Notes to Accounts of Gujarat State Financial Corporation

Mar 31, 2015

(01) All Government guaranteed bonds have been redeemed and proposal for vacation of guarantees are submitted to administrative department. Since there was no Government guaranteed bonds during the previous year, no guarantee fee is payable during the year under report. However, Corporation is in default of guarantee fee of Rs. 35,60,39,833/- (Previous year Rs. 35,60,39,833/-).

(02) While writing off principal amount as bad debts in certain cases, the value of securities available has not been ascertained and deducted from the principal amount. The sale proceeds of the securities will be accounted as bad debts recovered under the head "Other Income" as and when the amounts are realized.

During the year under review, the Corporation has recovered an amount of Rs. 10,71,944/-/- [Previous year (Rs. 50,79,234-)] towards Bad Debts written off.

(03) CONTINGENT LIABILITIES :

Contingent liabilities are not recognized as there is no present obligation as a result of past events and it is probable that there will be an outflow of resources. However, contingent liabilities are disclosed as under :

(i) Claims in Civil suits against Corporation not acknowledged as debt estimated to Rs. 202.85 lacs (previous year Rs. 202.85 lacs).

(ii) GIIC has claimed Rs. 33,75,000/- towards rent expenses payable in respect of share of Mumbai Office and Mumbai Guest House upto 31st March, 2004 whereas Corporation has made a claim of Rs. 51,70,056/- from GIIC on account of occupation of GSFC's office premises at Rajkot. Both the claims are yet to be resolved and hence neither income nor expense has been recognized in the accounts.

(iii) Details of Income Tax disputes against which appeals have been preferred are given below. The quantum of disputed tax liability is not ascertainable.

(a) Appeals pending before CIT (Appeals)

(04) DETAILS OF PENDING RECONCILIATION :

(i) In some of the cases, the balances as per the General Ledger are not tallied with the respective subsidiary ledgers. Some accounts also show odd balances.

(ii) The outstanding balance of current liabilities/ non current liabilities including the other liabilities and other assets are subject to confirmation and adjustment, if any.

(iii) Unpaid expenses of Rs. 91,58,513/- (Previous year Rs. 91,08,794/-) stands un- reconciled.

(iv) The Staff Advance interest accumulation of Rs. 2,03,37,025/- is un-reconciled with individual ledger balances (Previous year Rs. 2,35,35,986/-).

(v) The difference in Sales Tax deferment Deemed loan between Subsidiary Ledger and General Ledger stands un-reconciled.

(05) The figures of previous year have been regrouped and rearranged wherever necessary to make them comparable with figures of the current year.

(06) The Corporation has made provision as per the prudential norms prescribed by SIDBI on the principal outstanding and other expenses incurred and shown as receivables. The provision made is subject to the note no. B-4 regarding non reconciliation of general ledger balances as per the subsidiary ledger. During the year under reference, all loan accounts are treated as doubtful for more than three years or loss assets. Accordingly, 100% provision has been made. Corporation has written back provision of NPA to the extent of Rs. 8,85,02,220/- in the current year (Previous year Rs. 15,90,48,860/-).

(07) Corporation's operations are solely in the Financial Service Industry including Investment Operation. As interest income accounts for nearly 95% of Corporation's total revenue, separate segment reporting as per Accounting Standard-17 is not considered necessary.

(08) Board of Directors at its meeting held on 3.10.2012 decided to recommend to Government of Gujarat to make the loan of Rs. 621.37 crores as interest free from 1.7.2012. A proposal has been submitted to Government through Industries & Mines Department and decision is awaited. Till then, interest on Government loan is charged to Statement of Profit & Loss on simple interest basis from 1.7.2012.

(09) Corporation has been making specific provision @ 100% of outstanding principal and other expenses on ascertained bad debts in earlier years. Due to clubbing of accounts, no separate provision for ascertained bad debts has been made.

