Castrol India Management Discussions


Under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we present a comprehensive Management Discussion and Analysis Report focusing on business performance and outlook within the competitive landscape set by the Company.

Industry Structure and Developments

India is the worlds 3rd largest finished lubricants market, holding approximately 8% of the global share1 and is regarded as a growth market worldwide. •e lubricant segment in India encompasses the Automotive, Industrial, and Marine industries. •e Automotive and Industrial sectors, contributing significantly to overall demand, are almost evenly balanced. •e automotive sector includes demand from commercial and personal mobility vehicles and includes fluids such as gear oils, coolants, greases, and engine oils. Industrial demand comprises general industrial oils such as hydraulics, gear oils, refrigeration/compressor fluids, as well as process oils, metal working fluids, and greases. Both sectors see participation from nationalised oil companies (NOC), private multinational players, and several local oil companies. Your Company secured a prominent position in the retail automotive industry and ranks among the top 5 players in industrial metalworking fluids1.

Emerging trends

An emerging trend within the automotive sector is the adoption of electric powertrains. Electric vehicles constitute about 2% of sales of new cars and utility vehicles about 5% of new two-wheeler sales2 Your Company envisions that the transition to electric powertrains will happen sooner for two-wheelers and three-wheelers than for cars and commercial vehicles, predicting a sustained growth in lubricant demand invariably until 20403. •e Company actively supports this transition through technological collaborations with Original Equipment Manufacturers (OEM) and holds a strong position with two leading EV four-wheeler OEMs in India.

Your Company invests in training programmes to address the EV transition and ensure independent auto mechanics stay relevant. Your Companys unique EV-readiness training, endorsed by Indias Automotive Skills Development Council (ASDC), aims to equip mechanics for the ever-evolving automotive landscape. In FY 2023, your Company expanded the EV-readiness program to 13 cities, training more than 1,000 mechanics to date.

With 1,000+ mechanics becoming future-ready, the EV readiness training enables them to upskill rapidly and contribute to a sustainable future.

Demand drivers

Lubricant demand is driven by its Industrial and Automotive applications. Industrial lubricants cater to various industries, such as automotive, wind, power, steel, cement, general engineering, and manufacturing, which are linked to increased economic activity. India stands as the third-largest global market for automobile production2. •e demand for commercial vehicles is influenced by rising factory and farm output, infrastructure development, and mechanisation of agriculture. In contrast, for personal mobility vehicles, the demand is driven by a growing aspirational middle class, easy access to finance, and a lack of robust public transport infrastructure. Additionally, technological developments in hardware design are pushing the shi˜ to more e™cient fluids.

Supply drivers

Lubricants are manufactured by blending base oils with additives, which involve sophisticated formulations aligned with OEM specifications and industry norms. As a net base oil deficit market, India heavily relies on large-scale imports of base oils and additives. •is reliance on imports exposes the lubricants business to fluctuations in foreign exchange rates and potential disruptions in the supply chain.

Major industry developments

•e overall lubricants market displayed resilience and maintained growth momentum despite economic challenges and inflation. Overall, mobility has also remained strong and carried a growth trend.

Notably, consumer sentiments are improving and getting close to pre-COVID levels. However, rural recovery has been soƒer than urban. New vehicle sales registered strong growth across two-wheelers, four-wheelers, and trucks, with new four-wheelers registering a record of 4 Million+ units2. New two-wheeler dispatches grew by around 9% year-on-year2 but remained shy of the pre-COVID levels, given the steep increase in vehicle prices and higher financing costs over the last few years. However, government subsidies and soƒening battery prices increased electric vehicle sales. With the launch of newer models and improving supply-side conditions, SUVs continue to drive growth in the four-wheeler segment. e passenger vehicle industry also saw the adoption of BS-VI Stage 2 norms, which are expected to improve fuel efficiency further. Additionally, strong replacement demand and healthy growth in economic activity supported the sales momentum of commercial vehicles. Overall, lubricant consumption grew in FY 2023 compared to FY 2022 across various categories.

