Colgate-Palmolive (India) Ltd.

Jul 07 BSE 1391.85 (+ 8.85 0.64%)
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1641.00
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Prev. Close 1382.75
Open Price 1383.00
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52 Wk Low / High
1065.00 1642.60

You can view the entire text of Notes to accounts of the company for the latest year

ISIN No INE259A01022 Market Cap. ( in Cr. ) 37854.96 P/BV 23.75 Book Value ( ) 58.61
BSE Code 500830 52 Week High/Low ( ) 1643/1065 FV/ML 1/1 P/E(X) 46.36
NSE Code COLPALEQ Book Closure 29/07/2020 EPS ( ) 30.02 Div Yield (%) 2.01
Year End :2019-03 

A) Ultimate Holding Company : Colgate-Palmolive Company, U.S.A.

B) Group Companies where common control : Colgate-Palmolive Mktg. SDN BHD, Malaysia exists

: Colgate-Palmolive East Africa Ltd., Kenya

: Colgate-Palmolive Pty. Ltd., South Africa

: Colgate-Palmolive (Thailand) Ltd., Thailand

: Colgate-Palmolive (H.K.) Ltd., Hongkong

: Colgate-Palmolive Asia Pacific Ltd., Wan Chai, Hongkong (Formerly known as Colgate-Palmolive Management Services HK Ltd)

: Colgate-Palmolive (China) Co. Ltd., China*

: Colgate Palmolive (Vietnam) Ltd, Vietnam

: Colgate Sanxiao Company Limited, China

: Colgate-Palmolive (Burlington) Limited

: Colgate Palmolive Temizlik Urunleri Sanayi ve Ticaret S.A., Turkey

: Colgate-Palmolive Cameroun S.A., Cameroun

: Colgate-Palmolive Industrial Ltda., Brazil

: Colgate-Palmolive (Asia) Pte. Ltd. Singapore

: Norwood International Incorporated, U.S.A.

: Colgate-Palmolive Pty. Ltd., Boksburg, South Africa.

: Colgate Global Business Services Pvt Ltd, India

: Colgate-Palmolive Zambia Inc., Zambia

: Colgate-Palmolive Europe SARL, Italy

: Mission Hills S.A. DE. C. V., Mexico

: Colgate Palmolive Bt. Ltd., (Blantyre), Malawi

: Colgate Oral Pharmaceuticals Inc. Carrollton, U.S.A.*

: Colgate-Palmolive CACE Region, Istanbul, Turkey

: Colgate-Palmolive Senegal, Senegal

: Colgate-Palmolive Italia S.r.l., Italy

: Colgate-Palmolive (Pakistan) Limited, Pakistan

: Colgate Philippines Inc., Phillippines

: Colgate-Palmolive Mocambique Limitada

: Colgate-Palmolive S.P.A., Italy*

: Colgate Palmolive West East Investments, U.S.A.

: Tom's Of Maine, U.S.A.*

: Colgate-Palmolive Ghana Ltd, Ghana

: Colgate-Palmolive Europe Sarleu Div

: CP Middle East Exports Ltd

: Colgate-Palmolive (Myanmar) Limited, Myanmar

: Colgate Palmolive Espana S.A.,Spain

: Hill's Pet Nutrition, U.S.A*

: Hill's Pet Nutrition Asia Limited

: Colgate-Palmolive Arabia Ltd.*

: Colgate-Palmolive Pty. Ltd.,Australia*

: Hawley & Hazel Chemical (Taiwan) Co., Taiwan

C) Key Managerial Personnel of the Company

(i) Executive Directors : I. Bachaalani

: M.S.Jacob

: M. Chandrasekar

(ii) Non-Executive and Non Independent : V. Nambiar (Up to September 01, 2018)

Directors

: M. Deoras (effective September 01, 2018)

(iii) Non-Executive and Independent Directors : R. A. Shah

: P. K. Ghosh

: J. K. Setna (Up to March 31, 2018)

: V. S. Mehta

: I. Shahani

: S. Gopinath

: S. Kripalu (effective June 01, 2018)

