The company manufactures cylinders and is engaged in LPG bottling and distribution. It has fully absorbed the LPG bottling technology at its plants spread across Udaipur and Pali in Rajasthan; Raigad and Patalganga in Maharashtra; Coimbatore in Tamil Nadu; Haridwar in Uttaranchal; Chindwara, Gwalior and Jabalpur in Madhya Pradesh.
A plant in Patalganga manufactures cylinders, and the Andhra Pradesh State Government allotted a 10-acre piece of land in 2008 within a Visakhapatnam special economic zone to establish a second CNG cylinder manufacturing plant.
Beta 1.39
Institutional Holding 0.83%
Current Dividend Yield 0%
Current P/E 8
Current Market Price Rs 7.5
Current Market Cap Rs 204 cr
Confidence Petroleum has emerged a key vendor for marketing operations of oil and gas players. Focussing on its key clientele the company is expanding its bouquet of offerings and is adding capacities. Considering the interesting opportunities lying ahead for this little known company, it appears attractive for the long-term investors.
Business:
Confidence Petroleum (CPL) is establishing itself as an all service provider for the marketing and distribution needs of Indian oil marketing companies. The company has scaled up its traditional businesses of LPG cylinders and LPG bottling and is investing heavily in auto LPG and natural gas distribution related businesses.
CPL has emerged India’s largest bottler of liquefied petroleum gas (LPG) operating out of 51 locations. These dispersed facilities offer greater flexibility and cost advantage to petroleum retailers in supplying LPG to domestic users spread across the country.
The company is also the largest LPG cylinder manufacturer with 6 facilities having an installed capacity of around 42 lakh cylinders per annum. Its 7.5 lakh unit per annum plant near Kandla in Gujarate is a 100% export oriented unit (EOU). The company has set up 50 auto LPG dispensing stations (ALDS) across various cities under the brand of GoGas.
The company has also entered the natural gas related businesses and recently commissioned a 3-lakh unit per annum cylinder manufacturing facility for compressed natural gas (CNG). It has also launched auto meter reading solutions for piped natural gas (PNG) sold to households by the city gas distributors (CGD).
Towards the end of year 2008, the company acquired two ethanol manufacturing units with a combined capacity of 1.5 lakh liters per day and one crude oil refining unit with 2 lakh liters per day capacity in Maharashtra. The company acquired these distressed assets for a low investment of around Rs 7.5 crore, which allows them the flexibility of operating only when profitable.
Growth drivers:
The company has recently commissioned CNG cylinder manufacturing plant in Vizag for exports market. It is currently setting up LPG and CNG cylinder manufacturing complex in Uttarakhand, which will commission operations by end of 2009. This new plant will enjoy 15-year exemption from sales and excise duties.
The company is carrying an order book of over 30 lakh LPG cylinders. It has significant growth plans in ALDS to scale up to 250 stations in next couple of years and has also won a turn-key contract for Indian Oil to set up 9 similar stations.
The company has tied up with Israel’s Energetech to introduce an innovative technology for automotive natural gas called ‘Adsorbed Natural Gas’ (ANG). This would enable it to store large quantity of natural gas under less pressure, enabling light-weight cylinders, which could be installed even on two-wheelers.
This being a new concept in India needs government approval and the company has received permission from the Chief Controller of Explosives to conduct tests. This technology, when commercialised, would enable it to transport natural gas from the marginal fields. The company also has plans to augment its offering to the petroleum companies by adding fuel-dispensing units for petroleum retailing and also move into setting up auto CNG stations.
Financials:
The current management has taken over the listed company with two LPG bottling plants, which was a sick unit, few years back and has turned it around. Hence, we do not have long financial history for the company.
Last year the company raised over Rs 100 crore through a GDR issue and share warrants. The company’s debt-to-equity ratio has been steadily coming down to 0.1 for the year ended March 2008. Post completion of its Uttarakhand plant, CPL would be carrying around Rs 30 crore of debt.
The company has approved a share buy-back of upto 5% of its equity from open market at a price less than Rs 20 per share. The company is currently in the process of amalgamating three of its subsidiaries with itself.
During FY 2010, the company is expected to derive meaningful benefit of its investments in Vizag and Uttarakhand plants as well as the acquisitions.
