Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Castrol India Limited (NSE: CASTROLIND) Q1 2026 Earnings Call dated Apr. 29, 2026
Corporate Participants:
Saugata Basuray — Whole Time Director and Interim Chief Executive Officer
Analysts:
Nitin Tiwari — Analyst
Presentation:
Operator
Ladies and Gentlemen, welcome to one QFY 2026 earnings conference call of Castrol India Limited. Please note that all participant lines will be in the listen only mode and you can ask your questions after the opening statements. If you need assistance during the call, please press star then zero on your touchtone phone to reach the operator. Also please note that this conference call may contain certain forward looking statements which are based on the beliefs, opinions and expectations of the company as on date of this call.
These statements are not a guarantee of future performance and involve risks and uncertainties which are difficult to predict. We have with us Mr. Saugata Basuray, Whole Time Director and Interim CEO Castrol India Limited and Mr. Vinalini Srinivasan, CFO and Whole Time Director, Castrol India Limited. I now hand the conference over to Mrs. Saugata. Thank you. And over to you.
Saugata Basuray — Whole Time Director and Interim Chief Executive Officer
Thank you and good afternoon everyone. Thank you for joining us. We appreciate your continued interest in Castrol India. Let me start by acknowledging the broader context in which we are operating. This quarter has seen, amongst other things, continued macro uncertainty and towards the end of the quarter we saw the early signs of external headwinds driven by the conflict in the Middle East. These have started to reflect in currency movements and raw material prices in the last several months. Against this backdrop, our focus remains on change, consistent execution of our strategy, drive profitable growth and build a resilient business.
Before I hand over to Mrinalini, our CFO to talk about numbers, I wanted to take a few minutes to walk you through how the business has performed and the momentum that we are seeing. The first quarter reflects sustained momentum in the business and as we continue to execute our plan, our rural portfolio continues to grow at high double digit rates. We have expanded our distribution to now across 40,000 outlets. We’ve added 700 rural service express which cater to bikes. And we focused on expanding our reach directly into villages that have a population below 20,000.
This scale gives us deep last mile reach through which we can make our assortment available to rural consumers. In urban India, we remain focused on expanding distribution of our premium brands while investing in activation activating in high density consumption market especially for the car segment. As a result, premium brands portfolio delivered a double digit volume growth and value growth during the quarter. We’ve also been consciously building strong consumer relevance by engaging with large communities across platforms like Spirit of Unity and Road Trip United, our corporate campaign Harbhun Me Desh Ki Avtar continues to reinforce our role in powering India’s progress.
Our industrial business, something that we have spoken about for the last couple of years continues to perform well delivering yet another quarter of double digit growth making us sustaining a growth trajectory over multiple quarters. Now here our focus remains clear. Expand our portfolio with multiple made in India products uniquely tailor made for applications in India. Deepen our presence with existing customers. Continuing to add new customers in our chosen sectors. We focus on services and we continue to integrate that into our strategy.
Innovation remains central to our overall go to market. Alongside localization and customization of industrial products. We are strengthening our new auto care portfolio with an expansion of the product ranges that we offer now. We also signed an MoU with Hindustan Petroleum Corporation Limited to expose redefined base oil ecosystem in India. Our service ecosystem remains a strong pillar for business. 800 Castrol Auto Services at the end of March we now tap 34,000 independent bike workshops across the country and we lead 13,000 multi brand workshops in cars.
All of this has translated into continued market share gain. Reinforces that our strategy is delivering as planned. With that I will hand over to our CFO Mr. Mrinalin Srinivasan to take you through the financial performance this quarter.
Operator
Thank you Shabato. Good afternoon to everyone on the call. Building on the strong operating performance at Shakatoja spoke about. I’m pleased to share the results and numbers. We have delivered our 12th consecutive quarter of stable revenue and volume growth. Our margins remained within our expected operating band despite early signs of cost pressures. We continue to maintain strong cash flows and a robust balance sheet. What I would like to highlight is the predictability and quality of our earnings even in a volatile environment.
