Directors Report of Gujarat State Financial Corporation

Mar 31, 2025

The Board of Directors is pleased to place before you the 65^th Annual Report of the Corporation
containing audited Balance Sheet as at March 31, 2025, Statement of Profit and Loss, Cash Flow
Statement and other financial statements for the year ended March 31, 2025.

1. Financial results:

Corporation’s financial performance for the financial year ended March 31, 2025 is summarized
below:

(? in lakh)

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024
Interest on Loans and Advances	13.81	465.68
Interest on deposits	1,512.03	1,294.01
Other income (including exceptional items)	198.87	389.85
Total income	1,724.71	2,149.54
Interest on Borrowings	13,933.95	13,748.09
Employee’s cost	112.61	149.25
Other expenses	212.15	173.04
Total Expenditure	14,258.71	14,070.38
Loss for the year under reference	12,534.00	11,920.84
Accumulated loss carried forward	3,42,515.82	3,29,981.82

2. Performance:

During the year under reference, interest earned by the Corporation reduced substantially and stood
at ?13.81 lakh as against ?465.68 lakh reported in the previous year. Interest on deposits increased
by 16.85 per cent to ^1,512.03 lakh compared to ?1,294.01 lakh reported a year ago. Other income,
including non-cash items, for the year under reference almost halved to ?198.87 lakh compared to
?389.85 lakh reported in the previous year. Total income for the year under reference stood at
?1,724.71 lakh, a decrease of 24.63 per cent over ?2,149.54 lakh reported in the previous year.

Interest on borrowings for the year under reference increased marginally and stood at ?13,933.95
lakh as against ?13,748.09 lakh reported a year ago. Employees cost for the year under reference
reduced by 32.53 per cent and stood at ?112.61 lakh compared to ?149.25 lakh reported in the
previous year. Total expenditure for the year under report registered a marginal increase of 1.34 per
cent and stood at ?14,258.71 lakh as against ?14,070.38 lakh reported a year back. Loss for the year
under reference stood at ?12,534.01 lakh, an increase of 5.14 per cent over ?11,920.84 lakh
registered in the previous year. The accumulated loss increased by 3.80 per cent at ?3,42,515.82
lakh compared to Rs.3,29,981.82 lakh reported in the previous year.

3. Borrowings:

Corporation has not resorted to borrowings during the year under reference. All external borrowings
have already been repaid and aggregate principal borrowings from Government of Gujarat yet to be
repaid remained statistic at Rs.66,168.43 lakh.

4. Recovery:

During the year under reference, Corporation recovered 212.29 lakh as against ?558.77 lakh
reported a year ago.

5. Human Resource:

During the year under report, the staff strength of the Corporation reduced to 12 from 16 reported in
the previous year. The break-up of staff strength is as under:-

Sr. No.	Category	Total
1	‘A’ Grade officers	1
2	‘B’ Grade employees	8
3	‘C’ Grade employees	3
Total		12

Of the total staff strength of 12, four employees are on deputation with other Government
departments. The effective staff strength of the Corporation reduced to 8 spread over three Regional
Offices and Head Office.

6. Corporate Governance:

The detailed Corporate Governance Report containing all relevant information and the certificate
regarding compliance of corporate governance are forming part of the Annual Report. The
qualifications contained in para 2 of the Certificate of compliance with the conditions of Corporate
Governance Regulations are dealt with in “Other Disclosures” in para 10 of the Report on
Corporate Governance for FY 2024-25 forming part of the Annual Report.

Management Discussion and Analysis Report and declaration by Managing Director that the Board
of Directors and Senior Management Personnel have complied with the Code of Conduct also form
part of Annual Report.

7. Auditors:

Pursuant to Section 37 of the State Financial Corporations Act, 1951, the shareholders at its Annual
General Meeting held on 25^th July, 2024 had re-appointed M/s. Pankaj R Shah & Associates,
Chartered Accountants (FRN No. 107361W), for the third term as the statutory auditors of the
Corporation to hold office from the conclusion of 64^rd Annual General Meeting till the conclusion
of ensuing Annual General Meeting. As per RBI guidelines, in the normal course, an audit firm may
continue for a term of four years in one spell. Hence Corporation requested Reserve Bank of India
to confirm eligibility and suitability for re-appointment of the said firm as statutory auditors for the
fourth term for FY 2025-26. RBI, vide letter dated April 09, 2025, confirmed their eligibility and
suitability for the said re-appointment. Proposal to re-appoint the said auditors for the fourth and
last term as recommended by the Board is being placed before the shareholders at the ensuing
Annual General Meeting for consideration.

M/s. Pankaj R Shah & Associates, Chartered Accountants, statutory auditors have submitted
Independent Auditor’s Report on the financial statements of the Corporation for the year ended
March 31, 2025 which contains two qualifications, both reiteration of previous years. Said
qualifications along with comments thereon of the management is given in Addendum to this
Report and also form part of the Annual Report.

