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Colgate Palmolive (India) Directors Report, Colgate Reports by Directors
Colgate Palmolive (India)
BSE: 500830|NSE: COLPAL|ISIN: INE259A01022|SECTOR: Personal Care
Apr 17, 17:00
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Download Annual Report PDF Format 2013 | 2012 | 2011
Directors Report Year End : Mar '13    Mar 12
To, The Members of Colgate-Palmolive (India) Limited
 The Directors have pleasure in presenting their Report and Audited
 Accounts of the Company for the year ended March 31, 2013.
 Financial Results
                                                    (Rs. Crore)
                                               2012-13      2011-12
 Total Revenue (a b c)                        3,213.73     2,743.91
 Sales (Excluding Excise Duty) (a)            3,084.11     2,623.85
 Other Operating Revenue (b)                     79.70        69.38
 Other Income (c)                                49.92        50.68
 Profit before Taxation                         663.03       588.39
 Provision for Taxation                         166.28       141.92
 Profit after Taxation                          496.75       446.47
 Balance brought forward                        114.68       107.99
 Profit available for appropriation             611.43       554.46
 Appropriation :
 Dividend                                       380.78       339.98
 Dividend Tax                                    61.77        55.15
 General Reserve                                 49.67        44.65
 Balance carried forward                        119.21       114.68
                                                611.43       554.46
 Business Performance
 Despite an inflationary environment and increasingly fierce
 competition, your Company delivered very strong results. Your
 Company''s business continues to grow strongly in double digits. Sales
 for the year increased by 18 per cent to Rs. 3,084 crore as against Rs.
 2,624 crore during the previous year. The toothpaste and toothbrush
 businesses registered a very strong volume growth of 10 and 20 per cent
 respectively during the year.
 The profit before tax during the year was Rs. 663 crore as against Rs.
 588 crore during the previous year, an increase of 13 per cent. The
 profit after tax also increased, standing at Rs. 497 crore, an increase
 of 11 per cent over the previous year.
 Your Company continued to lay emphasis on cash generation driven by
 strong business performance, focus on efficiencies, cost management and
 continued efficient collection system. Your Company managed investments
 prudently by deploying surplus funds after ensuring that such
 investments satisfy the Company''s criteria of safety and security.
 During the financial year, your Company strengthened its leadership
 position in the toothpaste category to 54.6 per cent from 52.9 per cent
 in the previous year. Similarly, market share in toothbrush category
 was strengthened to 40.5 per cent and market share in mouthwash
 category has been growing consistently.
 Your Company achieved its goals by focusing on strategic initiatives
 which are : engaging to build own brands, innovation for growth, being
 effective and efficient and leading to win.
 The Company''s strong cash generation and positive growth momentum led
 the Board of your Company to declare three interim dividends of Rs.13
 per share, Rs. 6 per share and Rs. 9 per share aggregating Rs. 28 per
 share for the financial year 2012-13 as against Rs. 25 per share in the
 previous year. These dividends were paid on October 19, 2012, December
 27, 2012 and April 19, 2013. Having declared three interim dividends,
 your Board has not recommended a final dividend for the financial year
 Colgate - the Most Trusted Brand once again in 2012
 ''Colgate'' has been ranked as Most Trusted Brand by Brand
 Equity''s Annual Survey. In the year 2011 as well, Colgate was voted
 as #1 Most Trusted Brand of the year. Colgate had also been rated as
 India''s #1 Most Trusted Brand across all categories for four
 consecutive years from 2003 to 2007. It is the only Brand to be ranked
 in the top 3 from the inception of the survey in 2001.