You already have seen our detailed results and numbers. What we have delivered is a revenue growth of 9% to 1545 crores. Our EBITDA increased by 7% to 329 crores and our profit after tax rose 4% to 242 crores. Towards the end of the quarter we began to see geopolitical developments starting to impact our operations. While currency related pressures have been building ever since September. We additionally saw raw material costs increase a little bit. Our response has been proactive and structured taking calibrated pricing action where required.
Driving cost control measures across the business and strengthening supply chain resiliently through diversified sourcing. At this stage the impact is visible but we hope to navigate this potentially inflationary environment confidently. We’ve also strengthened internal levers to ensure great agility in decision making, fast responsiveness to market changes and continued protection of our core business fundamentals. Our capital allocation approach remains consistent. Disciplined deployment, strong cash generation and a continued focus on shareholder returns balanced with future investments.
With that, I turn it back to Shabudav for his closing remarks.
Saugata Basuray — Whole Time Director and Interim Chief Executive Officer
Thank you. So, before we open up the line, let me address a couple of areas that are likely to be on everyone’s mind. First and foremost, the evolving situation in the Middle East. At this point, while there’s no significant material disruption on supply chain, we are seeing increased pressure on sourcing both in terms of cost as well as unpredictability of lead times. Our sourcing strategy has been always diversified and we are not dependent on any single geography. But we have an eye on this and we are working through that.
More importantly, over the years we have built strong structural capabilities, manage subcycles, so we have strong supply relationships in place and we are planning on inventory with an eye on extended lead times. From a customer standpoint, our priority first and foremost is to be a reliable partner during times of uncertainty. We are focused on ensuring continuity of supplies to our customers and maintaining a certain discipline in our financial frame while we do all this. So the situation is evolving.
It is affecting how we source some of our key inputs that go into the lubricant manufacturing business, particularly feedstocks. But we are seeing the VM secondly on discussions around shareholder development and parent level. As you know, the deal is subject to closure after various approvals across the world are received regulatory approvals. From Castrol India’s standpoint, there’s no change in our structure, strategy or operating model. We continue to operate as a strong independent listed company with a strong balance sheet.
As Lenny just spoke about, our focus remains firmly on executing our growth strategy, delivering consistent performance and building shareholder value for the long term. In summary, while the underlying momentum is very strong, the external environment is increasingly volatile. The business fundamentally remains strong. We are actively managing near term volatilities. We remain focused on delivering consistent high quality earnings. We will continue to execute our plan of expanding distribution, invest on our brands and bring innovation into the market.
So thank you for your time and we’ll open up the call for any questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. If you wish to ask a question, please press STAR and one on your touchtone telephone. If you wish to withdraw yourself from the question queue, please press star and 2. Participants are requested to use handsets while asking a question Also in lieu of the time, we will stick to two questions per person. If you have further questions, kindly rejoin the queue. Ladies and gentlemen, let us wait for a moment while the questions come in.
We’ll take our first question from the line of Nitin Tiwari from Philip Capital. Please go ahead.
Nitin Tiwari
Hi, thank you for the opportunity. I hope I’m audible. Nitin,
Operator
Can you use your handset mode please?
Nitin Tiwari
Just a second.
Saugata Basuray
Hello? Yes
Operator
Nitin. Yes, please go.
Saugata Basuray
Yeah, thank you so much. Hi Mrinali. Hi Sagitta. So my question actually is with respect to your raw material costs. So we have seen a sharp increase in crude oil prices in the month of March and that continues to be the trend in April as well. So just wanted to understand that has that translated into our raw material cost as well? January to March quarter or that flow through is yet to happen. And secondly, like you know, therefore your direction on gross margin as well. How are we going to navigate if there is an increase in raw material costs?
So what will be the time lag before which like you know that can be passed on through price rectifications. So that would be the first one.
Operator
Nitin, maybe let me answer this and if you have further you can ask later. Thank you for your question. I think, I’m sure this question is on multiple people’s minds so I’ll try to address and give a little bit of clarity. You are right. Our main feedstock which is crude has indeed shown huge increase in costs. Similar increases are visible in packaging material. We expect things similar in fuel. We’ve also seen similar in many of our additives, other components that go into the manufacturing cost.
