­Incorporated in 1994, Confidence Petroleum India Limited is based in Mumbai, Maharashtra. The company is engaged in manufacturing of LPG cylinders and is also a supplier of Auto LPG in India with its network of bottling plants and ALDS (Auto LPG dispensing Station) across India. The company has its packed LPG cylinder division in the market, under the brand name 'Go Gas'. Further, the company is also engaged into LPG bottling under the brand name ‘Gaspoint’ catering to the industrial and commercial requirements of their own and offers job work to the companies such as Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), Indian Oil Corporation Limited (IOCL) and Reliance group, to name a few. At present, the company has 15 cylinder manufacturing units, 260 ALDS and 68 LPG bottling plants pan India. The company has  forayed in CNG segment business, with agreements to set up CNG Mobile Refuelling Units (MRUs) in Pune and 100 CNG stations in the city of Bengaluru.

­Maharashtra based, Confidence Group is promoted by Mr. Nitin Poonamchand Khara. The group has two of its companies, viz; Confidence Petroleum (I)Limited (CPIL) & Confidence Futuristic Energetic Limited listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Most of the business concentration comes under CPIL which is engaged in the manufacturing of LPG cylinders, ALDS (Auto LPG dispensing Station) and is a supplier of LPG in India with its network of bottling plants across India. The group has widespread network of 2000+ dealers & distributors across India spreading in over 22 states. The group has recently forayed into CNG segment business through: 1) Setting up of CNG Mobile Refuelling Units (MRUs) with Maharashtra Natural Gas Limited (MNGL). 2) Entered in agreement with GAIL Gas Limited to set up 100 CNG stations in the city of Bengaluru of which 32 has commenced operations and 5 are awaiting approval for commencement. 3) Commenced operations of the CNG cylinder manufacturing plant in Umred, Nagpur and at Dahej, Gujarat.

• Sustainable improvement in the revenues along with improved margins emanating from the completion of the ongoing capex.

• Significant deterioration in its working capital management leading to moderation in its financial risk profile

­The group has strong liquidity profile marked by healthy net cash accruals to its maturing debt obligations. The group generated cash accruals of Rs. 265.57 Cr. during FY2024, while its maturing debt obligations were modest at Rs. 46.21 Cr. for the same period. Further, the company has a buffer in its working capital limits as reflected by moderately utilized limits at ~54.03 per cent during the last six months ended February 2024.. The group plans to incur major capex in phased manner over the next three years, which would be funded by internal accruals and equity infusion. Furthermore, the simultaneous revenue generation from the units commissioned (as the capex would be in a phased manner) would support the cash flows of the company.

Going ahead, the liquidity position is expected to remain strong on account of healthy cash accruals generation to its maturing repayment obligations.

­Acuité believes that the CG will maintain a ‘Stable outlook over the medium term on account of extensive experience of management and the stable operating performance of its LPG segment and growth expected from the CNG business. The outlook may be revised to positive in case of higher-than-expected scale up of operations while maintaining its profitability and financial risk profile. Conversely, the outlook may be revised to 'Negative' in case significant cost and time overruns in completion of planned capex leading to lower than expected scale of operations and cash accruals or in case of deterioration in the company's financial risk profile or significant elongation in working capital cycle.

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.