Castrol India Limited (500870) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to our 4Q and Annual 2021 Earnings Conference Call for Castrol India Limited. [Operator Instructions] We have with us today, Sandeep Sangwan, Managing Director, Castrol India Limited; and Deepesh Baxi, Chief Financial Officer and Whole Time Director, Castrol India Limited. I would now like to hand the conference over to Sandeep. Thank you, and over to you, sir.

Can you hear me?

Yes, sir. We can hear you. You may please go ahead.

Okay. Thank you. Good afternoon, everyone, and thank you for joining us today. I hope you and your family are doing well and are safe and healthy. We're pleased to share that Castrol India Limited has delivered resilient growth and performance in the fourth quarter and full year ended 31st December 2021. In '21, Castrol India delivered its highest-ever revenue from operations until date. While pricing played a role in driving revenue growth, we are pleased to share that our volumes have also grown versus prepandemic levels in 2019, which is a great sign of recovery after 2 years of pandemic impacts. In fourth quarter, we achieved continued revenue growth amidst a very challenging environment marked by an unprecedented rise in input costs and supply chain disruptions resulting from the ongoing COVID-19 pandemic. Despite an adverse environment with rising input costs and softer market demand, especially in the second half, we also grew our bottom line through focused investments and prudent cost actions. Our investments are focused on leveraging growth opportunities through independent workshops, premium branded products and new formats such as Castrol auto service centers and Castrol Express Oil change outlets. Apart from investing in our brands, we are strengthening our service and maintenance offerings and scaling up adjacencies with 3M to offer co-branded products. I'll now invite Deepesh to take you through our numbers and financial performance. Deepesh, over to you, please.

Thank you, Sandeep. Good afternoon, everyone. Let me share some key highlights from our 2021 4Q and annual results for Castrol India Limited, which we announced yesterday. We reported a resilient financial performance in the calendar year and the fourth quarter ended December 31, 2021. From a current year point of view, full year, our revenue from operations were INR 4,192 crores, which is up 40% from last year, and this has been our highest revenue in the history of CIL. Our profit before tax was INR 1,029 crores, which is up 31% from the previous year. For fourth quarter 2021, our revenue from operation was INR 1,091 crores, which is up 17% compared to 4Q 2020. It was also 17% higher than the third quarter 2021, which is a sequential quarter. Our profit before tax was up 3% to INR 257 crores. In 2021, we delivered a strong return on sales and EBITDA of 21% -- 25%, sorry. The Board has declared a final dividend of INR 3 per equity share and this was in addition to an interim dividend of INR 2.5 per equity share, making the full dividend for the entire year at INR 5.50. I would now like to ask Sandeep to share some more updates on the business developments. Over to you, Sandeep.

