Colgate-Palmolive (India) Ltd

www.canadean-winesandspirits.com

Colgate-Palmolive (India) Ltd

TABLE OF CONTENTS

Colgate-Palmolive (India) Ltd ......................................................................................................................6

Colgate-Palmolive (India) Ltd - Key Employees ........................................................................................7

Colgate-Palmolive (India) Ltd - Key Employees Biographies ...................................................................8

Colgate-Palmolive (India) Ltd - Major Products and Services ..................................................................9

Colgate-Palmolive (India) Ltd - History ....................................................................................................10

Colgate-Palmolive (India) Ltd - Company Statement ..............................................................................11

Colgate-Palmolive (India) Ltd - Locations and Subsidiaries ...................................................................12

7.1

Colgate-Palmolive (India) Ltd - Head Office ............................................................................................................. 12

7.2

Colgate-Palmolive (India) Ltd - Other Locations and Subsidiaries ........................................................................... 12

Colgate-Palmolive (India) Ltd - Business Analysis .................................................................................13

8.1

Colgate-Palmolive (India) Ltd - Company Overview ................................................................................................ 13

8.2

Colgate-Palmolive (India) Ltd - Business Description .............................................................................................. 14

Colgate-Palmolive (India) Ltd - SWOT Analysis ......................................................................................15

9.1

Colgate-Palmolive (India) Ltd - SWOT Analysis - Overview .................................................................................... 15

9.2

Colgate-Palmolive (India) Ltd - Strengths................................................................................................................. 15

9.2.1

Strength - Strong support from the Parent Company ....................................................................................... 15

9.2.2

Strength - Comprehensive Product Portfolio .................................................................................................... 15

9.2.3

Strength - Increasing Revenues ....................................................................................................................... 15

9.3

9.3.1

Weakness - Declining operational performance ............................................................................................... 15

9.3.2

Weakness - Litigation ....................................................................................................................................... 15

9.4

Colgate-Palmolive (India) Ltd - Opportunities........................................................................................................... 16

9.4.1

Opportunity - Growing FMCG market in India .................................................................................................. 16

9.4.2

Opportunity - Growth Initiatives ........................................................................................................................ 16

9.4.3

Opportunity - Product launches ........................................................................................................................ 16

9.5

10

Colgate-Palmolive (India) Ltd - Weaknesses ........................................................................................................... 15

Colgate-Palmolive (India) Ltd - Threats .................................................................................................................... 16

9.5.1

Threat - Intense Competition ............................................................................................................................ 16

9.5.2

Threat - Changing consumer preferences ........................................................................................................ 16

9.5.3

Threat - Rising counterfeit goods market ......................................................................................................... 16

Colgate-Palmolive (India) Ltd - Company Financial Analysis .................................................................17

10.1

Colgate-Palmolive (India) Ltd - Five Year Snapshot: Overview of Financial and Operational Performance

Indicators .............................................................................................................................................................................. 17

11

Colgate-Palmolive (India) Ltd - Interim ratios ..........................................................................................19

11.1.1
11.2

Colgate-Palmolive (India) Ltd - Financial ratios: Capital Market Ratios ........................................................... 19

Colgate-Palmolive (India) Ltd - Financial Performance and Ratio Charts ................................................................ 20

11.2.1

Colgate-Palmolive (India) Ltd - Revenue and Operating margin...................................................................... 20

11.2.2

Colgate-Palmolive (India) Ltd - Asset and Liabilities ........................................................................................ 21

11.2.3

Colgate-Palmolive (India) Ltd - Solvency ......................................................................................................... 22

11.2.4

Colgate-Palmolive (India) Ltd - Valuation ......................................................................................................... 23

11.3

Colgate-Palmolive (India) Ltd - Competitive Benchmarking ..................................................................................... 24

11.3.1

Colgate-Palmolive (India) Ltd - Market Capitalization ...................................................................................... 25

11.3.2

Colgate-Palmolive (India) Ltd - Efficiency......................................................................................................... 26

11.3.3

Colgate-Palmolive (India) Ltd - Valuation ......................................................................................................... 27

11.3.4

Colgate-Palmolive (India) Ltd - Turnover: Inventory and Asset ........................................................................ 28

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Colgate-Palmolive (India) Ltd

TABLE OF CONTENTS

Colgate-Palmolive (India) Ltd ......................................................................................................................6

Colgate-Palmolive (India) Ltd - Key Employees ........................................................................................7

Colgate-Palmolive (India) Ltd - Key Employees Biographies ...................................................................8

Colgate-Palmolive (India) Ltd - Major Products and Services ..................................................................9

Colgate-Palmolive (India) Ltd - History ....................................................................................................10

Colgate-Palmolive (India) Ltd - Company Statement ..............................................................................11

Colgate-Palmolive (India) Ltd - Locations and Subsidiaries ...................................................................12

7.1

Colgate-Palmolive (India) Ltd - Head Office ............................................................................................................. 12

7.2

Colgate-Palmolive (India) Ltd - Other Locations and Subsidiaries ........................................................................... 12

Colgate-Palmolive (India) Ltd - Business Analysis .................................................................................13

8.1

Colgate-Palmolive (India) Ltd - Company Overview ................................................................................................ 13

8.2

Colgate-Palmolive (India) Ltd - Business Description .............................................................................................. 14

Colgate-Palmolive (India) Ltd - SWOT Analysis ......................................................................................15

9.1

Colgate-Palmolive (India) Ltd - SWOT Analysis - Overview .................................................................................... 15

9.2

Colgate-Palmolive (India) Ltd - Strengths................................................................................................................. 15

9.2.1

Strength - Strong support from the Parent Company ....................................................................................... 15

9.2.2

Strength - Comprehensive Product Portfolio .................................................................................................... 15

9.2.3

Strength - Increasing Revenues ....................................................................................................................... 15

9.3

9.3.1

Weakness - Declining operational performance ............................................................................................... 15

9.3.2

Weakness - Litigation ....................................................................................................................................... 15

9.4

Colgate-Palmolive (India) Ltd - Opportunities........................................................................................................... 16

9.4.1

Opportunity - Growing FMCG market in India .................................................................................................. 16

9.4.2

Opportunity - Growth Initiatives ........................................................................................................................ 16

9.4.3

Opportunity - Product launches ........................................................................................................................ 16

9.5

10

Colgate-Palmolive (India) Ltd - Weaknesses ........................................................................................................... 15

Colgate-Palmolive (India) Ltd - Threats .................................................................................................................... 16

9.5.1

Threat - Intense Competition ............................................................................................................................ 16

9.5.2

Threat - Changing consumer preferences ........................................................................................................ 16

9.5.3

Threat - Rising counterfeit goods market ......................................................................................................... 16

Colgate-Palmolive (India) Ltd - Company Financial Analysis .................................................................17

10.1

Colgate-Palmolive (India) Ltd - Five Year Snapshot: Overview of Financial and Operational Performance

Indicators .............................................................................................................................................................................. 17

11

Colgate-Palmolive (India) Ltd - Interim ratios ..........................................................................................19

11.1.1
11.2

Colgate-Palmolive (India) Ltd - Financial ratios: Capital Market Ratios ........................................................... 19

Colgate-Palmolive (India) Ltd - Financial Performance and Ratio Charts ................................................................ 20