8. Board of Directors:

The following are the changes in the Directorate took place during the financial year ended March
31, 2025:

a. Small Industries Development Bank of India, vide letters dated May 22, 2024, nominated
Shri Naresh Babuta, General Manager, SIDBI Ahmedabad Regional Office and Shri Dinesh

Kumar, Deputy General Manager, SIDBI Ahmedabad Branch Office as Directors on the
Board of Directors of the Corporation in places of Shri Sanjay Gupta and Shri Akash Pawar
respectively. Both nominees assumed office on May 24, 2024.

b. Small Industries Development Bank of India, vide letter dated November 12, 2024 nominated
Ms. Mamta Verma, IAS, Principal Secretary, Industries & Mines Department, Government of
Gujarat as Chairperson of the Corporation to succeed Shri S.J. Haider, IAS, the then
Additional Chief Secretary, Industries & Mines Department. Ms. Mamta Verma, IAS
assumed office with effect from December 05, 2024.

c. Shri Swaroop P, IAS, Industries Commissioner, took over as ex-officio Managing Director of
the Corporation with effect from February 04, 2025 in place of Shri Sandip J. Sagale, IAS
pursuant to Order dated April 29, 2017 read with Notification dated February 01, 2025 of the
General Administration Department.

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, brief
resume of Directors joined on the Board of Directors during the year under report was
furnished in the Corporate Governance Report for FY 2023-24. Brief resume of Chairperson
and Managing Director is included in the Corporate Governance Report for FY 2024-25,
forming part of the Annual Report.

9. Directors’ Responsibility Statement

The Directors, based on the representations received from the Operations Departments and to the
best of their knowledge and ability, hereby confirm that:

1. in the preparation of the annual accounts, the applicable accounting standards had been
followed along with proper explanation relating to material departures;

2. they have selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true and fair view of
the state of affairs of the Corporation at the end of the financial year ended March 31, 2025
and of the profit and loss of the Corporation for that period;

3. they have taken proper and sufficient care for the maintenance of adequate accounting
records in accordance with the regulatory provisions for safeguarding the assets of the
Corporation and for preventing and detecting fraud and other irregularities;

4. the annual accounts for the year ended March 31, 2025 has been prepared on a going
concern basis,

5. they have laid down internal financial controls to be followed by the Corporation and that
such internal financial controls are adequate and were operating effectively during the year
ended March 31, 2025; and

6. proper systems have been devised to ensure compliance with the provisions of all applicable
laws and that such systems were adequate and operating effectively during the year ended
March 31, 2025.

10. Acknowledgement:

The Board of Directors is sincerely grateful to the Government of Gujarat for its continuous support
and guidance. The Board acknowledges with gratitude the co-operation and support received from
Industries & Mines Department, Finance Department and other agencies of Government of Gujarat.
The Board thanks RBI, SIDBI and its Ahmedabad Office for their support and guidance. The Board
also acknowledges with thanks the commendable services rendered and guidance provided by Shri
S.J. Haider, IAS as Chairman, Shri Sandip J Sagale, IAS as Managing Director and Shri Sanjay
Gupta as well as Shri Akash Pawar, both Directors during their association with the Corporation.
The Board takes this opportunity to put on record its deep sense of gratitude to its stakeholders and
customers for their continued support and confidence. Last but not least, the Board appreciate the
sincere and dedicated services rendered by the employees of the Corporation.

For and on behalf of the Board of Directors,

Place : Gandhinagar (Swaroop P., IAS)

Date : 27-05-2025 Managing Director

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Mar 31, 2024

The Board of Directors is pleased to place before you the 64^th Annual Report of the Corporation containing audited Balance Sheet as at March 31, 2024, Statement of Profit and Loss, Cash Flow Statement and other financial statements for the year ended March 31, 2024.

1. Economic Scenario:

Global Economy: Global economy has displayed an extraordinary resilience, enduring wars, tight financial conditions and havoc-wreaking climate change. Global trade growth, which had flat-lined in 2023, is expected to recover in 2024, although it will likely to remain below its pre-pandemic trend. According to the World Trade Organization, trade measures introduced by G20 economies have become more restrictive in recent months than trade facilitating, although the value of traded merchandise covered by facilitating measures continued to exceed that covered restrictions. In its latest Global Economic Prospects (GEP), the World Bank has projected global growth to ebb from an estimated 3.0 per cent in 2023 to 2.9 per cent in 2024, making the third consecutive year of deceleration. The weaker outlook reflects the combined effects of the dampening of demand due to tight monetary policy, restrictive credit conditions, softening labour markets, reduced savings buffers, the waning of the revenge spending on services and lackluster global trade and investment.

Indian economy: The domestic economy is experiencing strong momentum. As per the second advance estimates, real gross domestic product (GDP) expanded at 7.6 per cent in 2023-24 on the back of buoyant domestic demand. Headline inflation softened to 5.1 per cent during January-February 2024 from 5.7 per cent in December. In India, economic activity remained resilient on the back of robust demand, notwithstanding the external headwinds. Indian economy has undergone many structural reforms that have strengthened its macroeconomic fundamentals. These reforms have led to India emerging as the fastest growing economy among G20 economies. The government’s economic policy focus was to restore India’s growth potential by getting the financial sector back on track, facilitating economic activity by easing conditions for business, and massively augmenting physical and digital infrastructure to enhance India’s connectivity and, thus, competitiveness of its manufacturing sector. With this vision to guide its policies, the Government has undertaken diverse economic reforms to prepare the economy to grow at its potential by creating a business-friendly environment, improving ease of living and strengthening the governance systems and processes. India has been showing both resilience as well as progress despite all risks and uncertainties in the global economic landscape. Through timely and effective policy actions aimed at achieving macro stability and repairing the balance sheets of financial and non-financial sectors as well as by investing significantly in building world-class physical and digital public infrastructure, India has been able to withstand the challenges, both domestic and global, and ensure that the economy continues to progress on a steady path.

