Southern Gas Ltd Management Discussions

The Board of Directors is pleased to present the Management Discussion and Analysis Report for the Financial Year ended 31 st March, 2026. The Report provides an overview of the global and Indian economic environment, industry developments, opportunities, risks, operational and financial performance, and the Companys outlook.

GLOBAL ECONOMIC OVERVIEW :

The global economy demonstrated resilience during the Financial Year 2025-26 despite persistent geopolitical tensions, evolving trade policies, inflationary pressures and volatility in energy and commodity prices. While inflation moderated across several advanced economies, central banks largely maintained a cautious monetary policy stance to support sustainable growth while ensuring price stability.

Global economic activity continued to be supported by investments in infrastructure, healthcare, clean energy, digital transformation and supply chain diversification. However, geopolitical conflicts, climate-related events, fluctuations in freight and logistics costs, and uncertainties in global financial markets continued to pose challenges to economic growth and international trade.

The industrial and healthcare sectors remained key contributors to global demand for industrial and medical gases, driven by increasing manufacturing activity, infrastructure development and expanding healthcare services. Going forward, the global economy is expected to witness moderate growth, supported by easing inflation, improving trade conditions and continued investments in industrial capacity and sustainable development. Nevertheless, geopolitical developments, commodity price movements and global financial conditions are expected to remain important factors influencing business sentiment and economic performance.

INDIAN ECONOMIC OVERVIEW :

India continued to remain one of the fastest-growing major economies during the Financial Year 2025-26, supported by robust domestic consumption, increased public capital expenditure, sustained growth in manufacturing and services, and favourable policy initiatives. Government programmes such as Make in India, the Production Linked Incentive (PLI) Schemes, PM Gati Shakti, National Infrastructure Pipeline and continued emphasis on ease of doing business have strengthened the countrys industrial ecosystem and investment climate.

The expansion of infrastructure projects, manufacturing industries, pharmaceuticals, healthcare facilities and engineering sectors continued to generate healthy demand for industrial and medical gases. With strong macroeconomic fundamentals, increasing industrialisation, rapid urbanisation and sustained public and private investments, India continues to provide significant long-term growth opportunities for businesses operating in the industrial gases sector.

INDUSTRY STRUCTURE AND DEVELOPMENTS :

The industrial and medical gases industry constitutes an

integral part of the manufacturing and healthcare value chain. Industrial gases are indispensable inputs for sectors such as steel, engineering, fabrication, chemicals, pharmaceuticals, food processing, electronics, automobiles, infrastructure and energy, while medical gases continue to play a critical role in hospitals and healthcare institutions.

Demand for industrial gases remained stable during the year, supported by growth in manufacturing activities, infrastructure development and healthcare expansion. Oxygen, Nitrogen, Argon, Dissolved Acetylene, Carbon Dioxide and Medical Oxygen continued to witness consistent demand across various end-user industries. Increasing emphasis on quality, operational efficiency, safety standards and reliable supply has further strengthened the role of organised industrial gas manufacturers.

The Southern Gas Limited, with its strategically located manufacturing and operating facilities across Southern India, continues to leverage its established market presence, diversified product portfolio and customercentric approach to cater to the evolving requirements of industrial and healthcare customers. The Company remains focused on operational excellence, safety, regulatory compliance and sustainable growth while strengthening its competitive position in its key markets.

OPPORTUNITIES AND THREATS :

Opportunities

The industrial and medical gases industry continues to offer significant growth opportunities driven by increasing industrialisation, infrastructure development, expansion of the healthcare sector, pharmaceuticals, engineering, fabrication and manufacturing activities. Government initiatives such as Make in India, Production Linked Incentive (PLI) Schemes and increased capital expenditure on infrastructure are expected to support long-term demand for industrial and medical gases.

The Southern Gas Limited, with its strategically located manufacturing and operating units across Southern India, diversified product portfolio, established customer relationships and commitment to quality, safety and timely service, is well positioned to capitalise on these opportunities. The Company continues to focus on operational excellence, customer satisfaction, cost optimisation and sustainable business growth.

Threats

The Company operates in a competitive business environment and faces challenges arising from intense competition, fluctuations in power and energy costs, volatility in raw material prices, increasing transportation and logistics costs, evolving regulatory requirements and general macroeconomic uncertainties. Supply chain disruptions, changing customer requirements and pricing pressures may also impact business operations and profitability. The Company continuously monitors the external business environment and adopts appropriate strategies to effectively respond to these challenges.