Now in quarter one. You are very fair in asking whether it indicated impacted my cost or not. Given the inventory cycle, we saw minimal impact of these raw material increases into the cogs that we reported in quarter one. I spoke about it in my comments. The currency fluctuation definitely impacted us. Many of these are imported for us and we pay in dollar and the dollar rate versus last year is down. I mean the rupee is down by about 6.57% versus same period last year. So to that extent my cogs in Q1 was impacted.
But a majority of the cost increases that we are talking about they are now pending 2Q. Our strategy is relatively simple. Shobhata spoke about it. Top priority is to secure supply customers and make sure that the entire pipeline that goes into making the final product is ready. And we’re really working on that with a with urgency. We spoke about it. We will have diversified supplier Networks so that we can minimize any supply gap. Great.
Saugata Basuray
I understand that. Mrinalini. I just wanted to understand what is the typical time lag before which, I mean, the price is actually passed on, if at all, to the consumers.
Operator
Yeah, that’s what I was coming to that. Nitin, as a second point, the objective of the company is we want to maintain our structural margins in the medium to long term. In the short term, we may see a little bit of long term. We want to go back at the beginning of April. Actually, towards the end of March, we measured. I’m
Nitin Tiwari
Sorry to interrupt. Sorry to interrupt, ma’, am. Your
Operator
Voice is. You know, we are losing you sometimes. Yeah,
Saugata Basuray
Actually I was also about to say that. Yes,
Operator
Nitin, I request you to stay connected. Let me reconnect the management. Ladies and gentlemen, please stay connected. Sam. Ladies and gentlemen, thank you for holding the line. We have the management line back on call.
Nitin Tiwari
Let me know if you can or not.
Saugata Basuray
I’m not sure I can hear you, but I’m still like, you know, hearing you in bits and pieces.
Operator
Yeah, let me call on a different number and please disconnect. Ladies and gentlemen, please stay connected. Ladies and gentlemen, we have the management team back on call. Yes, ma’. Am. Can you go ahead with the answer, please? Yes, Nitin, I’m going to try one more time and if you don’t hear me, let me know.
Nitin Tiwari
But
Operator
The point I was just making to close the point was that indeed we do consider pricing. We have taken one round of pricing already, end of March, and we keep our structural loss margin right in front of us to make sure that if there’s any future volatility, we will also address them as a combination of pricing and cost cutting measures.
Saugata Basuray
Understood. And my second question would be bookkeeping. 1. So what is the overall volume in this quarter? And also like, you know, our operating cost went up by about 23% Q&Q and about 10% YOY. So why was that?
Operator
Yes. So from, you know, on volumes and on revenue, I think you would see that our revenue, top line revenue, has gone up 9%. So it’s a high single digit result. Our volume is very much similarly in line. So high single digit is what we’ve delivered. Also on volume, what specific number
Saugata Basuray
Would be helpful, please? If you can help me with that?
Operator
7 to 8% volume growth is what we have delivered for the quarter, correct? You’re right.
Saugata Basuray
Okay. All right.
Operator
And now on expenses, you are right. Our overall expenses have grown 9% in line with the revenue. While revenue grew also 9% within this if you look at specifically cogs. Cogs have grown slower and that’s because of all the product cost saving and efficiency muscle that we have within the company that the cogs have actually grown slower than volume and all of our other expenses. I think we’re breaking it down internally into structural and one time there have been some one time costs here but structurally we’ve actually grown our gross profit by about 11%.
Saugata Basuray
Yeah, I mean that’s the absolute increase and that’s possibly volume led. I was referring to the operating expense which is about 338 crores which has grown by about 10 odd percent yoy and about 23%. I was referring to that. So you mentioned that there are some one off expenses. You can highlight what could be the quantum of those one off expenses and what are they related to?