2. Financial results:

Corporation’s financial performance for the financial year ended March 31, 2024 is summarized below:

(? in lakh)

Particulars	For the year ended March 31, 2024	For the year ended March 31, 2023
Interest on Loans and Advances	465.68	55.13
Interest on deposits	1,294.01	959.43

Particulars	For the year ended March 31, 2024	For the year ended March 31, 2023
Other income (including exceptional items)	389.85	421.72
Total income	2,149.54	1,436.28
Interest on Borrowings	1,3748.09	13,562.34
Employee’s cost	149.25	226.85
Other expenses	173.04	161.98
Total Expenditure	14,070.38	13,951.17
Loss for the year under reference	11,920.84	12,514.89
Accumulated loss carried forward	3,29,981.82	3,18,060.98

3. Performance:

During the year under reference, interest on Loans and Advances registered an increase of 744.69 per cent and stood at ''465.68 lakh compared to ''55.13 lakh reported in the previous year. Interest on deposits increased by 34.87 per cent to ''1,294.01 lakh as against ''959.43 lakh reported a year ago. Other income, including non-cash items, decreased by 7.56 per cent to ''389.85 lakh during the year under reference compared to ''421.72 lakh reported in the previous year. Total income for the year under reference stood at ''2,149.54 lakh, an increase of 49.66 per cent over ''1,436.28 lakh reported in the previous year.

Interest on loans granted by the Government for the year under reference increased marginally and stood at ''13,748.09 lakh as against '' 13,562.34 lakh reported a year ago. Employees cost for the year under reference reduced by 34.21 per cent and stood at ''149.25 lakh compared to ''226.85 lakh reported in the previous year. Total expenditure for the year under report registered a marginal increase of 0.85 per cent and stood at ''14,070.38 lakh as against ''13,951.17 lakh reported a year back. Loss for the year under reference stood at ''11,920.84 lakh, a reduction of 4.75 per cent over ''12,514.89 lakh registered in the previous year. The accumulated loss for the year under reference increased by 3.75 per cent at ''3,29,981.82 compared to ''3,18,060.98 lakh reported in the previous year.

4. Borrowings:

Aggregate borrowings from Government of Gujarat during the year under reference remained statistic at ''66,168.43 lakh.

5. Recovery:

During the year under reference, Corporation continued to extend liberal One Time Settlement Schemes to attract defaulting loanee units to come forward and settle the accounts. As a result of concerted efforts, Corporation registered a modest increase of 7.19 per cent in recovery of dues to ''558.77 lakh compared to ''521.29 lakh reported a year ago.

6. Human Resource:

During the year under report, the staff strength of the Corporation reduced to 16 from 24 reported in the previous year. The break-up of staff strength is as under:-

Sr. No.	Category	Total
1	‘A’ Grade officers	2
2	‘B’ Grade employees	11
3	‘C’ Grade employees	3
Total		16

Of the total staff strength of 16, one employee is on loan service and 5 are on deputation with other Government departments. The effective staff strength of the Corporation reduced to 10 spread over three Regional Offices and Head Office.

7. Corporate Governance:

The detailed Corporate Governance Report containing all relevant information and the certificate regarding compliance of corporate governance are forming part of the Annual Report. The qualifications contained in para 2 of the Certificate of compliance with the conditions of Corporate Governance Regulations are dealt with in “Other Disclosures” in para 10 of the Report on Corporate Governance for FY 2023-24 forming part of the Annual Report.

Management Discussion and Analysis Report and declaration by Managing Director that the Board of Directors and Senior Management Personnel have complied with the Code of Conduct also form part of Annual Report.

8. Auditors:

M/s. Pankaj R Shah & Associates, Chartered Accountants (FRN No. 107361W), were re-appointed for the second term as the statutory auditors of the Corporation to hold office from the conclusion of 63^rd Annual General Meeting till the conclusion of ensuing Annual General Meeting by the members at the AGM held on 27^th July, 2023 pursuant to 37 (1) of SFCs Act, 1951. Since an auditor can be continued for four years as per Reserve Bank of India norms, Corporation requested Reserve Bank of India to confirm their eligibility and suitability for re-appointment for the third term. RBI, vide letter dated April 05, 2024, confirmed their eligibility for re-appointment. Proposal to re-appoint the said auditors for the third term as recommended by the Board is being placed before the shareholders at the ensuing Annual General Meeting for consideration.

M/s. Pankaj R Shah & Associates, Chartered Accountants, statutory auditors have submitted Independent Auditor’s Report on the financial statements of the Corporation for the year ended March 31, 2024 which contains two qualifications, both reiteration of previous yea'' Said qualifications along with comments thereon of the management is given in Addendum to this Report and also form part of the Annual Report.

9. Board of Directors:

The following are the changes in chronological order in the Directorate during the financial year ended March 31, 2024:

a. Shri Sandip J Sagale, IAS, Industries Commissioner, took over as ex-officio Managing Director of the Corporation with effect from April 05, 2023 succeeding Dr. Rahul Gupta, IAS pursuant to Order dated April 29, 2017 read with Notification dated March 31, 2023 of the General Administration Department.

b. Pursuant to Section 10 (d) of the SFCs Act, 1951, Life Insurance Corporation of India nominated Shri Madhukar M Asthana, Senior Divisional Manager, LIC of India, Gandhinagar Divisional Office as Director on the Board of Directors of the Corporation in place of Shri Sanjeev Mehta vide letter dated May 16, 2023. Accordingly, Shri Madhukar M Asthana assumed office of Director of the Corporation on May 23, 2023.

c. Small Industries Development Bank of India, vide letter dated September 04, 2023 nominated Shri S.J. Haider, IAS, Additional Chief Secretary, Industries & Mines Department, Government of Gujarat as Chairman of the Corporation to succeed Shri Raj

Kumar, IAS, the then Additional Chief Secretary, Industries & Mines Department. Shri S.J. Haider, IAS assumed the position of Chairman with effect from September 26, 2023.

