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Directors Report of Colgate-Palmolive (India) Ltd.

Mar 31, 2015

The Members

Colgate-Palmolive (India) Limited

The Directors have pleasure in presenting their Report and Audited Accounts of the Company for the year ended March 31,2015.

Financial Results (Rs. Crore)

F.Y. 2014-15 F.Y. 2013-14

Total Revenue (a b c) 4,015.12 3,629.13

Sales (Excluding Excise Duty) (a) 3,954.78 3,544.88

Other Operating Revenue (b) 27.17 33.93

Other Income (c) 33.17 50.32

Profit before Tax from ordinary activities 780.39 663.58

Exceptional item - 64.38

Profit before Tax (including exceptional item) 780.39 727.96

Tax expense 221.41 188.09

Profit for the year 558.98 539.87

Balance brought forward 175.51 119.21

Adjustment of Depreciation as per Schedule-II of

the Companies Act, 2013 (0.17) -

Profit available for appropriation 734.32 659.08

Appropriation:

Dividend 326.38 367.18

Dividend Distribution Tax 61.99 62.40

General Reserve - 53.99

Balance carried forward 345.95 175.51

734.32 659.08

Business Performance

Indian economy as measured through GDP grew by 5% in 2014 compared to 4.7% in 2013. Public sentiment significantly improved with resounding majority of a single political party in the National elections in May 2014. Although, there was a renewed optimism in the country, it did not translate immediately into an increase in demand. Rural consumption slowed during the year, unexpected rains in some states further dampened the sentiments in the rural markets.

Wholesale and Consumer price inflation moderated substantially in 2014 as compared to the previous

year. Food inflation and crude oil prices also dropped significantly in 2014. While gradual increase in economic activity is expected in 2015, a clearer trend in rural consumption is expected only after monsoon and a possible pick up in Government spending.

In spite of the challenges and increased competitive intensity, your Company delivered strong results.

Your Company registered strong Sales growth of 12% to Rs. 3,954.78 Crore from Rs. 3,544.88 Crore in the previous year. Toothpaste and Toothbrush volumes grew at 5% and 7% respectively. This growth was achieved at a time when the overall Toothpaste market declined by just over 3%. Profit Before Tax (including exceptional item) during the year was Rs. 780.39 Crore, an increase of 7% over the previous year. Profit After Tax (including exceptional item) during the year was Rs. 558.98 Crore, an increase of 4% over the previous year.

Your Company has made very good market share progress with Toothpaste at 57.8% and Toothbrushes at 42.1%. This is a result of ongoing innovation supported by impeccable execution in all retail environments. The efforts in the area of efficiency continue to pay- off with Rs.Funding the GrowthRs. initiatives continuing to deliver savings, allowing us to improve investment levels while also delivering improved profitability.

Dividend

The Company has set up two state-of-the-art manufacturing facilities at Sanand, Gujarat and Sricity, Andhra Pradesh to manufacture toothpaste and toothbrush respectively, out of the internal accruals and strong cash generation. Despite making such substantial investments, your Board declared three interim dividends, each of Rs. 8/- per share, aggregating Rs. 24/- per share for the financial year 2014-15. These dividends were paid on October 16, 2014, December 29, 2014 and April 22, 2015. Having declared three interim dividends, your Board has not recommended a final dividend for the financial year 2014-15.

Colgate - the #1 Brand once again in 2014

Number 1 Most Chosen Consumer Brand in India

Your CompanyRs.s brand Rs.ColgateRs. is ranked the No.1 Rs.Most Chosen Consumer BrandRs. in India, in 2014 Brand Footprint report by consumer knowledge and insights firm, Kantar Worldpanel. This is the third consecutive time that the brand Rs.ColgateRs. is ranked number 1, across the FMCG and Personal Care category. The Rs.Most Chosen Consumer BrandRs. has been announced on the basis of certain parameters specified by Kantar Worldpanel.

#1 Most Trusted Brand in India

Colgate was once again voted as the #1 Rs.Most Trusted BrandRs. in India across categories in 2014. This is the fourth consecutive year that Colgate has been voted

as the #1 Rs.Most Trusted BrandRs.. It is pertinent to note that Colgate is the only brand to feature in the top three from 2001-2014 since inception of the survey.

Focus on Innovation and New Launches

Your Company has been continually pioneering innovation and development in the Oral Care category with best-in-class technologies.

Your Company has been staying ahead of trends by identifying opportunities based on insights into consumer behavior and by leveraging the technology from the Parent Company.

Your Company has made successful innovative launches during the year, as listed below :

In the Toothpaste category, the Company introduced innovative products like :

- Colgate Sensitive Pro-Relief™ (CSPR) Enamel Repair Toothpaste - a scientifically advanced technology that protects enamel from erosion by repair and remineralisation. It also provides long- lasting relief from tooth sensitivity.

- Colgate Visible White Plus Shine Toothpaste - This toothpaste is formulated with whitening accelerators that remove and prevent surface stains and helps in tooth whitening. In addition to this, the micro crystals in the formulation safely polish teeth surfaces for a shinier smile.

In the Toothbrush category, the Company introduced innovative products like :

- Colgate SlimSoft Charcoal Toothbrush - IndiaRs.s first toothbrush with slim tapered tip bristles technology infused with Charcoal. This revolutionary toothbrush technology is based on the key Indian insight of the traditional Oral Care benefits of Charcoal. The new Colgate SlimSoft Charcoal is one such clutter breaking offering, which brings together the traditional Oral Care benefits of Charcoal with advanced bristle technology. It was also voted as the Product of the Year for 2015.

