Colgate-Palmolive (India) Limited
Your Directors have pleasure in presenting their Report and Audited Accounts of theCompany for the year ended March 31 2017.
1. Financial Results
| ||F.Y. 2016-17 ||F.Y. 2015-16 |
|Total Revenue (a+b+c) ||4560.01 ||4388.62 |
|Sales (Including Excise Duty) (a) ||4489.85 ||4318.98 |
|Other Operating Revenue (b) ||30.35 ||30.13 |
|Other Income (c) ||39.81 ||39.51 |
|Profit before Tax from ordinary activities ||851.43 ||866.63 |
|Profit before Taxation ||851.43 ||835.28 |
|Tax Expense ||274.00 ||254.11 |
|Profit for the year ||577.43 ||581.17 |
|Other Comprehensive Income (net of Tax) ||5.17 ||1.19 |
|Total Comprehensive Income ||572.26 ||579.98 |
|Balance brought forward ||595.27 ||340.21 |
|Adjustment of Depreciation as per Schedule-II || || |
|of the Companies Act 2013 || || |
|Profit available for appropriation ||572.26 ||579.98 |
|Balance transferred to Retained Earnings from ||3.65 ||2.43 |
|Share Options Outstanding Account || || |
|Appropriation : || || |
|Dividend ||(271.99) ||(271.99) |
|Dividend Distribution Tax ||(55.37) ||(55.37) |
|General Reserve || || |
|Balance carried forward ||843.82 ||595.27 |
2. Business Performance
India continued to consolidate its position as the fastest growing major economy in theworld with all leading indicators including GDP growth inflation deficits foreigncurrency reserves etc. trending in the right direction. Normal monsoons helped stimulaterural demand as well as ensured inflation was benign paving the way for interest rate cutsby the Central Bank. The recovery in demand was temporarily halted by the demonetizationexercise that temporarily sucked liquidity from the system putting short term pressure onbusinesses due to softer demand as well as a reduction in trade pipeline. The much awaitedlandmark tax reform in the form of GST bill was passed by parliament paving the way for aunified market in India and it is expected to go a long way to help businesses conducttheir affairs in a more efficient manner.
During the year your Company continued its focus on innovation built on consumerinsights while leveraging its strong heritage in the oral care category. Despite intensecompetition in the FMCG space your Company maintained its leadership position in oralcare and continued to offer customized products for each market segment. While theoperations in the first half of the year saw healthy growth in sales and profitabilitythe second half of the year was more challenging for your Company. Demonetization affectedsales adversely during the third quarter with some spillover into the fourth quarter. YourCompany responded by selectively extending credit terms advancing processing of claimsand invoices as well as running additional schemes to maintain robust distribution.
In the above context reported Net Sales for the Financial Year stood at Rs. 4489.8crore an increase of 4% over last year. Reported Net Profit after tax for the year wasRs. 577.4 crore a decline of 0.6% over the previous year. Reported Net
Profit after tax in the previous year included net tax reversals of Rs. 14.9 crorerelating to favourable tax assessments. Excluding the impact of these reversals NetProfit after tax for F.Y. 2016-17 increased by 2% over the previous year.
Your Company's Board declared three interim dividends aggregating to Rs. 10/- pershare for the financial year 2016-17. These dividends were paid on November 23 2016December 27 2016 and April 21 2017. Having declared three interim dividends yourCompany's Board has not recommended a final dividend for the financial year 2016-17.
4. Colgate is the #1 Most Trusted Brand in India
Colgate was once again voted as the #1 Most Trusted Brand' in India acrosscategories in The Economic Times' Brand Equity 2016 annual survey. This is the sixthconsecutive year that Colgate has been voted as the #1 Most Trusted Brand'. Colgateis the only brand to feature in the top three from 2001-2016 since inception of thesurvey.
5. Focus on Innovation and New Launches
In a highly competitive market environment it is essential for fast moving consumergoods companies to offer quality products that delight consumers. Your Company thereforestrongly believes that developing new innovative products by leveraging technology fromthe Parent Company is a key driver of profitable growth. Your Company is focused ondeveloping insight-driven innovation that provides value-added new products across allprice points. Beyond new products innovation is embedded into your Company's culture toencourage new ideas and process improvements in every aspect of the organization.