 Your Company was also ranked as the 3rd most admired Company in India
 by the Global Business Magazine Fortune and Management Consultancy Hay
 Sale and transfer of Company''s division viz.  ''Global Shared
 Services Organisation'' (GSSO)
 In the year 2004, your Company with the assistance of Colgate-Palmolive
 Company (CP-USA) set up a Global Shared Services Organisation (GSSO
 Division) to provide IT/ITES services and assistance to some of the
 subsidiaries of CP-USA including your Company. Its services primarily
 revolve around, but are not limited to, the operations, maintenance and
 enhancement of the SAP ERP system as well as electronic communication
 systems, administrative, financial, managerial and technical matters in
 the IT/ ITES segment.
 Recently, CP-USA announced a four year Global Growth Efficiency Program
 (GG&EP) for sustained growth. The said program''s initiatives are
 expected to ensure continued growth and enhance the Colgate group''s
 global leadership positions in its core businesses. The said program is
 expected to achieve the objectives through :
 i.  Expansion of commercial hubs;
 ii.  Extension of Colgate Business Service Centres (CBS) and
 streamlining of global functions; and
 iii. Optimization of the Global Supply Chain and Facilities.
 Keeping in view the aforesaid objectives, your Board felt that transfer
 of GSSO division to Colgate Global Business Services Private Limited
 (CGBSPL), a recently formed entity, will enable CP-India to focus on
 its core business.
 Your Company accordingly decided to divest its GSSO division along with
 all its employees as well as assets and liabilities, as a going concern
 and by way of slump sale to CGBSPL, a 100% subsidiary of the ultimate
 holding company CP-USA for a lumpsum consideration of Rs. 59.89 crore.
 CGBSPL will provide the best in class service to CP-USA''s
 subsidiaries, including CP-India with greater efficiency.
 Your Company recently obtained the approval of the shareholders by way
 of Postal Ballot for sale of GSSO division.
 Status of new projects
 As stated in the Annual Report for the year 2011-12, to support the
 growth momentum and to cater to the increasing demand of our products,
 your Company is setting up a state of the art toothpaste manufacturing
 facility at Sanand in Gujarat. The new factory will be the best in
 class manufacturing facility which is scheduled to commence commercial
 production in the current year.
 Similarly, your Company is in an advanced stage of obtaining various
 permissions for a new toothbrush manufacturing facility at Sricity in
 Chittoor District in Andhra Pradesh. This new toothbrush manufacturing
 facility is expected to commence commercial production in the year
 Surrender of Lease and Sale of the factory building at Hyderabad
 Pursuant to the closure of the manufacturing operations at Hyderabad
 factory, your Board of Directors felt that it would be in the interest
 of the Company to surrender the lease of the land and sell the factory
 building to the Lessor, Swamy Sons Agencies Private Limited for a total
 consideration of Rs. 1,60,00,000/- (One Crore Sixty Lacs only). The
 approval of the shareholders for the aforesaid sale of factory building
 was obtained by way of Postal Ballot and formalities for surrender of
 lease and sale of factory building have been completed.
 Your Company is committed to sustainability through a program that
 focuses on People, Performance and Planet.
 Considering this, in the year 2010, your Company developed a plan that
 will guide its sustainability initiative for the next five years. The
 broad aspects covered are as under :
 - People - Promoting healthier lives, Contributing to the Communities
 where we live and work.
 - Performance - Delivering products that delight consumers and
 respect our planet.
 - Planet - Making every drop of water count, Reducing our impact on
 climate and the environment.
 Your Company believes that integrating sustainability into its everyday
 operations will help in making better business decisions and improve
 people''s lives. The sustainability strategy will also continue to
 increase consumer loyalty, provide a competitive advantage and help
 ensure long-term shareholder value.
