OPM rose by 280 bps to 32.7% leading to a 15% rise in operating profits to Rs 317.3 crore as cost of material consumed as a percentage of net sales decreased to 35.9% in the quarter ended June 2016 from 40.6% in the corresponding previous year period while employee benefit expense fell 50 bps to 4.4% offset by 170 bps increase in advertisement sales and promotions to 8.3%, 40 bps increase in purchase of stock in trade to 7.5% and 10 bps rise in carriage, insurance and freight expenses to 3.2% and 70 bps increase in other expenses to 8.3%.

Other Income increased 14% to Rs 17.3 crore in Q2CY16 from Rs 15.2 crore in Q2CY15 while interest cost was negligible at Rs 0.7 crore and depreciation rose 59% to Rs 14.9 crore. As a result PBT was up 13% to Rs 319 crore. The effective rate of tax rose to 35.1% from 34.5% leading a 12% increase in PAT to Rs 206.9 crore.

For H1CY'16 Net Sales of the company was up 6% at Rs 1827 crore compared to corresponding previous year while bottomline rose 15% to Rs 379.3 crore. OPM rose 420 bps to 31.3% leading a 23% rise in operating profits to Rs 572.2 crore. Other income decreased 39% to Rs 36 crore while interest cost was up 120% to Rs 1.1 crore and depreciation up 15% to Rs 23.5 crore. PBT as a result rose 16% to Rs 583.9 crore. Effective rate of taxes rose to 35% from 34.4% leading a 15% increase in PAT to Rs 379.3 crore.

Commenting on the results, Omer Dormen, Managing Director, Castrol India Limited, said: "This is a robust set of results, building upon the strong momentum of the previous quarter. I am particularly satisfied with the overall volume growth of 7% in the first half, which is in line with our expectations and reconfirms that we are on the right track with our strategy and plans."

"This volume increase is driven by double digit growth in the personal mobility segment and power brands. We also see a positive trend in the industrial segment where we have grown ahead of the market in our focus categories of metal working fluids and high performance products."

Castrol India continues its focus on delivering pioneering technology products for Indian consumers and customers and during the first half of the year we added two new brands to the iconic Castrol GTX family – Castrol GTX Ultraclean and Castrol GTX ECO. Castrol GTX Ultraclean is the cleanest GTX ever launched and helps keep car engines 50% cleaner than industry limits*. Castrol GTX ECO is Castrol's pioneering first step in eco-engineered lubricant technology delivering 10% CO2 reduction* and helping extend engine life.

We also launched a high performance cutting fluid Alusol SL 35 XBB in the Industrial segment, which is setting new standards for the industry. The product delivers significant improvements for controlling manufacturing costs, increasing productivity, protecting the quality of end products and meeting HSSE requirements.

Outlook: Commenting on the outlook for the second half of the year, Omer Dormen said: "We are progressing well against our strategy and that makes us confident about the future. Looking ahead, we expect that the lubricant market will continue to recover, driven by increased vehicle sales and freight movement. At the same time we expect the volatility in input costs and exchange rate to continue.

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 437 on the BSE