11.2.1

Colgate-Palmolive (India) Ltd - Revenue and Operating margin...................................................................... 20

11.2.2

Colgate-Palmolive (India) Ltd - Asset and Liabilities ........................................................................................ 21

11.2.3

Colgate-Palmolive (India) Ltd - Solvency ......................................................................................................... 22

11.2.4

Colgate-Palmolive (India) Ltd - Valuation ......................................................................................................... 23

11.3

Colgate-Palmolive (India) Ltd - Competitive Benchmarking ..................................................................................... 24

11.3.1

Colgate-Palmolive (India) Ltd - Market Capitalization ...................................................................................... 25

11.3.2

Colgate-Palmolive (India) Ltd - Efficiency......................................................................................................... 26

11.3.3

Colgate-Palmolive (India) Ltd - Valuation ......................................................................................................... 27

11.3.4

Colgate-Palmolive (India) Ltd - Turnover: Inventory and Asset ........................................................................ 28

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Colgate-Palmolive (India) Ltd

12

Colgate-Palmolive (India) Ltd - Mergers & Acquisitions and Partnerships ...........................................29

12.1

Colgate-Palmolive (India) Ltd - M&A and Partnerships Strategy ............................................................................. 29

13

Colgate-Palmolive (India) Ltd - Recent Developments ............................................................................30

14

Appendix ....................................................................................................................................................31
14.1

Methodology ............................................................................................................................................................. 31

14.2

Colgate-Palmolive (India) Ltd - Ratio Definitions ...................................................................................................... 31

14.3

Disclaimer ................................................................................................................................................................. 36

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Colgate-Palmolive (India) Ltd

List of Tables
Table 1: Colgate-Palmolive (India) Ltd - Key Employees .......................................................................................................... 7
Table 2: Colgate-Palmolive (India) Ltd - Key Employees Biographies ...................................................................................... 8
Table 3: Colgate-Palmolive (India) Ltd - Major Products and Services ..................................................................................... 9
Table 4: Colgate-Palmolive (India) Ltd - History ...................................................................................................................... 10
Table 5: Colgate-Palmolive (India) Ltd - Subsidiaries ............................................................................................................. 12
Table 6: Colgate-Palmolive (India) Ltd - Locations ................................................................................................................. 12
Table 7: Colgate-Palmolive (India) Ltd - Annual ratios ............................................................................................................ 17
Table 8: Colgate-Palmolive (India) Ltd - Interim ratios ............................................................................................................ 19
Table 9: Colgate-Palmolive (India) Ltd - Capital Market Ratios .............................................................................................. 19

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Colgate-Palmolive (India) Ltd

List of Figures
Figure 1: Colgate-Palmolive (India) Ltd - Revenue and Operating Profit ................................................................................ 20
Figure 2: Colgate-Palmolive (India) Ltd - Financial Position ................................................................................................... 21
Figure 3: Colgate-Palmolive (India) Ltd - Solvency ................................................................................................................. 22
Figure 4: Colgate-Palmolive (India) Ltd - Valuation ................................................................................................................. 23
Figure 5: Colgate-Palmolive (India) Ltd - Market Capitalization .............................................................................................. 25
Figure 6: Colgate-Palmolive (India) Ltd - Efficiency ................................................................................................................ 26
Figure 7: Colgate-Palmolive (India) Ltd - Valuation ................................................................................................................. 27
Figure 8: Colgate-Palmolive (India) Ltd - Turnover: Inventory and Asset ............................................................................... 28

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Colgate-Palmolive (India) Ltd

1 Colgate-Palmolive (India) Ltd

Financial Snapshot
Operating Performance

Fast Facts
Headquarters Address

Colgate Research
Centre,MUMBAI,Maharashtra,400076,India

Telephone

+91 22 25705050

Fax

+91 22 25705088

Website

www.colgate.co.in

Ticker Symbol , Exchange Name

COLPAL,National Stock Exchange of India

Number of Employees

1,756

Fiscal Year End

March

Revenue (US$ million)

611

The company reported revenue of US$611 million

during the fiscal year 2014 (2014). The company's
revenue grew at a CAGR of 9.35% during 20102014,
with an annual growth of 13.12% over 2013. In 2014,
the company recorded an operating margin of 18.97%,
as against 19.38% in 2013.
Revenue and Margins

SWOT Analysis
Strengths

Weaknesses

Comprehensive Product Portfolio

Declining operational performance

Increasing Revenues

Litigation

Strong support from the Parent

Company

Opportunities

Threats

Growing FMCG market in India

Changing consumer preferences

Growth Initiatives

Intense Competition

Product launches

Rising counterfeit goods market

Share Data
Share price (US$) as on 28 Nov 2014

31.76

EPS (US$)

0.68

Market Capitalization (US$ million)

4,354

Enterprise Value (US$ million)

4,308

Shares outstanding (million)

136

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Colgate-Palmolive (India) Ltd

2 Colgate-Palmolive (India) Ltd - Key Employees

Table 1: Colgate-Palmolive (India) Ltd - Key Employees
Name

Job Title

Board Level

Since

Godfrey Nthunzi

Chief Financial Officer, Director, Executive

Executive Board
Vice President - Finance

2013

Prabha Parameswaran

Managing Director, Director, Executive

Director

Executive Board

2012

Aditya Singh

Vice President - Human Resources

Senior Management

2008

Ajith Babu

Director - Marketing

Senior Management

2012

Laurence Wheeler

Executive Vice President - Manufacturing

and Supply Chain

Senior Management

M. Chandrasekar

Vice President - Customer Development

Senior Management

2012

Manu Mehrotra

Vice President - Toothbrush Category

Supply Chain

Senior Management

2011

Mustapha Yajid

Vice President - Manufacturing and Supply

Senior Management
Chain

Niket Ghate

Director, Vice President - Legal, Secretary

Senior Management
- Company Secretary

2011

Sanjoy Sen

Vice President - Customer Development

Senior Management

2011

Sarala Menon

Vice President - Customer Services and

Logistics

Senior Management

2010

Shashank Potnis

Director - Global Technology Centre

Senior Management

2012

Indu Shahani

Director

Non Executive Board

2012

J. K. Setna

Director

Non Executive Board

1978

Mukul Deoras

Chairman

Non Executive Board

2012

P. K. Ghosh

None

Non Executive Board

1988

Rajendra Shah

Vice-Chairman

Non Executive Board

1983

Vikram Singh Mehta

Director

Non Executive Board

2001

Source: Canadean

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Colgate-Palmolive (India) Ltd

3 Colgate-Palmolive (India) Ltd - Key Employees Biographies

Table 2: Colgate-Palmolive (India) Ltd - Key Employees Biographies
Employee Details

Biography

Godfrey Nthunzi
Job Title : Chief Financial Officer, Director, Executive Vice President Finance
Since : 2013

Mr. Godfrey Nthunzi has been the Chief Financial Officer, Executive
Vice President - Finance, and a Director of the company since 2013.
Prior to this, he served as the Vice-President-Finance at ColgatePalmolive, Canada and as the Finance Director at Colgate-Palmolive
South Africa since 2001.