Thanks, Deepesh. I'm very happy to share that we launched our Castrol Express Oil change service and India's first Jio-bp mobility station inaugurated in Navi Mumbai in October of '21. 25 of these express oil change outlets are currently operational in Jio-bp sites across India, offering swift and reliable oil change to 2-wheeler consumers on the go. We expanded our Castrol auto service network to 94 centers in 40-plus cities across India. Castrol's alliance with 3M to scale up adjacencies and develop a co-branded range of car care products was reinstated, which we had stopped because of the pandemic. And initially, when we did the pilot, we started with about 3 cities, and that has been expanded to 10 cities across India. The alliance combines 3M's expertise and technology with Castrol's route to market and branding know-how. Castrol also launched a new digital campaign, PerformanceThatSurprises, for Power1 Ultimate, its premium engine oil brand for 2-wheelers. And this campaign features Bollywood actor, Tiger Shroff. The campaign highlights the brand's 5-in-1 full synthetic formula that offers superior engine health for 2-wheelers. The fourth edition of Castrol Super Mechanic Contest launched in October 2021 registered participation from 140,000 mechanics, of which 35,000 short-listed mechanics received certified advanced technical training from the Automotive Skills Development Council of India, ASDC. The top 1,000 mechanics then have moved to the semi-finals of the contest and will culminate with the winners being announced in March 2022. In addition to existing partnerships with manufacturers of 4-wheeler electric vehicles, Castrol India also initiated technology collaboration discussions with some of the leading 2-wheeler manufacturers in India. We accelerated our focus on digital initiatives and technologies to automate business processes further and make our operations more agile and efficient. Talking to the community, which is an important part of our offer in the market, and as part of the sales teams on-ground community support for independent auto mechanics, Castrol India actively encouraged vaccination for mechanics and their families. I'm very happy to share that fully vaccinated mechanics were incentivized with a free-of-cost 2-liter pack of Castrol Activ. Advancing our sustainability agenda in India in 2021, we introduced targeted interventions in our operations, packaging and distribution with a focus on saving waste, reducing carbon and improving people's lives. We optimized our packaging design for small bottles, achieving 20% less plastic consumption and reduction of logistics footprint. In addition, we successfully commercialized reduced temperature blending for select product variants and conducted an energy audit at our 3 plants to identify options to switch from nonrenewable energy to renewables and solar energy for our plant operations and supply chain. On the social front, Castrol India's flagship CSR programs for mechanics and truck drivers continue to provide holistic development and upskilling to enable sustainable livelihoods and a greater sense of pride for mechanics and truck drivers in their profession. The company also undertook a COVID-19 vaccination drive for community members, reaching out to more than 70,000 beneficiaries. Amidst the ongoing pandemic, the increasing rate of vaccinations across India and return to normalcy is a good signal, and we remain positive on our future outlook. The management team at Castrol India Limited will continue to observe the external situation closely and respond with timely and appropriate actions as needed. We are confident of our strong business fundamentals and long-term profitable growth. And lastly, I urge you to continue following all COVID safety protocols to ensure you and your families are well and safe. On that note, I would like to open the session for your questions, please. Thank you.

[Operator Instructions] We take the first question from the line of Viraj Kacharia from Securities Investment Managers.

I just have 3 broader questions. First is on the EV play, we keep on saying that the parent has a 50% share in EV in the passenger vehicle space globally, but if we were to understand our play in India market, if you can just provide some perspective in terms of what is the current pipeline or OEs which we cater to. And how is the orientation cost? Most of the EV companies, which we see currently, especially in 2-wheelers, are new-age start-ups. While traditionally, we've been having a higher share in the incumbent ICE base players. So that is one. And a related question there is when we say EV fluids, a lot -- there are different offerings with some being pure and glycol-based and the formulation being just 1%. So there's a perception that the value addition is not that significant per se, vis-a-vis what we see in a loop or a traditional ICE vehicle. So if you can just provide some perspective, what is our play, what is our orientation and on the product itself. So that is one. Second is, we -- if you look at our overall dividend outgo, it's quite meager, it's constrained. We don't have any significant CapEx requirement or most of the investments in businesses are purely OpEx in nature. And the cash position just keeps on building up every year. So even this year, we kind of announced with INR 5.5 dividend, which is still quite low considering the kind of cash position we have and the cash position will keep on building up in coming years as well. So I just want to understand why and -- what is really stopping us from a larger payout or even probably buyback to reward long-term shareholders.

Thanks, Raj (sic) [ Viraj ], if I got the name correct and pardon me if I have not got the name correct. I think -- let me answer the EV question. I think the EV technologies are still evolving. And I just want to give a broader context. While there is a lot of kind of talk on EVs, I think the first transition we see happening would be the 3-wheeler and 2-wheeler space. I think as far as cars are concerned, given penetration rates for cars in India, we see the ICE market also expanding pretty handsomely going into the 2035 to 2040s. I think as far as your -- which are the OEs we work with, so the 2 biggest car OEs in India who are in the electric space are Tata Motors and MG Motors and we work with both of them. And we're working with a few others in terms of technical collaboration and see where that leads us and we have some OEs who also not publicly announced their kind of programs and respecting NDAs, I wouldn't like to name them. As far as 2-wheelers are concerned, as I said, we have technology partnerships with a combination of OEs, whether it's traditional or start-ups, as you said. So we are working with both of them from a technical collaboration perspective. Definitely, the 2-wheeler -- especially amongst the 2-wheelers and the fluid requirements, because they don't need engine oil, the fluid requirements tends to be lower, okay, which is primarily centered around transmission fluid, greases or coolants in a liquid-cooled battery, but the technology is still evolving, okay? I think if you look at the car sales, EV car sales, at the beginning of the year, they were about 0.2% of the total new car sales, okay? And so there's a lot of room for growth for a company like Castrol even in the traditional ICE engine space given the penetration rates in India. The second thing is, as I mentioned, that's as a result of -- EVs will come, and we want to help in the transition by offering fluids that work with EVs. But at the same time, we are expanding to adjacencies, as said, about service and maintenance network, the 3M collaboration, which will open up additional revenue opportunities for us. With that, to answer your third question, which is on the dividend outgo and the cash position, let me hand over to Deepesh. And Deepesh, if you can just respond to that.

