MIRA
INFORM REPORT
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Report Date : |
28.02.2011 |
IDENTIFICATION DETAILS
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Name : |
CASTROL INDIA LIMITED |
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Registered
Office : |
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Country : |
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Financials (as
on) : |
31.12.2009 |
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Date of
Incorporation : |
31.05.1979 |
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Com. Reg. No.: |
11-21359 |
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CIN No.: [Company Identification
No.] |
L23200MH1979PLC021359 |
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TAN No.: [Tax Deduction & Collection
Account No.] |
MUMC03626A |
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PAN No.: [Permanent Account No.] |
AAACC4481E |
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Legal Form : |
Subject is a public limited liability company. The company’s shares
are listed on the Stock Exchanges. |
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Line of Business
: |
Manufacturers and Marketers of Lubricating Oils, Greases, Brake
Fluids, Cable Filling Compounds, Jellies, etc. |
RATING & COMMENTS
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MIRA’s Rating : |
A (63) |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 19800000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is an established company having fine track. Financial
position of the company appears to be sound. Trade relations are reported as
fair. Business is active. Payments are reported to be regular and as per
commitments. The company can be considered normal for business dealings at usual
trade terms and conditions. |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – April 1, 2010
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Country Name |
Previous Rating (31.12.2009) |
Current Rating (01.04.2010) |
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A1 |
A1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
LOCATIONS
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Registered Office : |
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Tel. No.: |
91-22-56984100/ 23632511/ 23632512/ 23632513 |
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Fax No.: |
91-22-56984101 |
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E-Mail : |
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Website : |
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Plants : |
Located
at:
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Warehouses : |
White House, P. B. No. 16172, 91, Walkeshwar Road, Mumbai – 400 006,
Maharashtra, India |
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Tel. No.: |
91-22-23635447/ 23636555/ 23636562/ 23636563/ 23637569/ 23637590/
23637591/ 23637592/ 23637594/ 23637595/ 23632511 |
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Fax No.: |
91-22-23631335/ 23637003/ 23619578/ 23635447/ 23688837 |
DIRECTORS
As on 31.12.2009
|
Name : |
Mr. S. M. Datta |
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Designation : |
Chairman |
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Name : |
Mr. N. K. Kshatriya |
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Designation : |
Vice Chairman |
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Name : |
Mr. R. Gopalakrishnan |
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Designation : |
Director |
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Name : |
Mr. R. Hewins |
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Designation : |
Director |
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Name : |
Mr. S. Mukundan |
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Designation : |
Director |
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Name : |
Mr. D. S. Parekh |
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Designation : |
Director |
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Name : |
Mr. H. McCabe |
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Designation : |
Alternate to R. Hewins |
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Name : |
Mr. A P Mehta |
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Designation : |
Director |
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Name : |
Mr. S. Malekar |
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Designation : |
Director |
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Name : |
R. Kirpalani |
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Designation : |
Executive Director |
KEY EXECUTIVES
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Name : |
A. H. Mody |
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Designation : |
General Manager – Legal and Company Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on 30.06.2010
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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(A) Shareholding of Promoter and Promoter Group |
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175,645,858 |
71.03 |
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175,645,858 |
71.03 |
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Total shareholding of Promoter and Promoter Group (A) |
175,645,858 |
71.03 |
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(B) Public Shareholding |
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5,412,198 |
2.19 |
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24,554 |
0.01 |
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13,749,978 |
5.56 |
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14,356,036 |
5.81 |
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33,542,766 |
13.56 |
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4,508,744 |
1.82 |
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29,467,964 |
11.92 |
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4,113,258 |
1.66 |
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2,006 |
- |
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2,006 |
- |
