Apar Industries transformer oils and specialty oils segment tumbled 32 percent in its second quarter despite marginal increases in sales volume. Lower raw material prices were to blame for its decreases, which also included double-digit drops in revenue in the quarter and half-year periods. It expects more of the same in the second half of its fiscal year. Savita Oil Technologies saw profit increase and revenue decrease, although both only changed marginally from the year before.
The Indian supplier of transformers, conductors, cables and over 400 types of specialty oils saw its oil segment profits dip in its Sept. 30-ended quarter to Rs 39.3 crore (U.S. $5.7 million) from almost Rs 58 crore a year before. Its quarterly revenue of Rs 445 crore was down from Rs 509 crore. Revenue for the first half of its 2016-2017 fiscal year, Rs 840 crore, was 10 percent lower than the previous year.
Transformer oils, its main product in the segment, had a slow quarter due to a particularly heavy monsoon season thwarting commissioning of transformers, according to a transcription of a conference call last month. However, Indias power distribution reform package could result in increased offtake in the fourth quarter, it noted.
Apar adopted a hub and spoke manufacturing and distribution model for specialty oils, which allows for efficient delivery cycles to global original equipment manufacturers of transformer across Asia, Africa and Australia.
An improved distribution network was also credited for motor oils sales volumes havin increased to 5,580 tons in the quarter.
Overall sales volume for the segment was up to 75,650 metric tons in the quarter. We have posted a 3 percent growth in volume and this has come from the sub segments of auto lubricants, rubber processing oil and white oil exports, said Managing Director Kushal N. Desai. The automotive segment continues to grow faster than industry. If you look at the auto lube segment, we have delivered a 10 percent growth year-on-year in the quarter and a 17 percent growth if you compare the half-year this year to the previous year.
Apar has nearly completed construction of its blending plant in Sharjah, United Arab Emirates. We expect it to be commissioned towards the end of this quarter, subject to completing some of the regulatory approvals that we need from the port authority and the civil defense.
The trends Apar experienced in the quarter are likely to continue in the next quarter or two due to the same factors, it noted. We have of course taken various measures to work on the pressure that has come on the margins. But overall, we expect the profitability to be a little weaker in the second half compared to the first half in the oil segment also.
Apar commands a 60 percent share of Indias power transformer oil market and supplies 40 percent of the countrys distribution transformer oils.
Savita Oil Technologies Ltd.s petroleum products segment earned it Rs 2,402 lakhs in its Sept. 30-ended quarter, a marginal increase over the Rs 1,368 lakhs it recorded in the same period last year. Revenue for Savita, which makes Savsol lubes and is known primarily for its transformer oils and white oils, was Rs 38,177 lakhs, or just faintly less than last years second quarter.
The Mumbai-based firm also makes liquid paraffins, petrolatum, petroleum jellies, coolants and waxes.