Gandhi Special Tubes Ltd Management Discussions

Pursuant to Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

FY26 has been an exceptional year for Gandhi Special Tubes Limited (GSTL). Despite a challenging global environment, we delivered the highest annual performance in the Companys history, with revenue of 19177.02 lakhs, up 11.15% year-on-year. Profit After Tax (PAT) grew

16.52% to 6836.43 lakhs, also a record for the Company.

This performance was driven by several mutually reinforcing factors:

Commercial vehicle growth

A strong upcycle in commercial vehicle demand provided significant momentum, and Gandhi Special

Tubes Limited was well positioned to capture the resulting volumes.

Tractor and agricultural demand

The tractor segment was a standout contributor this year, buoyed by a favourable monsoon, resilient rural incomes, and steady replacement demand.

Dual Mometum

GSTL enjoys a distinctive advantage, the two end markets rarely peak in perfect step, so strength in one cushions any softness in the other. In Financial Year

(FY26), however, both expanded together, giving the Company the full benefit of two simultaneous upcycles.

Dynamic pricing strategy

A disciplined, responsive approach to pricing allowed us to protect margins while remaining competitive, translating higher volumes into higher-quality earnings.

Customer Centric Engagement

A more personalised, relationship-led approach to our customers deepened loyalty and strengthened long-term partnerships.

A shift toward quality-conscious customers

An increasing share of our customers now prioritise quality, reliability, and total value over the lowest headline price, a structural trend that plays directly to GSTLs strengths.

Taken together, these drivers made Financial Year FY26 the finest year in GSTLs history. Yet records exist to be broken. The strengths that carried us here are precisely the strengths that will carry us further.

1. ECONOMIC OVERVIEW

a. Global Economy

The global operating environment grew increasingly complex during the year. Geopolitical conflicts, shifting trade relationships and evolving tariff regimes continued to inject uncertainty into supply chains and global commerce, while inflation stayed sensitive to energy prices and currency movements. In brief:

Growth moderated - The global economy witnessed a slowdown in growth momentum during Calender Year (CY2025) amid heightened geopolitical disruptions and commodity-related supply shocks. The IMF, in its April 2026 outlook, revised global growth for CY2026 down to about 3.1%, reflecting the Middle East conflict, elevated commodity prices and renewed trade uncertainty.

Inflation edged up Global inflation is expected to rise modestly to about 4.4% in CY2026 from 4.2% in CY2025, reflecting higher higher energy and logistics costs, before gradually easing thereafter

Rates and currency - The U.S. Federal Reserve cut rates through CY2025 but paused further easing in early

CY2026 on energy-driven inflation concerns. The U.S. Dollar Index (DXY) saw intermittent strength amid safe-haven flows, elevated crude prices and intermittent capital outflows keeping currency markets volatile.

b. Indian Economy

India FY2025-26 at a glance

7.6%	2.1%	5.3%	$700bn	12.22L cr
Real GDP	Headline	Repo	Forex	Union
growth	CPI	rate	reserves	Budget capex

Amid rising global uncertainty, India continued to demonstrate strong economic resilience and momentum, supported by robust domestic demand, a favourable population profile and steady policy support. Rationalisation of Goods & Services Tax (GST) rates eased cost pressures and improved affordability, supporting consumption-led growth. Key highlights for FY2025-26:

GDP growth - Indias real GDP growth remained strong at approximately 7.6%, driven by resilient private consumption, government expenditure and steady investment activity across key sectors.

Inflation Headline CPI inflation remained well contained at around 2.1%, supported benign commodity prices, proactive policy measures and better food-supply management, keeping macroeconomic conditions stable. The RBI has projected CPI inflation to average around 4.6% for FY2026-27; however, the outlook remains uncertain due to volatility in global commodity and energy prices, which could intermittently exert pressure on headline.

Interest rates - The RBI cut the policy repo rate cumulatively by 125 bps to 5.25% during CY2025. In its April 2026 review, the Monetary Policy Committee held the repo rate unchanged with a neutral stance, citing external uncertainty and crude-price risks.