- Colgate ZigZag Black Toothbrush - Colgate ZigZag Black is a line extension of one of IndiaRs.s most popular toothbrush brands Rs.Colgate ZigZagRs.. As the market leader, your Company has introduced many Rs.firstsRs. in the toothbrush category and Colgate ZigZag is the first black toothbrush in the Mass Segment.

In the Mouthwash Category, your Company has launched Colgate Plax Active Salt Mouthwash. Building on the insight of salt water gargling, this innovative product provides dual benefit of Healthy Gums and Long-lasting freshness to our consumers.

Your Company will continue to remain focused on driving consumer relevant innovation in the future.

New projects

As stated in the Annual Report for the financial year 2013-14, your Company had set up a state-of-the- art Toothpaste manufacturing facility at Sanand in Gujarat which was commissioned in March 2014. The said facility is now fully operational and caters to the domestic and export markets.

Your Company has also set up a new state-of-the- art Toothbrush manufacturing facility at Sricity in Chittoor District in Andhra Pradesh. This facility was commissioned and fully tested in the month of March 2015 and has commenced its commercial production in the month of April 2015 and will have an installed capacity to produce 220 Million pieces of Toothbrushes by the end of the year.

With a commitment to grow the business, substantial investments have been made in the above two new manufacturing facilities, which will immensely benefit your Company in the years to come.

Expiry of Fiscal Incentives at Baddi facility

The CompanyRs.s manufacturing facility at Baddi, Himachal Pradesh was established in April 2005 and was entitled to certain fiscal benefits (Income Tax and Excise) for a period of 10 years pursuant to the then Industrial Policy of the Government of Himachal Pradesh. Accordingly, the income tax and excise benefits for the said facility expired on March 31,2015 and on April 21, 2015 respectively. The Company, therefore, pays applicable excise duty on production and income tax on profits from the said facility.

Your Company continues to manufacture its Oral Care products from the Baddi facility.

Toothpowder Manufacturing Facility at Aurangabad

As consumers shift from traditional toothpowder to toothpaste, Oral Care market in India has changed significantly over the past few years. This has resulted in a declining trend in toothpowder volume as the growth is captured by toothpaste. With a view to enhance the

CompanyRs.s competitiveness and operate in a cost effective manner, your Company offered a voluntary retirement scheme at its toothpowder manufacturing facility at Aurangabad while ensuring that the core values of caring for people are consistently followed. The said scheme was accepted by all the workmen and therefore the toothpowder manufacturing operations at the Aurangabad facility were discontinued effective May 5, 2015.

Sustainability

Your Company is committed to sustainability with focused and measureable goals. Your Company values sustainability through a commitment to the quality of the environment and extends it to the long-term well- being of the people and communities it serves.

Considering this, your Company developed a plan that guides its sustainability initiative with key goals in the following three areas viz. People, Performance and Planet.

The broad aspects covered in these goals are as under :

- People - Promoting healthier lives, Contributing to the Communities where we live and work.

-Performance - Delivering Products that delight consumers and respect our Planet.

- Planet - Making every drop of water count, Reducing our impact on the climate and the environment.

Your Company believes that integrating sustainability into its everyday operations will help in making better business decisions and improve peopleRs.s lives. The sustainability strategy will also continue to focus on increasing consumer loyalty for our brands, provide a competitive advantage and ensure long-term shareholder value. Listed below are a few initiatives undertaken during the year :

- Free Health Check-up for all the employees;

- Initiatives on clean technology, energy efficiency and renewable energy;

- Sourcing of packaging material locally to reduce 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 mentioned in an annexure to this report.

Responsibility Statement :

Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors, based on the representations received from the Management, confirm :

a) that in the preparation of the annual accounts, the applicable accounting standards have 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 statutory auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company 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 and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a going concern basis;

e) that they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) that they have had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Corporate Governance

A separate report on Corporate Governance along with the AuditorsRs. Certificate on its compliance is attached as Annexure - 1 to this Report.

Corporate Social Responsibility :

Your Company and its employees share a commitment to the following three core Corporate Values : Caring, Global Teamwork and Continuous Improvement. These values are reflected not just in the quality of products and the reputation of your Company, but also in our dedication to serving the communities in which we operate.

Your Company undertakes its Corporate Social Responsibility (CSR) activities through a variety of effective programs. Some of the key CSR activities which your Company has undertaken during the year are in the areas of Promoting preventive health care, Promoting education, Conservation of natural resources, Empowerment of women and Addressing inequalities. These activities are broadly in accordance with the Schedule VII of the Companies Act, 2013.

The Board of Directors and the CSR Committee review and monitor from time to time all the CSR activities being undertaken by the Company.

Following are the key CSR activities undertaken by your Company during the Financial Year 2014-15 :

- Bright Smiles, Bright Futures™

- Oral Health Month

- Rs.A Positive StepRs. - A Program in collaboration with Rs.Network in Thane by People Living with HIVRs. a Non-Governmental Organization (NGO), for addressing inequalities and promoting education for HIV infected and affected children

- Supporting Rs.PrathamRs., an NGO, in the areas of providing quality education to the underprivileged children of India

- Supporting Rs.Seva MandirRs., a nonprofit organization, in the areas of conservation of natural resources, improving health and education of the people.

