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Castrol: Gearing to beat slowdown - Views on News from Equitymaster
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  • Jun 5, 2001

    Castrol: Gearing to beat slowdown

    FY01 was a tough year for Castrol India. Facing a hostile external environment -- contracting market size, higher feedstock prices and a weakening Rupee -- the net turnover and post tax profits registered negative growth.

    For fiscal '01 the lubricants industry registered a negative growth of more than 6%. Higher diesel prices, slowdown in the transportation industry, stricter emission norms leading to higher vehicle prices and drought conditions affecting demand from the agricultural sector are the key reasons for the poor performance of the industry.

    It seems, however, the company plans to revive topline growth through extension of its product range and innovative channel management initiatives.

    Segment Product Description
    CVs*, Tractors Castrol Deusol Super

    A premium diesel engine oil introduced with two variants

    Deusol Super Turbo Power
    Deusol Super Euro
    CVs* Castrol RX Super Max

    High performance engine oil launched with exclusive recommendations from Telco for all their vehicles fitted with Cummins engine. First such initiatives taken by a lubricant company to have product recommendations from user industry.

    Tractors Castrol CRB Plus

    Product aimed specifically for the tractor market. Company has altered the stock keeping unit (SKU) size to 7.5 litres keeping in mind the consumption profile of the user. Understanding of consumption pattern will help the company better match the needs of the consumer.

    Two Wheelers - 4-Stroke engine oil Castrol Activ 4T

    Product has emerged as leader in the market segment within a year of its launch. The company has kept track of the shifting demand in the two wheeler segment from scooters to motorcycles. The product positions the company to benefit from the higher growth in the motorcycle segment.

    Two Wheelers - 2-Stroke engine oil Castrol Scootek Hi-Mile

    New ezee tube in 40 ml pack. New SKU to better match the consumption needs of the user. Also, different SKU sizes enables the company to plug the various price points.

    Passenger Cars Castrol GTX Magnatec

    National launch, high profile ad campaign featuring Rahul Dravid.

    *CV - Commercial Vehicles

    Besides the slew of new products the company has adopted innovative channel management strategies to help perk up the topline. The company has launched free home delivery of lubricants - 'Castrol call for a can', which has been extended to the top seven cities in the country. Another new concept is Castrol Drive Ins, which are workshops supported by Castrol and targeted for greater consumer convenience.

    In the industrial segment the company launched the Castrol Plus programme in FY00. Under this programme, Castrol undertakes complete management of the customer's chemical needs. Maruti Udyog Ltd. is amongst the new clients acquired during the previous fiscal for this service.

    The company, however, believes that the lubricants market will continue to grow in the low single digits (2.5%) over the next five years. Also, with weakening of the economy and the transportation sector, growth will be challenging. In such an environment the company believes in focusing more on protecting profitability through greater operational efficiency.



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