OPM rose by 40 bps to 28% leading to a 1% fall in operating profits to Rs 212.9 crore as cost of material consumed as a percentage of net sales decreased to 40.8% in the quarter ended September 2016 from 42.3% in the corresponding previous year period while purchase of stock in trade fell 50 bps to 6.4% offset by 90 bps increase in advertisement sales and promotions to 7.2%, 10 bps increase in employee benefit expenses to 6% and 10 bps rise in carriage, insurance and freight expenses to 3.4% and 70 bps increase in other expenses to 8.4%.

Other Income increased 4% to Rs 15.5 crore in Q3CY16 from Rs 14.9 crore in Q3CY15 while interest cost was negligible at Rs 0.1 crore and depreciation rose 14% to Rs 10.7 crore. As a result PBT was down 2% to Rs 217.6 crore. The effective rate of tax rose to 35.8% from 35.3% leading a 2% decrease in PAT to Rs 139.8 crore.

For 9MCY'16 Net Sales of the company was up 3% at Rs 2588.2 crore compared to corresponding previous year while bottomline rose 9% to Rs 519 crore. OPM rose 310 bps to 30.3% leading a 15% rise in operating profits to Rs 785.4 crore. Other income decreased 30% to Rs 51.5 crore while interest cost was up 100% to Rs 1.2 crore and depreciation up 14% to Rs 34.2 crore. PBT as a result rose 10% to Rs 801.5 crore. Effective rate of taxes rose to 35.2% from 34.6% leading a 9% increase in PAT to Rs 519.1 crore.

Commenting on the results, Omer Dormen, Managing Director, Castrol India Limited, said: "we continued to grow volume year on year during last quarter across key segments. The volume growth was led by personal mobility and power brands in line with our strategy and also strong growth in industrial segment. We witnessed softer volume in heavy duty segment due to heavy monsoon in some parts of the country. Marine segment volume dipped during the quarter due to continued pressure on marine business globally.

The company continues its focus on volume growth and investment behind power brands. The Commercial Vehicle segment has seen a healthy double digit growth in the key brands which we continue to invest in.

Despite contraction in Industrial IIP in 3Q, the Industrial business sustained its growth trajectory by winning several new customers and gaining share in existing customers with our differentiated products and service offers."

The company continues to strengthen its brand equity through sustained investment in brand building activities and this has been reflected in the recent Millward Brown survey where Castrol India has the highest brand health scores by far over competitors – both as far as consumers as well as mechanics are concerned.

The company also continues to strengthen its relationships with its key account customers and has recently renewed a strategic five year agreement with Tata Motors passenger car division.

The strong results year to date have been achieved in an environment which continues to be challenging for the Commercial Vehicle Oils and Industrial lubricant oils. Looking ahead, in the longer term following the good monsoon and a strong pick up in vehicle sales trend, the company continues to remain optimistic about the Indian lubricant market and our business growth. The company is in a strong position to benefit from growth prospects on account of its strong brands, enduring relationships with key stakeholders and continued commitment of its staff."

The scrip is currently trading around Rs 458 on the BSE