October 04, 2012

Mumbai

Confidence Petroleum India Limited

Ratings Suspended

(Refer to Annexure 1 for details on facilities)

CRISIL has suspended its ratings on the bank facilities of Confidence Petroleum India Limited (CPIL). The suspension of ratings is on account of non-cooperation by CPIL with CRISIL's efforts to undertake a review of the ratings outstanding. Despite repeated requests by CRISIL, CPIL is yet to provide adequate information to enable CRISIL to assess CPIL L’s ability to service its debt. The suspension reflects CRISIL's inability to maintain a valid rating in the absence of adequate information. CRISIL considers information availability risk as a key credit factor in its rating process and non-sharing of information as a first signal of possible credit distress, as outlined in its criteria ‘Information Availability Risk in Credit Ratings’.

About the Group

CRISIL has combined the business and financial risk profiles of CPIL and its subsidiaries, Confidence Go Gas Ltd, Envy Cylinders Pvt Ltd, Laxminirnal Petrochemicals Pvt Ltd, Virendra Petrochemicals Pvt Ltd, Pt. Surya Go Gas, Agwan Coach Pvt Ltd, Keepy Infrastructure Developers Pvt Ltd, Hemkunt Petroleum Ltd, and Taraa LPG Bottling Pvt Ltd. This is because these entities, collectively referred to herein as the Confidence group, are under a common management, in a similar line of business, and have fungible cash flows. CPIL also has interests in some partnership firms, joint ventures, and companies for strategic reasons; however, it is not a majority partner in these entities. CRISIL has therefore not combined the business and financial risk profiles of these entities with CPIL to arrive at its ratings.

CPIL is the flagship company of the Confidence group. Promoted by Mr. Nitin Khara, the group is engaged in a variety of operations related to LPG cylinder manufacturing and allied activities such as bottling of LPG on a job-work basis, marketing of industrial LPG under its own brand called Gaspoint, wholesale trading of LPG, blending of auto LPG, and retail of auto LPG through a network of ALDS outlets. Until September 2010, the group was deriving almost 80 per cent of its revenues from the sale of wholesale LPG. With its capacity of 3.8 million units, the group has the largest LPG cylinder manufacturing capacity in India. It also provides bottling assistance to public sector undertakings in the oil sector through their bottling units at various locations across 19 states. The Confidence group also runs 55 ALDS points across 9 states in India under the brand name Go Gas. Apart from LPG, the group is also engaged in CNG cylinder manufacturing, albeit on a very small scale with a capacity of 0.2 million units; it also plans to include CNG gas pumps on the same infrastructure with LPG gas stations.

Annexure 1 - Details of various bank facilities