The details of CSR activities by your Company are elaborated in the Rs.Annual Report on CSRRs. which is attached as Annexure - 2 to this Report.

The contents of the CSR Policy as well as the CSR activities undertaken by the Company are available on the Company website.

Employee Relations

The employee relations in the Company continued to be healthy, cordial and progressive.

Your Company recognizes its responsibility and continues to provide a safe working environment for women, free from sexual harassment and discrimination and to boost their confidence, morale and performance. Your Company also has a Policy on Prevention of Sexual Harassment which is reviewed by the Internal Complaints Committee at regular intervals.

"Managing With Respect" is the way Colgate People put your Company Values (Caring, Global Teamwork and Continuous Improvement) into action. Each and every employee is expected to work with all stake- holders (other employees, customers, consumers, suppliers etc.) in a respectful manner. Each employee is also expected to strictly follow your CompanyRs.s Code of Conduct and any violation is treated with zero tolerance. Your Company strives to set a Gold Standard in conducting business in the most ethical and respectful manner.

Trade Relations

Your Directors wish to record appreciation of the continued, unstinted support and co-operation from its retailers, stockists, suppliers of goods/services, clearing and forwarding agents and all others associated with it. Your Company will continue to build and maintain a strong association with its business partners.

Particulars of Employees

Information as per Section 197 of the Companies Act, 2013 (the Rs.ActRs.) read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. As per the provisions of Section 136 of the Act, the Report and Accounts are being sent to the shareholders of the Company and others entitled thereto, excluding the statement on particulars of employees. Any shareholder interested in obtaining a copy of the said statement may visit the registered office during business hours on any working day of the Company up to the date of 74th Annual General Meeting or write to the Secretarial Department at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange

The information required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption and foreign exchange earnings/outgo is appended hereto as Annexure - 3 and it forms part of this Report.

Directors and Key Managerial Personnel

Consequent to the elevation of the previous Managing Director, Ms. Prabha Parameswaran as President, Africa/Eurasia Division of Colgate-Palmolive Company, the Board of Directors at their meeting held on August 18, 2014 appointed Mr. Issam Bachaalani as the Managing Director of the Company for a period of five years effective October 1, 2014 subject to the approval of the Central Government and Shareholders of the Company. The details of the appointment of Mr. Bachaalani are elaborated in the Notice to the Annual General Meeting.

Your Board places on record its appreciation for outstanding contributions made by Ms. Prabha Parameswaran during her tenure as the Managing Director of the Company.

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 (the Rs.ActRs.) and the Articles of Association of the Company, the Board of Directors of your Company, based on the recommendation of the Nomination & Remuneration Committee, appointed Ms. Shyamala Gopinath as an Additional Director (Non-executive & Independent) of the Company effective May 19, 2015 and she shall hold office up to the date of the ensuing Annual General Meeting. The Company has received declarations from Ms. Shyamala Gopinath confirming that she meets with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Act and under Clause 49 of the Listing Agreement with the Stock Exchanges. Accordingly, her candidature for appointment as a Non-executive & Independent Director of the Company is included at Item No. 4 of the Notice to the Annual General Meeting.

Pursuant to the provisions of Section 152 of the Act and under Article 124 of the CompanyRs.s Articles of Association, Mr. Godfrey Nthunzi retires by rotation at the ensuing 74th Annual General Meeting and, being eligible, offers himself for re-appointment.

Pursuant to Sections 149, 150 and 152 of the Act, read with Companies (Appointment and qualification of Directors) Rules, 2014 along with Schedule IV of the Act (including any statutory modification(s) or re-enactment thereof for the time being in force) and shareholdersRs. approval in 73rd Annual General Meeting, the following Non-executive & Independent Directors can hold office for a term of five consecutive years on the Board of Directors of your Company :

1. Mr. R. A. Shah;

2. Mr. P. K. Ghosh;

3. Mr. J. K. Setna;

4. Mr. V. S. Mehta; and

5. Dr. (Ms.) I. Shahani.

These Non-executive & Independent Directors shall not be liable to retire by rotation. All the above mentioned Non-executive & Independent Directors have given the declaration of independence to the Company as per Section 149 (6) of the Act as well as under Clause 49 of the Listing Agreement. Mr. Issam Bachaalani, Mr. Godfrey Nthunzi and Mr. Niket Ghate are the Key Managerial Perosonnel of the Company.

Familiarization Program

Your Company, for many years now, has been familiarizing the Independent Directors on its Board with detailed presentations by its business functional heads on the Company operations, strategic business plans, new products and technologies, including significant aspects of the Industry and its future outlook. Details of familiarization programs extended to the Non- executive & Independent Directors during the year are also disclosed on the Company website from time to time at http://www.colgate.co.in/Colgate/IN/Corp_v2/ RelatedInformation/Familarization-Programme.pdf

Nomination & Remuneration Policy

The Board of Directors of your Company has, on recommendation of the Nomination & Remuneration Committee, framed and adopted a policy for selection and appointment of Directors, Senior Management and their remuneration. The contents of the policy are stated in the Corporate Governance Report.

Annual Performance Evaluation by Board

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 to the Listing Agreement, the Board has carried out an Annual Performance Evaluation of its own performance, the Directors individually as well as the evaluation of the working of the Committees. The manner in which the evaluation was carried out has been explained in the Corporate Governance Report.

