Castrol India Limited (CASTROLIND) Q3 FY23 Earnings Concall Transcript

Castrol India Limited (NSE: CASTROLIND) Q3 FY23 Earnings Concall dated Feb. 13, 2023

Corporate Participants:

Sandeep Sangwan — Managing Director

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Analysts:

Bharat Sheth — Quest Investment Advisor Pvt. Ltd — Analyst

Hemal — — Analyst

Abhijeet Bora — Sharekhan by BNP Paribas — Analyst

Douglas Danville — Invesco — Analyst

Vipul Shah — Sumangal Investments — Analyst

Danesh Mistry — Investor First Advisors — Analyst

Harsh Maru — Emkay Global Financial Services Ltd — Analyst

Jagdishwar Toppo — Japa Investment Adviser LLP — Analyst

Presentation:

Operator

Ladies and gentlemen, welcome to our 4Q and Full Year of 2022 Earnings Conference Call for Castrol India Limited. [Operator Instructions] We have with us Mr. Sandeep Sangwan, Managing Director, Castrol India Limited; and Mr. Deepesh Baxi, CFO and Whole-Time Director, Castrol India Limited.

I now hand over the conference to Mr. Sangwan. Thank you and over to your sir.

Sandeep Sangwan — Managing Director

Thanks. Good evening, everyone. I hope you can hear me clearly. And thank you for attending Castrol India’s fourth quarter ’22 earnings call. My sincere gratitude to you for taking out time and joining us at this hour. Due to some key business meetings, which were unavoidable, we had to schedule this call today in the evening, instead of market hours on the next day, which has been our usual practice. Both I and Deepesh, are joining you straight after our fourth quarter Board meeting. We’ve just disseminated our annual and fourth quarter results, a few minutes back.

We are pleased to share that Castrol India Limited has delivered a resilient performance in the fourth quarter and full year ended 31st December ’22. I would like to highlight, that Castrol India follows the Jan to December calendar year for financial reporting. Our fourth quarter ’22 performance, evolves in the backdrop of extreme forex and inflationary pressures arising from volatile crude oil prices, leading to rising costs of additives and base oil. To safeguard our margins and deliver bottom-line growth, we employed rigorous pricing and cost management decisions.

The inflationary and forex pressures are likely to continue through ’23, although we started seeing some softening in base oil and crude prices, but our topmost priority will be to continue driving growth, protecting our margins, making our employees and business future-ready and strengthening Castrol’s enduring legacy of innovative brands and reliable services with our customers and consumers.

To begin, I invite Deepesh to take you through our fourth quarter numbers and financial performance in detail. Deepesh over to you.

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Thanks, Sandeep. And good evening to all of you. I would also like to thank you for joining us at this hour, and for your continuous engagement with Castrol India. Today we announced of our 4Q and full year results for 2022. Let me share some key financial highlights. In the fourth quarter of 2022, we have reported a strong financial performance. Our revenue from operation was INR1,176 crores, which was up 8% compared to INR1,091 crores in 4Q 2021.

This is also 9.6% above the sequential quarter of 3Q 2022. Our profit before tax was INR248 crores. This was lower by 3% compared to 4Q 2021 and lower by 2.4%, in the sequential quarter 3Q 2022. With our 4Q 2022 results, we have also recorded INR4,774 crores as our annual revenue from operations for 2022. This is a growth of 14% compared to INR4,192 crores in 2021.

Profit before exceptional items and tax, stood at INR1,093 crores, marking a growth of 6% from INR1,029 crores in 2021. In addition to an interim dividend of INR3 per equity share, the company’s Board of Directors in the meet of today have recommended a final dividend of INR3.5 rupees per equity share, each for the financial year 2022. Of course, this would be subject to shareholders’ approval. This INR3.5 was compared to last year, 50% higher dividend. Overall, we remain confident of our strong business fundamentals and long-term profitable growth in India.

I would now like to hand over the call-back to Sandeep.

Sandeep Sangwan — Managing Director

Thanks, Deepesh. Apart from financial performance, I would like to draw your attention to some key business developments at Castrol India. In November ’22, we announced a partnership with key mobility solutions of KMS to leverage each other’s strengths and expand India as automotive aftermarket ecosystem via myTVS, KMS’ digitally integrated multi-brand service platform for two and four-wheeler.

