GSFC to sell defaulters' properties

Corporation to sell 142 properties that have been mortgaged

Gujarat State Finance Corporation (GSFC), the state-owned industrial credit corporation that has been ailing on account of large number of defaulters, has embarked on a recovery drive.

The corporation aims to reduce its net non-performing assets (NPAs) by 10 per cent to 52 per cent from 62 per cent by the year end. It is also targeting to recover Rs 140 crore during fiscal 2005-06.

GSFC has announced the sale of 142 properties that have been mortgaged by borrowers falling under the jurisdictions of Ahmedabad, Rajkot and Mehsana regional offices.

The corporation has also invited bids for 41 collateral securities apart from assets under mortgage in Ahmedabad, Rajkot and Mehsana.

At present GSFC has cumulative sanctions of over Rs 4,400 crore and disbursement of about Rs 3,300 crore for over 47,000 industrial units.

GSFC is exercising the powers under Section 29 of the Gujarat State Financial Corporations Act 1951, which empowers the state governments to establish financial institutions for their respective states.

"At present we are on a drive to recover long-pending dues. We are aiming to reduce the net NPA of the corporation considerably by the end of the current financial year. With the help of the sale of mortgaged properties and collateral securities, we are expecting to recover Rs 140 crore during the current fiscal which will result in better liquidity," said J P Joshipura, general manager, GSFC.

The corporation recently completed its bidding process for defaulters' properties in the Vadodara region.

However, the response received by the Vadodara regional office is not known at the moment.

"The corporation also completed the first round of the one-time settlement scheme on April 31, which is likely to fetch about Rs 170 crore in phases with the participation of 1,006 borrowers of GSFC. We have received good response from borrowers who were reluctant to repay their dues," said Joshipura.

Over the years GSFC has come under pressure because of week borrowers. The amount can be estimated from the list of the top 50 defaulters listed on the corporation's official website. Only Vadodara has top 50 defaulters worth about Rs 88 crore.

Ahmedabad and Surat are leading regions of GSFC with bad debt of over Rs 95 crore each by top 50 defaulters, according to the GSFC website.

The Mehsana regional office is offering 37, Rajkot 57 and Ahmedabad 48 properties for auction, according to the website. The Vadodara regional office of GSFC had announced the auction of about 50 properties, the process for which was completed in the last week of April.

The list of defaulters includes Astroage Castapack, London Dry Fruits based at Vadodara and the Ahmedabad-based Labh Construction and Umidex India.

The Ahmedabad regional office, which also covers Sabarkantha district, will open the bid covers on May 24. The properties for sale includes textile, chemical, plastic, engineering and building construction material manufacturing units.