Castrol India posts 11.3% fall in Q1 profit on rising input costs

BENGALURU (Reuters) - Engine oil maker Castrol India Ltd reported an 11.3% fall in first-quarter profit on Tuesday as rising raw material costs offset the growth in revenue.

Profit after tax fell to 2.03 billion Indian rupees ($24.82 million) for the three months ended March 31 from 2.28 billion rupees a year earlier.

Revenue from operations increased 4.7% to 13.12 billion rupees, but that was not enough to offset the 8.9% rise in total expenses to 10.23 billion rupees.

The cost of raw and packaging materials jumped 12.2% year-on-year.

"Our performance for first-quarter 2023 was impacted due to inflationary pressures, high input costs and fluctuating forex," said Managing Director Sandeep Sangwan in a statement.

Castrol highlighted this issue in February when it said it expects inflationary and forex pressures likely to continue in 2023.

The Mumbai-based company, known for brands such as Castrol Activ and Castrol CRB, had increased the prices of its products in the last four quarters, boosting its year-on-year profit for the three months ended Dec 31 by 2.5%.

The company is now focusing on expansion, moving towards the automotive aftercare and the electric vehicle (EV) markets.

In 2022, Castrol entered into an alliance with the TVS-owned automobile aftermarket business Ki Mobility Solutions.

It also expanded its service brands, adding more workshops and outlets across the country, and partnered with Indian fuels and mobility joint venture Jio-bp and China's SAIC Motor-owned MG Motor to explore setting up four-wheeler EV charging infrastructure.

This year, Castrol plans to launch a range of EV fluids under the brand Castrol ON.

Castrol shares closed flat on Tuesday, before the results.

($1 = 81.7800 Indian rupees)

(Reporting by Ashish Chandra in Bengaluru; Editing by Janane Venkatraman)