COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 1 Welcome to Colgate-Palmolive India
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 1
Welcome to Colgate-Palmolive India
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 2
• Business Update Roger Calmeyer
• Financial Review Moses Elias
• Questions & Answers
Agenda
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 3
Leadership Team
Debashish RoyV-P Human Resources
Roger CalmeyerV-P South Asia & MD India
Moses A EliasExec V-P & CFO
K VaidyanathanV-P & Company Sec
Vinay HegdeExec V-P Marketing
Shekar BharatwajV-P Sales
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 4
Leadership TeamRoger Calmeyer
V-P South Asia & MD India
Moses A EliasExec V-P & CFO
Arun PandeV-P Info Technology
K VaidyanathanV-P & Company Sec
Debashish RoyV-P Human Resources
Vinay HegdeExec V-P Marketing
Shekar BharatwajV-P Sales
Laurence WheelerExec V-P PSC
Surendra ManekV-P R&D
Sanjeev DaliDirector GSSO
Manish Lath GuptaCIC Head
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 5
Results Overview
• Positive Economic Indicators
- Oral Care market growth
• Strong volume growth and momentum
• Business Model proving effective
• Excellent profit performance
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 6
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 7
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 8
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 9
FMCG sector continues to be buoyant
4680949438 50436
5422158561
69760
30,000
40,000
50,000
60,000
70,000
80,000
2001 2002 2003 2004 2005 2006
Sale
s Rs
Cro
res
FMCG Sales
Estimated for based on Aug YTD’06 growth rateSource: AC Nielsen Retail Measurement Services
*
*
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 10
Non- food FMCG reverses declining trend of 2001- 2003
Growth in Non-food FMCG sales
0%
7%
18%
-1%
5%
-5%
0%
5%
10%
15%
20%
2002 2003 2004 2005 YTD Aug 06% Gr
owth
vs.
yea
r ago
Source: AC Nielsen Retail Measurement Services
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 11
Growth in all key categories including toothpaste
Growth Rate ( YTD Aug 2006 Vs YTD Aug 2005)
15.318.3
14.8 14.719.9 21.9
0
5
10
15
20
25
30
35
40
45
Toilet Soaps Washingpowders
DetergentCakes
Toothpaste Skin Creams Shampoos
%
Source: AC Nielsen Retail Measurement Services
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 12
Indian Oral Care market offers significant opportunities to drive penetration
Category Penetration
44 44 45 46 49 51
36 36 35 35 35 35
70 71 72 73 74 76
0
25
50
75
100
2001 2002 2003 2004 2005 2006 H1
Toothpaste Toothpowder Dentifrice
Source: Indian Readership SurveyDentifrice = Toothpaste or toothpowder
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 13
Opportunity to increase per capita consumption by increasing the frequency of brushing teeth
Source: AC Nielsen Retail Measurement Services & Indian Readership Survey
7%110India - Urban
86%285Malaysia
61%219China
%age - twice a day brushing
Per Capita Consumption (Grams/HH/Month)
7%92India - Urban
86%285Malaysia
61%219China
%age - twice a day brushing
Per Capita Consumption (Grams/HH/Month)
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 14
Strategic Position
Category Value Share Ranking Relative Share%
Toothpaste 47.6 # 1 1.6Toothpowder 43.8 # 1 1.5Toothbrushes 34.3 # 1 2.1Shower Gel* 39.6 # 2 0.8Liquid Hand Soap* 3.6 # 3 0.2Shaving Cream* 11.0 # 3 0.6Cold Cream* 4.2 # 4 0.1
* Urban only
Source: AC Nielsen Retail Measurement ServicesPeriod : YTD Sept 06
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 15
TOTAL TOOTHPASTE
2,500
3,000
3,500
4,000
4,500
5,000
Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06
Total
Revenue
3 per. Mov. Avg.(Revenue)
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 16
CP Sales per Capita (Rs)
5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
2002 2003 2004 2005 2006
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 17
Closer toDRIVING - Customer
GROWTH - Consumer
- Profession
FUNDINGGROWTH
Efficiency & Effectivenessin Everything
INNOVATION EVERYWHERE
Consumer InnovationCentre
BEST PLACETO WORK
BUSINESS MODEL
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 18
CLOSER TO THE CUSTOMER
- E CHOUPAL- DISHA
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 19
eChoupal - Trained farmers (Sanchalak) manage prominently located IT enabled Choupals. Project started in UP, extended in 2006 to Maharashtraand Rajasthan
Disha - Disha covers 47,000 Haats – unregulated periodic markets at 1/100 of the conventional cost using unemployed youth in rural India
