gandhi special tubes ltd share price Management discussions

Pursuant to Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report covering business performance and outlook (within limits set by Companys competitive position) is provided below:


a. Global Economy

A gradual recovery post the pandemic was starting to take shape with unwinding of supply chain disruptions. However, the Russia-Ukraine conflict resulted in further inflationary pressure and slowed the pace of recovery. As a result, aggressive monetary action was taken by various central banks to tame inflation. With strong policy action from various central banks, food and energy prices have come down, but economic growth is likely to remain weak in the short run.

In 2023, global growth is estimated to slow down to 2.8% and improve slightly to 3.0% in 2024. The global economic recovery is showing signs of uncertainty with persistent high debt levels, ongoing geopolitical conflict and financial sector turmoil.

b. Indian Economic Overview and Outlook

National Statistical Office ("NSO"): The growth in the real GDP during FY 2022-23 is estimated at 7.0%, compared to 9.1% in FY 2021-22. This is driven by the accentuated headwinds from prolonged geopolitical tensions, rising inflation, hardening interest rates, fears of El-Nino, tightening global financial conditions and slowing external demand. While commodity prices have been stabilizing in recent months, their future trajectories remain uncertain, given the lingering geopolitical hostilities and the likelihood of a rebound in demand from countries reopening from pandemic-related lockdowns. Global financial markets are exhibiting volatility. On the other hand, adverse weather shocks are becoming more frequent and there is heightened uncertainty about the southwest monsoon rains. CPI inflation is projected to average 5.2% in FY 2023-24, assuming a normal monsoon, a progressive normalization of supply chains, and no further exogenous or policy shocks.

The Passenger Vehicle segment posted its highest ever domestic sales, while Commercial Vehicles are yet to scale their previous peak. Commercial Vehicle Sector will continue to benefit from Government spending on infrastructure, Production Linked Incentives (PLI), rising finance penetration, continued growth in e-commerce and improving rural incomes.


The Company is specialized in the manufacturing of welded tubes, cold - formed coupling nuts and seamless tubes in various sizes and specifications.

These products are mainly supplied to the Original Equipment Manufacturers (OEMs) of the automotive sector, Farm Equipment manufacturers, Construction equipment manufacturers and other Engineering Industries.


• Rich legacy of three decades helps us in consistently delivering high quality small diameter tubes.

• Only integrated facility in India for small diameter cold drawn seamless steel tubes

• Only local player of scale and quality approved by majority of the leading local and global OEMs

• Capability to service orders faster than local peers, providing better operational flexibility to customers

• Strong financials of Gandhi Special Tube Limited reflect its potential to generate long-term value for its shareholders, customers, and other stakeholders.


• Allocation of INR 10 tn for infrastructure sector in FY23 Union Budget with a funding outlay of INR 200 bn for expansion of national highways

• PLI Scheme: The scheme will increase localisation of auto components and has the potential to make India an export hub in the global auto supply chain

• With implementation of Vehicle Scrappage Policy significant boost in demand for new vehicles expected in the Indian automotive industry over the coming years.

• Finance Penetration has been increasing in Automotive Sector creating demand for the Companys products.


• Fluctuation in the price of raw materials such crude oil and gas price will have impact on production and consequently on profit.

• Inflationary challenges and rising interest rate is reducing consumer spending power

• Fear of Global Recession, shortage of Semiconductor and geo-political challenges may impact the production and profitability of the Company.

• Fear of El - Nino would potentially impact monsoon dependent agricultural sector and rural demand.


More than 80% of the Revenue of the Company is generated from the production of Seamless Tubes and balance revenue is generated from other products viz; Welded Tubes, Cold Formed Nuts and generation of wind power.


Robust demand witnessed in Passenger Vehicles (PV) due to pent-up demand driven by easing of semiconductor supply situation and new model launches. Strong growth of Commercial Vehicles (CV) continued for FY2022-23 supported by replacement demand, improvement in the overall macroeconomic environment and pick-up in infrastructure propelled the demand of Seamless and Welded Tubes and Pipes.

However, the global recessionary strength and uncertainty geo-political environment has brought down the Domestic GDP slightly. Inflation, hardening interest rates and the threat of El-Nino are also likely to soften demand in the marketplace.

Nevertheless, your Company continues to focus on cost optimization, improving supply chain management and increasing labour productivity.


• Industry and macroeconomic risks

Because the Business operates in a volatile industry, its investments and performance are shaped by megatrends in the operating environment. The Companys operations and future performance depend on how these prevalent patterns affect its capacity to deliver on its commitments. Adverse regulatory or economic conditions in the worldwide market, can directly and negatively influence the companys revenue, earnings, cash position, and outlook.

• Foreign exchange risks

As the Company operates internationally, the Company undertakes transactions denominated in foreign currencies. The import of steel and its related consumable, and the export of finished tubes involve dealings in foreign currency. Therefore, any fluctuation in forex and interest rates will have a direct impact on the Companys operations.

• Risks to direct costs

Volatility in costing and/or utilisation of steel products, raw materials, energy, equipment or any other direct cost will have an impact on the Companys margins. The Company keenly monitors the price movements and undertakes the necessary strategy or adopts remedial measures to offset this risk.

• Legal risks related to tax structure

As an Indian entity, the Company is liable to various kinds of direct and indirect taxation applicable at various stages of the business. In light of this, the Company has in place a competent process and mechanism to deal with the constantly evolving tax environment that includes control framework for existing tax risks, the process for identifying and reporting new risks as well compliance to the same.

