Ladies and gentlemen, welcome to our 1Q 2025 earnings conference call for Castrol India Limited. Please note that all participant lines will be in the listen-only mode, and you can ask your questions after the opening statements. If you need assistance during the call, please press star then zero on your touchstone phone to reach the operator. We have with us Mr. Kedar Lele, Managing Director, Castrol India Limited. I now hand the conference over to Mr. Lele. Thank you, and over to you, sir.
Thank you. Namaskar and good afternoon, everyone. Thank you for participating in Castrol India's first quarter FY 2025 earnings call. I'm happy to reconnect with you all today. In terms of company's performance, we are glad to announce that Castrol India has begun the new year on a strong note with sound performance. As you might be aware, our reporting follows the January to December calendar year, and hence this is Q1 for us. Our relentless efforts towards product and service innovation, expanding distribution, and investment in our brand have spurred growth and volume despite these microeconomic headwinds from input costs and forex volatility. This shows our resilience through different market cycles. Speaking of our financial performance, we released our first quarter FY 2025 results on Monday, and I would like to share some key highlights with you. In Q1 2025, we reported strong financial performance.
Our revenue from operations was INR 1,422 crore. This revenue was up 7% year-on-year from INR 1,325 crore in Q1 2024. Profit before tax was INR 313 crore, a gain of 7% year-on-year compared to INR 292 crore in Q1 2024. Similarly, profit after tax rose to INR 233 crore, up 8% from INR 216 crore a year ago. The growth in top line reflects our continuous efforts towards enhancing our product portfolio and expanding geographical reach, especially in rural areas. Improvement in our profits underscores our focus on operational efficiency and cost management, which is a trademark of our resilience through market volatility. I would like to take this opportunity to also highlight the company's initiatives towards strengthening our product portfolio and distribution network and the recognition that our brand continues to gain in the market.
In terms of initiatives for brand building and marketing, we relaunched Castrol Activ with a refreshed pack design and advanced formulation. This was well supported by the "Garni Me V3X" prediction campaign featuring Shah Rukh Khan. The campaign, in fact, reached more than 220 million consumers across digital, TV, and outdoor media. Our association with Shah Rukh Khan as our brand ambassador has grown stronger after the Castrol Edge Stay Ahead campaign we did with him in the previous quarters. Our training program for truck drivers, known as Sarathi Mitra, and mechanics, known as Eklavya, also continue to gain further popularity. Speaking of expanding our network and market footprint, our pan-India network has now grown to approximately 1,480,000 outlets during this quarter, and this is ahead of the milestone we had reached in the previous quarter, signifying our continuous expansion of market coverage.
We continue to expand our reach in the rural areas also, as I captured earlier, where we've closed 40,000 workshops and retail outlets. We signed a supply agreement with motorcycle manufacturer Triumph for Castrol Power One, a two-wheeler engine oil with full synthetic technology, one of our best offerings for two-wheelers. We made tangible progress in boosting visibility and acquiring new customers in our industrial product range. Our chemical management service, also known as CMS business, saw the addition of a major gearbox manufacturer during this quarter. Moreover, our participation in IMTEX 2025 is expected to spur opportunities from new and existing customers. Our range of rust prevention products—I generally don't get a chance to talk about it too often, but the focus on industrial business with innovations such as Rustilo DW 800 series, which was launched recently, continues to gain traction in the tube industry and beyond.
Our auto care products are also witnessing increased adoption across the 60,000-plus outlets and e-commerce platforms. Moreover, our products aimed at SUVs and commercial vehicles such as Castrol Edge Magnatec Variants and Castrol CRB TurboMax Plus CK-4 are also gaining wider adoption. Being among the market leaders, it gives me great pride when our products, facilities, and teams do win accolades and recognition. For example, our Patalganga plant was awarded a gold during the ESG Global Awards for maintaining industry-leading standards in occupational health, safety, sustainability, and industrial hygiene. This comes after the OHSSAI Gold Award and the Golden Peacock Award, which the plant won in the previous quarter. Earlier on, our Paharpur and Silvassa plants also achieved industry recognitions.