External buffer The Rupee saw heightened volatility during

FY2025-26 but Indias strong foreign exchange reserves of around USD 700 billion provided an effective cushion against disorderly movements, with the RBI remaining active in curbing excessive volatility.

Union Budget - Capital-expenditure outlay was raised to an estimated 12.22 lakh crore for FY2026-27, up from 11.21 lakh crore in FY2025-26, continuing to support construction, mining and logistics activity.

Going forward, Indias strong domestic demand, favourable demographics and sustained policy support are expected to underpin a resilient consumption outlook and enable sustainable economic growth.

Tractor Industry

Domestic Sale 11,60,231 units

? Increase 23.5% YoY

The Indian tractor industry recorded its strongest year in recent memory in FY2025-26: domestic sales rose 23.5% to 11,60,231 units, well ahead of the more moderate 7.3% growth recorded in FY2024-25. A favourable, well-distributed monsoon, healthy reservoir levels, higher minimum support prices, and the GST rate cut on tractors were the principal drivers.

Indias tractor industry anchors the rural economy and is central to the countrys agricultural transformation. With nearly half of Indias workforce dependent on agriculture, mechanization is essential to improving productivity and rural prosperity.

CV Industry

Domestic Sale 10.79 lakh units

? Increase 12.6% YoY

The commercial vehicle industry recorded its highest-ever annual volumes in FY2025-26 10.79 lakh units, up 12.6% year-on-year and above the prior FY2018-19 peak reversing FY2024-25s marginal decline.

However, FY2025-26 unfolded unevenly for the domestic commercial vehicle industry: Afirsthalf, soft hurt by early monsoons and cautious fleet sentiment, gave way to a sharp second-half recovery on the back of GST 2.0, RBI rate cuts, firmer freight rates and renewed infrastructure activity.

Commodity Prices

Commodity costs emerged as a key concern in the latter part of the year. Rising prices of steel, aluminum and copper increased pressure on input costs, requiring disciplined cost management and operational efficiency. The Company deployed measured price increases, cost discipline and inventory management to protect margins while safeguarding customer affordability. Diesel prices remain a key monitorable, given their bearing on fleet operating economics and, in turn, commercial vehicle demand.

GSTL remains focused on cost optimisation through value engineering, supplier negotiations, prudent inventory management and long-term price contracts to manage this volatility, consistent with prior years.

Steel Industry

FY2025-26 was marked by global steel pricing pressure through the first three quarters, driven by continuing record exports from China. Trade interventions in India restored some balance in the second half, but the West Asia conflict in Q4 renewed uncertainty around input costs and supply chains. Regulatory pressures such as the EU Carbon Border Adjustment Mechanism (CBAM) and weak Chinese domestic demand added to the strain, though India remained demand-resilient despite capacity additions and import pressures. As steel is the Companys primary raw material, these dynamics directly influence its cost structure.

2. COMPANY OVERVIEW AND BUSINESS DESCRIPTION

Your Company delivers innovative and reliable tubular solutions to a wide range of industries and niche markets, with a core focus on automotive and commercial vehicles, hydraulic systems and general engineering. The Company manufactures tailor-made:

Seamless steel tubes

- High-pressure tubes

Welded tubes

- Cold-formed coupling nuts

These products are supplied mainly to Original Equipment Manufacturers (OEMs) in the automotive sector, along with farm equipment makers, construction equipment makers and other engineering industries. The Company blends advanced technical expertise with uncompromising quality standards to deliver the highest quality with precision.

3. STRENGTHS, OPPORTUNITIES AND THREATS

STRENGTHS	OPPORTUNITES
Integrated Manufacturing	Infrastructure Growth
Strong OEM Relationships	Industry 4.0 Adoption
Debt-Free Financial Strength	Favorable Interest Rates
Customer-Centric Customization	Global Recovery
Experienced Management	Strong Domestic Demand
THREATS	WAY FORWARD
Raw Material price Volatility	Elevate Quality Standards through technology and systems.
Trade Policy & Geopolitics Risk	Accelerate Digital & AI Transformation
Monsoon Linked Rural Demand	Invest in Talent Development
Supply chain disruption	Drive Customer-Centric Innovation
Currency Fluctuations	Strengthen Core Market Position
	Enhance supply chain efficiency

Strengths

? Integrated manufacturing - Indias only integrated facility for small-diameter cold-drawn seamless steel tubes, with end-to-end manufacturing integration to drive quality, precision, and efficiency.

