The Corporation's Board of Directors is pleased to present the 55th Annual Report on the operations of the Corporation together with the audited statement of accounts for the year ended March 31, 2015.

Before going into the performance highlights of the Corporation, economic scenario of the country, in brief, is taken stock of as under :

1. Economy :

Fiscal 2015 has been a different year for the Indian economy. During the year under reference, macro-economic stability has returned, reforms are being undertaken, the external environment has moved in India's favour and above all, a new Government has come into power. Regaining growth momentum requires restoration of domestic macroeconomic balance and enhancing efficiency and to this end, the emphasis of policy remained on fiscal consolidation and removal of structural constraints. Apart from fiscal consolidation, Government of India focused on maintaining a stable external balance, measures to further control inflation, priorities for growth revival which included streamlining of implementation procedures to restart the investment cycle and simplification of tax policy. The annual growth rate of the Indian economy is projected to be in the range of 5.4 to 5.9 per cent in 2014-15 overcoming the sub-5 per cent GDP growth of past two years. Measures taken for repealing of archaic laws governing market access, expansion and entry/exit of firms and revamp of the dispute resolution mechanism for commercial disputes to lend greater predictability to policy, giving boost to physical infrastructure and improving productivity in agriculture will yield results in years to come. Fundamentally, India's medium term growth prospects are promising and growth of about 7-8 per cent should be within reach. With basic public good provision and investment tapping into cheap labour, India can easily get closer to its growth frontier laying a strong foundation for the long run.

2. Financial Highlights :

During the year under report, your Corporation's gross income amounted to Rs. 41.64 crore, comprising interest income at Rs. 7.97 crore, other income at Rs. 6.84 crore and exceptional income at Rs. 26.83 crore. Interest expenses of Rs. 118.26 crore and operational expenses of Rs. 16.98 crore accounted for total expenditure, excluding provisions, depreciation and contingencies. Corporation provided Rs. 0.79 crore towards diminution in value of investments and written back NPA provision no longer required of Rs. 8.85 crore. During 2014-15, your Corporation's operations resulted in net loss of Rs. 94.80 crore. However, after over more than a decade, Corporation registered a net profit of Rs. 1.52 crore in the 4th quarter of the year under report due to exceptional income. Accumulated loss as on the last day of the year under report stood at Rs. 2234.73 crore. In view of loss, your Directors refrained from recommending dividend for the year under reference.

3. Resources :

During the year under report, your Corporation has not resorted to any borrowings. Corporation disposed off a part of its investment in shares and realized a net gain of Rs.14.13 crore. As at the end of the year, no external debts are outstanding for payment except that of Government of Gujarat.

4. Recovery :

As the members are aware, Corporation concentrates only on recovery since last many years. Good clients have already closed accounts either in the normal course of business or by availing benefits of One Time Settlement (OTS) schemes introduced by the Corporation from time to time. This has resulted into leaving only sticky accounts with the Corporation from which recovery was not easily forthcoming. In order to boost the recovery efforts, OTS schemes for BIFR/GBIFR cases and Term Loans are re-introduced during the second half of the year under report. Corporation's recovery of dues stood at Rs. 13.64 crore during 2014-15 as against Rs. 22.88 crore reported a year ago.

5. Human Resource :

The staff strength as on 31st March, 2015 stood at 81 consisting of 9 "A" Grade officers, 60 "B" Grade employees and 12 Grade "C" subordinate employees. Five employees are on loan service and 25 on deputation to various Government departments. The effective manpower strength available with the Corporation as on the last day of the report stood at 51.

6. Vigil Mechanism :

In compliance with Clause 49 of the Listing Agreement with Stock Exchanges, Corporation has devised an effective whistle blower mechanism enabling stakeholders, including individual employees, to freely communicate their concerns about illegal or unethical practices. The Whistle Blower Policy of the Corporation is available at the website of the Corporation.

7. Corporate Governance :

As required by Clause 49 of the Listing Agreement, the Management Discussion and Analysis Report, Corporate Governance Report and Certificate regarding compliance of conditions of Corporate Governance are annexed hereto and form part of this Annual Report.

8. Auditors :

M/s. Manubhai & Shah, Chartered Accountants, Ahmedabad (Firm Registration No. 106041W), statutory auditors of the Corporation retire at the ensuing Annual General Meeting and are eligible for re-appointment. In terms of Section 37 (1) of the SFCs Act, 1951, Reserve Bank of India confirmed their eligibility for re-appointment and the said firm has also consented for re-appointment as statutory auditors for financial year 2015- 16. Their re-appointment is being placed before the shareholders for approval in the ensuing Annual General Meeting. The observations made in the Auditors' Report on the audited accounts of the Corporation for the year ended 31st March, 2015 are dealt with in "Addendum" to this Report.

9. Board of Directors :

During the year under reference, SIDBI, vide its letter dated 29.12.2014, withdrawn the nomination of Shri Balbir Singh as Director on the Board of the Corporation and in his place, Shri Ajit Nath Jha, Deputy General Manager, SIDBI, Ahmedabad was nominated. In compliance with Clause 49 of the Listing Agreement, brief resume of the Director, who has been nominated by SIDBI 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 guidance and counsel received from Shri Balbir Singh during deliberations of the Board and Audit Committee as its Chairman.

On his elevation as Chief Secretary to Government of Gujarat, Shri D.J. Pandian, IAS, tendered resignation from the Board of the Corporation vide Note dated 1.11.2014. Since Section 14 of the SFCs Act, 1951 does not envisage resignation by a nominated Director and Section 11 of the said Act stipulates that a nominated director shall hold office during the pleasure of the authority nominating him, the resignation letter was forwarded to nominating authority.

10. 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 2015, 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 2015 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 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 2015 has been prepared on a going concern basis.

11. Acknowledgement :

Your Corporation's Board of Directors is sincerely grateful to the Government of Gujarat for its continuous support and guidance. The Board acknowledges with gratitude the co- operation and support received from Industries & Mines Department, Finance Department and other agencies. The Board thanks RBI, SIDBI and its Ahmedabad office for their support and guidance. The Board also acknowledges with thanks the commercial banks and other institutions for their support and co-operation. The Board takes this opportunity to put on record its deep sense of gratitude to its stakeholders and customers for their continued support and confidence. The Board appreciates the sincere and dedicated services rendered by the employees of the Corporation.

                           For and on behalf of the Board of Directors,

Place : Gandhinagar                    (Arvind Agarwal)

Date : 30-05-2015                     Managing Director