Risk Management

The Board of Directors of your Company has, on recommendation of the Risk Management Committee framed and adopted a policy on Risk Management of the Company. The broad terms of reference of the Committee are stated in the Corporate Governance Report.

Vigil Mechanism

Your Company has an effective Vigil Mechanism system which is embedded in its Code of Conduct. The Code of Conduct of your Company serves as a guide for daily business interactions, reflecting your CompanyRs.s standard for appropriate behavior and living Corporate Values. The Code of Conduct applies to all Colgate People, including Directors, Officers, and all employees of the Company. Even your Company vendors and suppliers are also subject to these requirements as adherence to the Code is a prerequisite for conducting business with your Company.

The Code of Conduct Hotline is available on the Company website to report any genuine concerns about unethical behavior, any actual or suspected fraud or violation of CompanyRs.s Code of Conduct.

Loans, Guarantees and Investments

Particulars of loans, guarantees and investments made by the Company pursuant to Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Accounts.

Related Party Contracts & Arrangements

All related party transactions done by the Company during the financial year were at armRs.s length and in ordinary course of business. All related party

transactions were placed in the meetings of Audit Committee and the Board of Directors for their necessary review and approval. During the financial year your Company has not entered into any material transaction (as per Clause 49 of the Listing Agreement) with any of its related parties which may have potential conflict with the interest of the Company at large. Disclosures pursuant to Accounting Standards on related party transactions have been made in the notes to the Financial Statements. To identify and monitor significant related party transactions Company has also framed a policy on the related party transactions and the same is available on the Company website http-.//www.colgate.co.in/Colgate/IN/Corp_v2/Investor/ CorporateGovernance/Related-Party-Transactions- Policy.pdf

Auditors

M/s. Price Waterhouse, Chartered Accountants, retire and are eligible for re-appointment as Auditors from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting. The AduditorsRs. Report for the financial year 2014-15 does not contain any qualification, resevation or adverse remarks.

Secretarial Auditor & Secretarial Audit Report

The Board had appointed M/s. S. N. Ananatha- subramanian & Co., Company Secretaries in Whole- time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2014-15. The report of the Secretarial Auditor is annexed to this report

as Annexure - 4. The Secretarial AduditorsRs. Report for the financial year 2014-15 does not contain any qualification, resevation or adverse remarks.

Extract of Annual Return

Pursuant to the Section 92(3) of the Companies Act, 2013 extract of the annual Return is annexed to this report as Annexure - 5.

Business Responsibility Report

The Business Responsibility Report for the financial year 2014-15, as stipulated under Clause 55 of the Listing Agreement is annexed to this report as Annexure - 6.

Acknowledgements

Your Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels. Your Directors also wish to place on record their gratitude to the shareholders for their continued support and confidence.

On behalf of the Board

M. V. Deoras R. A. Shah Chairman Vice-Chairman (DIN : 02869422) (DIN : 00009851)

May 19, 2015


Mar 31, 2013

To, The Members of Colgate-Palmolive (India) Limited

The Directors have pleasure in presenting their Report and Audited Accounts of the Company for the year ended March 31, 2013.

Financial Results

(Rs. Crore)

2012-13 2011-12

Total Revenue (a b c) 3,213.73 2,743.91

Sales (Excluding Excise Duty) (a) 3,084.11 2,623.85

Other Operating Revenue (b) 79.70 69.38

Other Income (c) 49.92 50.68

Profit before Taxation 663.03 588.39

Provision for Taxation 166.28 141.92

Profit after Taxation 496.75 446.47

Balance brought forward 114.68 107.99

Profit available for appropriation 611.43 554.46

Appropriation :

Dividend 380.78 339.98

Dividend Tax 61.77 55.15

General Reserve 49.67 44.65

Balance carried forward 119.21 114.68

611.43 554.46

Business Performance

Despite an inflationary environment and increasingly fierce competition, your Company delivered very strong results. Your Company''s business continues to grow strongly in double digits. Sales for the year increased by 18 per cent to Rs. 3,084 crore as against Rs. 2,624 crore during the previous year. The toothpaste and toothbrush businesses registered a very strong volume growth of 10 and 20 per cent respectively during the year.

The profit before tax during the year was Rs. 663 crore as against Rs. 588 crore during the previous year, an increase of 13 per cent. The profit after tax also increased, standing at Rs. 497 crore, an increase of 11 per cent over the previous year.

Your Company continued to lay emphasis on cash generation driven by strong business performance, focus on efficiencies, cost management and continued efficient collection system. Your Company managed investments prudently by deploying surplus funds after ensuring that such investments satisfy the Company''s criteria of safety and security.

During the financial year, your Company strengthened its leadership position in the toothpaste category to 54.6 per cent from 52.9 per cent in the previous year. Similarly, market share in toothbrush category was strengthened to 40.5 per cent and market share in mouthwash category has been growing consistently.

Your Company achieved its goals by focusing on strategic initiatives which are : engaging to build own brands, innovation for growth, being effective and efficient and leading to win.

Dividend

The Company''s strong cash generation and positive growth momentum led the Board of your Company to declare three interim dividends of Rs.13 per share, Rs. 6 per share and Rs. 9 per share aggregating Rs. 28 per share for the financial year 2012-13 as against Rs. 25 per share in the previous year. These dividends were paid on October 19, 2012, December 27, 2012 and April 19, 2013. Having declared three interim dividends, your Board has not recommended a final dividend for the financial year 2012-13.