The all-cash deal included a INR487 crores investment by Castrol India and acquisition of about 7% stake in key mobility solutions and this transaction was completed in January ’23. With this strategic investment, we aim to expand our presence in service and maintenance for both internal combustion engine and electric vehicles and leverage myTVS’ digital and operational capabilities. This alliance will also offer potential for Castrol and key mobility solutions to collaborate and partner in select markets beyond India.

Castrol’s future-ready strategy focuses on an enhanced play in service and maintenance foray into new segments in tooling automotive after care and electric mobility. In fourth quarter ’22, we expanded our service and maintenance network with 230 Castrol Auto Service centers, about 5,000 Castrol bike points and 40 plus Castrol Express Oil Change outlets across India. With the EV space evolving rapidly in ’22 we supported 200 top-tier car and bike mechanics in Delhi and Chennai, with our Automotive Skills Development Counsel Certified EV Readiness Training.

This year, we plan to extend our training to mechanics and other cities across India and help create an ecosystem enabled to serve EVs better. In ’23, we will also launch our Castrol ON range of EV fuels for the aftermarket and collaborate with two wheeler and four wheeler OEMs to support their EV transmission. On the brand side, Castrol Activ is one of our leading premium engine oil brands that is trusted by consumers.

In fourth quarter ’22, we launched a new marketing campaign Compromise Mehnga Padega for Castrol Activ demonstrating Activ’s superior protection for bike engines and how [Indecipherable] bike owners from expenses related to engine breakdown. Health, safety, security and compliance are some of the people on which we operate our business. I am pleased to share that Castrol India was authorized by the Directorate of International Customs as an economic operator, tier-two certified organization in recognition of the high safety, security and compliance standards demonstrated by us.

On that positive note, I’d like to thank you for your attention and would like to open the session for your questions, feedback and views. Thank you.

Questions and Answers:

Operator

Thank you, Mr. Sangwan and Mr. Baxi. [Operator Instructions] The first question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead.

Bharat Sheth — Quest Investment Advisor Pvt. Ltd — Analyst

Hi, good evening and thanks for the opportunity, sir. If I look at full year number, is it fair understanding that the larger top line as view almost, 13%, 15%, so large part of the growth has come because of a price or volume both. And second on core business. CV [Phonetic] were working on to enter into CV Mark CV, OEM and so what is the status of that? I have a second question. I’ll come back in queue.

Sandeep Sangwan — Managing Director

Yeah, so I can take that. I think the, you’re right, the top line growth has largely been driven by pricing, but there is volume also in. So, our volumes have grown versus ’21, and in fact, if I take the pre-pandemic normally 2019 also was that we’ve grown our volumes. But given that it was such a inflationary environment where costs increases hitting us month-after-month, especially during the first nine months, the priority was to balance margin protection and volume and I think we’ve managed that very well, delivering a bottom line growth of about 8%, so that’s the first bit.

I think as far as commercial vehicles have concerned your second part of question, we play very actively in the commercial vehicle segment, okay. We have some OEM relationships that we have established. And I think our strategy is to continue to be a premium branded player, this should continue to grow and support our commercial vehicles category with innovations in new products. So for example all our products are BS-VI compliant. We also introduced a product which is relevant for one of the large OEMs and CVO market. So we’ll continue participating in the commercial vehicle segment.

Bharat Sheth — Quest Investment Advisor Pvt. Ltd — Analyst

Sir, I mean taking forward to your first answer, is it possible to give some kind of a broadly volume and value growth, if you can. I mean, how much is because of the volume and how much is the pricing? And currently what is CV certainly in our overall business?

Sandeep Sangwan — Managing Director

Yeah so, commercial vehicles contribute to about, let’s say, about between 25% to 30% of our business. From a margin perspective, the volume contribution is much higher because margins are better in personal mobility sector and I think on volume and turnover growth, Deepesh, do you want to take that question?

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Yeah, yeah, sure. Thanks Sandeep. So, I think on a full year basis, we have grown volume from 208 million liters to about 210 million liters, yeah. What we have as Sandeep explained, [Indecipherable] is the cost input increase and that increase on a full year basis has almost been 20% on a per liter basis. And that is what we have tried to recover during the year through pricing intervention.

Operator

Thank you, Mr. Sheth. [Operator Instructions] Thank you. We’ll take the next question from the line of Hemal [Phonetci], an Individual Investor. Please go ahead.

