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Colgate Palmolive (India) Directors Report, Colgate Reports by Directors
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Colgate Palmolive (India)
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Download Annual Report PDF Format 2014 | 2013 | 2012 | 2011
Directors Report Year End : Mar '14    « Mar 13
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, 2014.
 
 Financial Results
 
                                                        (Rs. Crore)
 
                                                   2013-14      2012-13
 
 Total Revenue (a b c)                            3,629.13     3,213.73
 
 Sales (Excluding Excise Duty) (a)                3,544.88     3,084.11
 
 Other Operating Revenue (b)                         33.93        79.70
 
 Other Income (c)                                    50.32        49.92
 
 Profit before Tax from ordinary activites          663.58       663.03 
 
 Exceptional item                                    64.38            -
 
 Profit before Taxation (including 
 exceptional item)                                  727.96       663.03
 
 Provision for Taxation                             188.09       166.28
 
 Profit after Taxation                              539.87       496.75
 
 Balance brought forward                            119.21       114.68
 
 Profit available for appropriation                 659.08       611.43
 
 Appropriation :
 
 Dividend                                           367.18       380.78
 
 Dividend Tax                                        62.40        61.77
 
 General Reserve                                     53.99        49.67
 
 Balance carried forward                            175.51       119.21
 
                                                    659.08       611.43
 
 Business Performance
 
 Our Country witnessed unprecedented challenges during Financial Year
 2013-14. These challenges were high inflation, including food
 inflation, which rose to 13.2 per cent in the month of October 2013 and
 low GDP growth at 4.4 per cent along with unprecedented volatility in
 currency. The Reserve Bank of India kept a tight monetary policy in the
 Financial Year 2013- 14 and interest rates at elevated level to bring
 down the inflation. As a result of these factors and weak sentiments,
 consumer confidence declined resulting in slowing down of consumption
 in most categories of FMCG sector.
 
 According to Neilson, market researcher, FMCG arowth in Urban Market
 was 8 Der cent, while in Rural Market, the growth was 12 per cent.
 Overall, FMCG growth, as per the report, slowed down to 9 per cent in
 2013, half of the previous year as the consumers cut down on the
 discretionary spend or down traded to cheaper products.
 
 Despite such a challenging environment and increased competitive
 intensity, your Company delivered strong results.
 
 Your Company''s business continues to grow strongly in double digits.
 Sales for the year increased by 15 per cent at Rs. 3,544.88 crore as
 against Rs. 3,084.11 crore during the previous year. The toothpaste
 business registered a very strong volume growth of 9 per cent during
 the year.
 
 The profit before tax (including exceptional item) during the year was
 Rs. 727.96 crore, an increase of 10 per cent over the previous year.
 The profit after tax (including exceptional item) also increased,
 standing at Rs. 539.87 crore an increase of 9 per cent over the
 previous year.  Your Company also invested in building new plants at
 Sanand (Gujarat) and Sricity (Andhra Pradesh).
 
 Your Company strengthened its leadership position in the toothpaste
 category to 57.1 per cent from 55.4 per cent.  Similarly, market share
 in toothbrush category was strengthened to 42.3 per cent from 41.3 per
 cent.
 
 During the year, your Company also focused on bringing in consumer
 appealing innovation as well as adopting various innovative strategies
 to increase the distribution and penetration in rural markets.
 
 Dividend
 
 The Company''s strong cash generation and positive growth momentum led
 your Board to declare three interim dividends each of Rs. 9/- per share
 aggregating Rs. 27/- per share for the financial year 2013-14. These
 dividends were paid on November 20, 2013, December 20, 2013 and April
 16, 2014. Having declared three interim dividends, your Board has not
 recommended a final dividend for the financial year 2013-14.
 
 Colgate - the #1 Most Trusted Brand once again in 2013
 
 For the third consecutive year, ''Colgate'' has been ranked as the
 #1 Most Trusted Brand by Brand Equity''s Annual Survey. The Most
 Trusted Brand identifies the most special attribute - ''Consumer''s
 Trust''. This survey was conducted by Economic Times Brand Equity and
 market research agency, Neilsen. The survey covered design samples of
 7,200 across socio- economic classifications such as gender, income,
 age, work status and geography. Your Company is grateful to its
 consumers for their loyalty and trust reposed in the brand
 ''Colgate''. It is noteworthy that Colgate is the only Brand to be
 ranked in the top 3 from the inception of the survey in the year 2001.
 
