Accounting Policies of Southern Gas Ltd. Company

Mar 31, 2024

The Southern Gas Ltd is a company registered under Companies Act, 1956. The shares of the company are listed with Bombay
Stock Exchange (BSE).The Company is in the business of production and supply of Medical Oxygen, Industrial Oxygen, Argon,
Hydrogen, Nitrogen etc.

i. Basis of Accounting & Statement of Compliance

These Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS), under the
historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values.
The provisions of the Companies Act, 2013, to the extent notified, and guidelines issued by the Securities and Exchange
Board of India (SEBI) are complied with. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of
the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
Accounting policies have been consistently applied except where specifically mentioned / disclosed to the contrary.
Previous year figures have been restated wherever necessary to conform with current year figures.

ii. Use of Estimates

The preparation and presentation of the financial statements is in conformity with Indian Accounting Standards, which
requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenue and
expenses during the reporting period. Although such estimates are made on a reasonable and prudent basis taking
into account all available information, actual amounts could differ from these estimates and such differences are
recognised in the period in which the amounts are ascertained. If material, their effects are disclosed in the notes to
the financial statements.

iv. Property, Plant & Equipment

Property, Plant & Equipment are stated at cost less accumulated depreciation, impairment in value if any. Cost includes
purchase price (inclusive of import duties and non-refundable purchase taxes), other costs directly attributable for bringing
the assets to the location and condition necessarily for it to be capable of operating in the manner intended by management.

The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life at
the end of its life. The useful lives and residual values of the Company''s assets are determined by the Management at the
time the asset is acquired and reviewed periodically. The lives are based on historical experience with similar assets and/or
by valuation by experts. When parts of an item of Property, Plant & Equipment have different useful lives, they are
accounted for as separate items (major components).

v. Capital Work-in-progress:

All capital expenditure excluding advances paid for the construction of fixed assets are shown as capital work-in-progress
until completion of the project or until the asset is ready to be put to use. These costs are capitalised to the relevant items
of the property, plant & Equipment on completion or putting to use.

vi) Impairment of Assets

The carrying amount of assets is reviewed at each Balance Sheet date for indicators of impairment based on
internal/external factors. An asset is identified as impaired when the carrying value of the asset exceeds its
recoverable value and based on such assessment, impairment loss is recognized and charged to profit and loss
statement in the period in which the asset is identified as impaired. The impairment loss recognised in the
prior accounting periods is reversed in the year in which there has been change in the estimate of recoverable
amount.

vii) Depreciation/ Amortization

Depreciation / Amortization on Property, Plant & Equipment is provided on straight-line method based on the
useful lives as specified in the Schedule II of the Companies Act, 2013 except for cylinders for which useful
life has been adopted on the basis of technical evaluation by an external valuers and review by management
at the year end.

The Management estimates useful lives of the cylinders as seven years based on the internal assessment
and independent technical evaluation carried out by an agency. Hence the useful lives of this asset is different
from the useful lives as prescribed under Schedule-II of the Companies Act, 2013.

Lease premium paid in respect of leasehold land is amortized over the period of the lease.

viii) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are
capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are charged to revenue.

ix) Foreign Currency Transaction

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.
Monetary assets and liabilities other than forward contracts, outstanding at the Balance Sheet date are translated
at the applicable exchange rates prevailing at the said date. The exchange gain/loss arising during the year are
adjusted to the Statement of Profit and Loss.

x) Inventories

Inventories are valued at lower of cost or net realizable value on first in first out basis. For this purpose cost of
bought out inventories comprises of the purchase cost of the items net of applicable taxes/ duty credits and the
cost of bringing such items in the factory. The cost of manufactured inventories comprises of the direct cost
of production plus appropriate overheads. The net realizable value of bought out inventories is their current
replacement value.

xi) Investments

Long term investments are valued at cost. In case of long-term investments, provision/write down is made for
permanent diminution in value. Current investments are valued at lower of cost or fair value.

xii) Employee Benefits :

a) Short Term Employee Benefits

The amounts paid/ payable within twelve months of rendering services, comprising largely of salaries and
wages, short term compensated absences and annual bonus is valued on an undiscounted basis and
recognised in the period in which the employee renders related service.

b) Defined Contribution Plans

The Company has defined contribution plan for employees comprising of Provident Fund and Employee
State Insurance. The contributions paid/ payable to these plans during the year are charged to profit and
loss statement at actual cost to the company. The Company has no other obligation in this regard.

c) Defined Benefit Plans
Gratuity:

Payment of Gratuity to employees is covered by the Gratuity Trust Scheme based on the Group Gratuity cum
Assurance Scheme of the LIC of India, which is a defined benefit scheme and the company make contributions
under the said scheme. The net present value of the obligation for gratuity benefits as determined on
independent actuarial valuation, conducted annually using the projected unit credit method, as adjusted for
unrecognized past services cost if any and as reduced by the fair value of plan assets, is recognised in the
accounts. Remeasurement comprising actuarial gains and losses, the effect of the asset ceiling and the return
on assets (excluding interest) relating to retirement benefit plans, are recognized directly in other
comprehensive income in the period in which they arise. Remeasurement recorded in other comprehensive
income is not reclassified to income statement.

d) Long term Employee benefits
Compensated Absences

The company has a scheme for compensated absences for employees, the liability of which is determined on the
basis of an independent actuarial valuation carried out at the end of the year, using the projected unit credit
method. Remeasurement comprising actuarial gains and losses, the effect of the asset ceiling and the return on
assets (excluding interest) relating to retirement benefit plans, are recognized directly in other comprehensive
income in the period in which they arise. Remeasurement recorded in other comprehensive income is not
reclassified to income statement.

e) Termination Benefits:

Termination benefits are recognised in the profit and loss statement for the period in which the same accrue.
xiiI) Income taxes

Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit
in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity, in
which case it is recognized in other comprehensive income. Current income tax for current and prior periods
is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and
tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realized.

xiv) Earnings per share

Basic & Diluted Earnings per share is calculated by dividing the net profit or loss after tax for the year
attributable to equity shareholders (after deducting attributable taxes and preference dividend, if any) of the
company by weighted average number of equity shares outstanding at the end of financial year.

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Mar 31, 2014

A. Basis of Accounting

The financial statements are prepared under the historical cost convention, on accrual basis of accounting in confor¬mity with the accounting Principles generally accepted in India and comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act 1956.

b. Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting Principles requires estimates and assumptions to he made that affect the reported amounts of assets and liabilities on the date of finan¬cial statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual result and the estimates are recognised in the period in which the results are known materialized.

c. Revenue Recognition

i) Sale of goods: Income is considered to accrue upon full execution of the terms of sale, which normally coincides with delivery.

ii) Interest/ Claims: Income is taken credit for on accrual basis wherever realisability is not in doubt and others on receipt.

iii) Penalty for delayed Income is considered to accrue on time basis in accordance with the terms of sale. return of cylinders

d. Fixed Assets

Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation charged. Impairme¬nt in such value if any is adjusted. Cost includes all direct expenses incurred to bring art asset to working condition for its intended use. Leasehold Lands are stated at the lease premiums paid, less amortization.

e. Impairment of Assets

The carrying amount of assets is reviewed at each Balance Sheet date for indicators of impairment based on internal' external factors. An impairment loss is recognized and charged to profit and loss statement in the period in which an asset is identified as impaired, when the carrying value of the asset exceeds its recoverable value. The impairm-ent loss recognised in the prior accounting periods is increased or reversed to the extent of the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

f. Depreciation/Amortization

Depreciation on Fixed Assets is charged on straight-line basis at the rates specified in Schedule XIV to the Companies Act, 1956. Lease premium paid in respect of leasehold land, except those finder lease-cum-sale arrange¬ments are amortized over the period of the lease.

g. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h. Foreign Currency Transaction

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Mone¬tary assets and liabilities outstanding at the Balance Sheet date are translated at the applicable exchange rates prevailing at the year-end. The exchange gain/loss arising during the year are adjusted to the profit and loss statem¬ent.

i. Inventories

Inventories are valued at lower of cost or net realizable value on first in first our basis. For this purpose cost of bought out inventories comprises the purchase cost of the items net of Cenvat availed and the cost of bringing them to the factory. The cost of manufactured inventories comprises the direct cost of production plus appropriate overheads. The net realizable value of bought out inventories is their current replacement cost

j. Investments

Long term investments are valued at cost. In case of long-term investments, provision write down is made for permanent diminution in value. Current investments are valued at lower of cost or fair value.

k. Employee Benefits :

a) Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and recognised in the period in which the employee renders the related service.

b) Defined Contribution Plans

The company has defined contribution plans for employees comprising of Provident Fund and Employee's State Insurance. The contributions paid/payable to these plans during the year are charged to the profit and loss statement for the year.

c) Defined Benefit Plans

Payment of Gratuity to employees is covered by the Gratuity Trust Scheme based on the Group Gratuity corn Assurance Scheme of the LIC of India, which is a defined benefit scheme and the company makes contributions under the said scheme. The net present value of the obligation for gratuity benefits as determined on independent actuarial valuation, conducted annually using the projected unit credit method, as adjusted for unrecognized past services cost if any and as reduced by the fair value of plan assets, is recognised in the accounts. Actuarial gains and losses are recognised in full in the profit and loss statement for the period in which they occur.

d) Other Long perm Employee Benefits

The company has a scheme for compensated absences for employees, the liability of which is determined on the basis of an independent actuarial valuation carried out at the end of the year, using the projected unit credit method. Actuarial gains and losses are recognised in full in the profit and loss statement for the period in which they occur.

l. Segment Reporting

The company is engaged in the business of manufacture and trading of gases in the domestic market, which forms broadly part of one product group and hence the company has only a single reportable segment in terms of Accoun¬ting Standard- 17.

m. Taxes on Income

Tax expense comprises of current and deferred tax.

