Castrol India Limited (500870) Earnings Call Transcript & Summary

It is 3:00 p.m. now, and with your permission, I'll call the meeting to order. Dear shareholders, good afternoon. I welcome you, and thank you all very much for joining this 42nd Annual General Meeting of our company. I sincerely hope that all of you are safe and in good health and are gradually getting used to this new way of conducting an AGM. The requisite quorum is present, and I declare the meeting to order. Your safety is of prime importance to all of us. And hence, the company has taken all the requisite steps so that all of you can join and participate in this meeting seamlessly while being in the safety of your homes. This meeting being held through audiovisual medium of the Central Depository Services Limited, CDSL, in accordance with the provision of the Companies Act 2013 and the circulars issued by the Ministry of Corporate Affairs and SIP. Since this meeting is being conducted virtually, without the presence of members in person, the proxy facility is not necessitated and accordingly, has not been provided. Castrol Limited U.K. holding 51% of the paid-up capital of your company has, pursuant to the Section 113 of the Companies Act in 2013, nominated Mr. Sashi Mukundan to attend and vote at the meeting. While we have taken every precaution to make sure of connectivity, in order to maintain the continuity of the meeting, in the unlike event of a technical error and I get disconnected, I hereby propose Mr. Uday Khanna as your alternate Chairman of this meeting with the consent of all the directors present. I would request the directors to signal their content and their agreement to this proposal. Uday Khanna?

Yes. I consent to the proposal.

Rakesh Makhija?

I consent to the proposal.

Sangeeta Talwar?

I consent to the proposal.

Mr. Sashi Mukundan?

I consent to the proposal.

Mr. A Ramchander?

I consent to the proposal.

Mr. Sandeep Sangwan?

Consent to the proposal.

Mr. Jayanta Chatterjee?

I consent to the proposal.

Thank you very much, directors. With the permission of the members present, may I take the notice of the AGM as read. All of you have received the Annual Report electronically, and this includes the auditor's report. The statutory auditor of the company, Deloitte Haskins & Sells LLP, and the secretarial adviser of the auditor of the company, M/s S. N. Ananthasubramanian & Company, company secretaries, have submitted their respective reports for the financial year ending 31 December 2019. And there are no qualifications, reservations or adverse remarks in their respective reports. With your permission, I take the same as read. The auditor's report, financial statements and all are available from Pages 83 to 133 and the secretarial auditor's report, the Form MR-3, is enclosed as Annexure V on Page 45 of the Annual Report. I would now like to introduce the directors who are present at this meeting and confirm the location from where they are attending this meeting. I am R. Gopalakrishnan, Chairman of the Board and the Stakeholders Relationship Committee, I'm joining from Mumbai, India.

I am Uday Khanna, Independent Director and Chairman of Audit Committee, joining from Mumbai, India.

I'm Sangeeta Talwar, Independent Director and Chairperson of Nomination and Remuneration Committee, joining from New Delhi.

I'm Rakesh Makhija, Independent Director and Chairman of the [CSR] Committee, joining from Pune, India.

I'm Sandeep Sangwan, Managing Director and Chairman of Risk Management Committee, joining from Wokingham, United Kingdom.

I'm Jayanta Chatterjee, Whole Time Director, Supply Chain, joining from Mumbai.

I'm Sashi Mukundan, Nominee Director, joining from Mumbai.

I'm A S Ramchander, Nominee Director, joining from London, United Kingdom.

I'm Chandana Dhar, Company Secretary and Compliance Officer, joining the meeting from Mumbai.

Thank you very much, Directors and Company Secretary. Mr. Uday [indiscernible], who's the Nominee Director; and our CFO, Ms. Rashmi Joshi, one-time director, are unable to join this meeting due to unavoidable circumstances and have begged leave of absence. Apart from the Board members and the company secretary, we also have representatives of the statutory auditor, Deloitte Haskins & Sells LLP, and the secretarial auditor to the company, M/s S. N. Ananthasubramaniam and Company, company secretaries, who are present at the meeting. I welcome them to this meeting. We also have with us Mr. K. G. Saraf, practicing company secretary, who is appointed as scrutinizer for remote e-voting and e-voting to be conducted at the end of the AGM. Now as regards participation and voting at the meeting, I request the company secretary to provide general instructions to the members regarding participation and voting at this meeting. Company Secretary?

Thank you, sir. Dear shareholders, facility to join this 42nd Annual General Meeting through audiovisual medium is being made available to the members on first come first serve basis only, pursuant to the applicable MCA circulars. All members who have joined this meeting today are by default kept on mute and their videos are turned off by the host to avoid any disturbances arising from background noise in order to ensure a smooth conduct of this meeting. Once the question-and-answer session begins, the names of the shareholders who have preregistered themselves as speakers will be announced. Thereafter, microphone or speaking facility for such shareholder will be unmuted by the host. Once the speaker is unmuted, he or she is requested to turn on the video button and start speaking after mentioning the name, poll your number and the location from where he or she is joining the meeting. If for any reason he or she is unable to join through video, the speaker may continue speaking through audio mode only. If there is any connectivity issue at the speaker's end, we will request the next speaker to join. And once normal connectivity is restored for the earlier speaker, he will be requested again to speak after other preregistered speakers complete their turn. We would also request speaker shareholders to keep their questions brief and specific to the business of this meeting and limit their speech up to 2 minutes, so other shareholders have a fair chance to speak. Members who need assistance during this meeting or have any queries or issues regarding e-voting are requested to refer to the frequently asked questions, or FAQ document, and e-voting manual, both available at www.evoting.india.com under Help Section or write an e-mail to [email protected] or contact CDSL team on 1800-225-533. The register of directors and key managerial person and their shareholdings and the register of contracts or arrangements in which the directors are interested are available for inspection. Regarding voting at this meeting, there will not be any voting by show of hands, and there is no need to propose or second the resolutions set forth in this notice. Pursuant to provisions of Section 108 of the Companies Act 2013 and the related rules, all members of the company have been given an opportunity to cast their votes by way of remote e-voting. The cutoff date for the same was 3 July 2020. And the voting window was kept open from 11 July 9 a.m. India Time to 14 July 5 p.m. India Time. The persons who are members only as on the cutoff date can cast their votes for this meeting. Members who have not cast their votes through the remote e-voting facility can cast their votes today during the AGM and 15 minutes after the meeting has closed. Those members who have cast their votes through the remote e-voting can participate at the meeting but cannot vote at the meeting again. Voting window will be opened during the meeting and will also be available for another 15 minutes after the closure of the meeting. Thank you very much.

