CASE STUDY ON: Castrol

India Limited (CIL)

Strategies in Business (PGDM Sem
III)

Case Overview

Lubricant industry in India has 3 segments

Automobile (Diesel engine lubricants major part of

market), Industrial, Marine

CIL started operations in 1919

Premium segment of automotive lubricant

market

CIL dominates retail lubricant market with

access to over 70,000 retail outlets

2001 CIL merged with BP, one of the largest

global petroleum & petrochemical company

Case Overview

(Contd)

Phase I Before liberalization

Focus on survival

Dominance of public sector oil companies (90% market

share), base oil controls & canalization by public sector

Constrained growth due to insufficient availability of raw

material

Focus on margins entry into top end products

Under-investment & under-utilization of plant capacity

Case Overview

(Contd)

Phase III After liberalization

MNC entry increase in competition

Focus on growth

Emphasis on operations

Increasing volume of sales, high product availability

Increase capacity, modernize infrastructure, improve quality

& supply chain

Market segmentation, new brand creation

Case Overview

(Contd)

Phase III Challenging times (1997

onwards)

CIL reached market share of 20%

Oil shock in 1999

Increase in oil prices hence raw material cost

increased
CIL: 90% raw material cost (majorly base oil), 5%
manufacturing cost, 5 % others
Decrease in demand from trucking industry

Supreme court mandating engine technology

EURO II

Facts
Difficulties in recent times for lubricant industry

Derived demand industry- Impact of slowdown in

Automotive and Industrial sector

During 2001-2002

CV sales declined by 4.4%

Tractor sales declined by 10%

Passenger car segment grew by only 3.6%

Only two-wheeler segment performed well with

sales growth of 15%

Facts

(Contd)

CV consumes 70% of Diesel Engine Oils

Shift to technology

fuel efficient, emission compliant engines with lower

sump size
two-wheeler shift gears to four stroke

Automotive lubricant market declined by about 6%

Industrial lubricant demand has also declined due

to successive decline in industrial production &
growth from 5% (2000-01) to 2.7% (2001-02)

Porters Five Forces

HIGH

LOW

HIG
H

HIGH

SWOT
Strengths

Parent company BP
Strong brand equity
Distribution network (7,000 retail outlets)

Weakness

Focusing on a congested market (automobile lubricant segment where other major players exist)

Opportunities

Increase in demand in rural market

Decentralization of oil company

Threats

Poor industry condition of automobile sector

Price hike of oil
Development in technology
Inadequate infrastructure facilities
EURO II technology

Ansoff Matrix

Two-wheeler
segment

Rural market
via
strengthening
distribution

Lubricants
for marine
industry

Recommendations
Product innovation
(Synthetic oils, SKU)
New market
(Marine, Rural etc.)
Technology
(ERP for efficient supply chain)
Market Research
(Suitable price to be transferred to
consumers)

Chandrakala Yadav PG B 120

Pundalik Kalangutkar PG A 27
Kumar Ujjwal PG A 32
Manish Jain PG B 71