Impact of external factors

e lubricants market witnessed volatility in crude oil and base oil prices throughout FY 2023, influenced by geopolitical events and economic conditions. e year started with soƒening base oil prices due to subdued demand in Asia, driven by COVID restrictions in China and lower-than-expected economic growth. is phenomenon continued for over four months before turning upward in the second quarter. However, base oil margins were kept in check due to ample supplies and fewer refinery turnarounds. is was most evident during mid-2023 when, despite crude prices increasing by over 30% from early 3Q to 4Q 2023, base oil prices stayed relatively the same. e depreciation of the Indian Rupee by approximately 1.8% in 2023 added challenges to your Companys operations by affecting input prices across all procurement categories. e graph below indicates the trend of crude oil prices in INR/ USD in 2023:

In a turbulent business landscape, your Company persevered by creating value for its investors. is was achieved through strategic sourcing, utilising long-term contracts, implementing value improvement initiatives, prioritising service and quality, and vigilantly monitoring costs. e Company remained committed to the best value purchase model and implemented value-based inventory management. e focus on cash costs and working capital remained sharp throughout this challenging environment.

Opportunities and reats

Opportunities

In the realm of personal mobility, your Company is strategically positioned to capitalise on trends such as the surge in SUVs and CNG-powered vehicles, the demand for thinner viscometric premium lubricants, and the growing influence of e-commerce-driven and business-in-service activities such as delivery and ride-hailing. Additionally, the expansion of vehicle sales in rural areas and the evolving independent workshop ecosystem allow your Company to introduce tailored products like MAGNATEC SUV 5W-30. Your Company is actively pursuing these opportunities by reinforcing its presence in rural markets, implementing brand-building initiatives, and investing in channel development through strengthening the Castrol Auto Service network while developing new formats such as Castrol Express, enhancing the oil change experience.

In the commercial mobility sector, your Company is aligning itself with the governments focus on infrastructure development and increasing farm mechanisation. Your Company recognises the potential in both on-road and off-road commercial vehicles, seizing opportunities through innovation and expanding its product range under Castrol CRB ESSENTIAL. As hardware technology evolves, your Company aims to increase the adoption of premium fluids with higher specifications, such as CI4+ and CK4. Furthermore, the emergence of CNG as an alternate fuel for smaller commercial vehicles is another area of focus.

Your Company addresses these opportunities by fortifying its offerings, widening its product range, and sustaining brand-building activities. New product introductions like Castrol CRB ESSENTIAL engine oils, Castrol Spheerol ESSENTIAL and Castrol Spheerol CV 40K in greases cater to price-sensitive truck and tractor owners.

e newly launched Castrol CRB ESSENTIAL range of commercial vehicle engine oils provides engine protection, minimises repair costs, and prevents unexpected downtime.

e advent of new channels, especially in digitally enabled service ecosystems, is gaining prominence. Your Company is strategically partnering and expanding its service maintenance and repair network to strengthen its position in this segment.

Your Company revamped its visual identity system in line with the new brand essence of ‘Accelerating Progress. is included a renewed logo, new packaging for our entire range and an iconic brand sonic identity which will help stand out amongst the competition, as we move our partners upward, onward and forward.

Your Company is committed to its digitalization strategy, with ongoing initiatives such as FASTSCAN, FASTLANE, and Castrol SUPER MECHANIC. Your Company has also implemented an online academy, offering training programs to enhance the customer and consumer experience. Additionally, the E2E Transport Management System and other digital solutions have also been implemented to improve shipment planning, visibility, and overall operational efficiencies. Furthermore, your Company is in the process of revamping end-to-end integrated planning using the Kinaxis tool.

Launched in FY 2023, the Castrol Super Mechanic Learning Academy has trained 18,000+ mechanics and has the potential to reach 5,00,000 mechanics. It is available in six vernacular languages.

