2007- The power of team intent
The power of team intent
Your company's 2007 result proves that, if you will it, you can do it. "
Your company's 2007 result proves that, if you will it, you can do it. "
As you are aware, our business faced many challenges during the past few years. The cost of our key-raw material - base oil, quadrepled. Development in engine technology reduced the lubricant consumption per vehicle thus slowing down the lubricant market growth. The raw material cost increase was so rapid and continous that we had to keep running just to stand still. On the upside, we had an environment of strong economic and vehicle sales growth. All in all, our business (Sales and Profit before tax) still grew at a CAGR of almost 9% during the period of 2001-2006. While this was ahead of most of our lubricant peers globaly, this growth is not adequet for Castrol India - a business which has real "strength within" - strong brands, enduring customer relations and the power of its people.
With this in the background, our team resolved two years ago that we would rebuild Castrol India to the vibrant, growth business which it deserves to be. That intent is now becoming a reality. Since the fourth quarter of 2006, our company has been delivering a growth in profit before tax of 46% over 2006. While the core business continues to grow in all its segments of automotive, industrial and marine, your company has pioneered Castrol BikeZone, a unique two-wheeler motorcycle servicing franchising model.
We have lived upto our stated intent to be a stable, material and high returns business with growth potential. Our competitive strategy is to focus on segments which fully leverage our technology backed brands and distinctiveness in Sales and Marketing. We have chosen to target a discerning customer base wiling to reward us for our premium quality and service. As our primary driver in value growth, we have chosen to operate in segments which offer profitable volume growth and move away from unprofitable volumes. This approach has proven successful for us over the years as evidenced by a handsome increase in revenue growth and operating margins. Our global understanding of the lubricant category suggests that as markets develop and the auto industry advances technologically, focus shifts from overall volume to targeted volumes and hi-tech lubricants. Our strategy will aid us to minimize the impact of raw material volatility and to help us deliver sustained growth in revenue and profit.
With crude oil now having crossed a record of USD 100 per barel, we are starting 2008 with rapidly escalating costs of goods. Yet, with clarity in strategy, we have confidence in our ability to deal with this challange. In the medium to longer term, with a strengthened core lubricants portfolio and the new services business, we hope to further improve capital and people efficiency and to deliver increasing returns to all our stakeholders.
We have dedicated a lot more time and resources on our most precious asset - our people - who make the real difference. I take this oppurtunity to thank them for their unwavering support and intent to win. I belive that ultimately, it is "people's determination and team intent" which will make all the difference in taking us from "Good to Great"
Naveen Kshatriya
Managing director
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