Thank you, Ms. Dhar. Thank you. Good afternoon to dear shareholders, and I once again extend a warm welcome to all of you for this 42nd Annual General Meeting of Castrol India Limited. I do hope you and your families are safe and in good health in these very unusual times. Ideally, I would have loved to have met all of you in person. But under the circumstances of social distancing, please accept by virtual namaste, which I join you from my residents in Bombay. I have been associated with your company as an Independent Director for several years now, but I consider it an honor and a privilege to host all of you today as the Chairman of the Company's Board. I would like to begin by thanking my dear friend, colleague and our former ex-Chairman -- and our former Chairman, Mr. Sushil Datta. I have known him for many years, and he has served this Board with great distinction and has left a very onerous task for me as I take over. I would also like to take the opportunity to thank the former Managing Director, Mr. Omer Dormen, who we all spent many a day in the boardroom having intense conversations, and I remember very fondly his high degree of professionalism. So I would like to acknowledge their contribution and will say that it's been a great experience working with both of them and the entire Board and management team of your company. It would be appropriate to extend a very warm welcome to Sandeep Sangwan, who is a very experienced hand in Castrol, served them for many years over 2.5 decades. But he's attending his first Castrol India AGM after having taken over as the Managing Director on the 1study of January. Welcome, Sandeep. When I look back at the results of the company for the year 2019, the highlights have been, first, the exciting revenue growth in the personal mobility business, which is a very strong focus area for your company. Despite the slowdown of the economy through last year, this is very much in alignment with the strategic direction of the company, and we are very pleased with the revenue growth in the personal mobility section. Second, the company went into areas beyond lubricants as a part of its growth initiatives. It moved into adjacencies with vehicle care products, in the automotive sector through a partnership with a very reputed international technology company, 3M. Third, leveraging digital solutions, your company launched Castrol Fast Scan to provide a premium experience, especially for retailers and mechanics, who are our very, very valuable allies in the conduct of the business. Similarly, there have been other digital initiatives like your company's lubricants are now available on leading online sites for consumers to buy and also for Castrol Fastlane, a digital ordering portal for dealers. Lastly, I'd like to mention that your company delivered strong operating performance and earnings. Profit from operations grew 7% last year year-on-year at INR 1,083 crores, while the cash generation from the operations increased by 25% to INR 1,188 crores, all driven by very strong working capital management. Working capital management is the great strength of this company, and I therefore taking the liberty of pointing this out as one of its competitive advantages. That so far as 2019 are concerned, but that brings me to the presence and how the business might develop in the future years. I have spent some time reflecting on what we are going through in the current times, and extraordinary would probably be a slight understatement, but it is the most appropriate word to describe the times we are going through. In my 53 years of experience in the corporate sector, never can I recall having so many crises and disruptions coming together simultaneously, causing everyone, people, businesses, global economies, or alike to pass-through such unprecedented at turbulent times. The company has too had its fair share of disruptions. The COVID pandemic, the BS VI transition, the slowing down of the economy, we know the numbers for last year, along with the liquidity crunch, the depreciating rupee, and I must say the very volatile prices of petroleum products like the base oil that we use in our formulation, I must say it's been a very, very brutal environment. But having pointed this out, I need to tell you that your company believes that it needs to keep moving, keep the world moving. And therefore, there are some points, 6 or 7 salient points, which is stepping back from the annual operation of the company. Questions on which, of course, they are -- Managing Director will be happy to answer. But I just want to step back a little bit and tell you some of the things that are occupying the attention of your senior leadership and your Board. The first item I want to bring to your notice is about what I've termed transformational management. To ensure that this belief to keep the world moving is followed up with action, I would give full credit to the management team of your company. Empowered by the trust you have placed in the team, they have stood up to this challenge during these last several months. Their Board has weathered the storm and bravely faced extremely choppy and uncertain weather and continue to sail through these very turbulent times. The transformational management style that the company team has adopted, your senior management team has adopted, to handle and steer Castrol Board is with confident humility. I emphasize the words confident humility. Humility to know that you could get it wrong, confidence to know that you must try your best. They are successfully and determinedly focused on 3 strategic priorities during this period: first, and most important, protecting people; second, to support the communities where we work; and third, protecting the financial health of the business to be able to give value back to our esteemed shareholders. You will see the words protecting, supporting and protecting getting repeated. When the Board is turbulent, you don't take big risks. You take all the steps required to protect what you have, and that's exactly what your senior management has been doing and the Board. So far, and the storm still continues, I'm sure that we all join and wishing the management team good luck. You are aware that the final dividend for 2019 was revoked and instead an interim dividend of the same amount was announced to prevent any further delay to you in this uncertain situation. We realized that we were holding the money of the shareholders and if the AGM could not be held at the right time, which we had announced earlier, we would find a way to return the money to shareholders. In the first quarter of 2020, which is January to March period, business-wise, your company has continued to drive consumer communication and customer acquisition across key geographies and markets. It renewed a long-term partnership with JCB, which, as you will be aware, is the largest off-road vehicle manufacturer in India. Readying themselves for a low-carbon future, your company has entered into agreements for electric vehicle fluids with OEMs in India, including MG Motors and Tata Motors, as well as to supply lubricants to various OEMs for their BS VI compliant vehicles. All the products that Castrol India now makes are BS VI compliant. I'm happy to announce a remarkable development, which came earlier this week. The team has worked tirelessly to sign a new alliance with Reliance BP Mobility Limited, RBML. It's interesting that the Reliance meeting is going on right now as we speak in here. And this alliance offers your company the opportunity to market lubricants across all of the 1,400 Reliance BP Mobility Limited outlets, fuel outlets, which they have a plan to take it up to 5,500 sites over the next year. That's a tremendous opportunity for your company, but we'll have to be patient and build it skillfully. These will be branded as JioBP outlets in due course, which is for [grace], and this gives your company an entirely new channel to sell its products and solutions in -- as well as to enhance visibility and reach. So it's a very exciting development. I'm sure you get happy to hear it. So this is the first aspect I wanted to mention, which I've lumped under the head of transformational management. The second reflection I would like to share with you is about the industry landscape and the competitive positioning of your company. If you look at the global lubricants market, India is the world's third-largest market today. It is third coming after the United States and China, and it accounts for 7% of the global lubricants demand. So we are an important lubricants market globally speaking. Within the Castrol world, India is considered 1 of the top 3 growth markets with strong potential. So we are in a sector, which is the third largest in the world and Castrol India, your company, is the third most important within the first 3, keeps changing a little bit here and there with very strong potential. So in India, our company is a leading automotive publicans player with about 17% market share. Your company sails on a very strong shift with the company being the largest player, both in volume and value. We are the largest player in volume and value terms in automotive lubricants in this country. This is certainly something to recognize and for all the past employees and support of the shareholders to be grateful for and proud of. But at the same time, it comes with its own set of responsibilities. So this is the second point I wanted to make on transformation management about the industry landscape and the competitive position. The third point I want to make regards financial performance. We have benchmarked your company versus industry peers and competitors. This includes automotive companies, FMCG companies and auto ancillary companies. And the key profitability parameters, like return on sale, return on capital employed and operating profit margin. I'm pleased to report to you that your company features in the top quartile. I'm not saying it's the best, but it's the top quartile and has very good ratios for all these parameters as compared to many of the other companies. We will continue to benchmark ourselves in the future to make sure that we keep ourselves in the top end of the bunch that's working in FMCG, in auto ancillaries and the automotive sector. In terms of financial performance, the company has a robust plan will strengthen finances, including optimizing costs, protecting cash and evaluating more efficient ways to drive margin and looking at robust working capital by managing inventory. So that's the third point. I said I will make 6 or 7 points. The fourth one is a strong culture of ethics, also with a very, along with the business performance, a company gains respect when it has a strong corporate governance and ethical culture. I hope you will feel proud by the fact that your company is an extremely well-governed company. Forgive me, I'm the Chairman of the Board, forgive me for saying so myself. But we stand up to -- we try to live up to the best standard, and I think we largely succeed. It is a very professionally run Board, where the senior industry stalwarts whom you have been introduced to this morning, who bring several years of wisdom and experience. The Board has constructively challenged and effectively supported the management always in the key decisions and more so during these turbulent times that we are facing currently. The fifth point I want to make is we have a very focused set of Board members. I'm not suggesting other boards are not focused, but I wanted to give you a measure of what I mean by focused Board members. None of the directors in your company holds positions in more than 4 listed entities, including Castrol India. So they are at the most 3 companies, in many cases, even less. I have met several members of the Castrol India family, and they've always amazed me with their innovation, passion and drive for excellence in everything that they do. Their hunger to sell new benchmarks inspires me to give me confidence about their continued success. The last point I want to make is being a force for good. The company does not only believe in driving numbers and business and growth. It gives back wholeheartedly to communities in a meaningful way. In our stakeholders, we include people who drive trucks, mechanics who fix their vehicles. They are very, very key parts of our stakeholder groups. During this pandemic, I'm pleased to tell you that your company has helped several impacted communities, including government hospitals across 8 states with critical medical equipment and personal protection equipment, stranded truckers, migrant laborers, essential services workers, garbage collector, police, mechanics. In small ways, as much as we can, but we have tried our best to do that, and we've also supported families impacted by the cyclone Amphan in Bengal. So your company continues to focus its investments on those people, brands, distribution network, customer acquisition and advocacy efforts, which have helped to develop -- deliver on strategic priorities, enabling the business to grow profits in a very difficult environment. As you can see, I've just spoken to you about 7 aspects of your company that make it distinctive. I'm not trying to present Castrol India as an exceptional company, but it certainly got its own distinctive features, and it makes it stand out from the rest. I talked about the stellar management team, which works with confidence and humility, the focused experienced Board, strong business performance and leadership position your company enjoys in the market, the strong governance and ethics culture, the force for good your company is and finally, this great team that makes up your company. To me, these represent the 7 colors of a rainbow, one we see at the end of a storm, which signifies hope to be, akin very much to the promising future that lies ahead for our company. I spoke earlier about how your company has stepped up and played its part as a responsible corporate citizen. I would like to share a short audiovisual with you just highlighting the kind of work done by the company and its people. I do hope shareholders that you feel proud of your company's worth after you've seen it. Can I request you to play the audiovisual, please? [Presentation]