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38,091,972 |
15.40 |
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Total Public shareholding (B) |
71,634,738 |
28.97 |
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Total (A)+(B) |
247,280,596 |
100.00 |
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(C) Shares held by Custodians and against which Depository Receipts
have been issued |
- |
- |
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Total (A)+(B)+(C) |
247,280,596 |
100.00 |
(1) Indian
Bodies Corporate
Individual shareholders holding nominal
share capital up to Rs.0.100 millionsBUSINESS DETAILS
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Line of Business : |
Manufacturers and Marketers of Lubricating Oils, Greases, Brake
Fluids, Cable Filling Compounds, Jellies, etc. |
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Products : |
·
Lubricating Oils ·
Greases ·
Brake Fluids ·
Cable Filling Compounds ·
Jellies |
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Imports : |
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Products : |
·
Piesco ·
Empicryl and LIOH |
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Countries : |
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·
·
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PRODUCTION STATUS
(As on 31.12.2009)
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Particulars |
Unit |
Installed
Capacity |
Actual
Production |
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Lubricating Oils, Greases, Brake Fluids at Patalganga, Kolkata,
Chennai and Silvassa |
KLs/MTs |
236000 |
- |
|
Lubricating Oils, Greases, Etc. |
KLs/MTs |
- |
203684 |
Note:
(Technically evaluated as certified by the Management and accepted by Auditors)
(Per Year on a single shift basis)
GENERAL INFORMATION
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No. of Employees : |
Around 1110 |
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Bankers : |
·
Deutsche Bank ·
HDFC Bank Limited ·
The Hongkong and Shanghai Banking Corporation
Limited ·
State Bank of ·
Citibank N.A., Mumbai, ·
Standard Chartered Grindlays Bank, Mumbai, ·
Bank of |
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Banking
Relations : |
- |
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Auditors : |
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Name : |
S. R. Batliboi and Company Chartered Accountants |
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Memberships : |
Confederation of Indian Industry |
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Fellow
Subsidiaries with which the Company has transactions: |
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Holding Companies : |
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Associates : |
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CAPITAL STRUCTURE
As on 31.03.2009
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
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124000000 |
Equity Shares |
Rs.10/- Each |
Rs.1240.000 millions |
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Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
|
123640298 |
Equity Shares |
Rs.10/- Each |
Rs.1236.400
millions |
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Notes:
1. Includes 87,687,455 Equity Shares of Rs.
10/- each held by Castrol Limited,
2. Includes 116,353,318 Equity Shares
allotted as fully paid up Bonus Shares by capitalisation of Share
Premium/General Reserve.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.12.2009 |
31.12.2008 |
31.12.2007 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
1236.400 |
1236.400 |
1236.400 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
3713.600 |
3519.300 |
3065.400 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
4950.000 |
4755.700 |
4301.800 |
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LOAN FUNDS |
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1] Secured Loans |
0.000 |
0.000 |
0.000 |
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2] Unsecured Loans |
0.000 |
27.900 |
27.900 |
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TOTAL BORROWING |
0.000 |
27.900 |
27.900 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
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TOTAL |
4950.000 |
4783.600 |
4329.700 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
1113.300 |
1194.800 |
1183.100 |
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Capital work-in-progress |
261.300 |
249.700 |
149.500 |
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INVESTMENT |
5.200 |
5.200 |
205.800 |
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DEFERREX TAX ASSETS |
346.200 |
268.200 |
182.200 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
2086.300
|
2673.000 |
2249.800
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Sundry Debtors |
1606.000
|
1623.100 |
1479.500
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Cash & Bank Balances |
5257.600
|
2556.300 |
3179.100
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Other Current Assets |
35.500
|
11.100 |
18.600
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Loans & Advances |
1050.300
|
891.900 |
798.200
|
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Total
Current Assets |
10035.700
|
7755.400 |
7725.200
|
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Sundry Creditors |
3753.300
|
2678.500 |
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Other Current Liabilities |
563.900
|
360.400 |
3418.300
|
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Provisions |
2494.500
|
1650.800 |
1697.800
|
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Total
Current Liabilities |
6811.700
|
4689.700 |
5116.100
|
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Net Current Assets |
3224.000
|
3065.700 |
2609.100
|
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
4950.000 |
4783.600 |
4329.700 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.12.2009 |
31.12.2008 |
31.12.2007 |
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SALES |
|
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|
|
|
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Income |
