Capitaline

Analyst Meet / AGM 09-Feb-18

Conference Call

Castrol India

Optimistic about volume growth in 2018

Castrol India conducted conference call to discuss the financial results and performance of the company for the quarter ended December 2017. Managing Director Omer Dormen and Director Finance & Chief Financial Officer Miss Rashmi Joshi addressed the call
Highlights of the Concall

Castrol India reported 30% increase in its bottom-line to Rs 196.7 crore in Q4CYf17 on a 24% increase in topline to Rs 970.3 crore compared to corresponding previous year period. Profits were driven largely by strong volume growth

Q4CY17 total volumes were up 16% YoY, led by double-digit volume growth in personal mobility segment (passenger Car Motor Oils-PCMO) (around 45% volume share) and commercial vehicle operation (CVO) segment (around 40% volume share). Industrial segment volume growth was lower than previous year

Volume growth was around 3% in CY17

The company has passed on the full benefit of GST to customers and also supported distributors and channel partners to transition smoothly to the GST regime

The company took two price hikes which helped 3-4% increase in realization in CY17. Post that, another 3-4% hike has been taken in Jan-18.

The company saw market share growth in the Commercial Vehicle (CV) segment where industry volumes have been largely flat or declining.

Castrol India has a production capacity of 280 million liters, which can be further increased by 20-30% by adding one more shift. They have three blending plant across country.

The company also increased its engagement with mechanics with the hugely successful Castrol Super Mechanic contest seeing over 60,000 two-wheeler mechanics participating from across the country.

Advertisement expenditure for CY2017 was around 4]6% of total revenue and the company expects to incur similar amounts in CY18 as well

The company continues its focus on personal mobility and power brands, combined with aggressive distribution expansion and customer acquisition, underpinned by consistent investment in brand, technology and customer service and advocacy.

The company is beginning to see signs of recovery in the Indian economy and with the structural reforms continuing, it expects increase in sales of vehicles as well as freight movement.

The company is optimistic about volume growth in 2018. It expects double digit volume growth to be sustainable driven by growth across automotive segments.

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