Colgate-Palmolive (India) Ltd:Annual Report 2023-24 Analysis

Colgate-Palmolive (India) Ltd: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Colgate-Palmolive (India) Limited was established in 1937. It is the Indian subsidiary of Colgate-Palmolive Company, a global consumer products company headquartered in New York.

Headquarters Location and Global Presence:

The company’s headquarters in India is located in Mumbai, Maharashtra. As a subsidiary of Colgate-Palmolive Company, it benefits from a global presence spanning over 200 countries and territories.

Company Vision and Mission:

While the exact public statement of vision and mission might vary over time, generally, Colgate-Palmolive’s vision is to be the world’s leading consumer products company, focused on oral care, personal care, home care and pet nutrition. Their mission revolves around improving the health and wellbeing of consumers by providing high quality, innovative products.

Key Milestones in Their Growth Journey:

• 1937: Incorporation of Colgate-Palmolive (India) Limited.
• 1970s-80s: Expansion of product portfolio beyond toothpaste.
• 1990s: Increased focus on rural markets and distribution network.
• 2000s: Introduction of new variants and specialized oral care products.
• Present: Continued focus on innovation, sustainability, and digital transformation.

Stock Exchange Listing Details and Market Capitalization:

Colgate-Palmolive (India) Limited is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Market capitalization data is available on major financial websites.

Recent Financial Performance Highlights:

Please refer to the latest annual reports, quarterly reports, and financial news articles for the most up-to-date financial performance highlights, including revenue, profit, and key performance indicators.

Management Team and Leadership Structure:

The management team consists of experienced professionals in various fields such as marketing, finance, operations, and research & development. The leadership structure typically includes a Managing Director/CEO, CFO, and various department heads reporting to them.

Notable Awards or Recognitions:

Colgate-Palmolive (India) Limited has received various awards and recognitions for its business performance, sustainability initiatives, corporate governance, and employee relations. The exact awards may vary from year to year.

Their Products #

Complete Product Portfolio with Categories:

• Oral Care: Toothpastes, toothbrushes, mouthwashes, dental floss, teeth whitening products
• Personal Care: Soaps, handwashes, body washes, shampoos, conditioners
• Home Care: Dishwashing liquids, surface cleaners, fabric conditioners

Flagship or Signature Product Lines:

• Colgate Dental Cream: A classic and widely recognized toothpaste.
• Colgate MaxFresh: A toothpaste known for its intense freshness.
• Palmolive Naturals: A range of personal care products with natural ingredients.

Manufacturing Facilities and Production Capacity:

The company operates multiple manufacturing facilities across India to meet the demands of the domestic market. Specific production capacity figures are generally not publicly disclosed.

Quality Certifications and Standards:

Colgate-Palmolive (India) Limited adheres to stringent quality control measures and holds certifications such as ISO 9001, demonstrating its commitment to quality management systems.

Recent Product Launches or R&D Initiatives:

The company frequently introduces new product variants and formulations based on consumer needs and market trends. Recent R&D initiatives likely focus on areas such as natural ingredients, sustainable packaging, and advanced oral care technologies.

Primary Customers #

Geographic Markets (domestic vs. international):

Colgate-Palmolive (India) Limited primarily serves the domestic Indian market. While some exports may occur, the focus is on meeting the needs of Indian consumers.

Major Client Segments (agricultural, industrial, residential, etc.):

The primary client segment is the residential sector, encompassing individual consumers and households.

Distribution Network and Sales Channels:

The company has a well-established distribution network that includes:

• Retail outlets (supermarkets, hypermarkets, grocery stores)
• Wholesalers and distributors
• Pharmacies and drug stores
• Online retailers and e-commerce platforms

Major Competitors #

Direct Competitors in India and Globally:

• Hindustan Unilever Limited (HUL)
• Procter & Gamble (P&G)
• Dabur India Ltd.
• Godrej Consumer Products Limited

How they differentiate from competitors:

Colgate-Palmolive differentiates itself through:

• Strong brand recognition and heritage
• Wide distribution network
• Focus on oral care expertise
• Continuous innovation and product development
• Emphasis on quality and consumer trust

Industry Challenges and Opportunities:

• Challenges: Intense competition, fluctuating raw material prices, changing consumer preferences, and increasing regulatory scrutiny.
• Opportunities: Growing consumer spending, rising awareness of hygiene and health, expansion into rural markets, leveraging digital platforms, and developing sustainable products.

