MUMBAI, February 6: The board of directors of Castrol India has recommended a dividend of Rs 8 per share for the year ended December 31, 1997.This, along with the interim dividend of Rs 4 per share, brings the total dividend to Rs 12 per share.The company has reported a net profit of Rs 158.16 crore, a 67 per cent increase over Rs 94.53 crore in calendar 1996. Sales and other income was up by 11.6 per cent to Rs 1,010.79 crore from Rs 905.57 crore.
Castrol India's gross profit after interest but before interest and depreciation increased by 38 per cent to Rs 212.46 crore from Rs 152.12 crore. Depreciation for the year was higher at Rs 6.8 crore compared to Rs 4.49 crore.
According to a press release issued here on Friday, the company's performance is especially creditable in view of the fact that 1997 has been a very demanding year for not only the lubricants industry. The increased sales volume and turnover, the release adds, has been achieved through a judicious mix of cost control, better productmix, operational efficiency and optimal use of resources.
Tax breaks give the boost
The Castrol results reflect the performance of its new plant at Silvassa and the benefits that have accrued to the company as a result. The company is entitled to 15 years sales tax exemption and five years income tax exemption and a further five years will get an exemption up to 30 per cent of the profit.
The benefits have accrued from the very first half of the year with the new plant operating on a single shift basis. The effective tax rate then was 26 per cent, which has subsequently come down to 23 per cent for the full year. Mainly as a result of these tax breaks the company managed to post a 67 per cent increase in profits for the year.
The benefits from Silvassa will be felt in the current year as the plant stabilises production and is able to run at a better capacity utilisation. It would be interesting to see if Castrol can shift a part of its production to the new plant. Further, with an exemptionfrom sales tax, Castrol will price its products lower by at least 4 per cent; thereby providing a thrust to volumes.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