OEM alliances: Castrol recognises the opportunities arising from new vehicle sales and hardware advancements. Your Company has fostered strong relationships with key OEMs in various segments, expanding alliances with industry leaders like TATA Motors in the on-road commercial vehicle space. Your Company has also ventured into the EV market as a partner for EV fluid supply for leading passenger vehicle OEMs.

reats

Inflation remains a potential risk to consumer demand despite some moderation in consumer inflation levels. Electrification poses a threat as the adoption of electric vehicles increases, particularly in two-wheelers and small commercial vehicles for last-mile deliveries. While the longer-term demand projection for lubricants in internal combustion engine (ICE) vehicles is expected to persist, the electric vehicle (EV) market will experience growth. EVs require lubricating fluids for transmissions and cooling fluids for motors. Your Company is well-positioned to participate vigorously in this transition with its range of EV fluids and OEM alliances. Drain intervals for lubricating fluids are widening due to modern hardware design in on-road commercial vehicles and growing demand for higher specification oils, impacting overall category volumes. However, these volumes will continue to grow as they are driven by an increasing parc and higher sump sizes, making the impact of widening drain intervals moderate. Competition is intense in the Indian lubricant market, with multiple player profiles, including NOCs, international private companies, OEM genuine oils, and a large, fragmented set of lubricant manufacturers.

Product-Wise Performance

Automotive lubricants

In the personal mobility space, your Company demonstrated strategic prowess by leveraging cricket and the Indian Premier League (IPL) platform, reaching over one Billion impressions with the #CompromisePadegaMehanga campaign for Castrol Activ. Aligning with the worlds leading motorcycle event coming to India for the first time, Castrol POWER1 utilised digital key opinion leaders to amplify its association with motorsport, partnering with ViaCom18, RACR and LCR Honda Castrol MotoGP team to launch Castrol POWER1 presents Indias Ultimate MotoStar. is initiative aims to nurture racing talents, offering training in key cities and an opportunity to train with the LCR Honda Castrol MotoGP team in Europe. In the passenger car oils segment, Castrol MAGNATEC, upgraded to API SP and ACEA C specifications, showcased its advanced engine protection through a well-received campaign during the IPL, securing substantial reach nationwide.

To address the growing SUV market, the successful launch of MAGNATEC SUV 5W30, with API SP and ACEA C2 specs, positions it as a leader in SUV engine oils. With heavy load protection for SUV engines, MAGNATEC SUV is poised to be the leader in SUV engine oils.

A consumer promotion on the Castrol MAGNATEC range further marked the end of the year with a significant offline and online impact.

For commercial vehicle oils, the Castrol CRB TURBOMAX #BadhteRahoAagey campaign was launched, emphasising progress for truckers and the 3X Protection offered by Castrol CRB TURBOMAX. e campaign extends on-ground with Castrol CRB TURBOMAX #PragatiKiPaathshaala, endorsed by celebrity brand ambassador Sonu Sood, where two trucks will traverse different routes, covering key Transport Nagars across India to educate truckers on four key areas: driving safety, truck ownership, new technology and business profitability. e on-ground activation is targeted to reach over 1,00,000 truckers and actively engage at least 10,000 through training sessions.

Pragati Ki Paathshaala aims to boost the entrepreneurial mindset of the truckers and direct them towards the path of progress – bringing alive the idea of #BadhteRahoAagey.

To fortify its presence in the service and maintenance sector, your Company expanded its network of Castrol Auto Service workshops to 448 across 200+ towns in FY 2023.

To enhance customer experience at Castrol Auto Service (CAS) workshops, your Company signed an agreement with Mahindra Insurance Brokers Limited, a prominent insurance brokerage firm. is allows CAS workshops to act as the Point of Sales Persons (POSP) that offer automotive insurance products via a digital platform alongside repair and maintenance services.

e Castrol Auto Service car workshops expand nationwide, offering vehicle owners reliable service and quality products.

Your Company commissioned 48 Castrol Express Oil Change services for two-wheelers in urban Jio-bp mobility stations, providing quick engine oil changes for bike owners.