Thank you. Is it over, the audiovisual? Okay. Well, thank you very much. Dear shareholders, I hope that, that short audiovisual gave you a flavor of what's been happening over these last several years. If you got the message from it that people are in the center. It's not you boys, it's not mechanics, it's not truck drivers, but people and relationships are the center of Castrol India, you probably got the right impression. I now open the floor for members who have registered themselves as speakers. I recognize many of the names of people who are here to speak or post their questions. I request members to note that in order to avoid repetition, all questions will be answered at the end. We'll take down the questions, and we will curate them and all -- and after all the pre-registered members have spoken and all the questions have been put before the meeting, we will answer them. I now request, as usual, I will take the questions and those that are relating to the detailed operation of the company, I will require -- I request the Managing Director to answer. And some of them, I will try to participate in as well. So I now request the Company Secretary to please facilitate the questions from the members.

Thank you, sir. Can I request the moderator for the meeting today to unmute the pre-registered members one by one and take their questions? We will first request [Mr. Dyaneshwar K. Bhagwat] to kindly turn on his video facility and speak. Bhagwat?

Okay. My first question is that, there is no problem of sales part. The problem is at the income [indiscernible] you given the detailed information on our net income part. So there is no question of income part. On the 1 question is that, Page #47 Annexure 1, and point #6, I would like to know the details what's the disclamation has given by some points has given that disclamation. So can you let me know about what's the meaning of that?

Okay. We'll note that question now. Go ahead.

Second question is nothing much on the impact of COVID-19. What is the impact for the second quarter and third quarter? What will be the impact of COVID-19? Because just now, you've given all the details of that what the company is doing and all that. So there is no problem. I think there is no problems for me. That is the first question, which I give you some answer the questions.

Dyaneshwar, thank you very much. Both your questions have been noted, and we will address them when we answer all the questions together. Go ahead, Chandana. Who's the next speaker?

We will move to [Mr. Santosh Kumar Saraf]. Mr. Saraf, could you speak -- unmute yourself and speak?