? Deep market understanding - A legacy of over 40 years has built an intimate understanding of diverse customer needs across industries.

? Established OEM relationships - Over 30 years of strong partnerships with top customers and OEMs, ensuring consistent demand and trust.

? Delivery and customisation - Ability to fulfil orders of any quantity faster than local peers, offering superior operational flexibility.

? Preferred supplier - The only local player of comparable scale and quality approved by most leading Indian and global OEMs.

? Robust financials A strong, debt-free balance sheet reflecting the Companys ability to generate long-term value for shareholders and stakeholders.

? Cost leadership - A focus on value engineering, cost optimisation and efficient supply chain management supports competitive pricing and healthy margins.

? Experienced management - A stable leadership team with low staff turnover ensures prudent strategy and consistent execution.

Opportunities

? Union Budget - Government investment in roads, railways, logistics and housing is expected to drive demand for steel tubes and commercial vehicles.

? Export diversification Global supply-chain diversification in the US, Europe and ASEAN. Increasing sourcing of components from India by global manufacturers is expected to drive demand for Indian component manufacturers.

? Industry 4.0 - Investment in AI, automation and robotics can enhance production, improve productivity, reduce costs and increase flexibility.

? Favourable interest rates - Lower borrowing costs encourage capital investment and vehicle and equipment purchases, supporting demand for the Companys precision tubes.

? Recovery in international markets - A gradual global recovery, supported by stabilising supply chains, presents export growth opportunities.

? Private consumption remains strong - Consumption is expected to be supported by services sector momentum, GST rationalization and stable employment conditions

Threats

Raw material price volatility - Fluctuations in steel, crude oil and natural gas prices can significantly affect production costs and profitability.

Trade policy and geopolitical risks - Tariffs, trade wars and shifting alliances can affect export viability, disrupt supply chains and raise input costs. Regulations such as CBAM could increase cross-border sourcing costs and reduce competitiveness

Global economic slowdown - A global slowdown or persistent geopolitical tension could dampen demand across end-user industries.

Logistics and freight costs - Supply-chain disruptions and high shipping costs can affect timely delivery and raise operating expenses.

Supply-chain bottlenecks - Shortages of critical inputs may limit production throughput and deliveries, directly affecting revenue and order fulfilment.

Inflation Inflation is projected to rise towards the upper tolerance band during FY27.

Currency fluctuations Volatile exchange rates affect both the cost of imported inputs and the realisation from exports, impacting margins.

Rural Economy and Linkage to Monsoon - Tractor demand and rural sentiment are closely linked to monsoon performance. India is expected to receive below-normal south-west monsoon rainfall in FY2026-27, projected at 90 92% of the Long Period Average per the IMDs long-range forecast, owing to the El Nino effect a risk to rural demand.

International Markets - Prolonged weakness or a slower recovery in key international markets may affect volumes, margins and the viability of the Companys export-growth ambitions.

4. PRODUCT-WISE PERFORMANCE

macroeconomic profileremains favorable, and the structural shifts underway across its key sectors create multi-year opportunities that your Company is well-placed to capture.

5. BUSINESS OUTLOOK

Farm Sector

Indias agricultural transformation continues to be shaped by rising mechanisation, labour shortages, broader irrigation coverage and government focus on rural development.

Despite the IMDs forecast of a below-normal monsoon in 2026, structural drivers such as strong rural cashflows, higher Minimum Support Prices and favourable farm credit are expected to provide resilience.

CV

The commercial vehicle industry is expected to sustain its growth trajectory in FY2026-27, albeit at a more moderate pace, reflecting a strong base from FY2025-26 and near-term headwinds including commodity-cost pressure, geopolitical uncertainty and new regulatory requirements.

Diesel prices remain a key monitorable, given their bearing on fleet operating economics and, in turn, commercial vehicle demand. Underlying demand drivers remain constructive

infrastructure activity, improving fleet utilisation and the transition to cleaner, more connected transport.