23181.900 |
22057.000 |
18882.600 |
|
|
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Other Income |
360.700 |
418.100 |
348.400 |
|
|
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TOTAL (A) |
23542.600 |
22475.100 |
19231.000 |
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|
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|
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Less |
EXPENSES |
|
|
|
|
|
|
|
Cost of Materials |
11237.800 |
13130.900 |
10976.800 |
|
|
|
Operating and Other Expenses |
6190.500 |
4928.900 |
4610.100 |
|
|
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TOTAL (B) |
17428.300 |
18059.800 |
15586.900 |
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|
|
|
|
|
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Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
6114.300 |
4415.300 |
3644.100 |
|
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|
|
|
|
|
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|
Less |
FINANCIAL
EXPENSES (D) |
34.500 |
36.500 |
37.900 |
|
|
|
|
|
|
|
|
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|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
6079.800 |
4378.800 |
3606.200 |
|
|
|
|
|
|
|
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Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
271.800 |
256.800 |
207.800 |
|
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|
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|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
5808.000 |
4122.000 |
3398.400 |
|
|
|
|
|
|
|
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Less |
TAX (H) |
1997.400 |
1498.300 |
1214.100 |
|
|
|
|
|
|
|
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|
PROFIT AFTER TAX
(G-H) (I) |
3810.600 |
2623.700 |
2184.300 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
507.500 |
323.600 |
NA |
|
|
|
|
|
|
|
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|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Interim Dividend |
1236.400 |
741.800 |
NA |
|
|
|
Tax on Interim Dividend |
210.100 |
126.100 |
NA |
|
|
|
Proposed Final Dividend |
618.200 |
1112.800 |
NA |
|
|
|
Tax on Proposed Final Dividend |
105.100 |
189.100 |
NA |
|
|
|
Proposed Special Dividend |
1236.400 |
0.000 |
NA |
|
|
|
Tax on Proposed Special Dividend |
210.100 |
0.000 |
NA |
|
|
|
General Reserve |
390.000 |
270.000 |
NA |
|
|
BALANCE CARRIED
TO THE B/S |
311.800 |
507.500 |
NA |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Suppliers to Foreign Vessels |
143.800 |
150.500 |
122.000 |
|
|
|
Commission and Others |
38.500 |
47.000 |
52.300 |
|
|
|
FOB value of goods exported |
29.800 |
32.400 |
16.300 |
|
|
TOTAL EARNINGS |
212.100 |
229.900 |
190.600 |
|
|
|
|
|
|
|
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|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
4062.600 |
5425.600 |
3389.800 |
|
|
|
Capital Goods |
16.000 |
20.100 |
15.100 |
|
|
TOTAL IMPORTS |
4078.600 |
5445.700 |
3404.900 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
30.82 |
21.22 |
NA |
|
QUARTERLY RESULTS
(UNAUDITED)
|
PARTICULARS |
31.03.2010 (In Millions) |
30.06.2010 (In Millions) |
30.09.2010 (Rs. In
Millions) |
|
|
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
|
Net Sales |
6560.000 |
7458.000 |
6430.000 |
|
Total Expenditure |
4760.000 |
5193.000 |
4733.000 |
|
PBIDT (Excl OI) |
1800.000 |
2265.000 |
1697.000 |
|
Other Income |
81.000 |
73.000 |
72.000 |
|
Operating Profit |
1881.000 |
2338.000 |
1769.000 |
|
Interest |
5.000 |
6.000 |
6.000 |
|
Exceptional Items |
0.000 |
0.000 |
0.000 |
|
PBDT |
1876.000 |
2332.000 |
1763.000 |
|
Depreciation |
58.000 |
60.000 |
63.000 |
|
Profit Before Tax |
1818.000 |
2272.000 |
1700.000 |
|
Tax |
646.000 |
769.000 |
531.000 |
|
Provisions and Contingencies |
0.000 |
0.000 |
0.000 |
|
Profit After Tax |
1172.000 |
1503.000 |
1169.000 |
|
Extraordinary Items |
0.000 |
0.000 |
0.000 |
|
Prior Period Expenses |
0.000 |
0.000 |
0.000 |
|
Other Adjustment |
0.000 |
0.000 |
0.000 |
|
Net Profit |
1172.000 |
1503.000 |
1169.000 |
KEY RATIOS
|
PARTICULARS |
|
31.12.2009 |
31.12.2008 |
31.12.2007 |
|
PAT / Total Income |
(%) |
16.19
|
11.67 |
11.36 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
25.05
|
18.69 |
18.00 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
52.09
|
46.05 |
38.15 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
1.17
|
0.87 |
0.79 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
1.38
|
0.99 |
1.20 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
1.47
|
1.65 |
1.51 |
LOCAL AGENCY FURTHER INFORMATION
HISTORY:
Subject is the second largest player in the Indian lubricant
industry and is the market leader in the retail automotive lubricant segment. CIL
was incorporated in the year 1979 as a private limited company under the name
of Indrol Lubricants and Specialities Private limited. It manufactures and
markets a range of automotive and industrial lubricants. It markets its
automotive lubricants under two brands - Castrol and BP. The company has
leadership positions in most of the segments in which it operates including
passenger car engine oils, premium 2-stroke and 4-stroke oils and multigrade
diesel engine oils. In the year 1982, CIL was converted into a public limited
company. During the same year, the company had set up a modern blending plant
and brake fluid plant at Patalganga. The brake fluid plant and the lube oil
blending plant of the company were commissioned in February and March of the year
1985 respectively. In 27th June of the year 1986 the second Phase of lube oil
refining plant of the company was commissioned. CIL had formed a subsidiary
Company in the year 1987 under the name of Indtech Speciality Chemicals,
Limited for the manufacture of Telephone cable jellies, pharmaceuticals jellies
and industrial waxes in technical collaboration with Dussek Campbell, U.K. Name
of the company was changed from Indrol Lubricants and Specialities Limited to
Castrol India Limited with effect from
1st November of the year 1990. Indtech Speciality Chemicals (owned subsidiary)
was merged with the company with effect from 1st January of the year 1992.
