Gandhi Special Tubes Ltd.

Dear Members

The Board of Directors are pleased to present their Thirty Second Annual Report on thebusiness and operations of your Company along with the Audited Financial Statements forthe financial year ended on 31st March 2017. The Statement of Accounts Auditors' ReportBoard's Report and attachment thereto have been prepared in accordance with the provisionscontained in Section 134 of Companies Act 2013 and Rule 8 of the Companies (Accounts)Rules 2014.

1. FINANCIAL RESULTS

The Company's financial performance for the year ended March 31 2017 is summarizedbelow:

2. RESERVES

There has been no transfer to reserves made during the year under review as the same isnot mandatory.

3. PERFORMANCE AND AFFAIRS OF THE COMPANY

During the year under review despite of dif cult market conditions and effects ofdemonetisation the Net Sales has marginally increased by 6.91% from Rs 8898 Lakhs to Rs9513 Lakhs. Due to better operating ef ciency reduced wastage and stringent cost controlmeasures the operating profit has increased by 28.23% from Rs 2228 Lakhs to Rs 2857Lakhs.

The performance and outlook of the Company has been discussed in the ManagementDiscussion and Analysis Report which is forming part of the Annual Report.

4. DIVIDEND

The Company has declared and paid an Interim Dividend @180 % on 15th February 2017i.e. Rs 9.00 per share in the year 2016-17 as against Rs 7.50 per share in the previousyear 2015-16. The dividend has been paid to the shareholders whose names appeared in theRegister of Members as on 3rd February 2017. The total dividend paid for the year ended31 March 2017 was Rs1322.88 lakhs. Your Directors recommend that the Interim Dividend becon rmed as Final Dividend.

5. CURRENT STATUS

The order book position of the Company in the current financial year 2017-18 is betterthan last year and therefore barring unforeseen circumstances the Company expects toachieve better performance during the current year.

6. CHANGES IN NATURE OF BUSINESS AND REVISION IN THE BOARD'S REPORT

There is no change in the nature of business of the Company during the year. There isno revision made in the Board's Report and whatever submitted herewith is the nal report.

7. REPORT ON PERFORMANCE OF SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES

During the year under review your Company did not have any subsidiary associate andjoint venture Company.

8. CORPORATE GOVERNANCE

Pursuant to Regulation 27(2) and Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Corporate Governance Report and Certi cate regardingcompliance of conditions of Corporate Governance form an integral part of this report andare set out as separate Annexure to this Report. In order to obviate duplication ofinformation some of the information required under the Board's Report has been captured inthe Corporate Governance Report.

9. PUBLIC DEPOSITS

Your Company has not accepted any deposits within the meaning of Section 73 and 76 ofthe Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 and amendedrules thereafter. The question of non-compliance of the relevant provisions of the lawrelating to acceptance of deposit does not arise.

(i) Directors

Mr. Jayesh M. Gandhi (DIN NO: 00041330) Director will retire by rotation and beingeligible and not being disquali ed under section 164 of the Companies Act 2013 offershimself for re-appointment.

There is no change in the composition of the Board of Directors.

(ii) Key Managerial Personnel

During the year under review Ms. Priyanka Borkar resigned as the Company Secretary andCompliance Of cer with effect from 1st February 2017 and she was relieved of herresponsibilities by the Company at the close of the office hours on 6th March 2017.

(iii) Declaration by an Independent Director(s)

The Company has complied with Regulation 25 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and according to the provisions of Section149(6) of the Companies Act 2013.The Company has also obtained declarations from all theIndependent Directors pursuant to section 149(7) of the Companies Act 2013.

(iv) Annual Evaluation of Board

In compliance with the provisions of the Companies Act 2013 and Regulation 25 of SEBI(Listing Obligation and Disclosure Requirement) Regulations 2015 the Board has carriedout the annual performance evaluation of its own performance and that of its Committeeand other Directors. A structured questionnaire was prepared after taking intoconsideration inputs received from the Directors and also as per the Guidance Notesissued by

SEBI vide its Circular No: SEBI/HO/CFD/CMD/CIR/P/2017/004 dated January 5th 2017covering various aspects of the Board's functioning such as adequacy of the composition ofthe Board and its Committees Board culture execution and performance of specific dutiesobligations and governance.

