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00:00Well, hello and welcome. You're watching NDTV Profit. I'm Harsh Saita. We continue to bring
00:14you managements from the Go India Advisors Promoters Forum 2024 from the St. Regis. And
00:22the one management that we are very keen to talk about, especially given the LPG play,
00:27as well as what could come in the budget in terms of shift towards greener and better
00:34fuels, you know, we have with us Mr. Nitin Khara of Confidence Petroleum to talk to us
00:40about what the future holds and of course what we can expect from the budget, sir. So
00:46first off, sir, I want to talk about your fundraise, right, the most recent one. Talk
00:51to us about what plans with regard to where you are deploying the funds, how quickly are
00:56you deploying the funds, how quickly will it start to impact your numbers? See, before
01:04that I will explain about what vertical we are in. We are in the LPG cylinder manufacturing,
01:11that's our bread and butter where we have started our journey. Then we are into LPG
01:16import, LPG bottling and LPG marketing through our dealer networks, through more than 2,200
01:23dealers across the country. We have presence all across the country except Jammu and Kashmir
01:30and Paris, you can say. So we have total 16 LPG cylinder manufacturing plant, 68 LPG bottling
01:38plant presently and 260 around auto LPG gas station, more than 260 auto LPG gas station
01:46where we are supplying LPG to auto rickshaws and cars in the state of Karnataka, Telangana,
01:55Maharashtra and Tamil Nadu as well. Plus we are in the CNG cylinder manufacturing also,
02:01that is high pressure cylinder manufacturing, where we are manufacturing all type of high
02:05pressure cylinders, that is oxygen, nitrogen, CNG cylinders. We have three units, one is
02:10in Halol, one is in Daesh, one is in Nagpur also. Plus we are coming up with the CNG high
02:16pressure cylinder of composite cylinders, that is composite cylinder manufacturing plant
02:21also coming up in Nagpur. So what's our capacity we have presently, that is 68 bottling plant
02:28that we are expanding to 100 LPG bottling plant. So 32 more bottling plants are coming
02:33for that, this CAPEX will be utilized. Plus we have presently 260 auto LPG gas station,
02:41which we are targeting in coming three years to total 500 auto LPG station, that is almost
02:48around 240 more auto LPG station we are going to develop. For that also CAPEX will do this.
02:55Plus this CNG high pressure cylinder, composite cylinder unit, there also we will deploy CAPEX.
03:01So altogether, as I told in my previous interview also, we are going to do a 2000 crore CAPEX
03:09in this three years. Means through our EBITDA is coming up, a good EBITDA we are targeting
03:16in this coming three years. Through that also as well this CAPEX, this strategic partner
03:23who has invested just in our company, through that also.
03:26Understood. So sir, top line is around 2700 crore FY24. Where should it therefore go FY25 or 26 as some of these and all of these start to kick through on your top line?
03:38Right. We are targeting of around more than, we will cross 4500 crore in this FY25.
03:49And by FY26 we are targeting around 6200 crore rupees of top line.
03:56Understood.
03:57To get through all this infrastructure utilized properly.
04:01Sure, sure, sure. So understood. And just with regard to your margins therefore, they will be steady state, something around mid-teens, is that the expectation?
04:10Yeah, margin see, it's all on the month to month as per the international market LPG prices. Margins are economically same. Means either we are selling auto LPG or we are selling in packs and the margins will be always will be same.
04:27Understood. And as you know these 68 to 100 bottling plants as you grow, where is your customer coming from in terms of the market size? Is the market size increasing or are you taking away share from some of your competitors?
04:45See, it's both. Definitely we are taking our shares from our competitor. In bottling, always see logistic is more important. Because unless and until you have plant near to the market, we are unable to survive. And Confidence is the only company who is having such a big infrastructure across the country.
05:05And if we will go more bottling plant, it means we will save more cost into our logistic part, as per the logistic part. So, always price, market is a competitive market. And if we will give a competitive price to the market, we will get more market share to the market. And that's our aim, that's our motto also, to develop this bottling plant.
05:25Understood. And just with regard to your funding therefore, 2000 crore of CAPEX is fairly large for a company your size. Where does the funding come from? You have done an equity raise. You have around 600 odd crores of debt. So, how should that capital structure evolve?
05:43See, already this BW Energy, who is the Norway based company, they have invested in our group. Plus, EBITDA is also coming. Last year, we did almost 360 crore of EBITDA. So, this year also company is doing good, expanding their wings to auto LPG segment, expanding their wings to ECD segment, paxillion division. So, last year we did top line of 2700 crore.
