Colgate Palmolive (India) Directors Report, Colgate Reports by Directors

Colgate Palmolive (India)

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Directors Report Year End : Mar '15    « Mar 14
The Members
 Colgate-Palmolive (India) Limited
 The Directors have pleasure in presenting their Report and Audited
 Accounts of the Company for the year ended March 31,2015.
 Financial Results
                                          (Rs. Crore)
                                      F.Y. 2014-15      F.Y. 2013-14
 Total Revenue (a   b   c)                4,015.12            3,629.13
 Sales (Excluding Excise Duty) (a)        3,954.78            3,544.88
 Other Operating Revenue (b)                 27.17               33.93
 Other Income (c)                            33.17               50.32
 Profit before Tax from ordinary activities 780.39              663.58
 Exceptional item                                -               64.38
 Profit before Tax 
 (including exceptional item)               780.39              727.96
 Tax expense                                221.41              188.09
 Profit for the year                        558.98              539.87
 Balance brought forward                    175.51              119.21
 Adjustment of Depreciation as 
 per Schedule-II of
 the Companies Act, 2013                    (0.17)                   -
 Profit available for appropriation         734.32              659.08
 Dividend                                   326.38              367.18
 Dividend Distribution Tax                   61.99               62.40
 General Reserve                                 -               53.99
 Balance carried forward                    345.95              175.51
                                            734.32              659.08
 Business Performance
 Indian economy as measured through GDP grew by 5% in 2014 compared to
 4.7% in 2013. Public sentiment significantly improved with resounding
 majority of a single political party in the National elections in May
 2014. Although, there was a renewed optimism in the country, it did not
 translate immediately into an increase in demand. Rural consumption
 slowed during the year, unexpected rains in some states further
 dampened the sentiments in the rural markets.
 Wholesale and Consumer price inflation moderated substantially in 2014
 as compared to the previous
 year. Food inflation and crude oil prices also dropped significantly in
 2014. While gradual increase in economic activity is expected in 2015,
 a clearer trend in rural consumption is expected only after monsoon and
 a possible pick up in Government spending.
 In spite of the challenges and increased competitive intensity, your
 Company delivered strong results.
 Your Company registered strong Sales growth of 12% to Rs. 3,954.78 Crore
 from Rs. 3,544.88 Crore in the previous year. Toothpaste and Toothbrush
 volumes grew at 5% and 7% respectively. This growth was
 achieved at a time when the overall Toothpaste market declined by just
 over 3%. Profit Before Tax (including exceptional item) during the year
 was Rs. 780.39 Crore, an increase of 7% over the previous year. Profit
 After Tax (including exceptional item) during the year was Rs. 558.98
 Crore, an increase of 4% over the previous year.
 Your Company has made very good market share progress with Toothpaste
 at 57.8% and Toothbrushes at 42.1%. This is a result of ongoing
 innovation supported by impeccable execution in all retail
 environments.  The efforts in the area of efficiency continue to pay-
 off with Rs.Funding the GrowthRs. initiatives continuing to deliver
 savings, allowing us to improve investment levels while also delivering
 improved profitability.
 The Company has set up two state-of-the-art manufacturing facilities at
 Sanand, Gujarat and Sricity, Andhra Pradesh to manufacture toothpaste
 and toothbrush respectively, out of the internal accruals and strong
 cash generation. Despite making such substantial investments, your
 Board declared three interim dividends, each of Rs. 8/- per share,
 aggregating Rs. 24/- per share for the financial year 2014-15. These
 dividends were paid on October 16, 2014, December 29, 2014 and April
 22, 2015. Having declared three interim dividends, your Board has not
 recommended a final dividend for the financial year 2014-15.
 Colgate - the #1 Brand once again in 2014
 Number 1 Most Chosen Consumer Brand in India
 Your CompanyRs.s brand Rs.ColgateRs. is ranked the No.1 Rs.Most Chosen
 Consumer BrandRs. in India, in 2014 Brand Footprint report by consumer
 knowledge and insights firm, Kantar Worldpanel. This is the third
 consecutive time that the brand Rs.ColgateRs. is ranked number 1,
 across the FMCG and Personal Care category. The Rs.Most Chosen Consumer
 BrandRs. has been announced on the basis of certain parameters
 specified by Kantar Worldpanel.