11. BOARD AND COMMITTEES

During the year four (4) Board Meetings were convened and held the details of whichare given in the Corporate Governance Report that forms part of this Annual Report. Theintervening gap between two meetings was less than the period prescribed under theCompanies 2013 Secretarial Standard-1 on Board Meetings and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015. The details of the Audit CommitteeStakeholder Relationship Nomination and Remuneration Committee and CSR Committee havebeen given in the Report on the Corporate Governance.

12. DIRECTOR'S RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by your Directors they make the following statements in terms ofSection 134(3)(c)of the Companies Act 2013 and hereby con rm that:-

a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

b. the directors have selected such accounting policies and applied consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2017 and of the profit ofthe Company for the year ended on that date;

c. the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a going concern basis; and the directorshave laid down proper systems financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively.

e. the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

13. NOMINATION AND REMUNERATION COMMITTEE

The Board has in accordance with the provisions of sub-section (3) of Section 178 ofthe Companies Act 2013 formulated the policy setting out the criteria for determiningquali cations positive attributes independence of a Director and policy relating toremuneration for Directors Key Managerial Personnel and other employees. The text of thepolicy is available on the website of the Company www.gandhitubes.com.

14. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES

The Company promotes ethical behaviour in all its business activities and has put inplace a mechanism for reporting illegal and unethical behaviour.

The Board of Directors of the Company have pursuant to the provisions of Section177(9) of the Companies Act 2013 read with Rule 7 of the Companies (Meetings of Board andits Powers) Rules 2014 framed "Vigil Mechanism Policy" for Directors andemployees of the Company to provide a mechanism which ensures adequate safeguards toemployees and Directors from any victimization on raising of concerns of any violations oflegal or regulatory requirements incorrect or misrepresentation of any financialstatements and reports etc.

15. RISK MANAGEMENT POLICY

The Company has designed Risk Management Policy and Guidelines to avoid eventssituations or circumstances which may lead to negative consequences on the Company'sbusinesses and de ne a structured approach to manage uncertainty and to make use of thesein their decision making pertaining to all business divisions and corporate functions. Atpresent there is no identifiable risk which in the opinion of the Board may threaten theexistence of the Company.

OUTGO

The particulars as required under the provisions of Section 134(3) (m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofconservation of energy technology absorption foreign exchange earnings and outgo etc.are furnished in "Annexure A" which forms part of this Report.

17. INTERNAL CONTROL SYSTEMS

Adequate internal control systems commensurate with the nature of the Company'sbusiness size and complexity of its operations are in place. It has been operatingsatisfactorily.

18. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has an adequate system for internal financial controls which commensuratewith its size and nature of business. Detailed procedures are in place to ensure that allassets are safeguarded and protected against losses all transactions authorized recordedand appropriately reported. The internal control system is monitored and evaluated by anInternal Audit team which interacts closely with the Audit Committee. No material issuesin relation to the adequacy of Company's control systems were raised during the year.

19. EXTRACT OF ANNUAL RETURN

Extract of the Annual Return in form MGT-9 for the financial year ended 31 March2017made under the provisions of Section 92(3) of the Act is annexed as "AnnexureB" which forms part of this Report.

(i) STATUTORY AUDITOR

Under Sec 139 of the Companies Act 2013 and the rules made there under it ismandatory for the Company to rotate the current Statutory Auditors on completion ofmaximum term permitted under the said section and as such M/s S.V. Doshi & Co. willhold office upto the conclusion of 32 Annual General Meeting of the Company. Therefore theBoard has recommended an appointment of M/s Shashikant J. Shah Chartered AccountantsMumbai and having Firm Registration No: 109996W in place of M/s S.V.Doshi & Co.Chartered Accountants to hold office from the conclusion of 32nd Annual General Meetingupto the conclusion of 37th Annual General Meeting of the Company.