(iv) Company Secretary : M.Karnataki (upto August 31, 2017)*

: K.R.Singh (effective February 23, 2018)

D) Post Employment Benefit Funds : Colgate-Palmolive (India) Limited Provident Fund

: Colgate-Palmolive India Gratuity Fund for Workmen

: Colgate-Palmolive India Gratuity Fund for Non-Workmen

* There are no transactions with the Company during the current year

Note 1 - Share Based Payments (a) Employee option plan

The Company does not provide any equity-based compensation to its employees. However, the parent company, Colgate-Palmolive Company, U.S.A. (“the grantor”) maintains equity incentive plans that provide for the grant of stock-based awards to its executive directors and certain categories of officers and employees. The Parent’s Incentive Plan provides for the grant of non-qualified and incentive stock options, as well as restricted stock units. Exercise prices in the case of non-qualified and incentive stock options are not less than the fair value of the underlying common stock on the date of grant.

A stock option gives an employee, the right to purchase shares of Colgate-Palmolive Company common stock at a fixed price for a specific period of time. Stock options generally have a term of six years from the date of grant and vest over a period of three years.

A restricted stock unit provides an employee with a share of Colgate-Palmolive Company common stock upon vesting. Restricted stock units vest generally over a period of three years. Dividends will accrue with each restricted stock unit award granted subsequent to the grant date.

Fair Value of options granted

The fair value at the grant date of options granted during the year ended March 31, 2019 was Rs,617.53 per option (March 31, 2018 : Rs,538.36 per option and Rs,542.25 per option). The fair value at grant date is determined using the Black-Scholes Model which takes into account the exercise price, expected volatility, option’s life, the share price at grant date, expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The risk free interest rates are determined based on the zero-coupon sovereign bond yields with maturity equal to the expected term of the option. The expected volatility was determined based on the volatility of the equity share for the period of one year prior to issue of the option. Volatility calculation is based on historical stock prices using standard deviation of daily change in stock price. The historical period is taken into account to match the expected life of the option. Dividend yield has been calculated taking into account expected rate of dividend on equity share price as on grant date.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instrument: Level 1 : Quoted prices for identical instruments in active market.

Level 2 : Directly or indirectly observable market inputs, other than Level 1 inputs; and Level 3 : Inputs which are not based on observable market data.

(ii) Assets and Liabilities that are disclosed at Amortized Cost for which Fair values are disclosed are classified as Level 3.

Current financial assets and current financial liabilities have fair values that approximate to their carrying amounts due to their short-term nature. Non current financial assets and non current financial liabilities have fair values that approximate to their carrying amounts as it is based on the net present value of the anticipated future cash flows.

Inherent to the nature of the Company’s business are a variety of financial risks, namely liquidity risk, market risk and credit risk. Developing policies and processes to assess, monitor, manage and address these risks is the responsibility of the Company’s Management. The Risk Management Committee oversees this risk management framework in the Company and intervenes as necessary to ensure there exists an appropriate level of safeguards against the key risks. Updates on compliance, exceptions and mitigating action are placed before the Audit Committee periodically. Risk management policies and

systems are reviewed regularly to reflect changes like major changes in ERP systems or go to market model, changes in organization structure, events denoting material change in the risk environment, etc.

The Company’s Management works closely with its Treasury department and Internal Audit department to ensure there are appropriate policies and procedures governing the operations of the Company with a view to providing assurance that there is visibility into financial risks and that the business is being run in conformity with the stated risk objectives. Periodic reviews with concerned stakeholders provides an insight into risks to the business associated with currency movements, credit risks, commodity price fluctuations, etc. and necessary deliberations are undertaken to ensure there is an appropriate response to the developments.

A MANAGEMENT OF LIQUIDITY RISK

The Company follows a conservative policy of ensuring sufficient liquidity at all times through a strategy of profitable growth, efficient working capital management as well as prudent capital expenditure and dividend policies. The Company has a overdraft facility with banks to support any temporary funding requirements. The Company is cognizant of reputational risks that are associated with the liquidity risk and the risk is factored into the overall business strategy.

