Castrol India Limited (NSE: CASTROLIND) Q3 2025 Earnings Call dated Feb. 04, 2025
Corporate Participants:
Kedar Lele — Managing Director
Deepesh Baxi — Chief Financial Officer & Whole-time Director
Analysts:
Harsh Maru — Analyst
Hardik Solanki — Analyst
Ashwini Damani — Analyst
Nitin Tiwari — Analyst
Kirtan Mehta — Analyst
Karthik — Analyst
Natraj Shankar — Analyst
Vipulkumar Shah — Analyst
Rohan Jadhav — Analyst
Gaurav Shah — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, welcome to our 4Q and FY 2024 Earnings Conference Call for 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 touchstone phone to reach the operator.
Also, please note 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 the date of this call. These statements are not the guarantee of future performance and involve certain risks and uncertainties, which are difficult to predict.
We have with us Mr. Kedar Lele, Managing Director, Castrol India Limited; and Mr. Deepesh Bakshi, CFO and Whole-Time Director, Castrol India Limited.
I now hand the conference over to Mr. Lele for his remarks.
Kedar Lele — Managing Director
Good afternoon to you and to everyone and thank you for participating in Castrol India’s 4th-quarter and full-year 2024 earnings call.
Since this is my first address to you all as the Managing Director of this company, allow me to give you a brief background about myself. Prior to my current assignment, I’ve spent over two decades at Unilever in various leadership roles, latest being the Executive Director of HUL with responsibilities for sales and customer development for India and South Asia. I’ve also established actual’s e-commerce initiative over a decade ago, apart from scaling the modern trade and institutional business, post which I led Bangladesh as its Chairman and Managing Director from 2017 to 2021. And before that, I spent extensive time in the field of advertising, digital innovation and sales, building my expertise in marketing, customer development and general management. I’ve also served as Vice-President of Bangladesh in the past and I’m excited to have joined Castrol India and look-forward to working with my colleagues to drive this company’s growth in the coming times.
Moving on to this performance for this year. I’m delighted to announce that Castrol India has continued its growth trajectory in the 4th-quarter as well as the full-year 2024. And I would like to iterate that — rather reiterate that our reporting follows January to December calendar year. Our focus on continuous product and service innovation, along with consistent investment in our brand has driven a top-line growth of 6% for the year, highlighting our ability to adapt and thrive in an ever-evolving market landscape.
Let’s start by having Deepesh take us through our 4th-quarter financial performance. Deepesh, over to you.
Deepesh Baxi — Chief Financial Officer & Whole-time Director
Thank you, Kedar, and good afternoon to all of you.
Before I begin, I would like to extend a warm welcome to you to Kedar for joining Castrol as the Managing Director. I would also like to welcome Rakesh Makhija, who has taken over as the Chairman of the company and Satyavati Berera who has joined us as the Independent Director. Together, all of you bring tremendous experience and business acumen to the company’s health and we are all delighted to have you here.
Now talking about the numbers and how our performance has been, we released our 4th-quarter and full-year results on Monday. Here are some key financial highlights. Firstly, for 4Q 2024, I believe we reported strong financial performance. Our revenue was INR1,354 crores, which is up 7% from 4Q 2023 of INR1264 crores. Our profit before-tax was INR371 crores and that’s an increase of 14% year-on-year on a quarterly basis compared to 4Q 2023. And our 4Q ’24 PAT rose to INR271 crores, which is up 12%.
Now let me just talk briefly about the full-year. Full-year, we achieved a revenue of INR5,365 crores, which is a 6% increase compared to last year, Jan to December 2023, where we delivered a revenue of INR5,075 crores. And this reflects our consistent effort to expand operations, optimize performance and execute our strategy. Profit before tax stood at INR1,258 crores for the full-year 2024 and that’s grown by about 6% from INR1,181 crores in full-year ’23. This improvement highlights our focus on operational efficiency and cost management.
And finally, profit-after-tax, that reached INR927 crores, which is a 7% increase compared to last year of INR864 crores. This solid growth underlines our ability to drive profitability while navigating challenges, also making sure that we do a robust growth performance. The Board of Directors have proposed a final dividend of INR9.5 per equity share with a face value of INR5 each for the financial ending 31 December, 2024. This is of course, subject to shareholder approval. This will bring the total dividend for the year 2024 to INR13 per share. The INR9.5 final dividend that we have declared includes INR4.5 rupees of special dividend that we have declared to concentrate the 125 years of celebration of global cash flow.
Before handing the call-back to Kedar, I would like to highlight some of the biggest recognition that Castrol has garnered in the industry this year. Our three plants in Kaharpur, Pata Ganga and Silvasa have received multiple awards for safety, quality and efficiency. We have now reached 12 years of injury-free operation at our Castrol CMS site, a testament to our commitment to safety. Our customers like Tata Motors and JCB have recognized us for innovation and technology progress. And our marketing campaigns have won more than 30 awards, both nationally and internationally.
