Confidence Futuristic Energetech Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

GLOBAL ECONOMY

During the financial year 2024 25, the global economy continued to navigate a complex and evolving macroeconomic environment. Despite persistent challenges such as geopolitical tensions, supply chain disruptions, and divergence in monetary policies, the global economy demonstrated moderate resilience. According to the International Monetary Fund (IMF), global GDP grew at approximately 3.0%, driven by steady consumer demand in developed economies and selective recovery in emerging markets. However, growth remained uneven across geographies, influenced by heightened policy uncertainty, trade fragmentation, and lingering inflationary pressures.

Inflation, while easing from its peaks, remained above central bank targets in several regions. Advanced economies like the U.S. and the Eurozone witnessed a moderation in inflation, prompting central banks to pause or cautiously reverse previous interest rate hikes. In contrast, many developing economies faced ongoing challenges, including currency volatility and imported inflation due to high energy and food prices. This divergence in monetary policy created a mixed global financial environment, affecting capital flows and investment sentiment.

Geopolitical risks and trade dynamics continued to reshape global supply chains. Ongoing tensions between the U.S. and China, the prolonged Russia Ukraine conflict, and the emergence of new trade blocs drove increasing protectionism and strategic decoupling. As a result, industries across the board, including energy and technology, began diversifying their sourcing and manufacturing bases to ensure greater resilience.

Energy markets remained volatile throughout the year, with crude oil prices fluctuating due to Organization of the Petroleum Exporting Countries Plus decisions and global geopolitical instability. Simultaneously, the green energy transition gained momentum, especially in Europe, North America, and parts of Asia, as countries intensified efforts toward achieving energy security and climate goals. The global push for decarbonization and net-zero commitments presented significant growth opportunities in green infrastructure and alternative fuels.

Global financial conditions were mixed. While equity markets saw recovery in many regions amid expectations of policy easing, access to debt capital remained constrained, particularly for firms in emerging markets. Currency fluctuations and interest rate volatility underscored the need for strong treasury and risk management. In response, companies increasingly adopted supply chain financing, explored alternative funding routes, and embraced flexible capital structures to support growth and maintain liquidity in a dynamic macroeconomic landscape.

INDIAN ECONOMY

In the financial year 2024 25, Indias economy maintained its position as one of the fastest-growing major economies globally, despite facing external challenges such as geopolitical tensions, volatile energy markets, and divergent monetary policies among leading nations. Strong macroeconomic fundamentals, underpinned by robust domestic demand, ongoing policy reforms, and resilient performance in the services and manufacturing sectors, supported this growth. The Ministry of Finance and other key institutions projected Indias GDP growth at approximately 6.5% 6.8%, driven by solid consumption, sustained government capital expenditure, and a revival in private sector investment. The services sector, particularly IT, financial services, healthcare, and tourism, continued to be a significant growth engine, while the manufacturing sector gained momentum through Production Linked Incentive (PLI) schemes and heightened emphasis on "Make in India" initiatives.

Inflation moderated compared to previous years, although temporary pressures emerged from food price spikes and fluctuating global oil prices. The Reserve Bank of India adopted a cautious monetary stance, keeping interest rates largely steady throughout the year, balancing the dual objectives of price stability and economic growth. Easing supply-side constraints and improved logistics contributed to a downward trend in core inflation, with the RBIs inflation-targeting framework effectively anchoring inflation expectations and supporting overall financial stability.

Indias external sector experienced both headwinds and opportunities amid global trade volatility and elevated commodity prices. The countrys diversified export base spanning services, electronics, pharmaceuticals, and engineering goods helped cushion the impact. Although the merchandise trade deficit remained high, it was manageable, supported by robust service exports and remittance inflows. Government efforts to pursue bilateral trade agreements and reduce import dependency further strengthened the trade outlook.

On the fiscal front, the Union Budget 2024 25 prioritized fiscal consolidation while maintaining strong capital expenditure. Infrastructure development remained a key focus, with increased investments in roads, railways, renewable energy, and digital infrastructure. The government also emphasized inclusive growth through enhanced welfare programs, rural development initiatives, and targeted subsidies. Buoyant tax collections, aided by improved compliance and economic formalization, contributed positively to fiscal health, underpinning the governments balanced approach to growth and fiscal discipline.

CNG AND HIGH PRESSURE GAS INDUSTRY

Despite uncertainties, specific sectors particularly those aligned with sustainability and energy efficiency are witnessing robust growth. One such sector is the compressed natural gas (CNG) cylinder manufacturing industry, which is expanding globally as countries push towards cleaner fuel alternatives. Valued at around USD 3.1 billion in 2023, the global CNG cylinder market is projected to grow at a CAGR of approximately 8.4%, reaching nearly USD 5.8 billion by 2031. This growth is being driven primarily by the rising adoption of CNG vehicles, stricter emissions regulations, and the shift toward alternative fuels. The Asia-Pacific region, particularly India, China, and Pakistan, is at the forefront of this trend, expected to dominate the market with a share exceeding 60% by 2026.

