Castrol Indias Q2 profit drops


Castrol India reported that its second quarter income fell to 1.21 billion rupees (U.S. $21.9 million), a decrease of 15.16 percent from last years second quarter earnings of Rs 1.42 billion. Net sales in the quarter rose 7.72 percent to Rs 8.54 billion from last years Rs 7.93 billion for the same period.

Company officials noted that despite an extremely difficult market environment, sales grew by 8 percent on the back of a volume growth of 5 percent.

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Ravi Kirpalani, Castrol Indias automotive director and COO, noted however, that Castrol continued to invest in its brands, which resulted in a positive market response, with volumes rising appreciably.

During the second quarter, the company introduced Durashield boosters technology in Castrol CRB Plus and Castrol CRB Turbo brand lubricants. Upon their release, Castrol engaged in an extensive and intensive campaign, Kirpalani said. In all, the marketing campaign targeted 8,000-plus dealers, 10,000 mechanics and more than 100,000 consumers. The response has been extremely positive, Kirpalani said, noting the two brands share of the market has grown by more than 15 percent.

He noted that the cost of goods continue to be adversely impacted, driven largely by continuing rupee depreciation, putting margins under pressure. Castrol continued its investment in brands and relationships, and this has resulted in positive market responses with volumes rising appreciably.

Kirpalani noted that while the automotive segment showed strong growth in the second quarter, the industrial and building and construction lubricant markets have been adversely impacted due to reduced activity in these sectors and delays in a number of important projects.

Castrol a remained cautiously optimistic on the whole in the short to medium term, but noted that the next few quarters will continue to be challenging. While we will continue to push for top-line growth, we anticipate that margins will continue to be under pressure for some time to come.

Castrol India is a subsidiary of British Petroleum operating in India’s lubricants industry with a 20 to 22 percent market share in automotive lubricants.

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