Provision for current tax is made in accordance with the Inventions of the Income Tax An, 1961.

The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future. Deferred tax assets in case of unabsorbed depreciation are recognized only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits.

n. Earnings per share

Basic Earnings per share is calculated by dividing the net profit after tax for the year attributable to equity sharehol¬ders of the company by weighted average number of equity shares in issue during the year.

o. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement arc recognized when there is a present obliga¬tion as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements

p. Cash flow statement

Cash flow statement is prepared in accordance with the indirect method prescribed in Accounting Standard (AS) 3 on 'Cash Flow Statement'.

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Mar 31, 2012

A Basis of Accounting

The financial statement are prepared under the historical cost convention, on accrual basis of accounting in conformity with the accounting principles generally accepted in India and comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act 1956.

b Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual result and the estimates are recognised in the period in which the results are known / materialized.

c Revenue Recognition

i) Sale of goods : Income is considered to accrue upon full execution of the terms of sale, which normally coincides with delivery.

ii) Interest/ Claims : Income is taken credit for on accrual basis wherever readability is not in doubt and others on receipt.

iii) Penalty for delayed return : Income is considered to accrue on time basis in accordance with the of cylinders terms of sale.

d Fixed Assets

Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation charged. Impairment in such value, if any, is adjusted. Cost includes all direct expenses incurred to bring an asset to working condition for its intended use. Leasehold Lands are stated at the lease premiums paid, less amortization.

e Impairment of Assets

The carrying amount of assets is reviewed at each Balance Sheet date for indicators of impairment based on internal /external factors. An impairment loss is recognized and charged to statement of profit and loss in the period in which an asset is identified as impaired, when the carrying value of the asset exceeds its recoverable value. The impairment loss recognised in the prior accounting periods is increased or reversed to the extent of the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

f Depreciation/ Amortization

Depreciation on Fixed Assets is charged on straight-line basis at the rates specified in Schedule XIV to the Companies Act, 1956.

Lease premium paid in respect of leasehold land, except those under lease-cum-sale arrangements are amortized over the period of the lease.

g Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h Foreign Currency Transaction

Transactions in foreign currencies are recorded, at the exchange rate prevailing on the date of the transaction. Monetary assets and liabilities outstanding at the Balance Sheet date are translated at the applicable exchange rates prevailing at the year-end. The exchange gain/loss arising during the year are adjusted to the statement of profit and loss,

i Inventories

Inventories are valued at lower of cost or net realizable value on first in first out basis. For this purpose cost of bought out inventories comprises the purchase cost of the items net of Cenvat availed and the cost of bringing them to the factory. The cost of manufactured inventories comprises the direct cost of production plus appropriate overheads. The net realizable value of bought out inventories is their current replacement cost,

j Investments

Long term investments are valued at cost. In case of long-term investments, provision/write down is made for permanent diminution in value. Current investments are valued at lower of cost or fair value.

k Employee Benefits:

a) Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and recognised in the period in which the employee renders the related service.

b) Defined Contribution Plans

The company has defined contribution plans for employees comprising of Provident Fund and Employee''s State Insurance. The contributions paid/payable to these plans during the year are charged to the statement of profit and loss for the year.

c) Defined Benefit Plans

Payment of Gratuity to employees is covered by the Gratuity Trust Scheme based on the Group Gratuity cum Assurance Scheme of the LIC of India, which is a defined benefit scheme and the company makes contributions under the said scheme. The net present value of the obligation for gratuity benefits as determined on independent actuarial valuation, conducted annually using the projected unit credit method, as adjusted for unrecognized past services cost if any and as reduced by the fair value of plan assets, is recognised in the accounts. Actuarial gains and losses are recognised in full in the statement of profit and loss for the period in which they occur,

d) Other Long Term Employee Benefits

The company has a scheme for compensated absences for employees, the liability of which is determined on the basis of an independent actuarial valuation carried out at the end of the year, using the projected unit credit method. Actuarial gains and Losses are recognised in full in the statement of profit and loss for the period in which they occur.

l Segment Reporting

The company is engaged in the business of manufacture and trading of gases in the domestic market, which forms broadly part of one product group and hence the company has only a single reportable segment in terms of Accounting Standard-17,

m Taxes on Income

Tax expense comprises of current and deferred tax.