Sir, just -- sorry, just one follow-up on the first part. I understand the transition will be faster in 2-wheeler and 3-wheeler. And if you look at our overall current business mix also, we have a very high volume share from 2-wheelers in the personal mobility segment contributing a significant part of the volume and onto the profitability also. So I'm just trying to understand if, say, tomorrow -- a hypothetical question, but tomorrow, if the market were to move completely to EV in 2-wheelers, what is our preparedness? Where do we kind of retain -- how does the business look like? Because as a long-term investor, I mean, it's completely grey right now. How are we looking to play at it? And it's something which is kind of overhanging on the overall business and the stock generally, the lack of clarity for same.

Yes. So I think we're working on the transition scenarios. First of all, hypothetically -- in reality, the market is not going to turn overnight. It's not like you wake up to more money and goes to 100. So we're working on the transition scenarios. And as a company, as a brand, we are fully prepared to manage the transition. I think if I look at our total volumes of about 210 million, 208 million liters, only about 45 million liters comes -- 45 million, 50 million comes from 2-wheelers. And that transition, I think there's still enough large car parc over -- the vehicle parc over the next 8 to 10 years to continue giving us the volume. And then as cars penetration grows, there is also the impact of cars using more lubricants than the traditional 2-wheelers. I think as far as your question is concerned, how the company is prepared, we are fully prepared to face that transition and manage the transition through either having a greater share in categories which are still expanding, okay, which is the car space and the commercial vehicle space. The transition there is going to be much slower. At the same time, we are building additional sources of revenue and additional sources of growth to compensate for some of the impact that we'll see because of the 2-wheelers.

On the cash part, sir?

Yes, I'll let Deepesh answer that.

Yes. Thanks, Sandeep. So on the cash part, I'd like to address this in 2 or 3 ways. Firstly, whatever cash we have, and it's growing, and that's really good news, we are looking at how are we going to increase the yield on the cash that we have, right, through whatever investments in treasury portfolio that we currently deploy. So we will start seeing some more yield coming into the P&L from next year onwards. That's one. The second part is, as far as the dividend payout is concerned, yes, you're right, we have been consistently paying dividend of INR 5.5 in '19. In '20, again, when we had only a much lesser profit of only INR 580 crore, we continued with that dividend, right? So our policy is to be, be consistent. The dividend payout ratio is much higher than it was in 2019. 2019, it was 66%. This year, it is 72%, right? And we are always discussing and Board is guiding us in terms of how progressively we can yet be -- we can be consistent, yet reward our shareholders. I think the third element of your -- the way I would address the cash question is what do we do with the cash. So as Sandeep had shared in his initial message, we are entering into new areas. We are entering into Castrol auto services. We have the tie-up with Jio-bp, where we have put up Castrol quick lubes. And all these areas are going to require CapEx, right? So CapEx is a traditional sense of requiring for supply chain activities or expansion is one way of doing it. The other way of deploying CapEx is to grow organically, right? And that's where we want to ramp up and have an aggressive plan in terms of enabling a higher-volume profile to start coming in, really, which helps us grow our market share even higher. We spent -- last year, we spent about -- we normally spend be INR 80 crores to INR 100 crores and we want to increase that, at least by 25% to 50% in 2022 as well. So that cash gets deployed in all of these. On buyback, we're not in conversations right now on buyback. But overall, we are always looking for options. We are always looking to -- for how best we can utilize the cash to reward our shareholders. So be rest assured, as Castrol India, we've been here for long, and we want to make sure that we reward shareholders in the right way.