[Foreign Language]

[Foreign Language] Thank you very much. All these questions will be answered. What's next, Chandana?

We will request [Mr. Adil Polad Irani] to speak.

My old friend, [Adil Polad Irani]. I now recognize him from my Tata days.

I normally don't question what takes place before 31st of March, that is history. I mean basically, I become a shareholder, and I want to recall Mr. Gopalakrishnan is there. And I mean the question, what does Castrol stand for? Is it castor oil, which when we were small our parents used to give us? What does Castrol stand for, basically, okay? And okay, somebody also asked what is the savings per shareholder, basically? I mean it's something nice that is happening. And that is it. I always like [Foreign Language]. I'm basically again like a poor farmer from Dahanu. The people are fighting at the front and even the doctors. So it's [Foreign Language] and the poor farmers were producing -- and okay, sir. That's it.

Thank you, Adil. We will -- I appreciate your comments. Thank you very much. Keep well, stay safe.

We'll move on and request [Mr. Dipankar Purkayastha] to speak, please.

Okay. So first of all, being a non-Mumbai-based shareholder, let me say that I'm very grateful for this electronic video conference, which has permitted non-Mumbai-based shareholders to join. And I would request that in future also, even if the Ministry of Corporate Affairs permits the physical shareholder meetings to resume, please allow the non-Mumbai-based shareholders [Audio Gap] Now coming to questions, I had sent in a list of these questions. So I don't know, should I just recap those questions?

Yes, if you can take us through.

Mr. Purkayastha, you've been -- we can't see you. Your bandwidth is low.

Maybe some of us can take it off the video. I just closed mine.

Mr. Purkayastha, we can hear you. So why don't you speak your question, we will take it down. He has been cutoff, I think.

I think we lost his connectivity. We can come back to him.

We will come back to Mr. Purkayastha. If you go to the next shareholder, please?

Yes. We can request Mr. Arun Kumar Bopanna to speak, please.

Mr. Arun Kumar Bopanna, the poet.

[Foreign Language] So privilege and honor to attend this AGM. Welcome to Ajay sir, Gopal babu as the Chairman. Never before, never after has somebody taken over as Chairman in such a COVID situation. I wish you all the best. Corona has made everybody reset their lives. How did Castrol handle the situation, safety for all staff and stakeholders? RG, sir, you're always unique. You gave us hope when there was no scope. [indiscernible] into superiority. Always billing equality, I compliment you for that. I'm glad you're smiling, sir, I like your smile. I just want to tell the members there on the Board, regardless whether you're an active service or not, you're worth a lot, with silver in the hair, gold in the teeth, stones in the kidneys, gas in the stomach, lead in the feet, you're worth a lot, sir. My questions, one -- first, truck drivers are frontline warriors in mobility. What are the programs for the livelihood? The alliance with BP and Reliance industries, what are new channels for visibility and reach? What are the future plans for safe dispensing? Is it really practical? Will the production be affected given to the same business? Plans for future sustainable delivery? BS VI lubricants, carbon neutral offerings, Castrol -- can you throw some light? Are these glass cleaner, car shampoos, car cream waxes, et cetera, value-added products? What are advanced mobility solutions for better internal combustion engines, refluids, et cetera? In conclusion, sir, there is an enormous responsibility considering Castrol brand. I wish you all success to pace with boldness, avoid a duck media situations as there are no crystal ball predictions available. I wish you all the best and success in your quest to drive Castrol for bigger tomorrow with performance, responsible to community and society.

Thank you. Mr. Bopanna, as always, it's a great pleasure to listen to the depth of your questions. We will answer them. Thank you. Keep well. Yes, Chandana, next?

We will now request -- I'm sorry, Ms. [indiscernible] to speak, please.

I especially want to congrats our CSR committee members by performing their responsibilities very well and company was recognized with many prestigious and diverse external [awards]. What is the impact of COVID-19 pandemic situation within India as well as abroad? What is the company's policy to overcome this pandemic situation? Third one, what is the impact of COVID-19 situation on current employees' salary or any layoff policy? With this, I support all the resolutions and success in coming years.

Thank you.

Thank you, Ms. [indiscernible]. We will request [Mr. Vishesh Bhagat] to speak, please.

Let me congratulate Chairman sir first for becoming -- for taking over this in this difficult time, I'm avid reader of is column in Business Standard, and it is very interesting and knowledgeable. Now my question is, whether the plant of the company, they've resumed full operation and working in a full capacity? And what would be the impact of COVID-19 on the future earnings of the company?

Thank you.

[Mr. Rishabh Mankad], please?

I just have one question to ask. Will the company provide the printed copy of the annual report later?

Thank you.

Can we come back to [Mr. Dipankar Purkayastha]? Moderator, could you unmute him, please?

Yes. I'm sorry, I got cut off. Can you hear me now?

Yes, we can. Can we just -- you can put your video off. That way we can at least speak to you and hear you.

Okay. I think we'll just continue as it is. So my first question was that in the last 3 years, the receivables DSO, days sales outstanding, have been going up every year, payables days outstanding going down every year. As a result, the cash conversion cycle, which was the pride of this company, being negated by a large amount will probably turn positive this year, resulting in the company having to invest in working capital for the first time in its history. So why has the management of working capital deteriorated? Or has the terms of trade of the company deteriorated to its detriment? If so, why? The second question is, during the past 2 years, additions to furniture and fixtures have far exceeded additions to plant and equipment. In financial year '18, we spent INR 58 crores on furniture and fixtures, INR 28 crores on plant and machinery. In '19, we spent INR 52 crores on furniture and fixture and INR 12 crores on plant and machinery. Even if I allow for disposals of old furniture, the net expenditure on furnitures is far more than plant and machinery. As a result, on 31/12/19, if I see the balance sheet, the carrying amount of plant and equipment is INR 62.63 crores, is actually less than the carrying amount of furniture and fixtures, which is INR 66 crores. I think this is the only listed manufacturing company in India where the carrying balance of furniture and fixture is more than the carrying balance of plant and machinery. So why is the expansion of furniture going up and up? That was second question. Third question is, during the past 5 years, if I look at the CAGR of sales, it's 2.7% per annum. If I factor in inflation, this is actually negative or degrowth in real term year-on-year over the last 5 years. And if I look at our competitors, Gulf Oil, Tidewater Oil, which is a PSU, they have grown in real terms. So why is our company unable to grow whereas our competitors are able to do so? And what is our market share in automotive lubricants now? And what was it in 5 years back? Now we all know that with the advent of electrical and hybrid vehicles, the relevance of lubricants in the automotive sector is going to come down. So does this company have a mission vision statement? And what is its long-term strategy of remaining relevant in the automotive business? And finally, this collaboration that the company has signed up, one is with 3M. So what are the tangible benefits that are going to accrue to this? And have you all spent any money? Is there any investment involved in this collaboration? And my last question is the recent tie-up with the Reliance BP. It's a good thing. I welcome it. I only hope that you all are aligned to the fact that in the not-too-distant future, Reliance will also probably start manufacturing lubricants and selling it, just as the PSU oil companies are already doing so.

