Capitaline

Analyst Meet / AGM 31-Jul-19

Conference Call

Castrol India

Demand pressure in commercial vehicle segment.

Castrol India conducted conference call to discuss the financial results and performance of the company for the quarter ended June 2019. Managing Director Omer Dormen and Director Finance & Chief Financial Officer Miss Rashmi Joshi addressed the call
Highlights of the Concall

Revenue from operations was up 2% at Rs.1,040 crore in 2QCY19 and up 4% at Rs. 2016 crore in H1 2019 compared to the same period in the previous year.

Profit after tax was up 11% at Rs. 183 crore in Q2CY19 and up 6% at Rs. 368 crore in H1 2019 compared to the same period in the previous year.

Strong growth financials was driven by growth in personal mobility - especially in two-wheelers, focused channel management and robust efficiency measures despite a challenging environment.

Castrol witnessed a decline in volumes of 2.8% YoY to 55.4 million litre. The slowdown in auto volumes, especially CV sales had an impact on volumes. Industrial volumes also continued to remain weak during the year

Personal mobility volume growth was in higher single digit ahead of the market. The company feels it has gained market share in bikes and cars.

The company is seeing pressure in demand in commercial vehicle segment.

Other operating expenses were higher led by investment in distribution expansion, customer acquisition and servicing the customers.

The company is excited about the new opportunity in India following the announcement of the new strategic partnership between Groupe Renault and Castrol for supply of their after-sales network from 1 January 2020. Groupe Renault appoints Castrol as its supplier for global service fill engine oil lubricants from 1 January 2020.

Castrol India has launched its BS VI ready range of products for all categories of automotive engine oils, supporting the government's low carbon agenda. This range includes Castrol VECTON Long Drain 15W40 CK4 commercial vehicle engine oils which is certified carbon-neutral and powers trucks with an extended drain interval up to 1,20,000 kilometres.

Castrol India has done a new strategic collaboration with global technology company 3M. Through this tie-up, it will shortly be launching a new product range for the vehicle care market which will be offered through Castrol's distribution network.

The company feels adoption of Electric vehicle is likely to be faster among two & three wheelers, but a large section of cars and commercial vehicles would continue to be conventional. As a result the demand for lubricants would likely continue to grow over next 10-15 years.

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