Market Positioning Strategy:

Colgate-Palmolive (India) Limited positions itself as a trusted and reliable provider of high-quality oral, personal, and home care products at competitive prices.

Future Outlook #

Expansion Plans or Growth Strategy:

The company’s future growth strategy likely involves:

• Expanding its product portfolio with new innovations.
• Strengthening its distribution network in rural areas.
• Increasing its presence in the online retail channel.
• Focusing on sustainable and eco-friendly products.
• Targeting premium segments of the market.

Sustainability Initiatives or ESG Commitments:

Colgate-Palmolive Company has global sustainability goals focused on areas such as reducing water consumption, minimizing waste, using sustainable packaging, and promoting ethical sourcing. Colgate-Palmolive (India) is part of that global effort.

Industry Trends Affecting Their Business:

• Increasing consumer awareness of health and hygiene.
• Growing demand for natural and organic products.
• Rise of e-commerce and online shopping.
• Emphasis on sustainability and environmental responsibility.
• Digital transformation of marketing and sales.

3-Year Trend Analysis of Key Financial Metrics #

• Total Revenue increased from ₹5,279.77 crores in FY 2022-23 to ₹5,756.95 crores in FY 2023-24.
• Net Profit After Tax showed an increase of 26.4% from FY 2022-23 to FY 2023-24, reported at ₹1,323.66 Crores for FY 2023-24.
• Earnings Per Share (EPS) increased from ₹38.50 in FY 2022-23 to ₹48.67 in FY 2023-24.
• Dividend Per Share was ₹58 for FY 2023-24, including a one-time special interim dividend of ₹10 per share.
• Total Energy Consumption saw a slight decrease from 225,536.60 GJ in FY 2022-23 to 222,646.64 GJ in FY 2023-24.
• Renewable Energy share in total energy consumption increased by 236%, while non-renewable energy share reduced by 14% over FY 2022-23.
• GHG Emissions (Scope 1 + Scope 2) decreased by 11.3% in FY 2023-24, totaling 33,276.60 tCO2e.
• Total Waste Generated decreased from 6,330.65 MT in FY2022-23 to 6,077.29 MT in FY 2023-24.
• Total Water Withdrawal was at 239.83 million liters for FY 2023-24.
• Women representation across all management levels improved from 25% (2022-2023) to 26% (FY 2023-24).
• Average training hours remained consistent across senior and middle management.

Business Segment Performance #

• The Company operates primarily in the “Personal Care (including Oral Care)” segment, accounting for 98.19% of the total turnover in FY 2023-24.
• The Company maintained its leadership position in both Toothpaste and Toothbrush categories during FY 2023-24.

Major Strategic Initiatives and Their Progress #

• The “Brush at Night” initiative and the “Bright Smiles, Bright Futures®” program continued, focusing on oral health education.
• Re-launches of Colgate Strong Teeth, Colgate Active Salt, and Colgate Total with new formulations. MaxFresh was relaunched with “Neend Bhagao, Taazgi Jagao” campaign.
• Expansion of sustainable packaging, with 50% of the toothpaste portfolio transitioned to recyclable tubes.
• Digital transformation initiatives included using Machine Learning (ML) for demand forecasting and AI-led planogramming.
• The Colgate Clinical Innovation Institute (CCII) was launched in October 2023.

Risk Landscape Changes #

• Key risks identified include responsible supply chain management, business ethics, governance and transparency, consumer health and safety, human rights, water resource management, and waste management.

ESG Initiatives and Metrics #

• Three out of four manufacturing plants achieved net zero water status.
• Renewable energy accounts for 18% of the total energy mix.
• 83% of packaging is reusable, recyclable, or compostable.
• Rural Waste Management Program collected and segregated over 40 tonnes of dry waste across 25 villages.
• Repurposed 46 million liters of water across 40 water-stressed villages, benefiting 14,000 beneficiaries.
• 66 suppliers, contributing to 73% of the total direct material spends, were evaluated based on environmental and social criteria.

Management Outlook #

• The Company anticipates continued growth in the oral care market, driven by increasing awareness of oral hygiene.
• Focus on premiumization, innovation, and digitalization to enhance operational efficiency and customer experience.
• Strategic investments are aimed at driving growth and profitability while maintaining sustainability commitments.
• Commitment to ethical business practices and maintaining a strong financial condition.