Your Company's continued commitment to grow its business by creating new andtechnologically advanced products through innovation are demonstrated by launching thefollowing products : In the toothpaste category your Company introduced innovativeproducts like:
Colgate Cibaca Vedshakti : An excellent natural solution to take care of all youroral care needs. The new natural toothpaste has the power of six natural ingredients.Developed using Colgate's expertise in oral care Colgate Cibaca Vedshakti is enrichedwith the power of nature that helps in keeping your family's teeth healthy andproblem-free for long.
Colgate Sensitive Clove : Our first sensitivity toothpaste with naturalingredient. Colgate Sensitive Clove a natural product based toothpaste providesprotection against sensitivity.
Formulated with Potassium Nitrate and Clove Oil it penetrates deep into open dentintubules to soothe sensitive areas of teeth.
Colgate Kids Toothpaste : A new range of toothpastes for kids aged 2 to 5 yearswhich has two delightful flavours and exciting animal cartoons.
Colgate MaxFresh Power Freeze : A new invigorating gel toothpaste infused withcooling crystals which dissolve as you brush for a new dimension of freshness.
In the toothbrush category your Company introduced innovative products like: ColgateA1 Toothbrush : A new product that has been launched to address the consumer needs fordense and long lasting bristles. Colgate Star Toothbrush : An entry toothbrushproduct that has been launched in select markets to drive penetration at the bottom of thepyramid this toothbrush also comes with a tongue cleaner. Colgate Slim Soft AdvancedToothbrush : It has dual core bristles that gently reach 7X deeper below the gum lineand makes gums 300% healthier.
In the Personal Care category your Company introduced innovative products like : PlaxSpicy Fresh : This spicy fresh mouthwash variant has an intense Spicy Fresh sensationof
Eucalyptus & Clove for lasting fresh breath without the burning feeling. Thisalcohol free mouthwash removes 99% of germs & helps control bad breath 24/7.
Palmolive Body Wash Men's Range : Imported from Europe Palmolive Men bodywashes are available in three exciting variants: Palmolive Men Energising-enriched withMagnesium & Citrus Oil Palmolive Men Refreshing-enriched with Sea Minerals &Eucalyptus Oil and Palmolive Men Sensitive-enriched with Aloe Vera extract & VitaminE this variant nurtures your sensitive skin.
Palmolive Men Shaving Foams : The product helps soften your beard as you shaveallowing your razor to get close to your skin without causing skin irritation. Importedfrom Europe and available in two exciting variants: Palmolive Men Classic and PalmoliveMen Cool.
Innovations like these help your Company to maintain the position as India's MostTrusted Brand today and hopefully will for many more years.
Your Company is committed to sustainability with focused and measureable goals. YourCompany values sustainability through a commitment to the quality of the environment andextends it to the long term well-being of the people and communities it serves. Throughour sustainability efforts we are helping to ensure that the business grows responsiblywhile promoting the well-being of future generations.
Considering this your Company developed a plan that guides its sustainabilityinitiatives with key goals in the following three areas viz. People Performance andPlanet.
The broad aspects covered in these goals are as under :
- Promoting healthier lives Contributing to the Communities where we live and work.
- Delivering Products that delight consumers and respect our Planet.
- Making every drop of water count reducing our impact on the climate and theenvironment.
Your Company believes that integrating sustainability into its everyday operations willhelp in making better business decisions and improve peoples' lives. The sustainabilitystrategy will also continue to increase consumer loyalty provide a competitive advantageand help to ensure long-term shareholder value. Amongst the sustainability initiatives inthe area of People
Performance and Planet listed below are a few initiatives undertaken during the year :
- 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;
- 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; and
- Reusage of waste water from the factories.
More details on energy conservation measures undertaken by your Company are mentionedin Annexure - 3 to this report.
7. Responsibility Statement
Pursuant to Section 134(3)(c) of the Companies Act 2013 your Company's Directorsbased on the representations received from the Management confirm : a) that in thepreparation of the annual accounts the applicable accounting standards have been followedand that no material departures have been made from the same; b) that they have inselection of the accounting policies consulted the statutory auditors and have appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period; c) that to the best oftheir knowledge and information they have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) that they have prepared the annual accountson a going concern basis; e) that they had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and f) that they have had devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand operating effectively.
8. Corporate Governance
A separate report on Corporate Governance along with the Auditors' Certificate on itscompliance is attached as Annexure - 1 to this Report.
