COLGATE PALMOLIVE (INDIA) LIMITED
Know the Company
Colgate Palmolive (India) Limited (CPIL) is a prominent player in the personal care products industry in India, specializing in the manufacturing and marketing of oral care and other personal hygiene products. CPIL boasts a rich heritage in India, tracing its origins back to 1937 when it was established as a subsidiary of the Colgate-Palmolive Company, headquartered in the US. Presently, the company is a 51% subsidiary of US based global consumer products giant, Colgate-Palmolive Company Inc.
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CPIL produces a wide range of oral care products, encompassing toothpaste, tooth powder, toothbrushes, whitening products, mouthwashes, and dental creams, among others. In addition to oral care items, the company also manufactures and markets personal hygiene products such as body wash, shower gel, liquid hand soap, and shampoo. However, the oral care segment accounts for 90% of the company’s revenue. Some of its well-known sub-brands include Colgate Dental Cream, Colgate Active Salt, Colgate Total, and Colgate Zig Zag toothbrushes, while its soaps and body washes are sold under brands like Palmolive and Protex.
Product Portfolio
CPIL offers a diverse product portfolio within the oral care segment, catering to various price points with distinct qualities and quantities. Colgate brand of product offering spans from basic tooth powder at the entry level to specialized offerings such as Colgate Sensitive for individuals with sensitive teeth. It has also expanded its range to include herbal variants like ‘Active Salt Neem’.
In the toothpastes segment Colgate have almost two dozen of different products at various price ranges with different ingredients. Products with such different ingredients targeting customers with specific oral problems. In this category, Company offers include Colgate® Cibaca Toothpaste, Colgate® Active Salt Neem Toothpaste, Colgate® Barbie Toothpaste, Colgate Cibaca® Vedshakti Toothpaste, Colgate® Herbal Toothpaste, Colgate MaxFresh® Spicy Fresh Toothpaste, Colgate® Sensitive Plus Toothpaste, Colgate Swarna Vedshakti Toothpaste, Colgate® Charcoal Clean Toothpaste and Colgate® Visible White Toothpaste Toothpaste, etc.
In the toothbrush category company introduced more than 20 types of products such as Colgate® Extra Clean® Toothbrush, Colgate® Slim Soft Toothbrush, Colgate® 360° Charcoal Gold Toothbrush, Colgate® Cibaca Toothbrush, Colgate® Kids Barbie Battery Operated Toothbrush, olgate® Slimsoft Sensitive Toothbrush, Colgate® Super Shine Toothbrush, Colgate® Zig Zag® Toothbrus, etc.
Colgate also offers 9 types of mouth washes – Colgate® Plax® Active Salt Mouthwash, Colgate® Plax® Complete Care Mouthwash, Colgate® Plax® Fresh Tea Mouthwash, Colgate® Plax® Freshmint Splash Mouthwash, Colgate® Plax® Peppermint Fresh Mouthwash and Colgate® Plax® Sensitive Mouthwash, among others.
The company also offers tooth powder and a specialty product named- ‘Colgate Pain-out’ a professional grade oral care products that available without a doctor’s prescription. In addition to oral care products, the Company aggressively selling other body care segments like Body wash, hand Wash, sanitizers, shower gel etc.
Strengths
The unshakable faith of generations built over decades of operations has made ‘Colgate’ as a trusted household name in India, representing a major strength of the company. The Company has steadfastly nurtured the culture of oral care in India for several decades, leading it to become India’s most preferred oral care brand and the most widely penetrated FMCG brand, reaching nine out of ten households. ‘Colgate’ not only stands as a brand but also it represents a product category as a whole.
CPIL has a large distribution network of over 6.6 million stores, including Medical Stores span across the nook and corner of the country. This extensive sales network, particularly robust in rural areas, empowers the company to effortlessly introduce new products and promptly attract potential customers upon their launch. Colgate’ is a trusted household name in India with over 50% market share in toothpaste, almost 48% in tooth powder segment and around 40% in the toothbrush category. Colgate maintaining undisputed leadership position for several decades in the oral care category in India with strong brand recall and an extensive distribution network. Company’s strong brand image and variety of product with different price and weight range has enabled it to grab market share of smaller players.