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, brief resume of Directors joined on the Board of Directors during the year under report is furnished in the Corporate Governance Report, forming part of the Annual Report.

10. Directors’ Responsibility Statement

The Directors, based on the representations received from the Operations Departments and to the best of their knowledge and ability, hereby confirm that:

1. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Corporation at the end of the financial year ended March 31, 2024 and of the profit and loss of the Corporation for that period;

3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the regulatory provisions for safeguarding the assets of the Corporation and for preventing and detecting fraud and other irregularities;

4. the annual accounts for the year ended March 31, 2024 has been prepared on a going concern basis,

5. they have laid down internal financial controls to be followed by the Corporation and that such internal financial controls are adequate and were operating effectively during the year ended March 31, 2024; and

6. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the year ended March 31, 2024.

11. Acknowledgement:

The Board of Directors is pleased to place of record its gratitude to Government of India, Ministry of Finance, Department of Financial Services, Government of Gujarat and its various departments, Small Industries Development Bank of India, Lucknow and Ahmedabad offices, Reserve Bank of India, SEBI and BSE Ltd for their continuous support and guidance. The Board gratefully acknowledges its appreciation to the commendable services rendered and guidance provided by Shri Raj Kumar, IAS as Chairman and Shri Sanjeev Mehta as Director of the Corporation. The Board is also pleased to place on record its gratitude to the stakeholders, valued customers and well-wishers for their goodwill, patronage and support. Finally, the Board also appreciates the dedicated services rendered by the staff at all levels.

For and on behalf of the Board of Directors,

Place : Gandhinagar (Sandip J. Sagale, IAS)

Date : 28-05-2024 Managing Director

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Mar 31, 2014

To the Members,

The Board of Directors has pleasure in presenting the 54th Annual Report of the Corporation together with the audited statements of Accounts for the year ended 31st March 2014.

1.0 Economy :

India''s economy expanded at 4.7 per cent in the entire 2013-14 financial year, marking a second straight year of below 5 per cent growth. The expansion was slower than an offcial estimate of 4.9 per cent and higher than 4.5 per cent growth a year earlier. Growth was affected by poor performance in mining and manufacturing. Stagnant growth of GDP is attributable to the continued weakness in industrial activity and supply side constraints. A moderate recovery is likely to set in 2014-15. The recovery is likely to be supported by investment activity picking up due to part resolution of stalled projects and improved business and consumer confdence. Manufacturing activity shows improvement in recent months, albeit the pick-up was too gradual. High and persistent infation remained a key challenge facing India throughout the year 2013-14. Due to tightening of liquidity and other remedial measures taking place, it is expected that the economy may grow at a faster pace during 2014-15. International rating agency Fitch estimated the economic growth of India to 5.5 per cent during 2014-15.

2.0 Financial Results :

The income generation capacity of the Corporation is deteriorating since discontinuation of its main operations of sanction and disbursement. Further, One Time Settlement schemes for Term Loan and BIFR/GBIFR units have expired during the year. In spite of adverse circumstances, Corporation earned interest income of Rs. 18.03 crore during the year under reference as against Rs. 25.06 crore earned a year ago. Total income, including exceptional items, stood at Rs. 40.82 crore compared to Rs. 64.44 crore during the previous year. Corporation''s total expenditure for the period under reference stood at Rs. 153.61 crore as against Rs. 177.61 crore in 2012-13. Corporation registered a loss of Rs. 112.79 crore during the year under reference while the same in the previous year was Rs. 113.16 crore. The accumulated loss of the Corporation as on 31st March, 2014 stood at Rs. 2139.92 crore.

3.0 Recovery :

In spite of the diffcult economic conditions that prevailed during the year under report, Corporation recovered an amount of Rs. 22.88 crore during the year 2013-14 as against Rs. 34.55 crore recovered during FY 2012-13.

4.0 Human Resources :

During the year under reference, the employees of the Corporation were extended the benefit of revision of pay scales on line with VI Pay Commission recommendations from December, 2013. In order to adapt the rapidly changing environment and the challenges, nine offcials were imparted external training through institutions of repute.

11 officers/employees retired during the year. The total staff strength as on 31-03-2014 is as under :

1. Grade ''A'' officers 11

2. Grade ''B'' officers 74

3. Grade ''C'' employees 21

Total 95

Out of 95 employees, 35 staff is on deputation/loan service to other offices of the Government.

5.0 Auditors :

M/s. Mahendra N. Shah & Co., Chartered Accountants, Ahmedabad retires at the conclusion of the ensuing Annual General Meeting. They have been associated with the Corporation for the past four financial years and are not eligible for re-appointment as per the guidelines issued by Reserve Bank of India.

As recommended by RBI under the provisions of Section 37 (1) of the SFCs Act, 1951, followed by recommendation by the Audit Committee, M/s. Manubhai & Shah, Chartered Accountants, Ahmedabad, are proposed to be appointed as statutory auditors of the Corporation for financial year 2014-15 from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting.