Monsoon

With tractor and rural demand tied to the monsoon, the IMDs forecast of below-normal rainfall in FY2026-27 (90 92% of the Long Period Average) is a factor to watch. This remains a significant uncertainty for both growth and inflation.

Geopolitics

Given the current Middle East situation, global supply chains are being recalibrated. Merchandise exports are expected to face headwinds from elevated geopolitical risk, energy-price volatility and disruptions in key trade corridors. Robust services exports and continued government focus on bilateral and multilateral trade agreements are expected to partly offset these challenges.

Shifting Trade Dynamics

The global landscape entering FY2026-27 remains volatile. Rising protectionism, tariff actions and shifting geopolitical alliances continue to reshape global trade flows and commodity pricing. These dynamics bring commodity price volatility, supply-chain disruption and rising input costs.

However, globalsupply-chaindiversificationis opening new export avenues particularly in the US, Europe and ASEAN even as rising protectionism and tariff barriers pose risks.

India continues to have an opportunity to strengthen its position as a manufacturing and supply-chain hub as global sourcing diversifies away from concentrated geographies.

Your Company intends to pursue these opportunities selectively while managing the associated exposure.

AI

Artificial Intelligence is one of the most defining shifts shaping our world today, redefining industries, decision-making and the nature of work itself. For a precision engineering business like your Company, the practical value of AI lies in production planning, quality control, predictive maintenance and supply-chainefficiency.

Your Companys approach is to move with intent rather than experiment at the margins adopting AI and automation in a measured, purposeful way that improves productivity, sharpens decision-making and strengthens its competitive edge.

What to Expect Going Forward

The RBI, at its April 2026 MPC meeting, projected real GDP growth of 6.9% for FY2026-27, underscoring Indias relative resilience anchored in strong domestic demand, particularly rural consumption. With support from the Union Budget and the RBIs accommodative-biased liquidity management, Indias consumption-led growth story is expected to remain resilient, though external risks persist cautious private investment, oversupply from China, rising global commodity prices, logistics disruptions and export headwinds.

In a scenario with many moving parts, outcomes are difficult to predict. Uncertainty today is no longer cyclical, it is structural. Your Company therefore remains confident yet mindful, and will continue to focus on:

- Cost leadership and value engineering to manage inflationary and input-cost pressures.

Efficient supply chain management to protect margins.

A well-defined, customer-centric product strategy to capture demand while maintaining financial discipline.

Sustaining profitable growth, strengthening domestic leadership and expanding presence in global markets.

Gandhi Special Tubes Limited is well positioned to leverage Indias growth momentum and navigate evolving global dynamics with confidence.

6. RISKS AND CONCERNS

The Companys business is constantly exposed to various internal and external risks. It has implemented robust systems and review mechanisms to actively monitor, manage and mitigate these risks and protect business continuity and stakeholder value. The main risks are:

Industry and Macroeconomic Risks

Operating in a cyclical and volatile industry, the Companys performance is closely linked to macroeconomic trends, government policies and regulatory changes in India and globally. Adverse movements can affect demand, revenue, profitability and liquidity.

Foreign Exchange Risks

Sharp movement in global economy can impact cost structure and margins.

Raw Material Price Volatility

Fluctuations in the price of key raw materials such as steel and natural gas can affect production costs and margins, and may be worsened by supply-chain disruptions, geopolitical tensions and commodity-market volatility.

Energy Price Fluctuations

As the Companys processes are energy-intensive, volatility in gas and electricity prices can affect production costs.

Monsoon Dependence

A normal monsoon is critical for Indias agriculture and rural and economy, directly influencing automotive sectors. An untimely or unevenly distributed monsoon could adversely affect sales and business performance.

Environmental and Regulatory Compliance

The Companys operations are subject to environmental laws and evolving compliance requirements. Non-compliance or regulatory change could lead to higher costs, operational restrictions or reputational risk.

Legal and Taxation Risks

The Company operates within a dynamic legal and tax environment. Frequent changes in tax structures, interpretations and regulations require continuous monitoring and timely adaptation to ensure compliance, avoid penalties and manage litigation risk. The Company has robust processes to address these proactively.