Mukul Deoras
Job Title : Chairman
Since : 2012

Mr. Deoras has been the Chairman of the company since February
2012. Previously, he served as the Managing Director and the
Executive Director of the company since 2010. He also worked as the
Vice President and the General Manager for Personal Care in Global
Business Development of Colgate-Palmolive Company, the US. He
joined as a Director for Asia Pacific Division of Colgate- Palmolive
Company in 2004 and later became the President of Asia Division.
Earlier, Mr. Deoras also held various positions in marketing and sales
department in Hindustan Unilever Limited in India.

Source: Canadean

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Colgate-Palmolive (India) Ltd

4 Colgate-Palmolive (India) Ltd - Major Products and Services

Colgate-Palmolive (India) Limited is a manufacturer of personal and house hold care products. The key products
offered by the company include the following:
Table 3: Colgate-Palmolive (India) Ltd - Major Products and Services
Products:
Oral Care:
Toothpastes
Toothbrushes
Toothpowder
Whitening products
Mouthwash
Personal Care:
Body wash
Liquid hand wash
Shave preps
Skin care
Hair care
Dentist Products:
Gingivitis treatment
Sensitivity treatment
Fluoride therapy
Mouth ulcer treatment
Specialty cleaning
Tooth whitening
Household Care:
Surface care
Brands:
Colgate
Palmolive
Axion
Source: Canadean

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Colgate-Palmolive (India) Ltd

5 Colgate-Palmolive (India) Ltd - History

Table 4: Colgate-Palmolive (India) Ltd - History
Year

Event type

Description

2014

New Products/Services

The company introduced its first line of mouthwashes for kids.

2013

New Products/Services

The company launched Colgate SlimSoft , a tooth brush with 17 times slimmer tip bristles
than ordinary toothbrushes.

2013

New Products/Services

The company entered into gum care segment with the launch of Colgate Total Pro Gum
Health in India.

2012

New Products/Services

The company announced the launch of two new Palmolive body wash variants, Thermal Spa
Skin Renewal and Aroma

2011

New Products/Services

The company launched Colgate Sensitive Pro-Relief Toothpaste to provide instant relief from
tooth sensitivity.

2011

New Products/Services

The company launched Colgate 360 surround toothbrush to provide a whole mouth clean.

2011

Contracts/Agreements

The company signed an agreement with Essel Propack Limited to set up a manufacturing
plant in Goa.

2010

Acquisitions/Mergers/Takeovers

CPIL acquired remaining 25.00% stake in Professional Oral Care Product Pvt. Ltd.

2010

Acquisitions/Mergers/Takeovers

The company acquired remaining 25.00% Stake in CC Health Care Products Pvt. Ltd.

2008

Acquisitions/Mergers/Takeovers

Colgate-Palmolive India acquired 75.00% of the shares in CC Health Care Products Pvt. Ltd.

2007

Acquisitions/Mergers/Takeovers

The company acquired Professional Oral Care Products Pvt. Ltd., and SS Oral Hygiene
Products Pvt. Ltd.

2007

Acquisitions/Mergers/Takeovers

Colgate-Palmolive India acquired Advanced Oral Care Products Pvt. Ltd.

2003

Corporate Awards

The company was rated as Indias Most Trusted Brand by Brand Equitys Most Trusted Brand
Survey.

2001

Corporate Awards

The company was rated as the No.1 brand by A&M (MODE Annual Survey for Indias Top
Brands).

1937

Incorporation/Establishment

The company was incorporated.

Source: Canadean

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Colgate-Palmolive (India) Ltd

6 Colgate-Palmolive (India) Ltd - Company Statement

The statement from Management Discussion and Analysis Report is given below. The statement has been taken from the
company's annual report 2013.

The Company is engaged in the Personal Care business which includes Oral Care. The Oral Care business continues to
account for over 90 per cent of the Companys sales turnover.

Almost one-third of the Indian population does not have access to modern oral care. The per capita consumption of
toothpaste is about 146 gms one of the lowest in the world. The national epidemiological study on the status of oral health
in the country showed that dental caries (tooth decay) is prevalent in 63% of 15 year olds and as much as 80% amongst
adults in the age group of 35-44 years and periodontal diseases (gum diseases) are prevalent in 68% of 15 year olds and as
much as 90% amongst adults in the age group of 35-44 years. To address this situation, the Company in partnership with
Indian Dental Association has started conducting annually, an intensive twomonth- long awareness campaign in October
and November under the banner Oral Health Month. The aim of this campaign is to create oral health awareness and
motivate people to adopt preventive self-care habits to improve their oral health.
This was one more step in the Companys longstanding effort to spread the message of good oral health and encourage the
use of modern and efficacious Oral Care products.

To help its objective of expanding the Oral Care market, the Company has designed its product portfolio in such a manner
that its products are available at different price points to cater to the requirements of consumers across all segments.

While the predominant business of the Company has been confined to the Oral Care where it continues to face intense
competition, the outlook for industry is positive given the size of the opportunity. The Company believes that through a
combination of powerful marketing strategies, innovative new products and market development and expansion activities,
the dentifrice market in India and the Companys business will continue to grow strongly in the next several years.

The Company has good internal control systems, the adequacy of which has been reported by its auditors in their report.
The discussion on financial performance of the Company is covered in the Directors Report. There has been no material
development on human resources and industrial relations continue to be positive except for an unauthorised stoppage of
work by one of the unions for a period of 18 days at Goa toothpaste manufacturing facility. The Management, however,
successfully dealt with the issue by following due process and discussions with the union and operations resumed. The
impact on the operations during the period was minimal considering the inventory and back up from other plants of the
Company. The number of people employed as on March 31, 2013 was 2008.
It may please be noted that the statements in the Management Discussion and Analysis Report describing the Companys
objectives and predictions may be forward looking within the meaning of applicable rules and regulations. Actual results may
differ materially from those either expressed or implied in the statement depending on circumstances.

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Colgate-Palmolive (India) Ltd

7 Colgate-Palmolive (India) Ltd - Locations and Subsidiaries

7.1

Colgate-Palmolive (India) Ltd - Head Office

Colgate-Palmolive (India) Ltd

Colgate Research Centre
MUMBAI
Maharashtra
Zip: 400076
India
Tel: + 91 22 25705050
Fax: + 91 22 25705088

7.2

Colgate-Palmolive (India) Ltd - Other Locations and Subsidiaries

Table 5: Colgate-Palmolive (India) Ltd - Subsidiaries

Advanced Oral Care Products Private Limited

Professional Oral Care Products Private Limited

India

India

CC Healthcare Products Private Limited

Hyderabad
India
Source: Canadean

Table 6: Colgate-Palmolive (India) Ltd - Locations

Colgate-Palmolive (India) Ltd

Colgate-Palmolive (India) Ltd

Plot No. B 14/10 MIDC

Plot No. 78, EPIP Phase I

Waluj Industrial Area

Jharmajri, Baddi, District Solan

Aurangabad

India

India

Zip: 174 103

Zip: 431136

Colgate-Palmolive (India) Ltd

Plot Nos. 154, 158 & 160
Kundaim Industrial Estate
Kundaim, Goa
India
Zip: 403 115
Source: Canadean

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Colgate-Palmolive (India) Ltd

8 Colgate-Palmolive (India) Ltd - Business Analysis

8.1

Colgate-Palmolive (India) Ltd - Company Overview

Colgate-Palmolive (India) Limited (Colgate-Palmolive India) is a manufacturer of personal and household care products. The
company primarily offers oral care, skin care, and hair care products. Its portfolio includes tooth pastes, tooth brushes, tooth
powder, whitening products, body wash, shower gels, liquid hand wash, shave creams, shampoos, mouth ulcer treatment,
tooth whitening, gingivitis treatment and surface care. Colgate-Palmolive India also offers surface care products and dental
products. These products are marketed under the brands of Colgate, Palmolive and Axion across India and in neighboring
countries. The company operates as subsidiary of Colgate-Palmolive Company, USA. Colgate-Palmolive India is
headquartered in Mumbai, Maharashtra, India.