 Focus on innovation
 In India today, consumer needs are fast evolving.  Your Company has
 been staying ahead of trends by identifying opportunities based on
 insights into consumer behaviour and leveraging technology to deliver
 innovative products. Our success in delivering meaningful innovation is
 evident in several of our recent innovations. One out of three Indians
 suffer from gum problems. To address this issue, your Company launched
 Colgate Total Pro Gum Health, a technology breakthrough which reverses
 gum problems in four weeks. Your Company also launched Colgate Visible
 White toothpaste to create the beauty segment through this one-of-its
 kind Oral Care solution that offers one shade whiter teeth in just one
 week. In toothbrushes, your Company launched 3600, a battery operated
 toothbrush for consumers seeking superior teeth cleaning and MaxFresh
 toothbrush for those seeking freshness. In the mouthwash category, your
 Company launched Colgate Plax Fresh Tea, a new flavour that builds on
 the green tea trend.
 As the leaders in Oral Care, your Company is making a constant effort
 to cater to the Oral Care needs of different consumers by offering
 products across various price points.
 Innovation at your Company is not limited to new products. We are
 innovating in the way we connect with shoppers in-store, engage
 consumers in the digital arena, in how we go-to-market and in driving
 further efficiencies in the supply chain.
 Responsibility Statement
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors,
 based on the representations received from the Operating Management,
 a) that in the preparation of the annual accounts, the applicable
 accounting standards have been followed and that no material departures
 have been made from the same;
 b) that they have, in selection of the accounting policies, consulted
 the statutory auditors and have applied them consistently and made
 judgments and estimates that are reasonable and prudent so as to give a
 true and fair view of the state of affairs of the Company at the end of
 the financial year and of the profit of the Company for that period;
 c) that to the best of their knowledge and information, they have taken
 proper and sufficient care for the maintenance of adequate accounting
 records in accordance with the provisions of the Companies Act, 1956
 for safeguarding the assets of the Company and for preventing and
 detecting fraud and other irregularities; and
 d) that they have prepared the annual accounts on a going concern
 Corporate Social Responsibility
 Your Company in partnership with the Indian Dental Association (IDA)
 successfully concluded the 9th edition of a two-month long Oral Health
 Month Program during the year, covering a wide spectrum of activities
 designed to spread oral health awareness and good oral hygiene
 practices. The mission of this Program continued to be Mission Zero
 Cavity involving dental professionals spread across 1116 towns. The
 total dentists who participated in the program were 25,000.  The
 two-month long oral care awareness drive covered in-clinic free dental
 check-ups, school contact program, free dental check-ups in mobile
 dental vans, retailers outreach program and many more such activities
 to engage 3.7 million consumers.
 Education has been the primary focus of your Company''s Corporate
 Social Responsibility. Since 1976, your Company has been conducting a
 school initiative program Colgate Bright Smiles Bright FuturesTM
 wherein your Company partnered with IDA, to spread oral health
 awareness among school-going children in primary schools in urban and
 rural India. Till date, 107 million school children in 2,35,617 schools
 in urban and rural areas have benefited from this Program. In addition,
 your Company also conducts, jointly with IDA, a Teachers'' Training
 Program to enable teachers to instil good Oral Care habits among
 school-going children on an on-going basis.
 In addition, your Company also started an employee volunteering program
 called Adopt a School, wherein the employees of the Company were
 offered an opportunity to volunteer their time to spread the message of
 maintaining good oral hygiene in a simple, conversational, interactive
 manner to primary school children in municipal and government aided
 schools. The program contributed to Colgate''s market development
 efforts and business goals and reinforced Colgate''s emotional
 connection with consumers. The involvement and contributions by
 employees also helps Colgate give back to communities and demonstrates
 Colgate''s core value of caring.
 For close to a decade now, your Company partnered with the NGO,
 Pratham, the largest non-governmental organisation, working to provide
 quality education to the less privileged children of India. Pratham,
 established in 1994, provides education to the children in the slums of
 Mumbai city. Since then, the organization has grown both in scope and
 geographical coverage.
 Today Pratham reaches out to millions of children living both in rural
 and urban areas through a range of interventions. It''s flagship
 program, Read India, helps to improve the reading, writing and basic
 arithmetic skills of the children in the age group of 6-14 years. Even
 though India has made significant strides in improving the enrollment
 levels of the children in schools, a lot still needs to be done as far
 as the learning levels are concerned.