With that, I would like to hand over to you.
Kedar Lele — Managing Director
Thanks, Deepesh.
In addition to discussing our performance, I would like to highlight some significant business developments at Castrol India during this period. To start with, this year witnessed several new product launches across our portfolio. We introduced Castrol Edge variance aimed at SUVs, hybrids as well as European vehicles and CRB Turbomax Plus, TK4, a premium lubricant for trucks, extending our commercial vehicle portfolio as well. We expanded our Auto Care range with two new products and developed four advanced preventive solutions, which is called DW series that combine high-performance with environmental benefits.
Moreover, we inaugurated our state-of-the-art technology center in Patal, which is now here to drive innovation, blending, analytical testing and advanced EV and data center solutions. We have also installed state-of-the-art filling lines at our Paharpur and Silvasa plants, helping us unlock the headroom to go in the time to come. In terms of brand-building initiatives, you all remember Shahrukh Khan became our ambassador and he endorsed Castrol Edge stay ahead campaign, which is boosting our visibility across digital, TV and outdoor platforms.
We managed to reach-out to over 70,000 truckers across 35 cities through the CRB Turbomax Pragatiki program. We also launched Castrol Power-One, ultimate initiative with training opportunities for the winners at Castrol Honda, LCR Motor GP, Teams European facilities. In terms of geographical expansion, we also made huge inroads in rural market. Now we reach over 36,000 workshops and retail outlets in rural India and our national presence has now grown to over 143,000 outlets, including 600 Castrol auto service centers, also called CASC, 29,500 independent workshops and 10,000 multi-brand car workshops.
Now sustainability remains a key aspect for the business, with over 50% of recycled plastic now being used in our HDP bottles. We’ve also commissioned rainwater harvesting and solar projects at our Silvasa plant, thereby reducing our CO2 emission by 45%. If you ask me, all this reflects the hard work, the innovation and dedication of our teams across the country in delivering these results for 2024.
Looking ahead, in 2025, we shall continue to focus on delivering high-quality products and services to the automotive and industrial sector. A key focal point for the team will be expanding our footprint further in rural India while introducing innovative services and products across various regions. But this is indeed in-line with our strategy to make Castrol more accessible and affordable for consumers through our growing network. I’m hugely excited about the road ahead and remain committed to driving growth, sustainability and excellence in all that we do.
Thank you for your attention. I invite you to share any questions, feedback or views as we open the floor for discussions.
Questions and Answers:
Operator
Thank you very much, Mr. Lele and Mr. Baxi. We will now begin the question-and-answer session. Dear participants, if you wish to ask a question, please press star and 1 on your touchstone telephone. If you wish to withdraw yourself from the question queue, please press star and 2. All 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 have the first question from the line of Harsh Maru from Emkay Global Financial Services. Please go-ahead.
Harsh Maru
Yeah. Thank you so much for this opportunity. So my first question is relating to the volumes. So if you could share the 4th-quarter volumes as well as the full calendar year volumes?
Deepesh Baxi
Yeah. Hi, hi. So the 4th-quarter volume was 59 million liters.
Harsh Maru
Okay.
Deepesh Baxi
And the full-year volume was 234 milliliters.
Harsh Maru
Right. And so like diving a little bit more in terms of volumes, could you share some bit of approximation in terms of the essentials range that all have and what is the kind of ballpark volume share that you are having in the essentials range? And do you see any downtrading like within this essentials range from your existing customers?
Deepesh Baxi
Yeah. So thanks for that question. I think firstly, we are quite excited about the expansion range series that we announced and it is not only in commercial vehicle, but it is also in the two-wheeler segment as well. And if you look at the volume, we’ve grown about 6% as compared to last year and almost 4% of the PAT is coming from the essential series. Of course, you know, when you introduced and this is the second year of our operation really, there is definitely some downtrading that happens. But the reality also is there is a complete demarcation in terms of the kind of consumers that we are targeting and therefore, we are happy with where there has been down-trading and we are expecting not only to just look at Essential as a growth profile for next year, but also premium volumes, both in commercial vehicles and cars.
Harsh Maru
Right.And just one more question to Kedar in specifics. So in terms of the strategy now, we intend to become more accessible to customers. So could you please elaborate on what — like what does this imply in terms of financial as well as operational terms?
