(12) PROVISION:

Provisions involving substantial degree of estimation in measurement are recognized when
there is a present obligation as a result of past events and it is probable that there will be an

outflow of resources even though the amount cannot be determined with certainty and
represents only a best estimate in the light of available information. Contingent liabilities are
not recognized but are disclosed in the notes. Contingent assets are neither recognized nor
disclosed in the financial statements.

B. NOTES ON ACCOUNTS:

(01) All Government guaranteed bonds have been redeemed and Government in
Industries & Mines Department, vide Resolution No. PRC/102015/1126/P dated
07-10-2021, vacated the Government Guarantee of ?43,299.00 lakh thereby
making nil outstanding guarantee amount. However, Corporation is in default of
guarantee fee of ?35,60,39,833/- (Previous year ?35,60,39,833/-) to Government
of Gujarat.

(A) 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 amount
is realized.

During the year under review, Corporation recovered an amount of
?17,000/- (previous year?4,23,164/-) from Bad Debts written off.

(02) CONTINGENT LAIBILITES:

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) During the year under reference, BSE Ltd imposed aggregate fine of
?47,74,280/- (previous year ?46,17,340/-) for non-compliance with the
provisions contained in SEBI (LODR) Regulations, 2015.

Since Corporation has represented to appropriate authorities for
amendments in SFCs Act, 1951 vide letter dated December 27, 2021 in
response to SEBI letter dated December 20, 2021 and waiver of fine to BSE
Ltd from quarter to quarter, fine imposed has been recognized as contingent
liability.

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

Additional disclosures:-

(a) Availing Vivad se Vishvas Scheme:-

Pursuant to Corporation availing of the Vivad se Vishvas Scheme introduced by
the Income Tax Department in respect of demand raised for Assessment Year
2000-01, Income Tax Department issued Form No. 5 on 27^th May, 2021. Vide
order giving effect to the Scheme dated 11.01.2023, refund of ?24,79,448/- is still
awaited.

(b) Tax appeal preferred by Income Tax Department for AYs 2012-13 and 2015-16
before the Hon’ble High Court of Gujarat regarding disallowance under Section
14A of Income Tax Act, 1961 were withdrawn by the Department as the appeal is
less than ?2 crore and as per circular No. 9 of 2024 dated 17.09.2024, the Tax
appeal would not be maintainable.

(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.

(ii) The outstanding balance of borrowings, other liabilities and provisions and other
assets are subject to confirmation and adjustment, if any.

(iii) 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 the figures of the current year.

(06) 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 excess provision of ?1,90,86,523/- in the current year and shown
separately in the Statement of Profit and Loss (Previous year ^2,70,80,411/-).

(07) Corporation’s operations are solely in the Financial Service Industry including
Investment Operation. As majority of Corporation’s total revenue consists of
interest income, 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 ?621,36,80,000/- as interest free from
1.7.2012. A proposal dated 17^th October, 2012 has been submitted to Government
through Industries & Mines Department. In response to recent letter dated January
18, 2025 received from Government in Industries & Mines Department in the
matter, latest position of the Corporation has been submitted vide letter dated
February 04, 2025 and decision is awaited. Since 1.7.2012, interest on
Government loan is charged to Statement of Profit & Loss on simple interest
basis. Further, penal interest @ 2 per cent is also being charged to Statement of
Profit & Loss on delayed payment of interest.

(09) 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 as statutory Corporations pursuant 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 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. Corporation, being a statutory body, thus prepares accounts on
“going concern” assumption and it is appropriate under the aforesaid
circumstances.

(10) During the year under reference, Corporation withdrawn an amount of
^32,34,161/- (previous year ?2,19,79,134/-) from “Reserves for Bad and Doubtful
Debts” against bad debts written off.

(11) EARNINGS PER SHARE
Basic & diluted earnings per share

Basic and diluted earnings per share are computed in accordance with Accounting
Standard 20 - Earnings per share. Basic and diluted earnings per share are
calculated by dividing the net loss for the year attributable to equity shareholders
by the weighted average number of equity shares outstanding during the year.

GENERAL DISCLOSURE:-

(i) Corporation, while acting as an agency to Sales Tax Department, Government of
Gujarat, had sanctioned loans being the amount of sales tax payable by loanee units to
Sales Tax Department (part of loans and advances depicted under Note 7) and created a
liability for the same amount under the head “Long Term Borrowings” (Note 3). The
amount recovered from the loanee units is paid to Sales Tax Department. Though the
Corporation was only an agency for sanctioning of the loans, it has made provision for
NPA of Rs.31.49 crore on the said loan on a conservative basis.

Signatories to Notes “1” to “15”

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS,

(M.R. Malpani) (Raveendran Nair) (Naresh Babuta) (Leena D Katdare) (Swaroop P., IAS)

Executive Officer Secretary (Board) Director Director Managing Director

(Accounts)

As per our Report of even date
FOR PANKAJ R SHAH & ASSOCIATES
CHARTERED ACCOUNTANTS
ICAI Firm Reg. No. : 107361W

NILESH SHAH
PARTNER

Membership No. 107414

PLACE: AHMEDABAD PLACE: GANDHINAGAR

DATE: 27/05/2025 DATE: 27/05/2025