9. Corporate Social Responsibility
Your Company's success is linked to the Company's values of Caring Global Teamwork andContinuous Improvement. Your Company cares about people: Colgate people customersshareholders business partners and the community at large. Your Company works towardsprotecting the environment improving and enhancing the quality of life of individuals andcommunities through several partnerships and associations. Your Company and its employeesare committed to bring in a positive change in the lives of many underserved communities.Your Company undertakes its Corporate Social Responsibility (CSR) activities through avariety of effective programs. Some of the key CSR activities which your Company hasundertaken during the year are in the areas of Promoting preventive health care Promotingeducation Addressing inequalities and Conservation of natural resources. These activitiesare broadly in accordance with the Schedule VII of the Companies Act 2013. The Board ofDirectors and the CSR Committee review and monitor from time to time all the CSRactivities being undertaken by the Company. The following are the key CSR programsundertaken by your Company during the Financial
Year 2016-17 : i) Bright Smiles Bright FuturesTM ii) OralHealth Month iii) A Positive Step iv) Supporting Pratham v) SupportingSeva Mandir vi) Skill development program for rural youth vii) Waterfor People
The details of the above programs/activities are elaborated in the Annual CSR Reportattached as Annexure - 2 to this Report.
The contents of the CSR Policy as well as the CSR programs undertaken by the Companyare available on the Company's website.
10. Employee Relations
The employee relations in the Company continued to be healthy cordial and progressive.
Your Company's culture is one that reflects our values of caring global teamwork andcontinuous improvement as well as our unwavering commitment to integrity in everything wedo. Our employees are our greatest asset and we're committed to maintaining anenvironment that celebrates their differences values their contributions and providesopportunities for personal and professional growth. The diversity of our employees givesus an advantage over our competitors and continues to drive our success. Your Companyrecognizes its responsibility and continues to strive to provide a safe workingenvironment for its employees free from sexual harassment and discrimination. YourCompany also has a Policy on Prevention of Sexual Harassment which is reviewed by theInternal Complaints Committee (ICC) at regular intervals. "Managing WithRespect" is the way Colgate people put your Company Values (Caring Global Teamworkand Continuous Improvement) into action. Each and every employee is expected to work withall stakeholders (other employees customers consumers suppliers etc.) in a respectfulmanner. Each employee is also expected to strictly follow your Company's Code of Conductand any violation is appropriately addressed. By fully including ethics and integrity inthe ongoing business relationships and decision-making your Company demonstrates acommitment to a culture that promotes the highest ethical standards. During the financialyear 2016-17 four complaints were received investigated and resolved by the ICC. Thereare no pending complaints at the end of the year.
11. Trade Relations
Your Directors wish to record their appreciation of the continued unstinted supportand co-operation from its retailers stockists suppliers of goods/ services clearing andforwarding agents and all others associated with it. Your Company will continue to buildand maintain a strong association with its business partners.
12. Particulars of Employees
Information as per Section 197 of the Companies Act 2013 (the Act') read withthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 formspart of this Report as Annexure 6.
Details of employee remuneration in accordance with the Act and Rules mentioned aboveare available at the Registered Office of the Company during business hours on any workingday of the Company up to the date of 76th Annual General Meeting. Anyshareholder interested in obtaining a copy of the said statement may write to the
Secretarial Department at the Registered Office of the Company. Such details are alsoavailable on your Company's website.
13. Energy Conservation Technology Absorption and Foreign Exchange
The information required under Section 134(3)(m) of the Companies Act 2013 read withthe Companies (Accounts) Rules 2014 with respect to conservation of energy technologyabsorption and foreign exchange earnings/outgo is appended hereto as Annexure 3 andit forms part of this Report.
14. Directors and Key Managerial Personnel
During the year following changes took place in the Board of Directors and the KeyManagerial Personnel : i) Resignation of Mr. Niket Ghate as the Whole-time Director &Company Secretary effective December 31 2016 as he decided to pursue his career outsideColgate; ii) Cessation of Mr. Godfrey Nthunzi as the CFO and Whole-time Director effectiveOctober
6 2016 and October 28 2016 respectively consequent upon his promotion and movement toanother Colgate division; iii) Appointment of Mr. M. S. Jacob as the CFO and Whole-timeDirector effective October 7 2016 and October 28 2016 respectively; iv) Appointment ofMr. M. Chandrasekar as a Whole-time Director effective January 2 2017; and v) Appointmentof Mr. Makarand Karnataki as the Company Secretary & Compliance Officer effectiveJanuary 2 2017.