6.0 Management Discussion & Analysis and Corporate Governance Reports :

Reports on Management Discussion & Analysis and Corporate Governance together with the corresponding Compliance Certifcate are attached as part of this Annual Report.

7.0 Board of Directors :

The following changes have taken place in the Board of Directors of the Corporation during the year ended 31st March, 2014 :

SIDBI, vide its letter dated 5.8.2013, withdrawn the nomination of Shri KC Bhanoo as a Director on the Board of the Corporation and in his place, Shri Balbir Singh, Deputy General Manager, SIDBI, Ahmedabad, has been nominated.

Government of Gujarat in Finance Department, vide office Order dated 4th March, 2014, nominated Shri C. J. Macwan, Deputy Secretary & Director (IF), Finance Department, in place of Miss S. Aparna, IAS.

Shri D. J. Pandian, IAS, Additional Chief Secretary, Industries & Mines Department, was nominated as a Director on the Board of the Corporation by Notifcation dated 7-3-2014 of Industries & Mines Department in place of Shri M. Sahu, IAS (Retired).

The Board places on record its gratitude for the valuable contribution rendered by Shri M. Sahu, IAS (Retd.), Shri K. C. Bhanoo and Miss S. Aparna, IAS, during their tenure of office as Chairman and Directors respectively.

In compliance with Clause 49 of the Listing Agreement, brief resume of the Directors joined on the Board of the Corporation during the period under reference, is furnished in the Corporate Governance Report attached to this Directors'' Report.

8.0 Directors'' Responsibility Statement :

The Directors, based on the representations received from the Accounts Department, hereby confirm that :

1. in the preparation of the annual accounts for the year ended 31st March 2014, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any.

2. such accounting policies as mentioned in Note 16 of the Annual Accounts have been selected and applied consistently and judgments and estimates that are reasonable and prudent are made so as to give a true and fair view of the state of affairs of the Corporation at the end of the financial year ended 31st March 2014 and of the loss of the Corporation for that year.

3. proper and suffcient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Corporation and for preventing and detecting fraud and other irregularities.

4. the annual accounts for the year ended 31st March 2014 had been prepared on a going concern basis.

9.0 Acknowledgement :

The Directors are grateful to Government of Gujarat, Reserve Bank of India and Small Industries Development Bank of India for their advise, support and guidance. The Directors are also grateful to Industries & Mines Department and Finance Department for their continuous support. The Board thanks its valued customers and other stakeholders for their patronage. The Board also conveys its appreciation to all employees of the Corporation for their contribution during the year.

For and on behalf of the Board of Directors,

Place : Gandhinagar (Arvind Agarwal) Date : 05-08-2014 Managing Director

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Mar 31, 2013

To the Members,

The Directors present the 53rd Annual Report of the Corporation together with the audited statements of Accounts for the year ended 31st March 2013.

1.0 Economy:

Fiscal 2013 has been a challenging year for the Indian economy. During the FY 2012-13, both domestic and global factors affected growth of Indian economy. Moderation in GDP growth, high inflation and fiscal deficit as well as widening Current Account Deficit were the major concerns of the economy. Macro-economic climate showed a downward trend. While India''s recent slowdown is partly rooted in external causes, domestic causes are also important. The strong post financial crisis stimulus led to stronger growth in previous years. The slowdown, especially in 2012-13, has been across the board, with no sector of the economy unaffected. Wholesale price index (WIP) inflation has declined and stayed within 4 to 5% but Consumer Price Indices (CPI) remained elevated at close to double digits during the year. The economic growth during FY 2012-13 has come down to 5% from 6.2% in the FY 2011 -12. The softening global commodity prices, improved economic conditions in the US, pickup in Indian export prospects and good monsoon augur well for Indian economy and are expected to contribute positively to better numbers this current fiscal.

2.0 Operational Results/Financial Highlights :

Corporation''s main source of income is recovery from dues. During the year under reference, the total income, including exceptional item, stood at Rs. 64.44 crore compared to Rs. 56.71 crore during the previous year 2011-12. The total expenditure for the period under reference came to Rs. 177.61 crore as against Rs. 265.63 crore in 2011-12. Loss of the Corporation for the year under reference stood at Rs. 113.16 crore while that of the previous year was Rs. 208.92 crore. The accumulated loss of the Corporation as on 31st March, 2013 stood at Rs. 2027.13 crore.

Corporation redeemed the last trench of bonds guaranteed by the State Government totaling face value of X 1.25 crore while that of Public Sector Bonds amounting to Rs. 1.10 crore. There are no guaranteed or un-guaranted bonds outstanding as on date of report.

3.0 Resources:

Corporation is receiving active support of Government of Gujarat by way of budgetary allocation of funds to meet its liabilities. During the year under report, Corporation has not availed of loan from Government of Gujarat.

4.0 Recovery:

Corporation has put in place strong systems for resolution and recovery of non-performing loans. The One Time Settlement schemes for term loans and BIFR cases were operative upto 30th September, 2012. As a result of concerted efforts, Corporation recovered an amount of Rs. 34.55 crore during the year 2012-13 as against Rs. 31.69 crore recovered during FY 2011-12.

5.0 Human Resource :

In order to boost the morale of the staff, promotions to ten officers/employees to the next higher cadres have been granted in FY 2012-13. The process of upliftment of human resources through imparting training to appropriate employees has also been undertaken. During the year under reference, 15 staff of various cadres has been nominated for external training programs at the institutions of national repute. Severance of 29 personnel took place during the year under reference due to retirement etc. The total staff strength as on 31/03/2013 is as under:

1. Grade ''A'' Officers 11

2. Grade ''B'' officers 74 3. Grade ''C'' employees 21

Total 106

Out of 106 employees, 35 staff is on deputation/loan service to other offices of the Government.

