COLGATE-PALMOLIVE (INDIA) LIMITED
ANNUAL REPORT 2008-2009
Statement delivered by the Chairman, Mr. Justin Skala, at the 68th Annual
General Meeting of Colgate-Palmolive (India) Limited held in Mumbai on
Friday, July 17, 2009.
Ladies and Gentlemen:
On behalf of the Board of Directors and on my own behalf, I extend a very
warm and cordial welcome to all of you to the 68th Annual General Meeting
of your Company.
It gives me immense pleasure to address you today and present the annual
audited accounts for 2008-09 not only because the results are excellent but
also because the excellence has come in the face of a challenging economic
The year that has passed by was a difficult year. The global economy reeled
under severe recession. There was an atmosphere of pessimism and anxiety
all around. Businesses and corporations the world over were in the mode of
recovery rather than expansion. In this environment, I am pleased to state
that your Company has delivered a very good performance.
Sales for the year increased by 5 per cent to Rs. 1,695 crore as against
Rs.1,473 crore during 2007-08. Toothpaste registered an impressive volume
growth of 3 per cent.
The profit after tax for the year grew by 25 per cent to Rs.290 crore as
against Rs.232 crore during 2007-08.
Considering the Company's encouraging financial results, strong cash flow
and positive growth momentum, your Board declared two interim dividends of
Rs.9 and Rs.6 per share aggregating Rs. 5 per share for the financial year
2008-09 as against Rs.13 per share during 2007-08.
Your Company ended 2008-09 with an excellent business performance and began
2009- 0 with positive business momentum with a hope that the economy will
revive swiftly and the country will be blessed with a normal monsoon. Your
Company will continue to manage its business through a combination of
judicious pricing and aggressive cost savings to deliver margin
improvements while continuing to make commercial investments in its
Your Company's continued success is primarily on account of its sharp focus
on four clearly defined strategic initiatives, namely, getting closer to
consumers, the dental profession and customers; driving innovation across
the organization; increasing effectiveness and efficiency everywhere and
strengthening leadership. The benefits of focusing on these initiatives are
clearly reflected in the business results of your Company.
Let me briefly highlight each one of these strategic initiatives.
a) Getting closer to consumers, the dental profession and customers:
Strengthening relationships with consumers, the dental profession and
customers is critical to the continued success of your Company's brands in
the marketplace and to generating profitable growth.
To best reach consumers, both in and out of the store, Colgate uses
engaging integrated marketing communications that include a mix of
traditional and new media as well as creative promotional activities.
Colgate's shopper marketing program, which focuses on in-store behaviour,
is another way by which the Company identifies new growth opportunities for
itself and its retail partners. With over 50 per cent of consumer purchase
decisions being made in the store, Colgate shopper marketing program
analyzes in-store behaviour of shoppers to convert them into buyers. The
research showed that shoppers view chemists and druggists as authoritative
oral health professionals, who influence 30 per cent of toothbrush
purchases in that retail environment. As a result, your Company focuses on
educating chemists and druggists on the benefits of Colgate products and
provides them with specially designed in-store displays to help communicate
the message to shoppers. This not only enhances Colgate image as a
therapeutic leader but also increases chemist/druggist recommendations and
Equally important in driving growth is the Company's relationship with the
dental professionals. Their endorsements drive trial, long term loyalty and
market leadership. Your Company has expanded the size of its professional
sales force that visits dental clinics and is placing a sharper focus on
partnering with academia and key opinion leaders. Partnering with the
dental professionals strengthens Colgate's credibility as an oral care
authority and helps grow the Company's market shares.
Another critical component of your Company's business strategy is the
alignment of its goals and strategies with those of its customers. Colgate
has developed global commercial selling principles that apply to its
relationships with all customers, regardless of their size or location.
