Protecting and managing margins was a common theme for several India companies announcing financial results for the quarter and fiscal year ending March 31, as Castrol India Ltd., Gulf Oil Lubricants India Ltd. and Apar Industries Ltd. all cited the challenges of inflation, rising lubricant additive costs and foreign exchange rate fluctuations.
Their results varied, however. Castrol India reported lower net profit for the January-to-March period, its first quarter, while Gulf Oil Lubricants India posted lower net profit for the quarter and an increase for its full fiscal year. Transformer oil and lubricant supplier Apar Industries posted hefty increases in net profit for the quarter and fiscal year.
Although Castrol India built on its growth momentum from last year’s fourth quarter and registered sequential growth in the first quarter, “our performance versus 1Q 2022 was impacted due to inflationary pressures, high input costs and fluctuating [foreign exchange],” Managing Director Sandeep Sangwan said in its earnings press release. “We continued to invest in our brand and safeguard our margins, while maintaining our pricing premium,” he added.
“Quarter 4 witnessed some inputs – mainly base oils and rupee – stabilizing, which also resulted in some cooling off in the end pricing for customers,” Gulf Oil Lubricants India Ltd. said in its earnings news release. “However, many inputs like additives, etc. continue to be substantially higher than earlier years, still weighing heavily on the total cost of products. Hence, continuous margin management actions remain a key focus area for the company.”
Gulf Oil Lubricants India Managing Director and CEO Ravi Chawla also noted that the year “witnessed significant turbulence in input costs and in general, hyper inflationary environment.”
Industries Chairman and Managing Director Kushal Desai sounded a note of optimism in an earnings conference call with analysts, saying that towards the end of its fiscal year, “the margin pressures, which were there from the mismatch in cost versus selling prices have also eased, and we should see better profitability and consistency in performance even on the lubricant side, which includes three industrial and automotive lubricants.”
Castrol India
Castrol India reported net profit of Rs 203 crore (Rs 2 billion or U.S. $24.2 million) for the first quarter ending March 31, an 11% decline from the same period last year.
Revenue from operations increased 5% to Rs 1,294 crore in the first quarter.
Gulf Oil Lubricants India
Gulf Oil Lubricants India reported that its net profit decreased 2% to Rs 62.2 crore for the quarter ending March 31, the fourth quarter of its fiscal year. For the full fiscal year, net profit rose 10% to Rs 232.3 crore.
Net revenue for the quarter grew 24% to Rs 792.1 crore, while fiscal-year net revenue jumped 37% to Rs 2,999.1 crore.
The company said its business-to-consumer and business-to-business segments recorded double digit volume growth for the fiscal year and that the revenue growth was even higher because of several price increases taken to pass on the input cost increases.
Apar Industries
Apar Industries reported standalone net profit of Rs 234.8 crore for the quarter ending March 31, a whopping 209% increase. Fiscal year net profit surged, by 158%, to Rs 602.7 crore.
Standalone revenues from Apar’s transformer and specialty oil segment jumped 27% to Rs 913.3 crore. The revenue increase was driven by volume-led growth and base oil prices, Apar noted in its earnings presentation.
For the fiscal year, the segment’s revenue rose 24% to Rs 3,475.1 crore.
Desai noted in Apar’s conference call that sales of transformer oil – which accounts for about a third of the company’s oil division – grew at a faster pace than the other categories during the fiscal year ending in March. “And with the developments that are happening in the infrastructure space, we expect a steady demand to continue for transformer oil, both domestically as well as overseas,” he said.