 #1 Most Trusted Brand in India
 Colgate was once again voted as the #1 Rs.Most Trusted BrandRs. in
 India across categories in 2014. This is the fourth consecutive year
 that Colgate has been voted
 as the #1 Rs.Most Trusted BrandRs.. It is pertinent to note that
 Colgate is the only brand to feature in the top three from 2001-2014
 since inception of the survey.
 Focus on Innovation and New Launches
 Your Company has been continually pioneering innovation and development
 in the Oral Care category with best-in-class technologies.
 Your Company has been staying ahead of trends by identifying
 opportunities based on insights into consumer behavior and by
 leveraging the technology from the Parent Company.
 Your Company has made successful innovative launches during the year,
 as listed below :
 In the Toothpaste category, the Company introduced innovative products
 like :
 - Colgate Sensitive Pro-Relief™ (CSPR) Enamel Repair Toothpaste - a
 scientifically advanced technology that protects enamel from erosion by
 repair and remineralisation. It also provides long- lasting relief from
 tooth sensitivity.
 - Colgate Visible White Plus Shine Toothpaste - This toothpaste is
 formulated with whitening accelerators that remove and prevent surface
 stains and helps in tooth whitening. In addition to this, the micro
 crystals in the formulation safely polish teeth surfaces for a shinier
 In the Toothbrush category, the Company introduced innovative products
 like :
 - Colgate SlimSoft Charcoal Toothbrush - IndiaRs.s first toothbrush
 with slim tapered tip bristles technology infused with Charcoal. This
 revolutionary toothbrush technology is based on the key Indian insight
 of the traditional Oral Care benefits of Charcoal. The new Colgate
 SlimSoft Charcoal is one such clutter breaking offering, which brings
 together the traditional Oral Care benefits of Charcoal with advanced
 bristle technology. It was also voted as the Product of the Year for
 - Colgate ZigZag Black Toothbrush - Colgate ZigZag Black is a line
 extension of one of IndiaRs.s most popular toothbrush brands Rs.Colgate
 ZigZagRs.. As the market leader, your Company has introduced many
 Rs.firstsRs. in the toothbrush category and Colgate ZigZag is the first
 black toothbrush in the Mass Segment.
 In the Mouthwash Category, your Company has launched Colgate Plax
 Active Salt Mouthwash.  Building on the insight of salt water gargling,
 this innovative product provides dual benefit of Healthy Gums and
 Long-lasting freshness to our consumers.
 Your Company will continue to remain focused on driving consumer
 relevant innovation in the future.
 New projects
 As stated in the Annual Report for the financial year 2013-14, your
 Company had set up a state-of-the- art Toothpaste manufacturing
 facility at Sanand in Gujarat which was commissioned in March 2014. The
 said facility is now fully operational and caters to the domestic and
 export markets.
 Your Company has also set up a new state-of-the- art Toothbrush
 manufacturing facility at Sricity in Chittoor District in Andhra
 Pradesh. This facility was commissioned and fully tested in the month
 of March 2015 and has commenced its commercial production in the month
 of April 2015 and will have an installed capacity to produce 220
 Million pieces of Toothbrushes by the end of the year.
 With a commitment to grow the business, substantial investments have
 been made in the above two new manufacturing facilities, which will
 immensely benefit your Company in the years to come.
 Expiry of Fiscal Incentives at Baddi facility
 The CompanyRs.s manufacturing facility at Baddi, Himachal Pradesh was
 established in April 2005 and was entitled to certain fiscal benefits
 (Income Tax and Excise) for a period of 10 years pursuant to the then
 Industrial Policy of the Government of Himachal Pradesh. Accordingly,
 the income tax and excise benefits for the said facility expired on
 March 31,2015 and on April 21, 2015 respectively. The Company,
 therefore, pays applicable excise duty on production and income tax on
 profits from the said facility.
 Your Company continues to manufacture its Oral Care products from the
 Baddi facility.
 Toothpowder Manufacturing Facility at Aurangabad
 As consumers shift from traditional toothpowder to toothpaste, Oral
 Care market in India has changed significantly over the past few years.
 This has resulted in a declining trend in toothpowder volume as the
 growth is captured by toothpaste. With a view to enhance the
 CompanyRs.s competitiveness and operate in a cost effective manner,
 your Company offered a voluntary retirement scheme at its toothpowder
 manufacturing facility at Aurangabad while ensuring that the core
 values of caring for people are consistently followed.  The said scheme
 was accepted by all the workmen and therefore the toothpowder
 manufacturing operations at the Aurangabad facility were discontinued
 effective May 5, 2015.