 Focus on Innovation
 
 In the current year, your Company launched a breakthrough technology
 under the brand name, Colgate® Maximum Cavity Protection plus Sugar
 Acid Neutralizer™, its first and only family toothpaste that directly
 fights sugar acids, the leading cause of cavities.
 
 While fluoride alone reverses the damage caused by the sugar acids on
 the tooth enamel, the patented technology in Colgate® Maximum Cavity
 Protection plus Sugar Acid Neutralizer™ , is clinically proven to
 reduce early tooth decay, helps neutralize sugar acids before they can
 harm teeth.
 
 Your Company has been staying ahead of trends by identifying
 opportunities based on insights into consumer behavior and leveraging
 technology, in collaboration with the parent company, to deliver
 innovative products. Our success in delivering meaningful innovation is
 evident in our launches as listed below :
 
 i) Colgate Active Salt Healthy White toothpaste which offers the
 benefit of ''Yellowness removal'' from teeth. This product has the
 combination of salt and lemon that delivers yellowness removal.
 
 ii) Colgate Maxfresh Fresh Tea toothpaste which offers consumers a
 unique and exciting Tea flavor experience.
 
 In toothbrush category, the Company introduced innovative products
 like:
 
 i) Colgate® Slim Soft, a toothbrush with super slim and ultra-soft
 tapered bristles - 17X slimmer than ordinary end-rounded bristles;
 
 ii) Colgate Wave Gum Comfort Toothbrush with soft curved bristles for
 gum comfort and effective cleaning of teeth; and
 
 iii) Relaunch of Colgate Super Flexi Toothbrush with a new premium
 handle and flexi bands to reach hard-to-reach places in the mouth.
 
 Your Company will continue to remain focused on driving consumer
 relevant innovation in the future.
 
 Sale and transfer of Company''s division viz. Global Shared Services
 Organization (GSSO)
 
 As stated in the Annual Report for the year 2012-13, your Company after
 obtaining necessary approvals from the Board of Directors and
 Shareholders, sold and transferred the Company''s Global Shared
 Services Organization (GSSO Division) as and by way of a slump sale
 to Colgate Global Business Services Private Limited (CGBSPL), a 100 per
 cent subsidiary of the Ultimate Holding Company, Colgate-Palmolive
 Company (CP-USA) with effect from June 1, 2013, on a going concern
 basis for a total consideration of Rs. 5,989 Lacs after adjustment of
 relevant assets and liabilities of GSSO Division as shown under
 Exceptional Item of financial results of the report. CGBSPL now,
 provides the best in class service to CP-USA''s subsidiaries,
 including CP-lndia with greater efficiency.
 
 New projects
 
 As stated in the Annual Report for the year 2012-13, to cater to the
 increasing demand for the Company''s products, your Company has set up
 a state of the art toothpaste manufacturing facility at Sanand in
 Gujarat which was commissioned in March 2014.
 
 Similarly, your Company has invested in setting up a new Toothbrush
 manufacturing facility at Sricity in Chittoor District in Andhra
 Pradesh. Your Company is in an advanced stage of construction of the
 factory.  This facility is expected to commence commercial production
 in the fourth quarter of 2014.
 
 Sustainability
 
 Your Company is committed to sustainability with focused and
 measureable goals. YourCompany values sustainability through a
 commitment to environment quality and extends 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
 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 to
 ensure long-term shareholder value.  Amongst the sustainability
 initiatives in the areas of People, Planet and Performance, a few are
 as under:
 
 Blood Donation Camp at the head office;
 
 Free Health Check-up for all the employees;
 
 Initiatives on clean technology, energy efficiency, renewable energy
 etc.;
 
 Sourcing of packaging material locally to reduce the fuel emission; and
 
 Usage of reused and recycled materials for packaging.
 
 Responsibility Statement:
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the 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, 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
 basis.
 