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Colgate-Palmolive (India) Ltd

8.2

Colgate-Palmolive (India) Ltd - Business Description

Colgate-Palmolive India is a personal and household care product manufacturing company. The company operates as a
subsidiary of Colgate-Palmolive Company, USA.
The company classifies its offerings into four categories: Oral Care, Personal Care, Household Care, and From The Dentist.
Under the oral care category, the company offers tooth pastes, tooth brushes, tooth powder, whitening products, and
mouthwash. Its tooth paste portfolio includes Colgate Dental Cream, Colgate Total, Colgate Visible White, Colgate
Sensitive,
Colgate Kids Tooth Paste, Colgate Herbal, Colgate Cibaca Family Protection, Colgate Active Salt, Colgate
Maxwhite, Colgate Sensitive-Pro-Relief, Colgate Max Fresh and Colgate Active Salt Healthy White. For kids, the company
offers Colgate Kids and Colgate Kids 2+ tooth pastes. The company also offers a verity of tooth brushes for various market
segments such as regular, children, entire family purpose and special categories. These products are marketed under
Colgate brand.
The personal care category of the company offers body wash, liquid hand wash, shave creams, shower gels and shampoos.
Body wash is offered in various flavors such as milk, almond, lavender and naturals. These products are marketed under
Palmolive brand.

Under the home care category, the company offers dish washing paste and markets it under Axion brand.
Under the From The Dentist category, the company offers solutions for gingivitis treatment, sensitivity treatment, and mouth
ulcer treatment. It also produces tooth whitening kit and special tooth cleaning products.
The companys research and development (R&D) activities focus on new product development, market expansion and
increased consumption of the companys products. These activities also focus on material cost reduction, process
simplification, and quality improvements. It also implements Enterprise Resource Planning (ERP) software to handle all its
supply chain and finance functions. In FY2013, the company invested INR84 million in R&D activities.
Colgate-Palmolive India has one of the widest distribution networks in India. Its products are offered through about
4,500,000 retail outlets in India.
The company classifies its geographical operations into two segments, India and Outside India. In FY2013, India accounted
98.86% of the total revenue, whereas Outside India accounted for 1.14%.

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Colgate-Palmolive (India) Ltd

9 Colgate-Palmolive (India) Ltd - SWOT Analysis

9.1

Colgate-Palmolive (India) Ltd - SWOT Analysis - Overview

Colgate-Palmolive (India) Limited is involved in manufacturing of oral care, personal care, home care, and professional oral
care products. Strong support from the parent company, increasing revenues and comprehensive product portfolio are the
companys key strengths, whereas declining operational performance and litigations remain as concern areas. Going
forward, risks associated with changing consumer preferences, intense competition and rising demand for counterfeit
products may affect the company's operating results. However, product launches growth initiatives and growing FMCG
market in India may provide ample growth opportunities for the company.

9.2
9.2.1

Colgate-Palmolive (India) Ltd - Strengths

Strength - Strong support from the Parent Company

Colgate-Palmolive enjoys strong support from its parent company, Colgate-Palmolive Company, USA, which undertakes
business of personal care products through various subsidiaries. It produces and markets its products under Colgate and
Palmolive brands. The US based Colgate-Palmolive Company is a personal care product company with presence across
North America, Latin America North, Latin America South, Western Europe, Central & Eastern Europe, and Asia
Pacific. Strong market position and brand equity of the parent company provides an advantage to its subsidiaries while
attracting new customers and sustaining existing customer base. The parent company also provides Colgate-Palmolive
(India) Limited with the necessary financial support and the expertise to strengthen its market presence and venture into
new businesses.
9.2.2

Strength - Comprehensive Product Portfolio

The company offers comprehensive range of products in the oral care care market. The companys product portfolio
includes tooth pastes, tooth brushes, tooth powder, whitening products, and mouthwash. For kids, the company offers
special tooth pastes. The company also offers a verity of tooth brushes for various market segments such as regular,
children, entire family purpose and special categories. Additionally, it offers various solutions including gingivitis treatment,
sensitivity treatment, and mouth ulcer treatment and tooth whitening kit and special tooth cleaning products for dentist.
Comprehensive product portfolio enables the company to be the one stop solution for diversified customer needs therefore
providing a leading position in the market.
9.2.3

Strength - Increasing Revenues

The companys revenue has been significantly increasing. During FY2013, the companys revenue was INR 32137.29m
when compared to INR 27439.12m in 2012, INR 23273.59m in 2011, INR 20609.16m in 2010 and INR 17886.67m in 2009.
The companys total revenue grew at a CAGR of 15.78% over the past five years during FY2009-13. This was primarily due
to the increase in revenue of the companys Oral Care business as it continued to account for over 90.00% of its sales
turnover in FY2013. Furthermore, in FY2013, the companys toothpaste and toothbrush businesses registered a very strong
growth in term of volume and increased by 10.00% and 20.00% respectively. Increase in revenue may help the company to
gain investor confidence.

9.3
9.3.1

Colgate-Palmolive (India) Ltd - Weaknesses

Weakness - Declining operational performance

The operational performance of the company declined in the last year. During FY2013, operating margin of the company
was 20.63% in comparison with operating margin of 21.44%in FY2012. Additionally, the companys net margin decreased
from 16.27% in FY2012 to 15.46% in FY2013. This is primarily due to improper cost management of the company. The
companys operating cost as a percentage of sales also increased from 78.56% in FY2012 to 79.37% in FY2012. Improper
cost management is an indication of the companys lack of focus towards profitability. The company has to consider
necessary measures in order to focus towards achieving higher profits for future and reduce on operating costs.
9.3.2

Weakness - Litigation

The company has been a defendant in several lawsuits and also filed lawsuits against other parties to safeguard its market
position. For instance, in August 2013, Colgate-Palmolive India filed repeated lawsuits against Hindustan Unilever in the
Delhi High Court to restrain airing and publishing advertisements of Unilevers newly launched Pepsodent Germicheck
Superior Power toothpaste, claiming the advertisements were tarnishing, defaming the worth and reputation of the
companys toothpaste brand. In the same month, the companys two petitions against Unilever ware dismissed. Such
lawsuits not only inflate the companys expenditures but also have a derogatory effect on the brand image of the company.