Two of our product campaigns, very, very proud to share this with you, for example, Castrol Edge and Castrol CR-V TurboMax, together won 11 medals at Emvies for their impact in the market. Two of our senior team members, Mr. Rohit Talwar and Ms. Chikita Sopthi, were recognized on national platforms for their leadership in the fields of marketing and communications, respectively. Overall, we strive to push our boundaries and remain at the forefront of the industry. We have begun the new year on a strong footing. Looking ahead, we shall continue to focus on delivering high-quality products and services to the automotive and industrial sectors. Our focus on expanding our footprints in rural India, coupled with innovative services, is bearing fruit. This is in line with our strategy to make Castrol more accessible and affordable for consumers through our growing network.
We are indeed cautiously optimistic about the ongoing fiscal year, and we remain committed to driving growth with execution excellence in all our endeavors. Thank you for your attention. I now invite you to share any questions, feedback, or views as we open the floor for discussions.
Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star and one on your touchstone telephone. If you wish to withdraw yourself from the question queue, please press star and two. Participants are requested to use handsets while asking a question. Also, in lieu of the time, we will stick to two questions per person. If you have further questions, kindly rejoin the queue. Ladies and gentlemen, let us wait for a moment while the questions come in. We'll take our first question from CA Shaishav Vora, financial advisor. Please go ahead. CA Vora, please unmute your line and go ahead with your question, please. Mr. Vora?
Yes. Hello.
Yes, we can hear you.
Yes. Okay, good afternoon. I've got only one question. I just wanted to know why Castrol is developing any product with respect to the data center cooling environment. Do they have any product, and are they working in that area?
Okay, thanks, Mr. Vora, for that question. In fact, in the last quarter's analyst visit, also this question had come, and so did it before that. You will be happy to know that we have been working already with a bunch of data centers across the world where the coolants for immersive cooling, as well as direct-to-chip cooling technology, have been adopted, developed, and now being prospected with large data centers who are moving from, you know, ambient cooling to coolant-based cooling of their CPUs and processors. It's a business which will expand in the future, and Castrol, with its own range of products, is already playing a role in not just partnering with these large hyperscalers, but also with data center providers.
I am not at the liberty to express the name of the prospective customers with whom we are working, but in due course of time, as we close those contracts, I'll be very happy to share it with you and other people. Thank you very much.
Thank you, sir.
Thank you. We'll take our next question from the line of Nitin Tiwari from Philip Capital. Please go ahead.
Hi, good day. Thanks for the opportunity. Can you provide some more color, please, on?
I'm sorry, the line?
Sorry, we didn't hear you after all.
Yeah.
More color on?
He's disconnected. His line is disconnected.
Okay.
We'll wait for him to rejoin. Ladies and gentlemen, to ask a question, please press star and one on your phone. Yes, we have Mr. Nitin Tiwari back on the call. Mr. Tiwari, your line got cut off.
Yes, sure. No worries. Thanks for the opportunity again, and a good day to you. Just wanted some more color and understanding on your volume mix. What was the volume number in this quarter, and if you can provide some more color in terms of a breakup between your automotive and industrial segments, and also within automotive, if you can help us get some more understanding around what is the volume that is going towards your mid-market segment products and also, like, you know, in the rural areas. That would be one.
Okay. Yeah, great question, Nitin. Quarter on quarter, from Q1 2024 to Q1 2025, we have grown volumes by 8% at an overall level. Higher proportion of our volume growth comes from the automotive segment because that's almost 85% of our business. I should first say that all parts of our automotive segment, which is commercial vehicles, cars, two-wheelers, have grown handsomely in this quarter. Volume growth in commercial vehicles has been in double digits. Volume growth in cars has been in double digits, and volume growth in two-wheeler business has been high single digits. Industrial, on the other hand, has also grown in single digits, but that's a business that grows slowly and then builds momentum. Both urban and rural parts of our business have shown progress in both volume as well as profitability.