Operator
Yeah, so see our big cost buckets are employee cost. We spend in advertising and media and we spend a big chunk of money also as a license to operate in all of our franchisee workshops. So we’ve seen broad based increase in almost all of them for the one time costs that I spoke about are more in the employee cost bucket which we don’t. They are not substantial in nature and that should, you should see them going down in the next few quarters
Saugata Basuray
In terms of operating cost. This is a more sustainable sort of a run rate. That’s what we should assume about 340 crores per quarter.
Operator
No, like I said there are some one time in this quarter so they will go away. So the future quarters should be lower than.
Saugata Basuray
Great. I’ll get back in the queue. Britanni, thanks for answering my questions.
Operator
Thank you Nitin. Thank you. Before we take the next question, would like to remind participants to press star and one to ask a question. Next question is from the line of Dharwal Popat from Choice International. Please go ahead.
Saugata Basuray
Yeah, thank you for the opportunity and results. My first question is around the strategy as you highlighted the focus is around the motorcycles and there has been a focus on rural area for about one or two years that I’ve been reading the transits in the ports. But what I understand is that the key in which the question still remains that around the penetration of electric vehicles. And the one segment of the automotives where the penetration is the least is of course the commercial vehicles. Latest Royal Enfield has also launched their electric vehicle bike now which was still not penetrated.
It was only the gearless where EVs were present. So why is management not really focusing or is there a lesser focus on the Commercial vehicle segment where there is no penetration of electric vehicle at all. That is my first question and second question is around the so we have seen refiners, particularly Indian refiners buying crude at premium and I understand these are being procured by cash dollars mainly from Singapore and South Korea given the refinery output in Asia is lower and basal being the output of refineries.
Do you guys also. Does gastro also seem to have been charged premium to the base oil prices that are available in APEC region? Or are you
Nitin Tiwari
Able to diversify it enough to keep the premiums lower? Or are there no premiums at all on the major treasures of Song?
Saugata Basuray
This is Shobhat. Thank you for your question. I just. Before I respond to that, just want to check whether I’m audible clearly.
Nitin Tiwari
Yes, it’s loud and clear.
Saugata Basuray
Okay. Right. So two parts to your question. Strategy, the implication of electric vehicle and commercial and therefore a focus on commercial vehicle. And then you talked about base oil sourcing and what’s the kind of pricing mechanism around it. Right. So on. Let me come to the strategy first and I’ll. I’ll unpack it a bit. It’s not that we don’t focus on commercial vehicle. In fact commercial vehicle is a big sick sale, a significant contributor to our overall volume. Right. What I mentioned was that we have been pushing very heavily into rural India to build out distribution muscle in the last few years and that is reaping rewards for us in our motorcycle business, which is a very profitable part of our business.
That’s happening because most of the new two wheelers in this country have been bought in rural areas. So if we are just playing to a strategy where we said to change the growth profile in terms of volume growth in the business, you need to go and tap consumers where they are emerging. So that’s, that’s feeding onto our motorcycle strategy growth plan. In commercial vehicles there are two parts to it. There are the heavy commercial trucks business and then you have the tractor agribusiness. Castrol has traditionally been very strong in both in the trucks commercial space.
We work very closely with Tata Motors and we had announced that a few years back that we have a partnership going with them. That part of our business has also grown in double digit and therefore we play a full portfolio across all three categories. Cars, bikes and commercial vehicles. I’ll briefly touch upon EVs on EV side as well we have partnerships going. While this is an emerging space, still small, but from our point of view we want to be prepared for the future. So for example, on Two wheeler EV space.
We are working with energy. We have been in discussion with them for a few years. We are integrated into their, into the product development thinking and our technology team is working with them on certain products for their future vehicles. Likewise, we have been working with Tata Mobility electric mobility vehicles. And you’ll find that our transmission fluids are there in all the Tata EV vehicles which are on the road. So we are present across ice EVs and in between because we believe that the pathway to low carbon mobility will go via conventional ICE engines becoming more efficient.
So we have thin products as we call them. These are premium products, synthetic products. We have products which are compatible for hybrid engine already in the market. We have products which are now compatible for E20 and gas engines. Those are also in the market. And then we have products and partnerships going on in the EV space. So that’s the first part. Answer to the first part of your question. The second part is about base oil. We have a diversified sourcing strategy from across the world.
