal formalities, profit/loss on sale of property will be booked after complete development of property, though the Corporation has issued allotment letter and also executed deed of assignment.

INVESTMENTS :

To fulfill its underwriting liability, Corporation acquired shares for Rs. 218.86 lacs of various companies which have not been disposed off, though the period of 7 years has been expired, to that extent provisions of SFC Act, 1951, have not been complied with.

UNCLAIMED/UNPAID DIVIDEND:

There is an outstanding of Rs. 164989/- in unclaimed and unpaid dividend account 97-98 and Rs. 592033 in unpaid and unclaimed dividend account 98-99 which should have been transferred to Investor Education and Protection Fund. In the year 2002-03 aggregate amount of Rs. 1,45,50,833/- lying in Unclaimed/Unpaid Dividend account was transferred and credited to Profit and Loss Appropriation Account, which is not in connossance with provisions of Section 205 of the Companies Act, 1956 applicable to the Corporation in view of listing agreement. To that extent accumulated losses are understated and other liabilities are understated.

LOANS & ADVANCES AND NPA PROVISION :

(I) The provision for NPA is subject to the note no. B (4) of Schedule 16, regarding non reconciliation of difference in general ledger balance and subsidiary ledger balance in the case of advances.

The effect of our observation in foregoing paras and consequential effect of the above on the Loss/Assets/Liabilities as on business ratios for Capital, asset quality & credit, liquidity, operating results and disclosure requirements of SIDBI has not been ascertained by the management and are subject to consequential adjustment.

Date : 28-07-2010 For R.S. Patel & Co

Place : Ahmedabad Chartered Accountants

FRN 107758N

Rajan B. Shah

Partner

M. No. 101998

---

Mar 31, 2009

1. We have audited the attached Balance Sheet of Gujarat State Financial Corporation, Gandhinagar as at March 31, 2009, Profit and Loss Account and the cash flow statement annexed thereto for the year ended on that date.

2. These financial statements are the responsibility of the Corporations management. Our responsibility is to express an opinion on these financial statements based on our audit.

3. We conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from any material misstatements. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

4. On the basis of our audit, subject to audit limitations indicated in paragraph 3 above and further to our comments in the Annexure attached herewith, we report that:

a) We have obtained all the information and explanations, which, to the best of our knowledge and belief were. necessary for the purposes of our audit;

b) In our opinion, proper books of accounts have been kept by the Corporation so far as appears from our examination of those books;

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon as given in the Schedule 16, and in particular subject to our observation in Annexure attached herewith give the information required by the State Financial Corporation Act, 1951 as amended by the State Financial Corporation (Amendment) Act, 2000 and are properly drawn up in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India:

(a) In case of the Balance Sheet, of the state of affairs of the Corporation as at March 31, 2009 and,

(b) In case of Profit and Loss Account of the Loss for the year ended on that date.

(c) In the case of cash flow statement, of the cash flow for the year ended on that date.

ANNEXURE

SYSTEM OF ACCOUNTING, INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT :

(I) The day to day transactions of thecorporation are recorded on cash system of accounting in order to account for income and expenses on mercantile basis, at the year end provisions are made for income and expenses on the basis of information and estimates available. (Refer note no. A (2)(a) of Schedule (16).

(II) The value of securities under possession is accounted on realization instead of adjusting at the time of writing off bad debts. (Refer note no. A (2)(d) of schedule 16).

(III) The Corporation has incurred cash losses during the year and in the immediately preceding 5 years. For the time being it has discontinued the business of lending and due to the liquidity problems defaulted in repayment obligations and its networth is completely eroded. Inspite of that accounts of the Corporation have been prepared on going concern basis (Refer note no. A (1) of Schedule 16) which is not in accordance with AS -1" Disclosure of Accounting Policies", where in one of the fundamental accounting assumption is going concern, and since the quantification of the same on realization and settlement basis is not done, it is not possible to ascertain its impact on profit and loss and balance sheet of the corporation.

(IV) As per information given by the management, details of default position as on 31-3-2009 are as under :-

(Rs. in lacs)

Principal Interest Total Default Default Default Aggregate Non Guaranteed Borrowings 353.38 193.63 547.01

Loan from Government 16513.95 33058.67 49572.62

Guarantee fees payable _ _ 3475.82

As explained, management is in the process of rescheduling/restructuring the repayment obligations and future viability of Corporation can still be maintained with proper financial management and assets restructuring of Corporation.

(V) The internal control system and internal checks of the Corporation need to be strengthened substantially so as to be commensurate with the size and the nature of business of the Corporation. The Corporation has a system of Internal Audit but the same is not adequate and commensurate with the size and nature of its business. Moreover internal audit for the last quarter is pending to be completed.

(VI) Interest provision of Rs. 229.53 lacs due on PSB Bonds ill and IV is not made in the accounts resulting in understatement of loss for the year to that extent.

(VII) Reconciliation of General Ledger and Subsidiary Ledgers:-

ReferNote No.B (4) Schedule 16, regarding non reconciliation of the general ledger balances with the balances of the subsidiary ledgers and differences of Rs 22.78 lacs found, in few cases, credit balances are also disclosed in the accounts. Hence, we are unable to express our opinion as to correctness of these balances.