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Colgate-Palmolive (India) Ltd

9.4
9.4.1

Colgate-Palmolive (India) Ltd - Opportunities

Opportunity - Growing FMCG market in India

The company may benefit from the growing FMCG market in India. According to Associated Chambers of Commerce and
Industry of India (ASSOCHAM), due to increasing demand in rural areas, the fast moving consumer goods (FMCG) industry
in India is expected to grow from 2013 by 18.00% over the next 4 to 5 years. Packaged foods category, toiletries,
beverages, detergents, edible oil, and cosmetics are expected to drive major growth. Rise in demand primarily attributed to
the growing rural incomes and increasing awareness due to penetration of mass communication into rural areas, which led
to converging rural tastes on urban lines therefore increasing the demand for many personal use products at these
areas..The company offers a wide range of FMCG products including oral care, personal care, and household care.
Therefore, growing FMCG market in India may increase the demand for the companys products.
9.4.2

Opportunity - Growth Initiatives

The company pursued several capacity expansion initiatives in the last few months. In FY2013, the company invested in
setting up two new manufacturing facilities including a toothpaste manufacturing facility at Sanand, Gujarat and a toothbrush
manufacturing facility at Sricity, Andhra Pradesh, India. The company's new facility in Sricity is expected to commence
production in 2014. Such capacity expansion initiatives enable the company to effectively handle the demand-supply
fluctuations in market, which in turn enhance revenue flow.
9.4.3

Opportunity - Product launches

The company may benefit from the recent product launches. In FY2013, the company added two new oral care products to
its product portfolio. Colgate SlimSoft, a tooth brush with 17 times slimmer tip bristles than ordinary toothbrushes to remove
the plaque effectively, which revolutionized the tooth brush technology and Colgate Total Pro Gum Health by entering gum
care segment. With this launch, the company is positioned to tap the growing market in India. Such product launches may
enable the company to cater to new customer segments which in turn broaden its revenue base.

9.5
9.5.1

Colgate-Palmolive (India) Ltd - Threats

Threat - Intense Competition

The company faces tough competition from both local and global operators. Various expansion initiatives taken by
competitors may put pressure on the companys market position and profit margins. For instance, in Febraury 2013, the
companys competitor Dabur India Limited announced the expansion of its oral care portfolio with the launch of Dabur Super
Babool+Salt Power Toothpaste, India's first Natural toothpaste packed with two powerful oral care ingredients -- Salt and
Babul 'Acacia Arabia' extracts. Furthermore, in September 2013, Dabur announced the launch of a first-of-its-kind
standalone oral health portal, www.daburdentalcare.com. The portal will be a one-stop shop for all oral hygiene needs, right
from providing natural solutions for a variety of dental problems like toothaches, cavities, bad breath, Gingivitis etc, to
providing information about natural kitchen ingredients for dental care. Such moves by competitors put pressure on the
company to focus on innovation to stay competitive.
9.5.2

Threat - Changing consumer preferences

The company is subject to the ever changing consumer preferences. The company must constantly develop, produce and
market new products in order to maintain and enhance the recognition of its brands and try achieving a favorable mix of
products. The consumer spending patterns and preferences that change rapidly are difficult to predict. The decrease in the
market demand and change in the consumer spending demands for the companys products such as reduced demand for
the color cosmetics may result in the carrying inventories that are too high or cannot be sold at anticipated prices or
increased product returns by its customers. The companys business, financial condition and results of operations may
adversely affected if it is unable to respond to trends in the market for beauty and other consumer products and meet the
changing consumer demands.
9.5.3

Threat - Rising counterfeit goods market

The companys performance may be affected due to growing imitated products market, especially in the emerging countries.
Growing market for counterfeit goods has been on rise across industries and affecting the sales and the brand image of the
branded products. With global annual sales of around US$500 billion, these counterfeit goods are expected to cross US$2
trillion in sales by 2026. The imitated goods in this industry have taken away the share of the branded products through low
price offerings. It also creates confusion among the customers as the imitated goods carry the same design as of the
branded products. However, the low quality of these counterfeits affects the consumer confidence and also tarnishes the
brand image of the actual company. Hence, the company is prone to these challenges and any negative results of the
counterfeit products may affect on the companys fortunes.

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Colgate-Palmolive (India) Ltd

10 Colgate-Palmolive (India) Ltd - Company Financial Analysis

10.1 Colgate-Palmolive (India) Ltd - Five Year Snapshot: Overview of Financial and
Operational Performance Indicators
The company reported revenue of US$611 million during the fiscal year 2014 (2014). The company's revenue grew at a
CAGR of 9.35% during 20102014, with an annual growth of 13.12% over 2013. During 2014, operating margin of the
company was 18.97% in comparison with operating margin of 19.38% in 2013. In 2014, the company recorded a net profit
margin of 15.09% compared to a net profit margin of 15.70% in 2013.
Table 7: Colgate-Palmolive (India) Ltd - Annual ratios
Key Ratios

Unit/Currency

2014

2013

2012

2011

2010

Equity Ratios
EPS (Earnings per Share)

INR

39.7

36.53

32.83

29.6

31.12

Dividend per Share

INR

27

28

25

22

20

Dividend Cover

Absolute

1.47

1.3

1.31

1.35

1.56

Book Value per Share

INR

44.11

36

32.02

28.24

23.98

Cash Value per Share

INR

9.05

9.05

8.06

7.06

0.92

Gross Margin

59.71

59.39

59.84

60.68

59.15

Operating Margin

18.97

19.38

20.02

21.01

19.76

Net Profit Margin

15.09

15.7

16.58

17.61

21.57

Profit Markup

148.18

146.25

149

154.33

144.81

PBT Margin (Profit Before Tax)

20.34

20.96

21.85

22.74

24.7

Return on Equity

90

101.46

102.55

104.82

129.79

Return on Capital Employed

108.55

116.71

115.66

116.62

117.28

Return on Assets

36.26

38.01

39.52

38.93

47.95

Return on Fixed Assets

83.11

119.34

132.84

146.44

132.81

Return on Working Capital

5287.21

894.3

572.76

1003.18

Profitability Ratios

Growth Ratios
Sales Growth

13.12

17.47

17.81

16.49

15.76

Operating Income Growth

10.74

13.7

12.26

23.84

51.14

EBITDA Growth

10.18

12.59

13.26

6.09

38.79

Net Income Growth

8.68

11.26

10.9

-4.88

48.11

EPS Growth

-1.2

11.61

10.83

-4.29

48.11

Working Capital Growth

-1751.11

-80.77

-28.1

116.91

-146.52

Operating Costs (% of Sales)

81.03

80.62

79.98

78.99

80.24

Administration Costs (% of Sales)

26.13

35.62

35.39

35.64

37.46

Current Ratio

Absolute

0.78

1.01

1.09

1.13

1.07

Quick Ratio

Absolute

0.52

0.78

0.76

0.89

0.87

Cash Ratio

Absolute

0.43

0.61

0.56

0.7

0.76

Cost Ratios

Liquidity Ratios

Leverage Ratios
Debt to Equity Ratio

Absolute

0.01

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Colgate-Palmolive (India) Ltd

Table 7: Colgate-Palmolive (India) Ltd - Annual ratios

Key Ratios

Unit/Currency

Net Debt to Equity

Absolute

Debt to Capital Ratio

Absolute

2014
0.05

2013
-0.2

2012
-0.25

2011
-0.24

2010
-0.02
0.01

Efficiency Ratios
Asset Turnover

Absolute

2.4

2.42

2.38

2.21

2.22

Fixed Asset Turnover

Absolute

5.13

8.27

8.32

8.68

7.75

Inventory Turnover

Absolute

6.39

6.93

4.97

5.85

7.25

Current Asset Turnover

Absolute

5.33

3.99

3.72

3.24

3.32

Capital Employed Turnover

Absolute

5.97

6.46

6.19

5.95

6.02

Working Capital Turnover

Absolute

272.83

44.67

27.26

50.76

Revenue per Employee

INR

20380446

Net Income per Employee

INR

3074431

Capex to Sales

9.04

4.89

3.8

1.8

1.81

Source: Canadean

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Colgate-Palmolive (India) Ltd