Current CP Coverage in choupals / villages more than 4000 nos
Closer to the Customer…. eChoupal & Disha
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 20
CLOSER TO THE CONSUMER
- ORAL HEALTH MONTH- BRIGHT SMILES BRIGHT FUTURES PROGRAM
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 21
360º Plan - 2006
BSBF+ Dental Checkups
On pack messages
Free Dental Check-ups- In dental clinics- Factories- Housing
Societies- Corporates
Mobile Vans
- Under privileged areas
Trade visibility and CCP
MuskurahateinDD
National
Media, Website
PR support
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 22
Significantly Increased Scale and Touch points
OHM '04 OHM '05 OHM '06
No. of towns 6 50 102No. of dentists 70 venues 3500 5000
Societies 70Corporate 170
BSBF/Schools 1000 2500 3000
No. of towns 7 14 14 plannedMedia Channel Hungama DD National
PDC's
PDC's - New Touchpoints
Spread a Smile
(Public Dental Check-ups)OHM '04 OHM '05 OHM '06
No. of cities 6 50 102No. of dentists 70 venues 3500 5000
Societies 70Corporate 170
BSBF/Schools 1000 2500 3000
No. of cities 7 14 14 plannedMedia Channel Hungama DD National
PDC's
PDC's - New Touchpoints
Spread a Smile
(Public Dental Check-ups)
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 23
CLOSER TO THE PROFESSION
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 24
Closer to the Profession…. Professional Oral Care
BRMO - Brand Recommended Most Often by Dentists
BUMO - Brand Used Most Often by Dentists
Source : Dentist Track 2005
23%62%23%54%Toothbrushes
6%82%5%75%Toothpaste
CompColgateCompColgate
BUMOBRMO
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 25
2002 - VRS at Sewri, Mumbai ; 80 employees
2002 - Divestment of Toothbrush Manufacturing Facility, Aurangabad
2003 - Discontinuation of a Toothpaste Contract Manufacturer, Mumbai
2003 - Acquired Land and commenced construction of state-of-the-art Toothpaste manufacturing facility at Baddi, HP
Land - 36,000 m2, Building - 16,300 m2
2004 - Closure of Toilet Soap Manufacturing, Aurangabad
2005 - Closure of Toothpaste Manufacturing in Nepal
2005 - Commencement of Production at Baddi, HP. No of employees - 208; Installed Capacity - 24,000 tons
2006 - VRS at Sewri, Mumbai ; 263 employees
Efficiency & Effectiveness in Everything….Rationalization of Supply Chain
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 26
FINANCIAL REVIEW
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 27
FINANCIAL STRATEGY
Grow Topline
Reduce Costs
Invest in Brand Building
/ New Products
Grow NPAT
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 28
Grow Topline (% = current year vs previous year)
2000
2250
2500
2750
3000
3250
3500
Rs MM Jan-Mar2004
Apr-Jun2004
Jul-Sep2004
Oct-Dec2004
Jan-Mar2005
Apr-Jun2005
Jul-Sep2005
Oct-Dec2005
Jan-Mar2006
Apr-Jun2006
Jul-Sep2006
(Rs.
MM
)
3.9%
6.4%
13.2%
21.2%
25.8%19.9%
15.1%
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 29
- All numbers adjusted to reflect Operating Results for 2006-07
Grow NPAT
175
225
275
325
375
425
475
Jan-Mar 2004 Apr-Jun 2004 Jul-Sep 2004 Oct-Dec 2004 Jan-Mar 2005 Apr-Jun 2005 Jul-Sep 2005 Oct-Dec 2005 Jan-Mar 2006 Apr-Jun 2006 Jul-Sep 2006
(Rs.
MM
)
-11.8%
10.0%
14.5%
46.2%
14.4%29.4%
63.7%
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 30
(Rs Crores) Quarter Quarter Half Year Half Year YearEnded Ended Ended Ended ended
Sept. 30,2006 Sept. 30,2005 Sept. 30,2006 Sept. 30,2005 March 31, 2006(Audited)
Total Revenue 338.25 287.87 662.60 560.13 1,170.28
- Net Sales (Excl. Excise Duty) 320.01 278.12 629.59 536.42 1,124.19 - Other Income 18.24 9.75 33.01 23.71 46.09
Total Expenditure 318.00 239.59 587.50 467.17 950.38
- (Increase) / Decrease in Stock in Trade (4.06) 16.59 (4.83) 13.71 4.18 - Raw and Packing Material Cost 57.71 37.53 120.81 92.88 206.99 - Purchase of Goods 85.57 76.16 158.88 148.50 294.19 - Staff Cost 29.78 24.89 56.60 46.94 96.88 - Voluntary Retirement Scheme 58.80 - 58.80 - - - Advertising & Sales Promotion 41.66 51.58 98.33 97.18 197.81 - Other Expenditure 48.54 32.84 98.91 67.96 150.33
Interest Expense 0.22 0.13 0.44 0.31 0.59
Depreciation , Amortisation and Impairment 3.56 3.90 7.25 6.47 31.43
Profit before Tax 16.47 44.25 67.41 86.18 187.88
Provision for Taxation -Current Tax 8.55 7.71 22.15 17.45 46.86-Deferred Tax (16.26) 2.99 (15.98) 6.27 (2.58)-Fringe Benefit Tax 1.00 2.67 2.00 3.60 6.00
Net Profit after Tax 23.18 30.88 59.24 58.86 137.60