 Since 2008, your Company has been supporting a program called ''A
 Positive Step'' with the NGO, Network in Thane of People Living with
 HIV. Through this program, your Company supports children affected and
 infected by HIV with nutritional needs and school fees. The program has
 infused the children with hope leading to a definitive improvement in
 their academic performance and they now live with more confidence
 despite their HIV condition.
 Your Company will continue to take such measures to make a positive and
 significant contribution to the Society.
 Corporate Governance
 A separate report on Corporate Governance along with the Auditors''
 Certificate on its compliance is attached as Annexure 1 to this Report.
 Employee Relations
 The employee relations in the Company continued to be cordial except
 for an unauthorised stoppage of work by one of the unions at Goa
 toothpaste manufacturing facility for a period of 18 days from January
 6, 2013 to January 23, 2013. However, the Management successfully
 resolved the situation by following the due process and discussions
 with the union and normalcy was restored in the facility. Since Company
 had adequate inventory to serve the market, the impact on the
 operations of the Company during the period was minimal.
 A long term Memorandum of Settlement for three years and six months at
 the Company''s Aurangabad toothpowder manufacturing facility was
 signed on January 28, 2013. This settlement would be in force till May
 31, 2015.
 Information as per Section 217(2A) of the Companies Act, 1956 (the
 Act) read with the Companies (Particulars of Employees) Rules, 1975
 forms part of this Report. As per the provisions of Section
 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the
 shareholders of the Company excluding the statement on particulars of
 employees under Section 217(2A) of the Act. Any shareholder interested
 in obtaining a copy of the said statement may write to the Secretarial
 Department at the Registered Office of the Company.
 Trade Relations
 Your Directors wish to record appreciation of the continued unstinted
 support and co-operation from its retailers, stockists, suppliers of
 goods/services, clearing and forwarding agents and all others
 associated with it. Your Company will continue to build and maintain
 strong links with its business partners.
 Energy, Technology Absorption and Foreign Exchange
 The information required under Section 217(1) (e) of the Companies Act,
 1956 read with the Companies (Disclosure of Particulars in the Report
 of the Directors) Rules, 1988 with respect to conservation of energy,
 technology absorption and foreign exchange earnings/ outgo is appended
 hereto as Annexure 2 and it forms part of this Report.
 Mr. Godfrey Nthunzi was appointed as the Whole- time Director of the
 Company for five years, effective January 1, 2013, subject to the
 approval of Central Government and shareholders under the provisions of
 the Companies Act, 1956.
 Mr. Paul Alton, Whole-time Finance Director opted for an early
 retirement from the services of the Company effective December 31,
 2012. The Board places on record their appreciation of the outstanding
 contribution made by Mr. Paul Alton during his tenure as the Whole-time
 Finance Director of the Company.
 In terms of Sections 255 and 256 of the Act and under Article 124 of
 the Company''s Articles of Association, Mr. J. K. Setna and Mr. V. S.
 Mehta retire by rotation at the ensuing 72nd Annual General Meeting
 and, being eligible, offer themselves for re-appointment.
 Messrs. Price Waterhouse, Chartered Accountants, retire and are
 eligible for re-appointment as Auditors.
 Cost Auditors
 The Board of Directors at their Board Meeting held on March 25, 2013
 appointed Messrs. N. I. Mehta & Company as the Cost Auditors for
 auditing the cost accounts relating to cosmetics and toiletries for the
 financial year 2013-14.
 Your Directors sincerely appreciate the high degree of professionalism,
 commitment and dedication displayed by employees at all levels. The
 Directors also wish to place on record their gratitude to the Members
 for their continued support and confidence.
                                               On behalf of the Board
                              P. Parasmeswaran (Ms.)     R.A. Shah
                              Managing Director          Vice-Chairman
 May 28, 2013
Source : Dion Global Solutions Limited
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