 Your Company is committed to sustainability with focused and
 measureable goals. Your Company values sustainability through a
 commitment to the quality of the environment and extends it to the
 long-term well- being of the people and communities it serves.
 Considering this, your Company developed a plan that guides its
 sustainability initiative with key goals in the following three areas
 viz. People, Performance and Planet.
 The broad aspects covered in these goals 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 the climate and the
 Your Company believes that integrating sustainability into its everyday
 operations will help in making better business decisions and improve
 peopleRs.s lives. The sustainability strategy will also continue to
 focus on increasing consumer loyalty for our brands, provide a
 competitive advantage and ensure long-term shareholder value. Listed
 below are a few initiatives undertaken during the year :
 - Free Health Check-up for all the employees;
 - Initiatives on clean technology, energy efficiency and renewable
 - Sourcing of packaging material locally to reduce fuel emission;
 - Usage of reused and recycled materials for packaging;
 - LEED certification for our new facilities;
 - Reducing consumption of water and energy per ton of product produced;
 - Nil material to landfill.
 More details on energy conservation measures undertaken by your Company
 are mentioned in an annexure to this report.
 Responsibility Statement :
 Pursuant to Section 134(3)(c) of the Companies Act, 2013, your
 Directors, based on the representations received from the Management,
 confirm :
 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, 2013
 for safeguarding the assets of the Company and for preventing and
 detecting fraud and other irregularities;
 d) that they have prepared the annual accounts on a going concern
 e) that they had laid down internal financial controls to be followed
 by the Company and that such internal financial controls are adequate
 and were operating effectively; and
 f) that they have had devised proper systems to ensure compliance with
 the provisions of all applicable laws and that such systems were
 adequate and operating effectively.
 Corporate Governance
 A separate report on Corporate Governance along with the AuditorsRs.
 Certificate on its compliance is attached as Annexure - 1 to this
 Corporate Social Responsibility :
 Your Company and its employees share a commitment to the following
 three core Corporate Values : Caring, Global Teamwork and Continuous
 Improvement.  These values are reflected not just in the quality of
 products and the reputation of your Company, but also in our dedication
 to serving the communities in which we operate.
 Your Company undertakes its Corporate Social Responsibility (CSR)
 activities through a variety of effective programs. Some of the key CSR
 activities which your Company has undertaken during the year are in the
 areas of Promoting preventive health care, Promoting education,
 Conservation of natural resources, Empowerment of women and Addressing
 inequalities. These activities are broadly in accordance with the
 Schedule VII of the Companies Act, 2013.
 The Board of Directors and the CSR Committee review and monitor from
 time to time all the CSR activities being undertaken by the Company.
 Following are the key CSR activities undertaken by your Company during
 the Financial Year 2014-15 :
 - Bright Smiles, Bright Futures™
 - Oral Health Month
 - Rs.A Positive StepRs. - A Program in collaboration with Rs.Network
 in Thane by People Living with HIVRs. a Non-Governmental Organization
 (NGO), for addressing inequalities and promoting education for HIV
 infected and affected children
 - Supporting Rs.PrathamRs., an NGO, in the areas of providing quality
 education to the underprivileged children of India
 - Supporting Rs.Seva MandirRs., a nonprofit organization, in the
 areas of conservation of natural resources, improving health and
 education of the people.
 The details of CSR activities by your Company are elaborated in the
 Rs.Annual Report on CSRRs. which is attached as Annexure - 2 to this
 The contents of the CSR Policy as well as the CSR activities undertaken
 by the Company are available on the Company website.
 Employee Relations
 The employee relations in the Company continued to be healthy, cordial
 and progressive.
 Your Company recognizes its responsibility and continues to provide a
 safe working environment for women, free from sexual harassment and
 discrimination and to boost their confidence, morale and performance.
 Your Company also has a Policy on Prevention of Sexual Harassment which
 is reviewed by the Internal Complaints Committee at regular intervals.