These principles provide specific guidelines on how to achieve business
goals while maintaining Colgate's commitments to its values and to
upholding the highest ethical standards in its business dealings. To help
ensure full compliance with the principles, all the Company's commercial
personnel have completed the training either online or in classroom. The
principles have been extremely well received.
b) Driving innovation across the organization:
One of the factors instrumental for the Company's success is its sharp
focus on innovation across the organization from product development to the
supply chain to all business functions and processes.
The Company accelerates innovation by building collaborative partnerships
with leading suppliers, research institutes and other external experts. In
this regard, your Company continues to receive excellent support and
assistance from Colgate-Palmolive Company. Your Company enjoys unrestricted
access to the repertoire of Colgate's brands, technologies, business
processes and global best practices. Your Company is able to take full
advantage of Colgate's global scale particularly in the fields of brand
marketing and advertising, global supply chain, procurement of material and
c) Increasing effectiveness and efficiency everywhere:
Your Company continues to drive effectiveness and efficiency across the
organization by adopting several cost-saving measures to deliver profitable
growth. Some of the cost-saving measures taken during the year include:
i) Nepal subsidiary:
Considering the state of political instability, the economic hardships and
the deteriorating law and order situations in Nepal, your Company divested
its entire shareholding in Colgate-Palmolive (Nepal) Private Limited.
Accordingly, your Company ceased its manufacturing operations at Nepal
although it continues to export its products to service the Nepal market.
ii) Hyderabad subsidiary:
Your Company proposed a tax efficient amalgamation of SS Oral Care Products
Private Limited with your Company and accordingly, the amalgamation of the
subsidiary with your Company became finally effective based on the order
issued by the Andhra Pradesh High Court on February 24, 2009.
iii) Goa subsidiaries:
The two subsidiaries at Goa also finally amalgamated in terms of the order
issued by the Bombay High Court at Goa on April 27, 2009. This will help
the subsidiary avail the beneficial synergies of manufacturing operations
and significantly improve the operational efficiency of the unified
The toothpaste undertakings at Goa substantially expanded its productive
capacity during the year. Your Company's entire toothpaste requirements is
now being met by the Goa and Baddi facilities.
iv) Strengthening leadership:
Your Company's continued success is tightly linked to strengthening the
personal leadership at all levels of the organization. For Colgate people,
leadership entails living the Company's strong global values of Caring,
Continuous Improvement and Global Teamwork along with the principles of
Managing with Respect. These values and principles have long been the
foundation of the Company's culture, which values and respects the
contributions of all Colgate people and places a high priority on
conducting business with the highest ethical standards.
Developing the next generation of leaders is an integral part of Colgate's
business strategy. The Company uses a formal process to identify next-
generation leaders early in their careers.
Their career paths are laid out to build an array of required skills and
prepare them for leadership roles. As their careers progress, they are
given broad in-market experience across geographies and functions in
addition to training that instills Colgate's values and culture and
strengthens leadership and functional skills.
We are, therefore, confident that with the quality and potential of our
people and by focusing on our clearly defined strategic initiatives, your
Company is well equipped to achieve the business goals set for the year.
Looking ahead, India continues to be one of the most exciting markets in
the world. We see tremendous and continued growth potential here. The year
ahead is bound to be yet another full of challenges. Your Company is well
positioned to address these challenges through its experienced management
team, dedicated employees and, of course, with the continued support of the
Colgate Global company.
On a final note, I would like to sincerely thank all my colleagues on the
Board for their continued assistance, support and wise counsel.
I would also like to express my appreciation for the efficient and loyal
services rendered by the Company's employees at all levels. Without their
daily efforts and contributions, our success would simply not be possible.
I must also express my gratitude to our many business partners, our
stockists, distributors, retailers and suppliers for their continued
Most importantly, I want to thank you, our shareholders, personally and on
behalf of the Board for your sustained support and confidence in the
Management of your Company.
We remain, as always, committed to serving you and we will continue to do
our best to deliver superior value to all stakeholders.
Mr. Justin Skala
Date : July 7, 2009
Colgate Research Centre
Main Street, Hiranandani Gardens
Powai, Mumbai 400 076