Speech of the Chairman at 49th Annual General Meeting of the Shareholders of the Corporation held on 22nd January, 2010 at 3.00 p.m. in the Office of the Chairperson, Corporation Head office, Udyog Bhavan, Block No. 10, Ist Floor, Sector – 11, Gandhinagar : 382 017

Dear Shareholders,

I have great pleasure in welcoming you all to the 49th Annual General Meeting of the Corporation and present to you the Annual Report of your Corporation for the Financial Year 2008-09.

The Director’s Report and the audited balance sheet of your Corporation for the year ended 31st March, 2009 have already been provided to all the shareholders of the Corporation. With your permission, I take them as read.

The year in retrospect has been challenging for the world economy. The unprecedented financial crisis still continues, to some extent in most parts of the world. It is heartening to note that the Governments have responded with great speed and in rare unison through various stimulus packages. However, the path to recovery is expected to be long.

India has not been immune to this global upheaval and meltdown. Relatively, India has displayed resillent strength and character in sustaining decent growth rates, even though several sectors have been adversely affected. To counter the negative fallout of the global slowdown on the Indian economy, the Government responded by providing a substantial fiscal expansion in the form of tax relief to boost demand and increased expenditure on public projects to create employment and public assets. Though the efforts to arrest the slowdown started yielding results and there are signs of recovery, it is too early to predict signals of a full-fledged recovery. In spite of this adversity, the Indian GDP has grown better than expected rate of 6.7% during the year 2008-09.

Performance of your Corporation

The shareholders are aware that Corporation has discontinued sanctions and disbursement since 2001. The only area in which the Corporation now concentrating is on recovery. With the passage of time, almost all good accounts have been settled and closed. Now recovery is required to be effected from sticky units and recalcitrant loanees which is a herculian task. The Corporation has made recovery of Rs.75.13 crore during the year as against the Rs.98.44 crore during the financial year 2007-08. During the year under review, as against the total income of Rs.88.99 crore, the total expenditure was Rs.206.92 crore resulting into a net loss of Rs.117.93 crore. The corresponding figure of previous year were total income of Rs.67.89 crore, total expenditure of Rs.177.02 crore and net loss of Rs.109.13 crore respectively. The accumulated loss as on close of the financial year stood at Rs.1419.20 crore.

Cost reduction

The Corporation is making concerted efforts to reduce the administrative expenses. During the year under report, a Voluntarily Retirement Scheme was introduced so as to give an exit opportunity to the employees. 160 employees have availed the benefit of the scheme. The number of employees on the roll of the Corporation has come down to 210 as on the last day of reporting. Corporation, in line with the directives of the Task Force constituted by the Government of Gujarat, took measures to dispose off idle assets so as to augment resources to meet its liabilities. Recently, a portion of third floor of Udyog Bhavan was sold to GIDC. Corporation has also disposed off a plot of land acquired at Vadodara from Vadodara Municipal Corporation.Corporation merged some Regional Offices and at present only three Regional Offices at Ahmedabad, Surat and Rajkot are functioning. All these measures would further reduce the expenses and augment resources of the Corporation.

Financial Restructuring

The stake holders were informed in the previous year that the Corporation has made settlement with SIDBI at Rs.400 crore payable in 4 installments. I am happy to inform that with the active support of the Government of Gujarat, the Corporation has fully repaid the dues of SIDBI as per the schedule. Corporation has restructured, with the consent of bond holders, high interest bearing bonds. Corporation has redeemed principal sum of bonds worth Rs.66.12 crore during the year under report. A few bondholders who have not agreed for restructuring are now offered premature redemption option and their response is awaited.

Future Prospectus

The stake holders are aware that in the present scenario, Corporation is not in a position to carry on the business of sanction and disbursement due to its inability to raise resources from open market and to compete with other financial institutions and banks. However, Corporation is exploring the possibility of introducing innovative measures like bridge finance in R & D cases.

Acknowledgement

On behalf of the Board and on my behalf, I take this opportunity to thank all shareholders, customers and well wishers for extending support and patronage. I also thank the Government of Gujarat for its continuous guidance and support. I am also thankful to Reserve Bank of India, IDBI and SIDBI as well as their local offices for their co-operation. I shall be failing in my duty if I do not place on record our deep appreciation for the invaluable contributions made by my predecessors, Shri D Rajagopalan and Smt. Gauri Kumar and by Shri G P Joshi and Shri U R Tata, Directors. I am also grateful to my fellow Directors on the Board for their support and valuable inputs that they have provided over the past year. I also wish to place on record our appreciation for the services rendered by all the employees of the Corporation.

Thank you