Hemal — — Analyst

Sir, thank you for the opportunity. Just wanted to clarify, so just based on that the October-December volume will be around 48 million approximately, is that, is that actually?

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Yeah, yeah. That’s right.

Hemal — — Analyst

I mean, like a 10% volume decline year-over-year. Is that also accurate or?

Deepesh Baxi — Chief Financial Officer and Wholetime Director

No, that won’t be accurate. I think the volume decline only in the fourth-quarter I would say is in the range of 4% to 5%.

Hemal — — Analyst

4% to 5%. Okay, yeah, the part of the opening remarks was that the base oil price seems to be stable, but the additives have, price costs have continued to increase. So have you taken any — are you continuing to take any price rise going-forward in January, February or you think the price rises have now peaked, is what, like if you can throw some light on the reality of the competitive market space that you play in because the EBITDA margin obviously suffers because of that. So, is price rise for the possibility in our business going forward?

Sandeep Sangwan — Managing Director

So let me answer that question. First of all, I think in the year 2022, given the strength of our brand of Castrol in India and the trust that consumers put on our brand, we’ve been able to protect our per liter margin. So that’s the first kind of fact I want to put on the table and as I’ve said in the beginning, our intention was to protect our margins and balance our volumes. Coming to the cost pressures on additives, I think cost is a combination of multitude of factors, there is base oil, there is additives, there is forex involved.

And we have a pricing strategy, which we adhere to and we are a premium branded player. Now depending on where the cost environment is, we will take pricing actions, in-line with our strategy, but our intent is to continue delivering value to our consumers and customers. So I cannot say for a definitive answer, there will be further price increases or decreases. I think we’ll continue monitoring the environment as we have done in ’22 and take appropriate pricing actions that help grow the business, but also deliver value to our consumers and customers.

Hemal — — Analyst

Okay, sir. Thank you for the opportunity. Appreciate it.

Operator

Thank you. The next question is from the line of Abhijeet Bora from Sharekhan by BNP Paribas. Please go ahead.

Abhijeet Bora — Sharekhan by BNP Paribas — Analyst

Yes sir, I missed upon the annual volume number. Can you just share it again?

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Yeah, hi. Annual volume is 210 million liter.

Abhijeet Bora — Sharekhan by BNP Paribas — Analyst

Okay. Thank you, sir. That’s all from my side.

Operator

Thank you. The next question is from the line of Douglas Danville from Invesco. Please go ahead.

Douglas Danville — Invesco — Analyst

Thanks. My first question is just, I wonder if we could get a bit more, if your expectations for the coming year in terms of, I know you’ve already commented on price really dependent on my cost base, but in terms of your volume growth expectation and– how you see that as balanced against the ability to regain some of the margin that we have lost in the course of this year? That’s my first question, which is more forward-looking color, sir, coming year, please.

Sandeep Sangwan — Managing Director

Yeah. So Douglas, thanks for your question. So, I think the way I would to share with the answer is the looms category we project will grow at about 4% next year, okay, and then there will be differential rates of growth amongst personal mobility, commercial vehicles, but overall, the market should grow at about 4%, that’s our projection. And typically, we want to grow ahead of the market. So you can, got today’s couple of percentage ahead of the market. So that’s what our intent is, okay, but we’ll also have to see how the environment plays out. And the second is, from a Margin perspective, I think as I said, answer to the previous question, we’ve been able to given the strength of our brand hold our gross margin level and intent would be to continue making sure that we are holding gross margins are improving gross margins, that’s what our intent.

Douglas Danville — Invesco — Analyst

Understood. Historically you’ve spoken a little bit about. Maybe being willing to exchange a better gross margin in terms, in order to gain some incremental market-share and exchange, a bit of margin for volume, obviously, you’re not in a high-cost inflationary environment that is challenging, but obviously you could put in and perhaps just a bit of color around strategically how you’re thinking about volume versus margin trade-offs and as we look-forward.

Sandeep Sangwan — Managing Director

So, I while, I don’t want to speculate on what our future plays are going to be, but definitely our intent is to kind of make sure that we are a growth business and we grow most volumes and top-line, and not only the margin play. To give you an example, last year we introduced a product called Activ attention, okay, which was at a slightly lower-price point the, then we traditionally played in the two-wheelers category and that’s given us good growth in a very challenging environment. So we look at all the opportunities that are available, depending on where the white space in the category is and where we can find opportunities to grow. So, definitely something that we continuously think about.