I'm especially delighted about our expansion in rural because at the end of this quarter is also the season of agriculture that starts, and we are continuously expanding our presence in rural areas, and rural is now contributing to a handsome percentage of our business. We'll continue to expand there because increasingly, as I said in my last analyst call, more than 50% of two-wheelers sold in the country now are coming in rural areas, and we are the market leaders, absolutely market leaders when it comes to two-wheeler brands that we've got, and by a sizable margin. That's why I'm saying absolute market leaders there; otherwise, we are market leaders in other two spaces also. That gives us great confidence for not just this quarter but also for time to come.
Great. That's really helpful. If I understood this right, I mean, you mentioned that your automotive segment has really grown very well, where you mentioned that cars have double-digit growth and two-wheelers high single digit and still also high single digit. I think that's the right summary, right? You also mentioned that your rural segment has been growing very well. Any broad, I mean, like, you know, sort of percentage bifurcation we have, can we have between the urban and the rural sort of demand that we are seeing for our products?
See, Nitin, you know, I, I'll give you a construct instead of absolute numbers.
Okay.
You know, and all of us have been saying that, you know, 35% of population stays in urban, 65% of population in rural, more than 50% of two-wheelers are now being sold in rural, but vehicle park is more urban-centric, right? Which is, you know, the total number of vehicles that exist in India. We have about 45 million cars. We have 240 million bikes. It's largely urban. Rural expansion for automotive and the lubricant space has only started in the last few years. The contribution, if I were to say, will actually make it very, very visible to the rest of the world. I do not want to make that visible at the moment. Suffice it to say that growth has been in double digits, expanding very heavily, and comes at similar profitability.
We are not on profitability challenge when we go to rural. That's the power of our leader's distribution strength that we see across the country. It's a good space to be expanding in, and we are very happy about it.
Sure. Thanks for that color, and congratulations, and all the best for you guys.
Thank you.
Thank you, Nitin.
We'll take our next question from the line of Harshit Nagpal from Yes Securities. Please go ahead.
Good afternoon, sir. Sir, two questions. One on the EBITDA margins that have been stagnant over the whole land of 22%. Any particular reason for that? Second, more on the fundamental side, for the EV liquid that we have, we have said that we work with the OEMs and everything, and all. Is it that, how does that work? Is it for a longer period of time, or is it just that when we send for a car for services, I mean, the ICE engine, the person who's servicing the car changes the liquid? How does that fundamentally work? Just a better understanding on it if you could give some.
Okay. All right. First thing first, thank you, Harshit, for the question. I noticed that you do attend our call regularly. The EBITDA margin that you're talking about is, of course, at the lower end of the guidance that we have given for a while now, which is 22-24% odd. This is a quarter when I had to take a decision for balancing the volume growth and profitability while also ensuring that a large number of consumers get to see Shah Rukh Khan's participation with Active, and the expansion that we are doing. We advanced, we invested a bit more for fuel for growth that should be advertising and support, or promotion budget that we have, and that has helped us gain that momentum. You know, did we, could we do a little better?
We could, but, you know, this is the right time to invest, ahead of the time so that the rest of the year we get the benefit of that momentum. The second comparison that we should always do is not quarter on quarter, Q4 to Q1 for calendar year, but year on year between Q1 last year to Q1 this year. When you look at that number, our batch growth is 8% between the Q1 of last year versus this, and that's very, very healthy, because Q4, you know, people, all of you as analysts with a sharp eye know that for the last two years, Q4 happens to be a quarter when our profitability expands due to the volume benefit that we get from our large global suppliers of volume material that we purchase.