Okay. Just a feedback. I mean I really appreciate what you said. It gives a quite a detailed perspective. It's just that even with the increase in demand and the increased CapEx you're making, I think the business itself will grow to some extent. It itself will fund the CapEx or the cash position that you keep on building up. And unless we are seeing that the parent is looking -- or we are looking to participate in terms of PLI or any other activity, it just kind of -- I mean it's kind of lying at subpar return and could have better use either with this long-term shareholders, unless we're looking at investing in growth in a big way, then one can understand, but...

Sir, can I comment, please? I think to be -- thanks, Raj, and I think we welcome your suggestions and we keep looking at opportunities. As a matter of kind of fairness and respect to others, let's move on because otherwise, others will not get a chance to ask questions.

[Operator Instructions] The next question is from the line of [ Abhishek from AM Capital ].

Yes. I would like to understand what -- I mean, do we have products for wind turbines? Because the big...

Sir, if you can hear me, requesting you to please speak through your handset mode, sir, as your audio is not clearly audible.

Hello?

Yes, [ Abhishek ], go ahead.

Yes. I just need to understand, do we have products for wind turbine? And then what is the market position and how do you see the market access? Secondly, do we have any leverage of, let's say, some production capacity to access without the need for capital expenditure on the same?

So I could not understand the second part of your question, but if I understand correctly, do we have a products for wind turbines? Absolutely, we have a products for wind turbines. And we work with global wind players like Vestas and we supply to them. And I think as they ramp up capacity -- their production capacities in India, that's a good growth business for us.

Yes, so do we have a sizable market for the special lubricant for the wind turbine?

So I think the market in India is growing with some of the key players. Vestas had moved -- I think that's public knowledge -- they've moved on production to India from other countries. I think it's a market that will grow as the focus on renewables continues. As far as we are concerned, we have a very high-performance range of wind turbine products with greases and everything as part of our industrial portfolio, and we expect this market to grow handsomely in the coming time.

The next question is from the line of Yogesh from Quantum Advisors. As there's no response from the current participant, we move on to the next question. We take the next question from the line of Rohit Kadam from Entrust Family Office.

[indiscernible] have the volume growth for the full year CY '21 and also for the last quarter.

Deepesh, do you want to answer -- take that question? I think -- it's around volume growth. I think -- yes.

Sorry, I think -- let me just repeat your question. Your question was how much is the volume growth for full year, right, and previous quarters?

Yes, for full year and for the December quarter. I think usually, we do report our absolute volume numbers, that would be very helpful.

Okay. Sure. So our volume for full year compared to full year 2020 has grown by 26%, okay? And the fourth quarter for volume as in 4Q 2021, volume has been in the range of 51.5 million liters.

51.5 million?

Yes, roughly.

Okay. And I just had a quick follow-up there. I think our volumes have, I think, on sequential basis, slightly subdued. I mean I was not able to understand. Because last quarter, we did about 50 million liters. So it's basically maybe a 2% kind of growth. And just logically, intuitively, we cover so many businesses which are linked to economic activity and mobility, I was expecting a stronger ramp up sequential volumes and sales. So is there some kind of a mix angle here or any other kind of one-off that you would call out?

So no, so in this quarter, 2 things have happened. One, obviously, in the market in general, there has been slowness, right? If you look at industrial volumes and in terms of our customers, they have faced chip shortages. Apart from that, if you see the numbers around 4-wheelers and 2-wheelers which have been sort of published, there has been slowness around that as well. The second event that's there, which is a continuation of 3Q and early part of the year is that the cost of goods sold, which is our base oil, that compared to 3Q as well has been showing a flattish to an increasing trend. And I think all of that has played into the volume growth. I mean, as you know, we have a strategic pricing strategy. So we have interjected and we've taken the price increases as required. To a certain extent, volume has been impacted due to slowness in demand as well.