Your Board places on record its appreciation for the valuable contributions made by Mr.Niket Ghate and Mr. Godfrey Nthunzi during their tenure on the Board of the Company.
All the Independent Directors (except Ms. Shyamala Gopinath) were appointed by theshareholders for a term of five consecutive years effective July 25 2014.
Ms. Shyamala Gopinath was appointed by the shareholders for a term of five consecutiveyears effective July 30 2015.
None of the Independent Directors are liable to retire by rotation.
The Independent Directors of your Company have given a declaration that they meet thecriteria of independence as prescribed under the Companies Act 2013 and SEBI ListingRegulations.
Mr. Issam Bachaalani Managing Director Mr. M. S.
Jacob Whole-time Director & CFO and Mr. Makarand Karnataki Company Secretary& Compliance Officer are the Key Managerial Personnel of the Company.
A detailed profile of all the directors of your Company is available on the websitewww.colgatepalmolive.co.in
15. Familiarization Program
Your Company for many years now has been familiarizing the Independent Directors onits Board with detailed presentations by its business functional heads on the Companyoperations strategic business plans new products and technologies including significantaspects of the Industry and its future outlook. Details of familiarization programsextended to the Non-Executive & Independent Directors during the year are alsodisclosed on the Company website from time to time athttp://www.colgate.co.in/Colgate/IN/Corp_v2/RelatedInformation/Familarization-Programme.pdf
The Board of Directors of your Company from time to time has approved and framedvarious Policies under The Companies Act 2013 and its applicable Rules & Regulationsfor better governance and administration of your Company. Some of the important Policiesthat were framed by your Board include the following :
i) Nomination & Remuneration Policy : This policy sets out the objective termsof reference functions and scope of the Nomination & Remuneration Committee fordetermining qualifications experience independence etc. relating to the appointment andremuneration for the directors key managerial personnel and other employees of theCompany.
ii) Corporate Social Responsibility Policy : This policy sets the scope foridentification of areas where the CSR activities will performed evaluation of CSRactivities review the CSR spending vis-a-vis the activities implemented and monitoringthe process of CSR projects / programs of the Company.
iii) Risk Management Policy : This policy provides the framework for identificationrisks of the Company risk assessment and prioritization loss prevention measures andother risk management measures for the Company.
iv) Policy on Related Party Transactions : This policy intends to regulate thetransactions between the Company and its related parties based on the laws and regulationsapplicable to the Company from time to time.
v) Policy on determination of Materiality of Event or information : The objectiveof the Policy is to determine the materiality of event or information of the Company whichrequires disclosure to the stock exchanges pursuant to the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
vi) Record Management Policy : This policy establishes general guidelines forretaining preserving and when appropriate disposing of Records. vii) Code of Conductfor dealing in Company's Securities : Pursuant to the SEBI (Prohibition of InsiderTrading) Regulations 2015 your Company has framed a Code of Conduct for the designatedpersons for dealing in the securities of the Company. viii) Dividend DistributionPolicy : This policy provides the circumstances under which a shareholder may or maynot expect the dividend. Also details of the financial parameters and internal andexternal factors which shall be considered for declaration of dividend.
The Board of Directors of your Company has established various committees of the Boardto assist in discharging its duties. These include an Audit Committee Nomination &Remuneration Committee Risk Management Committee Stakeholder Relationship Committee andCorporate Social Responsibility Committee. The Board has approved the terms of referencefor each of these committees. All the Committees of the Board hold their meetings atregular intervals and make their recommendations to the Board from time to time.
The broad terms of reference of the said Committees are stated in the CorporateGovernance Report.
18. Annual Performance Evaluation by the Board
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 the Board has carried out an AnnualPerformance Evaluation of its own performance the Directors individually as well as theevaluation of the working of the Committees. The manner in which the evaluation has beencarried out has been explained in the Corporate Governance Report.