Detailed Analysis #

Financial Position Analysis #

Balance Sheet Analysis #

3-Year Comparative Analysis of Assets, Liabilities, and Equity #

(INR in Lakhs)

Significant Changes in Major Line Items (>10% YoY) #

• Current Assets (FY24 vs FY23): Increased by 23.06% (H35,592.75 lakhs) primarily due to increases in cash and cash equivalents, other bank balances, and other financial assets.
• Current Assets (FY23 vs FY22): Increased by 32.75% (H38,202.49 Lakhs)
• Other Equity (FY24 vs FY23): Increased by 9.35% due to an increase in Retained Earnings because of profit for the year.
• Other Equity(FY23 vs FY22) Increased by 48.35%
• Current loans(FY24 vs FY23) Decreased by 92.39%
• Current Liabilities (FY24 vs FY23): Increased by 14.26% due to higher trade payables and other financial liabilities.
• Non current Assets(FY23 vs FY22: Decreased by 15.19%

Working Capital Trends #

(INR in Lakhs)

Working Capital increased significantly from FY23 to FY24, driven by the rise in current assets.

Asset Quality Metrics #

Relevant asset quality metrics include:

• Inventory Turnover Ratio: Addressed in Key Financial Ratios in the Director’s Report. A higher ratio in FY24 (5.45) compared to FY23 (5.18) indicates a slight increase in inventory efficiency.
• Debtors Turnover: increased from 27.16(FY 2022-23) to 34.76(FY 2023-24).
• Fixed Asset Turnover: (Net Sales / Net Fixed Assets):

(INR in Lakhs)

• Non-Performing Assets: Not applicable as the Company primarily deals with fast-moving consumer goods and does not have significant loan assets.

Debt Structure and Maturity Profile #

Debt Structure #

(INR in Lakhs)

The Company’s debt consists primarily of lease liabilities.

Maturity Profile #

Refer to the Statement of Cash Flows.

Off-Balance Sheet Items #

• Contingent Liabilities: As of March 31, 2024, total contingent liabilities amounted to H1,31,389.11 lakhs, up from H99,504.77 lakhs in the previous year. This comprises claims against the Company not acknowledged as debts.
• Guarantees: The Company has not issued any guarantees which are recognized as off-balance sheet items.

Industry Benchmark Comparisons: Due to the varied nature of FMCG businesses and the lack of specific peer data within the provided document, a direct industry benchmark comparison for all metrics is not feasible. The analysis focuses on internal trends.

Operating Performance #

Revenue Breakdown #

Segment #

The Company operates in a single segment: “Personal Care (including Oral Care)”.

Geography (FY 2023-24) #

• India: 95.2% of total revenue.
• Outside India: 3.7% of total revenue.

Growth #

Domestic growth of 9.5% for FY 2023-24. Overall, Total Revenue increased by 9.0%. Sales increased by 8.8%.

Cost Structure Analysis #

• Cost of Materials Consumed: Decreased as a percentage of total revenue, from 28.3% in FY 2022-23 to 25.3% in FY 2023-24.
• Employee Benefits Expense: Increased from H 37,696.99 Lakhs to H 41,172.84 Lakhs.
• Advertising costs Increased significantly, from 12.0% of total revenue in FY 22-23 to 13.2% of total revenue in FY23-24.

Margin Analysis #

Operating Profit Margin #

Increased from 26% in FY 2022-23 to 31% in FY 2023-24.

Net Profit Margin (after tax) #

Increased from 20% in FY 2022-23 to 23% in FY 2023-24.

Operating Leverage #

The growth of profit is higher than the growth of revenues.

Non-Recurring Items #

Exceptional Items #

H 1,950.20 Crores in FY 2023-24, related to severance and related expenses. H 1,120.87 Crores in FY 2022-23.

One-time Special Interim Dividend #

H 10 per share declared in FY 2023-24.

EPS Analysis #

Basic and Diluted EPS #

Increased from J 38.50 in FY 2022-23 to J 48.67 in FY 2023-24.

Cash Flow and Liquidity Analysis #

Operating Cash Flow (OCF) #

• FY 2023-24: Increased to 119,896.38 J Lakhs from 117,626.32 J Lakhs in FY 2022-23, mainly driven by higher profit before tax.
• Key drivers of OCF include profit before tax and adjustments for non-cash items such as depreciation, finance costs, and employee stock option expenses.

Investing Cash Flow (ICF) #

• FY 2023-24: Net cash inflow of 7,923.95 J Lakhs, a shift from an outflow of (754.77) J Lakhs in FY 2022-23, primarily driven by purchase and sale of current investments.
• Significant outflows included purchase of property, plant, and equipment.
• Significant Cash inflow from Purchase and sale of current investments.