Most of the people reading this article, by now, must be aware of the of the illegal involvement of Ketan Parekh (He was involved in the scam related to Madhavpura Mercantile Co-operative Bank & amp; was banned by SEBI five-and-a-half-years ago) and the entities backed by him in unscrupulous trading activities in certain counters such as Cals Refineries, Confidence Petroleum, Bang Overseas, Temptation foods and Shree Precoated steels.
Securities and Exchange Board of India in the course of its routine market surveillance, received information regarding theexecution of synchronized deals in above mentioned scrips by entities namely, Maruti Securities Limited, Kundan Leasing and Finance Private limited,Chandra Financial Services Private Limited, Jay Investrade Private Limited and HSM Financial Services Private Limited. Also, SEBI's probe found that the two individuals — Harsh Shirish Maniar and Jay Shirish Maniar — were directors in three of the connected entities.
Now, Ketan Parekh's involvement is suspected as the PAN details of the two mentioned individuals revealed that their father, Shirish Shantilal Maniar, had been chargesheeted by the Central Bureau of Investigation (CBI) along with Ketan Parekh five years ago.
Devoid of economic rationale...The connected entities made off-market transactions amongst themselves. There were many instances where one connected client made off-market transfer to another connected client to enable the recipient to meet its market sale delivery obligations. Their transactions in securities amongst themselves appear to be devoid of economic rationale as they made substantial losses on account of their dealings in the scrips of Cals, SPSL and TFL. That they continued to execute such uneconomic transactions indicates that they possibly had alternative pay-offs outside the securities market and Ketan Prekh could be supporting them.
Confidence Petroleum Case...
It's a known fact that the connected clients carried out circular trading in the scrip of Confidence Petroleum as well and that has made many investors jittery and suspicious of the company. The stock also plunged by 5% in the day's trading after revelations of Ketan Parekh's involvement. The investors are very rightly concerned about their investments in this counter.
Let me put forward some points regarding the findings of SEBI :
#1. On December 28, 2006 Confidence petroleum had allotted around 2.1 Cr warrants to one of the connected entities i.e. Kundan Leasing and Finance Private limited (KLFPL). The warrants were converted to equity shares on June 13, 2007. The Lock-in Release date of the shares was on December 29, 2007. It is observed that KLFPL had dematerialized those shares and transferred the same through off-market transactions to various connected clients.
>>> Now, if the promoters had any intentions of manipulating the trade volume or rigging the stock price then they could have resorted to some other means & would not have issued warrants which had a lock-in release date of December 29, 2007 i.e full one year ahead. Why would a promoter ask an entity to manipulate the trading volumes in his company after 1 year?
#2. A thorough glance at the shareholding pattern of Temptation foods, Cals refinery and Confidence Petroleum clearly tells the difference. Temptation foods had just 18.19% as Promoters holding with 99.83% of their shares pledged, a case somewhat similar to Satyam. Also Venture Business Advisors private limited – the promoter group of Temptation foods limited was directly involved in off-market transactions with the connected entities, thus ensuring that promoters were a party to such fraudulent activities.
>>>Whereas in the case of Confidence Petroleum, the promoters have a sizeable holding of 45.52% with none of their shares pledged. Also in the last six months they have accumulated 26,81,231 shares from the open market with major purchasing done in the month of May when the price was hovering around 8-9 levels. That in itself should give a sense of satisfaction and should bolster the confidence of investors.
Trading in a counter by a group of entities take place on a daily basis in most of the counters and it's difficult for the promoters or others to know until authorized entities such as SEBI or Income tax department come out with such disclosures. So, one should not conclude that promoters are involved or a company is cheat.
It is blessing in disguise for those who wish to enter the scrip or want to invest more, because after such disclosures by SEBI, the stock price have come down to 7-8 levels, which otherwise may not have happened.
Off-late the company has performed really well with more than 50% jump in net profit for quarter ending Dec'09. Expect the company to register more than Rs 35 crore as net profit for FY 2009-10. This is substantial growth considering the fact that we are just out of recession. At present the company is available at very cheap valuations with a P/E multiple of just 8, while in the past it has traded at more than 20.