Kedar Lele
First, you would have followed the organization for a long-time, you know that Castrol is a market-leader across all the spaces that we operate as well as a premium brand perceived to be premium, priced at a premium, which means that we left out a large part of our market, which is called Middle Kingdom or Delhi of the market where we did not compete. And over the last one year, the organization introduced essential brand, which is a sub-brand across most of the spaces that we’ve got and mainly. And by doing focused market testing, we realize that, as Deepesh also said, the amount of cannibalization is not very-high. It’s very small amount of cannibalization. It tells us three things. One, consumers love the brand Castrol and they always wanted to have it, but they couldn’t afford it.
Second, when you make high-quality products available at an affordable price, new consumers start coming into the franchise. And third, retailers who have been able to store or stock both premium as well as affordable range of products have seen growth across their portfolio. So that allows us to really be consistently growing while also maintaining the profitable profile of the organization that you’ve seen in Q4 in this year. And that is what we will continue to do in the time to come.
Harsh Maru
Right. Thank you so much, sir.
Operator
Thank you. The next question is from the line of Hardik from ICICI Securities. Please go-ahead.
Hardik Solanki
Yeah. Congratulation on good set of numbers. So can you just share how the load spices have moved during the year and during the quarter? And also I just want to understand in case of the increase in crude prices or in case of increase in the crude link prices, which is our raw-material, how are we passing the input cost hike. That’s the number-one, sir.
Deepesh Baxi
Okay. Thanks, Hardik. On the crude oil, I just — first, I just wanted to explain that in the past many years, we have seen a strong relationship and co-op between the crude oil and base oil. Base oil is our input cost material as you know. But over the last year or so, that relationship has decoupled, but notwithstanding that, if I look at the average base oil for 2023 versus 2024, it has been broadly flat, $1,000 plus/minus, a few percentage. As far as 2025 is concerned, of course, with the geopolitical, it can be anybody’s guess where the crude oil will go. But our assumption is that it will be in the range of $75 to $80. So for that, I think we have a sort of pricing strategy in-place if we need to intervene into the market. But the input cost that we are already seeing a hit coming through is forex.
So as you know, we import almost 50% to 60% of our input materials and forex, which is averaged out about 83 in 2024 is expected to be in the range of 80% roughly. Again, you know you’re following the global events. So that is something that we’re keeping an eye on. By the way, as I’ve explained in the past, these input cost increases are part of our business. We have predictive models that we use within the — within the organization and take strategic pricing. As part of that, a part of our portfolio, retail, we’ve taken some pricing intervention already in the month of January as well. So that is something that I would like to share with you in terms of the same numbers as of now.
Hardik Solanki
Okay, okay. And sir, you mentioned that the volume for this FY ’24 is around 235 million liters, right? So just wanted guidance on how the volume should grow going-forward for next two to three years? And on the — if you look at for the quarter, the margin we have almost hit the all-time high EBITDA level. So just wanted guidance, is this a sustainable or what has — what has driven or drove this margin expansion?
Deepesh Baxi
Yeah. So EBITDA margin for 4Q is definitely at a higher-level, when you look at full-year ’24, we are within the guidance that we said, which is 22% to 25%. And for ’25 as well, we will continue to maintain that margin of 22% to 25%.
Hardik Solanki
So on volume growth?
Deepesh Baxi
Yeah, volume growth, yeah, volume growth. So across our portfolio and as you know, we have a very balanced portfolio. We give-and-take, you will see the market will grow in the range of 4% to 5% and we are committed to grow above the market.
Hardik Solanki
Okay. And sir, one more if I can. Can you just break-down the volume details individual passenger vehicles, motorcycle or you know, if you can just break-down for how the growth has been or in the percentage term, how the volume constitute has been?
Deepesh Baxi
Yeah. So look, 40% of our volumes come from commercial vehicles. And clearly in the commercial vehicles on the back of our introduction of the essential and Bharat portfolio, we’ve seen a double-digit growth this year. So without getting into the details on cars and bikes, we look at both of them together, which is personal mobility. Yeah. So in personal mobility, we — we’ve grown in single-digit and we are expecting a good momentum right now and that should continue in the next year as well. And typically, industrial portfolio is also growing in single-digit. As you know, industrial portfolio does not get impacted at all by electric vehicles. That’s definitely another area of focus that we are looking at for 2025.
Hardik Solanki
Okay. Okay. I have a few more. I will come in queue. Thanks.
Deepesh Baxi
Sure. Thank you, Hardik.
Operator
Thank you. The next question is from the line of Ashwini Damani from Manyavar Family Office. Please go-ahead.
Ashwini Damani
Hello. Hello, sir. Thank you for the opportunity. Sir, you mentioned that you expect a volume growth of 4% to 5%. If we look at the last 10-year data, our volume growth has hardly been 1% or 2%. I understand that you are increasing the outlets, but do you have some benchmark on the sale per outlet because if we plot the data going back to, say, 2018, ’19, ’20, we used to do sale per outlet of almost 1,500, 1,600 per liter, which has now fallen down to, say, INR1,200 per liter. So how will your volume growth come, A, on one-side, vehicles need lesser and lesser fluids. Your own outlet sale per outlet is reducing. So how do you plan to change this scenario?