Expanding its portfolio into the auto care segment in May 2023, your Company introduced products such as Chain Cleaner, Chain Lube, 3-in-1 Shiner, 1-Step Polishing Compound and Anti-Rust Lubricant Spray. is range is available at over 21,000 outlets and e-commerce platforms, reinforcing your Companys commitment to delivering superior service satisfaction to vehicle owners across India.

Your Company also introduced EV transmission fluids in the aƒermarket. Our Castrol ON product is available on leading e-commerce websites and is a testimonial to our commitment to keeping the portfolio future-ready.

Marine & energy lubricants:

e dynamic landscape of the ports and maritime sector has witnessed substantial changes, prompting the identification of six key trends in FY 2023. ese trends, ranging from environmental sustainability to digitalisation, reflect the evolving nature of the industry. Notable shiƒs include:

• Decline of ports and maritime transaction activity

• Decrease in maritime traffic with port decongestion

• Decrease in shipping line rates and profits

• Development of a green hydrogen logistics chain

• Environmental sustainability in shipping

• Digitalisation as an efficiency driver

Energy Sector:

In the energy sector, fluctuating crude oil prices, reaching USD 94 per barrel in September, have been influenced by additional supply cuts from major producers.

Indias oil demand is expected to rise significantly, driven by a positive outlook in the offshore oil and gas market due to supply security concerns and elevated oil prices. e offshore rig market is experiencing a high utilisation of 85%, reaching these levels for the first time since 2015. Your Company has expanded its presence in the domestic marine sector, including offshore supply vessels, fishing, and dredging. Roughly 80% of international trade is transported by sea. In the marine industrys pursuit of decarbonisation, Castrol Marine Technical Service teams collaborate closely with OEMs like MAN Energy Solutions, working on alternate fuels and developing specialized lubricants. Key achievements include the certification of Castrols Cylinder Oil Cyltech 40 XDC as category II BN Oil by MAN ES, emphasising cleanliness and lower combustion deposits. Castrol Energys active participation in industry events, such as the FPSO World Congress and Maritime Decarbonisation, showcases its commitment to staying at the forefront of technological advancements.

Industrial lubricants:

Your Company has expanded its customer outreach in the Industrial lubricants category by participating in important industrial exhibitions such as IMTEX and Windergy. Working closely with Industrial OEMs helped Castrol gain approvals for its Industrial lubricants. Your Company also conducted technical capability training for key customers to drive advocacy for their products. Additionally, it has also launched new greases (Ball Bearing EP 2) that are suitable for Industrial applications.

Various customer engagement activities helped increase the brand visibility of our Industrial lubricants business and have helped forge new partnerships and strengthen existing relationships.

Quality

Maintaining a strong focus on quality, your Company succeeded with initiatives like the zero-defect digitalisation journey, while adhering to global quality standards. A Quality Strategy is integrated throughout your Company, emphasising key pillars such as quality culture, customer quality, supplier quality & quality management systems.

e Quality Energiser Program, aimed at reducing risks and sharing best practices, has effectively solidified a positive quality culture across manufacturing sites. Standardising SOPs at customer sites enhances product performance while QR codes on-pack labels, along with upgraded scanning systems, elevate packaging quality.

rough a robust capex investment program, your Company has automated quality-critical processes, ensuring continuous risk reduction. e program role extends to carrying out feasibility studies for new product introductions, and successful line trials for packaging initiatives. Additionally, the integration of technology resulted in cost-competitive localised formulations, generating more value for businesses. In the pursuit of digitisation, your Company expanded the implementation of digital tools and apps to simplify processes, standardise data management, strengthen controls, enhance customer responsiveness, and manage quality performance in real-time.

e Company successfully completed recertification audits for ISO 9001:2015 and IATF 16949: 2016 standards. e Silvassa plant earned the Platinum award in ‘Apex India Quality Excellence 2023. Maintaining the Ford Q1 recertification underscores our plants quality excellence in the OEM business. Despite disruptions from geo-political challenges, your Company ended the year without any significant quality incidents, a testament to our commitment to delivering sustainable end-to-end quality performance.

