Castrol India was the most conspicuous gainer on the BSE Sensex today, jumping 4.69% to Rs 203.10.

The scrip of the lubricants major notched up volumes of 76,000 shares by 11:50 IST. In three sessions to date, the stock of Castrol has risen 10% from Rs 185 on 4 June 2003.

The counter has been witnessing accumulation from market players in recent sessions. There are rumours that the company may announce a buy-back of shares and even de-list from the stock exchanges.

The parent (BP Amoco) has hiked its holding in CIL to 71% from 51%. The public and institutions hold 19.84% and 6.89% stake in the company, respectively.

On 23 May 2003, the stock of Castrol turned ex-dividend. The company had declared a stupendous final dividend of 125% or Rs 12.50 per Rs 10 share for the year ended 31 December 2002. The dividend includes a special dividend of Rs 8.25 per share. The book closure period extends from 27 May 2003 to 19 June 2003.

Recently, Castrol India also declared its first quarter as well as FY 2002 results. For Q1 ended 31 March 2003, the company registered an 18.6% rise in net profit to Rs 35.76 crore (Rs 30.14 crore) on a 5.3% drop in total income to Rs 250.39 crore (Rs 264.44 crore).

For the year ended 31 December 2002, it posted a 41% rise in net profit to Rs 152.92 crore (Rs 108.4 crore) on a marginal fall of 0.85% in total income to Rs 1,169.98 crore (Rs 1,180.02 crore).

The results were not impressive, as per a few analysts, considering the US-Iraq war, which forced margins lower following the rise in crude oil prices. Crude oil is the key raw material in the manufacture of lubricants.

Castrol India is a major player in diesel engine oils, a segment that constitutes over 50% of the total lubricants market. It commands an overall market share of 25% with around 20% in the truck segment, 30% in tractors, 35% in cars, 45% in motorcycles and 10% in scooters.

The company's efforts to launch upgraded brand extensions like Castrol RX Super Max in alliance with Telco for its vehicles with Cummins engines, Castrol CRB Plus that promises longer engine life, GTX Magnatec, Activ 4T etc. have been accepted well by consumers.

Significant changes in truck engine technology over the past few years have not only led to longer oil change intervals but also multi-axle trucks that can carry the load of what two trucks could carry earlier. These factors have resulted in reduced oil consumption.

Clearly, the call of the day was to modify itself to be fit enough to survive this change. As a first step, CIL decided to upgrade its products. The company realised that to work around the problem of declining volumes it had to target greater value, which could come only though products with better margins.

With BP Amoco as its parent, CIL made best use of its access to technology to offer better products to its customers.

To shift customers from old to new products and specifications, the company was required to have much better direct contact with the customers. CIL has therefore shifted a sizeable chunk of the advertising budget from above-the-line to below-the-line promotions.

Direct consumer contacts and other below-the-line activities have gained significant importance with nearly 50% of the ad budget being utilised for that purpose.

Earlier, BP Amoco had acquired control over CIL through the global acquisition of the former parent, Castrol UK. After a protracted legal battle, BP Amoco was compelled to make an open offer for 20% of CIL's shares at a price of over Rs 425 per share, according to the Securities and Exchange Board of India (Sebi) formula.