(VIII) Corporation has not made provision for Leave Encashment payable on retirement which is not in accordance with AS-15" Employee benefits", since corporation has not obtained actuarial valuation as per Project Unit Credit Method, its impact on actual increase in loss could not be ascertained.

(IX) Corporation has charged amount paid to LIC towards Gratuity Fund Contribution and shortfall between gratuity received from LIC and actual amount paid to employees as expenses. However Corporation has not obtained actuarial valuation as per Project Unit Credit Method as required by AS- 15 "Employee benefits" and hence its impact on the loss could not be ascertained.

(X) Fixed Assets :

(a) (Refer note No.A (3&4) of Schedule 16) Till year ended on 31.3.2002 in case of disposal of fixed assets the Corporation neither eliminated the assets from financial statements nor recognized gain or loss arising from disposal of fixed assets in Profit & Loss Account, which practice was contrary to the Accounting Standard 10 "Accounting for Fixed Assets "issued by ICAI. Due to this practice followed by the Corporation till 31.3.2002, both the gross block and the net block are over stated/under stated to the extent of loss/gain on disposal of assets. As a result the depreciation provision during the year is also erroneous, which is not in accordance with AS -6 "Depreciation Accounting". In absence of sufficient information, effect of this practice on the value of assets and the correct depreciation is not quantified by the management Moreover estimated life of assets is not ascertained by the corporation hence correct depreciation could not be ascertained, hence due k; the lack of details, quantification and its impact on the Profit and loss and balance sho--;. of the corporation could not be ascertained.

(b) Corporation has not properly maintained the record of fixed assets to exhibit complete details of gross and net value, itemwise original cost, accumulated depreciation and depreciation for the year including quantitative details and location of fixed assets.

(c) There is no specific program for physical verification of fixed assets as compared to the book records.

(XI) GSFC TOWER AT SURAT :

Corporation had obtained the lease of land admeasuring 4000 sq.m. for 99 years from Surat Municipal Corporation for the purpose of construction of GSFC tower at Surat, at premium price of Rs.240.00 lacs plus legal/incidental expenses. In terms of Board resolution, Chairman and Managing Director were authorized to dispose off surplus property in the said property on commercial lines. Accordingly Corporation has allotted majority portion of the assets to various parties and entered into the Memorandum of Understanding (MOU) on 12.12.2001 for joint construction and development of above plot of land with various parties on commercial lines. The Corporation has also executed deed of assignment dated 5.9.2002 in favour of various parties.

In our opinion, construction and development of the property on commercial lines at Surat by Corporation is beyond the powers of the Board and ultra vires the provisions of section 25 of State Financial Corporation Act, 1951.

As per information and explanation given to us, whatever amount received against the tower and the construction bills for development of above property are separately accounted for, for which no entries pertaining to same are passed in bocks of accounts of the corporation.

Hence, we are unable to verify the accounting transactions pertaining to the above project. However amount of Rs.414.87 lacs received as advance against the sale is credited in books of accounts of Corporation is shown in Schedule 4 under the head sundry (other liabilities) and legal & incidental expenses of Rs.38.85 lacs in connection with the above property are shown in schedule 8 as capital work in progress under the head fixed assets.

As explained to us, pending the completion of legal formalities, profit/loss on sale of property will be booked after complete development of property, though the Corporation has issued allotment letter and also executed deed of assignment.

INVESTMENTS :

To fulfill its underwriting liability, Corporation acquired shares for Rs. 218.86 lacs of various con,panies which have not been disposed off, though, the period of 7 years has been expired, to that extent provisions of SFC Act, 1951, have not been complied with.

UNCLAIMED/UNPAID DIVIDEND :

There is an outstanding of Rs. 164989/- in unclaimed and unpaid dividend account 97-98 and Rs. 592033 in unpaid and unclaimed dividend account 98-99 which should have been transferred to Investor Education and Protection Fund. In the year 2002-03 aggregate amount of Rs. 1,45,50,833/- lying in Unclaimed/Unpaid Dividend account was transferred and credited to Profit and Loss Appropriation Account, which is not in connossance with provisions of Section 205 of the Companies Act, 1956 applicable to the Corporation in view of listing agreement. To that extent accumulated losses are understated and other liabilities are understated.

LOANS & ADVANCES AND NPA PROVISION :

(I) Corporation has not done valuation of NPA accounts classified in doubtful category after disbursement of loan, hence shortfall in the value of security if any could not be ascertained and thereby provision to that extent Is short provided and loss to that extent is understated.

(II) The provision for NPA is subject to the note no. B (4) of Schedule 16, regarding non reconciliation of difference in general ledger balance and subsidiary ledger balance in the case of advances.

The effect of our observation in foregoing paras and consequential effect of the above on the Loss/Assets/Liabiiities as on business ratios for Capital, asset quality & credit, liquidity, operating results and disclosure requirements of SIDBI has not been ascertained by the management and are subject to consequential adjustment.

Date : 23-9-2009 For R.S. Patel & Co.

Place : Ahmedabad Chartered Accountants

Rajan B. Shah Partner M.No. 101998