Future Outlook

Looking ahead to 2024, Indias economic activity and GDP growth are expected to remain resilient despite ongoing geopolitical uncertainties. As a result, India is poised to become one of the major economies in the world with a promising growth outlook. Your Company anticipates sustained demand growth across segments. e outlook for 2024 has been examined closely by your Company through the broad dimensions of demand drivers.

DEMAND DRIVERS FOR AUTOMOTIVE LUBRICANTS

In automotive lubricants, the anticipated off-take growth observed throughout 2023 is poised to sustain momentum in 2024. Your Company is committed to propelling this growth by expanding participation across diverse price segments, ensuring broader availability across geographic strata, reinforcing its workshop presence, and making substantial investments to nurture premium brands. In commercial mobility, your Company foresees continued off-take growth driven by an expanding vehicle parc, sustained economic activities, and a focus on infrastructure development. Our strategic approach involves aggressive growth pursuits through an extensive portfolio spanning the full-fluid spectrum, amplifying the footprint of technologically advanced premium products, and substantial investments in brand building.

DEMAND DRIVERS FOR INDUSTRIAL LUBRICANTS

Despite the challenges posed by a low base effect for 2Q 2023 and inflationary headwinds in the latter half of the year, overall industrial output experienced growth. e positive business confidence index and moderation in inflation position the long-term demand growth for industrial lubricants on an optimistic trajectory. Marine & energy lubricants: While world trade shows signs of recovery from the profound slump induced by the COVID-19 pandemic, economists from the World Trade Organization caution that ongoing aƒereffects of the pandemic could disrupt any rebound. Although trade volume growth was projected to rebound to 7.2% in 2021, it is expected to remain below pre-pandemic levels. e marine and energy lubricants sectors remain attuned to these dynamics, navigating potential disruptions while staying vigilant to emerging trends and opportunities in the post-pandemic landscape.

CHANNELS OF DISTRIBUTION

Your Companys products seamlessly reach customers through a robust distribution network involving 333 distributors, catering to approximately 1,30,000 customers. is extensive network extends to sub-distributors, reaching additional outlets in semi-urban and rural markets. Leveraging this distribution power, your Company strategically connects with a broader network of independent workshops. e successful expansion of the CAS channel, now boasting over 448 customers, has allowed it to offer premium services to many independent workshops. Directly serving close to 3700 customers, and in some instances through its distributors, your Company has fostered direct relationships. e alliance with Jio-bp (Reliance bp Mobility Limited) has unlocked a new growth channel, facilitating the expansion of your Companys footprint in fuel forecourts across India. In recent years, your Companys emphasis on priority channels, mainly e-commerce, has been the driving force behind robust topline growth. Moreover, the investment in a digitally- enabled integrated service model underscores the commitment to enhancing market coverage and elevating customer experiences for indirect customers. roughout FY 2023, your Company has remained dedicated to streamlining systems and processes, injecting speed and efficiency into its back-end operations. e strategic incorporation of digitalisation has facilitated operational enhancements and created a superior and premium experience for customers during their interactions and touchpoints with your Company.

Risks and Concerns

e Risk Committee vigilantly oversees potential risks and evaluates the efficacy of risk mitigation strategies devised by your Company.

e overarching risk of a general economic slowdown, stemming from pandemic-induced disruptions and persistent volatility in input costs and foreign exchange remains on the radar. Your Company has implemented comprehensive mitigation plans to safeguard margins while navigating growth and transformative endeavours. In FY 2023, strategic interventions, pricing adjustments, and a focused cost efficiency management program were executed, considering input costs, competitive positioning, and product brand strategies. Furthermore, by actively addressing cybersecurity risks, particularly in the context of increased remote working, your Company promotes responsible behaviours and employs tools and processes to shield information, systems, assets, and personnel from current and emerging cyber threats. e Risk Management Committee remains vigilant, constantly monitoring and reviewing existing and emerging risks. In the burgeoning Indian growth market, heightened opportunities for employability and commensurate roles elevate your Companys attrition risk. Your Companys robust capability offerings, nurturing and developing talent, enhance employee relevance in the market.