Understood. No, that's very clear. Appreciate it. Just a quick follow-up. Don't want to harp too much. But on the dividend bit, I think that question with -- from earlier gentleman, I also didn't kind of understand it. Because see, your profits are up 30% for this year. And I think last year, it was very nice of you to have a 90% payout. So I think logically, I was expecting more like a INR 7, INR 7.5 kind of dividend. Also, if we take a 5-year view, our cash reserves have doubled, whereas our sales would have grown probably 40% to 50%, right? So we have, I think, in the industry now, one of the largest as a percentage of sales cash. That's point number one. Point number two is I don't understand the reluctance to not do a buyback simply because I think all of us are aware that our shares are probably deserving of a higher valuation than where it is today. So just from a corporate finance view, it is best for nonselling shareholders if the company started buying back shares at this price. So if anything on the thought process you could kind of elaborate there.

Yes, sure. Thanks. No, so thanks for the feedback on the dividend. I think declaration of dividend considers many, many aspects, right? And obviously, we want to make sure that we reward the shareholders in the right way on a consistent basis. Buyback, currently, we do not have anything on the table. And I know on this call, it has been raised in the past, and this is something we will take as an input into the management and the Board.

[Operator Instructions] The next question is from the line of Bhagyesh Kagalkar from HDFC Mutual Fund.

Thanks for clarifications on certain areas of the EV business. But just one minor clarification, I guess. bp itself has announced that the charging business is now turning more profitable than the conventional petrol/diesel filling of the business. Well, they announced big, big numbers that from 11,000 charging stations, they intend to go to 17,000 -- 70,000. And they are also listing business as they have done very well in the fast charging -- the EV fast-charging business. So in doing an EV-based business call, since we have a lot of cash in the business and the EV fluid comes naturally to us, but these areas what the parent is thinking. What is the thought process at local level?

Yes. So let me take that. I think I -- since you mentioned bp absolutely have -- you said the right thing, bp wants to be a big player in fast charging, especially fast charging, and they want to have -- expand their network to 70,000-odd stations. I think in India, bp has different businesses. So for example, like bp's the 51% owner in Castrol India. And bp also has a JV with Reliance -- the Reliance Mobility -- RBML, Reliance BP Mobility Limited, and they are looking at the charging infrastructure development. And I think they've made good progress in the last few months. They opened up a charging station in Dwarka with the 100 charging stations. As far as Castrol is concerned, we are working in close partnership with them on a commercial basis, because both are independent companies, on how we can bring that charging infrastructure, which is being developed by Jio-bp and bring into that Castrol independent workshop network. In fact, we opened our first pilot site in Noida last month, but they're still kind of in testing stage, pilot stage. But we'll keep looking at every opportunity to collaborate with our other partners on commercial basis, which is Jio-bp.

The next question is from the line of Abhijeet Bora from Sharekhan.

Thank you, sir. My question has been answered.

The next question is from the line of [ Vimal ], an individual investor.

Just a quick one. On the base oil, are the prices now here in February in oil is -- crude oil is rising, is the base oil raw material now stabilized? Or is it still you're seeing a further rise in the raw material?

Sir, let me take that. And so I think the situation is still very volatile. I think we saw the high, the base oil in middle of last year at almost about $1,200 per metric ton. That price has come down. But I think as we get into 2022, I think inflationary pressures will continue. And that's what the sense that we are getting that is the base oil may not soften as much as kind of was predicted given where the crude prices are. And I think a lot of geopolitical things are also playing into price of crude. So we're watching the situation. I think last year, we intervened to make sure that we protect our margins. And as Deepesh said in the beginning, if we need to kind of do anything, we'll keep taking actions to make sure that we protect our business, we protect our margin and we protect our top line growth also.

So what would be the base oil price right now? Currently, would it be like hovering around $1,000, $1,050 or like it's back to $1,200 or...

No, I think it's -- but yes, the numbers you state are more or less in the right ballpark.

The next question is from the line of Bharat Sheth from Quest Investment.

Am I audible?

Yes. Yes. Yes, Bharat, we can hear you.

Sir, one first part is, say, on the volume front vis-a-vis 2019 to 2021, where we are? And second thing, if you can give some broader breakup between CV, PV and 2-wheeler and industrial, I mean, tractor and industrial, it will be little more helpful in understanding. And which part is growing faster, if you can give some color? And how much additional volume we have been able to get because of bp-Reliance partnership?

Deepesh, do you want to take that?