• Environmental law risks

Due its reliance on natural resources, the Companys business operations are subject to local environmental laws, especially at its manufacturing sites. The cost and compliance that is associated with such regulations can directly impact the Companys daily operations. As a responsible organisation, the Company follows all mandated guidelines and laws and adhere to norms with respect to the environment.

• Information technology risks

Access to information and data pertaining to operations and strategy is available through the inter-connected IT platforms the Company uses. Without adequate safeguards, this can be potentially harmful. The Company has (a) made significant investment towards ensuring robustness of security in addition to minimum cybersecurity protocols and (b) company has incorporated safeguards for hardware, software and has developed a highly competent in-house team to ensure trainings, developments, improvements etc.

Some additional external risk factors that your Company might be exposed to are:

Volatile in Cost of Raw Material due to Global Events - The Local and Global Uncertainty caused due to uncertain global events has resulted disruption in supply chain and distribution and which has resulted into increase in cost of Raw Material.

Gas Price Volatility - Fluctuation in gas price can impact cost of production.

Cyber Threats - Risk of Cyber Attacks are an ever growing threat that could lead to the loss of confidential information, impact business operation and potentially damage the Company reputation.


Your Company has a well-established internal control system in place which is commensurate with the size and nature of its business. The internal control system ensures that all the assets of the Company are safeguarded from loss, damage or disposition. Checks and controls are in place to ensure that transactions are adequately authorized and recorded and that they are reported correctly. The internal control system is supplemented by an internal audit by a firm of independent Chartered Accountants and statutory audit which is periodically reviewed by the management and Audit Committee.

No material issues in relation to the adequacy of Companys control systems were reported during the year.

The Audit Committee of the Board regularly reviews compliance with the Companys policies, procedures and statutory requirements in consultation with the Statutory Auditors and the Internal Auditors, who also attend the Audit Committee meetings.


During the year, Net Sales escalated by approximately 18.50 % and Net Profit escalated by 22.80 %.

Major Financial Ratios:

Sr. No. Ratio Description FY 2023 FY 2022 Change (%)
1 Debtors Turnover (in days)* 39 44 -12%
2 Inventory Turnover Ratio* (in days) 53 65 -19%
3 Interest Coverage Ratio Not Applicable in the absence of interest payment
4 Current Ratio 8.46 8.33 2%
5 Debt Equity Ratio Not Applicable in the absence of any debt
6 Operating Profit Margin (%) 36.36 35.61 2%
7 Net Profit Margin (%) 27.38 27.20 1%
8 Return on Net Worth 25.86 26.33 -2%

• Debtors Turnover: The above ratio is used to quantify a Companys effectiveness in collecting its receivables or money owed by customers. The ratio shows how well a Company uses and manages the credit it extends to customers and how quickly that short-term debt is collected or is paid. It is calculated by dividing turnover by average trade receivables.

• Inventory Turnover: Inventory Turnover is the number of times a Company sells and replaces its inventory during a period. It is calculated by dividing turnover by average inventory.

• Current Ratio: The Current Ratio is a liquidity ratio that measures a Companys ability to pay short-term obligations or those due within one year. It is calculated by dividing the current assets by current liabilities.

• Operating Profit Margin (%): Operating Profit Margin is a profitability or performance ratio used to calculate the percentage of profit a Company produces from its operations. It is calculated by dividing the EBIT by turnover.

• Net Profit Margin (%): The net profit margin is equal to how much net income or profit is generated as a percentage of revenue. It is calculated by dividing the profit for the year by turnover.

• Return on Net Worth: Return on Net Worth (RoNW) is a measure of profitability of a Company expressed in percentage. It is calculated by dividing total comprehensive income for the year by capital employed during the year.

Capital Investment of Rs 65.93 Lakhs was made during the year. The entire capital investment has been made out of the Companys internal cash accruals.


The Company believes that nurturing and strengthening the human resource is vital in creating a unique organizational structure consisting of harmonious relationships. The Company also considers its human capital a critical factor to its success. The Company also provides suitable environment for development of leadership skills which enables it to recruit and retain quality professionals in all the fields. The attrition rate is lower than the rate prevailing in the automotive sector. The Company has drawn up a comprehensive human resource strategy, which addresses key aspects of human resource development such as:

The code of conduct and fair business practices;

Evolution of performance based compensation packages to attract and retain talent.

Skill development of all Blue collared workforce to enable them to effectively meet the productivity and quality deliverables. There were total 385 number of employees (including contractual employees) under the payroll of the Company.


Your Company continues to adopt the best safety practices that have reduced the accident and severity rate. The initiation of new personnel in Safety, Health and Environment (SHE) Management practices, before their deployment to the shop floor, contributed to a significant reduction in unsafe practices. Constant upgradations in technology, safety equipment provisions and regular safety inspections of the plant and machinery are also carried out to mitigate any hazards. This is progressively taking the Company towards achieving the target of Zero Accidents.


Statements made in this Management Discussion and Analysis describing your Companys objectives, projections, estimates and expectations are "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.

The Management is confident that your Company with its quality products, enduring relations with OEM and commitment of staff will continue to sustain its growth and pay out by way of dividend to the shareholders in the year 2023-2024

Manhar G. Gandhi
Chairman and Managing Director
DIN: 00041190