Castrol India optimistic about lubricant market and growth
Castrol India Q4 2014 performance has been strong on the back of operational momentum in a challenging macro-economic environment. Profit from operations during the quarter ending in December was up 20 pct, driven by 1 pct increase in volume and a higher Unit Gross Margin. Other income was sharply lower attributed to lower interest post capital reduction and some one-offs. Profit after Tax (PAT) was up by 4.6 pct at Rs 132 crores over 126.2 in Q4 2013.
For FY 2014, Profit from Operations was higher at Rs 680.6 crores, up 4 pct over the previous year, despite sharp increase in Cost of Goods and a challenging environment. Profit after Tax for Full Year 2014 was lower at Rs 474.5 crores compared to Rs 508.6 crores in Q3 2013 equating to 6.7 pct decline owing to significant lower Other Income, one offs and exceptional items.
Net Sales/Income from Operations stood at Rs 855.9 crores in Q4 2014 over Rs 806.3 crores in Q3 2013, equating to 6.2 pct growth. For 2014, Net Sales/Income from Operations stood at Rs 3,380.8 crores over Rs 3166.1 crores in 2013, equating to 6.8 pct growth.
At the Board of Directors meeting on 25 February 2015, recommended subject to approval of company shareholders, a Final Dividend of Rs. 4 per share for the year ended 31 December 2014 (2013: Final Dividend Rs 3.50 per share). Interim Dividend of Rs 3.50 per share (2013: Interim Dividend Rs 3.50 per share) was paid on 21 August 2014. Both dividends aggregate to Rs 7.50 per share (2013:Rs 7.00 per share). Final dividend to be paid to shareholders whose names appear in Register of Members at the close of business hours on 7 May 2015, payable on 4 June 2015. Increase in dividend for 2014 reflects Board’s confidence that Castrol India has built operational momentum. This is likely to continue into 2015. Dividend payable for 2014 is in addition to Rs 5 per share paid back to shareholders pursuant to scheme of Capital reduction in March 2014.
Ravi Kirpalani, Managing Director, Castrol India Limited says this is a strong overall performance. The company has made good progress on its strategic agenda, including driving safety, employee engagement scores, brand health and market share of key brands for overall improved performance over 2013. Castrol India launched its carbon neutral range of engine oils under the Castrol Professional range. Castrol CRB Mini-truck (for Medium Light Commercial Vehicles) and Castrol Activ Scooter (for the fast growing Scooter segment) were launched last year. Despite significant demand shrinkage in core manufacturing sectors, company Industrial business showed good performance with volumes increasing by 8 pct over 2013.
Castrol India was valued at $1.3 billion as 15th most valuable brand in the BrandZ study. Equity (depth of emotional connect) was at par with financial value (width/ scale built). Looking forward, despite sharp drop in crude oil price translating into lower base oil cost in the short term, continuing volatility in crude prices and currency movement is expected. If economic environment improves, demand should pick up in H2 2015. In the longer run, Castrol remains optimistic about Indian lubricant market and business growth. Currently, Castrol Activ Cling On To The Cup campaign has gotten cricket fans to support their favourite team, and be virtually present on the field. Fans can send videos, photos, and cheers. Selected fan contribution will be displayed on perimeter boards and replay screens during matches.