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To the Members,
Your Directors have great pleasure in presenting the 58th Annual Report of the Corporation together with the audited accounts for the year ended 31st March, 2018.
1. Economic Scenario:
The economy of India is a developing mixed economy. It is the worlds sixth largest economy by nominal GDP and the third largest by purchasing power parity (PPP). After 1991 economic liberalization, India achieved 6 7% average GDP growth annually. In FY 2015 and 2018, Indias economy became the worlds fastest growing major economy, surpassing China. The long-term growth prospective of the Indian economy is positive due to its young population, corresponding low dependency ratio, healthy savings and investment rates and increasing integration into the global economy. The fiscal rectitude of the Government and its focus on raising the trend rate rather than cyclical growth will enhance the credibility of policy making, improve investor confidence and make India resilient to external shocks.
As per the second advanced estimates of the Central Statistics Office (CSO), the Indian economy is expected to grow 6.6 per cent in the fiscal ending March 31, 2018 compared to 7.1 per cent in 2016-17. The annual rate of inflation, based on monthly Wholesale Price Index, stood at 2.47 per cent for the month of March, 2018 over March, 2017 as compared to 2.48% for the previous month and 5.11 per cent during the corresponding month of the previous year. Build up inflation rate in the financial year was 2.47 per cent compared to a build-up rate of 5.11 per cent in the corresponding period of the previous year. The Economic Survey for 2017-18 struck an optimistic note about economic growth going forward. It noted that there were robust signs of growth in the second half of the financial year and predicted that growth for the full 2017-18 financial year would be 6.75 per cent year on year, higher than the Central Statistics Organizations prediction. The survey further estimated that the fading of shocks to economic activity like demonetization together with a recovery in the global demand and some domestic policy actions would raise growth in the coming financial year to 7-7.5 per cent. The impact of GST and demonetization has faded and the economy is seeing signs of revival. With the stabilization of GST, completing the twin balance sheet actions, decelerating inflation and staving off threats to macro-economic stability, the growth potential of Indian economy is optimistic.
2. Financial results:
During the year under reference, interest on loans and advances increased 103.52 per cent to Rs.6.46 crore compared to Rs.3.18 crore reported in the previous year. Due to decreasing trend of rates of interest, interest on deposits reduced by 8.31% and stood at Rs.8.28 crore as against Rs.9.04 crore a year ago. Other income, including provision written back, almost halved to Rs.3.24 crore during the year under report over Rs.5.85 crore reported in the previous year. Corporation recorded a total income of Rs.17.98 crore in the year under report as against Rs.18.07 crore a year ago.
Corporation is taking all efforts to reduce the expenditure to the maximum extent possible. Though personnel and other expenses could very well be contained, interest on borrowings is increasing. Total expenditure for the year under report stood at Rs.133.51 crore compared to Rs.135.25 crore reported in the previous year. Corporation registered a loss of Rs.115.53 crore during the year under report compared to Rs.117.18 crore reported a year ago. The accumulated loss as on the last day of the report stood at Rs.2,572.43 crore as a result of which no dividend is recommended for the year.
During the year under report, no borrowing was resorted to by the Corporation. Borrowings remained static at Rs.661.68 crore payable to Government of Gujarat.
Corporation is focusing its operations only on recovery of dues and all out efforts to recover as much dues as possible. In order to boost the recovery, various One Time Settlement Schemes are in operation. As a result of relentless efforts made, Corporation could register an increase of 23.36% in recovery of dues during the year and it stood at Rs.8.66 crore over Rs.7.02 crore recovered in the previous year.
5. Human Resource:
The staff strength on the pay-roll of the Corporation declined due to retirement and stood at 56 on the last day of the year under report as against 61 reported in the previous year. The break up staff strength is as under:-
|A Grade officers||4|
|B Grade employees||43|
|C Grade employees||9|
Two employees are loan service and 19 employees are on deputation with other Government departments. The effective staff strength of the Corporation stood at 35 spread over three Regional Offices and Head Office.