Deepesh Baxi
Yeah, sure. No, great. Thank you. I’ll share my thoughts and then I’ll invite Kedar to bring down. So firstly, what I said is just a clarification, 4% to 5% is market growth. And we will grow above the market. And you’re right, in the past, we have not grown in-line with the market, but we’ve grown our profits and gross margin much above the market. The shift and I think we have spoken earlier than we’ve met is that of this for the last couple of years, there has been a conscious effort to do a volume-led growth. And if you look at the last two years, both years we have grown volume above the market. And that’s been a part of a very specific intervention strategy. For example, we’ve got into renewal and that’s definitely an area of focus for us. We have launched this middle-market, Kingdom as we call it, which is also giving us at a slightly lower-price point, the volume uplift, yes. So we are confident that we will continue to grow above that 4% to 5% of market growth rate.
Kedar, you’d like to build anything?
Kedar Lele
I think you’ve answered the question, but maybe a perspective I can bring in is, Ashwin when I started looking at this business a few months ago, I realized that the vehicle ownership in India is expanding rapidly, not just in new cars and new bikes, but also in the secondhand market. And with that, the — as the ownership increases, so does the reach of these vehicles in the rural areas. So you’re right in saying that expansion of outlet coverage leads to per outlet throughput coming down. But collectively, it goes up because our products become available in the vicinity of these consumers who could be in urban areas, in the new suburbs which are coming up or in rural areas. So the idea is to be present where consumers are, either is to easily bring them into our consumer franchise — brand franchise and make brands and products available at the top-end of innovation, which is where performance is needed as well as at a more affordable end-of-the portfolio where consumers are looking for a good product, which is what we offer. So that’s how we firing on all cylinders is what the plan should be for the time to come.
Ashwini Damani
Sure. So one more question. And the market — the stock market today feels that Castrol is in a situation where there is terminal decline in the business because of the onslaught of electric vehicles and the stock prices are also similarly valued. At the same time, you coming from such a illustrious career background and from such an organization as large as HUL, what is your thought process when you join a company and I wanted to understand your psyche if so that would help us understand that as a senior person, how do you approach Castrol at this stage of your career coming to a company which is being considered on a terminal decline?
Kedar Lele
Yeah. That’s a very good question, that’s what I must say and it challenges maybe my decision to have joined Castrol, but I should tell you my induction experience has been incredibly immersive. It’s a new category that I have begun to love and understand. And I made this decision with lot of thought. So, I must tell you two things which are maybe more factual in nature and more macroeconomic. If you look at today, the vehicle park that we have, we look at the vehicle park for two-wheelers, it’s over 240 million vehicles. Vehicle park for four-wheelers is 4.5 million vehicles. Every year, India sells about 4 million give or take cars and about, 20 million, 22 million of two-wheelers. Now the penetration of EVs in that is about 5%, 5.5% for two-wheelers and 2%, 2.5% just about for four-wheelers. India as a country doesn’t have an incentive like China does to drive EV penetration at the same speed because for us, whether it be EV charging batteries or fuel or the crude oil, everything is imported demand.
So internal benefit as the evolution of vehicle technology changes from ICE to hybrid to EVs and we will have EVs coming in sectors such as look at the buses in the in the towns or cities, look at the mobility or two-wheeler mobility that last mile uses or salesmen and women use. Now those are kind of things which should become EV very, very quickly. Rest, I think next 15 to 20 years horizon, ICE engines will continue to remain relevant. Castrol as a business is also innovating and finding new applications for products and not just the lubricant, but also in different products that we are getting into, which is coolants and transmission liquids and fluids for data centers and so on. So while I appreciate your view on-market viewing the business as terminal value zero, there is lot more of so to say, juice in the lemon to squeeze for next two decades and more. That’s how my perspective has been and we can really create a very different business in the time to come for this brand to keep going.
Ashwini Damani
Thank you, sir. And that is what I wanted to just understand. Thank you for your thoughts, sir.
Kedar Lele
Thank you.
Operator
Thank you. Participants, you are requested to please restrict yourselves to two questions per participant. You may rejoin the queue for further questions. The next question is from the line of Nitin Tiwari from PhillipCapital. Please go-ahead.
Nitin Tiwari
Hi, good afternoon. Thanks for the opportunity. Sir, my questions basically are related to your raw-material cost and gross margins to start with. So your gross margin actually had a very decent expansion on a sequential basis in this quarter. Raw-material prices, I mean, were lower on per unit basis. So what led to that? I just wanted to understand that first.
