OPM rose by 600 bps to 29.8% leading to a 34% rise in operating profits to Rs 255.2 crore as cost of material consumed as a percentage of net sales decreased to 40.8% in the quarter ended March 2016 from 47% in the corresponding previous year period while employee benefit expense fell 10 bps to 5.1% and advertisement sales and promotions decreased to 7% from 9.3% limited by purchase of stock in trade which increased 110 bps to 5.5% and carriage, insurance and freight expenses increased 20 bps to 3.3% and other expenses increased 100 bps to 8.8%.

Other Income decreased 57% to Rs 18.7 crore in Q1CY16 from Rs 43.5 crore in Q1CY15 while interest cost was negligible at Rs 0.4 crore and depreciation fell 23% to Rs 8.6 crore. As a result PBT was up 19% to Rs 264.9 crore. The effective rate of tax rose to 34.9% from 34.2% leading a 18% increase in PAT to Rs 172.4 crore.

Commenting on the performance, Omer Dormen, Managing Director, Castrol India Limited, said, "This is an outstanding start to the year, underpinned by volume growth across all segments, good progress on key strategic drivers and a continuing favourable cost of goods environment."

Mr. Dormen added: "Whilst the personal mobility segment continues its growth momentum, this quarter has seen volumes increasing in the commercial vehicle and industrial segments as well. New products launched over the last year and a half, including Castrol CRB Mini Truck, Castrol Vecton, Castrol MAGNATEC Stop-Start and Castrol Activ Scooter, have also started contributing considerably to the volume delivery."

"Castrol Activ, the lead brand in the two-wheeler segment, continued to record double digit growth through sustained investment and effective market interventions. Castrol Activ brand equity was strengthened by leveraging the cricket platform through an innovative digital campaign ‘#clingontovictory', which enabled an outreach to over 17 million potential consumers."

"Castrol MAGNATEC, the flagship brand for passenger cars also showed an excellent growth led by new customer activation and strategically focused micromarketing initiatives aimed towards sharing new technology updates and brand benefits with key influencers."

"Despite continued sluggishness in most manufacturing segments and increased competitive pressures, Castrol's Industrial business achieved double digit volume growth driven mainly by new customer acquisitions and increased business share with key customers. This was enabled through superior products and enhanced services which helped our customers achieve overall cost competitiveness in their operations. In our focus segment of wind energy lubricants, we continued to gain market share by strengthening our relationship with all major global and Indian OEMs."

For CY'15 Net Sales of the company was down 3% at Rs 3298 crore compared to corresponding previous year while bottomline rose 30% to Rs 615.2 crore. OPM rose 600 bps to 27.1% leading a 25% rise in operating profits to Rs 894.8 crore. Other income increased 99% to Rs 95.9 crore while interest cost was down 67% to Rs 0.8 crore and depreciation up 8% to Rs 39 crore. PBT as a result rose 31% to Rs 950.9 crore. Effective rate of taxes rose to 35.3% from 34.7% leading a 30% increase in PAT to Rs 615.2 crore

Outlook as per company

Commenting on the outlook for the rest of the year, Mr. Dormen said: "Our 2015 full year and 2016 first quarter performance confirm that we are progressing well against our strategy and that makes us confident about the future. Looking ahead, we have started seeing an upward movement in crude oil prices and we expect base oil prices to follow. This, together with the continuing rupee volatility could impact our cost of goods. On the other hand, we expect the economy to become more vibrant with the optimistic monsoon forecast, resulting in increased vehicle sales and freight movement – both of which will positively impact our business.

In the longer term, we are optimistic about the Indian lubricant market and our business growth. Castrol India is in a strong position to benefit from growth prospects on account of its strong brands, enduring relationships with key stakeholders and highly committed staff."

The scrip is currently trading around Rs 410 on the BSE