Castrol India Q2 Net down 5% at Rs.142.5 crores; Half year Net up 4% at Rs.279 croresInterim Dividend at Rs. 7- per share

Release date: 11 August 2011

						Rupees in Crores
	April – June 2011	April – June 2010	% Increase / (decrease)	January – June 2011	January – June 2010	% Increase / (decrease)
Net Sales	790.0	744.0	6 %	1540.7	1398.0	10 %
Profit Before Tax	211.7	227.2	(7) %	414.7	409.0	1 %
Profit After Tax	142.5	150.3	(5) %	279.1	267.5	4 %

Castrol India Limited today announced its second quarter results for the period April – June 2011.

During the quarter under review, Profit before Tax decreased by 7% to Rs 211.7 crores whilst Profit after Tax decreased by 5% to Rs.142.5 crores. Net Sales were up by 6% to Rs. 790 crores.

For the six month period January – June 2011, Profit before Tax is up by 1% to Rs. 414.7 crores whilst Profit after Tax increased by 4% to Rs. 279.1 crores. Net Sales were up by 10% to Rs. 1540.7 crores.

The company has declared an interim dividend of Rs.7/- for the year ending 31st December, 2011.

Commenting on the results, Naveen Kshatriya, Vice Chairman, Castrol India Limited, said, “The results reflect the challenging base oil and additive cost environment in the first half of the year. The company has taken pricing actions to protect its margins, whilst continuing its focus on cost efficiencies”.

Despite the difficult environment, the company continued its investment in its brands and marketing activities. The highlight of the first half was the tie up with the International Cricket Council as its official Performance Partner. The company undertook a number of initiatives built around the ICC Cricket World Cup 2011, which resulted in a further strengthening of the Castrol brand which is already considered an ‘Olympic’ brand. The company also launched new advertising campaigns around its lead brands – Castrol GTX, Castrol Activ and Castrol CRB Turbo.

One of the key pillars of the company’s success has been its strong partnerships with local and international Original Equipment Manufacturers (OEMs). In addition to its strong and enduring existing partnerships with most local and global OEMs in India, the company has signed a partnership agreement with BMW India to supply automotive lubricants to the BMW dealer network in the country. The company also extended its strategic partnership with Tata Motors for a further period of five years.

Castrol’s Industrial business has also recently entered into a strategic alliance with ACE Micromatic Group – the largest CNC machine tool manufacturers in India - to work together to help unlock value in the manufacturing process of customers.

During the second quarter, the company also announced consolidation of its manufacturing assets in India, with the closure of its Tondiarpet Plant in Chennai. The higher landed cost of base oil on the Southern coast led to a delivered cost disadvantage for Tondiarpet operations. As a result, it was decided to phase out operations at Tondiarpet Plant and shift the manufacturing volumes to the West coast plants of Patalganga and Silvassa.

Outlook: We expect market pricing equilibrium to be better in the second half and given the decline in crude, base oil is expected to soften. This is expected to positively impact company performance during the second half of the year. However, demand for lubricants may soften given the challenging global economic situation. Inspite of this we expect a stronger performance in the second half and remain confident of the longer term growth potential for the company.