Health, Safety, Security, and Environmental considerations take precedence, mainly focusing on road safety for the frontline team and transporters traversing the country for business. Additionally, product quality and integrity remain paramount, aligning with your Companys quality vision of ‘Right Quality First Time Every Time and ‘Zero Defect, making it crucial for delivering a premium customer experience. Your Company maintains a robust risk mitigation plan, ensuring continuous monitoring and prompt mitigating actions as and when needed.

Internal Control Systems and their Adequacy

Your Company maintains an effective Internal Control System commensurate with its size and complexity, providing reasonable assurance of authorised and accurately recorded transactions. An independent Internal Audit function, coupled with extensive internal audits and periodic reviews, ensures the adequacy of internal control systems. Your Company remains committed to minimising identified risks through continuous monitoring and mitigating actions.

Discussion on Financial Performance Concerning Operational Performance

Please note that Castrol India Limited follows the calendar year (January to December) for its financial reporting. For the full year ended 31 December 2023, the Company registered Revenue from Operations of INR 5,075 Crores. It also marks an overall revenue growth of 6% compared to INR 4,774 Crores for the full year ended 31 December 2022. e Companys Gross Profit increased by 7% in FY 2023 over FY 2022. is was on account of higher volume and strategic price interventions. Operating and Other expenses increased by INR 91 Crores as compared to the previous year on account of investment in people, safety, brand, and business growth opportunities. Profit before Tax increased by about 8% over the previous year to INR 1,181 Crores. is generated a healthy cash flow from operations for FY 2023 of INR 853 Crores.

PertheSEBI(ListingObligationsandDisclosureRequirements) Regulations, 2015, the Company is required to give details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios.

Key financial ratios

Particulars Unit 2023 2022 % change
Debtors turnover Times 13.13 14.42 -9%
Inventory turnover Times 4.94 4.87 1%
Current ratio Times 1.91 2.00 -4%
Operating profit margin % 23% 23% 2%
Net profit margin % 17% 17% 0%
EBITDA % 24% 23% 1%
Return on net worth* % 43% 46% -7%

*Return on net worth is a measure of the profitability of a company expressed in percentage. It is calculated by dividing the profit for the year by the average capital employed during the year.

Interest coverage ratio and debt equity ratio are not applicable to the Company since there are no borrowings. e finance cost in the financial statements relates to leases (IND AS 116). e debtors turnover ratio indicates a companys effectiveness in collecting its receivables from customers. It is computed by dividing the revenue from operations by average trade receivables.

e inventory turnover ratio indicates the number of times a company sells and replaces its inventory during the period. It is calculated by dividing the cost of goods sold by the average inventory.

e current ratio is a liquidity ratio that measures a companys ability to pay obligations that are due within twelve months. It is calculated by dividing the current assets by the current liabilities.

Operating profit margin is a profitability or performance ratio used to calculate the percentage of profit a company produces from its operations. It is calculated by dividing the earnings before interest & taxes (EBIT) by revenue from operations. Net profit margin is equal to how much net income or profit is generated as a percentage of revenue. It is calculated by dividing the profit for the year by revenue from operations.

Key Developments in Human Resources / Industrial Relations

e unwavering focus on employee health and well-being, coupled with robust employee engagement initiatives, defined the human resource landscape in 2023. A total of approximately 5,200 hours were dedicated to diverse technical, behavioural safety, and leadership training, with the Lakshya manufacturing excellence programme in the supply chain providing an enriching external perspective.

Continuous investment in learning manifested through engagements with Learning Labs, People Leader clinics, and enduring commitment to the focus@bp platform, fostering career growth and better manager-subordinate relations. Internal candidates successfully filled 45% of Company vacancies, emphasising talent development.