Financing Cash Flow (FCF) #

• FY 2023-24: Net cash outflow of (119,526.67) J Lakhs compared to (1,08,672.51) J Lakhs in FY 2022-23, driven primarily by dividend payments.

Working Capital Management Efficiency #

• Debtors Turnover: Increased to 34.76 in FY 2023-24 from 27.16 in FY 2022-23.
• Inventory Turnover: Improved slightly to 5.45 in FY 2023-24 from 5.18 in FY 2022-23.
• Trade Payable Turnover decreased to 2.05 times, was 2.31 times.

Dividend and Share Buyback Trends #

Dividend #

• Declared an interim dividend of H 22 per share and a second interim dividend of H 26 and a one-time Special Interim Dividend of H 10
• Total dividend outflow for FY 2023-24: (1,16,953.82) J Lakhs, an increase from (1,06,074.39) J Lakhs in FY 2022-23.

Share Buyback #

• No share buyback activity is reported in the provided financial statements.

Liquidity Position and Cash Conversion Cycle #

Liquidity Position #

• Current Ratio: Increased to 1.54 in FY 2023-24 from 1.43 in FY 2022-23.
• Cash and Cash Equivalents: Increased to 88,899.34 J Lakhs from 80,605.68 J Lakhs in the previous year.
• Other Bank Balances increased to 48,478.92 J Lakhs.

Cash Conversion Cycle #

• Not directly calculable from the provided data, as it requires days inventory outstanding, days sales outstanding, and days payable outstanding.

Financial Performance Analysis: Key Operational Metrics #

Profitability Ratios (3-Year Trends) #

Return on Equity (ROE) #

• FY2023-24: 74%
• FY2022-23: 61%
• FY2021-22: 62%
• ROE has been consistently high and saw significant increase in FY24.

Return on Capital Employed (ROCE) #

• FY2023-24: 99%
• FY2022-23: 84%
• FY2021-22: 94%
• ROCE has been consistently high and increased in FY24.

Net Profit Margin #

• FY2023-24: 23%
• FY2022-23: 20%
• FY2021-22: 21%
• Net profit margin has improved year over year.

Operating Profit Margin #

• FY 2023-24: 31%
• FY 2022-23: 26%
• FY 2021-22: 26.68%
• Operating Profit Margin Has shown strong increase in the current FY.

Liquidity Metrics #

Current Ratio #

• FY2023-24: 1.54
• FY2022-23: 1.43
• FY2021-22: 1.08
• The current ratio has improved, indicating better short-term liquidity.

Cash Ratio #

• FY 23-24: 0.71
• FY 22-23: 0.74
• Cash ratio indicate short-term liquidity is strong.

Efficiency Ratios #

Inventory Turnover #

• FY2023-24: 5.45
• FY2022-23: 5.18
• FY2021-22: 5.5
• Inventory turnover shows slight improvement.

Receivables Turnover #

• FY2023-24: 34.76
• FY2022-23: 27.16
• FY2021-22: 27.84
• Receivables turnover has significantly increased, indicating faster collection of receivables.

Leverage Metrics #

Debt/Equity Ratio #

• FY2023-24: 0.04
• FY2022-23: 0.04
• FY2021-22: 0.04
• The company has negligible debt, so this ratio is very low.

Interest Coverage Ratio #

• FY2023-24: 346.85
• FY2022-23: 281.82
• FY2021-22: 573.97
• The interest coverage ratio is extremely high, demonstrating the company’s strong ability to cover interest expenses.

Working Capital Ratios #

Debtors Turnover #

• FY 2023-24: 34.76
• FY 2022-23: 27.16
• FY2021-22: 27.84
• The debtors turnover is very high, and has increased considerably in the current financial year.

Significant Deviations #

All deviations noted above are based on 3 years provided data.

Business Segment Performance Analysis #

Revenue and Profitability Metrics #

• Overall Revenue: FY 2023-24 reported net sales of INR 5,644.18 crores, an 8.8% increase from FY 2022-23. Total revenue was 5756.95 cr.
• Net Profit After Tax: FY 2023-24 net profit after tax was INR 1,323.66 crores, a 26.4% increase year-over-year.
• Profit Before Tax: Increased by 26.27%, reaching INR 1,781.33 crores in FY 2023-24.
• Operating Profit Margin increased to 31%, up from 26%, and Net profit Margin is 23%.