We do import a certain percentage of base oil from Singapore as well as from South Korea. This is really driven by the quality and the specification that we require for certain of our formulations. We equally source base oil domestically as well. We source from the Indian refiners. And depending on what our forecast is over the next few months, we are quite open to sourcing products from other parts of the world so long as they meet our quality requirements. Prices of base oil, depending on what companies have structured into their contracts, usually are indices driven unless somebody were to buy a spot cargo.
So similarly, our term contracts are all indices driven and as the market moves up or down, we get benefit of that. I hope that answers your question.
Nitin Tiwari
Yeah, it does. So my question was more on given there would be scarcity of
Saugata Basuray
Bazal as well. So is there you answered that it is in line with the indices. But is there a premium already being charged by the bazaar providers similar to what we saw for the, for the producers in the. In the first quarter and now that we are seeing
Nitin Tiwari
As well. So is there some premium kind of to be on that indices as well or. No, that is still not in effect.
Saugata Basuray
So in this is a move. So when I refer to indices, when I refer to indices, the two indices that you can go, you can refer to, one is Argus and other isis. And these are publicly, you know, available. And those indices will move and they are moving and therefore our contracts are marked to those indices.
Nitin Tiwari
Okay, okay. It was okay. This answers my question. I
Saugata Basuray
Believe there is no scalability in your message it is in line with the indices which are currently running. Okay, I’ll join that with you. Thanks. Thank you. Thank
Operator
You. Next question is from the line of Sabri Hazarika from NK Global Financial Service. Please go ahead.
Nitin Tiwari
Yeah, so just a clarification on this volumes you mentioned 7 to 8% growth yoy or is it qoq
Saugata Basuray
1q versus
Operator
1q 1q 26 versus 25.
Saugata Basuray
Yeah,
Nitin Tiwari
1q 26 versus 25 is 7 to 8%. Okay, fair enough. Secondly, so how do you see the margin scenario in in the current year given the volatility in the global market? So we had the EBITDA margin falling to around 21 now versus 23, 24%. So do you have a guidance for this quarter for this year as a whole?
Operator
Yeah, Sabi, thank you for the question. So I’ll take it in two parts. Firstly, on the margin itself delivered in quarter one you would remember we always have given the guidance of 21 to 24% will be our operating EBITDA margin range. The reason for always giving this range is because our cost profile from 1/4 to the other quarter really differs a lot. And if you now look at the Q4 that was last year we had a very high ebitda margin of 26%. But if you look at my Q1 of previous years you will see Q1 is always the softest quarter because of our cost profile.
So in line with that I don’t see a huge dilution in our ebitda margin in Q1 as we completed the results. Now looking forward will be a different story because we just acknowledged that there is a lot of geopolitical volatility and a lot of the raw material costs have increased. While structurally we will recover the structural margin for the company, we will want to go back into that same range of 21, 24. There could be some short term volatility that we will see even in our numbers. We’ve already taken one round of pricing, our cost optimization is on 24 7.
So we will try to mitigate any such impact. But in the short term there could be some impact.
Nitin Tiwari
Right. And just a small follow up. So I mean this hundred plus dollar oil equivalent of base oil price is yet to reflect right in your numbers. I mean it’s was there any impact in March itself on the base oil price or we’ll see them probably in the next two months or so.
Operator
Yeah. I believe Nitin had also asked a similar question because of our inventory cycles when the geopolitical scenario started, it was just early March. So our inventory cycle covered up for Q1 we saw minimal impact. The impact was primarily on foreign exchange. But to Q onwards, even the raw material prices will start showing up.
Nitin Tiwari
Okay, fair enough. Thank you so much and all the best.
Operator
Thank you. Ladies and gentlemen. To ask a question, please press RN1 on your phone. Now we’ll take our next question from the line of Nilesh Jain from Astute Investment Management. Please go ahead.