(10) Corporation sold out furniture and fixtures and realized an amount of Rs. 32,31,450/-. Since the assets sold out could not be identified from the Fixed Assets Register maintained, Capital Work-in-Progress of earlier years shown in the account has been appropriated and loss on sale of furniture of Rs. 8,21,659/- has been accounted for in the Statement of Profit and Loss.

(11) Corporation has sold Baroda Office building and received sale consideration of Rs.92.00 lakh and possession of the premises was handed over to the purchaser. Pending execution of sale deed, the amount is carried forward in the books and no depreciation is provided on the same during the year.

(12) Financial Corporations are established to financing medium and small scale industries as Regional Development Banks for accelerating the industrial growth in States. SFCs are created in pursuance to Entry No. 43 of the Union List by Parliament as a special Act. GSFC, being body corporate established under SFCs Act, 1951, remedial measures available to companies under SICA like rehabilitation, revival, takeover of management etc., are not available to the Corporation. The Corporation has suffered immense losses till date. However, it is continuing its recovery functions. The Government has been moved to make the loan advanced to the Corporation interest-free, which is under consideration. Inview of the above, it is the view of the Corporation that preparing accounts on "going concern" assumption is appropriate.

---

Mar 31, 2014

Note : 1 (i) Soft loan received from Government of Gujarat (21 accounts) during the years from 2004-05 to 2011-12 are repayable in 10 years in quarterly installments from the date of disbursement carrying interest ranging from 12% to 15%.

(ii) On account of weak financial condition and consistent operational losses, the Corporation has continuously defaulted in repayment of Government of Gujarat''s long term loans/borrowings. In view of huge accumulated losses and inadequate resources, there is a mis-match in revenue and repayment of liabilities. Hence all loans and interest thereon are classified as Non-Current Liabilities.

(01) All Government guaranteed bonds have been redeemed and since there was no Government guaranteed bonds during the previous year, no guarantee fee was payable during the year under report. However, Corporation is in default of guarantee fee of Rs. 35,60,39,833/- (Previous year Rs. 35,60,39,833/-).

(02) While writing off principal amount as bad debts in certain cases, the value of securities available has not been ascertained and deducted from the principal amount. The sale proceeds of the securities will be accounted as bad debts recovered under the head "Other Income" as and when the amounts are realized.

During the year under review, the Bad Debts Recovery account shows a debit balance of Rs. 50,79,234/- due to recasting of accounts. (Previous year Rs. 1,45,96,037/-) towards Bad Debts recovery.

(03) CONTINGENT LIABILITIES :

(a) Towards partly paid up equity shares shown as investment - Rs. 3,00,000/-.

(i) Towards net amount disputed on sales tax including interest and penalty on hire purchase/lease transactions of Rs. 39,47,16,960/- for FY 1995-96 to 2001-2002, Corporation has made a proposal to Government of Gujarat for settlement of Sales Tax dues. It was decided in the meeting of High Power Committee constituted by the Government of Gujarat held on 11-3-2013 that the Committee will recommend to Government for settlement of Sales Tax dispute of GSFC by accepting Rs. 20 crore. On recommendation of High Power Committee, Government decided that GSFC will make payment of Sales Tax amount of Rs. 20 crore to Sales Tax Department. After payment of Rs. 20 crore, Government will decide for waiver of balance Sales Tax amount. Accordingly, Corporation has made payment of Rs. 20 crore on 12-3-2014. The Corporation has identified the borrowers for recovery of sales tax for Rs. 76,594,188/-. However, such due recovery is not accounted for in the books.

(ii) Claims in Civil suits against Corporation not acknowledged as debt estimated to Rs. 202.85 lacs (previous year Rs. 202.85 lacs).

(iii) GIIC has claimed Rs. 33,75,000/- towards rent expenses payable in respect of share of Mumbai office and Mumbai Guest House upto 31st March, 2004 whereas Corporation has made a claim of Rs. 51,70,056/- from GIIC on account of occupation of GSFC''s office premises at Rajkot. Both the claims are yet to be resolved.