Within this global context, Indias economy continues to exhibit strong fundamentals, maintaining its position as one of the fastest-growing major economies. Backed by favorable demographics, infrastructure development, and proactive policy reforms, Indias focus on clean energy solutions is gaining momentum. The CNG cylinder manufacturing segment in India stands at the intersection of industrial growth and environmental responsibility. As the country expands its urban infrastructure and public transport systems, demand for natural gas-powered vehicles and associated equipment like CNG cylinders and CNG Cascades is growing steadily.

Automotive manufacturers are also innovating in this space; for instance, Tata Motors has introduced dual-cylinder CNG technology in its Tiago and Tigor models, enhancing boot space and fuel capacity.

These developments are aligned with the Indian governments ambitious plan to set up 10,000 CNG stations by 2030, creating a supportive ecosystem for the industrys growth. Companies in the CGD space are witnessing significant growth in CNG sales up to 20% in recent quarters indicating a strong market trajectory.

In conclusion, the global and Indian economies are converging on a common path toward sustainability and clean energy adoption. For India, the CNG cylinder manufacturing segment represents a high-potential opportunity, both economically and environmentally. With rising domestic demand, supportive government policies, and growing export potential, India is well-positioned to become a leading hub for CNG cylinder production in the Asia-Pacific region and beyond.

INDUSTRIAL AND MEDICAL OXYGEN GASES CYLINDERS

Indias industrial gas cylinder market is witnessing strong growth, primarily driven by rapid industrialization supported by initiatives like "Make in India" and increasing foreign direct investment (FDI). Key industries such as steel, automotive, petrochemicals, and chemicals rely heavily on gas cylinders for welding, cutting, and heat treatment processes. As these sectors expand, the demand for industrial gas cylinders is expected to rise significantly in the coming years.

The healthcare sector is also playing a crucial role in this growth, especially in the demand for oxygen cylinders. With a growing number of respiratory diseases and an aging population requiring oxygen therapy, the need for reliable and portable oxygen solutions is increasing. To meet this demand, manufacturers are innovating with lightweight designs, improved pressure control systems, and digital monitoring features to enhance safety, portability, and efficiency in both hospital and home care settings.

COMPANY REVIEW

Confidence Futuristic Energetech Limited, through its subsidiaries, has strategically ventured into the manufacturing of CNG and high-pressure gas cylinders. The company currently operates in this space through its Subsidiary-

Confidence Enterprises Private Limited a wholly owned subsidiary located in the Umred Industrial Area near Nagpur, Maharashtra.

Sarju Impex Limited a 75% owned subsidiary operating in Dahej, Gujarat.

Silversky Exim Pvt. Ltd.- a 51% owned subsidiary upcoming Type IV High Pressure cylinder manufacturing unit in Butibori MIDC Nagpur.

This facility is a fully functional unit specializing in high-pressure seamless steel gas cylinder solutions. Its product range includes industrial gas cylinders, CNG cylinders, medical gas cylinders, and cascades.

As part of its strategic expansion, the company has divested its stake in Maruti Kotsu Limited, a CNG manufacturing unit located in Halol, and has subsequently invested in a new subsidiary, Silversky Exim Pvt. Ltd., holding a 51% equity stake. A state-of-the-art manufacturing facility for Type-4 CNG cylinders has been established under this subsidiary at Butibori, Nagpur, and is expected to commence operations shortly. The plant has already received in-principle approval from PESO.

Type-4 cylinders, made from advanced composite materials, are significantly lighter approximately one-third the weight of traditional metal cylinders. These next-generation cylinders offer enhanced safety, efficiency, and performance. They are expected to play a critical role in advancing the green hydrogen economy, a rapidly growing sector as the world accelerates its transition toward clean and sustainable energy solutions.

Confidence Futuristic Energetech delivered a strong financial performance in FY 2023-24, with consolidated revenue reaching 181 crores, reflecting a steady growth trajectory. Although the company faced challenges such as a drop in cylinder selling rates and intensified market competition, it remains optimistic about its future outlook. This confidence is supported by a strong balance sheet, strategic investments, and ongoing expansion initiatives.

OUTLOOK & OPPORTUNITIES

Confidence Futuristic Energetech Limited (CFEL) is strategically positioned to take advantage of various emerging opportunities within the high-pressure cylinder manufacturing industry, driven by critical market dynamics and government initiatives. With a solid infrastructure that includes three advanced manufacturing units through its subsidiary, CFEL is well-prepared to meet the increasing demand for high-pressure cylinders utilized in diverse industrial and energy applications.

Recently, CFEL divested its 49% stake in Maruti Kotsu Limited also done a strategic investment in Silversky Exim Private Limited, acquiring a 51% equity stake. This new partnership has led to the establishment of a Type IV high-pressure cylinder manufacturing unit in MIDC Butibori, Nagpur. The plants machinery has already been installed, and the company has received the in-principle license from PESO, positioning the plant to become operational soon.