Yes. Sure. So on the 2019 volume, full year volume was around 204 million liters. And this year, it was around 208 million liters. In terms of the broad breakup on the volume, I would say our customer mobility, which is cars and bikes, that comprises around 65% to 70% of the volumes. And then the remaining is industrial and CVO. Industrial is about 10% volume.

And how is that we are seeing a growth here in segment because CV is on the low base, looks will grow. And do we have any partnership with any OEM?

So let me, Deepesh, take that. I think if you look at the growth rates, I think car space is growing very handsomely and synthetics are seeing pretty good growth in the overall market. And this is a market which can grow at about 2%, 3%. And we've seen our volumes grow across segments because if you remember in 2020, we took some kind of adjustments to make sure that we were competitive in the market, and that's given us a sense of the work. So we've been growing across the 3 segments, which is cars, bikes and commercial vehicles. I think commercial vehicles, tractor, agri sector was very robust last year, especially during the second half. But I think this year, it's -- especially coming to the second half, the demand has been a bit softer because what we saw is in Q4 of '20 and Q1 of '21, there was huge pent-up demand because after the first wave of pandemic, things suddenly kind of came back and there was a lot of optimism. We do see that bump up in the second half of this year. Just a small kind of also a correction. I think, Deepesh, when he was referring about 60%, 65% of personal mobility, that was more margin-related. I think the volumes are personal mobility, about 45%; commercial vehicles are another kind of 40-odd percent; and the balance is industrial. So all segments are growing at different rates. I think commercial vehicles have been a bit softer as compared to cars.

And if one will look at, I mean, last 10 years, the drain period is free-falling right now. Has it been stabilized that with a substantial change in the quality of the lubricant and all, will still this drain period will keep on having some kind of impact on our volume growth?

Yes, the drain period, as technology improves and as engines become more efficient, drain periods do keep extending, but that's also kind of compensated by the increasing vehicle parc because the penetration in India is -- on an absolute basis is so low. So as the vehicle parcs go, that compensates for some of the impact that we see because of the drain intervals.

Sorry, with your permission, last question. On this adjacency business like 3M as well as other services business, so how are we -- what is our strategy? And what kind of investment that we are -- so what stage we are? And maybe after, say, 3, 4 years, what will -- where you will be our ambition or your experience then to grow those business? Currently, it contribute how much?

So I think without sharing any specific numbers, our strategy is to get into more adjacency -- adjacent areas, whether it's kind of car care range of products, whether it is expanding footprint into service and maintenance. I think I won't be able to share any kind of future-looking numbers in terms of what percentage of our business that would be, but the intent is we'll keep growing those areas.

So I mean is it fair to understand that...

Sorry. Can I just intervene, Bharat, without being disrespectful and please pardon me for that, I think let's give chance to others also, and we will be really happy to engage in any investor forum if you want to kind of interact with us in more detail.

The next question is from the line of [ Vipul Shah from Sumangal Investment ].

So sir, my question relates to research on EV fluids. So that is -- like we, at Castrol, are carrying out extensive research or this work is carried out by the parent company for EV fluids?

So I think most of the research is carried out by the present -- the parent company, but we also have a technology setup in India, and we take those global research products and adapt them to Indian conditions and work with the Indian OEMs where relevant to further adapt, refine, develop those products.

The next question is from the line of [ Nikhil from Simple ].

I had one question. If we look at their -- in essence, this is more on the lubricant, the core business, if you look at over the last 3, 4 years and our competitor, what turns out is like Valvoline has done a great job, and it seems to have gained some market share. So have you seen any price-destructive competition which is happening there? Or would your assessment be similar? And how are we trying to get back our market share? Or is there anything wrong with my assessment?

So thanks, let me kind of just make one correction in your statement. I think if you look at this year, we've grown our market share. So we've grown our market share both in volume and value terms by more than 100 basis points, okay? So it's been a very strong performance on market share. In fact, on commercial vehicles where -- in 2018, 2019, we've seen a bit of softness in our share, but beginning 2020 with the corrective actions that we took, we've grown our share over the last 2 years, and Valvoline typically tends to play a lot more in the commercial vehicle spaces. The second thing as far as our offer to customers and consumers is concerned, we are a premium brand, and we want to continue to be a premium-branded player in the market. And as a result, we set premium to -- versus competition. And we keep adjusting our market position, depending on whatever the situation is. But I think to say Valvoline has grown hugely may not be correct. I don't want to kind of share a comment on competition, but we have grown our share over the last 2 years.

