Castrol, the premier private sector lubricant manufacturer in the country has been facing intense competition from the other private players such as Elf, Shell, Pennzoil who have made an entry into the country after liberalisation.
Apart from competition from the private players, the public sector oil companies such as Indian Oil, Hindustan Petroleum and Bharat Petroleum have also become aggressive in the lubricant market since the margins from petrol and diesel were under pressure last year due to the governmentís inability to raise end product prices.
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This has been prevented the company from raising prices commensurately to compensate for a 60% rise in base oil prices (due to higher crude oil prices), Castrolís main raw material. This is reflected in the drop in the operating margins from 21% in the first quarter of last year to 17% in the first quarter of the current year.
This situation is likely to persist in the second quarter too although a lot depends on the behaviour of international crude prices which affect base oil prices.
Castrol India Ltd has announced results for the second quarter of the current year ended December 2016. The company has reported a year on year (YoY) growth of 5.2% in the net sales while net profits for the quarter grew 12.1% YoY during the quarter.
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