During the year 1994, CIL had set up a new plant in Silvassa, Union Territory
of Dadra/Nagar Haveli at a cost of Rs.500.000 millions to the technology for
lubricant blending. The company formulated a satellite-linked management
information system (MIS), connecting the vast network in the year 1995 and also
obtained the ISO 9002 certification. In the same year of 1995, CIL had
introduced the Tractormax and RX Super Plus for the diesel engines and also
launched two stroke engine oils Jett X and Super TT; both exceed the Japanese
Automobile Standards Organisation (JAPO) specifications. During the identical
year Castrol
PERFORMANCE
Sales increased by
6% over the previous year to Rs.26850 millions mainly due to an increase in
unit sales realizations and better sales mix.
Costs of Materials
have reduced by 14% over the previous year to Rs.11240 millions due to a
reduction in Base Oil prices. Pro-active Margin Management strategy helped us
to grow their gross profits by 34%.
Operating and
other expenses increased by 26%, mainly due to increase in advertisement cost,
sales promotion
expenses and
Salaries.
Profit before tax
has increased by 41% over previous year to Rs.5810 millions.
Tax rate for the
current year has remained at nearly the same level as that of the previous
year. Fringe Benefit
Tax was lower by
Rs.50.000 millions during the year as the same was abolished from 1st April,
2009. As a result
Profit after Tax
increased by 45% over the previous year to Rs.3810.000 millions.
Bonus Shares
The Board of
Directors, have at their Board Meeting held on 18th February, 2010, recommended
the issue of Bonus shares in the ratio of one Bonus Equity Share for every one
Equity Share of Rs. 10/- each held on the Record Date to be fixed in
consultation with the stock exchange and subject to the approval of the
shareholders and other requisite approvals.
The approval of
the shareholders would be obtained by way of a Postal Ballot.
The Bonus shares are
entitled to receive dividend that may be declared/paid on or after the
allotment of Bonus shares for the financial year ending 31st December, 2010.
MANAGEMENT
DISCUSSION and ANALYSIS REPORT
Industry structure
and developments – 2009
The lubricant industry
in
The year 2009 has
been a mixed year for the industry. At the end of 2008, in line with global
trends, the Indian economic outlook was rather grim with most industries
slowing down significantly and many companies registering a decline in growth
rates. The first half of 2009 followed in similar vein. As a result, the market
growth outlook was bleak to start with. However, in the latter half of the
year, conditions improved in
Vehicle sales were
also stagnant during the first five months of 2009, with commercial vehicles
registering a decline compared to previous year. However, with the economy
showing strong signs of recovery in the latter half, the automotive industry
closed the year strongly across all vehicle categories. On the back of this
strong revival in the second half of the year, the lubricant industry is
estimated to have grown by 1- 2% in 2009.
The year also saw
several global Original Equipment Manufacturers (OEMs) accelerating their
activities in
opportunities for
lube players. In addition, focus by many OEMs on inexpensive small cars, like
the Tata Nano,
could
significantly increase car penetration in coming years.
Major Industry
developments
Economic scenario
The global
meltdown that started in 2008 continued in the first few months of the year.
Firms around the world had to cope with the effects of a financial crisis that
started in rich economies in the West but led to a global economic downturn.
Access to finance became more difficult. Demand for many products fell in
domestic and international markets and trade slowed globally. As a result, a
large segment of consumers too adopted a wait-and-watch approach. This
adversely impacted automotive sales and commercial vehicle utilization in the
first few months of the year.
However, the
impact of the global recession has neither been severe nor sustained in
strong domestic
demand, low dependence on export and a diversified export basket. As a result,
the country was among the early ones showing signs of recovery from the slump.
Major Industry
developments
Economic scenario
The global
meltdown that started in 2008 continued in the first few months of the year.
Firms around the world
had to cope with the
effects of a financial crisis that started in rich economies in the West but
led to a global
economic downturn.