Sir, would it be right to say that we had some pressure on the CV where they are larger, but probably with the last 2 years, we've been able to gain back what we had probably lost in that car market?

Yes. So we are leading in all the commercial vehicle segment specifications, whether it is kind of the latest techs of CI-4 or the previous CI-4. So I think -- as I said, there was a bit of softness in '18, '19, and I think we've grown our share beyond where we were in that year -- in those years.

We take the last question from the line of Hemang Khanna from Kotak Securities.

Sandeep, if I could just get your inputs on -- basically, the industry has grown at lower estimation, at different times, upper ballpark. How do you view that the industry growing more in the next year and the year volumes? And also on the diesel prices given that there will be some more recent pressures that [indiscernible] or other concerns this which are there? How do you all see pricing? Or are you all willing to take incremental pricing actions as a whole given where elevated base oil prices are?

Yes, your sound is not clear at all. I don't know. I couldn't understand the question. Can you please either speak towards the mic...

Sorry, is it audible now?

Yes, this is much better.

Yes, so my question was, first, the EV industry has typically grown at a low- to mid-single-digit kind of growth rate and historically, coming into the next couple of years from the base that the industry is right now, do you see that this kind of a trend is likely to sustain at least in the near term while we understand that there would be a transition in the medium term? And secondly, on the base oil pricing, given that we are still at elevated levels, is the industry in a shape to absorb incremental price hikes from the current level?

So let me try and answer, so our projections are like the industry will continue to see, as you said, whatever historical growth rates have been, at least in the next foreseeable future. And some of the 2-wheeler EV impact would be compensated by growth and penetration of cars and other vehicle categories. So we see that kind of low- to mid-single-digit growth continuing at least for the foreseeable future. As far as base oil is concerned, the situation is going to be very volatile, okay? And I think it's not only the lubricants industry which is facing inflationary pressures. If I look at any kind of industry, it will be kind of facing shortages, whether you talk to auto manufacturers. And the number of price increases auto manufacturers have to take last year has been similar across various categories. So we expect the inflationary pressures to continue this year. As far as -- I think pricing is a combination of value one offers to customers and consumers. So we keep watching our situation. And we will make sure that we're taking pricing actions something which the customers and the consumers can take and afford. But at the same time, we also have to cover for our cost increases. So we will intervene where required.

Sure. Got it. And just a last bookkeeping question. Could you help with what would be the market share in the tire segment?

So I think without being quoted kind of publicly, we are in the 20-plus segment or 20-plus share position.

Right. So from a sequential basis, would we have broadly maintained our share? Is that a fair way to look at it?

No. So I think over the last 1 year, we've grown by about 100 basis points. That's what I said, okay? And this is as mentioned by Nielsen. So...

Thank you very much. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Sandeep for closing comments.

Yes. Thanks, everyone, for taking the time to interact with us. And I think just a few closing messages. I think 2021 performance has been pretty strong, both on volumes, top line and bottom line. We've been largely able to protect our margins as we took both pricing and cost interventions in the year. And we've been largely able to protect our margins. I think going forward, the situation is going to continue to be volatile, especially from a cost input perspective and we'll intervene as required and still continue delivering value to our customers and consumers as a premium-branded lubricants player. And I think the focus is also to kind of continue moving forward in the EV space, working with OEMs, partnerships and also in near adjacencies areas with working with partners like Jio-bp or into -- keep testing and piloting new initiatives and some of the other categories that we can win and leverage our strength and trust that consumers put in Castrol. So with that, I think my only request to you all would be stay safe. I think sometimes we get into complacency around the pandemic is over, but let's continue taking all the precautions. And let's hope that this is behind us this year, and we can get back to normal lives. So thank you for your time and best wishes.

Thank you. On behalf of Castrol India Limited, we thank you for joining this call. You may now disconnect your lines. We wish you all a good day ahead. Thank you.