Gujarat State Financial Corporation Reports Widening Losses in Q2 FY26

Gujarat State Financial Corporation (GSFC) has reported a net loss of Rs 3,196.00 lakh for the quarter ended September 30, 2025, according to its latest financial results. This marks a slight increase in losses compared to the Rs 3,144.73 lakh loss reported in the corresponding quarter of the previous year.

Financial Performance

The corporation's financial situation remains challenging, as evidenced by the following key metrics:

Particulars (Rs. in lakh)	Q2 FY26	Q2 FY25	H1 FY26	H1 FY25
Total Income	410.42	412.85	817.93	825.24
Interest Expended	3,554.08	3,506.24	7,055.90	6,962.72
Operating Expenditure	67.38	84.80	125.66	156.14
Net Loss	3,196.00	3,144.73	6,298.13	6,266.44

Key Observations

Eroded Net Worth: GSFC's net worth remains completely eroded, with the corporation facing significant liquidity problems.
Non-Performing Assets: The gross Non-Performing Assets (NPAs) stand at Rs 39,736.76 lakh, representing 100% of gross advances.
Discontinued Lending: The corporation has discontinued its main lending functions since FY 2001-02 and currently focuses only on recovery operations.
Government Shareholding: The Government of Gujarat holds 55.09% of GSFC's shares.
Earnings Per Share: The Basic and Diluted Earnings Per Share (not annualized) for Q2 FY26 is Rs. (3.59), compared to Rs. (3.53) in Q2 FY25.

Auditor's Observations

The statutory auditors, M/s. Pankaj R Shah & Associates, have issued a qualified opinion in their Limited Review Report, citing two main concerns:

The financial results are prepared on a going concern basis despite the completely eroded net worth and default in repayment obligations.
Dues payable to the Government of Gujarat are subject to confirmation and adjustment, potentially affecting interest and penal interest calculations.

Management's Response

GSFC management maintains that as a statutory corporation established under the State Financial Corporations Act, 1951, it continues to prepare accounts on a "going concern" basis. The corporation has approached the Government of Gujarat to make the loans interest-free from July 01, 2012, and is awaiting a decision on this matter.

Despite the challenging financial situation, GSFC continues its recovery functions while grappling with historical losses and liquidity issues. The corporation's future remains uncertain as it navigates through these financial difficulties under the oversight of the Government of Gujarat.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
0.0%	-11.20%	-16.54%	-35.39%	-49.68%	+670.83%

Gujarat State Financial Corporation (GSFC) has announced its unaudited financial results for the first quarter, revealing a continued struggle with financial performance and asset quality.

Financial Performance

GSFC reported a net loss of ₹3,102.13 lakh for Q1, slightly improving from a loss of ₹3,121.71 lakh in the same quarter last year. The corporation's total income decreased to ₹407.51 lakh from ₹412.39 lakh year-over-year.

Key Financial Metrics

Particulars (₹ in Lakh)	Q1 (Current)	Q1 (Previous)	Change
Total Income	407.51	412.39	-1.18%
Interest Earned	9.25	52.67	-82.44%
Other Income	398.26	359.72	+10.71%
Interest Expended	3,501.82	3,456.48	+1.31%
Operating Expenditure	58.28	71.34	-18.31%
Net Loss	3,102.13	3,121.71	-0.63%

Asset Quality Concerns

The corporation's asset quality remains a significant concern, with both gross and net Non-Performing Asset (NPA) ratios standing at 100%. This indicates that all of GSFC's advances are classified as non-performing.

Capital Structure and Reserves

GSFC's paid-up equity share capital remains unchanged at ₹8,911.40 lakh. However, the corporation's reserves show a substantial negative balance of ₹3,15,431.29 lakh, highlighting the severe erosion of its net worth.

Ownership and Governance

The Government of Gujarat continues to hold a majority stake of 55.09% in the corporation.

Auditor's Observations

The statutory auditors, M/s. Pankaj R Shah & Associates, have issued a qualified opinion on the financial results, citing two main concerns:

The corporation's financial results are prepared on a going concern basis despite its completely eroded net worth and default in repayment obligations.
Dues payable to the Government of Gujarat are subject to confirmation and adjustment, potentially affecting interest and penal interest calculations.

Management's Response

GSFC's management maintains that as a statutory body established under the State Financial Corporations Act, 1951, it continues to operate on a going concern basis. The corporation is awaiting a decision from the Government of Gujarat regarding a proposal to make the loans advanced to GSFC interest-free from July 1, 2012.

Despite the challenging financial situation, GSFC continues its operations, focusing on its recovery function and its role in promoting balanced regional growth through financial assistance to micro and small-scale units in Gujarat.