Douglas Danville — Invesco — Analyst

Okay, great. Thanks, sir. My second question is on the key mobility side again. I wonder if you could just give us a little bit of color of how you see that business evolving, what the business model looks like there and how that would bets might start to — it should be basis for future financials.

Sandeep Sangwan — Managing Director

So on key mobility, I think the first thing I’d like to say is the coming together of to trusted brands in the Indian environment, to serve consumers and customers. So TVS is a very trusted brand by consumers. Castrol is a trusted brand and we find enough synergies and good synergies between our two businesses to grow the Indian aftermarket ecosystem and make that, first of all, give better consumer experience to customers. And the second is also digitize that other ecosystem. So to, for example, Castrol has good lubricants. TVS, myTVS has good spare parts capability and logistics capability.

MyTVS, historically it’s been strong in Southern India given their nature that they are based out of Chennai. Castrol is a National player with large-scale, we can leverage each other’s capabilities in both areas. And the third is, they’re developing digital solutions and systems both for the eco workshops but also from a consumer traffic perspective which Castrol can leverage its creation of a network of service and maintenance, where consumers can get trusted services by combining the strengths of both the brand and the organization. I think that’s what the intent is.

Operator

Thank you. Mr. Danville, in lieu of the time, we will stick to two questions per person. If you have further questions, kindly rejoin the queue. Thank you. We’ll take the next question from the line of Vipul Shah from Sumangal Investments. Please go ahead.

Vipul Shah — Sumangal Investments — Analyst

Hi, sir. Thanks for the opportunity. So taking the previous question forward, would you explain — would you elaborate how that partnership with TVS Group is going to benefit Castrol because I have still not understood how that partnership will work and how it will benefit Castrol?

Sandeep Sangwan — Managing Director

I think it’ll benefit Castrol in multiple ways. First is, it will give us lubricant supply in key mobility’s network. They have a network of workshops. If you remember two years ago, they bought the Mahindra First Choice business also, which is a part of key mobility solutions. First of all, it extends our workshop reach in terms of selling our traditional lubricant businesses. The second is, as I said in my opening note, we’re also creating a network of workshops. We have 230 Castrol Auto Services. We have about 5,000 bike points that we serve in India and we just started our journey on Express service on GOBP outlets, there’s about 40 of those.

So with key mobility partnership, we also get capability to supplier’s spare parts through key mobility to our network of workshops. And the third is, we will drive, join marketing programs to deliver better services to consumers either in the key mobility network or our network. So that’s how the ecosystem evolving, plus both of us have very good digital tools that can leverage capabilities of each other in terms of serving consumers and the other thing I’d like to state, everything would be restricting competition lots of, within the regulatory framework of the company.

Vipul Shah — Sumangal Investments — Analyst

Okay sir. Thank you.

Operator

Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead.

Bharat Sheth — Quest Investment Advisor Pvt. Ltd — Analyst

Hi, thanks for the opportunity once again. Taking forward this Castrol Auto Services, where we have been expanding also and what kind of expansion plan, do we have for future and how do we see this with the key mobility synergy and how much additional in sales? What is our experience of taking this whole additional volume growth of what kind of a sense, if you can give us some kind of a sense? And this is largely for two-wheeler, passenger vehicle or CV, if you can give a little more color on that also?

Sandeep Sangwan — Managing Director

Okay, so. I think on Castrol Auto Service, we have 230 workshops. These are workshops, which are not owned by Castrol, these are entrepreneurs who run these workshops, but we give them branding support, training support and making them more professional, where consumers can get trusted service and our effort is to continue expanding this network. At the same time, we are conscious that this has to be a quality a network rather than the sheer numbers, so we’re very focused in terms of the kind of workshops we enroll in this program. The second is this, the two segments, Castrol Auto Service is for four wheelers, passenger cars, okay, whereas on two wheelers, we have something called Castrol Bike Point, okay which tend to be two wheeler workshops.

So right now we’re focused on building both and on GOBP sides, we’re focused on building Express Oil Change centers, as I said, we have about 442 of those. So that’s, that’s the kind of exploration and I think, when we involve these workshops in our network, they tend to use our products, because consumers see Castrol signage on outside of the workshop and that gives them the trust of saying that in this workshop I can get a quality lubricant. So it extends our volume gains by selling more products in these workshops and our share of lubricants tends to be pretty high-end these workshops. So that’s the whole play. And I’d like Deepesh to add, Deepesh do you have anything to add on this?