Thus, the case definitely provides a buying opportunity to all those who were sitting on fence waiting for the price to come down and also to those who wish to add more to their holding as the company has strong fundamentals and has huge opportunities ahead both internationally and domestically. The stock has all the merits to appreciate significantly on the basis of its performance and I thus suggest you to keep holding the same for next 3-4 years. But once must take position according to their own risk appetite and do their own research. It's your money invest it wisely; I am just suggesting it.
Nitin Khara- A born winner
Born into a middle-class Gujrathi family, he grew up to become one of the very successful first generation entrepreneurs. He grew up inculcating all the good values of being a good person, an honest citizen and an ambitious leader.
His growth path started with a small venture into stainless steel business with limited capital from his pocket in the year 1985. Within a span of 8 years he had gathered enough experience and courage to take over a LPG cylinder manufacturing unit in Mandeedip, in M.P. From here began the growth of a true businessman whose vision was great, who could take risks and who had the courage to trade on paths un-trodden.
Hereafter it was more takeovers and acquisitions of cylinder manufacturing plants which he continued to do very confidently. Start of Bottling plant network :
Then came the Government’s hints that it may allow private companies to enter the field of domestic LPG marketing. Mr. Khara tapped the opportunity and “Gaspoint Petroleum (India) Ltd.” took birth in the year 1999. Under this banner, the company went on with opening of LPG bottling plants all over India. They were with the view of reaching out to the public as a whole.
The network of bottling plants increased steadily and now the company operates through its bottling plants in total 22 states all over India. The company caters to bottling requirements for all major Public Sector units including HPCL, BPCL, IOCL and also to private companies like Leader and Shell gas.
Manufacturing in big way:
The company acquired one after the other cylinder manufacturing units and became the largest cylinder manufacturer in the country.
* The acquisitions and takeovers can be summarized as below :
* Andhra Cylinders, Hyderabad in the year 1997.
* Maharashtra Cylinders Private Limited, Nagpur taken over in 1997.
* Karnool cylinders, Karnool, taken over in 1998.
* Sanuj Steels Private Limited, Khopoli taken over in 1999.
* Mercury Cylinders Pvt. Ltd., Mathura taken over in 2000.
* Devrasa Gas Chem Ltd.
Under his leadership the company revived the Khopoli plant to become Asia’s largest cylinder manufacturing plant.
The company is largest supplier of cylinders to major oil companies like HPCL, BPCL, IOCL and some other private companies like Reliance and Shell.
Formation of Confidence Group :
With his presence in all LPG related activities it was time to go national. He acquired a stock listed company with the name of “Devrasa Gas Chem” and renamed it as Confidence Petroleum India Ltd. Thus now his company was Bombay stock exchange listed. His phenomenal growth path continued herein as well and the shares of the company recorded a path breaking increase in prices in a short period of time. Once again Mr. Khara was in news, this time on National news channels as winner.
Confident as he is, he ventured into the Global securities market with a GDR listing. Again emerging as winner he not earned his company good share, but also an international acknowledgment.
Latest Ventures :
Visionary as he is, Mr. Khara is busy in some international tie ups that may give Indian LPG market a big technological boom. In view of the changing market scenario, where technology plays a vital role in any business, he is bringing the latest and the most modern one to India. The company’s latest venture is in the field of Auto LPG. In the initial phases, the company has plans to launch 150 Auto LPG Dispensing Stations (ALDS) all over India. The stations are specifically designed for maximum customer comfort and safety. The next phase includes setting up of Auto LPG Cylinder Manufacturing Units.
Global Businessman :
Mr. Khara’s vision has already seen the opportunity that lies in alternate sources of fuel to cater the ever increasing need of the society. He has ambitious plans for making the Natural Gas available in the country viable and usable to the society as a whole.
This includes some technological innovations to be brought in from other developed countries. He plans to make CNG & LPG as the parallel sources available under the banner of his company – Confidence Group of Compnaies.
One more sector he is venturing into is the Automatic Meter Reading technology. The system works on Radio Frequency and is one of its kind. The knowledge sharing agreements with an Israel company called Miltel are through and the products are being tested in India.
