Castrol India’s Q1 profit falls

Castrol India, one of the country’s largest lubricant blenders, saw profit fall in the first three months of the year as costs rose faster than sales.

Net profit of 2.28bn Indian rupees ($29.8mn) in the three months to end-March fell by 6pc from the same period a year earlier.

But it was still the third-highest quarterly profit in more than a decade and up from Rs1.89bn in the fourth quarter of last year.

Profit fell from the previous year even as sales rose by 9pc in the first quarter to Rs12.36bn.

“Despite a brief impact from the third wave of Covid-19 in January, business operations resumed normalcy and 1Q 2022 witnessed a good resurgence in demand,” said Castrol India Managing Director Sandeep Sangwan.

But costs rose even faster than sales, by 14pc to Rs9.39bn.

Within that segment, raw material costs rose by 21pc in the first quarter and accounted for 61pc of total costs. Before 2021, raw materials typically accounted for less than 55pc of total costs.

The higher raw material costs partly reflected a sharp rise in base oil prices during the first quarter. Prices for Group III base oils especially were much higher than year-earlier levels.

The rising costs squeezed Castrol India’s operating profit margin to 25.2pc in the first quarter, down from 29.2pc during the same period a year earlier.

Castrol India operates three blending plants in India and has 330 distributors and more than 100,000 retail outlets in the country.