The proposed Auditors have con rmed their eligibility under Section 141 of theCompanies Act 2013 and the rules framed there under. As per Regulation 33 of the SEBI(Listing Obligation and Disclosure Requirement) Regulations 2015 the auditors have alsocon rmed that they hold a valid certi cate issued by the Peer Review Board of theInstitute of Chartered Accountants of India. Their appointment shall be rati ed every yearby members at the Annual General Meeting.

Auditor's Report

There are no quali cations reservations or adverse remarks made by M/s S.V. Doshi& Co. Chartered Accountants in their report for the Financial Year ended March 31 2017.

(ii) SECRETARIAL AUDITOR

Pursuant to provisions of section 204 of the Act and the rules framed there under theBoard has appointed M/S Dholakia & Associates LLP Company Secretaries in Practice toundertake the Secretarial Audit of the Company for the financial year 2016-2017. TheReport of the Secretarial Audit Report in Form MR-3 is annexed herewith as "AnnexureD".

The Secretarial Audit Report does not contain any quali cation reservation or adverseremark.

(iii) COST AUDITOR

The Company is not required to appoint Cost Auditor as it is not required to submitcost audit report for the year under review pursuant to the provision of the Companies(Cost Records and Audit) Rules 2014.

21. GREEN INITIATIVES

Pursuant to Sections 101 and 136 of the Companies Act 2013 the Company will be sendingAnnual Report through electronic mode(email) to all the shareholders who have registeredtheir email addresses with the Company or with the Depository to receive the Annual Reportthrough electronic mode and initiated steps to reduce consumption of paper.

22. HUMAN RESOURCES

Employees are considered to be team members being one of the most critical resources inthe business which maximize the effectiveness of the Organization. Human resources buildthe Enterprise and the sense of belonging would inculcate the spirit of dedication andloyalty amongst them towards strengthening the Company's Polices and Systems. The Companymaintains healthy cordial and harmonious relations with all personnel and therebyenhancing the contributory value of the Human Resources.

23. ENVIRONMENT AND SAFETY

The Company is conscious of the importance of environmentally clean and safeoperations. The Company conducts operations in such a manner so as to ensure safety ofall concerned compliances environmental regulations and preservation of naturalresources. There was no accident during the year.

24. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE FINANCIAL YEAR END OF THE COMPANY TO WHICHFINANCIAL RESULTS RELATES

Except as disclosed elsewhere in this report no material changes and commitments whichcould affect the Company's financial position have occurred between the end of thefinancial year of the Company and date of this report.

25. PARTICULARS OF LOANS GUARANTEES INVESTMENTS AND SECURITIES

The Company has not taken any loan during the year. The details of GuaranteesInvestments and Securities as covered under the provisions of section 186 of the CompaniesAct 2013 are given in the notes No. 10 12 and 24 of the Financial Statements which formpart of the Annual Report.

26. PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business. Thus disclosure in form AOC-2is not required as such Related Party Transactions are not material. However the detailshave been furnished in the Notes No. 35 to the financial statement.

All Related Party Transactions are placed before the Audit Committee as also to theBoard for approval at every quarterly meeting.

The policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company. The web-link of the same has been provided in theCorporate Governance Report.

27. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT 2013 AND OTHER DISCLOSURESAS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES 2014.

There were no employees except the Managing Director and Joint Managing Director of theCompany drawing remuneration of Rs1.02 crores or more per annum or Rs 8.5 lakhs or moreper month during the year under review. Both the Managing Director and Joint Director arerelated to each other and they are promoters of the Company. Their appointment iscontractual as approved by the Board and members of the Company.

The information required under Section 197(12) of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Board's Report for the year ended March 31 2017 is given in a separateAnnexure E to this Report.

The above Annexure E is not being sent along with this Report to the Members of theCompany in line with the provisions of Section 136 of the Companies Act 2013. Members whoare interested in obtaining these particulars may write to the Company Secretary at theRegistered Office of the Company. The aforesaid Annexure is also available for inspectionby members at the Registered Office of the Company 21 days before the Annual GeneralMeeting and up to the date of the Annual General Meeting during the business hours onworking days.

28. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION &REDRESSAL) ACT2013.

The Company has set up an Internal Complaints Committee (ICC) for providing a Redressalmechanism pertaining to Sexual harassment of women employees at workplace Mumbai and Halol(Gujarat). There was no complaint received during the year under review.

29. GENERAL DISCLOSURES

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

1. The Company has not issued any shares with differential rights and hence noinformation as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of theCompanies (Share Capital and Debenture) Rules 2014 is furnished.

2. The Company has not issued any sweat equity shares during the year under review andhence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13)of the Companies (Share Capital and Debenture) Rules 2014 is furnished.

3. The Company has not issued any equity shares under Employees Stock Option Schemeduring the year under review and hence no information as per provisions of Section62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture)Rules 2014 is furnished.

4. During the year under review there were no instances of non-exercising of votingrights in respect of shares purchased directly by employees under a scheme pursuant toSection 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures)Rules 2014 is furnished.

5. No orders have been passed by any Regulator or Court or Tribunal which can have animpact on the going concern status and the Company's operations in future.

30. ACKNOWLEDGEMENT

Your Directors wish to express their gratitude for co-operation valuable guidance andsupport received from Bankers Government authorities all stakeholders and businessassociates. Your Directors also wish to place on record their appreciation for thecommitted services of all the Employees of the Company. Your Directors convey their thanksto the Shareholders who have reposed the con dence in the management of the Company.

PARTICULARS REQUIRED PURSUANT TO SECTION 134(3)(M) OF THE COMPANIES ACT 2013 READ WITHRULE 8 OF THE COMPANIES (ACCOUNTS) RULES 2014 FOR THE YEAR ENDED ON 31ST MARCH 2017.

I. Conservation of Energy

A. Energy conservation measures taken:

Furnace atmosphere in bright annealing furnaces was changed from Exo-gas to Endo-gaswhich resulted in considerable reduction in consumption of Pipe Natural Gas.

B. Additional investments and proposals if any being implemented for reduction ofconsumption of energy:

At present the Company is not considering any specific investment but normalinvestment wherever required will be made on need basis from time to time.

C. Impact of the measures at (a) and (b) above for reduction of energy consumption andconsequent impact on cost of production of goods. There will be a marginal reduction inthe cost of Piped Natural Gas and electricity.

A. POWER AND FUEL CONSUMPTION

B. CONSUMPTION PER UNIT OF PRODUCTION

* Indicates combined consumption of Welded / Seamless Tubes and Nuts. ** Indicatesonly GSPC GAS consumption and Liquid Nitrogen.

(1) SPECIFIC AREAS IN WHICH R & D WAS CARRIED OUT BY THE COMPANY

The Company is undertaking regular developmental activities to strengthen itsoperations through innovation to improve productivity and quality.

(2) BENEFITS DERIVED AS A RESULT OF THE ABOVE R & D

The Company is achieving ef ciency in production and improvement in quality ofproduct.

(3) FURTHER PLAN OF ACTION

At present there are no specific areas in which the Company has undertaken Research& Development.

(4) CAPITAL EXPENDITURE ON R & D

The Company has not made separate allocation in the accounts but the expenditure(other than capital expenditure) is shown under respective heads of expenditure in theProfit & Loss Account.

B. TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION

The Company is taking steps on a continuous basis to improve product and processtechnology in an effort to provide equality products to the consumers.

III. Foreign Exchange Earnings and Outgo

Total foreign exchange used and earned are as follows:

"ANNEXURE C" ANNUAL REPORT ON CSR ACTIVITIES

Note:

The Company is in the process of evaluating the CSR Project

The Company has identified the projects for Tissue Culture conservation of naturalresources and animal husbandry of the registered Trust in Gujarat subject to furtherevaluation by CSR Authority established by the State Government of Gujarat for recognitionof CSR activities. Once the above said projects are recognized by the team of CSR GujaratAuthority the fund earmarked for CSR activities will be released to the said Trust.