It gives me great pride to present to you the 25th Annual Report on the performance ofConfidence Petroleum India Ltd for the year 2018-19.
Key macro developments shaping the Company's prospects
India continued to be recognised amongst the fastest growing economies globally. Thanksto the endeavouring efforts and the vision of the Government and its focus inclusivegrowth and introducing reformsandschemesthatbenefitto the larger section of the society.While GST implementation was a favourable move to promote the organised segment schemessuch as Pradhan Mantri Ujjwala Yojna (PMUY) were focussed towards strengthening LPGoutreach across the country. The demand for LPG connections accelerated post theimplementation of the PMUY Scheme. This demand is not likely to simmer down anytime soonas Government has strongly emphasised on 100% LPG penetration during the Union Budget2019. Besides implementation of the Direct Benefit Transfer (DBT) further curbed thesupply chain leakages and kept a check on the limits set by the Government on providingthe subsidised cylinders to the households. The energy industry is at an inflection point.Oil prices and consequently LPG prices remained low in 2018-19. Spilling over for thepast 5 years there have been record investments and policy amendments to adopt cleanenergy by various states and the Central Government. The policy makers have recognised andrealised the impact of the choice of fuel on climate change carbon emissionenvironmental degradation hazards to human health and the long-term impact on thesociety. It was shocking to see the World Health Organization's report which stated that14 out of the top 15 most air polluted cities in the world are in India. (Source:Times of India WHO) The challenge and the opportunity for the LPG industry in this periodof change is to be recognised as a clean green and modern energy and an immediatesolution to mitigate air pollution and provide clean and safe environment. The Centre isalso actively promoting the green energy outreach to curb pollution levels and encouragingthe use of LPG in automobile. There is also a push towards making India a clean and lowcarbon economy. These clean energy initiatives by the Central and State Governments haveunlocked the potential opportunities for the LPG industry be it providing safer andhealthier kitchens through the Ujjwala scheme or usage of auto LPG in publictransportation. These developments present brighter prospects for India's downstream oiland gas sectors. Given the growing demand for clean energy in India and its wideapplication in household and industrial activities major investments in this sector isexpected to increase over the next 3 to 5 years.
Performance and Strategies
In preparation CPIL has completed a new strategic review for 2019-2022 to increase ourpositive impact to the environment industry stakeholders and valuable clients as werespond to the opportunities provided within the Indian energy industry and help itstransition to a low carbon economy.
The Company surpassed its targets in 2018-19 which is largely due to our verticallyintegrated business model across the LPG space. It continues to remain one of our keystrengths. Over the years we benefittedfrom economies of scale improved costefficiencies through a judicious management of inventories cutting-edge technologymanaged cash flows focused on value-added products; added new territories and alignedlong-term business strategies with diverse stakeholder expectations. Such an approach hasenabled us to maintain a robust CAGR revenue growth of at 102.16% and net profit growth of1127.31% over the last three years.
During 2018-19 the Company reported great numbers across different financialparameters as follows: Revenues increased 65% from Rs. 610 Crores in 2017-18 to Rs.1009Crores in 2018-19 Net profit strengthened 149% fromRs.27 Crores in 2017-18 to Rs.67 Croresin 2018-19
The year 2018-19 has set the momentum for CPIL for achieving the strategic andoperational goals set for the next three financial years. CPIL scaled new heights andrecorded its best financial and operational performance. sounder as we have always soughtvalue Ourfutureliesinourstrategy.Weare financially over volume.
Over 2018-19 we continued to progress in our cylinder manufacturing division and LPGbottling gains from our consumerdivision.Going facingthefuturewesee significantpacked cylinder marketing and the Auto LPG divisions. We have made a good progress indeveloping our dealer and stockist network in new states and developing the right vendorrelations to service our Auto LPG stations. Our initiatives to improve the safety ofkitchens through our partnerships with composite cylinder manufacturer have also achievedsignificant response from the residential segment.
Auto LPG as a transport fuel continues to grow and in 2019 we have initiateddiscussions and are also working alongside with various policymakers in the state andCentral Government to introduce Auto LPG in the Northern States. Not only will Auto LPGhelp towards curbing the vehicle emissions motorists will also benefit from significantsavings by switching to a lower priced fuel. LPG being a stable priced fuel will alsohelp the Government in saving billions of dollars on import bill.
As a Company we are increasingly agile and readily adapting to the new realties in theenergy sector. We are looking keenly at our downstream activities within the oil and gasspace and working to secure our supplies of LPG at competitive rates.
We have an ambitious capex plan over the next three years. The Company has plannedcapacity expansion for ALDS and bottling plants. The total capital expenditure planned isRs. 444 Crores. The Company has already sourced part of the funding by way of apreferential issue of Rs. 78 Crores as well as issued warrants to the tune of Rs. 53Crores to promoters thereby raising over Rs. 131 Crores for the same. The remaining isexpected to be generated through strong cash flows over the next 27 months.
Our People Driving The Momentum
Our employees have brought together a core set of organizational values and have builta culture that inspires us to gain the accelerated momentum. Throughout the Group thereis a spirit of pride and professionalism and these are key qualities at a time of growthinflection. We are determined to recognise talent in across the Group's businesses and tosupport development of people from early in their careers not just in top-levelsuccession planning but also focussing on divisional and departmental leadership.Confidence Group takes pride in its employees and their families who help us to create adifference in the areas of our operation as well as the country.
The Group has strong financial control sound administration and our governance isrobust and transparent. Moreover we are building the assets and the teams to securefurther growth. I would like to end by thanking all our talented and committed colleaguesfor their unstinting hard work and dedication. I would also like to thank our BoardMembers for their constant guidance. Finally I would like to thank all our stakeholdersfor being with us and contributing immensely to our success. We remain focused on the taskin hand and are committed to delivering on our strategies and continuing to driveprofitability within the business and building upon the successes of we achieved in2018-19.We reaffirm our commitment towards nation building by curbing air pollution andmoving towards sustainable development.