Notes to Accounts of Gandhi Special Tubes Ltd.

Mar 31, 2018

1. EMPLOYEE BENEFITS As required by Ind AS 19 ‘Employee Benefits'' the disclosures are as under : a) Defined Contribution Plans

Company offers its employees defined contribution plans in the form of Provident Fund (PF) and Employees'' Pension Scheme (EPS) with the government, and certain state plans such as Employees'' State Insurance (ESI). PF and EPS cover substantially all regular employees and the ESI covers certain employees. Contributions are made to the Government''s funds. While both the employees and Company pay predetermined contributions into the Provident Fund and the ESI Scheme, contributions into the Pension fund is made only by Company. The contributions are normally based on a certain proportion of the employee''s salary. During the year, Company has recognized the following amounts in the Accounts :

b) Defined Benefit Plans

Gratuity : Company makes annual contributions to Employees'' Group Gratuity-cum Life Assurance (Cash Accumulation) Scheme of LIC, a funded defined benefit plan for qualifying employees. The scheme provides for payment to vested employees as under :

On normal retirement / early retirement / withdrawal / resignation :

As per the provisions of Payments of Gratuity Act, 1972 with vesting period of 10 years of service.

On the death in service :

As per the provisions of Payments of Gratuity Act, 1972 without any vesting period.

Although the analysis does not take into account full distribution of cash flows expected under the plan, it does provide an approximation of sensitivity of assumptions. The estimated of future increase in compensation levels, considered in the actuarial valuation, have been taken on account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The expected contributions for Defined Benefit plan for the next financial year will be in line with FY 2017-18.

e) Leave Encashment:

Company''s employees are entitled for compensated absences which are allowed to be accumulated and encashed as per Company''s rule. The liability of compensated absences, which is non-funded, has been provided based on report of independent actuary using “Projected Unit Credit Method”.

Accordingly Rs,12.66 Lakhs (Previous Year Rs,6.93 Lakhs) being liability as at the year - end for compensated absences as per actuarial valuation has been provided in the accounts.

2. SEGMENT REPORTING

Operating Segment are those components of the business whose operating results are regularly reviewed by the chief operating decision making body in the Company to make decisions for performance assessment and resource allocation. Accordingly, the Company operates in manufacturing of Steel Tubes / Nuts and generation of Wind Power. However, the operating segment in respect of Nuts and generation of Wind Power do not meet the quantitative thresholds for disclosure under Ind AS 108 “Operating Segments” and hence aggregated.

3. EVENTS AFTER THE REPORTING PERIOD

The Board of Directors have recommended dividend of Rs, 9.00 (180%) for equity share for the financial year ended 31 March 2018. The dividend is subject to the approval by the shareholders in the ensuing Annual General Meeting of the Company and therefore, has not been recognized as a liability as at the Balance Sheet date in line with Ind AS 10 on “Events after reporting period”

4 DISCLOSURES OF TRANSACTIONS WITH RELATED PARTIES REQUIRED UNDER IND AS 24 ON “RELATED PARTY DISCLOSURES” Key Managerial Personnel (KMP)

Chairman and Managing Director - Mr. Manhar G. Gandhi

Joint Managing Director - Mr. Bhupatrai G. Gandhi

Relative of KMP

Director - Mr. Jayesh M. Gandhi

Entities over which KMP / Relative of KMP have control

Jaishri Engineering Co. Pvt. Ltd.

Randeep Exports

Notes :

Related parties relationship is as identified by the Company on the basis of information available with them and accepted by the Auditors.

The Sales to / Job work charges received from related parties are at arms length price. The outstanding balances represents remuneration payable as on date.

5 OPERATING LEASE

The Company has taken land for installing wind mills under cancellable operating lease for 15 years which is renewable for further 15 years

Lease Rent of Rs,1.42 Lakhs (Previous year of Rs,1.63 Lakhs) has been recognized in the statement of Profit and Loss for the year ended 31 March 2018 under the head Windmill operating Expenses under Other Expenses Note No. 29.

6 CONTRIBUTION TOWARDS CORPORATE SOCIAL RESPONSIBILITY (CSR)

The particulars of CSR expenditure are as follows :

a) Gross amount required to be spent by the Company as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof by the Company during the year is Rs,56.77 Lakhs (Previous year Rs,51.42 Lakhs)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

b) Amount spend during the year and debited to Statement of Profit and Loss Rs,101.62 Lakhs (Previous year Rs, Nil ) Out of note (b) above, Rs,100 Lakhs is spent through Shri Vinay Vihar kelwani Mandal for Old Age Home and Rs,1.62 Lakhs is spent through HDFC Charity Fund for Cancer Cure.

