Castrol India Ltd.s profit dropped 19 percent in the first quarter of 2014. Net profit after taxes was Rs 100.2 crores (U.S. $17.2 million) for the three months ended March 31, compared to Rs 124.3 in 2013s first quarter.
The company, a subsidiary of British energy giant BP, attributed the results mostly to external conditions. Sectors such as commercial vehicles and industrial oils saw weak demand, Managing Director Ravi Kirpalani said in a press release last week, leading to lower volumes. Hardening base oil prices and increased investment in people and advertising costs also played a role, he said.
Kirpalani also pointed to rupee depreciation as a factor in Castrol Indias profit loss. The adverse impact of the rupee depreciation alone was Rs. 53 crores during the quarter under review, he said.
Despite the dip in profits, however, the company said it is optimistic about its lubricants business. However, we continued to grow in the personal mobility segment, which includes two-wheelers as well as passenger car engine oils, and showed robust underlying growth.
Net sales in Castrol Indias automotive segment were Rs 719.7 in this years first quarter, up from last years Rs 696.8. The non-automotive segment resulted in Rs 97.3 this quarter, which was also an uptick from last years corresponding quarters number, Rs 87.9.
Castrol India launched two new product brands this quarter: Castrol Activ Scooter, which is a dedicated engine oil for scooters; and Castrol Magnatec Stop Start – an engine oil for passenger cars, especially those operating in city driving conditions.
The company also launched an oil-immersed brake oil for wet brake application in tractors and reported that it secured a contract for exclusive supply of products to Fords new plant in Sanand, Gujarat, this quarter.
Castrol Indias industrial business experienced a 5 percent increase in volume despite the countrys significantly shrinking manufacturing sectors, the company said.
The strong headwinds of 2013 are continuing into 2014, and the first half is likely to remain both volatile and uncertain due to the macro-economic weaknesses, the company said. The company response is to continue its sharp focus on the personal mobility business and improving its brand advantage, advocacy and availability.