Gujarat State Financial Corporation Management Discussions

1. (a) Industry structure and developments:

Gujarat State Financial Corporation is a body corporate established as statutory Corporation by Government of Gujarat pursuant to Section 3 (1) of State Financial Corporations Act, 1951 to provide medium and long term credit to small and medium scale industrial undertakings in the State of Gujarat and Union Territories of Dadra and Nagar Haveli. Corporation played a pivotal role in industrial development of the State by extending financial assistance to SMEs. With the passage of time and particularly after financial reforms, Corporation s fortune dwindled and could not withstand stiff competition from new entrants. Corporation was forced to discontinue its main activities of sanction and disbursement from FY 2001-02 and concentrating on recovery of dues since then.

(b) Opportunities and Threats

SFCs are established to help decentralizing economic development and to create employment opportunities by assisting first generation entrepreneurs, artisans, SSI units etc. Gujarat is one of the most industrialized States in the country with large number of MSMEs. Though there is no dearth in opportunities for an organization like GSFC to prosper, the present state of affairs does not permit it to continue with its main activities. Corporation has immense potential to serve the MSME sector from close quarters but adverse financial position and its inability to raise cheap funds prevented it from carrying out its main operations of sanction and disbursement.

(c) Segment-wise performance:

As members are aware, Corporation has discontinued main functions of sanction and disbursement for the last more than two decades and concentrating on recovery of dues only since then. With the passage of time, almost all good loan assets have been closed leaving only units under litigation or non-traceable/non-existing. As such, there is no reportable segment except recovery of dues from assisted units. During the year under report, Corporation recovered an amount of 0.83 crore as against 2.12 crore recovered in the previous year.

(d) Outlook :

Corporation is not contemplating to start its main activities in the near future. Available machinery is deployed for recovery of dues.

(e) Risks and concerns :

Risk is an inherent part of business and the Corporation not free from various risks associated with the business. Its utmost concern is how to effect recovery from sticky Non-Performing assets. Recovery of dues is expected to diminish from year to year considering the nature of loan assets available with the Corporation.

(f) Internal control system and their adequacy:

Corporation s internal control system provides for budgetary control and cost monitoring system. Corporation engaged services of an external firm of Chartered Accountants for internal audit so as to provide timely information to management. The internal control system of the Corporation is adequate commensurate with the size and operations of the Corporation.

(g) Financial Performance:

(Rs. in crore)

(h) Material developments in Human Resources:

No reportable material development in human resources took place during the year under reference. Corporation s staff strength, including employees on deputation, reduced to 10 as on 31 st March, 2026 compared to 12 reported in the previous year.

(i) Details of significant changes in key financial ratios:

No significant change in key financial ratios took place during the year under report as compared to immediately preceding financial year.

2. Cautionary statement :

Statements in the Management Discussion and Analysis describing the Corporation s objective, projections, estimates and expectations may be forward looking within the meaning of applicable laws or regulations. Actual results may differ from those expressed or implied.