(04) In some of the cases, the balances as per the General Ledger are not tallied with the respective subsidiary ledgers. Some accounts also show odd balances. The total difference between General Ledger balances and the balances as per the subsidiary ledger is to the tune of Rs. 9,28,746/- (previous year Rs. 13,36,268/-) which is under reconciliation.

(05) The outstanding balance in the composition of current liabilities/non current liabilities including the other liabilities and other assets are subject to confirmation and adjustment, if any.

(06) The fgures of previous year have been regrouped and rearranged wherever necessary to make them comparable with fgures of the current year.

(07) Unpaid expenses of Rs. 91,08,794/- (Previous year Rs. 86,14,789/-) stands un- reconciled.

(08) The Corporation has made provision as per the prudential norms prescribed by SIDBI on the principal outstanding and other expenses incurred and shown as receivables. The provision made is subject to the note no. B-4 regarding non reconciliation of general ledger balances as per the subsidiary ledger. However since there is reduction in NPA on an overall net basis after considering all relevant provisions, Corporation has written back provision of NPA to the extent of Rs. 14,74,12,140/- in the current year (Previous year Rs. 27,02,77,050/-).

(09) The Staff Advance interest accumulation of Rs. 2,35,35,986/- is un-reconciled with individual ledger balances (Previous year Rs. 2,57,34,228/-).

(10) Corporation''s operations are solely in the Financial Service Industry including Investment Operation. As interest income accounts for nearly 95% of Corporation''s total revenue, separate segment reporting as per Accounting Standard-17 is not considered necessary.

(11) Board of Directors at its meeting held on 3-10-2012 decided to recommend to Government of Gujarat to make the loan of ? 621,36,80,000/- as interest free from 1-7-2012. A proposal has been submitted to Government through Industries & Mines Department and decision is awaited. Till then, interest on Government loan is charged to Statement of Profit & Loss on simple interest basis from 1-7-2012.

(12) The difference in Sales Tax deferment Deemed loan between Subsidiary Ledger and General Ledger stands un-reconciled.

(13) Corporation has been making Specific provision @ 100% of outstanding principal and other expenses on ascertained bad debts. However, due to decrease in such assets, an amount of Rs.1,16,36,720/- (Previous year Rs.6,00,78,526/-) has been written back and recognized as income in the Statement of Profit and Loss for the year under reference.

(14) The Corporation has purchased new office premises and also sold office premises at Surat for which full payment is made and received respectively during the year. The conveyance deed of both the properties are executed after 31st March, 2014.Therefore no cognizance of the transactions of purchase/sale of such immoveable properties are taken during the year and payments made and received for such transactions of the properties are shown as liabilities/assets respectively. The Corporation has sold Baroda office building and received sale consideration but pending final sale deed, the amount carried in the books and no depreciation is provided on the same during the year.

(15) Other current assets as stated in Note No. 8 includes element of non-current nature also but for want of proper information, it could not be quantifed and reported separately.

A. CAPITAL

(a) Capital to Risk Assets Ratio (CRAR) -2401.33%

(b) The Amount of subordinated debt raised and outstanding as Tier -ll Capital Nil

(c) Risk weighted assets- separately for on and off balance sheet items

(d) The share holding pattern as on the date of the Balance Sheet

(h) Movement in net NPA''s Amount (Rs. in crore)

Opening Balance of Net NPA''s 468.95

Closing Balance of Net NPA''s 453.52

Movement in Net NPA''s -15.43

As the figure of recoveries in NPA''s were not available, the addition in net NPA''s has been netted by the amount of recoveries made during the year.