 Managing With Respect is the way Colgate People put your Company
 Values (Caring, Global Teamwork and Continuous Improvement) into
 action. Each and every employee is expected to work with all stake-
 holders (other employees, customers, consumers, suppliers etc.) in a
 respectful manner. Each employee is also expected to strictly follow
 your CompanyRs.s Code of Conduct and any violation is treated with zero
 tolerance. Your Company strives to set a Gold Standard in conducting
 business in the most ethical and respectful manner.
 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 a
 strong association with its business partners.
 Particulars of Employees
 Information as per Section 197 of the Companies Act,
 2013 (the Rs.ActRs.) read with the Companies (Appointment and
 Remuneration of Managerial Personnel) Rules,
 2014 forms part of this Report. As per the provisions of Section 136 of
 the Act, the Report and Accounts are being sent to the shareholders of
 the Company and others entitled thereto, excluding the statement on
 particulars of employees. Any shareholder interested in obtaining a
 copy of the said statement may visit the registered office during
 business hours on any working
 day of the Company up to the date of 74th Annual General Meeting or
 write to the Secretarial Department at the Registered Office of the
 Energy Conservation, Technology Absorption and Foreign Exchange
 The information required under Section 134(3)(m) of the Companies Act,
 2013 read with the Companies (Accounts) Rules, 2014 with respect to
 conservation of energy, technology absorption and foreign exchange
 earnings/outgo is appended hereto as Annexure - 3 and it forms part of
 this Report.
 Directors and Key Managerial Personnel
 Consequent to the elevation of the previous Managing Director, Ms.
 Prabha Parameswaran as President, Africa/Eurasia Division of
 Colgate-Palmolive Company, the Board of Directors at their meeting held
 on August 18, 2014 appointed Mr. Issam Bachaalani as the Managing
 Director of the Company for a period of five years effective October 1,
 2014 subject to the approval of the Central Government and Shareholders
 of the Company. The details of the appointment of Mr. Bachaalani are
 elaborated in the Notice to the Annual General Meeting.
 Your Board places on record its appreciation for outstanding
 contributions made by Ms. Prabha Parameswaran during her tenure as the
 Managing Director of the Company.
 Pursuant to the provisions of Section 161(1) of the Companies Act, 2013
 (the Rs.ActRs.) and the Articles of Association of the Company, the
 Board of Directors of your Company, based on the recommendation of the
 Nomination & Remuneration Committee, appointed Ms. Shyamala Gopinath as
 an Additional Director (Non-executive & Independent) of the Company
 effective May 19, 2015 and she shall hold office up to the date of the
 ensuing Annual General Meeting.  The Company has received declarations
 from Ms. Shyamala Gopinath confirming that she meets with the criteria
 of independence as prescribed both under sub-section (6) of Section 149
 of the Act and under Clause 49 of the Listing Agreement with the Stock
 Exchanges. Accordingly, her candidature for appointment as a
 Non-executive & Independent Director of the Company is included at Item
 No. 4 of the Notice to the Annual General Meeting.
 Pursuant to the provisions of Section 152 of the Act and under Article
 124 of the CompanyRs.s Articles of Association, Mr. Godfrey Nthunzi
 retires by rotation at the ensuing 74th Annual General Meeting and,
 being eligible, offers himself for re-appointment.
 Pursuant to Sections 149, 150 and 152 of the Act, read with Companies
 (Appointment and qualification of Directors) Rules, 2014 along with
 Schedule IV of the Act (including any statutory modification(s) or
 re-enactment thereof for the time being in force) and shareholdersRs.
 approval in 73rd Annual General Meeting, the following Non-executive &
 Independent Directors can hold office for a term of five consecutive
 years on the Board of Directors of your Company :
 1. Mr. R. A. Shah;
 2. Mr. P. K. Ghosh;
 3. Mr. J. K. Setna;
 4. Mr. V. S. Mehta; and
 5. Dr. (Ms.) I. Shahani.
 These Non-executive & Independent Directors shall not be liable to
 retire by rotation. All the above mentioned Non-executive & Independent
 Directors have given the declaration of independence to the Company as
 per Section 149 (6) of the Act as well as under Clause 49 of the
 Listing Agreement. Mr. Issam Bachaalani, Mr. Godfrey Nthunzi and Mr.
 Niket Ghate are the Key Managerial Perosonnel of the Company.
