Castrol India has a long term strategy of focussing on personal mobility side and wants to sustain profitability and volume growth going forward, said Rashmi Joshi, Chief Financial Officer and Whole Time Director, Castrol India.
Castrol India has a long-term strategy of focussing on personal mobility side and wants to sustain profitability and volume growth going forward, said Rashmi Joshi, Chief Financial Officer and Whole Time Director, Castrol India.
Speaking to CNBC-TV18, Joshi said the company is looking at various opportunities to grow volumes in a profitable manner and added that the company may raise prices further depending on cost of crude oil as well as situation of the economy and how various sectors recover from the impact of demonetisation.
With revenues dropping 1.1 percent year-on-year to Rs 782.2 crore from Rs 790.9 crore for the same period last fiscal the company reported a lacklustre results for the quarter ended December 2016.
Below is the transcript of Rashmi Joshi's interview to Sumaira Abidi and Prashant Nair on CNBC-TV18.
Sumaira: The company has registered a volume growth of about 4.5 percent in FY16 after the decline that we have seen over the past five years. What is the kind of volume growth that we can now expect in FY17?
A: As you know, Castrol has been talking about profitable volume growth as its strategy and as you said, after many years, this is the first year we have seen a significant volume growth which is very impressive considering some of the challenge that we faced especially in the second part of the year.
An important part of this volume growth is that we continue to grow double digit on our personal mobility side which is again our strategic thrust area. And in other segments as well, we have improved volumes year-on-year (Y-o-Y) quite significantly and we want to continue the volume growth going forward as well. That is our long-term strategy as we have been saying. So, we will be looking at opportunities to grow our volume in a profitable manner, up-trade as necessary and continue to focus on personal mobility. So if you are talking of future years, that is the direction we will go in.
Prashant: You took a price hike in the month of December. Any plans to increase prices any further now?
A: It is a good question. We did some pricing intervention in the month of December. If you see the input costs, crude is expected to increase in terms of prices. Base oil prices will depend not only on crude, but they will also depend on the capacity of the market and supply and demand situation which we find a bit challenging during this first half of 2017 and that will lead to increase in input costs.
We also expect rupee, currently which is stable, but you cannot predict which way it will go. It depends on a lot of global factors. So, input cost environment will remain volatile. Economy again depends a lot on how demonetisation will impact various sectors. We will consider all these things and we will do certain interventions in pricing as we have been doing throughout last year, so you will see certain action from Castrol. Which way the actions will go, will depend on some of these factors that we discussed.
Sumaira: Also, your company has cash worth about Rs 800 crore odd. Is there any utilisation plan that you have in place?
A: You would have seen that we have declared a special dividend this time, over and above the Rs 9.
Prashant: But that is Rs 2 per share, right?
A: Yes, but it is Rs 11 versus last year of Rs 9 which is 20 percent increase. So, that itself will take out some of the cash from the balance sheet, Castrol has been paying interim dividend regularly, so we will continue with our usual dividend policy and pay out the cash to shareholders whenever we have excess cash in the balance sheet. If we want to grow the business and require some money for those investments, then that is the part we usually hold back but otherwise, our dividend policy has been almost paying 80 percent out and we will continue to do that.
Sumaira: Is there any indication that you can give us of whether BP has any plan or intention of cutting stake?
A: I have no visibility of what BP would like to do with its shareholding. Based on the last press release that we have seen from BP, I can say that they are keen on holding on to the 51 percent stake that they currently have. So there is no further news that I have that BP wants to further dilute their holdings in the company.
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