Thank you, Mr. Dipankar, very perceptive questions. We have taken all your questions. Are there any other shareholders, Chandana?

We will invite [Mr. Vinay Bhide] to speak. He will be the last speaker for the day. Moderator, could you unmute [Mr. Vinay Bhide's] line, please?

Now I will start, first of all, we have got 2 new members on our Board. One is an existing Board member in new avatar, so I welcome Mr. Gopalakrishnan as our Chairman. And of course, Mr. Sandeep Sangwan, who fills in the shoes of Mr. Omer Dormen, who has also had a good stint in the company. So I will quickly start with the questions that I have listed out, just give me a second. My mobile seems to be having some problem. Anyway, I'll quickly make 2 points, which I had as an afterthought after listing out the points, which I've sent on mail. Now the first thing that has come to my mind after the recent announcement is that this year our company has been great at making partnerships. This is what is one great thing about our company. Earlier, it was partnerships with the auto manufacturers. Then we had some programs that we ran for the mechanics and so on. This year, there's a different shade to the partnerships. First, I was very happy for the partnership that we are having with 3M and close on the heels of that. And after now, I wrote my points for this AGM is the announcement which you have recently made regarding the partnership with Reliance BP mobility, wherein our lubricants will be sold through the existing 1,400 pumps to go up to 5,500 pumps. So these are 2 key points which quickly come to my notice. I listed out a few points. If you can give me a minute, I will get back. But I think in order to save time, if you can go on to the remaining speakers, I'll quickly set right my mobile and get back to the questions.

Actually, if you've sent your questions, we already have it. And if you will agree, then we will take them for answer, so that you don't spend your time on your mobile phone and listen to us.

No, I also got my mail open. Let's me check if the laptop is helping. So where this can be read out further benefit of the viewers, just give me a second, sir.

Sure.

Well, it's going to take some time. So what I suggest is that either you can give the replies on the questions I've given or if somebody is having a print out of that, they could as well read out the questions for the benefit of the readers.

Okay.

I close, sir, for giving me an opportunity to speak, I support all the resolutions. Though the question of some of the earlier speakers like Mr. Purkayastha has got me thinking a little all the same, and I believe that Castrol is a great company. They will come out with innovative ideas to get out of any problems that we may have in the future.

Thank you, Mr. Bhide. Any other, Chandana?

No, none more, sir. Mr. Bhide was the last speaker for the day.

So thank you very much to all the shareholders. You asked very pertinent and sharp questions, and we really value it, believe me. We really value your questions because we are a reasonably good company, but we always have scope to improve. What we have decided on this particular AGM, because we are not all sitting together, and we are not able to exchange notes, is that the Managing Director, Sandeep Sangwan, will curate these questions, bunch them up together and would have collective data from his colleagues. And many of them are operational and pertain the company's detailed operations. May I request that Sandeep Sangwan will answer these questions. Sandeep, over to you.