Nitin Tiwari
Hi. Thank you for the opportunity. My first question is on the new industry or the new energy broadly focusing on the data center side. Obviously we mentioned that we had been in the pilot stage. The parent company just wanted to understand how it has moved and how it has progressed. And by then can we expect to at least start contributing to our business? If you can give any time, draw timeline and further to that would be what can be the potential addressable market for us.
Saugata Basuray
Thanks, Nilesh. So as you would know that there’s a lot happening in that space. A lot has been announced in terms of new data centers being developed or built in India. The team remains closely in touch with the people who are developing the data centers as well as OEMs who develop the cooling system solutions around those data centers. So it is beyond pilot. There are trials that are going on and these are long time cycle capital investments that you can understand. So as and when they scale up and the developers have firmed upon what is their path, what is the technology that they have chosen for the cooling system, the data centers and we would be able to see that flow through into our business.
We can’t make a guidance at the moment because this is not something we are driving in terms of the implementation of or the execution of the data center. But our teams are closely in touch. The products that we have deployed in the country for pilot or rather for trials are the products that are being used in other parts of the world in data centers.
Nitin Tiwari
Are we not testing it domestically or it’s only being done at a global level now?
Saugata Basuray
We are testing. We are, we have tests or rather we have trials that are happening in India.
Nitin Tiwari
Okay, okay. Given the. We expect the penetration to go increase more towards liquid cooling side, broadly, just to understand so that things will move faster now as compared to, you know, what it has been.
Saugata Basuray
So we’ll see. I mean, within liquid cooling as well, there are broadly two types of technology. There is the emerging coolant and the director chip. We have products for both. Depending on the technology which the developers choose, we will have options to participate in them.
Nitin Tiwari
Okay. You would not able to share any market Size product, right? For now.
Saugata Basuray
Yeah. I think it’s very, very early for everyone concerned and we will see because an emerging space. We’ll see how it develops.
Nitin Tiwari
Thank you.
Saugata Basuray
Thank you.
Operator
Thank you. Next question is from the line of Rahul Ahuja from Prescient Capital. Please go ahead. Rahul, please use your handset mode.
Nitin Tiwari
Sure. Am I audible?
Operator
Yes, please go ahead.
Nitin Tiwari
So firstly, congratulations on the good set of numbers. Just wanted to understand what kind of price increase we have taken in Q1 to address the increase in cost. And my follow up question will be regarding the advertisement expense in Q1. Can you just give me a broad picture of what this is as a percentage of revenue?
Operator
Yeah. Thank you Rahul. Thanks for your congratulations and also for the two questions. See, Castall is a relatively diversified business. Even within Woodbiken we have a large retail part of portfolio with bikes, cars and commercial. We also have our partnership with our manufacturers and the industrial part of the portfolio. We don’t go with a blanket price increase with any. What we have done is we’ve been able to narrow down individually for each of their portfolio what is the cost increase and the intent is to recover any cost increase that we have and like I said, balance between price increase and cost optimization.
So I won’t be able to specifically answer your price increase percentage question but all I can tell you is that the intent is to recover margins and hold the margins going forward. Your second question was on advertising spend. You would see our numbers. Historically we’ve spent about 3 to 4% on advertising and a similar trend has been spent even in one Q.
Nitin Tiwari
Okay, I just wanted to add one more question regarding you said there’s a currency impact. So hedging policy. With respect to that, is there any percentage which is normally hedged?
Operator
Yes, yes we do have a hedging policy. Hedging is a very critical tool for us which helps us with certainty of foreign exchange. It doesn’t really assure us with a lower foreign exchange exposure. So let me talk you through it. We do have a 60 day hedging policy and this 60 day roughly links to my inventory cycle. So as and when we have certain exposure, we go and hedge against that certain exposure. From a raw material exposure standpoint, half of our raw material is locally procured and half of it is imported.
So about half of my box is what we hedge for.
Nitin Tiwari
Okay. Any base percentage for hedge.
Operator
Can you elaborate the question a little bit?
Nitin Tiwari
We just wanted to understand if there any base percentage for hedging like percentage in terms of percentage.
