Colgate-Palmolive (India) Ltd.
|BSE: 500830||Sector: Consumer|
|NSE: COLPAL||ISIN Code: INE259A01022|
|BSE LIVE 15:50 | 16 Jan||912.60||
|NSE LIVE 15:54 | 16 Jan||911.00||
|Mkt Cap.(Rs cr)||24822.72|
|Mkt Cap.(Rs cr)||24822.72|
Colgate-Palmolive (India) Ltd. (COLPAL) - Director Report
Company director report
Colgate-Palmolive (India) Limited
Your Directors have pleasure in presenting their Report and Audited Accounts of theCompany for the year ended March 312016.
1. Financial Results
2. Business Performance
Indias economic growth rate as measured through GDP showed signs of steadyrecovery in F.Y. 2015-16 at around 7.6% as compared to 7.2% in 2014-15. Much of thatimprovement is attributed to increase in urban consumption and infrastructure investmentsby the Government. However the rural consumption in 2015 has remained subdued due to twoconsecutive weak monsoons and drought conditions in some of the states in India.
Indias Wholesale Price Index fell for the 17th consecutive month untilMarch 2016 because of cheaper fuel and manufactured goods indicating weak demand and lackof pricing power for the producers. Inflation in 2015-16 continued to moderate steadily asthe Consumer Price inflation index has declined to 5% from 5.9% in 2014-15. The CentralBank which primarily looks at retail inflation data had in the month of February 2016cut the policy rate by 0.25% and projected retail inflation at about 5% this fiscal year.The Indian Meteorological Department has forecasted an above normal monsoon this yearwhich will help in improving rural economy and drive the consumption.
While the economic environment for the year looks positive a revival in privateinvestment increase in rural consumption and good monsoon will remain as criticaleconomic drivers of growth in F.Y. 2016-17. While the fiscal policies of the governmentare being focused around growing rural economy and improving public infrastructurepassing of reforms like GST could give further impetus to Indias economic agenda.
Notwithstanding increased competitive intensity and low consumer demand in previousfinancial year your Company delivered good results.
Your Companys Net Sales for the F.Y. 2015-16 stood at ' 4132.16 Crore ascompared to ' 3954.78 Crore for the previous financial year. The Organic growth of theCompany stands at 10% offset by phasing out of fiscal benefits in the State of HimachalPradesh to give a reported growth of 4% over the same period of the previous year.
Your Companys Net Profit after Tax for the F.Y. 2015-16 is up at 32% whichexcludes the impact of phasing out of fiscal benefits in the State of Himachal Pradesh andrestructuring cost related to toothpowder manufacturing facility at Aurangabad in theState of Maharashtra. Including the aforesaid impact the Net Profit after Tax of yourCompany for the F.Y. 2015-16 is ' 576.51 Crore as compared to ' 558.98 Crore for theprevious financial year.
Your Company has made outstanding market share progress with Toothpaste at 55.7% andToothbrushes at 46.2% during the period of January to April 2016. This is a result ofongoing innovation supported by impeccable execution in all retail environments by yourCompany. Your Companys efforts in the area of efficiency continue to pay-off withits Funding the Growth initiatives which deliver savings allowing us toimprove our investment levels while also delivering improved profitability.
3. Bonus Issue
The Board of Directors of your Company with a view to encourage the participation ofretail investors recommended a bonus issue of one equity share for every equity shareheld at their meeting held on July 30 2015. The said recommendation for issue of Bonusequity shares was approved by the shareholders through postal ballot and e-Voting onSeptember 10 2015.
Your Board declared three interim dividends aggregating ' 10/- per share on theexpanded capital base for the F.Y. 2015-16. These dividends were paid on November 262015 December 23 2015 and April 21 2016. Having declared three interim dividends yourBoard has not recommended a final dividend for the F.Y. 2015-16.
5. Colgate - the # 1 Most Trusted Brand in India
Colgate was once again voted as the #1 Most Trusted Brand in India in theEconomic Times - Brand Equity Survey across categories in 2015. This is the fifthconsecutive year that Colgate has been voted as the #1 Most Trusted Brand. Itis pertinent to note that Colgate is the only brand to feature in the top three from2001-2015 since the inception of the survey.
6. Focus on Innovation and New Launches
Your Company strongly believes that introducing new innovative products by leveragingtechnology from the Parent Company is a key driver of profitable growth. Your Company isfocused on innovation that provides value-added new products across all price points.Beyond new products innovation is embedded in your Companys culture that encouragesnew ideas and process improvements in every aspect of the organization.