 Familiarization Program
 Your Company, for many years now, has been familiarizing the
 Independent Directors on its Board with detailed presentations by its
 business functional heads on the Company operations, strategic business
 plans, new products and technologies, including significant aspects of
 the Industry and its future outlook. Details of familiarization
 programs extended to the Non- executive & Independent Directors during
 the year are also disclosed on the Company website from time to time at
 Nomination & Remuneration Policy
 The Board of Directors of your Company has, on recommendation of the
 Nomination & Remuneration Committee, framed and adopted a policy for
 selection and appointment of Directors, Senior Management
 and their remuneration. The contents of the policy are stated in the
 Corporate Governance Report.
 Annual Performance Evaluation by Board
 Pursuant to the provisions of the Companies Act, 2013 and Clause 49 to
 the Listing Agreement, the Board has carried out an Annual Performance
 Evaluation of its own performance, the Directors individually as well
 as the evaluation of the working of the Committees. The manner in which
 the evaluation was carried out has been explained in the Corporate
 Governance Report.
 Risk Management
 The Board of Directors of your Company has, on recommendation of the
 Risk Management Committee framed and adopted a policy on Risk
 Management of the Company. The broad terms of reference of the
 Committee are stated in the Corporate Governance Report.
 Vigil Mechanism
 Your Company has an effective Vigil Mechanism system which is embedded
 in its Code of Conduct.  The Code of Conduct of your Company serves as
 a guide for daily business interactions, reflecting your CompanyRs.s
 standard for appropriate behavior and living Corporate Values. The Code
 of Conduct applies to all Colgate People, including Directors,
 Officers, and all employees of the Company. Even your Company vendors
 and suppliers are also subject to these requirements as adherence to
 the Code is a prerequisite for conducting business with your Company.
 The Code of Conduct Hotline is available on the Company website to
 report any genuine concerns about unethical behavior, any actual or
 suspected fraud or violation of CompanyRs.s Code of Conduct.
 Loans, Guarantees and Investments
 Particulars of loans, guarantees and investments made by the Company
 pursuant to Section 186 of the Companies Act, 2013 are given in the
 Notes to the Financial Accounts.
 Related Party Contracts & Arrangements
 All related party transactions done by the Company during the financial
 year were at armRs.s length and in ordinary course of business. All
 related party
 transactions were placed in the meetings of Audit Committee and the
 Board of Directors for their necessary review and approval. During the
 financial year your Company has not entered into any material
 transaction (as per Clause 49 of the Listing Agreement) with any of its
 related parties which may have potential conflict with the interest of
 the Company at large.  Disclosures pursuant to Accounting Standards on
 related party transactions have been made in the notes to the Financial
 Statements. To identify and monitor significant related party
 transactions Company has also framed a policy on the related party
 transactions and the same is available on the Company website
 CorporateGovernance/Related-Party-Transactions- Policy.pdf
 M/s. Price Waterhouse, Chartered Accountants, retire and are eligible
 for re-appointment as Auditors from the conclusion of this Annual
 General Meeting until the conclusion of the next Annual General
 Meeting. The AduditorsRs. Report for the financial year 2014-15 does
 not contain any qualification, resevation or adverse remarks.
 Secretarial Auditor & Secretarial Audit Report
 The Board had appointed M/s. S. N. Ananatha- subramanian & Co., Company
 Secretaries in Whole- time Practice, to carry out Secretarial Audit
 under the provisions of Section 204 of the Companies Act, 2013 for the
 financial year 2014-15. The report of the Secretarial Auditor is
 annexed to this report
 as Annexure - 4. The Secretarial AduditorsRs. Report for the financial
 year 2014-15 does not contain any qualification, resevation or adverse
 Extract of Annual Return
 Pursuant to the Section 92(3) of the Companies Act, 2013 extract of the
 annual Return is annexed to this report as Annexure - 5.
 Business Responsibility Report
 The Business Responsibility Report for the financial year 2014-15, as
 stipulated under Clause 55 of the Listing Agreement is annexed to this
 report as Annexure - 6.
 Your Directors sincerely appreciate the high degree of professionalism,
 commitment and dedication displayed by employees at all levels. Your
 Directors also wish to place on record their gratitude to the
 shareholders for their continued support and confidence.
                                           On behalf of the Board
                        M. V. Deoras            R. A. Shah
                            Chairman           Vice-Chairman 
                    (DIN : 02869422)        (DIN : 00009851)
 May 19, 2015
Source : Dion Global Solutions Limited
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