Deepesh Baxi
Yeah. So for the quarter, compared to sequential, this quarter was a sequential-quarter the main reason is that every year in 4th-quarter, we get our rebates, which is on the volumes that we purchased both for local and international. So that is the one-off that is leading to the reduction in per liter cost of the cost of material cost. I mean, there are many other factors, of course, it offsets there is a forex in China, but before we simplifying the…
Nitin Tiwari
I’m sorry, I miss on that. You said that rebates that you offer. I didn’t get there or debates you are offered.
Deepesh Baxi
So because we have long-term contracts with our suppliers for purchase of raw materials, both global and local, at the end-of-the year, the rebate basis the slab gets transferred and goes. So our cost of production goes down.
Nitin Tiwari
Okay, is it right to understand that I mean most of the rebates that came in for the year were in the last quarter, that would be the right understanding.
Deepesh Baxi
That is exactly. And it happens every year. So when you compare last year’s 4th-quarter and this year’s 4th-quarter as well, you will find that the is slightly lower compared to sequential quarters.
Nitin Tiwari
Understood. And secondly, if I have to look at your raw mat in terms of a breakup between base oil and additive pricing. So what would be a broad bifurcation in terms of percentages if specifics are not feasible between how much would be additives and basically base oil when I look at it in volume terms in percentages and when in terms of — and in terms of cost, in terms of percentage?
Deepesh Baxi
Yeah, so I can’t give you exact breakdown, but broadly, we will find that 60% to 60% to 70% is base oil, 10% to 15% is aggressive, then 5% to 10% is the cost of factoring materials material and then all the other overheads, etc., will form the remaining very-high level.
Nitin Tiwari
But 60% to 70% is base oil in cost terms.
Deepesh Baxi
In cost terms, yeah.
Nitin Tiwari
And in volume terms, how much is base oil in a liter of lubricant?
Deepesh Baxi
So what do you mean in volume terms?
Nitin Tiwari
I mean if I’m looking at a liter of lubricant. So in volume percentage terms, how much of that would be base oil and how much would be additive?
Deepesh Baxi
Yes. So look, I mean that’s almost a question around what a bill of material build is and that I don’t think we will be comfortable sharing with you in that granularity.
Nitin Tiwari
I mean that’s more of a population question, but that’s fine. I mean like even a broad percentage would be okay with me.
Deepesh Baxi
Yeah, I think look, I mean, it will still follow the similar sort of cost profile. It’s not materially way off, yeah. I mean if you want to take a ballpark.
Nitin Tiwari
Okay. And secondly, I mean, this would be the last one. How do we account for our inventories? I mean, was there any incidence of inventory losses in this quarter because our raw-material prices declined. So have you booked any inventory losses as well?
Deepesh Baxi
No, we do it on a — we do it on a weighted-average cost, but there aren’t any inventory losses that we there.
Nitin Tiwari
And how many days of inventory do we carry generally?
Deepesh Baxi
So of course, based oil and finished goods both are different, but on an average, you can take that we are — we trend between, you know, so fixed — so finished goods is much lower, okay, and raw materials is slightly higher because there are imports involved, so there is a lag time. But I would say you can take anything between on an average 30 to 40 days.
Nitin Tiwari
30 days to 40 days combined for both?
Operator
Can we request you to please rejoin the queue if you have to questions.
Nitin Tiwari
Sure. I mean, it’s just a continuation of the same question. I understand that I’m not going to last years. So base oil and basically Robat both combined along with final products is 32 quarterly day.
Deepesh Baxi
So that will be — I mean that will be slightly higher given that we also have additives, okay. So I think base oil, that’s my answer for base oil and finished goods. So there is base oil finished growth additives. If I put all of that together, that will be about 50 days.
Nitin Tiwari
50 days. Great, great. Thank you so much for the…
Deepesh Baxi
Thank you.
Operator
Thank you. The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund. Please go-ahead.
Kirtan Mehta
Thank you, sir for the opportunity. One question on the sort of the margin drivers for the upcoming quarter. So what I understood from is that there was a higher which had benefited the cost, probably that would be upset during the next coming quarter. However, we may see some impact from the depreciation of the rupee and this could probably be partially offset by the higher volumes, which are typical for the Q1 quarter. So how would we see the net margin moving sequentially in the next quarter?
Deepesh Baxi
Yeah. Great question. So two things. One is the rupee depreciation to a large extent, we have already, as I was mentioned earlier, we’ve taken our necessary pricing interventions to cover that, okay. So every year, our quarter one compared to quarter-four, we’ll see the cost of materials going slightly up because you take-away that underlying rebate impact, yeah. So strictly the comparison will be with previous quarter or as in the previous year quarter one, in this case, quarter one 2024. So, all our strategic interventions are firing, we’re in a good place.
