1.1 Corporate Information
Gandhi Special Tubes Limited (“the Company”) is
engaged in manufacture of Seamless and Welded Steel
Tubes, Nuts and generation of Wind Power.
The Company is a public limited company incorporated
and domiciled in India and has its registered office at
201-204, Plaza, 2nd Floor Near Dharam Palace, 55
Hughes Road, Mumbai - 400004. The equity shares of
the Company are listed on Bombay Stock Exchange
Limited (BSE) and National Stock Exchange of India
Limited (NSE).
The financial statements for the year ended 31 March
2025 are approved by the Company's Board of Directors
on 28 May, 2025
1.2 Basis of Preparation
These financial statements of the Company have
been prepared in accordance with Indian Accounting
Standards (Ind AS) as prescribed under Section 133
of the Companies Act, 2013 (the 'Act') read with the
Companies (Indian Accounting Standard) Rules as
amended from time to time.
These financial Statements are prepared on an accrual
basis under the historical cost convention or amortised
cost, except for the following assets and liabilities, which
have been measured at fair value :
i) Certain financial assets and liabilities that are measured
at fair value
ii) Defined Benefit Obligations - as per actuarial valuation
These financial statements are presented in Indian
Rupees (INR), which is also the Company's functional
currency and all amounts are rounded off, except when
otherwise indicated.
1.3 Critical Accounting Judgements and Key Sources of
Estimation Uncertainty
The preparation of the financial statements requires
the management to make judgements, estimates and
assumptions in the application of accounting policies
and that have the most significant effect on reported
amounts of assets, liabilities, income and expenses,
and accompanying disclosures, and the disclosure of
contingent liabilities. The estimates and associated
assumptions are based on historical experience and
other factors that are considered to be relevant. Actual
results may differ from these estimates. The estimates
and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the
revision affects only that period or in the period of the
revision and future periods if the revision affects both
current and future periods.
1.4 Key estimates, assumptions and judgements
The key assumptions concerning the future and other
major sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described
below:
a) Property, Plant and Equipment/Intangible Assets
Property, Plant and Equipment/ Other Intangible Assets
are depreciated/amortised over their estimated useful
lives, after taking into account estimated residual value.
The useful lives and residual values are based on the
Company's historical experience with similar assets and
taking into account anticipated technological changes
or commercial obsolescence. Management reviews
the estimated useful lives and residual values of the
assets annually in order to determine the amount of
depreciation/amortisation to be recorded during any
reporting period. The depreciation/amortisation for future
periods is revised, if there are significant changes from
previous estimates and accordingly, the unamortised/
depreciable amount is charged over the remaining useful
life of the assets.
b) Leased Assets
Identification of a lease requires significant judgment in
assessing the lease term (including anticipated renewals)
and the applicable discount rate. The Company
determines the lease term as the non-cancellable period
of a lease, together with both periods covered by an option
to extend the lease if the Company is reasonably certain
to exercise that option; and periods covered by an option
to terminate the lease if the Company is reasonably
certain not to exercise that option. In assessing whether
the Company is reasonably certain to exercise an option
to extend a lease, or not to exercise an option to terminate
a lease, it considers all relevant facts and circumstances
that create an economic incentive for the Company to
exercise the option to extend the lease, or not to exercise
the option to terminate the lease. The Company revises
the lease term if there is a change in the non-cancellable
period of a lease. The lease payments are discounted
using the interest rate implicit in the lease or, if not readily
determinable, using the RBI lending rates increased by
2%.
c) Fair Value measurements of Financial Instruments
When the fair values of financial assets and financial
liabilities recorded in the balance sheet cannot be
measured based on quoted prices in active markets
(Net Assets Value in case of units of Mutual Funds),
their fair value is measured using valuation techniques
including the Discounted Cash Flow (DCF) model.
The inputs to these models are taken from observable
markets where possible, but where this is not feasible,
a degree of judgement is required in establishing fair
values. Judgements include considerations of inputs
such as liquidity risk, credit risk and volatility. Changes
in assumptions about these factors could affect the
reported fair value of financial instruments.
d) Employee Benefit Plans
The cost of the defined benefit gratuity plan and other-
post employment benefits and the present value of
gratuity obligations and compensated absences is/
are determined based on actuarial valuations. An
actuarial valuation involves making various assumptions
that may differ from actual developments in the future.
These include the determination of the discount rate,
future salary increases, attrition and mortality rates.
Due to the complexities involved in the valuation and
its long-term nature, these liabilities are highly sensitive
to changes in these assumptions. All assumptions are
reviewed at each reporting date.
The mortality rate is based on publicly available mortality
tables. Those mortality tables tend to change only at
interval in response to demographic changes. Further
salary increases and gratuity increases are based on
expected future inflation rates.
e) Impairment of Assets
The Company has used certain judgements and
estimates to work out future projections and discount
rates to compute value in use of cash generating unit
and to access impairment. In case of certain assets
independent external valuation has been carried out to
compute recoverable values of these assets.
f) Impairment of Financial Assets
The impairment provisions for financial assets are based
on assumptions about risk of default and expected cash
loss rates. The Company uses judgement in making
these assumptions and selecting the inputs to the
impairment calculation, based on the Company's past
history, existing market conditions as well as forward
looking estimates at the end of each reporting period.
