Gujarat State Financial Corporation reported a net loss of ₹12728.91 lakh for the financial year ended March 31, 2026, widening from the loss of ₹12534.01 lakh recorded in the previous year. The corporation’s total income from operations for the year stood at ₹1701.04 lakh, compared to ₹1534.34 lakh in the prior year. Due to the reported loss, the Board of Directors did not declare any dividend for the financial year.

The statutory auditors, M/s. Pankaj R. Shah & Associates, issued a qualified opinion on the financial statements. The auditors noted that the financial statements are prepared on a going concern basis despite the corporation's net worth being completely eroded and defaults in repayment obligations due to liquidity problems. This treatment is not in accordance with Accounting Standard (AS)-1, and the effect on the financial statements is not ascertainable. Additionally, dues payable to the Government of Gujarat are subject to confirmation and adjustment, with the impact on interest and penal interest currently unascertainable.

Financial Performance

The corporation’s operating profit before provisions and contingencies was negative at ₹(12733.01) lakh for the year ended March 31, 2026. Exceptional items for the year included a diminution in the value of investments amounting to ₹(56.86) lakh and a net write-back of provision for NPAs of ₹60.96 lakh. The paid-up equity share capital remained constant at ₹8911.40 lakh.

Asset Quality and Reserves

The Gross NPA and Net NPA ratios both stood at 100% as of March 31, 2026. The reserves excluding revaluation reserves were negative at ₹(328194.54) lakh, indicating a significant erosion of net worth. The corporation’s total assets were valued at ₹23360.74 lakh, comprising primarily investments of ₹22108.36 lakh and other liabilities and provisions of ₹276014.98 lakh.

Board Decisions

The Board of Directors has recommended the appointment of M/s. J.H. Mehta & Co, Chartered Accountants, as statutory auditors for FY 2026-27. The 66th Annual General Meeting is scheduled to be held in physical mode on July 30, 2026. M/s. Spanj & Associates, Company Secretaries, were appointed as the scrutinizer for the remote e-voting and poll process.

BSE Ltd has levied a fine of ₹9,67,600 on Gujarat State Financial Corporation for non-compliance with corporate governance requirements during the quarter ended March 31, 2026. The penalty was communicated via an email dated May 27, 2026, which was opened by the corporation on May 29, 2026. The fine addresses violations of specific regulations under the SEBI (LODR) Regulations, 2015, including Regulations 17(1), 17(2A), 18(1), and 19(1)/19(2).

The regulatory action specifically cites the non-appointment of independent directors and issues regarding the quorum of meetings. Gujarat State Financial Corporation disclosed that it has not remitted the fine and has requested the exchange to reconsider the imposition of the penalty. The corporation argues that its board composition is governed by the State Financial Corporations Act, 1951, a statute that does not currently provide for the induction of independent directors.

Statutory Conflict and Compliance Efforts

Gujarat State Financial Corporation is a statutory body corporate established by the Government of Gujarat under the State Financial Corporations Act, 1951. The corporation stated that the composition of its Board of Directors is determined by Sections 10, 15, and 17 of this Act. Since the existing statute does not mandate independent directors, the corporation claims that complying with the SEBI requirement is inconsistent with its primary governing law.

Following advice from SEBI via a letter dated December 20, 2021, the corporation approached the appropriate authorities on December 27, 2021, to propose amendments to the State Financial Corporations Act. The objective of these proposed amendments is to align the act with the SEBI (LODR) Regulations. Until these legislative changes occur, the corporation asserts it is complying with corporate governance requirements to the extent possible within the framework of the 1951 Act.

Financial Impact and Waiver Request

The corporation has maintained that there is no impact on its financial, operational, or other activities as a result of the fine. It reiterated that the penalty has not been paid. Furthermore, Gujarat State Financial Corporation noted that Regulation 17(2A) of the SEBI (LODR) Regulations, 2015, which pertains to the composition of the board, is technically not applicable to it as it is not among the top 2000 companies. Despite repeated requests to waive the fine on this basis, the exchange has not granted the waiver.