Cybersecurity and IT Risks

As the Company advances its digital initiatives, it faces risks of cyber threats and data breaches that could disrupt operations and harm its reputation. The Company has conducted cybersecurity assessments to identify gaps, invested in security tools and adopted best practices to protect the confidentiality, integrity and availability of information.

Trade Policy and Geopolitical Risks

Tariffs, trade wars and geopolitical developments can affect the Companys export competitiveness, input costs and supply-chain stability. Rising protectionism could lead to higher duties on imports and exports.

Competition and Technological Disruption

The Company faces competition from domestic and international players. Technological advances, changing customer preferences or new substitute materials can affect demand for seamless tubes. The Company continues to invest in technology and operational

Credit and Customer Concentration Risks

Dependence on key OEM customers exposes the Company to credit and demand risk if a major customer reduces orders, delays payments or faces financial . stress

7. INTERNAL CONTROL SYSTEMS

Your Company has a well-established internal control system appropriate to the size and nature of its business. The system safeguards the Companys assets from loss, damage or misuse and ensures that transactions are adequately authorised, recorded and reported correctly.

It is supplemented by an internal audit conducted by an independent firm of Chartered Accountants and by statutory audit, both periodically reviewed by management and the Audit Committee. The Audit Committee regularly reviews compliance with the Companys policies, procedures and statutory requirements in consultation with the Statutory and Internal Auditors, who attend its meetings.

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

8. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year, Net Sales grew by approximately 11.15 % and Net Profit grew by 16.52 %.

Major Financial Ratios

Sr. Ratio Description	FY	FY	Change
	2026	2025
1 Debtors Turnover (in days)	39	47	-17%
2 Inventory Turnover (in days)	107	95	12%
3 Interest Coverage Ratio - Not applicable, in the absence of interest
payments.
4 Current Ratio	6.11	7.8	-22%
5 Debt-Equity Ratio - Not applicable, in the absence of any debt.
6 Operating Profit Margin (%)	44.68	41.61	7%
7 Net Profit Margin (%)	33.58	31.81	6%
8 Return on Net Worth (%)	21.66	22.11	-2%

Notes on the ratios:

Debtors Turnover - measures how effectively Company collects money owed by customers; it is turnover divided by average trade receivables.

Inventory Turnover - is the number of times the

Company sells and replaces its inventory in a period; it is turnover divided by average inventory.

Current Ratio - measures the Companys ability to meet short-term obligations; it is current assets divided by current liabilities.

Operating Profit Margin is the profit from operations as a percentage of turnover (EBIT divided by turnover).

Net Profit Margin is net profit as a percentage of turnover (profit for the year divided by turnover).

Return on Net Worth - measures profitability relative to capital employed (total comprehensive income divided by capital employed).

A capital investment of 220 lakhs was made during the year, funded entirely from the Companys internal cash accruals.

9. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company believes that nurturing and strengthening its human resources is vital to building a harmonious and effective organization, and considers its people a critical factor in its success. It provides an environment that develops leadership skills and helps recruit and retain quality professionals across all fields. The Companys prevailing rate in the automotive sector.

The Companys human resource strategy addresses key aspects such as:

- A code of conduct and fair business practices.

Performance-based compensation to attract and retain talent.

Skill development of the blue-collar workforce to meet productivity and quality deliverables.

As at the year-end, the Company had 447 employees

(including contractual employees) under its payroll.

10. SAFETY, HEALTH AND ENVIRONMENT (SHE) MANAGEMENT

Your Company continues to adopt best safety practices thatthe have reduced accident frequency and severity. New personnel are trained in Safety, Health and Environment (SHE) practices before deployment to the shop floor, significantly reducing unsafe practices. Constant upgrades in technology and safety equipment, along with regular safety inspections of plant and machinery, are carried out to mitigate hazards. These efforts are progressively taking the Company towards its target of Zero Accidents.

11. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the 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 relationships with OEMs and the commitment of its staff, will continue to sustain its growth and reward shareholders through dividends in the year 2026-2027.

	For GANDHI SPECIAL TUBES LTD.
	Manhar G. Gandhi
	Chairman and Managing Director
	DIN: 00041190
Place: Mumbai
Date: 25 May 2026