Access to finance became more difficult. Demand for many products fell in
domestic
and international
markets and trade slowed globally.As a result, a large segment of consumers too
adopted
a wait-and-watch
approach. This adversely impacted automotive sales and commercial vehicle
utilization in
the first few
months of the year.
However, the
impact of the global recession has neither been severe nor sustained in
strong domestic
demand, low dependence on exportand a diversified export basket. As a result,
the country
was among the
early ones showing signs of recovery from the slump.
Base Oils and
Additives
The global downturn
in economic conditions put many sectors to a severe test. Though base oil
prices were softer for a short period, eventually the prices moved up by 60-70%
from its low, driven by several factors. The global economic crisis impacted
the Refining and Marketing sector significantly. With intent to protect their
refining margins and in view of the lower demand, refineries sought to take
measures like closures, run cuts and forced shutdowns to balance the demand and
supply position.
Despite crude and
other commodity chemicals softening in early 2009, the performance additive
prices witnessed a sharp increase in 2008 and remained at almost the same
levels in 2009. This was mainly due to rising demand in Asian countries and
pricing policy of global additive companies to recover earlier losses. The
commodity chemicals, primarily driven by crude oil, witnessed a gradual price
increase since second quarter of 2009 and reached 20-25% higher levels by the
end of 2009.
However, effective
control of the inventories and effective buying decisions in highly volatile
markets helped the Company to procure at the best rates and release cash in a
timely manner.
Market behavior
and outlook
Automotive Sector
outlook
The automotive
lubricant sector can be segmented as per the following vehicle categories:
(a) Trucks,
tractors and off-road equipment – mainly diesel engine oils
(b) Passenger cars
– mainly gasoline engine oils
(c) Motorcycles
and three wheelers – 2-stroke and 4-stroke oils
Market growth:
The year 2009 has been
a mixed year for the automotive lubricant market. The market is estimated to
have grown volumes by 1-2% after an initial no-growth projection. This has been
led primarily by the increased four stroke motorcycle and passenger car sales,
recovery in agri-driven lubricant consumption and a growing, new generation,
high technology, truck segment. These trends are expected to continue in 2010.
The old generation truck market and the two stroke motorcycle lubes market are
projected to decline.
The building and
construction segment, feeding the infrastructure sector, is also expected to
continue growing at a fast pace.
Thus, lubricant
consumption is projected to grow robustly in passenger cars, four stroke
motorcycles and the building and construction equipment segments.
The monsoon in
2009 was delayed and though it recovered, there may be some residual impact
felt in 2010. Overall, the lube market is projected to grow at around 2-3% in
volume terms in 2010.
Channels:
With the
burgeoning growth of the vehicle industry, especially cars and two-wheelers,
almost all distribution channels have seen a growth in recent times. While the
traditional retail channel continues to be dominant, OEM dealerships and
authorized workshops registered a faster pace of growth on the back of higher
vehicle sales and higher retention period of vehicle servicing at the OEM
authorized workshops. However, since the growth in number of workshops has not
yet kept pace with the growth in vehicle population, the small independent workshops
have also been witnessing a rapid pace of growth. The historically dominant
channels, like petrol stations, continue to decline and are no longer a
dominant channel for the industry. This trend is expected to continue.
Organized retail
and the entry of global retailers, which have had a minimal impact till date,
are expected to gradually pick up pace over the next few years.
Competitive
activity
The competitive
situation remains largely unchanged with all major international lubricant
players having been present in the market for several years now. The Company
continues to be the leading brand in the retail sector, followed by the public
sector brands. However, the smaller players have been competing aggressively
with lower prices and higher sales promotion to gain market share. Castrol
continues to be a major player in the automotive lubes market and holds a
volume market share of approximately 20% in the overall market, according to
internal estimates.
Non-Automotive
sector outlook
Indian industry
swiftly recovered in the second half of 2009 from the unprecedented economic
and financial situation which prevailed globally during the first half and the
outlook is expected to be good.
Industrial output,
measured through the General IIP (Index of Industrial Production) is expected
to grow at around 8% in 2009-10 compared to 2.7% growth achieved in 2008-09.
The growth in industrial production is expected to accelerate in 2010.
The rising income levels,
availability of affordable finance and raft of new automobile models will
ensure that the demand for passenger cars and two wheelers continues to grow at
robust pace in 2010. The increased activity in the transportation segment is
also leading to higher demand for commercial vehicles. Overall, the automotive
sector is expected to grow significantly in 2010. Commissioning of fresh
capacities and healthy order books of Machinery manufacturers implies that the
growth in this segment would also be good for the next two years. An increase
in the production of machinery and automobiles and increased activity in the
construction and infrastructure industry will generate positive demand for
metal and metal products in 2010. Cement, Paper, Chemicals and Food products
are also likely to grow substantially during the current year.