Because of the IFRS principles, we have to budget all of that in that quarter. It creates some amount of, you know, volatility in comparison between quarter and quarter. Once you all of us get used to it, you will start seeing it. Q4 tends to be higher profitability with like-for-like business, and Q1 over Q1 is a true comparison of performance, which in my opinion, this quarter has been very good with 878, 8 volume, 7 top line, 8 batch. That's the detail and the color for your question on EBITDA. See, when the EVs come alive, you know, I don't know if you do own a EV. EVs don't have an engine. EVs have a motor. They have a, you know, a transmission box and four wheels and a steering, and of course, the electronic components.
The amount of fluid that can go into an EV is actually limited to transmission fluid, some greases, and of course, the coolant that we are able to put onto the new high-powered batteries which come in. Now, these products do not require frequent replacement or change. These products last longer, and then you have to change them only during the long service intervals when there is a requirement of a change in transmission fluid or a battery, damage or whatever else. It is important and relevant for any of the leaders like Castrol to stay relevant with the change that's taking place, whether it's in business models or in terms of products that we service to these new age vehicles. Now, before the EV revolution, always remember that internal combustion engine itself is going through a change.
Japanese OEMs favor a hybrid car, which is both gasoline and battery, and we are relevant there, very, very relevant. It works. There's another thing which is coming, which is ICE hydrogen, which is also big on Indian government's agenda, and in those vehicles also, we are very relevant. The space is going to be quite complex and interesting. As I keep saying, what is important and required, essential for us is to really perform while transforming the business for the future. Those are both, you know, so to say, dimensions or vectors on which we are working continuously. Does that help, Harshit?
Yeah. Yeah. Thank you, sir. One more question, if I could sneak in. Could you give the million-liter volume number for this season, this quarter? Like amount we sold in million liters?
Yes. No, I will because those are in public space. We delivered over 63 million liters of volume in this quarter.
Right. Thank you, sir. Thank you.
Thank you.
Thanks.
We'll take our next question from the line of Apurva from [uncertain] . Please go ahead.
Yeah. Hi. Thank you for the opportunity. Am I audible?
Yes. Please go ahead.
Yeah. Hi. I just wanted your perspective from a medium to long term on the industrial part of the business, right? You spoke about initially it would be a little, you know, steady growth, then it will, you know, maybe gain traction. If you could just give some on what are we doing in terms of strategy and how are we going about it, and where do we see the business over the next three to five years, I mean, you know, and as a part of the entire portfolio. That would be helpful.
Okay. Right. Thanks, Apurva. That's a great question because I also generally believe that the industrial growth in India will see a huge upside in the time to come, and with that a large lubricant player like ourselves should get our industrial strategy and portfolio right. That is exactly what we are doing. Now, industrial lubricant is a very large set of products. If I were to define them for you, it has general industrial oil. It has products like treating fluids, cutting oils, rust preventers, forming oils, and so on and so forth, right? We are a large player when it comes to rust preventers as well as metal working fluids. Hydraulic fluids, industrial, general, general fluids or general industrial tend to be low margin, high volume products. That is where some of the large, you know, natural oil companies play a more key role because they also create a more sticky solution for industries offering fuel, which could be diesel, petrol, gas, and along with that lubricant.
Now, we have to play the role of being a specialist, high-quality, specific, industries that require our products. For example, I spoke about rust preventers for tube industry, or I spoke about the chemical management solution that we can offer to chemical industries or industries like steel and cement in the future. We are big on not just automotive components but also in metal working industry. That's why we participate in IMTEX. In the future, the electronics industry that expands in India, you know, we are seeing electronics manufacturing coming in here, will also require specific fluids, which is what we make. So this part of the business has been, you know, is not being very large.
It's about 12-15% of our business, and it will grow over a period of time because, you know, industries are tough customers who require long-term testing to begin with. After testing, once they switch, then they stay with you for a long period. That's exactly what our strategy is: create products which are high-quality, technologically advanced, work with a large number of prospects, offering the trials, technology support, and then convert them into the customer base that we can then grow over a period of time. That's the strategy, Apurva. I'm very enthused about what we would be doing because we have a dedicated team led by a leader for industries, very well supported by the technical team here and our R&D team, not just here but also in the U.K. and Germany.
