Directors Report of Gujarat State Financial Corporation

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