The Company is
well placed to reap the benefits of the manufacturing sector growth, through
innovative and differentiated products and services which add distinctive value
to the customers.
Opportunities and
threats
(Opportunities
Automotive sector Overall economic activity):
With an expected
GDP growth of more than 7% in 2010, growth in the industry and infrastructure services
sector and a likely good monsoon, the basic consumption drivers for lubricants
are all set to make the industry grow. They expect the revival of the economy
to directly impact the movement of goods and hence increase consumption
of commercial vehicle
engine oils.
Growth in personal
mobility:
Growing personal
disposable incomes, double income households and aggressive marketing by
automobile manufacturers continue to drive demand for passenger cars and two
wheelers. Castrol has strong brand equity in these segments and growth in the
personal mobility segment would have a positive implication on the Company’s
performance. The business in these segments, especially passenger cars, is
driven to a large extent by the workshop channel where superior service
propositions, along with strong brands, can lead to significant business gains.
It is also expected that the growth of
four stroke motorcycle sales in rural markets will outstrip urban demand in the
foreseeable future. This trend presents both an opportunity as well as a
challenge to the Company.
OEMs:
The influx of
international OEMs into the Indian market continued in 2009. Although the
number of new model launches announced in the first few months was low, with
the economy reviving, there have been renewed signs of activity by almost all
OEMs. A slew of new vehicle launches are on the cards.
The start of the
low-price vehicle segment, pioneered by the Tata Nano and subsequently taken up
by others like Bajaj and Renault, will drive a sharper rate of increase in car
ownership.
Castrol has strong
partnerships with leading automotive OEMs as well as with key off-road
equipment manufacturers. With more global OEMs coming into
Changes in engine
technology:
With increasing
pace of adoption of superior engine technology, they expect that the market
demand for higher quality lubricants will also go up. The resultant demand for
high-performance synthetic lubricants is therefore expected to result in
industry profitability growth. Castrol with its proven track record of
technological leadership will drive the ‘syntheticization’ trend in the market.
Infrastructure
growth:
In the 2010 Finance
Bill, the government announced that it would significantly increase spending on
various infrastructure projects. This move is slated to stimulate demand growth
in the building and construction sector and thereby have a positive impact on
lubricant demand.
Segment-wise /
Product-wise performance
Automotive
performance
Despite a
challenging economic environment, the Company delivered a stellar performance
during the year 2009, with growth in topline of 8% and growth in operating
profits of 47% in the automotive segment. This was achieved through a continued
focus on the high-growth and high-margin segments.
Distinctive
propositions
The Company has
always focused on meeting consumers’ needs by delivering distinctive and
diversified propositions through its brand portfolio. As part of their long
term strategy to drive the ‘syntheticization’ of the Indian lubricants market,
they had upgraded their lead brand in the diesel oil category – Castrol CRB, to
include synthetic technology. Castrol CRB, a heritage brand in the Indian
market, with a very strong and loyal consumer following, further cemented its
position in 2009.
In line with their
long-term strategy, their lead brand for two-wheelers, Castrol Activ, was also
upgraded to a part-synthetic formulation in the year. Castrol Activ, which
already enjoys enviable brand equity in the market, thereby further
strengthened its proposition of better all-round protection.
Diesel Oils (Consumer Truck and Heavy Duty
Vehicles)
In the diesel
engine oils space, a large scale consumer contact program was mounted for the
tractor consumer.
This program was
instrumental in reaching consumers at the point of consumption and thereby
driving sales. A large scale communication program targeting commercial vehicle
mechanics was also implemented during the year. This program drove home the
benefits of using Castrol lubricants in vehicle maintenance. An integrated
marketing campaign for Castrol CRB Turbo emphasized the importance of not
making a compromise in vehicle maintenance even in difficult times. This key
program was instrumental in reviving consumer confidence and resulted in a
turnaround in sales.
Motorcycle Oils
(MCO)
The flagship brand
in two-wheeler segment, Castrol Activ, was relaunched in second quarter of the
year. Castrol Activ now has synthetic technology that gives the bike’s engine,
clutch and gear, superior all-round protection. The launch was supported with
complete 360 degree campaign including a new Television Commercial, direct
contacts with consumers, synthetic meets and merchandising blitz across retail
and trade channels. The brand has seen a significant uplift in its performance
in terms of volume, distribution and brand health.