 Corporate Social Responsibility:
 
 Your Company, in partnership with the Indian Dental Association (IDA),
 successfully concluded the 10th edition of a two-month long Oral Health
 Month (OHM) Program. During OHM, a wide spectrum of activities were
 designed and conducted to spread oral health awareness and good oral
 hygiene practices.
 
 OHM 2013 conveyed the message of holistic oral health through the
 ''Colgate Healthy Mouth Pledge'' with 29,000 IDA dentists
 participating in the program. The two-month long oral care awareness
 drive included in-clinic free dental check-ups, free dental check-ups
 in mobile vans and at underprivileged schools as well as modern trade
 outlets. Approximately 4.9 million consumers were covered under these
 activities.
 
 Education has been the primary focus of your Company''s Corporate
 Social Responsibility. Since 1976, your Company has been conducting a
 school initiative program viz. Colgate Bright Smiles, Bright FuturesTM
 wherein your Company partners with IDA, to spread oral health awareness
 among school-going children in primary schools in urban and rural
 India.  Till date, 114 million school children in urban and rural areas
 have been benefited from this Program.  In addition, your Company also
 conducts, jointly with IDA, a Teachers'' Training Program to enable
 teachers to instill good oral care habits among school-going children
 on an on-going basis.
 
 Your Company has been associated with one of the largest
 non-governmental organisations, Pratham, working to provide quality
 education to the underprivileged children of India. Pratham,
 established in 1994, provides education to the children in the slums of
 Mumbai city. Since then, the organisation 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. Its 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.
 
 Your Company has been supporting Pratham initiatives in Mumbai since
 2000. The support has been crucial for ensuring a perceptible change in
 the educational levels of approximately 3000 children in the age group
 of 3 to 14 years. The partnership over the years has enabled students
 of class one to seven to reach proficiency levels in reading and
 mathematics and children between the age group of 3 to 6 years to get
 pre-school education.
 
 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.
 
 Colgate-Palmolive supports ''Water for People'' to provide access to
 substainable drinking water, sanitation facilities and hygiene
 education programs in Sheohar, Bihar. By fostering community ownership
 and rehabilitation of hand pumps in 10 communities, approximately 1,500
 people are being served.
 
 Moreover, with school level engagement, over 5,660 students and
 teachers are benefitting from access to drinking water and improved
 sanitation conditions.
 
 Your Company has constituted a Corporate Social Responsibilty (CSR)
 Committee to review and monitor the CSR policy and its activities
 undertaken by the Company. 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 positive.
 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.
 
 A long term Memorandum of Settlement was signed on February 11, 2014
 with the workmen at the Company''s Goa facility for a period of thirty
 seven months effective March 1, 2013 to March 31, 2016.
 
 Your Company also has a Policy on Prevention of Sexual Harassment which
 is reviewed by the Internal Complaints Committee at regular intervals.
 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.
 
 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 association 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.
 
 Directors
 
 Pursuant to Section 152 of the Companies Act, 2013 (the ''Act'') and
 under Article 124 of the Company''s Articles of Association, Mr. Niket
 Ghate retires by rotation at the ensuing 73rd 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 alongwith
 Schedule IV of the Act (including any statutory modification(s) or
 re-enactment thereof for the time being in force), the Independent
 Directors can hold office for a term of five consecutive years on the
 Board of Directors of your Company. Accordingly, it is proposed to
 appoint the following existing Independent Directors as Non-executive
 Independent Directors for five (5) consecutive years with effect from
 July 25, 2014, subject to approval of members at the ensuing 73rd
 Annual General Meeting (AGM) of the 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.) Indu Shahani.
 
 These Independent Directors shall not be liable to retire by rotation.
 All the above mentioned Independent Directors have given the
 declaration of independence as per Section 149 (6) of the Act.
 
 Auditors
 
 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.
 
 Cost Auditors
 
 The Board of Directors at their Meeting held on March 27, 2014
 appointed M/s. N. I. Mehta & Co., a firm of Cost Accountants, as the
 Cost Auditors of the Company to conduct the audit of the cost accounts
 maintained by the Company in respect of Cosmetics and Toiletries for
 the financial year 2014-15.
 
 Acknowledgements
 
 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
 
 May 23, 2014
Source : Dion Global Solutions Limited
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