After clocking an annual growth of around 20 per cent this financial year, Castrol India, an automotive and industrial lubricant manufacturing company, has lowered its growth target for next financial year around to 10 per cent, owing to the present global economic scenario.
“We have continuously grown over 20 per cent in the last three years. However, considering the adverse economic environment this year, we expect a modest growth of around 10 per cent,” Naveen Kshatriya, vice president Asia & Pacific region for BP’s lubricant business, said.
This year, the company says it would focus on the strategic areas of growth like cars, motorbikes and tractors where it expects to grow in volume and value terms. Castrol India is a 70.92 per cent subsidiary of UK-based BP Group and sells lubricants under two brands — Castrol and BP.
The company posted a net profit of 20 per cent for the FY09 at Rs 262.3 crore over a net profit or Rs 218.4 crore in the financial year ended December 2007. Net sales of the company rose to Rs 2,205.7 crore in the financial year from Rs 1,888.3 crore a year ago.
Castrol India’s almost 80 per cent of sales volume comes from the auto space and the balance from industrial and marine segments. But with the auto sales falling in recent months, the firm says its business has been marginally affected.
The volumes declined for the company during December 2008 was around 17 per cent.
With a fall in global crude oil prices, the input prices (base oil) for the business have also been falling. On an average base oil prices have slipped from $1,550 a tonne in August 2008 (its peak level) to $1,100 a tonne in December, following a decline in crude oil prices.
Analysts say that if crude oil prices stabilise around $50-60 a barrel, the base oil prices could slip to around $700 a tonne in the next quarter and this could help Castrol India.
Total market of lubricants worldwide is around 40 billion litres with India’s share at around 1.5 billion litres. BP contributes around 8 per cent of the world’s total lubricant volume. Castrol India and BP lubricant are the second largest brand in the country.
For FY10, the company plans to focus on higher growth categories like workshops and B2B sectors (construction sectors, fleet owners and building). In 2007 the company initiated the setting up of Castrol Authorised Service Associates (CASA), which service independent workshops. The company has around 400 CASAs.
The company is however, not looking at expansion in the distribution sector this year. “We have sufficient number of distributors and we are very satisfied. We are just looking at improving our productivity,” adds Kshatriya. The company has a strong nation-wide network of 270 distributors, which service over 70,000 outlets.
Shares of Castrol India were trading at Rs 330, down 0.36 per cent, on the Bombay Stock Exchange.