---

Mar 31, 2013

(01) The State Government vide Circular NO. BHD/1098/3764 dated 9th December, 1998 has increased the rate of guarantee fees on bonds from 0.25% to 1.00% on the bonds guaranteed by the State Government on outstanding amount as on date. Amount of Rs. 1,25,000/- is provided towards guarantee fee payable during the current year based on outstanding amount in the previous year which is charged to Statement of Profit & Loss. The default in guarantee fee as on 31.3.2013 is Rs. 35,60,39,833/-. (Previous year Rs. 35,59,14,833)

(02) While writing off principal amount as bad debts in certain cases, the value of securities available has not been ascertained and deducted from the principal amount. The sale proceeds of the securities will be accounted as bad debts recovered under the head "Other Income" as and when the amounts are realized.

During the year under review, the Corporation has recovered an amount of Rs. 1,45,96,037/- (Previous yearRs. 90,38,977/-) towards Bad Debts written off.

(03) CONTINGENT LIABILITIES :

(a) Towards partly paid up equity shares shown as investment - Rs. 3,00,000/-.

(i) Towards net amount disputed on sales tax including interest and penalty on hire purchase/lease transactions ofRs. 39,47,16,960/- for FY 1995-96 to 2001-02.

(ii) ClaimsinCivilsuitsagainstCorporationnotacknowledgedasdebtestimatedto Rs. 202.85 lacs (previous year Rs. 202.85 lacs).

(iii) GIIC has claimed Rs. 33,75,000/- towards rent expenses payable in respect of share of Mumbai Office and Mumbai Guest House upto 31st March, 2004 whereas Corporation has made a claim of Rs. 51,70,056/- from GIIC on account of occupation of GSFC''s office premises at Rajkot. Both the claims are yet to be settled. Hence the liability/income has not been recognized by the Corporation.

(iv) Against Income Tax demand for Assessment Years 1998-1999, 1999-2000 and 2000-2001 of Rs. 45,67,768/-, Rs. 24,10,052/- paid in the previous year and balance demand for Rs. 21,57,716/- is treated as contingent liability pending final verdict of appellate authority.

(i) The Return for Assessment Year 2006-07 was reopened during the year under reference and AO added Rs. 159,46,05,271/- credited by the Corporation to Capital Reserves Account to income of the Corporation and made demand forRs. 11,47,93,780/-. The said demand was raised without taking into account the accumulated loss carried forward. Corporation filed application for Rectification of Mistake and also preferred an appeal before CIT (Appeals)-VIII. In view of the accumulated loss and Corporation contested the addition, no provision has been made.

(ii) For Assessment Year 2009-10, Income Tax department has issued notice u/s 143(3) of Income Tax Act, 1961 and added/disallowed Rs. 61.72 crore as against the loss ofRs. 152.86 crore and for Assessment Year 2010-11, Rs. 17.99 crore was disallowed/added as against the loss ofRs. 151.59 crore. Corporation preferred appeals against the said assessment orders before appellate authority.

(04) In some of the cases, the balances as per the General Ledger are not tallied with the respective subsidiary ledgers. Some accounts also show odd balances. The total difference between General Ledger balances and the balances as per the subsidiary ledger is to the tune of Rs. 13,36,268/- (previous year Rs. 13,37,267/-) which is under reconciliation.

(05) The outstanding balance of current liabilities/ non current liabilities including the other liabilities and other assets are subject to confirmation and adjustment, if any.

(06) The figures of previous year have been regrouped and rearranged wherever necessary to make them comparable with figures of the current year.

(07) Unpaid expenses of Rs. 86,14,789/- (Previous year Rs. 90,41,126/-) stands un-reconciled.

(08) The Corporation has made provision as per the prudential norms prescribed by SIDBI on the principal outstanding and other expenses incurred and shown as receivables. The provision made is subject to the note no. B-4 regarding non reconciliation of general ledger balances as per the subsidiary ledger. However since there is reduction in NPA on an overall net basis after considering all relevant provisions, Corporation has written back provision of NPA to the extent of Rs. 27,02,77,050/- in the current year (Previous year Rs. 27,30,50,355/-).