Socialite :
Mr. Nitin Khara is not only an accomplished businessman but also has a great presence in social and community activities. His leadership qualities come in play in taking him to the top in every activity that he undertook. Some of the chairs currently dawned by him are:
1. Director in Vardhman Urban Co-operative Bank Ltd.
2. Vice President – All India Parallel LPG Federation
3. Chairman – Mahavir International
4. Vice President – ‘Sankalp’ a social organization.
5. Trusty – Sakal Jain Foundation
6. Trusty – Shree Vardhman Sthanakwasi Jain Shrawak Sangh
7. Trusty – Vanrai – a social group
8. Executive Member – Jain Social Group
9. Trusty – Shree Gujrathi Samaj
10. Member – Vidarbha Industries Association (VIA)
11. Member – Nag Vidarbha Chamber
12. Member – Lions Club
Awards and Achievements :
This journey has given a lot of satisfaction and accolades to Mr. Khara in the form of various awards won by him. Some of the major awards are :
Presented with memento for Outstanding and meritorious contribution at the hands of then President of Lions Club in the year 1995-1996. Jay Maharashtra Smruti Chinha for outstanding achievements in the field of business at the hands of Sh. Vilasrao Deshmukh in the year 1999. Udyog Patra – by “Institute of Trade and Industrial Development” in the year 2002 at the hands of the then Labour minister Sh.Satyanarayan Jatiya during “16th Economic Development Conference”. Rashtriya Udyog Ratan Award by IOBRD.
Thus, the case definitely provides a buying opportunity to all those who were sitting on fence waiting for the price to come down and also to those who wish to add more to their holding as the company has strong fundamentals and has huge opportunities ahead both internationally and domestically. The stock has all the merits to appreciate significantly on the basis of its performance and I thus suggest you to keep holding the same for next 3-4 years. But once must take position according to their own risk appetite and do their own research. It's your money invest it wisely; I am just suggesting it.
Nitin Khara- A born winner
Born into a middle-class Gujrathi family, he grew up to become one of the very successful first generation entrepreneurs. He grew up inculcating all the good values of being a good person, an honest citizen and an ambitious leader.
His growth path started with a small venture into stainless steel business with limited capital from his pocket in the year 1985. Within a span of 8 years he had gathered enough experience and courage to take over a LPG cylinder manufacturing unit in Mandeedip, in M.P. From here began the growth of a true businessman whose vision was great, who could take risks and who had the courage to trade on paths un-trodden.
Hereafter it was more takeovers and acquisitions of cylinder manufacturing plants which he continued to do very confidently. Start of Bottling plant network :
Then came the Government’s hints that it may allow private companies to enter the field of domestic LPG marketing. Mr. Khara tapped the opportunity and “Gaspoint Petroleum (India) Ltd.” took birth in the year 1999. Under this banner, the company went on with opening of LPG bottling plants all over India. They were with the view of reaching out to the public as a whole.
The network of bottling plants increased steadily and now the company operates through its bottling plants in total 22 states all over India. The company caters to bottling requirements for all major Public Sector units including HPCL, BPCL, IOCL and also to private companies like Leader and Shell gas.
Manufacturing in big way:
The company acquired one after the other cylinder manufacturing units and became the largest cylinder manufacturer in the country.
* The acquisitions and takeovers can be summarized as below :
* Andhra Cylinders, Hyderabad in the year 1997.
* Maharashtra Cylinders Private Limited, Nagpur taken over in 1997.
* Karnool cylinders, Karnool, taken over in 1998.
* Sanuj Steels Private Limited, Khopoli taken over in 1999.
* Mercury Cylinders Pvt. Ltd., Mathura taken over in 2000.
* Devrasa Gas Chem Ltd.
Under his leadership the company revived the Khopoli plant to become Asia’s largest cylinder manufacturing plant.
The company is largest supplier of cylinders to major oil companies like HPCL, BPCL, IOCL and some other private companies like Reliance and Shell.
Formation of Confidence Group :
With his presence in all LPG related activities it was time to go national. He acquired a stock listed company with the name of “Devrasa Gas Chem” and renamed it as Confidence Petroleum India Ltd. Thus now his company was Bombay stock exchange listed. His phenomenal growth path continued herein as well and the shares of the company recorded a path breaking increase in prices in a short period of time. Once again Mr. Khara was in news, this time on National news channels as winner.
