On February 27, Castrol India was in the limelight after oil major BP announced a strategic review of its global lubricants business, including Castrol. The review is to accelerate Castrol’s next phase of value delivery and to explore potential divestment options as well.
This was highlighted by BP as a strong global presence of Castrol in over 150 countries and segments serving industries such as automotive, marine, industrial and energy. BP also pointed out that Castrol has growth ambitions of expanding its core mobility business, industrial lubricants and mobility services, while diversifying to data center cooling fluids.
As part of the review, BP may be allowed to keep Castrol to improve its own balance sheet. The proceeds from any potential transaction would be used to enhance BP’s financial structure. At 10:50 am on February 27, Castrol India shares on the BSE were down by 1.35%, or ₹2.96, to close at ₹220.26 apiece.
Earlier this month, Bloomberg reported that BP, which is facing pressure from activist investor Elliott Investment Management, is assessing the possibility of a sale of its lubricants business. Elliott, which has a 5 percent stake in BP and is worth about £3.7 billion ($4.7 billion), is demanding cost cuts and asset sales to enhance BP’s long term value.
Castrol brand is popular in automotive, aerospace, industrial and energy applications. Of late, it has forayed into the domain of liquid cooling technology for data centers to tackle the problem of overheating. Also, Castrol has a robust presence in global sports through its partnerships with the NBA, WNBA, and motorsports.
From a strategy development perspective, BP’s review may lead to significant changes in the future of Castrol India and its impacts on investor sentiment in the coming months.
