Driving the resurgence
2003 has been a year of turnaround
Although 2003 closed with decline in profits, attributable to unprecedented raw material prices, our company recorded an underlying volume growth for the first time since 1999. This was achieved in spite of overall market and company volume decline reported in the first half of the year. By year-end we also recorded share and turnover growth for the full year with increased investment in brand building and customer management. The year saw significantly increased efforts on Health, Safety and Security of our employees and partners. Our Company increased commitment to Social investment, especially in the area of Road Safety. We consolidated several different office locations into a single modern workplace for better work culture, morale and productivity. All this was achieved whilst simultaneously reducing overheads. The strong underlying performance of the year reflects revitalizing of your Company. The second half of the year saw a volume growth of over 6%. Some of the path breaking achievements includes creation and consolidation of key OEM alliances. We have outperformed competition in new channels and growing product categories. The biggest success was breakthrough growth in bp brand. This now provides a second plank for acceleration of topline. The economy is growing at a faster clip. The good monsoon augurs well for our agri-segment business. However, the downward pressure on demand for Commercial Vehicle lube oils will continue because of structural changes led by new engine technology. These efficient engines consume lesser lubricants per Kilometer. Therefore, in spite of continued rapid growth in vehicle production, we are not witnessing a corresponding lube demand in transport segment.
We have started 2004 on a strong note. But it is appropriate to signal some of the challenges we face this year. Base oil and packaging material prices have escalated further to unforeseen levels, impacting margins. In a competitive market and a branded business, we need to carefully manage pricing to avoid downtrading or brand shifts by consumers. We recognize that material costs will reverse in the medium term because of their cyclical commodity nature. In summary, 2003 was truly exhilarating for the Castrol Team because of:
- Successful implementation of a carefully crafted strategy
- Excellence in execution
- Immense learnings enabling us to set up a launch pad for revitalizing Castrol India
But above all, it was a year of building stronger bonds with our stakeholders. In the next few pages, we share with you the effort made to strengthen these relationships, which provide a real competitive advantage for Castrol India.
Message - As appearing in CIL Annual Report 2003