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Yeah, Sandeep. Thanks. So just one more build, I think you also asked so– so what are the workshops in key mobility. In key mobility, they have both four-wheeler and two-wheeler workshops. So in terms of the lubricant supply that we spoke about earlier, we will supply lubricants to both kind of workshops.

Bharat Sheth — Quest Investment Advisor Pvt. Ltd — Analyst

How do we see synergy between these — our own initiative of Castrol Express for this two-wheeler then Castrol Auto Services for four wheelers and key mobility, what kind of a synergy again? And so largely is we will be playing in Southern India market through key mobility, so is it fair that just Castrol Auto Service will focus on North India and other parts of the country?

Sandeep Sangwan — Managing Director

No, so there is no restriction on focus on where key mobility plays and where we play. I think both networks will play across the country. What I said is, historically, the development of myTVS brands, has moved from Southern India, but there is no restriction of any sorts on where we will participate. I think both are independent companies and will continue participating. The synergies is about partnership on where we have capabilities that complement each other and delivering a better value to customers. And there is enough space in the Indian market development, the Indian aftermarket for both of us to play competitively to create service and maintenance networks.

Operator

Thank you, Mr. Sheth. In lieu of the time, we will stick to two questions per person. If you have further questions kindly join the queue. Thank you. The next question is from the line of Abhijeet Bora from Sharekhan by BNP Paribas. Please go ahead.

Abhijeet Bora — Sharekhan by BNP Paribas — Analyst

If I do the back calculation, your Q4 number works so we are owned or close to INR55 billion, but that shows around the 8% growth on a Y-o-Y business. So is that the correct calculation because in the earlier remarks, you mentioned that is a decline of 4% to 5%.

Sandeep Sangwan — Managing Director

Yeah, I think Deepesh answered that question in terms of the volume. Our volume 48 million liters in fourth-quarter, so I don’t know how it get to 55 million number but maybe you can take that offline.

Abhijeet Bora — Sharekhan by BNP Paribas — Analyst

I just — I just did the back calculation from the earlier volumes.

Deepesh Baxi — Chief Financial Officer and Wholetime Director

No, so let me just come in. Our 4Q number is roughly 48 million liters. 4Q ’21 was around 50 million liters. So that it is a drop of about 4%, 4.5%.

Abhijeet Bora — Sharekhan by BNP Paribas — Analyst

Okay. Yeah, okay, okay. Thank you, sir.

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Okay. Thank you Abhijeet.

Operator

Thank you. The next question is from the line of Danesh Mistry from Investor First Advisors. Please go ahead.

Danesh Mistry — Investor First Advisors — Analyst

Yes, hello, good evening. Thank you for taking my question. I had just one question regarding your gross margin. If you could just help us, and I think there’s compression of about 300 bps, 400 bps. So obviously there is some impact of RM here, but do you think that’s abating now and how do you see that playing out going forward? Thank you.

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Right. So, in terms of the gross margin, obviously I can’t share the exact numbers, but we’ve had some reduction in the gross margin compared to the last year 4Q 2021. However, when you look at our full year performance, I think our gross margin has gone up. In terms of, you asked, so how is it going to be looking forward, I think Sandeep had answer that question earlier. I think we would aim to maintain the gross margin of course, the focus is also on growing market-share and balancing that — with the response that we will have in the market, depending on how the input costs changes. As you know, forex continues to be challenging.

We are seeing some softening on the base oil, which is an input costs, but some of the other input cost seem to be challenging. So it’s going to be, wait-and-watch situation. Having said that, in the fourth quarter given the challenge on the volumes, as well as softening on the base oil, we did make a pricing intervention in terms of dropping the prices on some of our products as well. So that, it is a strategic pricing decision that we take looking at not just one quarter, but at least a full year view forward.

Danesh Mistry — Investor First Advisors — Analyst

Got it, so when you said that you will try and maintain the gross margins, is it the full year gross margins that we try and maintain or the Q4 gross margin that we will try and maintain?

Sandeep Sangwan — Managing Director

So, I think we look at our P&L on a holistic basis, It’s not kind of saying, okay, month-to month or quarter-to-quarter. We look at full year and see what is best for the business — keep growing the top line, but also balancing the margin.

Danesh Mistry — Investor First Advisors — Analyst

Got it. Okay, thank you very much. Thank you so much.