Your Companys continued commitment to grow the oral care category by adoptingadvanced products has resulted in several new product launches that are mentioned as below:
In the toothpaste category the Company introduced innovative products like :
Colgate Total Charcoal Deep Clean
Toothpaste a product which combines the science of Colgate Total with microcharcoal particles. The result is a clinically proven unique and superior anti-germtechnology with ultra-micro charcoal particles that prevents germ build-up on all mouthsurfaces viz. teeth gums cheeks and tongue.
Colgate Active Salt Neem Toothpaste
addresses the inflammatory gum problem of pyorrhea. Its unique formula containing Salt& Neem helps strengthen the weakening gums and keep Pyorrhea away.
Colgate Sensitive Pro-Relief (CSPR)
Enamel Repair Toothpaste a scientifically advanced technology that provideslong-term relief from the problem of tooth sensitivity.
In the toothbrush category the Company introduced innovative products like :
Colgate 360 Toothbrush range :
360 Charcoal Gold a never-seen- before gold coloured toothbrush thatprovides superior whole mouth cleaning. It has Charcoal infused spiral bristles whichgently polish teeth and give a deep & gentle clean.
360o Whole Mouth Clean provides 151% more germ removal than anyordinary toothbrush.
360o Visible White with its spiral bristles and whitening cupseffectively removes surface stains.
360o Floss-Tip reaches 4X deeper with its FlossTip technologythat is designed to clean along the gumline.
Colgate ZigZag Black Toothbrush a line extension of one of Indiasmost popular toothbrush brand Colgate ZigZag. As the market leader Colgatehas introduced many firsts in the toothbrush category and Colgate ZigZag Blackis the first black toothbrush in the Mass Segment.
Colgate Pain Out - Your Company has recently introduced a completely new segment of"express Relief from Tooth Pain" with the launch ofinnovative ProprietaryAyurvedic Medicine "Pain Out". Colgate Pain Out is a revolutionary new productwhich provides express symptomatic relief from tooth pain with just one drop. Thisfirst-of-its-kind product has been conceptualized and introduced by your Company in India.Adopting innovations like these help reaffirm your Companys position as a thoughtleader in the Oral Care category and as a Company which strives to understand and addressthe needs of the consumers.
In the Personal Care category your Company has introduced for the first time PalmolivesFoaming Hand Wash range in two variants - one with delicate notes ofRaspberry and one with a fresh bouquet of Lime & Mint. Therich foam from these hand washes gently clean and hydrate hands to make them feel soft& smooth. Your Company has also introduced two new variants of liquid Hand Wash -The Palmolive Black Orchid & Milk with milk proteins & a sensualscent of exotic flowers and The Palmolive Sea Minerals with 100% naturalorigin sea salt.
Innovations like these will help your Company maintain its position of Indiasmost trusted Brand today and hopefully for many years to come.
7. New projects and expansions
As stated in the previous Annual Reports your Company had set up the state-of-the-artToothpaste manufacturing facility at Sanand in Gujarat in the year 2014 and a new state-of-the-art Toothbrush manufacturing facility at Sricity in Chittoor District in AndhraPradesh in the year 2015. The above facilities have already commenced commercialproduction and are catering to the domestic and the export markets (for Sanand Toothpastefacility).
Your Company with a long term vision of sustaining profitable growth has madeadditional capital investments during the year for expanding the existing manufacturingcapacities at its above Toothpaste and Toothbrush manufacturing facilities. Your Boardstrongly believes that such additional investments on capacity expansions have been madeto grow the business and deliver a profitable growth over the long term.
8. Expiry of Fiscal Incentives at Baddi Facility
As stated in the Annual Report for the F.Y. 2014-15 the income tax and excise benefitsto the Companys manufacturing facility at Baddi expired in the year 2015 and postits expiry the Company has been paying applicable Excise duty on the production andIncome tax on the Profits from the said facility.
Your Company is committed to sustainability with focused and measurable 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 ensuring that the business grows responsibly whilepromoting the well-being of future generations.
Considering this your Company developed a plan that guides its sustainabilityinitiative with key goals in the following three areas viz. People Performance andPlanet.
The broad aspects covered in these goals are as under :
Your Company believes that integrating sustainability into its everyday operations willhelp in making better business decisions and improve peoples lives. Thesustainability strategy will also continue to increase consumer loyalty provide acompetitive advantage and help to ensure longterm shareholder value. Amongst thesustainability initiatives in the area of People Performance and Planet listed are a fewinitiatives 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; and
- Nil material to landfill
More details on energy conservation measures undertaken by your Company are mentionedin Annexure - 3 to this Report.