Yes. Thank you, Chairman, sir, and good afternoon, everyone, and namaste to all our esteemed shareholders. I do hope you and your families are safe and in good health. Your company is going through extraordinary phase in time with 3 key external factors impacting the present and possibly the future. I think the current situation in COVID pandemic, which we're facing as a company, as a nation, as a society, is the first one. The second being the auto industry is transitioning in India to BS VI emission standards. And the third is the onset of hybrid, electric and autonomous vehicles on the horizon in the midterm future. I think as a company and brand, with a strong track record of success and growth, Castrol has endured disruptions and major shifts in its business through the years. Be it the 2-wheeler market, which changed from 2-stroke to 4-stroke engines. Mono-grade oils moving to multi-grade oils and now to synthetics. The internal combustion engine, which has become far more efficient with longer drain intervals requiring superior products. For some of our brands, for example, of commercial vehicle oils, we claim long drain intervals of up to 120,000 kilometers now as compared to 60,000 about 3 years ago. So that's the change in technology that we are facing. But not only that, we are coming up with superior products to address the market. I think your company has kept pace with the industry with a passion for performance and innovation, combined with the philosophy of working in partnership with several stakeholders. Your company monitors the changing landscape closely to review several future scenarios and adapt its strategy to take advantage of these developments. While the scale of disruption appears unique and unprecedented, so is the experience your company has in managing these. This experience will stand in good stead, along with the strong values of safety and quality, as it gets ready to shape and win in the future of mobility. And I just wanted to share this context with our esteemed shareholders before I get to specific questions. And -- sorry, somebody wanted to come in -- so let me get into the specific questions. The order may be different, but we'll try and address all the questions that have been raised by our esteemed shareholders. There was a question about our collaboration alliance with Reliance Industries, as our Chairman sir said, our collaboration with Reliance BP Mobility Limited. I think it presents us with an exciting new growth opportunity as Castrol India will supply lubricants to the JioBP fuel courts shortly. We will be starting on that very shortly, in fact, within this month. This joint venture presents us with an exclusive access to JioBP fuel courts and retailing network of 1,400 sites, which are planned to expand to 5,500 sites over the next 5 years, and Castrol would be the only lubricant on those fuel courts. This also provides us with the prospect of interacting with millions of potential consumers visiting these outlets, which will help strengthen Castrol brand visibility and consumer engagement. So we see it as a very exciting opportunity, which will help us grow our business. There was a second question around what is the impact of COVID-19 situation on the current employees' salary or any layoff policy. We are very happy to say, and thank you for showing the concern for our employees and people, that during the lockdown, we have paid both employees and contractors as per our contractual obligations. The employees' increments have been deferred to a later period during the year, but we will give increments, and we have not laid off any employees due to COVID as on date. Let me move on to another question, which was about future and how will we work in the future about safe distancing? Is it really practical? And again, a big thank you for your question and concern. In Castrol, the safety and well-being of our people has been our number one priority always and more so during this pandemic. Our teams began working from home since mid-March. In fact, a week earlier than when the government announced the lockdown, and our plant operation was safely suspended for some time until we resumed operations back in early May. At our plants, social distancing, masking, washing hands, temperature checks and sanitization is part of the new normal, which you may have seen glimpses of in the opening video. And I'm happy to inform our shareholders that all the 3 plants that we have in India are operational, and we are respecting all the government advisories and compliances in this current situation. Office-based staff continue to work from home, and this will continue for the foreseeable future. Similarly, we will take all the precautions necessary for social distancing and safety once we resume offices, and we have a plan in place as and when that happens. There was a question around 3M collaboration and what are the tangible benefits that will accrue with these partnerships. The Castrol 3M India is an exciting partnership between 2 trusted and quality brands aimed at extending Castrol presence in the automotive care category. This collaboration brings new business model for Castrol and drives value for Castrol's customers and consumers through innovative vehicle care products that are adjacent to Castrol core engine oil brands and transmission fluids. There is no significant investment in this collaboration, except for normal marketing investments that we continue to make behind our brands. We are working with our partners and 3M to be able to build the right distribution model as well as the right product assortment that would lead to long-term profitable growth from this segment. We have seen good progress and are confident of growing this category in the future. And this is still in a limited test market scenario, and we will expand nationally based on those learnings. There was a related question that what are these products such as glass cleaners, car shampoos, cream waxes, tire dresses, et cetera, and are these value-added products. Castrol, as I said earlier, in collaboration with 3M is offering co-branded products. So these products have a Castrol brand and 3M brand. And these are for car and bike care as you highlighted in your question, and these are quality products and are categorized into 3 subcategories about cleaning, cleaning your vehicles, shine, which is giving a shine and a gloss appearance for your vehicles, and the third is protect products, which protect the appearance of your vehicles outside and inside. There was a question around the last 5 years' growth that our sales is about 2.7% -- sales growth is 2.7% per annum. And what does it mean? And what has been the market share over the last 5 years? So first of all, sir, I'd like to say that you make a very valid point, and thank you for raising that question, which has been on our minds as well as we look at our business and our future. It is true that we've grown sales by CAGR of 2.7% over the last 5 years, while others have grown at a higher rate. What I'd like to share with you is Castrol continues to be the market leader in automotive space, as reported by Nielsen, with a volume share of 17.4%. So we are in a strong position. However, our share has declined by about 1.4% in the last 4 years, and that's an area that we continuously monitor and are working on plans then how do we win back that share. I think our strategy has been to grow profitable market share. We have made strategic choices and prioritized resources on the faster-growing and profitable categories, such as personal mobility. We strive to strike the right balance between market share and shareholder return. In striving to meet this balance and being a market leader also makes us vulnerable to competition, both organized and unorganized, because there is a part of market in India which is in the unorganized sector. But thanks for raising this. We will definitely keep this in mind as we work through our plans for the future. I think there was a question around the split of revenues from tractors, SUVs, 2-wheelers and indicated market share of Castrol India for the following types of vehicles, tractors, SUVs, 2-wheelers. I'd like to share with our shareholders that we report our accounts on the broad category of lubricants and not by various very specific individual segments. Almost 60% of our business is accounted for by personal mobility and the balance being commercial vehicles, agri sector, heavy-duty and industrial. As reported by Nielsen, our market share by volume in cars is 29% and 2-wheelers is 25%. That is what we track as a market share. There was another question around -- which was a submitted question from our shareholders. Truck drivers are frontline warriors in mobility. What are the programs for their livelihoods? First of all, I'd like to say thank you for your empathy shown towards truck drivers who lead a tough and demanding life, spending days and nights on the road away from their families, driving for long hours on difficult terrains and challenging road conditions. Supporting truckers community is a key part of our CSR strategy. Castrol Sarathi Mitra is Castrol India's flagship social responsibility program and aims at holistically improving lives of truck drivers through interventions that enable a sustainable livelihood, build pride and respect in their profession and opportunities for socioeconomic growth. Key objectives of the program is to enable trucker participants towards safe driving, healthy living and financial empowerment for them and their families. To date, we have touched the lives of 75,000 drivers through this program. There was a question [Foreign Language]. And I'd like to say, as a responsible corporate citizen, Castrol India has committed its support to communities by allocating approximately 50% of the annual CSR budget towards COVID pandemic support, while we have not donated anything specifically to the PM CARES Fund. We are working with various NGOs in the areas of medical support in form of critical equipment to government hospitals across 8 states. Survival kits, including groceries and dry rations to the migrant daily-wage earners and food for stranded truck drivers at various transportation hubs. As Chairman sir said, a protective gear to policemen and sanitation workers. We touched about 62,000 mechanics and their families with a small monetary contribution and complementary lubricants through independent workshops across the country to service vehicles belonging to essential service vehicles. And we've also provided complementary sanitization offers and sanitization kits to independent workshops in order to help them safely restart their workshops as they get back to business. I think Mr. Saraf also asked a question around providing jobs to disabled people and [Foreign Language] and we strongly support diversity and inclusion within our organization. We strive to look for a diverse talent, including differently abled people. We are very happy to take note of your suggestion without compromising on the right skills for the right role, and we will definitely keep that in mind as we go along. There was a question around furniture and fixtures that why have -- furnitures and fixtures over the last 2 years have far exceeded additions to plant and equipment. Let me first assure you, sir, that our plant and machinery have adequate investments and capacity to sustain and grow our business. We've also embarked on Silvassa expansion to further increase our capacity in line with our strategic focus on growth in personal mobility. The increase that you see in furniture and fixtures is on account of classification as spends related to retail transformation, which is signages in the market, signages in the trade that we put on workshops and various retail outlets to drive our brand visibility and consumer preference fall under furnitures and fixtures. Net of the retail transformation spends of INR 52 crores in 2019 and INR 57 crores in 2018, the increase in furniture and fixtures is negligible. Of the CapEx payable of INR 21 crores as of 31/12/19, approximately 25% is towards this retail transformation spend. I think there was a submitted question around use of recycled packing materials, particularly polymers. And this trend is already seen in progressive FMCG products and companies and what is Castrol doing about