06:11This year we are targeting 4500 crore. That means EBITDA will also be more. So, through these three years, this CAPEX we will do in the coming three years. So, we don't think we have any hesitation of raising of any type of or needing of any type of fund. Because, already BW has started their investment. If required, they are also ready for further more investment also.
06:38Understood, understood. So, no debt raise plans at all. You will either do equity or you will do internal accruals. And therefore, no debt. Fair point.
06:46Internal accruals are good, doing good, company is doing good. That's it.
06:50Understood, understood. Sir, you have given us a very good overview of the business as a whole. Talk to us about how your revenue mix shifts. Because, you are investing in different divisions. Therefore, what is your revenue mix today and where does it go maybe when you reach 6200 crore in FY26?
07:12I didn't get you.
07:13Your revenue mix, sir. So, say auto versus bottling versus, if you can just give us an idea.
07:19Presently, altogether, almost around more than 30,000 metric ton we are doing the business in LPG segment. So, in auto LPG, we are doing almost around 7500 metric ton per month presently. And in packed cylinder, we are doing almost 16,500 metric ton. And bulk marketing, around 6000 metric ton. Altogether, 30,000 metric ton.
07:43So, we are expecting in this packed cylinder division, presently, which is doing 16,500 to go up to 30,000 metric ton by FY25. And FY26, we are targeting around 40,000 metric ton. Same in the auto LPG, which we are doing 7500 metric ton, we are targeting around 11,500 in FY25. And in FY26, around 15,000 metric ton.
08:09Understood.
08:10So, growth of around, say, 20% every year.
08:13And across businesses.
08:15Across businesses. In CNG also, CNG retail also, presently, 40 CNG stations we have developed in the short period of one and a half year in Bangalore city. So, now we are targeting 100 stations. So, that revenue will also generate in this.
08:30Understood. And just in terms of other expansion, in terms of infrastructure, geography, setting up more stations, servicing more auto LPG, what's the kind of, you know, funding and thought process behind those, if you can give us. Because geographically, you have some limits on certain of your products.
08:53You mean to say…
08:55On the auto side of things, you are limited to the south. So, would you be growing stations across geographies?
09:02Why we are focusing on south? Because they are all auto rickshaws in south. Particularly in Tamil Nadu, particularly in Karnataka, in Telangana. If you can go to Bangalore, you can find every auto rickshaw running on LPG. In Tamil Nadu, maximum 80% of the rickshaw running on LPG. Because LPG is the cheapest fuel. See, ultimately, these auto drivers, they want a cheaper fuel. Economical green fuel, cheaper fuel. And that's what we are focusing.
09:27So, to development of this state, in this state, we are focusing more. No doubt, we are coming up in West Bengal also, we are coming up in Rajasthan also. But mainly our focus in Maharashtra, Telangana, Karnataka, Tamil Nadu, where auto LPG business is growing more.
09:43Understood. And with regard to policy, what's the kind of support that you believe that there are gaps in? What do you think should change?
09:54See, mainly, OEM should focus more to sell. Definitely, as demand is there, they are bringing their auto rickshaw on LPG business. But two-wheeler like two-wheeler, just we have developed one, our colleague has developed one two-wheeler, they have converted that into LPG.
10:16So, that segment, if we will push more, we will get the more business of LPG in LPG segment there. So, that's we want, number one. Number two, just we have introduced a bigger size of cylinder, 425 kg. So, that's also, if people used to take, because in that, they do not have to install more size of big bullet like industry.
10:35Suppose, they want to convert their furnace oil to LPG, they can easily convert with utilizing this segment. So, if we develop more type of customer in that, we will get more customer in that also. Strategically, confidence is the supermarket of LPG and CNG, I can say here. I can put here, it's a supermarket. We are in the LPG bottling, we are in the LPG marketing, every CNG also, manufacturing and CNG retail also.
11:03And sir, budget now, just about a month away, likely, a date not announced yet, but just about a month away. Talk to us about what your expectations from the Indian budget 2024 will look like.
11:17We have put our expectation also to the government, just three months before only, before, that if they reduce GST on auto LPG, as it's a green fuel, people want this. If presently, GST is around 18%, 18% GST on auto LPG. If they reduce it to 5%, then the auto LPG demand will be more and people,
11:43people want cheaper gas. People want to know from where to get it. How they can get the output of, so green, see, today, pollution is increasing everywhere. If they get the green fuel in the cheaper price, at the cheaper price, so that demand we have put with the government and we are expecting, we have requested, we are expecting that government will definitely fulfill this demand.
12:09If they reduce this auto LPG tax of 18% GST to 5%.
12:39But with that, a complete wrap on this edition of the show. Stay tuned to NDTV Profit for more.