6.0 Auditors :

The statutory audit was carried out by M/s. Mahendra N. Shah & Co., Chartered Accountants, Ahmedabad. Their report is being annexed and forms part of this report. The statutory auditors will retire at the ensuing Annual General Meeting. As recommended by RBI under the provisions of Section 37 (1) of the SFCs Act, 1951, followed by recommendation by the Audit Committee, the Board has proposed the re-appointment of M/s. Mahendra N Shah & Co., Chartered Accountants, as statutory auditors for financial year 2013-14. Their re-appointment is being placed before the shareholders for approval.

7.0 Board of Directors :

The following changes have taken place in the Board of Directors of the Corporation during the year ended 31st March, 2013:

SIDBI, vide its letter dated 7.8.2012, withdrawn the nomination of Shri R. D.Silva as Director on the Board of the Corporation and further informed vide letter dated 21.8.2012 that they have decided to appoint only one nominee on the Board of the Corporation for the present.

Government of Gujarat in Finance Department vide Notification dated 3rd October, 2012, withdrawn the nomination of Shri D. N. Pandey, IAS on the Board of the Corporation and nominated Miss. S. Aparna, IAS, Commissioner (Bureau of Public Enterprises) & Principal Secretary, Finance Department, in his place.

The Board places on record its gratitude for the valuable contribution rendered by Shri R. D. Silva and Shri D. N. Pandey, IAS, during their tenure of office as Directors on the Board.

As per Clause 49 of the Listing Agreement, brief resume of the Director, who has been nominated by Government of Gujarat during the period under reference, is furnished in the Corporate Governance Report attached to this Directors'' Report.

8.0 Corporate Governance :

Management Discussion and Analysis Report, Corporate Governance Report and Certificate regarding compliance of conditions of Corporate Governance are annexed hereto and form part of the Annual Report in compliance of Clause 49 of the Listing Agreement with Stock Exchanges.

9.0 Directors'' Responsibility Statement:

The Directors, based on the representations received from the Accounts Department, hereby confirm that:

1. in the preparation of the annual accounts for the year ended 31st March 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

2. such accounting policies as mentioned in Note 16 of the Annual Accounts have been selected and applied consistently and judgments and estimates that are reasonable

and prudent are made so as to give a true and fair view of the state of affairs of the :

Corporation at the end of the financial year ended 31st March 2013 and of the loss of the Corporation for that year.

3. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Corporation and for preventing and detecting fraud and other irregularities.

4. the annual accounts for the year ended 31st March 2013 has been prepared on a going concern basis.

10.0 Acknowledgement:

The Board of Directors is pleased to place on record its gratitude to the Government of Gujarat for continuous support. The Board takes this opportunity to thank the Industries & Mines Department and Finance Department of Government of Gujarat for their timely help, support and guidance. The Board gratefully acknowledges the assistance and support provided by RBI, SIDBI and its Ahmedabad office to the Corporation.

The Board also acknowledges with thanks the commercial banks for their support and co-operation.

The Board is also pleased to place on record its gratitude to the Members for their continued support and confidence. The Board also appreciates the dedicated efforts made by the employees of the Corporation at all levels during the year.

For and on behalf of the Board

Place : Gandhinagar (Arvind Agarwal)

Date : 25/07/2013 Managing Director

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Mar 31, 2010

The Directors present the 50th Annual Report of the Corporation together with the audited statements of Accounts for the year ended 31st March 2010.

1.0 Economy:

The Indian Economy has been able to recover faster than its peers due to the combined and timely efforts of Government of India and Reserve Bank of India. The GDP growth in Financial Year 2009-10 is expected to be between 7.2% and 7.5% as against 6.7% for the financial year 2008-09. As per RBIs Annual Monetary and Credit policy announced on 20th April 2010, Indian economy is expected to grow by 8% in 2010-11. The sustained growth may as well be attributed to dynamic commercial sector, active capital market, acceleration in GDP growth, turnaround in exports, strong recovery in industrial production especially in manufacturing, services sectors, revival of stock market activities, revival in capital inflows and indications of positive corporate sales leading to signs of improved profitability and credit growth. In a nut-shell, the year 2009-10 is characterized by soft interest rate scenario, abundant liquidity but rising inflationary pressure. The challenge before Indian economy is thus to adopt such policy measures which would strike a balance between controlling rising inflation and maintaining growth with stability.

2.0 Operational Results/Financial Highlights :

Corporation continued to stop lending and disbursement, which were its main business activities. Corporation made concerted efforts to dispose off units under possession. During the year under report, an amount of Rs. 11.29 crore was realized from sale of units/assets as against the realized amount of Rs.24.82 crore during 2008-09.

Corporation once again introduced a One Time Settlement Scheme during the year for accelerated recovery of over dues from its loanees. During the year, an amount of Rs.21.69 crore was realized under the OTS Scheme. During the year under review, as against the total income of Rs.55.45 crore, the total expenditure was Rs. 184.83 crore resulting into a net loss of Rs. 129.38 crore. The accumulated loss as on balance sheet date is of Rs. 1548.58 crore.