it? We are trying to become more sustainable. We are working with leading plastic post-consumer recycled resin, PCR resin manufacturers across the country and have conducted various trials on our regular packs -- when I say packs, it's bottles, wherein we are establishing recipe for using PCR materials and significant percentage in our commercial packaging and will continue progressing on this initiative. Last year, we also implemented a project which has helped us reduce our plastic content by 20%, saving on 800 metric tonnes of plastic annually within India, while also achieving 20% reduction in logistics footprint. BP, Castrol's parent company, has also announced a net 0 ambition by 2050, which we will also take into consideration to become more sustainable in the future. There was a submitted question from Mr. Bhide. What is the target date for completion of expansion of Silvassa plant capacity and start of commercial production? We would like to report, sir, Silvassa expansion project is currently on hold on account of the current COVID situation. The time lines will be reviewed when the project activities commence again as soon as the situation allows us to recommence these activities. There was a question, what changes has Castrol undertaken to its portfolio to comply with BS VI? BS VI has different specifications and implications across vehicle categories. Castrol's BS VI compliant range of technologically advanced lubricants with lower levels of sulfur, phosphorescent sulfated ash were launched in the market towards end of 2019. Your company, I'm very proud to share, was one of the first companies in India to launch the full range. Castrol's lubricants use superior quality-based stocks and performance additives, which help in maintaining critical properties of the lubricants, including oxidation stability, ware control, oil consumption and durability under severe operating conditions. There was a question around long-term strategy and remaining relevant in the automotive business, given the advent of hybrid, electric vehicles in the not-too-distant future. And I'd like to share that, as I said in the beginning, Castrol has seen several disruptions and has been successful in navigating changes in the industry over the last 100 years. With that, I'd like to assure you that the company is also geared to manage the changes in the future. First of all, internal combustion engine vehicle park is going to grow over the next few decades, given the low penetration of car ownership in India, which is only about 21 per thousand consumers in 2019. And if I compare that with China, it's about 168 cars per 1,000. So there is still a potential to grow our business in internal combustion engines. At the same time, with support of our global R&D centers, we continue to develop a range of e-fluids for the hybrid vehicles and the electric vehicles. And in hybrid vehicles, actually the fluids consumption is higher than internal combustion engines because they need both kind of fluids. They need lubricants for internal combustion and they need other fluids, which are more related to EV fluids. In India, you'll be happy to know that, we are already supplying e-fluids to Tata and MG Motors. And keeping future in mind, we're also entering into adjacencies as the 3M collaboration that I spoke about. And I think if you look at these new opportunities and the new developments, they also bring opportunities in new channels and spaces, which we continuously evaluate. For example, EV technology will give Castrol's strong technology and innovation background to create differentiation in transmission fluids and new generation battery coolants, and that is something our global R&D teams are working on. There was a question, does the company have a mission vision statement, if so, what it is? Our 5-year vision for Castrol India is focused on making tomorrow bigger. And that's a statement that we've shared with our employees, with our stakeholders making tomorrow bigger with 3 key pillars of growth, transformation and responsibility. And one statement that we share with our teams and all stakeholders is, we at Castrol India constantly reinvent ourselves by powering transformations and creating solutions for a better tomorrow. There was a question, what are the advanced mobility solutions for better internal combustion engines, e-fluids and hybridization to decarbonize. And I think I've responded to this question in my earlier answer that we continue working with our global R&D technology centers on EV fluids, hybrid fluids and better engine oils for the new category of internal combustion engines, which are more thinner and synthetic oils. There was a question on what is the impact of COVID-19 on the company. What are the steps, policy changes made by a company to overcome the situation in India and globally? I think COVID-19 is -- ma'am, is a currently ongoing crisis. We continue managing this crisis based on the 3 key principles that Chairman sir spoke about, which is keeping our people safe, supporting our communities and protecting the health of our business. We continue to work from home and have provided support to our employees as you've seen in the video. We've also supported our communities, which I've shared on what we have done in one of the earlier questions. For protecting health of our business, we have a clear plan to strengthen our finances, including near-term objectives like optimizing cash -- optimizing costs, sorry, protecting cash and evaluating more efficient ways to drive margin and looking at robust working capital by managing inventory. As far as the future is concerned, I think COVID is also impacting global economies, and we follow the same principles across the globe as Castrol. And at the same time, we are working to come out of this crisis stronger and more efficient through innovation and new ways of working. And we have been working on various multiple scenarios of recovery, and we've done scenario planning and the impact of COVID is likely to stay for the next 18 to 24 months in the short term, and which will mean fundamental changes on how we operate as we go into the future. Specifically on the second and third quarters, I think we are seeing good recovery in demand coming through. And we are -- given our scale and presence in India, we are able to fulfill all the demand that is coming from the market. There was a question from Mr. Saraf on dividend distribution tax and the treatment of that. Sir, when the final dividend was declared, DDT was still applicable. And hence, we have disclosed the same under Note 9b of the financial statement. However, this is only a disclosure in the notes, and there is no provision in the books for 2019 on account of either final dividend for 2019 or DDT applicable thereon, in line with the India -- IND AS requirement. Since the dividend has been paid subsequently in July, there is no DDT applicable thereon. There was another question, [Foreign Language]. Have you donated any electoral bond to a political party? If yes, then what is the value of those? And sir, we do not make any political donations as Castrol India. There was another question around -- from Mr. Saraf. On Page 90, you reported that there are so many tax disputed cases that are pending from year 1994. In this regard, kindly tell me why you are not interested in settling these cases under Vivad se Vishwas and Sabka Vishwas scheme launched by the central government. The scheme Vivad se Vishwas and Sabka Vishwas are for settlement of central tax litigation. The tax dispute for the year 1994 pertains to state taxes. We have case of possible refund in the state of Maharashtra, which we are pursuing with the tax authorities. The company evaluates all the amnesty schemes and applies wherever appropriate. We are confident that the company has a strong case to defend. There was a question from Mr. Purkayastha on receivables and DSOs as to why is it impacting the cash conversion cycle. Sir, we would like to state, and thanks for raising this, during the recent years, there's been a liquidity crunch in the market, which has impacted our business partners in their operations. On account of the long-term relationship your company shares with its key stakeholders, your company had to make interventions to support them to tide over the situation. We have extended our credit terms to the distributors as well as offered shorter payment terms to some of our vendors as a response to these challenges. Further, we have digitized some of our payment processes for our key stakeholders. For example, for rebates, coupons, distributor claims, resulting in lower outstanding days. We are constantly monitoring the liquidity situation. And once things resume to normalcy, we will bring back our focus on driving working capital improvements. We continue to be empathetic to our business partners and support them to the extent possible in times of their need. There was a question from Mr. Irani on castor oil. What does Castrol mean? Is it derived from castor oil? Sir, yes, when the company started years ago, castor oil, because it was the slipperiest vegetable oil available in the market, was used as a lubricant before hydrocarbons came in. That's where Castrol comes from. There was a question -- submitted question, which was not raised. All the director photographs with good smile, but what about foreign director photograph is not seen in the annual report? Sir, we would like to state that the present annual report depicts the Board of Directors of the company as on date of the Board meeting held on 31 January to approve the audited financial results for 2019. Foreign directors, that is Mr. Omer Dormen; Mr. Peter Weidner; Mr. Josceline Mark Sclater and Ms. Shiva McMahon, had ceased to be directors of Castrol India as on that date. There was a question about a disclaimer in Annexure 1, Page #47.6. Please explain me about the disclaimer why such remark has given? Sir, S. N. Ananthasubramaian & Co. are secretarial auditors of the company. They're not responsible for auditing company security -- they are responsible for auditing company secretarial records. Accordingly, they do not audit or verify the correctness and appropriateness of financial records and books of accounts of the company, which is done by the statutory auditors of the company. There was a request raised. Please register my name for the plant visit. Please do not forget me. Sir, at present, the company does not have any plan of organizing the plant visit considering safety of the shareholders of the company. There was a question from Mr. Saraf around why is it the 42nd AGM. CIL was incorporated as Indrol Lubricants & Specialities Pvt. Ltd. on May 31, 1979. Thereafter, name of the company changed to Indrol Lubricants & Specialties Ltd. on December 10, 1982. The financial year of the company was changed from April, March to June, December. In one of the financial years, 2 AGMs were held. Hence, this is the 42nd AGM from the date of incorporation of the company. There was a question again from Mr. Saraf around -- kindly tell me the aggregate number of shareholders and debenture shareholders whose undelivered or unclaimed shares debentures are lying in the unclaimed shares debenture suspense account at the end of the year, 31 March 2020, excluding in IEPF. Sir, the requirement of maintaining an unclaimed shares, debentures, suspense account does not apply since the company has not made any public issue of shares or debentures in the last decade. There was a question around the conference -- sorry, the AGM cost. Last year, INR 45 lakhs approximately was the cost of the -- holding the AGM. Given the virtual meeting and distribution of e-copies of the annual report, expenses for this year is expected to be lower than last year, but what it is, we just need to complete the process and then have that information. And I'm coming to the last question, which is, will the company provide printed copies of the annual report after the AGM? In view of the MCA circular, company will not provide the printed copies of the annual report this year. The e-copy of the annual report is available for download from the Castrol India website and the stock exchanges. With that, Mr. Chairman, sir, I think I've answered all the questions that were submitted or asked in the conversations, and I hand it back to you, sir.