Market Share and Competitive Position #

• The Company maintains a leadership position in both Toothpaste and Toothbrush categories in India.
• Referenced as India’s #1 Oral Care Brand, most loved, most penetrated (9/10 households), and most considered (87%).

Key Products/Services Performance #

• Colgate Strong Teeth: Relaunched with Arginine technology, promoting “Daanton Ka Poshan” (teeth nourishment).
• Colgate MaxFresh: Relaunched with UltraFreeze technology and was the fastest growing core brand.
• Colgate Active Salt: Relaunched, emphasizing its traditional benefits and addressing oral problems.
• Colgate Zig Zag: The fastest growing core toothbrush brand.
• Colgate Visible White 02: Enhanced, recognized at multiple awards.
• Colgate Total Sensitive: New, with zinc, arginine.
• Colgate Super Junior: Relaunched.

Geographic Distribution and Market Penetration #

• Products reach over 1.7 million stores, with 89% active every quarter.
• The BSBF Program is active on 8 states.
• The Digital and Financial literacy program is active in 5 states, and 240 villages.
• Presence across 150 cities and towns.
• Focus on expanding reach to last-mile stores and modern trade shoppers.
• International sales reported, but detailed breakdown is not fully provided.

Segment-wise ROIC #

• ROIC is 99% up from 84%.

Operational Efficiency Metrics #

• Total Distribution Points (TDPs): Focus on both breadth and assortment, with a +20% reach uplift versus the previous year.
• Smile Stores: AI-ML led solution, customized recommendations to 1.7 million stores, +14% assortment increase over two-year CAGR.
• Modern Trade: Reinvented category shelves in select Reliance Stores.
• AmaZing: Image recognition-led merchandising solution, live in 5000+ stores, analyzing 3.1 million+ images with 95%+ accuracy.
• Manufacturing excellence: Digitization, AI Based end rounding.

Growth Initiatives and Challenges #

• Growth Initiatives: Focus on growing the core, driving premiumization, strengthening Palmolive, and simplifying operations through Machine Learning (ML) and Artificial Intelligence (AI).
• Environmental Sustainability: Significant strides, with three plants achieving net water positivity, 18% of energy mix from renewables, and 50% of toothpaste tubes recyclable.
• Challenges: Addressed the challenge of lower market traction for the Zig Zag toothbrush line through product, packaging, and proposition rejuvenation.
• ESG Initiatives: Expanded ESG scope, including employee well-being, product stewardship, and sustainable sourcing.
• CSR Initiatives: Bright Smiles, Bright Futures program, reaching over 5.2 million children, water access and augmentation in water-stressed villages.

Risk Assessment Framework #

Strategic Risks #

• Severity: High. Inability to adapt to shifting consumer preferences towards premium, specialized, and sustainable oral care products poses a substantial threat to market share.
• Likelihood: Medium. Market trends suggest a growing demand for premium and niche oral care products, indicating a probable shift in consumer behavior.
• Trend: Increasing. Growth in premiumization of the toothpaste category is a consistent trend.
• Mitigation Strategies: Re-launching core brands like Colgate Strong Teeth, Colgate Active Salt, and MaxFresh with superior formulas and targeted campaigns. Introduction of new products like the Visible White Teeth Whitening Pen.
• Control Effectiveness: Partially Effective. Relaunches and new product introductions have shown positive initial results, such as MaxFresh becoming the fastest-growing core brand. Brand awareness and consideration are at a high level in the category.
• Potential Financial Impact: Significant. Market share losses in the core segment and inability to capture the premium market can lead to reduced revenue and profitability.

Operational Risks #

• Severity: Medium. Disruptions in the supply chain, especially concerning key forest-risk commodities like palm oil, soy-based products, and pulp and paper packaging, can affect production.
• Likelihood: Medium. Dependence on global supply chains, especially for commodities, makes the company vulnerable to disruptions.
• Trend: Stable. Ongoing efforts to enhance supply chain resilience and responsible sourcing.
• Mitigation Strategies: Adherence to the Policy on Responsible and Sustainable Sourcing of Palm Oil and No Deforestation Policy. Supplier Responsible Sourcing Assessment (SRSA) Program to assess and audit suppliers. 73% of direct material spend aligns with responsible sourcing guidelines.
• Control Effectiveness: Effective. High percentage of direct material spend and contract manufacturing spend aligned with responsible sourcing guidelines, and 100% compliance of 3PL warehouse operations as per third-party assessments.
• Potential Financial Impact: Moderate. Supply chain disruptions can lead to increased costs and potential production delays.