Colgate - the Most Trusted Brand once again in 2012

''Colgate'' has been ranked as "Most Trusted Brand" by Brand Equity''s Annual Survey. In the year 2011 as well, Colgate was voted as #1 Most Trusted Brand of the year. Colgate had also been rated as India''s #1 Most Trusted Brand across all categories for four consecutive years from 2003 to 2007. It is the only Brand to be ranked in the top 3 from the inception of the survey in 2001.

Your Company was also ranked as the 3rd most admired Company in India by the Global Business Magazine Fortune and Management Consultancy Hay Group.

Sale and transfer of Company''s division viz. ''Global Shared Services Organisation'' (GSSO)

In the year 2004, your Company with the assistance of Colgate-Palmolive Company (CP-USA) set up a Global Shared Services Organisation (GSSO Division) to provide IT/ITES services and assistance to some of the subsidiaries of CP-USA including your Company. Its services primarily revolve around, but are not limited to, the operations, maintenance and enhancement of the SAP ERP system as well as electronic communication systems, administrative, financial, managerial and technical matters in the IT/ ITES segment.

Recently, CP-USA announced a four year Global Growth Efficiency Program (GG&EP) for sustained growth. The said program''s initiatives are expected to ensure continued growth and enhance the Colgate group''s global leadership positions in its core businesses. The said program is expected to achieve the objectives through :

i. Expansion of commercial hubs;

ii. Extension of Colgate Business Service Centres (CBS) and streamlining of global functions; and

iii. Optimization of the Global Supply Chain and Facilities.

Keeping in view the aforesaid objectives, your Board felt that transfer of GSSO division to Colgate Global Business Services Private Limited (CGBSPL), a recently formed entity, will enable CP-India to focus on its core business.

Your Company accordingly decided to divest its GSSO division along with all its employees as well as assets and liabilities, as a going concern and by way of slump sale to CGBSPL, a 100% subsidiary of the ultimate holding company CP-USA for a lumpsum consideration of Rs. 59.89 crore. CGBSPL will provide the best in class service to CP-USA''s subsidiaries, including CP-India with greater efficiency.

Your Company recently obtained the approval of the shareholders by way of Postal Ballot for sale of GSSO division.

Status of new projects

As stated in the Annual Report for the year 2011-12, to support the growth momentum and to cater to the increasing demand of our products, your Company is setting up a state of the art toothpaste manufacturing facility at Sanand in Gujarat. The new factory will be the best in class manufacturing facility which is scheduled to commence commercial production in the current year.

Similarly, your Company is in an advanced stage of obtaining various permissions for a new toothbrush manufacturing facility at Sricity in Chittoor District in Andhra Pradesh. This new toothbrush manufacturing facility is expected to commence commercial production in the year 2014.

Surrender of Lease and Sale of the factory building at Hyderabad

Pursuant to the closure of the manufacturing operations at Hyderabad factory, your Board of Directors felt that it would be in the interest of the Company to surrender the lease of the land and sell the factory building to the Lessor, Swamy Sons Agencies Private Limited for a total consideration of Rs. 1,60,00,000/- (One Crore Sixty Lacs only). The approval of the shareholders for the aforesaid sale of factory building was obtained by way of Postal Ballot and formalities for surrender of lease and sale of factory building have been completed.

Sustainability

Your Company is committed to sustainability through a program that focuses on People, Performance and Planet.

Considering this, in the year 2010, your Company developed a plan that will guide its sustainability initiative for the next five years. The broad aspects covered are as under :

- People - Promoting healthier lives, Contributing to the Communities where we live and work.

- Performance - Delivering products that delight consumers and respect our planet.

- Planet - Making every drop of water count, Reducing our impact on climate and the environment.

Your Company believes that integrating sustainability into its everyday operations will help in making better business decisions and improve people''s lives. The sustainability strategy will also continue to increase consumer loyalty, provide a competitive advantage and help ensure long-term shareholder value.

Focus on innovation

In India today, consumer needs are fast evolving. Your Company has been staying ahead of trends by identifying opportunities based on insights into consumer behaviour and leveraging technology to deliver innovative products. Our success in delivering meaningful innovation is evident in several of our recent innovations. One out of three Indians suffer from gum problems. To address this issue, your Company launched Colgate Total Pro Gum Health, a technology breakthrough which reverses gum problems in four weeks. Your Company also launched Colgate Visible White toothpaste to create the beauty segment through this one-of-its kind Oral Care solution that offers one shade whiter teeth in just one week. In toothbrushes, your Company launched 3600, a battery operated toothbrush for consumers seeking superior teeth cleaning and MaxFresh toothbrush for those seeking freshness. In the mouthwash category, your Company launched Colgate Plax Fresh Tea, a new flavour that builds on the green tea trend.

As the leaders in Oral Care, your Company is making a constant effort to cater to the Oral Care needs of different consumers by offering products across various price points.

Innovation at your Company is not limited to new products. We are innovating in the way we connect with shoppers in-store, engage consumers in the digital arena, in how we go-to-market and in driving further efficiencies in the supply chain.

Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have 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 statutory auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company 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 and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) that they have prepared the annual accounts on a going concern basis.

Corporate Social Responsibility

Your Company in partnership with the Indian Dental Association (IDA) successfully concluded the 9th edition of a two-month long Oral Health Month Program during the year, covering a wide spectrum of activities designed to spread oral health awareness and good oral hygiene practices. The mission of this Program continued to be "Mission Zero Cavity" involving dental professionals spread across 1116 towns. The total dentists who participated in the program were 25,000. The two-month long oral care awareness drive covered in-clinic free dental check-ups, school contact program, free dental check-ups in mobile dental vans, retailers outreach program and many more such activities to engage 3.7 million consumers.