Thank you. Thank you very much, Sandeep. In one sense, having this virtual AGM is causing a little more order in the questions and the answers. At least, that's my perception. But I hope the shareholders are satisfied with the answers given. I would now like to proceed to the balanced statutory part formalities of the Annual General Meeting. Since the notice of the Annual General Meeting has already been circulated to members, I take the notice as read. The text of all the resolutions, along with explanatory statement, forms part of the notice of the AGM circulated to all the members. We will take up all the resolutions set forth in the notice. Company Secretary, do I need to read out every resolution or can I just say, item number one?

If you can read out just the headlines of the resolution, sir. You don't need to get into the details of the resolution.

Item number one is about ordinary business, adoption of the audited financial statement, auditor's report for the financial year ended 31study December and the Board's report thereon. Can I go to item number two?

Yes, sir.

Item number two is ordinary business, an appointment of a director in the place of Mrs. Rashmi Joshi of her director's number, who retires by rotation and, being eligible, offers herself for reappointment. Item number three comes under special business, to consider and ratify the remuneration payable to Kishore Bhatia & Associates, Cost Accountants for the financial year ending December 31, 2020. Item number four is also special business to consider reappointment of Mr. Omer Dormen as the Managing Director of the company for the period from 12th October to 31st December 2019, is just to bridge the gap before Mr. Sangwan took over. Item number five is also a special business to consider the reappointment of Mr. Jayanta Chatterjee as a Wholetime Director of the company for the period of 5 years, effective 30th October 2019. Item number six is also special business to consider the reappointment -- oh, this is myself. So am I supposed to read it out or am I supposed to hand over to [indiscernible]?

You can read it out. You're really announcing what the resolution is.

To consider the reappointment of R. Gopalakrishnan as an Independent Director of the company for a term 5 years effective 1st October 2019. Item number seven, to consider the reappointment of Mr. Uday Khanna as an Independent Director, again, for the same period from October '19. Item number eight is to consider the appointment of Rakesh Makhija as an Independent Director for the same period from 5 years from October '19. And item number nine is to consider the appointment of Sandeep Sangwan as a Director of the company. Item number 10 is to appoint Sandeep Sangwan as the Managing Director of the company for a period of 5 years from 1st January 2020. Item number 11 is special business to appoint remuneration other than sitting fees payable to the nonexecutive directors of the company. So those are the 11 resolutions on which you're required to vote. They shall be deemed to be passed today subject to receipt of the requisite number of votes. As mentioned earlier, the e-voting facility available during this meeting and will also be available for 15 minutes after the closure of this meeting. After combining the results of both the remote e-voting and voting at the AGM, the results will be announced within 48 hours from the conclusion of the meeting and shared with the stock exchanges and to be uploaded on the websites of the company, the CDSL. We have some -- how many members participating in this meeting?

64 of our members joined the meeting today, sir.

64 members participating in this meeting. I thank you all very much, once again, for joining the meeting today. I sincerely hope you and your family stays safe and healthy in the period to come. I hereby declare this meeting as closed. Thank you very much. And God be with you.