Operator
Like I said Half of my cogs.
Nitin Tiwari
Yeah,
Operator
Half of my cogs is local which we don’t hedge for. Half of my cogs is imported. So that exposure is my dollar exposure and that’s what WIX hedge for.
Nitin Tiwari
Okay, okay, got it. Thank you so much.
Saugata Basuray
Thank you. Next question is from the line of Rudraksh
Operator
From Navneet family office. Please go ahead.
Saugata Basuray
Thank you and congratulations on this set of results. I wanted to understand on the data center opportunity. Again, while we understand that it’s preliminary and difficult to give any guidance yet, the two things which you can share is one, in terms of our global supply agreements or market share that we have already in place, giving us confidence in terms of the direction in which the business can potentially head to. And also wanted to understand the competitive intensity and profitability in that space.
Again at a global level. We understand that India is very nascent. It’s priority depends on a lot of factors. But if you can share competition
Nitin Tiwari
As well as profitability there. So to get a sense of where things would end up stacking over a period of time, if that’s possible. Thank you.
Saugata Basuray
Thanks for the question. Look at a global level too. This is a fast changing ecosystem. A few years back a lot of the data centers were air cooled. They have been subsequently moving to liquid cooled and beyond that going to the electric. Because all the data center develops are scavenging for power efficiency. So the products that we sell serve to meet that requirement of power efficiency. The more heat you remove, the more efficient the data center becomes. That’s the broad sort of area where we’re working in market share.
Numbers are not available globally and I wouldn’t be able to give you guidance globally what’s going on. You can just give a broad how the ecosystem works. It is a competitive space, but again very fast growing and at the same time also evolving because the technology choices are not being firmed up. Which is the reason why we are not in a place where we can start giving guidance. It’s too new or rather at a very preliminary stage for us to give some headline numbers in terms of the size of the market and where it’s going.
I hope that sort of answers your question
Nitin Tiwari
Partially, if I may actually push in a follow up. So let’s
Saugata Basuray
Put it this way, that the technology evolves and the possibility of the changes continue to sustain. Is it fair to assume that once you are an early entrant or once you actually are entry in a certain offering that a data center chooses to have, is it possible that a coolant or a Material comparable which is used for cooling can be replaced by an alternate supplier later. And also does the technology allow the switch to an alternate provider once you are into the system? Or that’s not possible. I effectively mean to ask if you become engraved into the place and replacements are not possible or a replacement is possible or an alternate coolant or an effective offering to subsequently refill if possible.
Nitin Tiwari
Yeah, I think it’s a difficult question to put a very clear answer
Saugata Basuray
To, but I’ll make an attempt. So the model for liquid coolant of data centers are complex. It’s not just for charging a liquid in. There is a whole apparatus in the cooling ecosystem. Most of them are closed loop systems, which means that there are specialized people who manufacture the hardware within which you would have liquids that you know, we manufacture going. And that is a closed system loop which continues whether over a period of time somebody would replace the liquid with another liquid perhaps, I don’t know, honestly, because it’s the business or that industry is not mature.
Right. But I just thought I’ll help you visualize how does the whole system work. One level below that is the approach to that whole liquid cooling. You know, there are those who are immersing the the server blades or the chips into, you know, liquid pool. If you were to visualize, that’s when there are those systems where the chip itself is directly cooled. It’s called direct to chip where you know, it’s integrated on top of a board which is cooled from beneath with fluids moving around. They have their own dynamics.
It’s not as simple as, you know, taking on one click fluid and putting another fluid. But given that the whole technology around it is evolving quite, quite fast, it’ll be a bit premature for us to make predictions about it.
Nitin Tiwari
Okay, thank you.
Operator
Thank you. Next question is from the line of Vipul Kumar Shah from Sumangal Investments. Please go ahead.
Saugata Basuray
Hi, thanks for the opportunity. So my question is regarding sales mix. What is the contribution of two wheeler, four wheeler commercial vehicles? If you can break it down?