Castrol Power
launched ‘Power1Passion Hunt’ — a nationwide hunt for
Passenger Car Oils
(PCO)
In 2009, the
passenger car oils segment continued its rapid growth trajectory. The Company
continued to reach out to the mechanic community through innovative and
engaging programs like the ‘Castrol Golden Spanner Awards’ which recognize the
skill and knowledge of mechanics.
In a new
initiative — one of the first of its kind, the flagship brand in the passenger
car oils category, Castrol GTX was relaunched with a new “sludgebuster”
proposition. The relaunch campaign reached out to millions of consumers and
influencers across all the channels, using a 360 degree communication approach
which led to a strong growth of the brand.
Heavy Duty Channel
(Transport fleets, Building and Construction and Mining)
In 2009, the
heavy-duty segment continued its growth path in both volumes and margins, due
to the strong relationships and preferred partner status the Company enjoys
with key OEMs and customers. During the course of the year, they strengthened
their offers and association with strategic accounts. They launched transport
fleet management solutions consisting of superior products and services to
support customer operations. In line with their intent to take advantage of the
booming infrastructure industry, they launched a series of products dedicated
to this segment called ‘Castrol Heavy Duty Series’. With their association and
commitment to jointly work with the OEMs in creating and delivering value to
customers with new products and initiatives, the performance of this segment in
the coming years will continue to be strong.
UNAUDITED FINANCIAL RESULTS
FOR THE HALF YEAR ENDED 30TH JUNE, 2010
(Rs. In Millions)
|
Quarter Ended 30.06.10 |
Particulars |
Half Year Ended 30.06.2010 |
|
|
|
|
|
8528.000 |
Sales / Income from Operations |
16035.000 |
|
1088 .000 |
Less: Excise Duty |
2055.000 |
|
7440.000 |
Net Sales / Income from Operations |
13980.0 00 |
|
18.000 |
Other Operating Income |
38 .000 |
|
7458.000 |
Total Income |
14018.000 |
|
|
Expenditure |
|
|
103.000 |
a) (Increase) / Decrease in Stock in Trade |
(284.000) |
|
3410.000 |
b) Consumption of Raw Materials |
6928.000 |
|
108.000 |
c) Purchase of Traded Goods |
201.000 |
|
244.000 |
d) Staff Cost |
460.000 |
|
60.000 |
e) Depreciation |
118.000 |
|
|
f) Other Expenditure |
|
|
361.000 |
- Advertisement |
825.000 |
|
227.000 |
- Carriage, Insurance and
Freight |
447.000 |
|
740.000 |
- Other Expenditure |
1376.000 |
|
5253.000 |
Total Expenditure |
10071.000 |
|
2205.000 |
Profit from Operations before Other Income & Interest |
3947.000 |
|
73.000 |
Other Income |
154.000 |
|
2278.000 |
Profit from Operations before
Interest |
4101.000 |
|
6 .000 |
Interest and Finance Charges |
11.00 |
|
2272.000 |
Profit from Ordinary Activities Before Tax |
4090.000 |
|
769.000 |
Provision for Taxes (Refer Note 4 below) |
1415.000 |
|
1503.000 |
Net Profit After Tax |
2675.000 |
|
|
|
|
|
2473.000 |
Paid up Equity Share Capital |
2473.000 |
|
|
(Face value of share of Rs.10/- each) |
|
|
- |
Reserves excluding Revaluation Reserve |
- |
|
6.08 |
EPS - (Rs.) (Basic and Diluted) (Refer Note 6 below) |
10.82 |
|
|
|
|
|
|
Public Shareholding |
|
|
71634738 |
Number of shares |
71634738 |
|
28.97% |
Percentage of Shareholding |
28.97% |
|
|
|
|
|
|
Promoters and promoter group Shareholding |
|
|
|
|
|
|
|
a) Pledged / Encumbered |
|
|
NIL |
- Number of shares |
NIL |
|
|
|
|
|
N. A. |
- Percentage of shares (as a % of the total shareholding of promoter
and promoter group) |
N. A. |
|
N. A. |
- Percentage of shares (as a% of the total share capital of the
company) |
N. A. |
|
|
|
|
|
|
b) Non-encumbered |
|
|
175645858 |
- Number of shares |
175645858 |
|
|
|
|
|
100.00% |
- Percentage of shares (as a % of the total shareholding of promoter
and promoter group) |
100.00% |
|
71.03% |
- Percentage of shares (as a% of the total share capital of the
company) |
71.03% |
Notes:
1.
