Castrol in talks to vend lube via RIL, Essar Oil network

Naveen Kshatriya, managing director, Castrol India, said, "We are in talks with RIL as well as Essar Oil to market our product through their proposed retail distribution network."

If the marketing alliance materialises, it will be the first private sector lube company to sell its product through petrol bunks.

In early '90s, when the government decontrolled the lube market, the private sector had no access to petrol stations to market their products since they were all owned by public sector oil companies "" Indian Oil Corporation, Hindustan Petroleum Corporation, Bharat Petroleum Corporation and IBP.

These firms marketed their own lubes through retail outlets, while they also entered into marketing tie-ups with select multinationals to sell international branded lubes.

This led to private sector aggressively carving their own sales channel called the bazaar segment to corner a sizable market share in the one million tonne lubricant market.

"The value of marketing lubricants through retail outlets has diminished over a period of time. In Europe only 10 per cent of lubes are marketed through petrol bunks. However, in India 25 per cent of the lubricants are still marketed through them and it is attractive enough to explore this opportunity," Kshatriya added.

Castrol hopes to have a topline growth. Kshatriya said, "Till now we had a topline growth of four per cent and I hope that we would be able to beat that by having a double digit topline growth with a multi-pronged strategy and also by aligning with private retail players and some alliances."

At present, Castrol enjoys a 35 per cent market share in the bazaar segment in volume terms.

It has two brands to offer, Castrol and BP through the private retail networks proposed by the private oil majors.

Reliance Industries has received the government's nod to set up about 5,800 retail outlets across the country, while Essar Oil has chalked out plans for 2,500 outlets.

Reliance plans to roll out about 1,500 retail outlets by the second quarter of next year, Essar Oil has set a target of at least 100 petrol station by mid-2004.

The latter has already unveiled first private sector oil station in Maharashtra.

Kshatriya says the company still continues to make investment in its brand so as to have a double digit topline growth.

During the quarter ended September 2003, the company reported a 3.5 per cent increase in its sales revenue. However, its net profit dipped 27 per cent due to high base oil prices.