As the automotive market recovers and new players enter the growing electric vehicle space, the lube industry faces new challenges in both ICE and electric vehicle (EV) segments. According to industry experts, the lube market is expected to grow at four percent in CY23.
India's lubricants business was valued at $36.46 billion in 2021 and it is expected to reach $48.22 billion by 2027. Passenger cars are expected to represent the fastest growing segment, followed by commercial vehicles and two-wheelers.
Industrial volumes are expected to see good traction as the economy recovers in CY23.
Castrol India's management expects forex pressures and the inflationary environment to continue in the near term. Its focus will be on protecting margins, while catering to its customers.
In line with the same, amid sustained input cost pressure, the lube maker has decreased its EBITDA/EPS estimate by 13 percent each for CY22 and by 13 percent and 12 percent for CY23.
Sandeep Sangwan, Managing Director of Castrol India says the company will continue to invest in its existing core business of oils and lubes and at the same time explore emerging business opportunities in the fast-changing automotive ecosystem.
Excerpts from the interview:
India has seen the highest inflation in the third quarter followed by currency pressures. With more than 40-50 percent of your operating expenses driven by imports, how are you balancing inflationary and forex pressures to safeguard your margins?
We've seen the highest inflation in Q3. In fact, August, and September have been very heavy and this year we've taken three price increases just to manage our margins and volume balance. We took a price increase in March, the second increase in June and a third price increase in September.
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