Castrol India net profit down by 19% in Jan-March-2014

Castrol India Limited announced today that their net profit after tax is down by 19% in first quarter of this year (January-March-2014). The company's net profit after taxation is 100.2 crores while the oil manufacturer recorded 124.3 crores net profit same last year. The company also introduced two new engine oils Castrol Active Scooter and Castrol Magnatec Stop Start. They also won a contract for supply of products during this period with Ford India for their new plant in Sanand, Gujarat

Commenting on the first quarter results, Ravi Kirpalani – Managing Director, Castrol India Limited, said: “The lower profits for the quarter are a reflection of the continued difficult external market environment largely in the Commercial Vehicle, Building Construction and Industrial sectors. These lower Profits were a result of weak demand leading to lower volumes, significant rupee depreciation compared to the same period last year, hardening base oil prices and increased investment behind people and advertising costs. The adverse impact of the Rupee depreciation alone was Rs. 53 crores during the quarter under review. However, we continued to grow in the personal mobility segment, which includes two-wheeler as well as passenger car engine oils, and showed robust underlying growth.”

The company slashed the fully paid-up face value of equity shares from Rs.10/- per share to Rs. 5/- per share – as it follows reduction of share capital under Sections 100 to 105 of The Companies Act, 1956 as approved by the shareholders and Honorable High Court of Bombay. In the first quarter this year, they paid Rs. 5/- per share to the eligible shareholders. Apart from this, the company grew on the industrial demands despite a slow market in the manufacturing field. They witnessed a growth of 5% in this quarter in Industrial business. The advertising and sales promotion grew 14%, they were the performance partner of the International Cricket Council, the company leveraged the ICC T20 Cricket World Cup, held in Bangladesh.

Mr. Kirpalani said: “Despite the challenging environment, we were able to recover almost all the increase in the cost of goods through improved sales mix and judicious pricing actions. We continued to invest in our brands, pioneering technology and marketing activities and the quarter under review saw an increase of almost 14% in the Advertising Sales promotion spend compared to the same period last year. The quarter saw the launch of two new product brands - Castrol Activ Scooter – a dedicated engine oil for scooters and Castrol Magnatec Stop Start - an engine oil for passenger cars, especially those operating in city driving conditions. The company also launched an Oil Immersed Brake Oil (OIB) for wet brake application in tractors”.