That's the plan, and we are here to stay and expand industrial business.
All right. Just a follow-up on this. In terms of, you know, addressable time, there are many segments in the industrial which we spoke about, right? What are the, what is the, addressable market that we are focusing on? Just as a, you know, a ballpark, you know, I know it would be a bit since we are not doing the hydraulics and, you know, which are the volume products, but what is the time side that we would look to address in the future? Maybe not now, maybe three to five years. In terms of margins in, since industrial customers, right, difficult to break in, but are the margins, you know, you know, just some color on that, you know?
Yeah. Some color, I can certainly offer. See, as you, I think, Apurva, you seem to be an analyst of the segment, so you know what we are talking about. Industrial oils and, and fluids tend to be a very large market. And if you were to think about, you know, the millions of liters that it runs into, the relevant TAM for us will be about 30% of that volume. And that 30% volume also gets chosen because of its healthy gross margin that a partner or a supplier like us can make. It tends to be lower margin business than automotive. But remember, it does not have the, you know, advertising and support spends of a consumer business, aftermarket business that we do. All of that margin typically ends up coming into more of that margin ends up coming into EBITDA. It is a sustainable business.
Sustainability of that business is very comparable to our overall business where we talk about 22-25% EBITDA as a, as the principle with which we have been operating in the past. I do not see a reason why we should not be growing industrial because it is healthy, it is consistent long-term partnership, and it is technologically advanced so that, you know, once you get in and start working with a customer, you actually develop long-term partnerships. That is the way forward.
Of course. If I can just summarize, 30% of the addressable overall industrial TAM that we are looking to, due to gross margins and EBITDA margins, is not similar but a little in the ballpark range of the automobiles. Is that the right way to look at it, right?
I would say that because you're talking three to five years, that would be.
Yeah.
Very good.
Yeah. Okay. The pickup you see, maybe generally, what is the customer cycle? If you start testing now, how much time does it take for you to, you know, onboard a new, you know, industrial client so that it becomes sticky? Just trying to understand the cycle. Yeah. Sorry. That would be my last.
That's the third question, Apurva. But I will still answer.
I'm sorry for that. Yeah.
If we will go off this conversation, i t does take time. Some customers convert in four weeks. Some take about six months. The average, in my opinion, is about 8-12 weeks cycle time.
Eight to twelve weeks. Okay. Okay. In that cycle, we should see maybe next one, one and a half years, some progress on that. Yeah. Okay. Thanks. Thank you so much for answering all the questions. Yeah. Thank you. Hope to connect with you.
Thank you. We'll take our next question from the line of Nishant Chauhan from Geotech. Please go ahead.
Yeah. Hi, sir. Am I audible clearly?
Yes. Please go ahead.
Yes, Nishant.
Yeah. Hi, sir. First question would be, recently we've seen a sharp correction in crude oil prices. Could you just help me understand any impact of seeing on our financials?
Okay. Do you have a follow-up question also on that?
Yeah. The second question would be a little, to do with the, data center piece that you mentioned. I mean, it was interesting to hear about, the same. If you can just, you know, share some more data, like what percentage of revenues it currently forms for us and, you know, what is the TAM that we could, we could possibly see in this, segment. That's it.
Okay. So first thing first, Nishant and all of the listeners, you know, we keep talking about the fact that while base oils, base oils are made out of crude oil, the correlation between the prices of crude oil to base oil is very low. We do not see high correlation between the spot prices or the monthly prices of crude oil to base oil. It is because of several reasons. One is base oil refineries are limited in number across the world, and they also have a forward stock of two and a half to three months. So depending on the crude oil availability and the prediction of prices is how refineries decide at what price would the base oil be sold in the quarter in the future. The probability of crude oil prices being low is high.