Operator
Yeah, thanks for the question. See, traditionally Castrol has been very strong in the commercial vehicle space and has really grown also in the two wheeler space. Those two combined do become a majority of our automotive sales. I would say together both of them will be about 60% of our sales. Cars is an emerging segment. As you can imagine. Even India demographically is early on the car penetration stage. The cars portfolio for us is also in the early stages. So that would be another 15, maybe 20% of our revenue.
And then the rest of it is the industrial part of the portfolio.
Saugata Basuray
Thank you very much.
Operator
Thank you. Next question is from the line of Namish Pandya from NT Advisor. Please go ahead.
Nitin Tiwari
I’m audible. Thanks for giving me this opportunity.
Saugata Basuray
Yes. So my ask couple of questions. So my first question being as you as we all know that ruler markets are growing well so how do margins in ruler compare with urban markets? First and secondly, can you break down volume growth
Nitin Tiwari
Across ruler versus urban markets and even between key segments like automotive and industrial?
Saugata Basuray
Okay, look, I’ll make an attempt on the volume growth story and then Lenny will come through and talk about margins. So rural business now has been growing volume wise on a double digit consistently now for several years. As we build out our direct reach into rural India. The majority of the products that are sold into our rural business, approximately two thirds of it is motorcycle products. Margins are quite good. They are accretive to the business. If I look at urban, urban has both commercial vehicles, cars and bikes.
The mix is quite different in terms of margins for us. We earn more in cars followed by bikes followed by commercial vehicles in urban centers. Our focus is on what we internally categorize as high density convention points which are largely about cars and motorcycles. In those markets our margins are again accretive. Right. But there’s a large commercial vehicle business that we service all over the country which is lower in terms of margin compared to bikes and cars. Industrial fast growing in terms of volume.
There are pockets of it which are very high margin, specialized application. But overall at a weighted average level the industrial margin would be a bit lower and again consistently growing at double digit for last several quarters. Now.
Operator
I’ll just build on a small anecdotal point on the rural margins that you asked.
Nitin Tiwari
I
Operator
Think the use cases on commercial vehicles and bikes, which Shabrata just said is a big part of our portfolio actually very closely linked to livelihood in many cases in rural. And we’ve also learned that actually owners are very proud owners of their motorbikes also when it comes to they really invest in their vehicle. So while we have a portfolio of bike oils and we have a portfolio of commercial oil, what we see play out in rural activities that they tend to pick the active which is the premium for them and it’s a high cost margin for us as well as even on commercial vehicle, they tend to pick the ones which are healthy gross margins for us.
So we don’t see rural as a gross margin diluter for us at all.
Nitin Tiwari
Got it, Got it. That’s it from us. Thank you. Thanks a lot.
Operator
Thank you. Since we have last two minutes of the call, we’ll take our last question from the line of Kirtan Mehta from Baroda PNP Paribas Mutual Fund. Please go ahead.
Saugata Basuray
Thank you for the opportunity. One question coming back on the volume growth, we have narrated that almost all segments like rural, urban, commercial as well as industrial, all of them are growing in double digit. However, at the portfolio level we are achieving a 7 to 8% y o
Nitin Tiwari
I growth. So which is the pocket which is probably growing slower and sort of impacting our overall volume growth.
Saugata Basuray
Right. So the rural nerve and our geographies like the way we categorize it. So within that rural is growing at double digit. In urban we further segmented because we think urban has a role to play in premiumizing our mix. The premium portfolio that we sell into urban India, predominantly cars and motorcycles that also growing at double digit. If you remove this, then you have the large commercial vehicle business or commercial vehicle products which include engine oil for trucks which somebody asked a while earlier.
You have specialty products like transmission fluids and greases or. All of this is quite significant part of our portfolio. It is growing, but not at double digit. High single digit and all of this at a blended level brings us to the kind of growth profile that we talked about.
Nitin Tiwari
Sure. Thank you.
Saugata Basuray
Thank you.
Operator
We are at time. This brings us to the end of the call. On behalf of Castrol India Ltd. I thank you for joining this call. You may now disconnect your lines. Wish you a good day ahead.
Nitin Tiwari
Thank you.