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History: Shareholding Summary For Colgate-Palmolive (India) LTD

Colgate-Palmolive (India) Ltd is India's leading provider of oral care and personal care products. It offers toothpastes, toothpowders, toothbrushes, and mouthwashes under the Colgate brand as well as dental therapies under Colgate Oral Pharmaceuticals. The company is owned by its ultimate parent company Colgate-Palmolive Company USA. Colgate-Palmolive (India) Ltd was incorporated in 1937 and has a separation between management and ownership. It finances its activities solely through equity and has not utilized any debt financing.

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127 views

History: Shareholding Summary For Colgate-Palmolive (India) LTD

Colgate-Palmolive (India) Ltd is India's leading provider of oral care and personal care products. It offers toothpastes, toothpowders, toothbrushes, and mouthwashes under the Colgate brand as well as dental therapies under Colgate Oral Pharmaceuticals. The company is owned by its ultimate parent company Colgate-Palmolive Company USA. Colgate-Palmolive (India) Ltd was incorporated in 1937 and has a separation between management and ownership. It finances its activities solely through equity and has not utilized any debt financing.

Uploaded by

Ronit Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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HISTORY

Colgate-Palmolive (India) Limited is India's leading provider of scientifically proven oral care
products. The range includes toothpastes toothpowder toothbrushes and mouthwashes under
the Colgate brand as well as a specialized range of dental therapies under the banner of Colgate
Oral Pharmaceuticals. The company also provides a range of personal care products under the
`Palmolive' brand name. Colgate-Palmolive Company U.S.A. is the company's ultimate holding
company. Colgate-Palmolive (India) Ltd was incorporated in the year 1937.

Colgate-Palmolive (India) Ltd is a company where there is a separation between management and ownership.

Hindustan Unilever Management

Chairman Mukul Deoras


Dy. Chairman P K Ghosh
Director V S Mehta
Director Indu Shahani
Director Shyamala Gopi
Managing Director I Bachaalani
CFO M S Jacob

Shareholding Summary for


3.415 Colgate-Palmolive (India)

Ltd
19%

51%
12%

8%

7%

Promoters mutual funds & bank Insurance Companies FII Non-Institutions Foreign nationals
Financing Choices

Financing Instruments (Amount in INR MILLION)

2014 2015 2016 2017 2018


DEBT 0 0 0 0 0
EQUITY 136 136 272 272 272
TOTAL 136 136 272 272 272

The company has been virtually debt free and has a constant equity capital of 272 crores. The
company has not raised any money thought debt or equity because the company is enjoying
high retained earnings y-o-y of about INR 10943.6 Million.

• As per the annual report of Colgate-Palmolive (India) Ltd, it is evident that the company
has been financing it via only equity since Inception it has never used debt to finance its
activities in India.
•
• On 23 Sep 2015 company issued bonus Equity shares (135,992,817) making its paidup
capital to INR 272 Million

Advantages of low Debt to equity ratio


• The benefit for the owners is that they can retain control over their business with
limited capital by preferring debts over the equity. The owner can enjoy higher returns
on equity because the total returns are divided into very few hands.

• At a lower D/E ratio, the lenders enjoy a better margin of safety.

Disadvantages of low Debt to equity ratio


• Equity investors expect to receive a return on their money. The business owner must be
willing to share some of the company's profit with his equity partners. The amount of
money paid to the partners could be higher than the interest rates on debt financing.

• All the partners will not always agree when making decisions. These conflicts can erupt
from different visions for the company and disagreements on management styles. An
owner must be willing to deal with these differences of opinions.
Capital structure Pattern

From the above table it is evident that the capital structure of the firm has been stable after
2015. In sept 2015 the company has issued bonus equity share of rs 1 face value (135992817)
in number making its paid capital to INR 272 Million.
Assumptions

We are taking net sales into consideration for the purpose of calculating revenue and variable cost is
the sum of amounts highlighted below variable cost in bold. EBIT is obtained by adding provision for
tax and financial service expense to profit after tax all of which is highlighted in bold. EBT is taken by
adding provision for tax to profit after tax.

Note : All items taken is highlighted in bold. Leverage Analysis

Colgate-Palmolive (India) Ltd.

Income & Expenditure Summary : Mar


2009 - Mar 2018 : Non-Annualised : Rs.
Million Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
12 mths 12 mths 12 mths 12 mths 12 mths
IGAAP IGAAP INDAS INDAS INDAS
-
Total income 39,060.20 42,715.20 44,197.10 45,775.10 44,017.50
Sales 37,913.00 42,394.20 43,510.90 45,221.80 43,303.90
Industrial sales 31,341.80 35,019.60 43,219.00 44,932.00 43,032.70
Income from non-financial services 6,571.20 7,374.60 291.9 289.8 271.2
Income from financial services 358.2 263.8 261.1 310.1 290.3
Interest income 358.1 263.8 261.1 291.9 290.3
Dividends 0.1 0
Income from treasury operations 18.2
Other income 124.5 57.2 45 61.2 78.3
Prior period and extraordinary income 664.5 380.1 182 345