Education has been the primary focus of your Company''s Corporate Social Responsibility. Since 1976, your Company has been conducting a school initiative program Colgate Bright Smiles Bright FuturesTM wherein your Company partnered with IDA, to spread oral health awareness among school-going children in primary schools in urban and rural India. Till date, 107 million school children in 2,35,617 schools in urban and rural areas have benefited from this Program. In addition, your Company also conducts, jointly with IDA, a Teachers'' Training Program to enable teachers to instil good Oral Care habits among school-going children on an on-going basis.

In addition, your Company also started an employee volunteering program called "Adopt a School", wherein the employees of the Company were offered an opportunity to volunteer their time to spread the message of maintaining good oral hygiene in a simple, conversational, interactive manner to primary school children in municipal and government aided schools. The program contributed to Colgate''s market development efforts and business goals and reinforced Colgate''s emotional connection with consumers. The involvement and contributions by employees also helps Colgate give back to communities and demonstrates Colgate''s core value of caring.

For close to a decade now, your Company partnered with the NGO, Pratham, the largest non-governmental organisation, working to provide quality education to the less privileged children of India. Pratham, established in 1994, provides education to the children in the slums of Mumbai city. Since then, the organization has grown both in scope and geographical coverage.

Today Pratham reaches out to millions of children living both in rural and urban areas through a range of interventions. It''s flagship program, Read India, helps to improve the reading, writing and basic arithmetic skills of the children in the age group of 6-14 years. Even though India has made significant strides in improving the enrollment levels of the children in schools, a lot still needs to be done as far as the learning levels are concerned.

Since 2008, your Company has been supporting a program called ''A Positive Step'' with the NGO, Network in Thane of People Living with HIV. Through this program, your Company supports children affected and infected by HIV with nutritional needs and school fees. The program has infused the children with hope leading to a definitive improvement in their academic performance and they now live with more confidence despite their HIV condition.

Your Company will continue to take such measures to make a positive and significant contribution to the Society.

Corporate Governance

A separate report on Corporate Governance along with the Auditors'' Certificate on its compliance is attached as Annexure 1 to this Report.

Employee Relations

The employee relations in the Company continued to be cordial except for an unauthorised stoppage of work by one of the unions at Goa toothpaste manufacturing facility for a period of 18 days from January 6, 2013 to January 23, 2013. However, the Management successfully resolved the situation by following the due process and discussions with the union and normalcy was restored in the facility. Since Company had adequate inventory to serve the market, the impact on the operations of the Company during the period was minimal.

A long term Memorandum of Settlement for three years and six months at the Company''s Aurangabad toothpowder manufacturing facility was signed on January 28, 2013. This settlement would be in force till May 31, 2015.

Information as per Section 217(2A) of the Companies Act, 1956 ("the Act") read with the Companies (Particulars of Employees) Rules, 1975 forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders of the Company excluding the statement on particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said statement may write to the Secretarial Department at the Registered Office of the Company.

Trade Relations

Your Directors wish to record appreciation of the continued unstinted support and co-operation from its retailers, stockists, suppliers of goods/services, clearing and forwarding agents and all others associated with it. Your Company will continue to build and maintain strong links with its business partners.

Energy, Technology Absorption and Foreign Exchange

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings/ outgo is appended hereto as Annexure 2 and it forms part of this Report.

Directors

Mr. Godfrey Nthunzi was appointed as the Whole- time Director of the Company for five years, effective January 1, 2013, subject to the approval of Central Government and shareholders under the provisions of the Companies Act, 1956.

Mr. Paul Alton, Whole-time Finance Director opted for an early retirement from the services of the Company effective December 31, 2012. The Board places on record their appreciation of the outstanding contribution made by Mr. Paul Alton during his tenure as the Whole-time Finance Director of the Company.

In terms of Sections 255 and 256 of the Act and under Article 124 of the Company''s Articles of Association, Mr. J. K. Setna and Mr. V. S. Mehta retire by rotation at the ensuing 72nd Annual General Meeting and, being eligible, offer themselves for re-appointment.

Auditors

Messrs. Price Waterhouse, Chartered Accountants, retire and are eligible for re-appointment as Auditors.

Cost Auditors

The Board of Directors at their Board Meeting held on March 25, 2013 appointed Messrs. N. I. Mehta & Company as the Cost Auditors for auditing the cost accounts relating to cosmetics and toiletries for the financial year 2013-14.

Acknowledgements

Your Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels. The Directors also wish to place on record their gratitude to the Members for their continued support and confidence.

On behalf of the Board

P. Parasmeswaran (Ms.) R.A. Shah

Managing Director Vice-Chairman

May 28, 2013


Mar 31, 2012

To, The Members of Colgate-Palmolive (India) Limited

The Directors have pleasure in presenting their Report and Audited Accounts of the Company for the year ended March 31, 2012.