Paid-up Equity Share Capital 136.00 136.00 136.00 136.00 136.00(Face value:Rupees 10 per share)Reserves excluding Revaluation Reserve 135.08
Basic and Diluted EPS (Rs.) 1.71 2.27 4.36 4.33 10.12
Aggregate of Non-promoter shareholding - Number of Shares 66,636,481 66,636,481 66,636,481 66,636,481 66,636,481 - Percentage of holding 49% 49% 49% 49% 49%
QUARTER ENDED SEPTEMBER 30, 2006UNAUDITED FINANCIAL RESULTS OF
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 31
Rs. CroresPre Tax Net of Tax Pre Tax Net of Tax
Reported Per Clause 41 16.47 23.18 67.41 59.24Increase (Y-o-Y) -62.8% -24.9% -21.8% 0.6%
Add :VRS Cost 58.80 39.01 58.80 39.01Contractor Termination (post VRS) 3.50 2.32 3.50 2.32
Sub-Total 78.77 64.51 129.71 100.57
Less :Profit on Sale of Apartment 6.00 3.98 6.00 3.98Excess Provisions nolonger required 8.50 5.64 8.50 5.64Prior year's tax provisionsno longer required 0.00 4.35 0.00 4.35
Profit 64.27 50.54 115.21 86.60Increase (Y-o-Y) 45.2% 63.7% 33.7% 47.1%
Operating Results
Quarter Half Year
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 32
Net Sales
630
1,124
939 964
0
200
400
600
800
1,000
1,200
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
+16.5%
+17.4%
+2.6%
536
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 33
Costs (Excl. Advt. & Depre.)
- All numbers adjusted to reflect Operating Results for 2006-07
645 666
753
431
68.7% 69.1%
66.9%
0
100
200
300
400
500
600
700
800
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
Cost % Sales
370
69.0%
68.4%
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 34
Advertising
- All numbers adjusted to reflect Operating Results for 2006-07
103
198
137
148
16.3%
17.6%
14.2%
15.7%
50
65
80
95
110
125
140
155
170
185
200
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
10%
11%
12%
13%
14%
15%
16%
17%
18%
Advertising % Sales
+44.5%
97+5.8%
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 35
EBITDA
- All numbers adjusted to reflect Operating Results for 2006-07
146
161174
96
15.5%16.7%
15.6%15.2%
3045
60
75
90105
120
135
150
165180
195
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
5%
7%
9%
11%
13%
15%
17%
19%
EBITDA % Sales
+8.1%+10.2%
+38.6% 69
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 36
EBIT
- All numbers adjusted to reflect Operating Results for 2006-07
89
142139
12213.0%
14.4%
12.7%
14.1%
30
50
70
90
110
130
150
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
5%
7%
9%
11%
13%
15%
17%
EBIT % Sales
+2.2%
63
+41.2%
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 37
Profit Before Tax
- All numbers adjusted to reflect Operating results for 2006-07
115
188178
15116.1%
18.5%
16.7%
18.3%
60
80
100
120
140
160
180
200
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
10%
15%
20%
PBT % Sales
+5.6%
+33.7%
86
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 38
Income Tax
2
5970
47
27
-15-5 -3
6
29%
36%
27%25%
-20
-10
0
10
20
30
40
50
60
70
80
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
0%
5%
10%
15%
20%
25%
30%
35%
40%
Curr Tax Def Tax FBT Tax Rate
- All numbers adjusted to reflect Operating Results for 2006-07
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 39
Profit After Tax
- All numbers adjusted to reflect Operating Results for 2006-07
87
138113108
11.5% 11.7%12.2%
13.8%
45
55
65
75
85
95
105
115
125
135
145
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
PAT % Sales
+21.4%
+4.62%
+47.1%
59
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 40
EPS, DPS & Payout
- All numbers adjusted to reflect Operating results for 2006-07
6.4
10.1
7.9
8.3
7.5
6.0
7.0
95%
85%85%
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
)
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
EPS DPS Payout
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 41
Net Working Capital
-133 -123
-201
-243-14.2%
-12.8%
-17.8%-300
-250
-200
-150
-100
-50
0
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
NWC % Sales
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 42
Cash + Bank + Investments
374
299
260
302
250
270
290
310
330
350
370
390
2003-04 2004-05 2005-06 6 months 2006-07
(Rs.
Cro
res)
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 43
Average Yield
4.2%4.6%
2.7%
2.0%
0.1%
0.6%
1.1%
1.6%
2.1%
2.6%
3.1%
3.6%
4.1%
4.6%
5.1%
2003-04 2004-05 2005-06 2006-07
BSE Sensex Average - 1.4%
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 44
Average PE
17.8 18.3
27.3
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2003-04 2004-05 2005-06
Industry Average - 17.0
COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET – OCT 2006 45
Thank You