Recruitment practices in FY 2023 remained committed to diversity, with women holding 20% of managerial positions and an overall female employee representation of 16%. A workforce intervention resulted in a 4% increase in diversity in the workmen category at the Patalganga plant. A newly formed team focused on enhancing Diversity, Equity & Inclusion will strengthen these efforts further.

e Growth Week 3 initiative played a pivotal role in building capabilities and skills aligned with your Companys cultural framework of ‘Who We Are, featuring influential speakers such as Sanjeev Mehta from Standard Chartered Bank and Anil Jayaraj, the CEO of Sports at Viacom 18 Media.

A proactive approach to safety leadership was evident through globally featured sessions and discussions on leadership, courage, integrity, and feedback. We participated in panel discussions, engaging audiences on the importance of safety, understanding business risks and psychological safety, and delivering the plan as crucial elements of ‘Playing to Win.

e Changemaker Community, comprising over 40 enthusiastic participants, actively contributed to embedding your Companys cultural framework and fostering an environment where innovative ideas come to life.

e Changemaker Community drove the ‘Who We Are cultural framework forward through a series of engagements during Growth Week 3 in FY 2023.

As part of the internal audits review of controls, a thorough assessment of critical controls in human resources and legal compliance were conducted to ensure the controls design and operating effectiveness.

Cordial relations with internal and external stakeholders, including workmen and contractors, were cultivated through senior leadership engagement via town halls, team meetings, and recognition programs. Your Company prioritised mental health initiatives, complementing physical well-being efforts for comprehensive employee wellness. As of 31 December 2023, your Companys dedicated workforce comprised 630 employees, including factory workers.

Health, Safety, Security and Environment (HSSE)

In FY 2023, your Company placed paramount importance on the health and safety of its workforce, aligning with all relevant laws and regulations. Health and Safety are core tenets of the Companys vision, representing our License to Operate. e commitment and strict adherence to the HSSE policy are expected from every member of the Company. Your Companys leadership conducts monthly Health & Safety Performance reviews, underscoring our vigilance towards these critical aspects. Your Company operates within a robust Health & Safety framework, embodied in the Operation Management System (OMS), as a guiding force for procedures and compliance. e Leadership Team actively ensures compliance with OMS through visible Safety Leadership engaging in field inspection programs. Safety Leadership Principles have been instituted, emphasising a commitment to cultivate a culture of care. An annual review protocol for key risks and controls strengthens controls/barriers and continues to a structured risk management program. e introduction of Life Saving Rules focuses on proper evaluation and control implementation for high-risk activities, striving towards zero harm. All three of Castrol Indias manufacturing plants hold certifications for the Environment Management System (ISO 14001:2015), Occupational Health and Safety Management System (ISO 45001: 2018) and Quality Management System Standard (ISO 9001:2015), with two plants additionally certified with Automotive Quality Management System IATF 16949:2016.

In FY 2023, your Companys manufacturing plants consistently demonstrated robust HSSE performance, earning external recognition, including the ‘Golden Peacock and Directorate Industrial Safety and Health (DISH) Award for the Patalganga site, ‘Apex Safety Award for the Silvassa Plant, and the ‘ICC Safety Award for the Paharpur Plant. e Chemical Management Services (CMS), where we are engaged with our customers to support lubrication activities at the site, achieved 11 years of injury-free operations, underlying our commitment to safety.

e comprehensive Driving Safety and Transportation Policy, applicable across all businesses in India, strives for the safety of every individual every day. Implementing the SMART (Safe from the Moment You Start) program for employees driving for business purposes has led to consistent year-on-year improvement in driving safety records. In FY 2023, as part of resource optimisation, your Company focused on reducing energy, water and waste to minimise its environmental footprint. Several initiatives align with our global PATH360 sustainability framework. Additionally, compliance with Plastic Waste Management Rules was upheld, exceeding the set requirement by recycling 100% of the overall plastic used in packaging.

On behalf of the Board of Directors
Sandeep Sangwan
Managing Director
DIN: 0861771
Deepesh Baxi
Chief Financial Officer & Wholetime Director
DIN: 02509800
Place: Mumbai
Date: 1 February 2024