India’s Apar sees Q1 profit rise

Apar Industries, one of India’s largest base oil importers, saw its profit rise in the first three months of the year on a pick-up in domestic and especially overseas sales that rose faster than costs.

The company also benefited from strong demand for industrial oils that countered relative weakness in the automobile market segment.

Operating profit of 1.12bn Indian rupees ($14.42mn) in the first three months of the year rose by 75pc from year-earlier levels to the highest in at least six years.

Profit rose on the back of a 59pc rise in sales to R30.12bn from its conductors, transformer and speciality oils, and power cable units.

Sales of transformer oils and other speciality oils rose by 29pc and accounted for some 31pc of Apar’s total revenue. Sales got a boost from a 30pc rise in sales volumes and a rise in the share of sales to overseas markets.

Lube sales got support throughout the year from firmer demand for industrial oils that countered a drop in sales volumes of automobile oils. The slowdown partly reflected weakness in the tractor segment of the market.

The rise in sales volume helped to cushion the impact of higher costs that squeezed standalone profit margin to 8pc, down from 15pc during the same period a year earlier.

Lube oil sales volumes could face pressure over the coming year amid higher prices in response to rising base oil costs. The higher prices could impact demand as buyers push back against higher costs.