Financial Results

(Rs Crore) 2011-12 2010-11

Total Revenue (a b c) 2,743.91 2,327.36

Sales (Excluding Excise Duty) (a) 2,623.85 2,220.56

Other Operating Revenue (b) 69.38 65.56

Other Income (c) 50.68 41.24

Profit before Taxation 588.39 519.95

Provision for Taxation 141.92 117.37

Profit after Taxation 446.47 402.58

Balance taken over on Amalgamation of subsidiary company - 2.59

Balance brought forward 107.99 91.95

Profit available for appropriation 554.46 497.12

Appropriation :

Dividend 339.981 299.18

Dividend Tax 55.15 49.69

General Reserve 44.65 40.26

Balance carried forward 114.68 107.99

554.46 497.12

Platinum Jubilee Year of the Company

This is a very special year as your Company completes very successful 75 years in 2012. Over these years, your Company has won the trust and loyalty of consumers and stakeholders. Your Company is celebrating not just the length of the journey since 1937, but also the manner in which this length was travelled and the foundation of ethics and values on which Company built the business over these years.

Business Performance

Your Company's strong performance continued in 2011-12, despite difficult economic conditions coupled with fierce competition, and high inflationary market conditions resulting in higher input cost. The depreciation of Rupee also imposed severe challenges during the year. Despite such challenging environment, your Company achieved a healthy double-digit sales growth during the year 2011-12. Sales for the year increased by 18 per cent at Rs 2,624 crore as against Rs 2,221 crore during the previous year. The toothpaste business registered an impressive volume growth of 14 per cent during the year.

The profit before tax for the financial year 2011-12 was Rs 588 crore as against Rs 520 crore during the previous year. During the year, your Company significantly increased its investment in the brand and equity building activities by 18 per cent i.e. Rs 63 crore. Despite this additional investment coupled with the lower deduction under the income-tax regulations on the profits of the Baddi manufacturing facility resulting in higher year-on-year tax payments of Rs 25 crore, the profit after tax for the financial year 2011-12 was Rs 446 crore as against Rs 403 crore during the previous year.

Cash generation continued to be strong arising from significant improvements in the business performance, efficiencies and cost savings across the organisation and a continued efficient collection system. Your Company managed investments prudently by deployment of the surplus funds after ensuring that such investments satisfy the Company's criteria of safety and security.

Your Company continued to achieve excellent business results year after year despite the testing market environment. This has been possible due to several key initiatives which focused on consumers, dental professionals, retail customers with a stronger focus on innovation, greater effectiveness and efficiency everywhere, while strengthening organisational leadership.

Dividend

The Company's strong cash generation and positive growth momentum led your Board to declare three interim dividends of Rs 8 per share, Rs 9 per share and Rs 8 per share aggregating Rs 25 per share for the financial year 2011-12 as against Rs 22 per share in the previous year. These dividends were paid on June 24, 2011, December 30, 2011 and April 17, 2012. Having declared three interim dividends, your Board has not recommended a final dividend for the financial year 2011-12.

Most Trusted Brand

In the year 2011, the Brand Equity's Most Trusted Brand Survey ranked your Company as the #1 Most Trusted Brand of the year. Colgate has also been rated as India's #1 Most Trusted Brand across all categories for four consecutive years from 2003 to 2007. It is the only brand to be ranked in the top 3 from 2001-2011.

Voluntary Retirement Scheme for the employees at the Hyderabad Factory

In order to drive efficiency and cost effectiveness, your Company offered Voluntary Retirement Scheme to the employees working at the manufacturing unit at Hyderabad. All the employees working at the factory have availed of the benefit of the said scheme and accordingly, the manufacturing operations in the Hyderabad Factory have been discontinued since September 29, 2011.

Such discontinuation of operations at the Hyderabad Factory will not impact the toothpowder business as your Company has adequate capacity to cater to the demand of the market.

New Projects

To support the growth momentum and to cater to the increasing requirement of the products, your Company has acquired a plot of land from Gujarat Industrial Development Corporation on long-term lease for setting up a new Toothpaste manufacturing facility. The new manufacturing facility is expected to be operational in the year 2013.

Your Company has also acquired in April 2012 a plot of land from Sri City Private Limited on long-term lease for setting up a new Toothbrush manufacturing facility in Andhra Pradesh. The new manufacturing facility is expected to be operational in the year 2013.

Sustainability

Your Company recognizes that a broad approach to sustainability, encompassing its long commitment to environment quality and extending to the long-term well-being of the people and communities it serves, is the true expression of its values. Considering this, in 2010, your Company developed a plan that will guide its sustainability initiative for the next five years with key goals in all three of its sustainability focus areas: People, Performance and Planet with focused measurable goals that align with company's business objectives. Your Company believes that integrating sustainability into its everyday operations will help in making better business decisions and improve people's lives. The sustainability strategy will also continue to increase consumer loyalty, provide a competitive advantage and help ensure long-term shareholder value.

Focus on innovation

The Company's growth is sparked by the innovative products that it brings to the market and also by ensuring that there is innovation at all price points. This strategy offers consumers a choice of products from entry level to super premium and allows them the opportunity to trade up as disposable income level rise. During 2011-12, innovative products like Colgate Sensitive Pro-Relief (the only product that provides instant relief from hypersensitivity), variants of Plax Mouth Wash with sensorial and functional benefits, were successfully launched further enhancing the broad range of oral care benefits that Colgate provides to the consumers. Your Company will continue to remain focused on driving innovation in future.

Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have 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 statutory auditors and have applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company 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 and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) that they have prepared the annual accounts on a going concern basis.