10. Responsibility Statement
Pursuant to Section 134(3)(c) of the Companies Act 2013 your Directors based on therepresentations received from the Management confirm :
a) that in the preparation of the annual accounts the applicable accounting standardshave 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 statutoryauditors and have applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany 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 andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
d) that they have prepared the annual accounts on a going concern basis;
e) that they have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectively; and
f) that they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
11. Corporate Governance
A separate report on Corporate Governance along with the Auditors Certificate onits compliance together with the Management Discussion and Analysis Report is attached asAnnexure - 1 to this Report.
The details of number of meetings of the Board and its Committees are given in theCorporate Governance Report.
12. Corporate Social Responsibility
Your Companys success is linked to the Companys values of Caring GlobalTeamwork and Continuous Improvement. Your Company cares about people : Colgate peoplecustomers shareholders business partners and the community at large. Your Company workstowards protecting the environment improving and enhancing the quality of life ofindividuals and communities through several partnerships and associations.
Your Company and its employees are committed to bring in a positive change in the livesof many underserved communities. Your Company undertakes its Corporate SocialResponsibility (CSR) activities through diverse effective programs. Some of the key CSRactivities which your Company has undertaken during the year are in the areas of Promotingpreventive health care Promoting education Addressing inequalities and Conservation ofnatural resources. These activities are broadly in accordance with the Schedule VII of theCompanies Act 2013.
Your Board of Directors and the CSR Committee review and monitor from time to timeall CSR initiatives being undertaken by the Company.
Following are the key CSR programs undertaken by your Company during the Financial Year2015-16 :
Bright Smiles Bright Futures
Oral Health Month
A Positive Step - A Program in collaboration with Network in Thaneby People Living with HIV a Non-Governmental Organization (NGO) for addressinginequalities and promoting education for HIV infected and affected children. Under thisinitiative 79 children are supported by your Company during the year.
Supporting Pratham - An NGO in the areas of providingquality education to the underprivileged children of India. Under their motto ofEvery child in school and learning well your Company supports the NGO intheir initiatives like Laakhon Mein Ek and Read India that areaimed at promoting continuous education.
Supporting Seva Mandir - A nonprofit organization working inthe areas of conservation of natural resources improving health and education of thepeople. Under the Colgate Seva Mandir Scholarship Fund the corpusamount donated by the Company is being used to support school education of children ofclass 8 to 12 especially for those who are from underserved families or those living inthe tribal areas.
Skill development program for rural youth
- Under a program named SAKSHAM your Company has partnered withSEEDS for economic & social upliftment of rural youth through skilldevelopment programs that make them employable. The implementation partner is affiliatedby National Skill Development Corporation (NSDC) and has necessary expertise includingpan- India presence to promote this high impact initiative.
Donation to Chennai flood victims - During the year the State of TamilNadu especially Chennai and surrounding areas had come to a standstill because of majorfloods. In this time of adversity your Company had partnered with an emergency group ActionAid a Non-Governmental Organization which works towards helping communities indisaster management and contributed to support women with disabilities to help them regainlivelihood.
The details of the above programs/activities are elaborated in the Annual Reporton CSR activities which is attached 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 Companys website.
13. Employee Relations
The employee relations in the Company continued to be healthy cordial and progressive.
Your Companys culture is one that reflects its values of Caring Global Teamworkand Continuous Improvement as well as its unwavering commitment to integrity ineverything we do. Our employees are our greatest asset and your Company is committed tomaintain an environment that respect their differences value their contributions andprovide opportunities for their personal and professional growth.
Your Company recognizes its responsibility and continues 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 With Respect" is the way Colgate people put Company Values intoaction. Each and every employee is expected to work with all stakeholders (otheremployees customers consumers suppliers etc.) in a respectful manner. Each employee isalso expected to strictly follow the Companys Code of Conduct and any violation istreated with zero tolerance. By fully including ethics and integrity in the ongoingbusiness relationships and decision-making your Company demonstrates a commitment to aculture that promotes the highest ethical standards. During the year 5 complaints werereceived investigated and resolved by the ICC. There are no pending complaints at the endof the year 2015-16.
14. Trade Relations
Your Directors wish to record appreciation of the continued unstinted support andco-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.
15. Particulars of Employees
Information as per Section 197 of the Companies Act 2013 (the Act) readwith the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014forms part 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 75th Annual General Meeting. Anyshareholder interested in obtaining a copy of the said statement may write to theSecretarial Department at the Registered Office of the Company. Such details are alsoavailable on your Companys website.
16. 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 and itforms part of this Report.