11 Colgate-Palmolive (India) Ltd - Interim ratios

Table 8: Colgate-Palmolive (India) Ltd - Interim ratios
Key Ratios

Unit/Currency

Jun-2014

Jun-2013

Mar-2004

Dec-2003

Equity Ratios
Interim EPS (Earnings per Share)

INR

9.92

13.62

2.7

2.02

Gross Margin

62.67

61.82

59.88

47.33

Operating Margin

18.51

26.08

22.89

11.43

Net Profit Margin

14.1

21.54

24.05

9.83

Profit Markup

167.87

161.89

149.26

89.85

PBT Margin (Profit Before Tax)

19.18

28.07

26.42

15

Operating Costs (% of Sales)

81.49

73.92

77.11

88.57

Administration Costs (% of Sales)

24.97

25.33

32.7

21.85

Profitability Ratios

Cost Ratios

Liquidity Ratios
Leverage Ratios
Source: Canadean

11.1.1 Colgate-Palmolive (India) Ltd - Financial ratios: Capital Market Ratios

Table 9: Colgate-Palmolive (India) Ltd - Capital Market Ratios
Key Ratios

Value

P/E (Price/Earnings) Ratio

47.26

EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization)

32.41

Enterprise Value/Sales

7.05

Enterprise Value/Operating Profit

37.18

Enterprise Value/Total Assets

16.95

Dividend Yield

0.01

Note: Above ratios are based on share price as of 28-Nov-2014. The above ratios are absolute numbers.
Source: Canadean

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Colgate-Palmolive (India) Ltd

11.2 Colgate-Palmolive (India) Ltd - Financial Performance and Ratio Charts

11.2.1 Colgate-Palmolive (India) Ltd - Revenue and Operating margin
The consolidated group revenue of the company for 2014 stood at US$611 million, which corresponds to a growth rate of 13.12%
over the previous year. The operating margin of the company was 18.97% in 2014, a decrease of 41.00 basis points over the
previous year.
Figure 1: Colgate-Palmolive (India) Ltd - Revenue and Operating Profit

Source: Canadean

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Colgate-Palmolive (India) Ltd

11.2.2 Colgate-Palmolive (India) Ltd - Asset and Liabilities

The company's assets grew 13.93% over the previous year to US$254 million in 2014. The company's liabilities grew 8.77% over
the previous year to US$152 million in 2014. The company's asset to liability ratio improved from 1.60 in 2013 to 1.67 in 2014.
Figure 2: Colgate-Palmolive (India) Ltd - Financial Position

Source: Canadean

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Colgate-Palmolive (India) Ltd

11.2.3 Colgate-Palmolive (India) Ltd - Solvency

In 2014, the company's current ratio declined to 0.78 from the previous year's current ratio of 1.01. The companys quick ratio
declined to 0.52 in 2014 from the previous year's quick ratio of 0.78. In 2014, the companys debt ratio remained unchanged at
0.00.

Figure 3: Colgate-Palmolive (India) Ltd - Solvency

Source: Canadean

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Colgate-Palmolive (India) Ltd

11.2.4 Colgate-Palmolive (India) Ltd - Valuation

As of 28-Nov-2014, the company recorded an EV/EBIT of 37.18, EV/Total Assets of 16.95 and EV/Sales of 7.05.
Figure 4: Colgate-Palmolive (India) Ltd - Valuation

Source: Canadean

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Colgate-Palmolive (India) Ltd

11.3 Colgate-Palmolive (India) Ltd - Competitive Benchmarking

The following companies are the major competitors of Colgate-Palmolive (India) Ltd:
Dabur India Limited (Ticker: DABUR)
Godrej Consumer Products Limited (Ticker: GODREJCP)
Henkel Adhesive Technologies India Private Limited
Hindustan Unilever Limited (Ticker: HINDUNILVR)
JHS Svendgaard Laboratories Ltd (Ticker: JHS)
Reckitt Benckiser (India) Limited

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Colgate-Palmolive (India) Ltd

For competitive benchmarking, latest financial results are considered. Following are the key performance indicators against
which the companies have been benchmarked:
11.3.1 Colgate-Palmolive (India) Ltd - Market Capitalization
As of 28-Nov-2014, the company recorded a market capitalization of US$4,772 million, lower than its close competitors Hindustan
Unilever Limited (Ticker: HINDUNILVR), Dabur India Limited (Ticker: DABUR) and Godrej Consumer Products Limited (Ticker:
GODREJCP) which recorded market capitalizations of US$31,969 million, US$7,915 million and US$6,078 million respectively.
The company recorded earnings per share of US$0.74 in 2014, which has led to a price/earnings ratio (P/E ratio) of 47.26. This
was higher than the P/E ratios of its peers Hindustan Unilever Limited (Ticker: HINDUNILVR), Dabur India Limited (Ticker:
DABUR) and Godrej Consumer Products Limited (Ticker: GODREJCP), which recorded P/E ratio of 43.33, 45.93 and 42.77
respectively.
Figure 5: Colgate-Palmolive (India) Ltd - Market Capitalization

Source: CanadeanNote: Company names are represented by ticker symbols

Bubble size represents Market Capitalization US$ Million
For those data points with negative values, bubbles will not be displayed.
Where the market cap is disproportionately smaller, a bubble may not be displayed.

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Colgate-Palmolive (India) Ltd

11.3.2 Colgate-Palmolive (India) Ltd - Efficiency

The company recorded an operating margin of 18.97% in 2014. This was higher than the operating margins of its peers,
Hindustan Unilever Limited (Ticker: HINDUNILVR), Dabur India Limited (Ticker: DABUR) and Godrej Consumer Products Limited
(Ticker: GODREJCP), which recorded the margins of 16.03%, 14.97% and 14.48% respectively. In terms of revenues, the
company is 0.12 times of Hindustan Unilever Limited (Ticker: HINDUNILVR), 0.51 times of Dabur India Limited (Ticker: DABUR),
and 0.47 times of Godrej Consumer Products Limited (Ticker: GODREJCP).
Figure 6: Colgate-Palmolive (India) Ltd - Efficiency

Source: CanadeanNote: Company names are represented by ticker symbols

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Colgate-Palmolive (India) Ltd

11.3.3 Colgate-Palmolive (India) Ltd - Valuation

As of 28-Nov-2014, the companys EV/EBIT was 37.18. This was higher than that of its peers, Hindustan Unilever Limited (Ticker:
HINDUNILVR) and Godrej Consumer Products Limited (Ticker: GODREJCP), which reported EV/EBIT figures of 36.31 and 31.03
respectively.
Figure 7: Colgate-Palmolive (India) Ltd - Valuation

Source: CanadeanNote: Company names are represented by ticker symbols

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Colgate-Palmolive (India) Ltd