7 CAPITAL MANAGEMENT

For the purpose of the Company''s Capital Management, Capital includes issued Equity Capital and all Other Reserves (including Capital Redemption Reserve created during the year on buy back of Equity shares) attributable to the Equity shareholders of the Company. The Primary objective of the Company''s Capital Management is to maximize the shareholders’ value. The Company''s Capital Management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholder''s value.

8 FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT A Fair value measurements

i) Fair value of financial assets and liabilities that are measured at fair value on a recurring basis

Fair value of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the market participants at the measurement date.

Valuation

The Fair values of investments in units of mutual fund units is based on the net asset value (''NAV'') as stated by the issuers of these mutual fund units in the published statements as at the Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

The Fair values of investments in Bonds and Preference Shares which are quoted, are based on the quoted price of those bonds on the measurement date.

Fair Value measurement hierarchy

The fair value of financial instruments as referred below have been classified into three categories depending on the method used in the valuation technique.

The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

The categories used are as follows:

Level 1: Quoted prices for identical instruments in an active market;

Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and Level 3: Inputs which are not based on observable market data.

ii) Financial Instruments measured at amortized cost :

The carrying amount of financial assets and financial liabilities measured at amortized cost in the financial statements are a reasonable approximation of their fair value since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.

B Financial Risk Management and Policies

The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The risk management policy is approved by the Company''s Board. The Company''s principal financial liabilities comprise of trade and other payables. These financial liabilities form part of the Company''s working capital. The Company''s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations and investments. The Company is exposed to market risk, credit risk, liquidity risk,etc. The objective of the Company''s financing policy are to secure solvency, limit financial risks and optimize the cost of capital, if any. The Company''s capital structure is managed using only equity as part of the Company''s financial planning.

Company has exposure to following risk arising from financial instruments:

Credit risk Liquidity risk Market risk

a) Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, investments in units of mutual funds, other balances with banks, deposits and other receivables.

i) Trade Receivable

Customer credit risk managed by Company''s established policy, procedure and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored.

ii) Financial instruments

The Company limits its exposure to credit risk by investing mainly in units of debt funds issued by mutual funds and that too have higher credit rating. The Company monitories changes in credit risk by tracking published external credit ranking.

b) Liquidity risk

Liquidity risk is the risk that Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. Company''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. Company closely monitors its liquidity position and deploys a robust cash management system. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.

The Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities. The ratio of cash and cash equivalents and other investments to outflow is 4.00 times as at 31 March 2018, 4.68 times as at 31 March 2017 and 6.92 times as at 01 April 2016.

The maturity of all financial liabilities of the Company is less than one year or on demand.

c) Market Risk

“Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments and derivative financial instruments. The Company does not have any loan or borrowing. The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.”

b) Defined Benefit Plans

Under previous GAAP, actuarial gains and losses in respect of gratuity were recognized in profit and loss. Under Ind AS, the actuarial gains and losses forming part of remeasurement of the net defined benefit liability/ asset, are recognized in the Other Comprehensive Income instead of profit or loss. The actuarial gains for the year ended 31^stMarch 2017 were Rs,3.50 Lakhs, with tax Rs,1.21 Lakh This change does not affect total equity, but there is an decrease in profit after tax of Rs,2.29 Lakhs in total profit of Rs,3080.63 Lakhs for the year ended 31^st March 2017.

c) Provision For Sales return

Revenue is recognized net of such provision for sales returns and consequently related cost of such goods is reflected in Inventories.

d) Insurance claim Receivables

The Company has recognized credit loss in respect of the Insurance claim receivables amounting to Rs,6.28 Lakhs. Accordingly, the Total Equity balance was decreased to this extent as at 1 April 2016.

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Mar 31, 2017

1. RELATED PARTY DISCLOSURES

(A) NAME OF RELATED PARTIES AND RELATIONSHIP

Name Relationship

1) Mr. Manhar G. Gandhi Key Management Personnel (KMP)

2) Mr. Bhupatrai G. Gandhi Key Management Personnel (KMP)

3) Mr. Jayesh M. Gandhi Relative of KMP

4) Jaishri Engineering Co. Pvt. Ltd. Significant influence by KMP

5) Randeep Exports Significant influence by KMP / relatives of KMP

Related parties relationship is as identified by the Company on the basis of information available with them and accepted by the Auditors

2. PREVIOUS YEAR FIGURES

Previous year figures have been regrouped, rearranged and reclassified, wherever necessary to correspond with the current year''s classification / disclosure.