17. Directors and Key Managerial Personnel
Consequent to the elevation of role of the previous Chairman Mr. Mukul Deoras as theChief Marketing Officer of Colgate-Palmolive Company USA the Board of Directors of yourCompany after considering the recommendation of the Nomination & RemunerationCommittee have appointed Mr. Vinod Nambiar as the Nonretiring Director and theChairman of the Board of the Company effective September 28 2015. The Board ofDirectors of your Company have also appointed Mr. Nambiar as a member of the Nomination& Remuneration Committee effective September 28 2015. Your Board strongly believesthat appointment of Mr. Nambiar would add significant value and strength to the Board. Thedetails of Mr. Nambiar are available on the Company website.
Your Board places on record its appreciation for the outstanding contributions made byMr. Mukul Deoras during his tenure as the Chairman of the Board of the Company.
Following are the Non-executive & Independent Directors of yourCompany who were appointed by the shareholders at their 73rd Annual GeneralMeeting for a term of five consecutive years effective July 25 2014.
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
6. Ms. Shyamala Gopinath was appointed by the shareholders at their 74thAnnual General Meeting for a term of five consecutive years effective July 30 2015.
The Independent Directors of the Company have furnished the declarations as requiredunder Section 149(6) of the Act regarding their independence.
Mr. Issam Bachaalani Managing Director Mr. Godfrey Nthunzi Whole-time Director &CFO and Mr. Niket Ghate Whole-time Director & Company Secretary are the KeyManagerial Personnel of the Company.
Pursuant to the provisions of Section 152 of the Act and under Article 124 of theCompanys Articles of Association Mr. Niket Ghate retires by rotation at the ensuing75th Annual General Meeting and being eligible offers himself forre-appointment.
A detailed profile of all the directors of your Company is available on the companywebsite www.colgatepalmolive.co.in
18. Familiarization Programme
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. The details of familiarization programmesextended to the Non-executive & Independent Directors during the year are available onthe Company website at http://www.colgate.co.in/Colgate/IN/Corp_v2/RelatedInformation/Familarization- Programme.pdf
The Board of Directors of your Company from time to time has framed and approvedvarious Policies for better governance and administration of your Company. Some of theimportant Policies that were framed by your Board include the following :
i. Nomination & Remuneration Policy : This policy sets 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 Senior Management employeesof the Company.
ii. Corporate Social Responsibility Policy : This policy sets the scope foridentification of the areas where the CSR activities will be 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 foridentification of risks of the Company risk assessment and prioritization lossprevention measures and other 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.
Apart from the above your Company during the year has framed and approved certainadditional Policies which include Policy on determination of Materiality of Event orInformation Record Management Policy and Code of Conduct for Dealing in CompanysSecurities.
Brief information about the aforesaid policies is stated in the Corporate GovernanceReport annexed to this Report.
The Board of Directors of your Company has constituted various committees of the Boardto assist in discharging its duties. These include Audit Committee Nomination &Remuneration Committee Risk Management Committee Stakeholders RelationshipCommittee and Corporate Social Responsibility Committee. The Board has approved the termsof reference for each of these committees. All these Committees of the Board hold theirmeetings at regular intervals and make their recommendations to the Board from time totime.
The broad terms of reference of the said Committees are stated in the CorporateGovernance Report annexed to this Report.
21. 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 annexed to this Report.
22. 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 Companys 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 Colgate-Palmolive EthicsLine phone number and e-mail id are available on theCompany website to report any genuine concerns about unethical behaviour any actual orsuspected fraud or violation of Companys Code of Conduct.
23. 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.
24. Related Party Contracts & Arrangements
All related party transactions done by the Company during the financial year were atarms 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 the Company has framed apolicy on the related party transactions and the same is available on the Companyswebsite.
M/s. Price Waterhouse Chartered Accountants retire and are eligible forre-appointment as Auditors from the conclusion of this Annual General Meeting until theconclusion of the next Annual General Meeting. The Auditors Report for the financialyear 2015-16 does not contain any qualification reservation or adverse remarks.
26. Secretarial Auditor & Secretarial Audit Report
The Board had appointed M/s. S.N. Ananthasubramanian & Co. Company Secretaries inWhole-time Practice to conduct 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 Year2015-16 does not contain any qualification reservation or adverse remarks.
27. Extract of Annual Return
Pursuant to the Section 92(3) of the Companies Act 2013 extract of the annual returnin Form MGT-9 is annexed to this Report as Annexure - 5.
28. Business Responsibility Report
The Business Responsibility Report for the Financial Year 2015-16 as stipulated underRegulation 34 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 is annexed to this Report as Annexure - 7.
29. 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.Additionally there are no material changes and commitments which will affect thefinancial position of the Company.
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