3.0 Resources/Financial Restructuring :

State Government has continued to extend financial support to the Corporation. During the year under report, State Government provided an assistance of Rs.20.00 crore which was utilised for repayment of dues of Bonds guaranteed by the State Government. The outstanding Government guaranteed bonds as on 31/03/2010 was Rs.18.98 crore as against Rs.60.14 crore during the last year.

4.0 Scheme for Physically Handicapped :

Corporation has discontinued functioning as a channelising agency of the NHFDC, Faridabad since November 2006 and therefore, no amount was sanctioned and disbursed during the year. However, an amount of Rs. 7.91 lacs has been recovered by the Corporation during the year under NHFDC scheme.

5.0 Recovery:

During the year 2009-10, Corporation recovered an amount of Rs. 35.22 crores as against Rs.75.13 crores during FY 2008-09.

6.0 Staff Strength :

The total staff strength as on 31/03/2010 is as under:

1. GradeAOfficers 14

2. GradeBofficers 141

3. Grade C employees 30 Total 185

7.0 Audit:

The Corporation re-appointed M/s. R S Patel & Company, Chartered Accountants, Ahmedabad as Statutory Auditors in the Annual General Meeting held on 22/01/2010, as per the recommendation of RBI under the provisions of Section 37 (I) of the SFC Act, 1951 to conduct audit of the Books of Accounts of the Corporation for Financial Year 2009-10. The audit of the accounts was completed for the year by them.

8.0 Board of Directors :

During the financial year, the nomination of Smt. Gauri Kumar, IAS, was withdrawn by the Government of Gujarat on 02/04/2009 and in her place Shri M Sahu, IAS, Principal Secretary, Industries & Mines Department, Government of Gujarat was nominated. SIDBI vide letter dated 09/07/2009 appointed Shri M Sahu, IAS, as Chairman of the Corporation. Government of Gujarat also withdrawn the nomination of Shri G P Joshi, IAS, from the Board of the Corporation vide notification dated 02/04/2009 and in his place, Shri C L Meena, IAS, Principal Secretary (Expenditure), Finance Department, Government of Guarat, was nominated.

9.00 Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and certificate regarding compliance of conditions of Corporate Governance are made a part of this Annual Report.

10.0 Directors Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217 (2AA) of the Companies Act, 1956 :

1. That in the preparation of the annual accounts for the year ended 31st March 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

2. That such accounting policies as mentioned in Schedule 16 of the Annual Accounts have been selected and applied consistently and judgments and estimates that are reasonable and prudent are made so as to give a true and fair view of the state of affairs of the Corporation at the end of the financial year ended 31st March 2010 and of the loss of the Corporation for that year.

3. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Corporation and for preventing and detecting fraud and other irregularities.

4. That the annual accounts for the year ended 31st March 2010 has been prepared on a going concern basis.

11.0 Acknowledgement:

The Board is grateful to the Government of India, Government of Gujarat and Small Industries Development Bank of India for their advise, support and guidance. The Board thanks GIIC, GIDC, DICs and various Banks for extending their support and co-operation.

The Board thanks Industries Department as well as Finance Department of Government of Gujarat for their valuable guidance and support. The Board is obliged to the shareholders of the Corporation for reposing their confidence and supporting the Corporation.

Board also takes on record the commendable services rendered by outgoing Chairperson, Smt. Gauri Kumar, IAS and also outgoing Director Shri G P Joshi, IAS.

The Board conveys its appreciation to all employees of the Corporation for their performance during the year and calls upon similar performance in the current year.

For and on behalf of the Board

Sd/- Place : Gandhinagar (Arvind Agarwal)

Date : 28-07-2010 Managing Director

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Mar 31, 2009

1.0 Economy:

Many challenges face Indian industry in the current macro-economic environment. Indias heady growth story of the last five years was somewhat subdued this year, eventhough GDP growth is now looking at approximately 6% compared to the heights of 9% reported in previous year. Monsoon has been erratic, and picked up late in some states. The global economic environment was also shaken. Oil prices continued spiraling and food prices soared. It was indeed a difficult year for the Indian economy.

Indian Industrys performance swung substantially each month, led by decline in growth of consumer goods segment. Fortunately, the services sector has continued its momentum as the growth driver for the economy and has truly emerged as a power house, stabilizing growth even as the industry and agriculture sectors faltered.

2.0 Operational Results/Financial Highlights :

Corporation continued to stop lending and disbursement, which were its main business activities. The Task Force appointed by Government of Gujart for financial restructuring of GSFC suggested to reduce the overall administrative expenditure. Accordingly, GSFC has taken several steps for reduction of administrative expenditure. In 2008, VRS was offered to the employees which has been availed by total of 160 employees. .

Corporation made concerted efforts to dispose off units under possession. During the year under report, an amount of Rs.24.82 crores was realized from sale of units/assets as against the realized amount of Rs.35.40 crores during 2007-08.

Corporation also introduced a scheme of One Time Settlement during the year for the dues of its term loanees with a view to maximize the recovery and minimize the number of accounts with the Corporation During the year, an amount of Rs.40.27 crores was realized under the OTS Scheme.

3.0 Resources/Financial Restructuring :

State Government has continued its financial support and provided an assistance of Rs.60.00 crores, which was used for repayment of dues of SIDBI and Bonds guaranteed by the State Government.

4.0 Scheme for Physically Handicapped :

Corporation has discontinued functioning as a channelising agency of the NHFDC, Faridabad since November 2006 and therefore, no amount was sanctioned and disbursed during the year. However, an amount of Rs.23.06 lacs has been recovered by the Corporation during the year under NHFDC scheme.