(09) The Staff Advance interest accumulation of Rs. 2,57,34,228/- is un-reconciled with individual ledger balances (Previous year Rs. 2,85,04,587/-).

(10) Corporation''s operations are solely in the Financial Service Industry including Investment Operation. As interest income accounts for nearly 95% of Corporation''s total revenue, separate segment reporting as per Accounting Standard-17 is not considered necessary.

(11) Board of Directors at its meeting held on 3.10.2012 decided to recommend to Government of Gujarat to make the loan of Rs. 621.37 crores as interest free from 1.7.2012. A proposal has already been submitted to Government through Industries & Mines Department. Pending decision by Government, interest on Government loan is charged to Statement of Profit & Loss on simple interest basis from 1.7.2012.

(12) The difference in Sales Tax deferment Deemed loan between Subsidiary Ledger and General Ledger stands un-reconciled.

(13) Corporation has been making specific provision @ 100% of outstanding principal and other expenses on ascertained bad debts. However, due to decrease in such assets, an amount of Rs. 6,00,78,526/- has been written back and recognized as income in the Statement of Profit and Loss for the year under reference as against provision made for the previous year of Rs. 4,45,14,154/-.

(14) Corporation has made a proposal to Government of Gujarat for settlement of Sales Tax dues. Meetings of High Power Committee constituted by the Govt, of Gujarat were held on 21.8.2012 and 11.3.2013 to decide on the issue and the final decision is awaited. Corporation has, therefore, not made specific provision for Sales Tax dues. Recovery from loanees made is separately shown as liability.

* Includes special class of shares of 18,00,000 & 7,00,000 held by Govt, of Gujarat & SIDBI respectively

---

Mar 31, 2012

(01) The State Government vide Circular NO.BHD/1098/3764 dated 9th December, 1998 has increased the rate of guarantee fees on bonds from 0.25% to 1.00% on the bonds guaranteed by the State Government on outstanding amount as on date. Amount of Rs. 4,20,000/ is provided towards guarantee fee payable during the current year based on outstanding amount in the previous year which is charged to Statement of Proft & Loss. The default in guarantee fee as on 31.3.2012 is Rs. 35,59,14,833/ .

(02) While writing off principal amount as bad debts in certain cases, the value of securities available has not been ascertained and deducted from the principal amount. The sale proceeds of the securities will be accounted as bad debts recovered under the head "Other Income" as and when the amounts are realized.

During the year under review, the Corporation has recovered an amount of Rs. 90,38,977/ (Previous year Rs. 63,24,988/ ) towards Bad Debts written off.

(03) CONTINGENT LAIBILITES :

(a) Towards partly paid up equity shares shown as investment Rs. 3,00,000/ .

a. Towards net amount disputed on sales tax on hire purchase/lease transactions Rs. 39,47,16,960/ and interest and penalty thereon. (for FY 1995 96 to 2001 2002). Corporation has made a proposal to the Government of Gujarat for settlement of dues by paying principal amount. The proposal is under active consideration.

b. Claims in Civil suits against Corporation not acknowledged as debt estimated to Rs. 2,03,000/ (previous year Rs. 2,03,000/ ).

c. Rs. 29,58,000/ towards rent expense payable to Gujarat Industrial Investment Corporation Limited (GIIC) being share of expenses for Mumbai offce and Mumbai Guest House upto 31st March 2004. Management has not accepted this claim.

d. Against Income Tax demand for Assessment Years 1998 1999, 1999 2000 and 2000 2001 of Rs. 45,67,768/ , Rs. 24,10,052/ paid and taken to Revenue account whereas balance demand for Rs. 21,57,716/ is treated as contingent liability pending fnal verdict of litigation.

(04) In some of the cases, the balance as per the General Ledger are not tallied with the respective subsidiary ledgers. Some accounts also show odd balances. The total difference between General Ledger balances and the balances as per the subsidiary ledger is to the tune of Rs. 13,37,267/ (previous year Rs. 2,14,59,136/ ) which is under reconciliation.