19. Vigil Mechanism
Your Company has an effective Vigil Mechanism system which is embedded in its Code ofConduct. The Code of Conduct of your Company serves as a guide for daily businessinteractions reflecting your Company's standard for appropriate behaviour and livingcorporate values. The Code of Conduct applies to all Colgate people including DirectorsOfficers and all employees of the Company. Even your Company vendors and suppliers arealso subject to these requirements as adherence to the Code is a prerequisite forconducting business with your Company.
The Code of Conduct Hotline is available on the Company website to report any genuineconcerns about unethical behaviour any actual or suspected fraud or violation ofCompany's Code of Conduct.
20. Loan Guarantees and Investment
Particulars of loans guarantees and investment made by the Company pursuant to Section186 of the Companies Act 2013 are given in the Notes to the Financial Accounts.
21. Related Party Contracts & Arrangements
All related party transactions done by the Company during the financial year were atarm's length and in ordinary course of business. All related party transactions wereplaced in the meetings of Audit Committee and the Board of Directors for their necessaryreview and approval. During the financial year your Company has not entered into anymaterial transaction as per the SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 with any of its related parties which may have potential conflict withthe interest of the Company at large. Disclosures pursuant to Accounting Standards onrelated party transactions have been made in the notes to the Financial Statements. Toidentify and monitor significant related party transactions
Company has also framed a Policy on the Related Party Transactions and the same isavailable on the Company's website.
All the related party transactions entered during the year were in Ordinary Course ofthe Business and on Arm's Length business and hence disclosure unde section 134(3)(h) inForm AOC-2 of the
Companies Act 2013 is not applicable.
M/s. Price Waterhouse (Firm Registration
No. 301112E) Chartered Accountants has been the Auditors of the Company for a periodmore than ten years. Pursuant to Section 139 of the Companies
Act 2013 an audit firm which has completed two terms of five consecutive years cannotbe re-appointed as the Auditor of the Company.
Accordingly the twofiveconsecutive terms of years and the transitional period of threeyears of the present auditors expires at the conclusion of the forthcoming 76thAnnual General Meeting. The Board of Directors of the Company based on the recommendationof the Audit Committee propose the appointment of M/s. S R B C & CO LLP CharteredAccountants (Registration No. 324982E/E300003) as the Statutory Auditors of theCompany.
The Company has received a written consent eligibility letter and other necessarydeclarations and confirmations from M/s. S R B C & CO LLP. stating that they satisfythe criteria provided under Section 141 of the Companies Act and that the appointment ifmade shall be in accordance with the applicable provisions of the Act and rules framedthereunder.
If approved by the Members the appointment of M/s. S R B C & CO LLP CharteredAccountants as the Statutory Auditors will be for a period of five consecutive yearscommencing from the conclusion of 76th Annual General Meeting till theconclusion of the 81st Annual General Meeting subject to ratification of theappointment by
Members at every Annual General Meeting held after this Annual General Meeting.
The Audit report for the financial year 2016-17 does not contain any qualificationreservation or adverse remarks.
23. Secretarial Auditor & Secretarial Audit Report
The Board had appointed M/s. S.N. Ananthasubramanian & Co. Company Secretaries inWhole-time Practice to carry out Secretarial Audit under the provisions of Section 204 ofthe Companies Act 2013. The report of the Secretarial Auditor in Form MR-3 is annexed tothis report as Annexure 4. The Secretarial
Auditors' Report for the financial year 2016-17 does not contain any qualificationreservation or adverse remarks.
24. Extract of Annual Return
Pursuant to the Section 92(3) of the Companies
Act 2013 extract of the annual return in Form
MGT-9 is annexed to this report as Annexure 5.
25. Business Responsibility Report
The Business Responsibility Report for the
Financial Year 2016-17 as stipulated under
Regulation 34 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 is annexed to this report as Annexure 7.
26. Significant and Material Orders passed by the
Regulators or Courts
There are no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and operations of the Company in future.
Your Directors sincerely appreciate the high degree of professionalism commitment anddedication displayed by employees at all levels. Your Directors also wish to place onrecord their gratitude towards the shareholders for their continued support andconfidence.
| ||On behalf of the Board |
|Issam Bachaalani ||R.A. Shah |
|Managing Director ||Vice-Chairman |
|(DIN : 06975320) ||(DIN : 00009851) |
|M.S. Jacob ||M. Chandrasekar |
|Whole-time Director & CFO ||Whole-time Director |
|(DIN : 07645510) ||(DIN : 07667965) |
|May 15 2017 || |