And from that point-of-view, we do continue to expect that the volume growth will be above the market. And that volume growth once we get the mix right, which is the mix of the portfolio, which is Essential cities and our brand and that I think we are making a lot of interventions in-quarter one as well. We believe that the margin profile on an EBITDA level will continue to be in that range of 2025%. I wouldn’t comment on the gross profit because as a listed entity, we would like to look at the full P&L as well. We will continue to invest in our brands, very important. We’ve taken — and you’ll see it in the market as well. We are relaunching our flagship brand Active and there is a — there is lot of action on other initiatives that we are taking to help the volume growth as well.
Kirtan Mehta
Right, sir. Just one follow-up on the same. In terms of the Q1 being a seasonally strong quarter for the market, do we expect our margin to be on the higher-end of the range during the quarters on a seasonal trend?
Deepesh Baxi
So again, look, we — I’ll — I mean, I may sound boring, but I’m going to continue to say that we will see it in the range of 22% to 25%. And let me just — let me just explain why we are doing it this way. The reason is that the input costs does fluctuate and we’ve seen this year-on-year. Even if you see the 4th-quarter, four quarters EBITDA margin that we’ve had in this year. We were very close to 22% in 1Q. And as we went along, we were able to take the necessary action to get the volume growth, get the right mix and then navigate through these uncertain times in terms of the geopolitical situation and forex, yeah. So that’s the reason we need a bit of an elbow room to make sure that we are able to balance the volume and the margin, right? That’s really what our intent is.
One other thing you might want to appreciate about our business is, while we have the automotive business and we also have the retail business, we also have very strong B2B business and industrial business. And some of the interventions around price to get the new customer acquisition. I mean that takes time and that’s not directly — you can’t start in 1/4 and finish in the same quarter as well. So, that’s the reason we are giving a range and this year is a classic example where we’ve grown the top line, we have grown gross profit, we have grown PBT and we have managed to be in the EBITDA margin of 22% to 25%.
Kirtan Mehta
Right, sir. Thanks for this color. One more question on the volume side. We mentioned that around 4% out-of-the 6% growth came in from the essential range. Would you also be able to give us some color in terms of how the rural expansion is helping us to drive the volume growth? How much would you attribute to our rural expansion?
Deepesh Baxi
Yeah. Look, I think rural impact is — so let me just clarify, rural — while most of our Middle Kingdom volume is in rural, not all the rural in Middle Kingdom, if that makes sense, yeah. So in the rural, there is a huge opportunity and requirement from our customers in rural to get the right volume — right mix and right product, yeah. So the rural volume growth is much higher and back-in double-digit than what we have done compared to last year.
Kirtan Mehta
Thank you, sir. Thanks for this color.
Deepesh Baxi
Thank you.
Operator
Thank you. Participants, as we are on the last five minutes of the call, you may please press star and one to ask a question. The next question is from the line of Karthik [Phonetic], an Individual Investor. Please go-ahead.
Karthik
Okay. Yeah, hi, thanks for the opportunity. This is actually with reference to the last quarter’s call. You mentioned about liquid cooling and you made some strides in this space. I would like to get an update on where this is? Is it picking-up in India or abroad? Do you have some use cases that you can share? Any information on this would be useful there.
Deepesh Baxi
So I mean, I don’t have a — I don’t have too much update except for the fact that there is a significant amount of work that is happening all-in the right direction in U.S., in Europe, and they are taking the lead-in terms of the data center capacity development. And we know that in India, we’re going to grow double-digit in terms of the market of the you know liquid cooling. We are in India in talks to talking to our customers to both do a proof-of-concept, and commercial viability of these projects. So a lot of different technologies are currently in-progress. So hopefully, I think in the second-half of the year towards the end-of-the year, we will be able to give you a more concrete answer on where we are and what our roadmap is for the liquid cooling. But I must say that there is a lot of work happening globally as well. In fact, in our Patal plant, we have set-up a R&D center and this is in addition to what global set it up at the cost of INR500 crores in U.K. So we are doing that in India as well. So that hopefully gives you an assurance. I think you’d have to just give us some more time and we’ll come back to you in terms of the roadmap.
Karthik
Okay. And but so based on what you’re saying is you’re saying that there is good amount of promise outside of India where it has been — a pilot has been done and looks promising and you want to expand it in India. Is that — can I make that statement? Is that correct?
Deepesh Baxi
No, no, what I’m saying is the growth is essentially led by global.
Karthik
Okay.