(05) The outstanding balance of current liabilities/ non current liabilities including the other liabilities and other assets are subject to confrmation and adjustment, if any.

(06) The fgures of previous year have been regrouped and rearranged wherever necessary to make them comparable with fgures of the current year.

(07) Unpaid expenses of Rs. 90,41,126/ (Previous year Rs. 87,91,885/ ) stands un reconciled.

(08) The Corporation has made provision as per the prudential norms prescribed by SIDBI on the principal outstanding and other expenses incurred and shown as receivables. The provision made is subject to the note no. B 4 regarding non reconciliation of general ledger balances as per the subsidiary ledger. However since there is reduction in NPA on an overall net basis after considering all relevant provisions, Corporation has written back Rs. 27,30,50,355/ in the current year (Previous year Rs. 33,05,08,381/ ).

[09] The Staff Advance interest accumulation of Rs. 2,85,04,587/ is to be reconciled with individual ledger balances (Previous year Rs. 3,09,38,392/ ).

(10) Corporation's operations are solely in the Financial Service Industry including Investment Operation. As interest income accounts for nearly 95% of Corporation's total revenue, separate segment reporting as per Accounting Standard 17 is not considered necessary.

(11) The difference in Sales Tax deferment Deemed loan between Subsidiary Ledger and General Ledger stands un reconciled.

(12) Corporation has made specifc provision @ 100% of outstanding principal and other expenses amounting to Rs. 4,45,14,154/ (previous year 3,89,90,537/ ) against the principal outstanding, assets of which are acquired under section 29 of SFCs, Act 1951.

---

Mar 31, 2010

[01 ] The State Government vide Circular No. BHD/1098/3764 dated 9th December, 1998 has increased the rate of guarantee fees on bonds from 0.25% to 1.00% on the bonds guaranteed by the State Government on outstanding amount as on date. Amount of Rs. 0.60 crore is provided towards guarantee fee payable during the current year based on outstanding amount in the previous year is charged to P & L account. The default in guarantee fee as on 31/03/2010 is Rs. 35.36 crore.

[02] While writing off principal amount as bad debts in certain cases, the value of securities available has not been ascertained and deducted from the principal amount. The sale proceeds of the securities will be accounted as bad debts recovered under the head other income as and when the amounts are realized.

During the year under review, the Corporation has recovered the amount of Rs. 26,08,698/- (Previous year Rs. 22,45,449/-) towards Bad Debts written off.

[03] CONTINGENT LIABILITIES :

[a] Towards partly paid up equity shares shown as investment Rs.3 lacs.

[b] Towards net amount disputed on sales tax on hire purchase/lease transactions Rs. 39.11 crore and interest and penalty thereon.(for FY 1995- 96 to 2001-2002). GOG convened a meeting of all concerned officials in this regard onl5-09-2003 and decided that equity capital contribution be made available to GSFC from the State Government, which should be adjusted towards payment of Sales Tax dues. The sales tax dues would be principal plus interest and not other charges or penalty etc.

[c] Claims in Civil suits against Corporation not acknowledged as debt estimated amount to Rs 1.61 crore (previous year Rs. 6.17 crore).

[d] Rs. 29.58 lacs towards rent expense payable to Gujarat Industrial Investment Corporation Limited (GIIC) being share of expenses for Mumbai office and Mumbai Guest House upto 31st March 2004. Management has not accepted this claim.

[04] In some of the cases the balance as per the General Ledger are not tallied with the respective subsidiary ledgers. Some accounts also show credit balances. The total difference between General Ledger balances and the balances as per the subsidiary ledger is to the tune of Rs 8531653.78 (previous year Rs. 2277803.18) which is under reconciliation.

[05] The outstanding balance of current liabilities including the other liabilities and other assets are subject to confirmation and adjustment, if any.