Change in stock 323.5 211.3 341.9 -25.8 -735.4

Total expenses 33,985.00 37,336.70 38,727.30 39,975.00 36,548.40


Operating expenses 31,578.30 34,253.80 34,703.90 35,737.10 31,406.40
Variable Cost 16761.10 17886.90 18206.40 18113.40 18425.60
Raw materials, stores & spares 11,421.90 11,987.20 11,374.90 11,660.40 12,080.20
Purchase of finished goods 2,993.80 2,983.60 3,536.70 3,147.50 2,844.30
Packaging and packing expenses
Power, fuel & water charges 227.6 326.8 378.4 440.4 441.6
Compensation to employees 2,117.80 2,589.30 2,916.40 2,885.10 3,059.50
Indirect taxes 2,414.40 2,836.00 5,283.80 5,532.00 884.5
Royalties, technical know-how fees, etc 1,949.70 2,210.10 2,208.30 2,085.10 2,073.00
Rent & lease rent 190.6 322.5 477.5 504.5 456.5
Repairs & maintenance 132.9 222.6 258.2 280.6 337.6
Insurance premium paid 30.5 24 38.1 37.3 39.8
Outsourced manufacturing jobs 44.8 49.8 66.3 90.7 81
Outsourced professional jobs 918.6 1,011.90 1,044.70 1,115.00 1,157.00
Non-executive directors' fees 3.7 5.9 9 8.7 10.4
Selling & distribution expenses 8,084.30 8,520.00 5,865.90 6,541.00 6,583.70
Travel expenses 311.2 315.1 349.2 302.6 327.7
Communications expenses
Printing & stationery expenses
Miscellaneous expenditure 823.1 916.6 955 1,166.20 1,081.20
Other operational exp of industrial ent
Other operational exp of non-fin
services ent
Provision for estimated losses on
onerous contracts
Provision for obscolescence of raw
material
Financial services expenses 13.30 9.00 22.20 0.00 10.30
Fee based financial services expenses
Fund based financial services expenses 13.3 9 22.2 10.3
Non-cash charges 512.5 852.9 1,118.30 1,336.10 1,571.90
Depreciation 507.5 750.2 1,114.10 1,332.40 1,565.10
Amortisation
Write-offs 5 3.3 4.2 3.7 5.3
Provisions 99.4 1.5

Prior period and extraordinary expenses 7 30.8 118.2

Provision for direct tax 1,880.90 2,214.00 2,852.10 2,901.80 3,441.60

Profit after tax 5,398.70 5,589.80 5,811.70 5,774.30 6,733.70

Addendum Information
Total income net of P&E 38,395.70 42,715.20 43,817.00 45,593.10 43,672.50
Net sales 35,498.60 39,558.20 38,227.10 39,689.80 42,419.40
Cost of goods sold 18,495.90 20,085.60 20,505.60 20,891.80 22,088.10
Cost of sales 31,845.20 34,721.60 35,382.30 36,990.80 33,580.90
Cost of sales per day 87.2 95.1 96.9 101.3 92

Leverage Analysis
(Rs(Million)

Mar-14 Mar-15 Mar-16 Mar-17 Mar-18


Sales 35498.60 39558.20 38227.10 39689.80 42419.40
Variable cost 16761.10 17886.90 18206.40 18113.40 18425.60
Contribution 18737.50 21671.30 20020.70 21576.40 23993.80
EBIT 7292.90 7812.80 8686.00 8676.10 10185.60
EBT 7279.60 7803.80 8663.80 8676.10 10175.30

Degree of Operating
Leverage(DOL) =
Contribution/EBIT (times) 2.57 2.77 2.30 2.49 2.36
Degree of Financial
Leverage(DFL)= EBIT/EBT (times) 1.01 1.01 1.01 1 1

Degree of Combined
Leverage(DCL)= (DOL)x (DFL)
(times) 2.59 2.79 2.32 2.49 2.36
Operating leverage analysis

Operating leverage is a measure of how revenue growth translates into growth in


operating income, it helps us to know how risky or how volatile operating income
of a company is. It shows that how 1% change in sales will result in change in EBIT
of a company for a particular year. High operating leverage are good when sales are
growing but it’s dangerous for the when there is a drop in sales as it will result in
higher loss of EBIT. So it is advisable not to have too much of operating leverage
and if the operating leverage is close to 1 then its safe for companies having
uncertain future. Colgate has maintained a constant degree of operating leverage
around 2 to 3
2014:- 2.57
2015:- 2.77
2016:- 2.30
2017:- 2.49
2018:- 2.36

Financial leverage analysis

Colgate-Palmolive (India) Limited is a debt free company i.e. it’s more depended on its owners
fund to fund its projects and capex. An excessive amount of financial leverage increases the
risk of failure, since it becomes more difficult to repay debt.. So it doesn’t uses its financial
leverage as calculated above the degree of financial leverage is constant around 1 that means
there will no change or very little change in EPS with change in EBIT because of low or
ignorable interest factor. This company is unleavened with Degree of financial leverage is close
to 1
2014:- 1.01
2015:- 1.01
2016:- 1.01
2017:- 1.00
2018:- 1.00

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