Deepesh Baxi
And there is a — there is so there is technology aspect of it and then there is the commercial viability and testing of the product aspect of it. All that work is happening in global. We are having conversations with them and with help of our global, we’re doing similar conversations in India. We’ve now set-up something in India as well. And India market, India market, yeah, Northeastern India. India market is expected to grow at about 20% on this model solutions. That’s the frame I would like you to operate in. And Castrol being a leader in technology, we will play into that aggressively. However, we can’t give you exact number at this stage.
Karthik
Yeah, no problem. Thank you and all the best. Yeah. Thank you.
Deepesh Baxi
Thank you, Mr. Karthik.
Operator
Thank you. The next question is from the line of Natraj Shankar [Phonetic] from DSP Mutual Fund. Please go-ahead.
Natraj Shankar
Yeah. Thanks for the opportunity. I just had a follow-up to Karthik’s questions earlier. So the roadmap you said you will probably share in the Jan call-in the previous two calls. I just wanted to follow-up on that. You said in six months, probably you’ll give some color. Is that understanding correct?
Kedar Lele
Maybe I can take that, Natraj because I could give you a color from my induction time and some learning as well. See the — if you look at the number of data centers that exist across the world, most of them are in the US, followed by some in China, Europe and then India is the emerging space. Within the data centers, as you would know, the liquid coolant based data centers is a new technology coming up to manage the thermal management as well as the carbon emissions of data centers, which is now becoming a big area of concern. Now as we said earlier, Castrol is now leading conversations with multiple partners because the data center has three or four big partners have to come together. There is server manufacturers, chip manufacturers, tank manufacturers, liquid coolant providers and then the technology integrator. And those are some of the pilots which have started in India as well.
At this stage, we are not at a freedom to disclose who these customers are because we are in advanced stages, some of the pilots have succeeded. They are waiting for the next stages of expansion. But as it expands, for India is good for our business, it is good for data centers. So we will have freedom or rather privilege to announce those as the agreements get signed in and before the ink dries on the paper, you wouldn’t get to hear about it anyway.
Natraj Shankar
Okay. Okay. And secondly, on the 240 million two-wheelers and the 45 million passenger vehicles you spoke about, how — what would be your aspirational market-share, let’s say, three years hence from where we stand today? And if you could also give a color on where you stand today? I mean, ballpark aspirational?
Kedar Lele
Yeah, I decided when I came into the role that as a — as a matter of principle, I’ll not comment on-market share because you should — you would know already that Castrol is a market leader across the three spaces of commercial vehicles, two-wheelers as well as cars. Now the aspirational market-share is a pipe dream for many people because there are aspects of coverage of and where do you pick-up the data and so on and so forth. At an overall level, as long as we continue to grow our volumes ahead of the market, you would see our shares would grow. And that to me is a real testimony to our performance in terms of innovations that we will bring to market, which would be in constant-currency with engine changes which are taking place, as well as consumer affordability for value and value price equation that we’ll offer. So, you would see us in fact firing on all these cylinders in the time to come.
Operator
Okay. That’s it from me. Thank you and all the best for the root.
Kedar Lele
Thank you.
Operator
Thank you. The next question is from the line of Vipulkumar A. Shah from Sumangal Investments. Please go-ahead.
Vipulkumar Shah
Hi, thanks for the opportunity. So what type of R&D spend we are looking for from India on data center solutions per annum?
Kedar Lele
Yes, Vipul ji, see, the fact is R&D is global in nature for and every year, the company spends anywhere between $250 million to $350 million $400 million on R&D. And given that we are a globally wired organization, all of those innovations come into the country without any delay. So, India specifically doesn’t need to spend on R&D for data centers. It’s a global project. It has some portions being done in India, some parts being done in Europe, some in the U.S. and then it all comes together. So, I think suffice it to say that we will have access to the best and the latest on the day it gets signed off and approved with our vendors and customers.
Vipulkumar Shah
Okay. So can we assume that over the next two years, we should be getting sizable revenue from our data center solutions?
Kedar Lele
I think I would have to bring in some more understanding of how data centers would expand in the country and how would they look at reshaping themselves because today, opening up a data center and most of the large companies and data centers are doing it still have to understand how immersive cooling system will work in those data centers. And that’s what we are all pushing for. So it’s a third degree of impact on our category after data centers start changing their shape and structure. But yeah, we would all be hoping for that kind of a change to happen in the environment for us to have another fresh line of business coming to us.
Vipulkumar Shah
Okay. Thank you and all the best.
Kedar Lele
Thank you, sir.
Operator
Thank you. The next question is from the line of Rohan Jadhav [Phonetic] from Jadav Family Office [Phoneic]. Please go-ahead.
Rohan Jadhav
Thanks for the opportunity. Congratulations on a good set of numbers. So I have three questions. One is the — what would be the advertising expenses during the quarter and what would be the major activities done in regards to advertising?