CPIL is the only one oral care company that has the full portfolio of oral care products in India – toothpastes for varied benefits and from basic toothbrushes to premium electric toothbrushes.
The Company leverages its extensive experience in the oral care and personal care industry, supported by external partners who contribute valuable patents and proprietary technologies. This collaboration enables the company to develop some of the most effective products tailored for the Indian market. Some notable product introductions in this category include Colgate Max-Fresh Charcoal Toothpaste, Colgate PerioGard Toothpaste, KEEP Toothbrush, Visible White O2 Toothpaste, advanced Electric Toothbrushes, and the Super Flexi Toothbrush, among others.
CPIL maintains a diversified portfolio characterized by unique and superior-quality products, consistently introducing new varieties through robust research and development efforts. The company boasts a formidable R&D team comprising over 900 scientists and 750 quality specialists. As evidence of its industry-leading technology, the parent company owns more than 125 global patents. The Indian unit extensively benefits from both the R&D support of the parent company and its own R&D capabilities, resulting in a synergistic approach to innovation and product development.
Currently, rural areas contribute nearly 40% of company’s sales. CPIL not only increasing its sales force especially in rural areas but also making steps to create new customers. It is aggressively tapping new age marketing opportunities like digital media, e-comers etc. which now contributes over one-third of its revenue.
Company is spending substantial amount in brand building through advertisement, including digital marketing. For the FY2023, company spent almost 14.2% of its revenue, almost Rs. 635 crores for the advertisement and business promotion.
Financials
CPIL registered a 35.7% increase in its net profit to Rs 330 crore for the quarter ended December 31, 2023, supported by double-digit growth in the toothpaste segment. The company had reported a net profit of Rs 243 crore in the corresponding quarter of the previous year. Sales surged by 8.2% to Rs 1,389 crore for Q3 FY24, compared to Rs 1,281 crore in the same quarter last year. For the latest quarter, CPIL recorded its highest ever gross margins at 69.6% for the quarter ended December, 2023.
Outlook
Oral health issues are becoming more prevalent worldwide, including in India, due to rapid changes in lifestyles, living standards, and an increase in sugar-rich diets. Per capita usage of toothpaste remains low in India, presenting an opportunity for strong growth. The rising population, increasing per capita income, changing lifestyles, and greater awareness of personal hygiene also contribute to the industry’s fast growth. The industry is further expanding due to increased premiumization, customer demand for more tailored solutions, and a growing number of active practicing dentists. It is estimated that India adds about 25,000 qualified dentists each year.
Various surveys estimate that nearly one-third of the population in India still does not have access to modern oral care solutions. To address this, CPIL has been conducting programs like “Bright Smiles, Bright Future.” Increasing awareness about oral care, impactful advertising, availability of different types of products, and a vast distribution network provide strong growth opportunities for the company going forward.
Concerns
CPIL is engaged in the FMCG – Oral Care segment, where intense competition is prevalent. Other large FMCG companies such as Hindustan Unilever, P&G, Himalaya, Dabur, and Emami are keenly exploring the oral care space to broaden their portfolios. This is likely to result in a high degree of competition in this segment in the future as well.
In the recent past, CPIL received several penalty orders from the Income Tax Department for previous years, amounting to several crores, due to the alleged failure to maintain adequate documentation regarding transfer pricing regulations. This may result in a financial liability for the company if the court verdict is unfavorable.
Sector: Fast Moving Consumer Goods
Market Price: Rs. 2,874.25 as on today
FV: Rs 1/-
Stock Name: Colgate Palmolive (India) Ltd
BSE Code: 500830, NSE Code: COLPAL
Market Cap.: Rs 77,826 Cr.
Book Value: Rs. 64.8
Segment: Personal Care - MNC
Incorporation: 2004
Headquarters: Mumbai