Operator

Thank you. The next question is from the line of Harsh Maru from Emkay Global. Please go ahead.

Harsh Maru — Emkay Global Financial Services Ltd — Analyst

Thank you for the opportunity, sir. My first question is regarding the Q-o-Q like Y-o-Y volume drop of about 4% to 5%. So if you could give us some color on which segments didn’t perform well? And the second question being, in terms of our after services expansion that we are trying to build in terms of Auto Service parts are the bike points, etc, so what is the kind of gross margins that we are targeting say is it roughly in terms of what the core business is or it’s some few basis points here like up or down. So if you could provide some color on that, that’d be my second question.

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Yeah, Harsh. Thanks for that question. So on the volume change between Q-on-Q, in the Personal Mobility segment, we did quite well, which is about bikes and car portfolio. I think where we had the volume loss, mainly in the industrial side and some of it in the commercial vehicles as well. You had another question, can you just remind me?

Harsh Maru — Emkay Global Financial Services Ltd — Analyst

Yeah, yeah.

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Yeah, your question was on Auto Services, what kind of margins we will maintain right?

Harsh Maru — Emkay Global Financial Services Ltd — Analyst

Yeah, and some kind of a service element to the entire business besides the core lubricants. So if you can elaborate on margin profile around that?

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Yeah, sure. So I think on the Castrol Auto Services, the margin is not intended to be exactly in line with the core business. It is the volume that we are after more than margin in that kind of business model. Service element that is the intent, I think it will be a transition and gradual phasing, as we establish our business model as we ramp-up and we get the complete model right, we will start going into the service as well.

Harsh Maru — Emkay Global Financial Services Ltd — Analyst

Okay. Thank you, sir.

Deepesh Baxi — Chief Financial Officer and Wholetime Director

Thank you.

Operator

Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead.

Bharat Sheth — Quest Investment Advisor Pvt. Ltd — Analyst

Yes, sir. Thanks for the opportunity. Something you said now, Service business, we are working on to establish the same and then we also like to have a — that service business, good margin. So can you give some color how long this process is? One year, two year, three year and when do we really see that it can start contributing to our top line as well as bottom line meaningfully? And second thing, what is our aspiration over two, three year time from all with key mobility and to get additional volume as well as our own services?

Sandeep Sangwan — Managing Director

So, I think Deepesh has outlined what we how we want to kind of grow our service and maintenance business and definitely take us a few years, whether it takes two years or four years, only time will tell. But the intent is to start creating revenue streams beyond lubricants. I think the first intent of us has been to create a network of workshops where consumers can get trusted service. I think once they start trusting those workshops so services we can add on more quality, so both for the workshops and the consumers. So I think and to give any projections on margin right now is very difficult because we are also in the establishment and growing phase. But our intent is to start generating non-lubes revenue in the coming years, as the core [Phonetic] strategy.

Let me just kind of give you an idea is, we’ve also been testing Auto Care range of products, okay, for example, is another source of revenue and we piloted quite a few things in the last two years and now we feel confident that we can also play that Auto Care category and scale that effort from 10 cities to national level this year, so that’s one of the intent. The other as we started making our Castrol Auto Service networks, Educated about EVs also. So for example, this year we play about 200 and mechanics in Chennai and Delhi on EV training through auto, automotive Skill Development Council of India. So we are working on various programs to make sure that the business continues to grow and we keep adding non-lubes revenues.

Bharat Sheth — Quest Investment Advisor Pvt. Ltd — Analyst

And sir, what kind of additional volume in our core business like the lubricant that we can expect on this all given key mobility as well as our own care services?

Sandeep Sangwan — Managing Director

So I think it’s a function of how the network grows, okay because network growth will lead to volume growth we have internal kind of business projection, which I cannot share because we don’t normally share our forward-looking statement under which how much volume will come from which segment. But the intent is to grow ahead of the category in the coming years.

Bharat Sheth — Quest Investment Advisor Pvt. Ltd — Analyst

Okay, thank you and all the best, sir.

Sandeep Sangwan — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] We’ll take the next question from the line of Douglas Danville from Invesco. Please go ahead.