6. Corporate Governance:
The Corporation has been continuously observing the corporate governance practices. A separate section on Corporate Governance and a certificate from Shri Kishor Dudhatra, Practicing Company Secretary, regarding compliance of the conditions of Corporate Governance in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 form part of this 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 this Report.
Section 37 (1) of SFCs Act, 1951 stipulates that the auditors shall be appointed by the Corporation in general meeting of shareholders out of the panel of auditors approved by the Reserve Bank of India for such term and such remuneration as the RBI may fix. The directives of Reserve Bank of India prescribe that an audit firm may continue for a term of four years in one spell. M/s. Manubhai & Shah LLP, Auditors of the Corporation, who were re-appointed as statutory auditors at the last Annual General Meeting, have completed their consecutive term of four years. Since M/s. Manubhai & Shah LLP has already completed their term of four years, RBI confirmed the eligibility of M/s. Priyam M Shah & Associates, Chartered Accountants (FRN/Mem. No. 118421W) as the statutory auditors vide letter No. DBS.ARS.No.6438/ 08:05:038(Gujarat)/2017-18 dated May 8, 2018 for the year 2018-19 and their appointment is recommended by the Board for approval of shareholders at the ensuing Annual General Meeting.
The statutory auditors have submitted their Independent Auditors Report on the financial statements of the Corporation for the year ended 31st March, 2018 which contains qualifications. Managements views on the qualifications are given in Addendum to this Report and also form part of the Annual Report.
8. Board of Directors:
During the year under reference, Small Industries Bank of India (SIDBI), vide letter dated 31st May, 2017, nominated Shri Manoj Kumar Das, IAS as Chairman on the Board of the Corporation in exercise of the powers vested in it under Section 15 (1) read with Section 10 (a) of the SFCs Act, 1951 in place of Shri PK Taneja, IAS (Retd.). Government of Gujarat in Finance Department, vide Office Order dated 14.7.2017, nominated Shri Hurbert Christian, Financial Advisor (Ind.) on the Board of the Corporation in place of Shri C.J. Macwan. Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, brief resume of the Directors joined during the year under reference, is furnished in the Corporate Governance Report attached to this Report.
The Board places on record its appreciation for the valuable services rendered by the outgoing Directors.
Subsequently, in terms of Section 10 (c) of the SFCs Act, 1951, Small Industries Development Bank of India, Mumbai, vide letter dated May 08, 2018, nominated on ex-officio capacity the Deputy General Manager, SIDBI, Ahmedabad Branch Office as Director on the Board of the Corporation with immediate effect replacing Shri Pramod Kumar Vijayvargia. Accordingly, Shri Pushkar Mishra, the present incumbent of the post, became Director on the Board of the Corporation. Brief resume of the Director is as under:-
Shri Pushkar Mishra, aged 47 years, is a post graduate in Commerce. He has rich and varied experience of 22 years in financial sector. He is the Chairman of the Audit Committee of the Corporation. He does not hold directorship in any other company or firm. He is not holding any shares of the Corporation in his individual capacity and is not related to any Director or Key Managerial Personnel of the Corporation.
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 31st March, 2018 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 31st March 2018 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 31st March, 2018; and
6. Proper systems have been devised to ensure compliance with the provisions all applicable laws and that such systems were adequate and operating effectively during the year ended 31st March, 2018.
Your Board is grateful to the Government of Gujarat and its various departments for the support and excellent guidance extended to the Corporation. Your Board also acknowledges with appreciation the RBI and SIDBI and its Ahmedabad Offices for their valuable guidance and support to the Corporation. Your Board acknowledges with appreciation the invaluable support provided by its auditors, lawyers, business partners, commercial banks, customers and stakeholders. Your Board records with sincere appreciation the valuable contribution made by the employees at all levels.
For and on behalf of the Board of Directors,
Place : Gandhinagar Date : 28-05-2018
(Mamta Verma, IAS) Managing Director