The Company’s treasury department regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated by the operating entities, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and debt investments with appropriate maturities to optimize the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

As at March 31, 2019, the Company had undrawn letter of credit facilities in aggregate of Rs,Nil (March 31, 2018:Rs,Nil).

The following table shows the maturity analysis of the Company’s financial liabilities based on contractually agreed undiscounted cash flows as at the Balance Sheet date.

B MANAGEMENT OF MARKET RISK

The Company’s size and operations result in it being exposed to the following market risks that arise from its use of financial instruments:

- currency risk;

- commodity price risk;

C MANAGEMENT OF CREDIT RISK

Credit risk is the risk of financial loss to the Company if a customer or other counter-party fails to meet its contractual obligations.

Trade Receivables

Trade receivables are subject to credit limits, controls and approval processes. A majority of customers pay prior to shipment, thereby reducing exposure to trade receivables significantly. Due to a large customer base, the Company is not exposed to material concentration of credit risk. Basis the historical experience supported by the level of default, the credit risk in case of trade receivable is low and so trade receivables are considered to be a single class of financial assets. (Refer Accounting Policy 1 B (h) on trade receivables.)

The gross carrying amount of trade receivables is Rs,209,78.64 Lakhs as at March 31, 2019 and Rs,206,09.48 Lakhs as at March 31, 2018.

Other financial assets

The Company maintains exposure in cash and cash equivalents, term deposits with banks and investments in debt instruments. The Company has concentrated its main investment activities with a limited number of counterparties which have secure credit ratings, to reduce this risk. Individual risk limits are set for each counter-party based on financial position, credit rating and past experience.

Credit limits and concentration of exposures are actively monitored by the Company’s Treasury department.

The Company’s maximum exposure to credit risk as at March 31, 2019 and March 31, 2018 is the carrying value of each class of financial assets as disclosed in Note 39(iii).

The Company’s objective in managing its capital is to safeguard its ability to continue as a going concern and to optimize returns to our shareholders. The Company considers the following components of its Balance Sheet to be managed capital:

1) Share Capital, 2) Share Premium and 3) Other Reserves comprising of General Reserve and Retained Earnings.

The Company’s capital structure is based on the Managements assessment of the balances of key elements to ensure strategic decisions and day to day activities. The capital structure of the Company is managed with a view of the overall macro economic conditions and the risk characteristics of the underlying assets.

The Company’s policy is to maintain a strong capital structure with a focus to mitigate all existing and potential risks to the Company, maintain shareholder, vendor and market confidence and sustain continuous growth and development of the Company.

The Company’s focus is on keeping a strong total equity base to ensure independence, security, as well as high financial flexibility without impacting the risk profile of the Company.

In order, to maintain or adjust the capital structure, the Company will take appropriate steps as may be necessary. The Company does not have any debt or financial covenants.

* The principal amount represents amount outstanding (due as well as not due) as at the Balance Sheet date.

Note 3: Exceptional Item for the year ended March 31, 2019 represents profit before tax of Rs,34,11.57 Lakhs on the sale of the Company’s former factory leasehold land and buildings at Aurangabad, Maharashtra and Rs,3,61.05 Lakhs on severance and related expenses. Exceptional Item for the year ended March 31, 2018 represents severance and related expenses of Rs,11,65.07 Lakhs with respect to certain organization structure changes.

Note 4: The toothpowder manufacturing operations at the Aurangabad factory, Waluj, Maharashtra were discontinued effective May 5, 2015. The Company had received approval from the Maharashtra Industrial Development Corporation (MIDC) for transfer of its rights in the aforesaid property in favour of a buyer and the transfer has been completed in the current year.

Note 5:Subsequent to year end, the Company has declared a Special Interim Dividend of '8 per share aggregating to Rs,262,31 Lakhs (including dividend distribution tax) on May 27, 2019. During the previous year, subsequent to year end, the Company has declared a Special Interim Dividend of Rs,11 per share aggregating to Rs,360,68 Lakhs (including dividend distribution tax) on May 21, 2018. In accordance with the provisions of Ind AS 10, these dividends are not recognized as a liability for the respective years.

Note 6:Previous year figures have been regrouped / reclassified, where necessary, to conform to the current year’s classification.


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