The Company reviews its carrying value of investments
carried at amortised cost annually, or more frequently
when there is indication for impairment. If the recoverable
amount is less than its carrying amount, the impairment
loss is accounted for.
g) Income taxes
Significant judgements are involved in determining the
provision for income taxes, including amount expected
to be paid/recovered for uncertain tax positions as also
to determine the amount of deferred tax that can be
recognised, based upon the likely timing and the level of
future taxable profits. Also refer Note No.32.
1.5 Property, Plant and Equipment (PPE)
PPE is recognised when it is probable that future
economic benefits associated with the item will flow to
the Company and the cost of the item can be measured
reliably. PPE (other than Freehold Land) are stated at
cost less accumulated depreciation and impairment
losses, if any. The initial cost of an asset comprises its
purchase price, non- refundable purchase taxes and any
costs directly attributable to bringing the asset into the
location and condition necessary for it to be capable of
operating in the manner intended by management, the
initial estimate of any decommissioning obligation, if any.
Freehold land is carried at historical cost.
The carrying amount of an item of PPE is derecognised
upon disposal or when no future economic benefit is
expected to arise from its continued use. Any gain or
loss arising on the derecognition of an item of PPE is
determined as the difference between the net disposal
proceeds and the carrying amount of the item and is
recognised in Statement of Profit and Loss.
Depreciation :
Depreciation on Property, Plant and Equipment,
Leasehold Assets (other than freehold land) is provided
on the Straight-Line Method as per the useful life
prescribed under Schedule II to the Companies Act,
2013, except for Wind Mill, which is provided on Written
Down value Method.
The estimated useful lives, residual values and
depreciation method are reviewed at the end of each
reporting period, with the effect of any change in estimate
accounted for on a prospective basis.
1.6 Leases
The Company's lease asset classes primarily consist of
lease for Land on which windmill has been installed for
power generation. The Company assesses whether a
contract is or contains a lease, at inception of a contract.
A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a
period of time in exchange for consideration. At the date
of commencement of the lease, the Company recognises
a right-of-use asset (“ROU”) and a corresponding lease
liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less
(short term leases) and leases of low value assets.
For these short term and leases of low value assets,
the Company recognises the lease payments as an
operating expense on a straight line basis over the
term of the lease. The right-of-use assets are initially
recognised at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made
at or prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They
are subsequently measured at cost less accumulated
depreciation and impairment losses, if any. Right-of-use
assets are depreciated from the commencement date on
a straight-line basis over the shorter of the lease term and
useful life of the underlying asset. The lease liability is
initially measured at the present value of the future lease
payments. The lease liability is subsequently remeasured
by increasing the carrying amount to reflect interest on
the lease liability, reducing the carrying amount to reflect
the lease payments made. A lease liability is remeasured
upon the occurrence of certain events such as a change
in the lease term or a change in an index or rate used
to determine lease payments. The remeasurement
normally also adjusts the leased assets. Lease liability
and ROU asset have been separately presented in the
Balance Sheet and lease payments have been classified
as financing cash flows.
1.7 Intangible Assets
Intangible assets are initially recognised at cost.
Intangible assets are amortised over estimated useful
life of three years on straight- line basis.
1.8 Impairment of non-financial assets
At the end of each reporting period, the Company reviews
the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those
assets have suffered an impairment loss. If any such
indication exists, the recoverable amount, which is the
higher of the value in use or fair value less cost to sell, of
the asset or cash-generating unit, as the case may be,
is estimated and impairment loss (if any) is recognised
and the carrying amount is reduced to its recoverable
amount.
In assessing the value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have
not been adjusted. When it is not possible to estimate the
recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash generating
unit to which the asset belongs.
An impairment loss is recognised immediately in the
Statement of Profit and Loss. When an impairment
subsequently reverses, the carrying amount of the asset
is increased to the revised estimate of its recoverable
amount, but upto the amount that would have been
determined, had no impairment loss been recognized
for that asset or cash generating unit. A reversal of
an impairment loss is recognised immediately in the
Statement of Profit and Loss.
1.9 Current versus Non-current classification
The Company presents assets and liabilities in
the Balance Sheet based on current / non-current
classification. An asset is treated as current when it is :
i) Expected to be realised or intended to be sold or
consumed in normal operating cycle
ii) Held primarily for the purpose of trading
iii) Expected to be realised within twelve months after the
reporting period, or
iv) Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period
All other assets are classified as non-current.
All liability is current when :
i) It is expected to be settled in normal operating cycle
ii) It held primarily for the purpose of trading
iii) It is due to be settled within twelve months after the
reporting period, or
iv) There is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period
The company classifies all other liabilities as non-current.
Based on the nature of products and the time between
the acquisition of assets for processing and their
realization in cash and cash equivalents, the Company
has ascertained its operating cycle as twelve months
for the purpose of current / non-current classification of
assets and liabilities.
1.10 Inventories
Inventories comprise all costs of purchase, conversion
and other costs incurred in bringing the inventories to
their present location and condition.
Raw materials, fuels, stores and spares are valued at
lower of cost and net realisable value. Cost is determined
on the basis of the FIFO method. However, materials and
other items held for use in the production of inventories
are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at
or above cost.
Work-in-progress and finished goods are valued at lower
of cost and net realisable value. Cost includes direct
materials, labour, other direct cost and a proportion of
manufacturing overheads based on normal operating
capacity.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the
sale.
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