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.

The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future. Deferred tax assets in case of unabsorbed depreciation sire recognized only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits.

n Earnings per share

Basic Earnings per share is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the company by weighted average number of equity shares in issue during the year.

o Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2010

1. Basis of Accounting:

The financial statements are prepared under the historical cost convention, on accrual basis of accounting in conformity with the accounting principles generally accepted in India and comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act 1956.

2. Use of Estimates:

The presentation of financial Statements in conformity with the generally accepted accounting principles requires estimates and assumptions to he made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual result and the estimates are recognised in the period in which the results are known / materialized.

3. Revenue Recognition:

i) Sale of goods : Income is considered to accrue upon full execution of the terms of sale, which normally coincides with delivery.

ii) Interest/Claims: Income is taken credit for on accrual basis wherever realisability is not in doubt and others on receipt.

iii) Penalty for delayed Income is considered to accrue on time basis in

return of cylinders: accordance with the terms of sale.

4. Fixed Assets:

Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation charged. Impairment in such value, if any, is adjusted. Cost includes all direct expenses incurred to bring an asset to working condition for its intended use. Leasehold Lands are staled at the lease premiums paid, less amortization.

5. Impairment of Assets

The carrying amount of assets is reviewed at each Balance Sheet date for indicators of impairment based on internal/external factors. An impairment loss is recognized and charged to Profit and Loss account in the period in which an asset is identified as impaired. when the carrying value of the asset exceeds its recoverable value. The impairment loss recognised in the prior accounting periods is increased or reversed to the extent of the carrying value that would have prevailed by charging usual depreciation if there was no impairment

6. Depreciation/Amortization:

Depreciation on Fixed Assets is charged on straight-line basis at the rates specified in Schedule XIV to the Companies Act, 1956.

Lease premium paid in respect of leasehold land, except those under lease-cum- sale arrangements are amortized over the period of the lease.

7. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

8. Foreign currency transactions:

Transactions in foreign currency are accounted at the exchange rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last date of the accounting year and the resultant exchange gain/loss, if any, are recognized in the Profit and Loss Account to the extent they relate to items other than liabilities incurred for acquiring fixed assets and those relating to liabilities for fixed assets have been adjusted in the carrying cost of such assets.

9. Inventories:

Inventories are valued at lower of cost or net realizable value on first in first but basis. For this purpose cost of bought out inventories comprises the purchase cost of the items net of Cenvat availed and the cost of bringing them to the factory. The cost of manufactured inventories comprises the direct cost of production plus appropriate overheads. The net realizable value of bought out inventories is their current replacement cost.

10. Investments:

Long Term Investments are stated at cost. In case of long-term investments, provision/write down is made for permanent diminution in value. Current investments are valued at lower of cost or fair value.

11. Employee Benefits

a) Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and recognised in the period in which the employee renders the related service.

b) Defined Contribution Plans

The company has defined contribution plans for employees comprising of Provident Fund and Employees State Insurance. The contributions paid/payable to these plans during the year are charged to the Profit and Loss Account for the year.

c) Defined Benefit Plans

Payment of Gratuity to employees is covered by the Gratuity Trust Scheme based on the Group Gratuity cum Assurance Scheme of the L1C of India, which is a defined benefit scheme and the company makes contributions under the said scheme. The net present value of the obligation for gratuity benefits as determined on independent actuarial valuation, conducted annually using the projected unit credit method, as adjusted for unrecognized past services cost if any and as reduced by the fair value of plan assets, is recognised in the accounts. Actuarial gains and losses are recognised in full in the Profit and Loss account for the period in which they occur.

d) Other long Term Employee Benefits

The company has a scheme for compensated absences for employees, the liability of which is determined on the basis of an independent actuarial valuation carried out at the end of the year, using the projected unit credit method. Actuarial gains and losses are recognised in full in the Profit and Loss account for the period in which they occur.

12. Segment Reporting:

The company is engaged in the business of manufacture and trading of gases in the domestic market, which forms broadly part of one product group and hence the company has only a single reportable segment in terms of Accounting Standard-17.

13. Taxes on Income:

Tax expense comprises of current and deferred tax.

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.

The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future. Deferred tax assets in case of unabsorbed depreciation are recognized only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits.

14. Earnings per Share:

Basic Earnings per share is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the company by weighted average number of equity shares in issue during the year.

15. Provision, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.