Castrol India net profit increases 30% in Q2

Mumbai: Castrol India Ltd, a leading lubricant company in India, has announced a 30-per cent increase in its net profit for the second quarter ended 30 June 2002. During the period under review, the net profit increased to Rs 43.6 crore as compared to Rs 33.6 crore during the same period last year.

The pre-tax profit during the quarter rose by 36 per cent to Rs 63.5 crore as compared to Rs 46.8 crore for the same period last year. Sales revenue for this period was Rs 359.2 crore as compared to Rs 363 crore for April to June 2001.

For the half-year ended 30 June 2002, the profit before tax also increased by an impressive 38 per cent. The net profit for the half-year grew at a slightly lower pace of 29 per cent, on account of a higher effective tax rate applicable in 2002.

This improvement in the pre-tax profit and the net profit has been achieved despite an increase in advertising expenses by Rs 13 crore compared to January-June 2001. The increase in advertising is in line with the company's plans to invest in brands, particularly in developing and establishing the newly-launched BP brand. The year 2002 will be the first full-year of the BP brand, launched late 2001.

Castrol India managing director Naveen Kshatriya says: “Despite difficult market conditions, the company has displayed strong results with a rise in profit by 30 per cent and continues to sustain its leadership in the large automotive segment with a retail share of over 26 per cent. Overall, we will continue to rely on our brands, focus on a better portfolio mix in favour of value-added premium margin products, and pursue cost-savings in our operations.“

The lubricant market conditions continued to be difficult during the quarter. While the passenger car and two-wheeler lubricants are showing significant growths, demand in the sizeable and mature diesel engine oil segment is sluggish. In these difficult market conditions the company has maintained its dominant position and leadership market-share in the retail segment, as well as achieving strong financial growth.

This performance has been achieved through compelling consumer propositions such as '5.1-per cent fuel-savings' with the BP brand, new product launches such as CRB Turbo Plus for new-generation engines and strengthening of the company's joint offers with key OE companies. In the industrial and other B2B segments, the emphasis has been on simplifying businesses, by streamlining the product-range and de-emphasising the non-profitable segments.

Significant gross-margin improvements have been achieved through savings in material costs, efficiencies in product costs through changes in formulations and packaging, and control on 'other expenses.' But there are trends that base oil costs in the second half of the year will increase.

The board of directors has announced payment of an interim dividend of Rs 4 per share for the year ending 31 December 2002.