Secondly, any price hike taken during the quarter and for the year and in which segments? And lastly, what would be — what would be your B2C and B2B growth for the quarter? Thanks.
Deepesh Baxi
Okay, sure. So in terms of advertisements, I’m going to just simplify the definition, advertisement and sales promotion, if I add together, that is in the range of about 8% of our turnover. And that is something that we will continue to do. In fact, we would want to do more as we go forward. As far as price hike is concerned, I assume your question is, did we take any price increase in 2024? So in 2023 4th-quarter, we took a price increase. And like I was explaining earlier, a price increase and price reduction is a matter of strategic pricing of both the color input cost and inflation as well. So we did take one more price increase in the middle of the year and that’s about it. So on — on B2B and B2B breakup, look, I think you just must understand the model because B2C is retail and B2B has got to do with lot of contracts which we have with OEM and some of the other businesses, yeah. I won’t be able to share the breakup of both the sectors in the specific terms. But B2C we grew single-digit and B2B we grew double-digit.
Rohan Jadhav
Okay. Thanks so much, sir.
Operator
Thank you. The next question is from the line of Hardik from ICICI Securities. Please go-ahead.
Hardik Solanki
Yeah. Thanks for giving me one more opportunity to ask the question. So as you mentioned that going-forward, not very nearby, but going-forward, there’ll be some demand that might flow from the EV space as well. So just want to understand any investment acquisitions we have done or looking for in the battery space or the cool end space, if you can just throw lights on that?
Secondly, you, you did give the breakup of the segment price-volume growth. But I just want to understand how the constitute is, for example the diesel — the — for the commercial vehicle is the volume is 70%, 80%, that how you can just break-up within the segment? Thanks.
Deepesh Baxi
Yeah. So on the — I think the question is more wider in terms of inorganic. So if we work to a capital frame and this is our projections for the organic capex, which we will grow next year and our dividend policy and our intent to share the success of our cash generation with the shareholders. If you factor all of that, we will — in terms of that frame, we will continuously be looking for any inorganic investments. We did one investment of INR100 crores in the service and maintenance space in key mobility about two years ago. And not only EV, but there are other areas also where we are — we continuously look at-the-market in terms of scanning and finding opportunity to invest. These are matters of more discussion. So of course, I cannot share with you. But rest assured, cash is not a constraint, we want to invest in inorganic. And in fact, as a matter of fact, as you must-have seen, it appears we have declared a special dividend of INR4.5, which is the highest-ever as well, in line with our expect to distribute cash to our shareholders. So that’s on EV.
The second question was constituent of commercial vehicle. So can you expand what we really meant? I mean commercial vehicle is broadly 40% of our volumes. What constituent were you looking at?
Hardik Solanki
No, right, right. So that’s what. So basically commercial vehicle would be of 40%, then your two-wheelers and your passenger vehicles, what is the breakup and the industrial segment?
Deepesh Baxi
Yeah. So 45% will be personal mobility, cars and the remaining 50% is industrial.
Hardik Solanki
Okay, fair enough. Thank you.
Deepesh Baxi
Okay. Thank you, Hardik.
Operator
Thank you. The next question is from the line of Gaurav Shah from Harshant Gandhi Securities. Please go-ahead.
Gaurav Shah
Thanks for opportunity. Sir, my question is on the advanced EV in the data center opportunity. So just wanted to reconfirm. So whenever the opportunity materializes, it’s going to be flowing through the listed entity. I just have one question.
Deepesh Baxi
Yeah. I think we — we are actively working on those opportunities as Kedar had also explained. And currently, I do not have any — any other ideas in terms of telling you otherwise. So the Castrol brand in India is operating through the listed entity.
Gaurav Shah
Okay. Okay. So that’s it. Thanks.
Deepesh Baxi
Maybe I’ll ask you the question in return. So what was on your mind? What exactly were you looking for?
Gaurav Shah
So whenever the opportunity materializes in the sales, when you start the selling and all that, so it’s going to be booked in the listed entity, not in some other unlisted entity, right? So Castrol India listed entity will get all the benefit from that option, right?
Deepesh Baxi
Yeah. As long as it’s Castrol brand, it will be in entity. But I mean, these are matter of structuring, right? I mean it’s very difficult for me to say anything on that part but the intent is that diversification is very much a pivot — important pivot of our forward strategy for cash flow, not only in India, but globally as well.
Gaurav Shah
Okay. Okay. Thanks.
Kedar Lele
Thank you.
Operator
Thank you. We are at time. This brings us to the end-of-the call, ladies and gentlemen. On behalf of Castrol India Limited, I thank you for joining this call. You may now disconnect your lines. Wish you a good day-ahead.
Deepesh Baxi
Thank you.
Kedar Lele
Thank you.