5.0 Recovery:

During the year 2008-09, Corporation recovered an amount of Rs.75.13 crores as against Rs.98.44 crores during FY 2007-08.

6.0 Staff Strength :

The total staff strength as on 31/03/2009 is as under:

1. GradeAOfficers 18

2. Grade B officers 159

3. Grade C employees 33 Total 210

7.0 Audit:

The Corporation re-appointed M/s. R S Patel & Company, Chartered Accountants, Ahmedabad as Statutory Auditors in the Annua! General Meeting of the shareholders held on 23/01/2009, as per the recommendation of RBI under the provisions of Section 37 (I) of the SFC Act, 1951 to conduct audit of the Books of Accounts of the Corporation for FY 2008-09, The audit of the accounts was completed for the year by them.

8.0 Board of Directors :

(1) Chairperson/Chairman

Sr. No. Name of Chah man/Chairperson Period

1 Shri D, Rajagooaian, IAS From 15/01/07 to 21/05/2008

2 Smt. Gauri Kumar, IAS From 22/05/2008

(2) Managing Director

Sr. No. Name of Managing Director Period

1 Shri Arvind Agarwal, IAS From 07/05/07 onwards

(3) Directors : Shri G P Joshi, IAS, nominated by Government of Gujarat as Director of the Corporation from 21/05/2008 in place of Shri A K Jots, IAS. Shri U R Tata, nominated by SIDBI, as Director cf the Corporation was withdrawn by SIDBI on 19/12/2007 and Shri D Ghosh was nominated in his place.

9.00 Acknowledgement:

The Board is grateful to the Government of India, Government of Gujarat and Small Industries Development Bank of India for their advise, support and guidance. The Board thanks GIIC, GIDC, DICs and various Banks for extending their support and co-operation.

The Board thanks Industries Department as well as Finance Department of Government of Gujarat for their valuables guidance and support. The Board is obliged to the shareholders of the Corporation for reposing their confidence and supporting the Corporation.

Board also takes on record the commendable services rendered by outgoing Chairman, Shri D Rajagopalan, IAS and also outgoing Director Shri A K Joti, IAS and Shri U R Tata.

The Board conveys its appreciation to all employees of the Corporation for their performance during the year and calls upon similar performance in the current year.

EXPLANATORY NOTES OF THE BOARD ON QUALIFICATIONS/OBSERVATIONS OF

STATUTORY AUDITORS.

Point No. V

The Auditors have not given specific comment about the areas of aspect where the internal control system of the Corporation is inadequate and require to be strengthened. It is, therefore, not possible to give a specific reply to the observation of the auditors. However, in respect of internal control, the Corporation has a well laid down policy and procedure in the form of guidelines and circulars and the system provides for in-built checks and balances of the transactions. The transactions are also periodically reviewed at various levels so that chances of errors and frauds are minimized. For internal audit, the Corporation has also appointed a firm of Chartered Accountants and the scope of internal audit covers checking of transactions on regular basis. Review of internal control, system and procedures - now the system of pre- audit of expenditure is also introduced. The internal auditors has also been requested to conduct system-based audit in the Corporation to further strengthen the system & procedures.

Point No. VI

Interest provision of Rs. 229.53 lakh on PSB Bonds III, IV & V has not been made as contractual rates since the Corporation has moved a financial restructuring programme with these bond holders where the repayment is adjusted against the principal amount as a part the total package and no interest is paid to the Bond Holder.

Point No. VII

Reconciliation of General Ledgers and Sub-ledgers

Some credit balances have come because of loanees are paying in advance. Reconciliation is an ongoing exercise and most of the accounts have already been reconciled with the general ledger. Since the amount under review is insignificant compared to the total asset block, it hardly makes any difference in the provisions.

Point No. VIII & IX

Corporation is traditionally adopting the practice of making actual payment at the time of retirement of employees and debiting the actual amount to the Profit & Loss Account in the year in which liability arises.

FIXED ASSETS

Corporation provides depreciation as per the provisions of Income Tax act. Corporation has decided to calculate Profit or Loss on the assets sold where the nature of assets are significant, outdated unrepairable computers where the gain haraly makes any difference and required lengthy calculation. During the year, Corporation has sold out own land along with compound wall at Surendranagar and building at Bhavnagar for Rs 39 00 lakh. Corporation has also received gain due to this transaction and shown in Profit & Loss Account.

GSFC TOWER AT SURAT

Corporation is reviewing the legal, administrative and accounting treatment of Surat Tower. As soon as this is accomplished, necessary accounting entries will be passed.

INVESTMENT

The securities under question are not tradable in the open market and hence are not disposed of though more than 7 years have passed. However, Corporation has made total provision on investment keeping aside a token value of Rs. 1/- in abeyance.

UNCLAIMED / UNPAID DIVIDEND

Corporation has utilized the unclaimed dividend on partly paid shares since provision of SFCs Act are applicable to the Corporation instead of Companies Act.

Loan and Advances & NPA Provision

Corporation has more than 5000 units under doubtful category scattered in State of Gujarat where valuation of each unit is not feasible. Moreover, Corporation has already made 99.55% provision under doubtful category. As a prevailing practice, Corporation gets valuation done from outside valuers for those unit which are under possession of the Corporation.

For and on behalf of the Board

Sd/- Place: Gandhinagar (ARVINDAGARWAL)

Date : 30-09-2009 MANAGING DIRECTOR