RISKS AND CONCERNS :

The Company operates in a highly competitive business environment and is exposed to various business risks including intense competition, fluctuations in raw material and energy prices, increasing transportation

and logistics costs, changes in regulatory requirements, supply chain disruptions and delayed realization of receivables. Being engaged in the manufacture and distribution of industrial and medical gases, the Company also accords utmost importance to operational safety during production, storage and transportation. The Management continuously reviews the risk environment and adopts appropriate risk mitigation measures, supported by robust operational controls, to minimize the impact of such risks on the Companys business and financial performance.

SEGMENT - WISE / PRODUCT - WISE PERFORMANCE:

The Company operates in a single business segment, namely the manufacture and supply of Industrial and Medical Gases. The Company manufactures and markets products including Medical Oxygen, Industrial Oxygen, Nitrogen, Argon, Dissolved Acetylene, Hydrogen, Carbon Dioxide and other allied gases catering to the requirements of hospitals, healthcare institutions and various industrial customers. In view of the Company operating in a single reportable segment, separate segment-wise reporting is not applicable.

OUTLOOK :

The outlook for the industrial and medical gases industry continues to remain positive, supported by sustained growth in the healthcare sector, manufacturing activities, infrastructure development and industrial expansion across the country. The Company expects demand for its products to remain stable over the medium to long term and will continue to focus on operational excellence, cost optimization, customer satisfaction, quality assurance and prudent financial management. The Management remains confident of improving operational performance and achieving sustainable growth while creating long-term value for its stakeholders.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has in place adequate internal control systems commensurate with the nature, size and complexity of its business operations. These systems are designed to ensure safeguarding of assets, reliability of financial reporting, compliance with applicable laws and regulations and efficient conduct of business operations. The adequacy and effectiveness of the internal control systems are periodically reviewed by the Management, Internal Auditors and the Audit Committee of the Board, and suitable improvements are implemented wherever considered necessary.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE :

The operational revenue of the company during the year was of f 3,684.49 Lakhs which is more 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	FY 2025-26	FY 2024-25
Revenue from Operations	3,684.49	3,571.20
Expenses :
Cost of material consumed	1,683.04	1,654.20
Gross Profit	2,001.45	1,917.00

The operational performance during the year was influenced by prevailing market conditions, demand from industrial and healthcare sectors, fluctuations in input costs and continued emphasis on operational efficiencies. The Management remains focused on improving productivity, optimizing costs, strengthening customer relationships and enhancing overall profitability.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS :

The Company firmly believes that its employees are its most valuable asset and continues to focus on creating a healthy, safe and motivating work environment. Industrial relations across all the units of the Company remained cordial throughout the year under review. The Company continued to invest in employee training, skill development, safety awareness and professional growth with the objective of enhancing employee engagement and organizational effectiveness. As on 31 st March, 2026, the Company had 93 employees on its rolls.

SAFETY, HEALTH AND ENVIRONMENT :

The Company accords the highest priority to safety, health and environmental protection across all its operations. Appropriate systems, procedures and safety practices are implemented to ensure safe manufacturing, storage and transportation of industrial and medical gases. Regular training programmes are conducted to enhance employee awareness regarding occupational health and safety. The Company continues to comply with all applicable statutory requirements relating to environment, health and safety and remains committed to sustainable and responsible business practices.

SIGNIFICANT KEY FINANCIAL RATIOS:

Particulars	FY 2025-26	FY 2024-25
(i) Debtors Turnover (in times)	7.60	7.12
(ii) Inventory Turnover (in times)	25.08	26.18
(iii) Interest Coverage Ratio (in times)	-	59.34
(iv) Current Ratio (in times)	0.95	1.01
(v) Debt Equity Ratio (in times)	-	-
(vi) Operating Profit Margin (%)	11.11	8.33
(vii) Net Profit Margin (%)	7.69	4.91
(viii) Return on Net Worth	11.01	7.44

DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENTS :

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under section 133 of the Act and other relevant provisions of the Act. There has been no accounting treatment different from that prescribed under the applicable Accounting Standards in the preparation of the financial statements.

CAUTIONARY STATEMENT :

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various factors including changes in economic conditions, market conditions, government policies, taxation, regulatory framework, raw material prices, demand and supply dynamics, competitive

environment, foreign exchange fluctuations, natural calamities and other factors beyond the Companys control. The Company undertakes no obligation to publicly update or revise any forward-looking statements on the basis of subsequent developments, information or events.

Sd/-
Gautam Vithaldas Pai Kakode
Managing Director
DIN:02395512

Sd/-
Dr. Upendra Saulo Quenim Robolo
Additional Director
DIN:11460238

Sd/-
Adv. Ninad Gurudas Kamat
Independent Director
DIN: 09611972

Dated: 13 th August, 2026
Place: Margao, Goa

For and on behalf of the Board of Directors
The Southern Gas Limited