Corporate Social Responsibility

Your Company in partnership with the Indian Dental Association (IDA) successfully concluded the 8th edition of a two-month long Oral Health Month Program during the year covering a wide spectrum of activities designed to spread oral health awareness and good oral hygiene practices. The mission of this Program continued to be "Mission Zero Cavity" involving dental professionals spread across 1090 towns. The total dentists who participated in the program were 22,146. The two-month long oral care awareness drive covered in-clinic free dental check-ups, school contact program, free dental check-ups in mobile dental vans, retailers outreach program and many more such activities to engage more than 3.6 million consumers.

Education has been the primary focus of your Company's Corporate Social Responsibility. Since 1976, your Company has been conducting a school initiative program (now called Colgate Bright Smiles, Bright Futures TM Program) wherein your Company partnering with IDA, to spread oral health awareness among school-going children in urban and rural schools. Till date, 105 million school children in 2,34,756 schools in urban and rural areas have benefitted from this Program. In addition, your Company also conducts, jointly with IDA, a Teachers' Training Program to enable teachers to instill good oral care habits among school-going children on an ongoing basis.

In addition, your Company also started an employee program called "Adopt a School" in which the employees of the Company were offered an opportunity to volunteer their time to spread the message of maintaining good oral hygiene in a simple, conversational, interactive manner to primary school children. The program contributed to Colgate's market development efforts and business goals and reinforced Colgate's emotional connection with consumers. It helps give back in return to the communities, your Company does business in and demonstrates Colgate's core value of caring.

The impact of this initiative is that over 1,00,000 children in schools have been covered through this program where it has been conducted by employees.

Since 2002, your Company partnered with Pratham, a non-profit organization, to promote academic education of the less privileged children. The grant from the Company has supported the concept of Libraries in the "S" Ward of Mumbai where children are encouraged to read books to enhance their knowledge and continue their academic education. Your Company supports 65 schools in the Pratham-focused communities in "S" Ward in Mumbai and also seeks to engage parents in the "mother participation" program to aid the learning process of the child.

Your Company started supporting the children affected and infected by HIV with nutritional needs and school fees since last four years. The program has infused the children with hope leading to a definitive improvement in their academic performance and they now live with more confidence despite their HIV positive condition.

Your Company will continue to take such measures to make a positive and significant contribution to the society.

Corporate Governance

A separate report on Corporate Governance along with the Auditors' Certificate on its compliance is attached as Annexure 1 to this Report.

Employee Relations

The employee relations in the Company continued to be positive. Information as per Section 217(2A) of the Companies Act, 1956 ("the Act") read with the Companies (Particulars of Employees) Rules, 1975 forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders of the Company excluding the statement on particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said statement may write to the Secretarial Department at the Registered Office of the Company.

Trade Relations

Your Directors wish to record appreciation of the continued unstinted support and co-operation from its retailers, stockists, suppliers of goods/services, clearing and forwarding agents and all others associated with it. Your Company will continue to build and maintain strong links with its business partners.

Energy, Technology Absorption and Foreign Exchange

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings/ outgo is appended hereto as Annexure 2 and it forms part of this Report.

Directors

Ms. Prabha Parameswaran was appointed as the Managing Director of the Company for five years from February 1, 2012 to succeed Mr. Mukul Deoras who has been elevated as President, New Asia Division of Colgate-Palmolive Company. The appointment of Ms. Prabha is subject to the approval of the shareholders and the Central Government under the provisions of the Companies Act, 1956.

The Board places on record their appreciation of the outstanding contribution made by Mr. Mukul Deoras during his tenure as Managing Director of the Company.

Mr. Niket Ghate was appointed as the Whole-time Director of the Company for five years from October 1, 2011 subject to the approval of the shareholders under the provisions of the Companies Act, 1956.

Mr. K. V. Vaidyanathan retired from the services of the Company on November 30, 2011. He held the position of Whole-time Director of the Company since April 1997 and during this period, he made several significant contributions to the Company's growth and business strategies. The Board places on record their appreciation for the distinguished services rendered by Mr. Vaidyanathan during his tenure with the Company.

Mr. Derrick Samuel retired from the services of the Company and hence stepped down from the Board on January 31, 2012. The Board places on record their appreciation of the outstanding contribution made by Mr. Derrick Samuel during his tenure as director and Chairman of the Board.

Dr. (Ms.) Indu Shahani was appointed as an Additional Director of the Company on January 23, 2012 and she holds office up to conclusion of this Annual General Meeting. A notice in writing, with the requisite deposit has been received from a member proposing Dr. (Ms.) Indu Shahani as a candidate for the office of Director.

Under Article 124 of the Company's Articles of Association, Mr. P. K. Ghosh and Mr. R. A. Shah retire by rotation at the 71st Annual General Meeting and, being eligible, offer themselves for re-appointment.

Auditors

Messrs. Price Waterhouse, Chartered Accountants, retire and are eligible for re-appointment as Auditors.

Cost Auditors

The Board of Directors at their Board Meeting held on March 23, 2011 appointed Messrs. N. I. Mehta & Company as the Cost Auditors for auditing the cost accounts relating to cosmetics and toiletries for the financial year 2011-12. The due date for submission of the cost audit report was September 27, 2011 and the actual date of submission of the report was September 26, 2011.

Acknowledgements

Your Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels. The Directors also wish to place on record their gratitude to the Members for their continued support and confidence.

On behalf of the Board

P. Parameswaran (Ms.) R. A. Shah

Managing Director Vice-Chairman

May 30, 2012

 
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