Financial Risks #

• Severity: Low. Fluctuations in foreign currency exchange rates and interest rates.
• Likelihood: Medium. Exposure to foreign currency transactions is inherent in the business.
• Trend: Stable. The Company monitors currency risk
• Mitigation Strategies: Management uses the business model, such as pricing strategies, to cover the exposure.
• Control Effectiveness: Effective
• Potential Financial Impact: A 1% strengthening of the INR against key currencies could result in an additional pre-tax gain of H 6.29 lakhs. A 1% weakening could result in an equal but opposite effect.

Compliance/Regulatory Risks #

• Severity: Medium. Non-compliance with evolving regulations related to product safety, ingredient transparency, and environmental standards (e.g., plastic waste management, EPR).
• Likelihood: Low. The company has a strong focus on compliance and has demonstrated adherence to regulations.
• Trend: Stable. Ongoing monitoring of regulatory changes and proactive adaptation.
• Mitigation Strategies: Implementation of Global Quality Standards modeled after the US FDA’s Six-system approach. Compliance with Extended Producer Responsibility (EPR), achieving 107% collection of plastic waste. Adherence to ingredient safety policies and regulations.
• Control Effectiveness: Effective. Zero product recalls in FY 2023-24, indicating strong product quality and safety controls.
• Potential Financial Impact: Moderate. Non-compliance can result in penalties.

Emerging Risks #

• Severity: Medium.
• Likelihood: Medium
• Trend: Increasing. Evolving regulations regarding waste collection.
• Mitigation Strategies: Monitoring regulations and implementing changes to processes as applicable.
• Control Effectiveness: Effective.
• Potential Financial Impact: Moderate.

Strategic and Management Analysis #

Long-Term Strategic Goals and Progress #

• The Company is guided by its 2025 Sustainability & Social Impact Strategy, focusing on driving social impact, helping millions of homes, and preserving the environment.
• Targets related to social impact show mixed progress: 100% of employees are covered under wellbeing benefits. 26% Women representation in management roles, exceeding the 2025 goal of 25%.
• Environmental targets also demonstrate progress: Recyclable tubes constitute 50% of the toothpaste portfolio, 107% of plastic waste has been collected under EPR. Three of four industrial sites are Net Zero Water.
• The company aims to become a net zero water at India level by 2025.
• Targets have been set to transition to Net Zero carbon emissions, including 100% renewable electricity by 2030 and Net Zero Carbon by 2040.

Competitive Advantages and Market Positioning #

• Colgate-Palmolive (India) maintains a leadership position in both the toothpaste and toothbrush categories, with reported net sales increase.
• Brand awareness and consideration are reported to be at 67% (+600 bps) and 68% (+500 bps), described as highest in the category.
• The Company is described as India’s single most penetrated FMCG brand.
• A key part of brand strengthening included relaunches of core products (Colgate Strong Teeth, Colgate Active Salt, Colgate Total, MaxFresh)

Innovation Initiatives and R&D Effectiveness #

• R&D efforts are directed towards “revolutionizing oral, skin, and overall health.”
• The company’s R&D includes adapting technology received from Colgate-Palmolive Company, USA, for Indian consumers.
• The Colgate Clinical Innovation Institute (CCII) was launched in 2023 as a hub for innovation.
• Specific product innovations mentioned include Arginine-fluoride technology for teeth nourishment, MaxFresh with “UltraFreeze” technology, and the Visible White Teeth Whitening Pen.
• 50% of toothpaste tubes have transitioned to recyclable packaging, on track to 100% recyclability by end of FY 2024-25.

Management’s Track Record in Execution #

• The report references a strategic pillar which has doubled down on sustainability, mentioning specific metrics, such as reaching 18% renewable energy in their energy mix.
• Management has expanded CSR programs, reaching 5.2 million children with the “Bright Smiles, Bright Futures” program.
• The company uses digital tools to reduce complexity.
• The company’s domestic sales growth was 9.5% with 26.4% PAT.

Capital Allocation Strategy #

• The company declared a First Interim Dividend of J 22 per share, a second Interim Dividend of J 26 and a One-time Special Interim Dividend of J10 per share during the financial year.
• No final dividend was recommended for FY 2023-24.
• No amount was transferred to the general reserves during the financial year.