Confident as he is, he ventured into the Global securities market with a GDR listing. Again emerging as winner he not earned his company good share, but also an international acknowledgment.
Latest Ventures :
Visionary as he is, Mr. Khara is busy in some international tie ups that may give Indian LPG market a big technological boom. In view of the changing market scenario, where technology plays a vital role in any business, he is bringing the latest and the most modern one to India. The company’s latest venture is in the field of Auto LPG. In the initial phases, the company has plans to launch 150 Auto LPG Dispensing Stations (ALDS) all over India. The stations are specifically designed for maximum customer comfort and safety. The next phase includes setting up of Auto LPG Cylinder Manufacturing Units.
Global Businessman :
Mr. Khara’s vision has already seen the opportunity that lies in alternate sources of fuel to cater the ever increasing need of the society. He has ambitious plans for making the Natural Gas available in the country viable and usable to the society as a whole.
This includes some technological innovations to be brought in from other developed countries. He plans to make CNG & LPG as the parallel sources available under the banner of his company – Confidence Group of Compnaies.
One more sector he is venturing into is the Automatic Meter Reading technology. The system works on Radio Frequency and is one of its kind. The knowledge sharing agreements with an Israel company called Miltel are through and the products are being tested in India.
Socialite :
Mr. Nitin Khara is not only an accomplished businessman but also has a great presence in social and community activities. His leadership qualities come in play in taking him to the top in every activity that he undertook. Some of the chairs currently dawned by him are:
1. Director in Vardhman Urban Co-operative Bank Ltd.
2. Vice President – All India Parallel LPG Federation
3. Chairman – Mahavir International
4. Vice President – ‘Sankalp’ a social organization.
5. Trusty – Sakal Jain Foundation
6. Trusty – Shree Vardhman Sthanakwasi Jain Shrawak Sangh
7. Trusty – Vanrai – a social group
8. Executive Member – Jain Social Group
9. Trusty – Shree Gujrathi Samaj
10. Member – Vidarbha Industries Association (VIA)
11. Member – Nag Vidarbha Chamber
12. Member – Lions Club
Awards and Achievements :
This journey has given a lot of satisfaction and accolades to Mr. Khara in the form of various awards won by him. Some of the major awards are :
Presented with memento for Outstanding and meritorious contribution at the hands of then President of Lions Club in the year 1995-1996. Jay Maharashtra Smruti Chinha for outstanding achievements in the field of business at the hands of Sh. Vilasrao Deshmukh in the year 1999. Udyog Patra – by “Institute of Trade and Industrial Development” in the year 2002 at the hands of the then Labour minister Sh.Satyanarayan Jatiya during “16th Economic Development Conference”. Rashtriya Udyog Ratan Award by IOBRD.
Net profit of Confidence Petroleum India rose 103.10% to Rs 11.80 crore in the quarter ended September 2010 as against Rs 5.81 crore during the previous quarter ended September 2009. Sales rose 105.08% to Rs 163.49 crore in the quarter ended September 2010 as against Rs 79.72 crore during the previous quarter ended September 2009.
ReplyDeleteConfidence Petroleum India has decided to convene extraordinary general meeting on 03 November 2010.
Confidence Petroleum India Ltd has informed BSE regarding Confidence Petro takes over 'Vedant LPG Venture' - A Cylinder Manufacturing Plant at Raipur (C.G.)
ReplyDeleteConfidence Petroleum India Ltd has informed BSE that during the fiscal 2010-11 ADDITIONAL ORDERS WORTH RS. 36.64 CRORES for supply of 3.05 lac LPG Cylinders have been awarded by HINDUSTAN PETROLEUM CORPORATION LTD to the Company's Khopoli Cylinder manufacturing unit & Andhra Cylinders, a unit of Envy Cylinders (100% subsidiary of Confidence Petroleum India Limited). The orders are to be executed by April, 2011. Company is expecting further orders from HPCL to its Bazpur (Uttaranchal), Kalmeshwar (Nagpur) & Saoner (Nagpur) units.
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