We are seeing that the crude oil projections in this year will be under $70 a barrel. With that, we should be able to project the number, though with low correlation of base oil pricing also. When we run those models for the next three to four quarters, I see that our net prices landed in India will be more or less similar and range-bound as it was last year. Last year also, the crude was not at $80. This year also, when crude went to $65, it is in range-bound between $68-$70, not very different. However, what you might have also seen is the forex impact. Last year, when it was, if landed price INR 2 a liter higher in the base is actually getting affected by forex, which is now INR 2-INR 3 more expensive.
Net-net, if I look at next two to three quarters as I stand today, it looks like our total cost will be range-bound and will not be very different as far as base oil is concerned. Remember, base oil makes 50-60% of the cost. There are also additives. There are also the cost of conversion and other things which go into making, making lubricants available in the market. Base oil answer range-bound with forex headwind should look more or less similar to what it was last year. I'm not being excited too much with crude oil actually going down and profitability being jagged up because of the base oil being low correlation to that. I hope that explains to everyone also because it's a very frequently asked question by everyone.
Now, coming to data center piece, it's a classic example of future being bright for a product which today is, has been developed and is being prospected upon. Now, if we are talking only India, you would know better than I that the number of data centers in India are run by four or five large companies, right, which are of repute. As the data center's requirement in terms of processing power goes up, the heat that these processing generates, you know, for example, last couple of weeks, all of us were trying to convert our pictures into something, which is inspired by the Japanese cartoon, if you remember. Yeah. We are seeing a lot of profile pictures coming out of that. That picture that gets created actually generates a tremendous amount of heat on the server or the processor that's making it.
How do you control that heat? Today, it's done through air conditioners. Tomorrow, that heat is so high that air conditioners will be ineffective, and you'll have to dip those processors and CPUs into coolants, which are nothing but oil coolants. It is similar to a two-wheeler being air-cooled and a four-wheeler being oil-cooled. It's the same thinking, just that a new way of running data centers will be required. In the future, when you walk into data centers, you'll see large containers and tubs filled with coolants in which the processors will be fully dipped, and you will see them inside the oil. That, of course, will do heat management. That is the technology.
Now, this requires not just the civil work but hyperscalers who are to work with people who design those tubs, people like us who design those coolants, and people like, you know, hardware manufacturers like Dell and HP and others who do those machines which can remain safe dipped in oil. All of this is happening at a good speed across the world. Today, those numbers in our P&L are negligible. Ten years from now, would they be significant? The answer is yes. Would that be a new segment where we have not operated? The answer is yes. Would that be profitable? Surely. Are we doing everything to get there? For sure, 100%. The point being made is this is, these are areas which will transform the business.
We have to be ready with technological understanding, innovation, route to market, and the design, thinking in order to be growing our business in sectors which are going to emerge in the time to come. That's the journey, Nishant, if I'm able to explain.
No, sir. Thank you. Thank you so much for your detailed explanation for points verification. Thank you.
Thank you. We'll take our next question from the line of Abinash S. from NAFA AMC. Please go ahead.
Hello. Hi, sir. Am I audible?
Yes. Please go ahead.
I have two questions. This quarter, I noticed that your other cost expenses on a year-on-year basis as well as on a quarter-on-quarter basis is roughly about INR 40-45 crore more than the usual range of, say, INR 250-260 crore. What is the reason for that? That's number one. Number two, the global parent has announced a strategic review of the Castrol business. Is there any preliminary discussions or directives from BP plc to the Indian operation? If you could just throw some light on it, that would be great. Thank you.
Thanks, Abhinash. Let me answer your second question first, right? BP announced the strategic review of its Castrol business globally, with the intention of accelerating Castrol's next phase of value delivery. It is very clear that BP would want to unlock value out of Castrol, and Castrol itself has significant growth ambitions, which includes growing our core mobility business, expanding our participation in industrial lubricants that I just spoke about, and also enhancing our mobility services and diversifying into central, or data center fluids, right? Now, this proposed strategic review will consider all options with, as I said, the focus will be on value creation. Now, if you ask me personally, is this a good opportunity for Castrol to determine how we can become more effective and innovative business partner? Surely, it is.
