southern gas ltd share price Management discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS REPORT</dhhead>

The Board of Directors is pleased to present the Management Discussion and Analysis Report based on the current Government Policies and the Market Conditions.

India Market Overview Economy

The Financial Year 2022-23 was a watershed year for India as it became the fifth largest economy in the world, surpassing the UK. It also assumed the presidency of the G20 forum for the first time, highlighting the global spotlight on India. The macroeconomic fundamentals of the Indian economy are under control and showing signs of an inclusive, broad-based recovery across industries, as the country eyes on India@100, a journey towards her centennial as a modern, fastest growing, industrialized nation. Despite the ongoing global headwinds caused by external factors like post pandemic spill overs, supply chain disruptions due to the escalating Russia-Ukraine conflict and potential recessionary pressures facing developed economies, the Indian economy continued to move ahead and weathered the global economic crisis and headwinds. Multiple initiatives by the government including PLI schemes, national logistic reforms, increased spending on infrastructure, robust local demand, conducive domestic policy environment, digitisation, etc. has helped the country to race past other economies and be the fastest-growing economy among the seven largest emerging markets and developing economies (EMDEs). India seems to be in a bright spot with the overall growth remaining at robust level. According to the Second Advance estimates released by the Ministry of Statistics and Programme Implementation, Indias GDP may grow 7% for Financial Year 2022-23 even as it gets back the crown of the fastest growing major economy.

Industry structure and developments The global medical oxygen gas cylinders market size was valued at $2,971.40 million in 2020, and is estimated to reach $5,337.50 million by 2030, growing at a CAGR of 5.70% from 2021 to 2030.

Medical oxygen gas cylinders are often used by medical care workers for therapeutic and diagnostic purposes. Medical oxygen gas systems, for example, oxygen concentrators and compressed oxygen gas cylinders are considerably utilized in homecare settings and are normally chosen by old patients who experience challenges in mobility and rely upon a steady oxygen supply.

The Company is categorized as a Small Company as per the MSME Act, 2006 and currently operates in the State of Karnataka and Kerala for the supply and manufacture of Industrial & Medical Gases.

However, the company is also having its unit in Tamil Nadu which is not in operation for time being. The head office of the Company is in the State of Goa. There has been no significant change or effect of the industry or any developments in the industry on the operations of the Company within the previous financial year, however the Company hopes to maintain an optimistic outlook toward the future.

Segment-wise or Product-wise performance

The Company operates in only one segment, i.e., the manufacture of Industrial & Medical Gases, and the primary products manufactured by the Company are Medical Oxygen and Industrial Gases such as Oxygen, Nitrogen, Dissolved Acetylene, Argon, Hydrogen, Carbonic Acid, Medical Gases, Fuel Gases and all other kindred substances, or any compound preparation thereof. The performance of the Company in this segment has been found to be satisfactory. Opportunities

The Companys plant situated at various places in South India such as in Bangalore, Mysore, Bhadravati, Harihar, Hubli, Trivandrum, Calicut and Cochin (Udyogamandal) and all are equipped with latest technology and offers high quality products. The plant has all infrastructure facilities and is well connected with State highway. The Company manufactures (a) Industrial gases viz. Oxygen, Nitrogen, Dissolved Acetylene and Argon and its related grades and (b) Medical Oxygen. The Company caters to various industries and hospitals in entire Southern India in order to provide better service to its customers.

Risks and concerns

The Company faces risks in the market due to competitive prices and increase in competition from other entities in its market segment. Although the Company has put in its best efforts to combat such risks this remains a major concern for the Company. The Company also faces risks which are common in the industry like high costs for transportation, safety in the production process and transportation of products and timely recovery of dues from its customers.

Outlook

The Company has an optimistic outlook for the future performance of the company due to increasing government incentives for the industry. The Company aspires to provide quality products at fair prices to have a steady and sustainable rate of growth over the years. Internal control systems and their adequacy The Companys internal control system over its operation has found to be adequate for the scale and size of its operations. The management, in consultation with the audit committee of its board of directors regularly reviews the adequacy and effectiveness of the internal control systems and undertakes improvements, wherever necessary.

Discussion on financial performance with respect to operational performance

The operational revenue of the company during the year was of INR. 3,593 lakhs, which is less in comparison to the previous year.

The Operational Highlights of the Company are given below, it is recommended that the same is read with the Financial Statements, the schedules and the notes thereto.

Rs in lakhs

Particulars	F.Y. 2022 - 23	F.Y. 2021 - 22
Revenue from Operations	3593.41	4163.94
Expenses: Cost of material consumed	1427.27	1873.95
Gross Profit	2166.14	2289.99

 

Material developments in Human Resources / Industrial Relations front, including number of people employed.

The Companys relations with its employees across all the Companys units were cordial during the year under review.

Safety, Health and Environment

The Company gives utmost importance to safety, health, and environment related issues. The employees are continuously educated and trained to improve their awareness and skills. All safety statutory requirements are being complied with Requirements of environmental acts and regulations are also complied with.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forwardlooking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make the difference to the Companys operations include raw material availability and its prices, cyclical, demand and pricing in the Companys principle markets, changes in Government regulations, Tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.

	By Order of the Board For The Southern Gas Limited
Sd/-	Sd/-
Gautam Pai Kakode Managing Director DIN:02395512	Motilal Sanvlo Keny Director DIN: 06813111
Dated: 11th August, 2023 Place: Margao-Goa