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Mar 31, 2016

a) Reconciliation of number of shares

There is no movement in the share capital during the current and previous year.

b) Rights, preferences and restrictions attached to equity shares :

The Company has one class of equity shares having a par value of Rs. 5/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

c) Details of shares held by each shareholder holding more than 5% shares.

Notes:

Related parties relationship is as identified by the Company on the basis of information available with them and accepted by the Auditors.

1. PREVIOUS YEAR FIGURES

Previous year figures have been regrouped, rearranged and reclassified, wherever necessary to correspond with the current year''s classification / disclosure.

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Mar 31, 2015

A) Rights, preferences and restrictions attached to equity shares :

The Company has one class of equity shares having a par value of Rs. 5/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

B) Details of shares held by each shareholder holding more than 5% shares:

Note Particulars 31/03/2015 31/03/2014

2 CONTINGENT LIABILITIES AND COMMITMENTS

(I) CONTINGENT LIABILITIES

(a) Claims against the Company not acknowledged as debt :

i) Excise / Service Tax matters under disputes 2,48,20,338 1,91,02,251

ii) Sales Tax demand disputed by the Company 25,23,477 25,34,394

(b) Counter Guarantees given by the Company to the bankers for Bank Guarantees 1,00,00,000 1,75,00,000

(II) COMMITMENTS

Estimated amount of contracts (net of advances) remaining to be executed on capital account - 17,20,584 and not provided for on Tangible assets

(III) The Income Tax assessments of the Company have been completed upto assessments year 2012- 13. The total disputed demand is Rs. 4,87,61,011/- (P.Y. Rs. 4,38,77,391/-). The Company has deposited Rs. 4,68,93,440/- (P.Y. Rs. 3,19,49,820/-) against the same. Based on the decisions of the Appellate authorities and the interpretations of other relevant provisions, the Company has been legally advised that the demand is likely to be deleted. However, as an abundant caution the Company has made provision for the same.

25 Effective April 1, 2014 the Company has changed the estimated useful life of assets in line with the recommended useful life as per Part C of Schedule II to the Companies Act, 2013. As per para 7 (b) of Notes to Part C, where the remaining 'useful life' of an asset as on the effective date is Nil, the carrying amount of the asset should be recognised in the retained earnings. Accordingly, the carrying amount as on April 1, 2014 of Rs. 3,65,905/- (Net of Deferred Tax of Rs. 1,88,412/-) has been adjusted against Surplus / (Deficit) in statement of Profit and Loss.

3 THE DETAILS OF AMOUNT DUE TO MICRO, SMALL AND Nil Nil MEDIUM ENTERPRISES BASED ON INFORMATION AVAILABLE WITH THE COMPANY AND RELIED UPON BY AUDITORS

The Company has disclosed Business Segments as the primary segment. There are no secondary segments. Segments have been identified taking into account the nature of the product, the differing risk and returns, the organisational structure and internal reporting system. The Company's operations predominantly relate to manufacture of Steel Tubes. Other segments comprise of manufacture of Nuts.

Segment Revenue, Segment Result, Segment Assets and Segment Liabilities include respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis. The expenses which are not directly relatable to the business segments, are shown as unallocated expenses. Assets and liabilities that can not be allocated between the segments are shown as unallocated assets and liabilites respectively.

Notes :

Related parties relationship is as identified by the Company on the basis of information available with them and accepted by the Auditors.

4 PREVIOUS YEAR FIGURES

Previous year figures have been regrouped, rearranged and reclassified, wherever necessary to correspond with the current year's clasification / disclosure.