Douglas Danville — Invesco — Analyst

Yeah, thanks very much. Can I just get a little bit more color around volume decline in fourth quarter? I think you said it was good in personal mobility the loss was mostly of industrial side in the commercial vehicles. If you could just explain what caused that volume decline, whether that was the market shrinking and if so, why — wasn’t there was perhaps some loss of market-share? And just help me understand what was going on here. And so perhaps what we should expect volumes, which I think you said you saw the market growing at 4%, next year, how we get from a decline in fourth quarter to that kind of growth rate, what the drivers are would be very helpful. Thank you.

Sandeep Sangwan — Managing Director

Yeah, yeah, let me take that Douglas. I think there were two or three factors. What has happened is the national oil companies have their own pricing strategy. So their pricing moves have been much lower than the pricing that we’ve taken and they traditionally have strong position in commercial vehicles markets. So that was one of the factors where we had our price [Indecipherable] because our intend to protect margins were on the higher side and that’s something that we are conditionally watching and we will take actions as required to make sure that the we’ll get our share back and volumes back. The second is I think the agricultural sector has been a bit soft, okay, while commercial vehicles have grown in the first quarter in terms of new vehicle sales. The agri sector has been a big soft where we felt a bit challenged on volumes. So those are the two kind of key drivers of volume challenges on the commercial vehicle sector.

Douglas Danville — Invesco — Analyst

Okay. And so to get back to the 4% volume growth for the market — where does that estimate come from to your mind, what are the drivers behind that?

Sandeep Sangwan — Managing Director

No, So the category will grow the category. As I said, when I said 4% growth after lubricants category growth that we’re projecting for this for ’23, ’23 calendar year yeah, and I think we are — what we are saying is through our programs, pricing strategy, we should be able to grow ahead of that category — beyond the 4% on a total lubricants category basis.

Douglas Danville — Invesco — Analyst

Yeah, understood. Sorry, I was questioning why — what is going to change that takes the whole category from shrinking a little bit in the fourth-quarter, or did it not?

Sandeep Sangwan — Managing Director

The category did not shrink, that’s what I said. Commercial vehicles category was quite okay in the fourth quarter. We lost a bit of share because of our price positions and we will take appropriate actions to get our growth back.

Operator

Thank you. [Operator Instructions] The next question is from the line of Vipul Shah from Sumangal Investment. Please go ahead.

Vipul Shah — Sumangal Investments — Analyst

Hi, sir. What was our overall exit market — exit market share at the end of December ’22 and what was the same at the end of December ’21?

Sandeep Sangwan — Managing Director

Shah, first of all, we haven’t got the December report as yet. I think the market share that we can take — there’s a lag about two months, but our latest share is in the range of 20-odd-percent and I think I’ll exit of last year was at a similar level. So we’ve been around 20% share in some categories we’ve gained and in some categories we faced challenge but overall we are at the same ballpark.

Vipul Shah — Sumangal Investments — Analyst

Okay, sir. Thank you.

Operator

Thank you. The next question is from the line of Jagdishwar Toppo from Japa Investment. Please go ahead.

Jagdishwar Toppo — Japa Investment Adviser LLP — Analyst

Yeah, good evening, sir. Just wanted to understand if you can elaborate on your marketing and advertisement spend for the next few years as to how you want to invest in brand building, specifically in new, more digital channels such as YouTube or In App. So if you can elaborate and how do you see this as a percentage of revenue? I mean overall ad marketing this time, just because revenue has been increased because of interest in [Indecipherable] also.

Sandeep Sangwan — Managing Director

So, thanks for asking the question. I think, first of all, as I’ve maintained, we are a premium branded business. So we will continue investing, we have behind our brands, because that’s one of the core strengths of Castrol. And if you remember, we continued investing even during COVID years in ’20 and ’21. We did not take a break on investments. So that’s a part of our core strategy. In terms of specific, how much do we invest behind our brands Deepesh can kind of tell you — can share the numbers with you. Typically we stayed in a range of investment that is, Deepesh and I, we spent about 3% to 4% of our revenue in marketing support, and we’ll continue operating in that range.

I don’t want to say anything about the future whether it will increase decrease or whatever, but typically the ranges and we’ve been consistent in our investment. Digital is becoming a huge area of marketing investments and in line with the market and line with best-in class brand, digital is also a part of our strategy for marketing investments.

Jagdishwar Toppo — Japa Investment Adviser LLP — Analyst

Thank you. Thank you so much sir. That was quite helpful. And best of luck.

Sandeep Sangwan — Managing Director

Thank you.

Operator

[Operator Closing Remarks]