COVID-19 impact: Castrol India's net profit slumps by 64%

Lubes maker Castrol India on Tuesday reported a 64.20 per cent decline in its net profit to Rs 65.4 crore in the second quarter of this calendar year amid the coronavirus pandemic, resulting in a continued slowdown of the economy including a drop in lubricant consumption.

The company had posted a net profit of Rs 182.7 crore in the corresponding quarter of 2019, according to a regulatory filing.

Its total revenue during the June 2020 quarter declined 52 per cent to Rs 505.8 crore, compared with Rs 1,055.5 crore a year ago.

The profit in the first half of the calendar year dropped 48.16 per cent to Rs 190.6 crore, against Rs 367 crore in the corresponding period a year ago. The total sales declined 40.85 per cent to Rs 1,213.6 crore, compared with Rs 2,052.8 crore in the second half of 2019, according to the filing.

"Performance in the second quarter and first half of 2020 speaks of our resilience and determination, while being focused towards three priorities - protecting our people, supporting communities and protecting the financial health of our business in these difficult times," Castrol India Managing Director Sandeep Sangwan said in a release.

This is despite disruptions owing to the COVID-19 pandemic that escalated in the second quarter of 2020, resulting in a continued slowdown of the economy including a decline in lubricants consumption, the company said.

"Our agility and responsiveness to this volatile situation is a reflection of strong fundamentals of the business. Our strategy remains unchanged and we are confident of long-term profitable business growth as economic activities return to normalcy," Castrol India said in the release.

The company said it generated Rs 302 crore net cash from operations in the January-June period of 2020, which is 85 per cent of the last year's levels.

Along with judicious cost management and efficiency programmes, it has helped the company maintain a current strong liquidity and financial position in order to meet any near-term challenges.

Another key development was the signing of the strategic alliance with the 'Jio-bp' fuel retail network that will enable Castrol lubricants to enhance reach and visibility at 1,400 Jio-bp retail sites across the country, it said. The sites are planned to expand to 5,500 sites in the next five years.

"We have been equally focused on our strategic deliveries during this period. With digitisation unfolding as the new normal, we leveraged digital to build a strong virtual connect among several key stakeholders," the company stated.

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