Because history of Castrol is 125 years old, out of which last 25 years is the time when Castrol as a brand has been with BP. Now, we do aim to ensure that any outcome of this strategic review will help us continue to accelerate these growth ambitions, unlock more collaboration opportunities with partners. Now, it is true for Castrol globally. It is true for Castrol in country, in India as well. Now coming to your question on our cost, right? And, and you've already done the P&L analysis, so thank you for that, and I appreciate your efforts. There are two heads in which our costs this quarter have been higher than the last year. We spent about INR 180,000,000 more in ASP, which is called Advertising, Digital, and Mechanic Activation. And that INR 180,000,000 more is a sizable sum of money.
We made a decision that this is the right time to invest because we got Shah Rukh Khan on board. New campaign was being unleashed. I hope you managed to see that campaign where Shah Rukh Khan plays a police officer chasing two robbers on a summer afternoon in Rajasthan, and his bike, of course, driven by, you know, Garmi Mein Bhi 3X Protection Proposition, actually continues, and he's managing to catch those thieves. That's a proposition landing in a very interesting manner in our storytelling. We supported that. Second is, what you would remember as what we call as JBL, which is Joint Business Loyalty. Since the time, you know, my predecessor, Sandeep, started this partnership with OEMs, deeper partnership, I have simply decided to expand that further.
Our partnership with OEMs is such that our business in B2B, which is OEM, OEM-related, has also grown well. For that, we have shelled out close to INR 14 crore more in those royalties to our partners. Those two put together come to INR 44 crore of additional cost that you're seeing in the overheads. Does that answer your question, Abinash?
Yes, sir. It does. Thank you.
Thank you.
Thank you.
We'll take our next question from the line of Rohit Maheshwari from NTT . Please go ahead.
Good afternoon, sir. This came in.
If we can't hear you clearly, can you use your handset mode, please?
As you is, as, two-wheeler EV penetration is expected to increase, like, from 45% to currently, to 23% over the next given five or eight years. Can you give some color how, this is going to impact cash flow?
Okay. Rohit, the straight answer to that is, you know, all of us get excited about the in-year number, but the lubricants are being used by the full park. The park is the number of two-wheelers that India has, which is close to 240 million. Every year, India has 23-24 million two-wheelers getting sold. That's what, you know, gets sold. Some go into replacement, some go into new. You can assume that about 60-70% of them get added to the park. Now, today, we are seeing only about 5% of that number, right, of 23-24 million, which is about a million odd EV two-wheelers getting sold.
Over a period of time, by 2030, my expectation is, if government supports it and the EV charging infrastructure at home also grows and they become more safe to ride on, you should see about 30%, as you rightly said, of the numbers getting sold becoming EV, which means of the park, that number will still be less than 10%. Five to eight years hence, the total market for two-wheeler lubricant, which would have grown by then, will see a 10% correction in total volume requirement. We are actually talking about if the growth of 8% every year in the park with new vehicles for the next seven to eight years gets us to a number, and all of us know the rule of 72, in nine years' time, this park will double. At that stage, about 10% of that park will become EV.
That's the macro factors which are operating here. Now, what will be the impact on cash flow? As you know, Castrol is the market leader for two-wheeler lubricant. We have brands like Power One, Active, Essential, and all of this put together, I believe, as per external data, we have a quarter of this business. Fortunately for us, and bad news for others, we also play in EV fluids, including, as I said, the coolants as well as the transmission fluids. You will see, we will see some impact on our volumes in those days in that period, and we will have to replace that with the fluids which are relevant for EVs.
On an overall level, for the next eight to ten years, I see the growth in ICE-based two-wheelers actually fueling our overall continued growth of 7-8%, as the industry or the, as the, as the park size of the two-wheeler grows. That's the, that's the, that's the big story for me here.
