Colgate Palmolive

General overview
Colgate Palmolive is a non-durable FMCG company which was started in the year 1806 in
the United States of America. The company specialises in health care and cleaning agent
products all over the world. Colgate was incorporated in India in the year 1937 and it has
been focusing only on personal healthcare products such as toothbrush, toothpaste,
mouthwash, hand wash and soaps. Colgate has a CAGR of almost 15% over the past 10
years and has around 40 different types of products introduced in the market over the past
few years. Colgate has 4 plants all over the country where the Baddi (Himachal Pradesh)
plant is the oldest one.

Management of the Company

The company’s management seems to have a substantial stability and has recently
appointed a new chairman. The rest of the management is also considered compelling
enough to toughen the company for any new challenges.

Mukul Deoras is the CEO of Colgate Palmolive India Ltd since 2018. He studied from Indian
Institute of management, Ahmedabad. He serves as a board member in three different
companies.
Mr. R A Shah is currently serving as the vice chairman, non-executive and independent
director of Colgate Palmolive India. He also serves as the chairman of Pfizer and P&G and at
the same time he is the chairman of the board of Godfrey Phillips India.
Mr. Issam Bachaalani has been the managing director of the company since 2014. He
studied from the Lebanese American University. He has experience on a global level due to
his strong marketing and leadership skills.

SWOT
Strengths: High volume market shares in both toothpastes (49.5%) and toothbrush (44.8%)
segment is the strongest point for the company. The reason for a strong market share is the
customer loyalty which has played an important role. Net profit margin is growing higher for
the past three years. It has an efficient cash flow which increased by 53.8% in the FY18.
Colgate has a strong distribution network which has allowed the company to expand its
operations to certain rural areas of the country. The company immensely focuses on its CSR
programmes such as “Bright Smiles, Bright Futures” which spreads awareness amongst the
children and the “Oral Health Month” which promotes free dental check-ups.
Weakness: Increase in Long term financial debt of 14.67% in the FY18 may increase cash
outflow from the company. The return on equity has declined and return on capital
employed has been volatile for the past five years. The cost of raw materials increased by
11.13% to 45.76 lacs which may lead to increase the number of loans to be taken. The
company has seen a rise in administration and selling expenses by 2.95% in the FY18. The
amortisation and depreciation expenses are also increasing every year. The current
unsecured loans have risen by 44.27% to 89.76 lacs for the FY18. There is a rise in
advertisement costs due to the increase in competition.
Opportunities: Expanding into the corners of the country will become possible with the help
of their strong supply and distribution channels. Introducing low priced and quality
toothpastes will attract more consumers. The company has ample resources to introduce
and focus on new products which can help to procure back their lost market share. More
CSR programmes can help them grow the demand for their products and make the people
aware of health and oral hygiene.

Threats: Heightened competition in the natural toothpaste segment in the current times has
made the company face a minute loss in the market share. The company is facing a
competition between its own products. For example, after the launch of Vedashakti, Cibacca
and Active Salt ended up making a loss in sales due to increased demand for Vedashakti.
The company may further face an increase in the cost of raw materials which may lead to a
slump in the margins. Brand switching maybe done regularly by the consumers and thus,
can cause the company to face a reduction in demand.

Competitors
HUL: HUL’s Pepsodent and Close Up are the toothpaste brands which stand right after
Colgate, with a volume market share of 16.8% . Even though HUL ranks first in the FMCG
sector, Colgate ranks above HUL in terms of the toothpaste and toothbrush segment. In
2017, HUL relaunched Close up with better promotional advertisement and the company
also came out with their own natural products segment called “Lever Ayush”. Lever Ayush is
a natural range of healthcare focusing on products such as soaps, face wash and
toothpastes which has been getting a decent response from the market.

Patanjali: After the introduction of Dantakanti in the market, Colgate faced a slump in the
volume market share to 52.5% where as Patanjali gained around 8% of the toothpaste
market due to its low cost, natural characteristics and significant marketing in the FY17.
Ultimately, Colgate ended up launching Vedashakti and has recently gained a lot of response
in the market. In the FY18, Patanjali gained around 8.7% of the market share proving their
growth in the toothpaste segment. Yet, Patanjali has been facing with certain manufacturing
issues as the supply is not able meet the market demand.
GSK: Sensodyne is a toothpaste which focuses on people’s sensitive teeth. GSK’s Sensodyne
has managed to capture a market share of 23% in the year 2018. The company has 7 types
of toothpastes which not only focuses on the sensitivity issue but also on whitening and
deep cleaning. Sensodyne has also come out with its own toothbrush. The company has
maintained its sales due to doctors recommendation and comparatively lower costs than
other similar brands. Colgate Pro Relief is a similar toothpaste but is not easily available,
according to the consumers response.

Analysis
Colgate has a greater potential to expand further in the country. Although the company is
facing an intense competition by other brands, it has been aiming to maintain its
sustainability with the competition in many different ways. The company can strategize its
growth with exemplary marketing and promotional plans in order to gain the consumers
attention. Maintaining high margins is an important factor which can lead to keeping the
cash in the company and utilising it for other reasons such as payment of debts and
interests which is the primary need in order to attain the faith of investors.