[06] The figures of previous year have been regrouped arid rearranged wherever necessary to make them comparable with figures of the current year.

[07] Unpaid expenses of Rs 0.80 crores (Previous year. Rs. 0.85 Crore) is un-reconciled.

[08] The Corporation has made provisions as per the prudential norms prescribed by SIDBI on the principal outstanding and not on expenses incurred for recovery of dues shown as receivable. The provision made is subject to the note no. B-4 regarding non reconciliation of general ledger balances as per the subsidiary ledger. However since there is reduction in NPA on an overall net basis after considering all relevant provisions, corporation has written back Rs. 18.99 Crores in the current year.

[09] The Staff Advance Balance of Rs. 1.01 crore is to be reconciled with individual ledger balances.

[10] Corporations operations are solely in the Finance Service Industry including Investment Operation. As interest income accounts for nearly 95 % of companys total revenue separate segment reporting as per Accounting Standard-17 is not considered necessary.

[11] There is difference of Rs. 0.69 Crs. in Sales Tax deferment Deemed loan between subsidiary ledger and General Ledger which needs to be reconciled

[12] Corporation has made specific provision @100% of outstanding principal and other expenses amounting to Rs. 5.75 crore against the principal outstanding, assets of which are acquired under section 29 of SFC Act 1951 and sold out by corporation.

A. CAPITAL

(a) Capital to Risk Assets Ratio (CRAR) -1937.30%

(b) The amount of subordinated debt raised and outstanding as Nil Tier-ll Capital

(c) Risk weighted assets - separately for on and off balance sheet items 19279.59

---

Mar 31, 2009

[01] The State Government vide Circular No. BHD/1098/3764 dated 9th December, 1998 has increased the rate of guarantee fees on bonds from 0.25% to 1.00% on the bonds guaranted by the State Government on outstanding amount as on date. Amount of Rs. 0.96 crore is provided towards arrears of guarantee fee payable during current year is charged to P & L account. The default in guarantee fee is Rs.34.75 crore.

[02] While writing off principal amount as bad debts in certain cases the value of securities available has not been ascertained and deducted from the principal amount. The sale proceeds of the securities will be accounted as bad debts recovered under the head other income as and when the amounts are realized. During the year under review, the Corporation has recovered the amount of Rs.22,45,449/- (Previous year Rs. 5036530/-) towards Bad Debts written off.

[03] CONTINGENT LIABILITIES :

[a] Towards partly paid up equity shares shown as investment Rs.3 lacs.

[b] Towards net amount disputed on sales tax on hire purchase/lease transactions Rs. 39.11 crore and interest and penalty thereon.(for FY 1995-96 to 2001-2002). GOG convened a meeting of all concerned officials in this regard on15-09-2003 and decided that equity capital contribution be made available to GSFC from the State Government, which should be adjusted towards payment of Sales Tax dues. The sales tax dues would be principal plus interest and not other charges or penalty etc.

[c] Claims in Civil suits against Corporation not acknowledged as debt estimated amount to Rs 6.17 crore (previous year Rs. 13.84 crore).

[d] Rs. 29.58 lacs towards rent expense payable to Gujarat Industrial Investment Corporation Limited (GIIC) being share of expenses for Mumbai office and Mumbai Guest House upto 31st March 2004. Management has not accepted this claim.

[04] In some of the cases the balance as per the General Ledger are not tallied with the respective subsidiary ledgers. Some accounts also show credit balances. The total difference between General Ledger balances and the balances as per the subsidiary ledger is to the tune of Rs. 2277803/18 (previous year Rs. 2277803/18) it is under reconciliation.