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Mar 31, 2013

1 CONTINGENT LIABILITIES AND COMMITMENTS

(I) CONTINGENT LIABILITIES 31-03-2013 31-03-2013 Rs. Rs. (a) Claims against the Company not acknowledged as debt:

i) Excise/Service Tax matters under disputes 1,65,18,114 1,16,31,506

ii) Sales Tax demand disputed by the Company 27,10,620 25,23,477

(b) Counter Guarantees given by the Company to the bankers 1,30,00,000 1,02,00,000 for Bank Guarantees

(c) Letter of Credits issued by the Bank 4,50,50,474 5,70,57,339



(II) COMMITMENTS

Estimated amount of contracts remaining to be executed on 6,85,37,509 3,25,63,885 capital account and not provided for on Tangible assets

(III) The Income Tax assessments of the Company have been completed upto A.Y. 2010-11. The total disputed demand is Rs. 2,31,49,820/- (P.Y. Rs. 1,23,19,440/-). The Company has deposited Rs. 1,77,19,440/- (P.Y. Rs. 65,00,000/-) against the same. Based on the decisions of the Appellate authorities and the interpretations of other relevant provisions, the Company has been legally advised that the demand is likely to be deleted and accordingly no provision has been made.

2 PREVIOUS YEAR FIGURES

Previous year figures have been regrouped, rearranged and reclassified, wherever necessary to correspond with the current year''s clasification / disclosure.

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Mar 31, 2012

Note Particulars 31-03-2012 31-03-2011 No Rs Rs

01 CONTINGENT LIABILITIES AND COMMITMENTS

(I) CONTINGENT LIABILITIES

(a) Claims against the Company not acknowledged as debt:

i) Cenvat/Service Tax Credit under disputes by Excise 3,918,242 2,907,295 authorities

ii) Excise demand disputed by the Company 7,713,264 5,799,625

iii) Sales Tax demand disputed by the Company 2,523,411 2,523,411

iv) Professional fees - 166,000

(b) Counter Guarantees given by the Company to the bankers 10,200,000 6,906,900 for Bank Guarantees

(c) Letter of Credits issued by the Bank 57,057,339 14,667,296

(II) COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for on Tangible assets 32,563,885 6,197,684

(III) The Income Tax assessments of the Company have been completed upto Assessment Year 2009- ID. The disputed demand outstanding upto the said Assessment Year is Rs.1,23,19,440/-. Based on the decisions of the Appellate authorities and the interpretations of other relevant provisions, the Company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provison has been made.

2 PREVIOUS YEAR FIGURES

The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclouser and presentation made in the financial statements. Previous year figures have been regrouped, rearranged and reclassified, wherever necessary to correspond with the current year's clasification /disclosure.

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Mar 31, 2011

2010-2011 2009-2010 Rs. In Lacs Rs. In Lacs

1). CONTINGENT LIABILITIES

a) Claims against the Company not acknowledged as debt:

i) Cenvat/Service Tax Credit under disputes by Excise authorities 29.07 56.55

ii) Excise demand disputed by the Company 57.99 28.98

iii) Sales Tax demand disputed by the Company 25.23 25.23

iv) Professional Fees 1.66 -

b) Counter Guarantees given by the Company to the bankers for Bank Guarantees 69.07 50.00

c) Letter of Credits issued by the Bank 146.67 -

2) RELATED PARTY DISCLOSURES

A) NAME OF RELATED PARTIES AND RELATIONSHIP

Name Relationship

1) Mr. M.G. Gandhi Key Management Personnel(KMP)

2) Mr. B.G.Gandhi Key Management Personnel(KMP)

3) Mr. J.M. Gandhi Relative of KMP

4) Jaishri Engineering Co. Pvt. Ltd. Significant influence by KMP

5) Gandhi Finance Co. Pvt. Ltd. Significant influence by relatives of KMP

6) B.M. Gandhi Investment Co. Pvt. Ltd. Significant influence by relatives of KMP

7) Randeep Exports Significant influence by KMP/ relatives of KMP

3) Previous Year figures have been regrouped, rearranged and reclassified, wherever considered necessary.

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Mar 31, 2010

2009-2010 2008-2009 Rs.In Lacs Rs.In Lacs 2).Estimated amount of contracts remaining to be executed on Capital Accounts and not provided for (Net of Advance) 3.30

3).CONTINGENT LIABILITIES

a)Claims against the Company not acknowledged as debt :

i)Cenvat/Service Tax Credit under disputes by Excise authorities 56.55 27.89 ii)Excise demand disputed by the Company 28.98 29.39 iii)Sales Tax demand disputed by the Company 25.23 25.23

b)Counter Guarantees given by the Company to the bankers for Bank Guarantees 50.00 80.73

2) DUE TO MICRO AND SMALL ENTERPRISES

Amount outstanding for more than 45 days.

The above information and that given in Schedule 11 - "Current Liabilities" regarding Micro and Small enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.

3) Previous Year figures have been regrouped, rearranged and reclassified, wherever considered necessary.