Okay. The second question is related to, if I see an 8% volume growth, why, why? Can you help, like, understand, like, help us understanding that how much was for Essential? Because when I see the volume, the volume has been growing for the last, if you take in the last 15 to 24 quarters, the volume is growing very, single, like, very healthy volume growth is there. I guess on the Essential part, as per my understanding, your cash flow will be outperforming the industry growth. If you can dissect that 8% from Essential, how much that will be very helpful?
Okay. Good. I think, right in the beginning, Harshit also asked this question. Maybe Nitin asked this question, so I can repeat that and also give you a sense of Essential. First is this 8% growth in volume is fueled by holistic growth that we have seen in commercial vehicles, in cars, and in two-wheelers. As I said, our commercial vehicles and cars have been in double digits. Our volume growth in two-wheelers has been high single digits. Having said that, why did we launch Essential? I have to keep talking about it because it does make sense for our kind of industry and our kind of segment. Essential is Castrol's answer to a large central belly of the market, the center of this business where consumers do want a more high-quality, acceptable quality oil at affordable prices.
Castrol has been a premium oil manufacturer and marketer across the world for 125 years. Now in India, with Bharat strategy, we decided that we must get Essential then. By getting Essential, we have begun to expand operations both in terms of availability and in terms of applicability. Now, because we do not give specific segment-wise contribution of our products because then it becomes pretty visible to everyone, suffice it to say that it has allowed us to grow our consumer franchise by a sizable number. Many people believe that rural India buys only low-quality, low-priced products. That's not true. Rural India actually buys high-performance, good products which offer good value. Hence, in our rural India expansion, we have been able to prove and see that both high-end Active, Power One, as well as Essential have started growing.
What Essential has essentially done for us is to make Castrol more relevant for a wider range of people who aspired to buy Castrol but couldn't afford it earlier. Now that is available at a low price premium, and hence that is fueling our growth ambition. You know, I can only tell you that our premium variants are also growing very, very well, and all of this growth is not coming from Essential. If your concern was about profitability of the business, that we have been able to maintain well.
Thank you. The last question is, can you give some color on the auto care part, like, what will be as a percentage of sales today, and how do you see next five years' business, will have a meaningful contribution? The auto care business is a margin dilutive or margin accretive business for Castrol?
Great question, Rohit. You know, while I do want to keep the answers limited to only the products that we sell, the question I do ask is, I hope some of you have started taking care of your vehicles beyond just putting fuel and lubricants. When that changes, a large market will emerge. It's already a INR 2,500 crore market in India of auto care products, which include, you know, chain lube, chain care products, or shining products. We've got some, you know, a cloth for the bike, as well as, all, you know, it's called multi-use rust preventive and rust adversarial spray. All of these products are actually very good expansion for Castrol. Why? Two reasons. One, it gives our consumers opportunity to interact with our brand more often than their lube change frequency.
It makes brand interaction more frequent, number one. Number two, because it's a product which actually commands premium, its P&L will be very healthy and accretive to our overall business. Third, this business is not a business of liters. This is a business of units. As of today, it's available in about 60,000 outlets. It's growing in high double digits. You can also buy it online with Amazon and others. It will be almost like an FMCG product which gets bought more often and by more people. We are in the seeding stage, and at some point in time towards next year is when I'm thinking I'll bring these numbers in light for everyone to see once I've established this business at scale.
Just to clarify, you said this auto game market is overall INR 2,500 crore in India, correct?
Correct. In MRP terms, yes. That is our estimate because no clear numbers from industry bodies available. Most of that market tends to be unbranded.
Thank you, sir. All the best for your future.
Thank you.
Thank you, Rohit.
Ladies and gentlemen, while we do have more questions, we have run out of time. On behalf of Castrol India Limited, I thank you for joining this call. You may now disconnect your lines. We wish you a good day ahead.