[05] The Corporation has made provisions as per the prudential norms prescribed by SIDBI on the Principal Outstanding and not on expenses incurred for recovery of dues shown as receivable. The provision made is subject to the note No. B-4 regarding non-reconciliation of general ledger balances as per the subsidiary ledger. Moreover as per revised prudential norms prescribed by SIDBI additional provision required to be made in case of doubtful assets over 3 years could be phased out over a period of 3 years, corporation has amortised additional provision requirement of 141.48 crores by providing 47.16 crores in 2006-2007, 47.16 in 2007-2008 and the remaining 47.16 crore is provided in current financial year 2008-09. However since there is reduction in NPA on an overall net basis after considering all relevant provisions, corporation has written back Rs. 30.53 Crores in the current year.

[06] The amount outstanding in ioanee account, where the cases were settled and NDC issued earlier has been written off and charged to the P& L account for the year Rs. 31.99 Crores (Previous year - Rs. 24.37 Crores). The amount is increased due to implementation of OTS.

[07] The outstanding balance of current liabilities including the other liabilities and other assets are subject to confirmation and adjustment, if any.

[08] The figures of Previous year have been regrouped and rearranged wherever necessary to make them comparable with figures of the current year.

[9] Corporation restructured government guaranteed priority sector bonds series I & II. Rate of interest is reduced from 13.25% & 11.75% respectively to 8% from 1-4-2003. All the bond holders have accepted the restructured amount.

[10] Unpaid expenses of Rs 0.85 crores (Previous year Rs. 1.31 Crore) is unreconciled.

[11] The Staff Advance Balance Rs. 1.32 crore is to be reconciled with individual ledger balances.

[12] Companys operations are solely in the Finance Service Industry including Investment Operation. As interest income accounts for nearly 95 % of companys total revenue separate segment reporting as per Accounting Standard-17 is not considered necessary.

[13] There is difference of Rs. 1.06 crs in Sales Tax deferment Deemed loan between subsidiary ledger and General Ledger which needs to be reconciled

[14] Corporation has made specific provision @100% of outstanding principal and other expenses amounting to Rs. 16.22 Crore against the principal outstanding, assets of which are acquired under section 29 of SFC Act 1951 and sold out by corporation.

[15] Corporation has done one time settlement with IDBI Bank and Indian Overseas Bank, against the total principal outstanding balance of Rs. 2037.35 lacs, dues were settled for Rs. 1230.00 lacs and of the balance amount of, Rs 807.35 lacs is transfer to Capital Reserve and unpaid accrued interest transfer to Profit and loss Account under the head "Interest Sacrifice on Restructuring " Rs1279.97 lacs.

[16] SIDBI settled their entire outstanding amount inclusive of interest, overdue interest, penalty, damages etc. on 01-03-2006 for Rs. 400 crore payable in following schedule: By March 2006 Rs.120/- Crore By Sept. 2006 Rs. 120/- Crore

By Sept.2007 Rs. 120/- Crore By Sept.2008 Rs. 40/- Crore

Corporation has paid the amount as per schedule with financial support of State Government.

REGIONAL & OTHER OFFICES :

AHMEDABAD REGIONAL OFFICE CHILDRENS HOSPITAL BUILDING OPR ELLIS BRIDGE POLICE LINE, ELLIS BRIDGE, AHMEDABAD - 380006. TELE.NO. [phone] 26464480 FAX NO. [phone]

SURAT REGIONAL OFFICE

VIKAS BUILDING DUTCH GARDEN ROAD NANPURA, SURAT - 395 001 TELE.NO. [phone], 2471173 FAX NO. [phone]

MUMBAI OFFICE

198, KHETAN BHAVAN, 1st FLOOR, 198 J-TATA ROAD, CHURCH GATE, MUMBAI-400 020 TELE / FAX NO. [phone]

RAJKOT REGIONAL OFFICE

RACE COURSE, RING ROAD, NEAR LIFE BUILDING RAJKOT-360 001. TELE.NO. [phone], 2442715 FAX NO. [phone]

VADODARA OFFICE

REGENT TOWER, 3RD FLOOR, OPP. ITO, RACE COURSE CIRCLE, VADODARA-390 007. TELE.NO. [phone] , 2353328 FAX NO. [phone]