A key growth driver for CFEL is the Indian governments ambitious plan to establish 10,000 CNG stations nationwide. This initiative is anticipated to significantly enhance the demand for CNG cascades and cylinders as the CNG infrastructure expands to satisfy the growing needs of both consumers and industries. CFEL stands to benefit from this demand surge due to its established expertise in high-pressure cylinder production and its strategic focus on this sector.

Additionally, the governments emphasis on hydrogen as a crucial component of its energy transition strategy presents a substantial opportunity for CFEL. As hydrogen technology gains traction, the need for advanced storage solutions, particularly Type 4 high-pressure cylinders, is expected to grow. CFELs upcoming Type 4 cylinder manufacturing unit is specifically designed to cater to this rising demand. This new facility will enable the company to manufacture lightweight, high-strength cylinders suitable for storing high-pressure gases, including hydrogen and CNG, thereby positioning CFEL as a prominent player in this expanding market.

In conclusion, CFELs strategic investments in enhancing its manufacturing capabilities and alignment with government-led energy initiatives create a strong foundation for future growth. The companys focus on meeting the increasing demands of the CNG and other high pressure gases segment, along with its commitment to innovation and quality, ensures that CFEL is well-equipped to seize these significant market opportunities and deliver sustained value to its stakeholders.

The governments initiative to make CNG more economical and accessible as a green fuel for a broader population presents two major opportunities: the supply of CNG cascades for fueling stations and the production of CNG cylinders. Furthermore, with the wider availability of CNG across many regions, an emerging market for retrofit kits is developing.

With the governments emphasis on reducing reliance on fossil fuels specifically petrol and diesel for transportation Compressed Natural Gas (CNG) is expected to be widely promoted as an alternative fuel. The management anticipates that this will unlock new opportunities for the company in the near future, along with favorable profit margins driven by demand and suitable commercial arrangements.

RISKS, THREATS & CONCERNS

Confidence Futuristic Energetech Limited is mindful of a range of risks that could influence its growth trajectory and financial resilience. One of the primary concerns is the volatility in raw material prices, which has the potential to alter cost structures and put pressure on margins. The high-pressure cylinder industry is also becoming competitive, with market dynamics and pricing pressures posing ongoing challenges. Regulatory changes, particularly in the domains of safety and environmental standards, may necessitate additional investments in compliance, thereby raising operating costs. Another area of concern is the companys dependence on a select group of customers and suppliers, which could create vulnerabilities in the event of disruptions in supply chains or changes in customer procurement strategies.

At the same time, structural shifts in the energy sector, especially the gradual adoption of electric vehicles (EVs), are being closely monitored. While EVs are expected to play a larger role in the long term, their immediate impact on the CNG ecosystem remains limited due to barriers such as high battery costs, range constraints, and underdeveloped charging infrastructure. Consequently, Confidence Futuristic Energetech anticipates sustained demand for CNG-related solutions over the coming years. By maintaining a sharp focus on operational efficiency, diversifying its customer and supplier base, and keeping abreast of evolving industry trends, the company is well-positioned to address these challenges proactively."

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

"Confidence Futuristic Energetech Limited has put in place a strong internal control framework aimed at ensuring accurate and reliable financial reporting, regulatory compliance, and operational efficiency. This framework is supported by well-defined policies and procedures that cover key operational, financial, and compliance-related risks. The company conducts regular audits and reviews to assess the effectiveness of these controls and to highlight areas requiring improvement. The internal audit function plays a pivotal role by evaluating control processes, monitoring adherence to established guidelines, and suggesting measures for further strengthening. The management remains fully committed to continually improving these controls to safeguard the companys assets and uphold the integrity of its financial reporting."

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

"During FY 2024 25, Confidence Futuristic Energetech Limited made notable progress in strengthening its human resources and industrial relations practices. The company remains committed to fostering a supportive and engaging workplace that emphasizes employee development, retention, and overall well-being. By the close of the fiscal year, the organization employed a diverse team of approximately [insert number] people across its various locations. Key initiatives included the rollout of advanced training programs to upgrade skills and enhance operational effectiveness. At the same time, the company reinforced its employee relations framework to promote transparent communication and timely resolution of concerns. These measures reflect the companys proactive approach to building a positive work culture and aligning its workforce with long-term strategic goals."

COMPLIANCE

Confidence Futuristic Energetech Limited accords the highest importance to compliance with applicable laws, regulations, and industry standards. The company follows stringent requirements across areas such as environmental protection, safety norms, and corporate governance. To ensure consistent adherence, regular compliance audits and reviews are carried out, aligning operations with legal obligations and industry best practices. The organization remains committed to transparency, ethical conduct, and timely adaptation to evolving regulatory changes. This strong compliance framework not only safeguards operational integrity but also reinforces stakeholder confidence and supports sustainable long-term growth.

DISCLAIMER

The Financial statements are drawn in compliance with the requirements of the Companies Act, 2013 and recently adopted Indian Accounting Standards in India. All statements that address expectations or projections about the future, including but not limited to statements about the companys strategy for growth, product development, market position, expenditures and financial results are forward projecting statements. Forward projecting statements are based on certain assumptions and presumptions of future events. The Company doesnt guarantee such assumptions and presumptions as accurate or realized.