The above results were reviewed by the Audit Committee and approved by
the Board of Directors at its meeting held on 15th July, 2010.
2. The above results have been subjected to
"Limited Review" by the Statutory Auditors of the Company.
3. The Board of Directors of the Company, at
its meeting held on 15th July, 2010 have announced payment of an Interim Dividend of Rs. 7.00
per share for the year ending 31st December,
2010 (2009: Interim Dividend Rs. 10.00
per share) to those shareholders whose names appear on the Register of Members
at the close of business hours on 21st
July, 2010. The said interim dividend is payable on the Bonus shares allotted on 13th April, 2010.
4. Provision for
Taxes includes Current Tax, Deferred Tax and Fringe Benefit Tax (upto 31st
March, 2009).
5. There were no
outstanding investors complaints at the beginning and end of the Quarter 2 of
2010. Seven investor complaints were received and disposed off during Quarter 2
of 2010.
6. The Company has allotted bonus
shares on 13th April, 2010 in the ratio
of one equity share for every one equity share of Rs. 10/- each held in the Company on the
Record Date. The Basic and Diluted EPS has been calculated for all periods
presented after taking into account the bonus issue.
7.
Previous period's figures have been regrouped wherever necessary.
SEGMENTWISE REVENUE,
RESULTS AND CAPITAL EMPLOYED, UNDER CLAUSE 41 OF THE LISTING AGREEMENT
(Rs. In Millions)
|
Quarter Ended 30.06.10 |
Particulars |
Half Year Ended 30.06.2010 |
|
|
Segment Revenue |
|
|
|
(Net Sales / Income from
Operations) |
|
|
6507.000 |
Automotive |
12171.000 |
|
933.000 |
Non Automotive |
1809.000 |
|
7440.000 |
Total Segment Revenue |
13980.000 |
|
|
|
|
|
|
Segment Results |
|
|
1937.000 |
Automotive |
3443.000 |
|
286.000 |
Non Automotive |
542.000 |
|
2223.000 |
Total Segment Results |
3985.000 |
|
|
|
|
|
55.000 |
Unallocable Income net off
Unallocable (Expenditure) |
116.000 |
|
6.000 |
Interest and Finance Charges |
11.000 |
|
2272.000 |
Profit from Ordinary Activities Before Tax |
4090.000 |
|
|
|
|
|
|
Segment Capital Employed |
|
|
1519.000 |
Automotive |
1519 .000 |
|
911.000 |
Non Automotive |
911.000 |
|
3183.000 |
Add: Unallocable Assets less Liabilities |
3183.000 |
|
5613.000 |
Total Capital Employed in the Company |
5613 .000 |
Disclosure of Balance Sheet Items as per clause 41 (V) (h) of Listing
Agreement for the Half Year ended 30th June, 2010.
(Rs. In Millions)
|
|
Half Year Ended |
|
|
30.06.2010 |
|
Shareholder's Fund |
|
|
(a) Capital |
2473.000 |
|
(b) Reserves and Surplus |
3140.000 |
|
Loan
Funds |
0.000 |
|
Total |
5613.000 |
|
|
|
|
Application of Funds |
|
|
Fixed Assets (Net) |
1310.000 |
|
Investments |
0.000 |
|
Deferred Tax Assets (Net) |
326.000 |
|
|
|
|
Current
Assets, Loans and Advances |
|
|
(a) Inventories |
2588.000 |
|
(b) Sundry Debtors |
2065.000 |
|
(c) Cash and Bank balances |
5525.000 |
|
(d) Other current assets |
330.000 |
|
(e) Loans and Advances
|
1184.00 |
|
|
|
|
Less:
Current Liabilities and Provisions |
|
|
(a) Liabilities |
4489.00 |
|
(b) Provisions |
292.800 |
|
Total |
5610.000 |
Contingent
Liabilities not provided for in the accounts:
|
PARTICULARS |
2008-2009 (Rs. In millions)
|
|
Counter Guarantees given to Banks |
66.800 |
|
Excise/Sales Tax Demands made by the Authorities, in respect of which
appeals have been filed |
180.700 |
|
Claims against the Company not acknowledged as debts estimated at : |
|
|
(i) Income Tax |
11.700 |
|
(ii) In respect of Third Parties – Miscellaneous |
14.300 |
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on Corporate
Governance to identify management and governance. These factors often have been
predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.45.37 |
|
|
1 |
Rs.73.24 |
|
Euro |
1 |
Rs.62.68 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
NO |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
63 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively below
average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.