11.3.4 Colgate-Palmolive (India) Ltd - Turnover: Inventory and Asset

In 2014, the company reported an inventory turnover of 6.39, higher than that of its peers: during the same period, Hindustan
Unilever Limited (Ticker: HINDUNILVR), Dabur India Limited (Ticker: DABUR) and Godrej Consumer Products Limited (Ticker:
GODREJCP), recorded inventory turnovers of 5.22, 3.50 and 3.28 respectively. The companys asset turnover in 2014 was 2.40,
higher than the asset turnovers of its peers: during the same period, Hindustan Unilever Limited (Ticker: HINDUNILVR), Dabur
India Limited (Ticker: DABUR) and Godrej Consumer Products Limited (Ticker: GODREJCP) recorded asset turnovers of 2.12,
1.33 and 0.91 respectively.
Figure 8: Colgate-Palmolive (India) Ltd - Turnover: Inventory and Asset

Source: CanadeanNote: Company names are represented by ticker symbols

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Colgate-Palmolive (India) Ltd

12 Colgate-Palmolive (India) Ltd - Mergers & Acquisitions and

Partnerships
12.1 Colgate-Palmolive (India) Ltd - M&A and Partnerships Strategy
Essel Propack partners with Colgate Palmolive
Deal Type

Partnership

Deal Sub Type

Other

Deal Status

Announced

Announced Date

6/17/2011 12:00:00 AM

Deal in Brief
Essel Propack Limited, a specialty packaging company, a manufacturer and seller of laminated, and seamless or extruded plastic
tubes, has signed a long-term agreement with Colgate-Palmolive (India) Limited, a manufacturer and seller of oral care and
personal care products to set up a plant in Goa at an investment of 400 million rupees.

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Colgate-Palmolive (India) Ltd

13 Colgate-Palmolive (India) Ltd - Recent Developments

Colgate & Indian Dental Association bring free dental check-ups closer to consumers
Colgate-Palmolive (India) Limited, the market leader in Oral Care, and the Indian Dental Association (IDA) have been organizing free dental
check-ups as part of Oral Health Month(OHM) - an annual initiative dedicated to spreading oral health and hygiene awareness throughout the
country.
Published Date : 11/6/2014 12:02:00 PM

Colgate & IDA launched Oral Health Month, 2014 with an aim to create a cavity-free future
Colgate-Palmolive (India) Limited, the market leader in Oral Care, and the Indian Dental Association announced the commencement of Oral
Health Month (OHM) across the country.
Published Date : 10/8/2014 12:00:00 AM

Colgate introduces SlimSoft Charcoal, super slim tip bristle toothbrush

Colgate-Palmolive (India) Limited, the market leader in Oral Care, now introduces Colgate SlimSoft Charcoal Indias first and only toothbrush
with super slim tip bristles now infused with Charcoal.
Published Date : 8/4/2014 12:00:00 AM

Colgate introduces complete teeth whitening treatment

Colgate-Palmolive (India) Limited, the market leader in Oral Care, now introduces a beauty-oral care breakthrough - the new Colgate Visible
White teeth whitening treatment.
Published Date : 4/3/2014 12:00:00 AM

Colgate-Palmolive Q3 net profit up 74%

Colgate-Palmolive (India), a subsidiary of Colgate Palmolive in the US has announced that its Q3 net sales were INR6.69bn ($133.73m), up 20%
against the same quarter last year. The firm's Reported Net Profit After Tax for the quarter was INR1.15bn ($23.08m), up 74% compared to the
same quarter of the previous year.
Published Date : 1/25/2012 5:54:00 AM
Source: Canadean

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Colgate-Palmolive (India) Ltd

14 Appendix
14.1 Methodology
Canadean company reports are based on a core set of research techniques which ensure the best possible level of quality
and accuracy of data. The key sources used include:
Company Websites
Company Annual Reports
SEC Filings
Press Releases
Proprietary Databases

Notes
Financial information of the company is taken from the most recently published annual reports or SEC filings
The financial and operational data reported for the company is as per the industry defined standards
Revenue converted to US$ at average annual conversion rate as of fiscal year end

14.2 Colgate-Palmolive (India) Ltd - Ratio Definitions

Capital Market Ratios

Price/Earnings Ratio (P/E)

Capital Market Ratios measure investor response to owning a company's stock and also the cost
of issuing stock.
Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual income
earned per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors
are paying more for each unit of income, so the stock is more expensive compared to one with
lower P/E ratio. A high P/E suggests that investors are expecting higher earnings growth in the
future compared to companies with a lower P/E. Price per share is as of previous business
close, and EPS is from latest annual report.
Formula: Price per Share / Earnings per Share

Enterprise Value/Earnings
before Interest, Tax,
Depreciation & Amortization
(EV/EBITDA)

Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel with,
or as an alternative to, the P/E ratio. The main advantage of EV/EBITDA over the PE ratio is that
it is unaffected by a company's capital structure. It compares the value of a business, free of
debt, to earnings before interest. Price per share is as of previous business close, and shares
outstanding last reported. Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / (Net Income +
Interest + Tax + Depreciation + Amortization)

Enterprise Value/Sales

Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to buy
the company's sales. EV/Sales is seen as more accurate than Price/Sales because market
capitalization does not take into account the amount of debt a company has, which needs to be
paid back at some point. Price per share is as of previous business close, and shares
outstanding last reported. Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Sales

Enterprise Value/Operating
Profit

Enterprise Value/Operating Profit measures the company's enterprise value to the operating
profit. Price per share is as of previous business close, and shares outstanding last reported.
Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Operating Income

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Colgate-Palmolive (India) Ltd

Enterprise Value/Total
Assets

Enterprise Value/Total Assets measures the company's enterprise value to the total assets.
Price per share is as of previous business close, and shares outstanding last reported. Other
items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Total Assets

Dividend Yield

Dividend Yield shows how much a company pays out in dividends each year relative to its share
price. In the absence of any capital gains, the dividend yield is the return on investment for a
stock.
Formula: Annual Dividend per Share / Price per Share

Equity Ratios

These ratios are based on per share value.

Earnings per Share (EPS)

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding
share of common stock. EPS serves as an indicator of a company's profitability.
Formula: Net Income / Weighted Average Shares

Dividend per Share

Dividend Cover

Dividend is the distribution of a portion of a company's earnings, decided by the board of

directors, to a class of its shareholders.

Dividend cover is the ratio of company's earnings (net income) over the dividend paid to
shareholders.
Formula: Earnings per share / Dividend per share

Book Value per Share

Book Value per Share measure used by owners of common shares in a firm to determine the
level of safety associated with each individual share after all debts are paid accordingly.
Formula: (Shareholders Equity - Preferred Equity) / Outstanding Shares

Cash Value per Share

Cash Value per Share is a measure of a company's cash (cash & equivalents on the balance
sheet) that is determined by dividing cash & equivalents by the total shares outstanding.
Formula: Cash & equivalents / Outstanding Shares

Profitability Ratios

Gross Margin

Profitability Ratios are used to assess a company's ability to generate earnings, based on
revenues generated or resources used. For most of these ratios, having a higher value relative
to a competitor's ratio or the same ratio from a previous period is indicative that the company is
doing well.