Organizational Changes and Their Impact #

• Key leadership changes included the retirement of Ms. Shyamala Gopinath (Non-Executive, Independent Director), and the retirement of Mr. Vikram Singh Metha and Dr. Shahani.
• New appointments include, Dr. (Mr.) Indu Bhushan and Mr. Sanjay Gupta as a Non-Executive and Independent Directors.
• Mr. Sriram V. was appointed as the Executive Vice President, End to End Supply Chain, succeeding Ms. Sarala Menon.

ESG Analysis of Colgate-Palmolive (India) Limited #

Environmental Metrics and Targets #

• Colgate-Palmolive (India) Limited aims for Net Zero Carbon by 2040 and 100% renewable electricity by 2030, with 18% of overall electricity currently from renewables.
• GHG emissions (Scope 1 & 2) decreased by 11.3% in FY 2023-24, totaling 33,276.6 tCO2e.
• Total energy consumption for FY 2023-24 was 222.64 TJ, with the share of renewable energy increasing by 236% and non-renewable energy reducing by 14% year-over-year.
• Three out of four industrial sites achieved Net Zero water status by FY 2023-24.
• The Company aims for 100% reusable, recyclable, or compostable plastic packaging by 2025, achieving 83% in FY2023-24.
• The Company aims to maintain TRUE Zero Waste certification for all owned plants.
• Under EPR, 37,466 MT of plastic waste was collected, with 25,839 MT recycled and 11,627 MT safely disposed.

Social Responsibility Programs #

• The Colgate Bright Smiles, Bright Futures® (BSBF) program reached over 5.2 million children in FY 2023-24, and has education, women’s empowerment, and water access programs.
• Keep India Smiling Scholarship programs supported students in dentistry, engineering, and sports.
• Digital & Financial Literacy programs for Women and Persons with Disabilities (PwDs) impacted 30,000 beneficiaries, linking them to government policies worth ₹600 million.
• Waste Management programs across 25 villages collected over 40 tonnes of dry waste and created 100 green jobs.
• Water Augmentation programs repurposed 46 million liters of water, benefiting over 14,000 beneficiaries across 40 villages.

Governance Structure and Effectiveness #

• A Board-level ESG & CSR Committee (ECC) oversees ESG Impacts, Risks, and Opportunities.
• The Board of Directors includes diverse members and independent voices experienced in ESG.
• The Company achieved 26% women representation in management roles, exceeding the 2025 target of 25%.
• No instances of child labor, forced labor, or violations of collective bargaining agreements were reported in FY 2023-24.
• Human Rights Due Diligence was conducted for 100% of direct business operations.
• 100% of 3PL warehouse operations are compliant as per third-party assessment.

Regulatory Compliance and Future Preparations #

• The Company adopted the Business Responsibility and Sustainability Reporting (BRSR) framework.
• Independent reasonable assurance of the BRSR was obtained.
• No instances of non-compliance regarding the health and safety impacts of products were reported in FY 2023-24.
• The company is compliant with the environmental acts as applicable to the company.

Future Projections and Guidance #

Personal Care (Including Oral Care) #

Management Guidance and Assumptions #

• Management aims for sustainable, profitable growth and superior shareholder returns.
• Ethical business practices and stakeholder well-being are prioritized.
• Management assumes continued leadership in the Toothpaste and Toothbrush categories.
• Management assumes steady growth.
• Management considers the current macroeconomic conditions for volatility.

Market Growth Forecasts #

• The toothpaste category in India is valued at H 18,000 Crores, with a 5-year CAGR of 5.3% in value growth.
• The oral care market in India is experiencing rapid growth, driven by increased awareness, rising incomes, and dental disease prevalence.
• Management considers that low per capita toothpaste usage in India.
• Urban demand is growing for innovative products (therapeutic, oral beauty).

Planned Strategic Initiatives #

• Drive category consumption and premiumization in Toothpaste.
• Gain market share in Toothbrush and devices.
• Build on the strengths of the Palmolive brand in Personal Care.
• Continue social impact programs (e.g., Bright Smiles, Bright Futures®).
• Focus on the digital transformation.
• Improve customer experience.

Capital Expenditure Plans #

• FY 2023-24 capex investments in specific technologies to improve environmental and social impacts of product and processes represented 11.6% of total capex.
• At Sanand: H 25.56 Lakhs on initiatives that will result in water savings.

