The Tondiarpet plant is one of the companys oldest plants in the country, and was faced with a situation of high landed cost of base oil, leading to a steep increase in its manufacturing cost per liter over the past several months, Castrol India stated. This had adversely affected the production activities in the plant.

The production capacity was 48,000 kiloliters per annum, but actual maximum production was around 28,000 kiloliters, Castrol India told Lube Report. The company said the plant commenced operations in 1962, and the lubricant products manufactured there were mainly automotive lubricants.

The company had decided to phase out the manufacturing activities at the plant and said it offered a voluntary retirement scheme to its employees. In the announcement, Castrol India noted it will decided at a later date the future of the plant, machinery and the part of the land the company owned at the site.

According to Castrol India, it has no other blending plants in South India where the Tondiarpet plant was based. It has one plant in Eastern India, in Kolkatta, and two in Western India, in Patalganga and Silvassa. We have spare capacity, and the plants from West and East [India] will supply material to the southern region, the company said.

In its Opportunities in Lubricants 2010: India Market Analysis report, consultancy Kline & Co. estimated the total Indian lubricants market for 2009 at nearly 1.9 million metric tons valued at almost $2.8 billion. Of that, Castrol had estimated sales of 185,000 tons, for a 10 percent market share. Kline found that among suppliers for Indias consumer market in 2009, Castrol led with 24 percent, followed closely by Indian Oil at 23 percent, BPCL at 14 percent, Shell with 10 percent, Idemitsu at 8 percent, Total at 6 percent and HPCL at 5 percent.