Gross margin is the amount of contribution to the business enterprise, after paying for directfixed and direct variable unit costs.
Formula: {(Revenue-Cost of revenue) / Revenue}*100

Operating Margin

Operating Margin is a ratio used to measure a company's pricing strategy and operating
efficiency.
Formula: (Operating Income / Revenues) *100

Net Profit Margin

Net Profit Margin is the ratio of net profits to revenues for a company or business segment - that
shows how much of each dollar earned by the company is translated into profits.
Formula: (Net Profit / Revenues) *100

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Colgate-Palmolive (India) Ltd

Profit Markup

Profit Markup measures the company's gross profitability, as compared to the cost of revenue.
Formula: Gross Income / Cost of Revenue

PBIT Margin (Profit Before

Interest & Tax)

Profit Before Interest & Tax Margin shows the profitability of the company before interest
expense & taxation.
Formula: {(Net Profit + Interest + Tax) / Revenue} *100

PBT Margin (Profit Before

Tax)

Profit Before Tax Margin measures the pre-tax income over revenues.
Formula: {Income Before Tax / Revenues} *100

Return on Equity

Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of
the common stock owners.
Formula: (Net Income / Shareholders Equity)*100

Return on Capital Employed

Return on Capital Employed is a ratio that indicates the efficiency and profitability of a
company's capital investments. ROCE should always be higher than the rate at which the
company borrows; otherwise any increase in borrowing will reduce shareholders' earnings.
Formula: EBIT / (Total Assets Current Liabilities)*100

Return on Assets

Return on Assets is an indicator of how profitable a company is relative to its total assets, the
ratio measures how efficient management is at using its assets to generate earnings.
Formula: (Net Income / Total Assets)*100

Return on Fixed Assets

Return on Fixed Assets measures the company's profitability to its fixed assets (property, plant &
equipment).
Formula: (Net Income / Fixed Assets) *100

Return on Working Capital

Return on Working Capital measures the company's profitability to its working capital.
Formula: (Net Income / Working Capital) *100

Cost Ratios

Cost ratios help to understand the costs the company is incurring as a percentage of sales.

Operating costs as percentage of total revenues measures the operating costs that a company
Operating costs (% of Sales) incurs compared to the revenues.
Formula: (Operating Expenses / Revenues) *100
Administration costs (% of
Sales)

Administration costs as percentage of total revenue measures the selling, general and
administrative expenses that a company incurs compared to the revenues.
Formula: (Administrative Expenses / Revenues) *100

Interest costs (% of Sales)

Interest costs as percentage of total revenues measures the interest expense that a company
incurs compared to the revenues.
Formula: (Interest Expenses / Revenues) *100

Leverage Ratios

Leverage ratios are used to calculate the financial leverage of a company to get an idea of the
company's methods of financing or to measure its ability to meet financial obligations. There are
several different ratios, but the main factors looked at include debt, equity, assets and interest
expenses.

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Debt to Equity Ratio

Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio also
depends on the industry in which the company operates. For example, capital-intensive
industries tend to have a higher debt equity ratio.
Formula: Total Liabilities / Shareholders Equity

Debt to Capital Ratio

Debt to capital ratio gives an idea of a company's financial structure, or how it is financing its
operations, along with some insight into its financial strength. The higher the debt-to-capital ratio,
the more debt the company has compared to its equity. This indicates to investors whether a
company is more prone to using debt financing or equity financing. A company with high debt-tocapital ratios, compared to a general or industry average, may show weak financial strength
because the cost of these debts may weigh on the company and increase its default risk.
Formula: {Total Debt / (Total assets - Current Liabilities)}

Interest Coverage Ratio

Interest Coverage Ratio is used to determine how easily a company can pay interest on
outstanding debt, calculated as earnings before interest & tax by interest expense.
Formula: EBIT / Interest Expense

Liquidity Ratios

Current Ratio

Liquidity ratios are used to determine a company's ability to pay off its short-terms debts
obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the
company possesses to cover short-term debts. A company's ability to turn short-term assets into
cash to cover debts is of the utmost importance when creditors are seeking payment.
Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine
whether a company will be able to continue as a going concern.

Current Ratio measures a company's ability to pay its short-term obligations. The ratio gives an
idea of the company's ability to pay back its short-term liabilities (debt and payables) with its
short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable
the company is of paying its obligations. A ratio under 1 suggests that the company would be
unable to pay off its obligations if they came due at that point.
Formula: Current Assets / Current Liabilities

Quick Ratio

Quick ratio measures a company's ability to meet its short-term obligations with its most liquid
assets.
Formula: (Current Assets - Inventories) / Current Liabilities

Cash Ratio

Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It only
looks at the most liquid short-term assets of the company, which are those that can be most
easily used to pay off current obligations. It also ignores inventory and receivables, as there are
no assurances that these two accounts can be converted to cash in a timely matter to meet
current liabilities.
Formula: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

Efficiency Ratios

Fixed Asset Turnover

Efficiency ratios measure a company's effectiveness in various areas of its operations,

essentially looking at maximizing its use of resources.

Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to generate
sales. A higher ratio indicates the business has less money tied up in fixed assets for each
currency unit of sales revenue. A declining ratio may indicate that the business is over-invested
in plant, equipment, or other fixed assets.
Formula: Net Sales / Fixed Assets

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Asset Turnover

Asset turnover ratio measures the efficiency of a company's use of its assets in generating sales
revenue to the company. A higher asset turnover ratio shows that the company has been more
effective in using its assets to generate revenues.
Formula: Net Sales / Total Assets

Current Asset Turnover

Current Asset Turnover indicates how efficiently the business uses its current assets to generate
sales.
Formula: Net Sales / Current Assets

Inventory Turnover

Inventory Turnover ratio shows how many times a company's inventory is sold and replaced
over a period. A low turnover implies poor sales and, therefore, excess inventory. A high ratio
implies either strong sales or ineffective buying.
Formula: Cost of Goods Sold / Inventory

Working Capital Turnover

Working Capital Turnover is a measurement to compare the depletion of working capital to the
generation of sales. This provides some useful information as to how effectively a company is
using its working capital to generate sales.
Formula: Net Sales / Working Capital

Capital Employed Turnover

Capital employed turnover ratio measures the efficiency of a company's use of its equity in
generating sales revenue to the company.
Formula: Net Sales / Shareholders Equity

Capex to sales

Capex to Sales ratio measures the company's expenditure (investments) on fixed and related
assets' effectiveness when compared to the sales generated.
Formula: (Capital Expenditure / Sales) *100

Net income per Employee

Net income per Employee looks at a company's net income in relation to the number of
employees they have. Ideally, a company wants a higher profit per employee possible, as it
denotes higher productivity.
Formula: Net Income / No. of Employees

Revenue per Employee

Revenue per Employee measures the average revenue generated per employee of a company.
This ratio is most useful when compared against other companies in the same industry.
Generally, a company seeks the highest revenue per employee.
Formula: Revenue / No. of Employees

Efficiency Ratio

Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company is
losing a larger percentage of its income to expenses. If the efficiency ratio is getting lower, it is
good for the bank and its shareholders.
Formula: Non-interest expense / Total Interest Income

Source : Canadean

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14.3 Disclaimer
All Rights Reserved
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means,
electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Canadean.
The data and analysis within this report is driven by Canadean from its own primary and secondary research of public and
proprietary sources and does not necessarily represent the views of the company profiled.
The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the
findings, conclusions and recommendations that Canadean delivers will be based on information gathered in good faith from
both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Canadean can
accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

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