Efficiency Improvement Targets #

• Reduce energy consumption and emissions through initiatives such as:
  • Electronically Commutated (EC) Fans at Baddi, saving 60,000 kWh annually.
  • Switching to Natural Gas (NG) for boilers at Baddi, achieving a 15% reduction in CO2 emissions in the pilot phase.
  • AI-powered metering systems across operations to monitor and reduce resource wastage.
  • Closed loop chiller systems
• Optimization of routes and leverage multimodal logistics.
• Reduce fixed power costs through energy-saving and monitoring systems.
• Achieve Net Zero Water at the India level by 2025.
• Maintain TRUE® Zero Waste Platinum Certification for all owned plants.
• Transition 100% of the toothpaste portfolio to recyclable tubes by 2025.
• Reduce waste by streamlined waste collection and improved segregation.
• Increase the use of renewable energy.
• Continue revenue growth management and “funding-the-growth” initiatives.

Potential Challenges and Opportunities #

• Challenges:

  • Macroeconomic volatility and geopolitical tensions.
  • Maintaining ethical standards and compliance across the value chain.
  • Consumer health and safety risks, including product recalls.
  • Water scarcity in certain regions (Sanand, Baddi).
  • Plastic waste management in rural areas.
  • Risk management for operations.

• Opportunities:

  • Increase in market share in Toothpaste through category consumption.
  • Growing oral care market in India, driven by increasing awareness and incomes.
  • Potential for category growth through increased per capita toothpaste usage.
  • Premiumization and demand for specialized oral care products.
  • Expansion in the Personal Care segment through the Palmolive brand.
  • Community development, fostering diversity and inclusion.
  • Sustainable packaging and responsible sourcing.

Scenario Analysis and Sensitivity #

• Currency Risk: A 1% strengthening of the INR against key currencies would result in a pre-tax gain of approximately H 6.29 lakhs; a 1% weakening would have an equal but opposite effect.
• Commodity Price Risk: A 1% increase in commodity prices would lead to an additional loss of approximately H 530 lakhs; a 1% decrease would have an equal but opposite effect.
• The company did not provide sensitivities for interest changes.
• Financial assets are stated at their fair value or amortised cost, which is approximately equal to the carrying costs.

Audit and Regulatory Analysis #

Auditor’s Opinion and Qualifications #

• The auditor’s opinion is unqualified, stating the financial statements give a true and fair view in conformity with accounting principles generally accepted in India.
• No qualifications, reservations, or adverse remarks were reported in the audit report for FY 2023-24.
• No instances of fraud were reported by the Statutory Auditors to the Audit Committee or Board.

Key Accounting Policies and Changes #

• The financial statements comply with Indian Accounting Standards (Ind AS) and are prepared on a historical cost basis, with exceptions for certain financial assets and liabilities, defined benefit plans, and share-based payments.
• No ammendments were made in accounting policies.

Internal Control Effectiveness #

• The Company maintains an adequate internal financial control system.
• The Audit Committee periodically evaluates the internal financial controls system.
• Internal auditors oversee financial processes, policies, and recommend robust internal financial controls.

Regulatory Compliance Status #

• The Company is compliant with the applicable provisions of the Companies Act, 2013, SEBI Listing Regulations, and Secretarial Standards.
• The Company is compliant with the applicable environmental laws/ regulations/ guidelines in India.

Legal Proceedings and Potential Impact #

• The Company has pending litigations, mainly related to tax demands.
• There were no significant or material orders passed by regulators, courts, or tribunals impacting the going concern status and future operations during FY 2023-24.
• Demand notices have been received related to the increase of lease rental for a property with a dispute, which are deemed as exorbitant.

Related Party Transactions #

• All related party transactions during FY 2023-24 were at arm’s length and in the ordinary course of business.
• All related party transactions were reviewed and approved by the Audit Committee.
• No material related party transactions, as defined by the SEBI Listing Regulations, were entered into during the year.

Subsequent Events #

• Subsequent to the year-end, the Company declared a Second Interim Dividend of ₹26 per share and a one-time special interim dividend of ₹10 per share.

Analysis of Accounting Quality and Regulatory Risk Assessment #

• The implementation and maintenance of accounting records are adequate for safeguarding assets and preventing fraud.
• The Company’s accounting software includes audit trail features, enhancing transparency and accountability.
• The Company’s adherence to a formalized, board-level ESG & CSR, shows a commitment to sustainability.
• The absence of qualifications in the auditor’s report suggests a high quality of financial reporting.
• Compliance with Ind AS, SEBI regulations, and the Companies Act demonstrates adherence to regulatory frameworks.
• Regular review of policies and procedures and transparent reporting is being made.
• The Company appears to be in compliance, indicating a lower regulatory risk.