Welcome to Colgate-Palmolive India COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 1
Agenda Business Update Roger Calmeyer Financial Review Moses Elias Questions & Answers COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 2
Leadership Team Roger Calmeyer V-P South Asia & MD India Moses A Elias Exec V-P & CFO Vinay Hegde Exec V-P Marketing K Vaidyanathan V-P & Company Sec Shekar Bharatwaj V-P Sales Debashish Roy V-P Human Resources COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 3
Leadership Team Roger Calmeyer V-P South Asia & MD India Moses A Elias Exec V-P & CFO Vinay Hegde Exec V-P Marketing Arun Pande V-P Info Technology Manish Lath Gupta CIC Head K Vaidyanathan V-P & Company Sec Shekar Bharatwaj V-P Sales Debashish Roy V-P Human Resources Sanjeev Dali Director GSSO Laurence Wheeler Exec V-P PSC Surendra Manek V-P R&D COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 4
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 5
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
FMCG sector continues to be buoyant 80,000 70,000 69760 * Sales Rs Crores 60,000 50,000 46809 49438 50436 54221 58561 40,000 30,000 2001 2002 2003 2004 2005 2006 Source: AC Nielsen Retail Measurement Services Estimated for based on Aug YTD 06 growth rate * FMCG Sales COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 9
Non- food FMCG reverses declining trend of 2001-2003 Growth in Non-food FMCG sales % Growth vs. year ago 20% 15% 10% 5% 0% -5% 18% 5% 7% 0% 2002 2003 2004 2005 YTD Aug 06-1% Source: AC Nielsen Retail Measurement Services COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 10
Growth in all key categories including toothpaste 45 Growth Rate ( YTD Aug 2006 Vs YTD Aug 2005) 40 35 30 % 25 20 15 15.3 18.3 14.8 14.7 19.9 21.9 10 5 0 Toilet Soaps Washing powders Detergent Cakes Toothpaste Skin Creams Shampoos Source: AC Nielsen Retail Measurement Services COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 11
Indian Oral Care market offers significant opportunities to drive penetration Category Penetration 100 75 50 Toothpaste Toothpowder Dentifrice 70 71 72 73 74 76 44 44 45 46 49 51 25 36 36 35 35 35 35 0 2001 2002 2003 2004 2005 2006 H1 Source: Indian Readership Survey Dentifrice = Toothpaste or toothpowder COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 12
Opportunity to increase per capita consumption by increasing the frequency of brushing teeth China Malaysia India - Urban Per Capita Consumption (Grams/HH/Month) 219 285 110 92 %age - twice a day brushing 61% 86% 7% Source: AC Nielsen Retail Measurement Services & Indian Readership Survey COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 13
Strategic Position Category Value Share Ranking Relative Share % Toothpaste 47.6 # 1 1.6 Toothpowder 43.8 # 1 1.5 Toothbrushes 34.3 # 1 2.1 Shower Gel* 39.6 # 2 0.8 Liquid Hand Soap* 3.6 # 3 0.2 Shaving Cream* 11.0 # 3 0.6 Cold Cream* 4.2 # 4 0.1 Source: AC Nielsen Retail Measurement Services Period : YTD Sept 06 * Urban only COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 14
5,000 TOTAL TOOTHPASTE 4,500 4,000 3,500 Total 3,000 Revenue 2,500 3 per. Mov. Avg. (Revenue) Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 15
CP Sales per Capita (Rs) 12.00 11.00 10.00 9.00 8.00 7.00 6.00 5.00 2002 2003 2004 2005 2006 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 16
BUSINESS MODEL BEST PLACE TO WORK Closer to DRIVING - Customer GROWTH - Consumer - Profession INNOVATION EVERYWHERE Consumer Innovation Centre FUNDING GROWTH Efficiency & Effectiveness in Everything COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 17
CLOSER TO THE CUSTOMER - E CHOUPAL - DISHA COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 18
Closer to the Customer. echoupal & Disha echoupal - Trained farmers (Sanchalak) manage prominently located IT enabled Choupals. Project started in UP, extended in 2006 to Maharashtra and 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 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 19
CLOSER TO THE CONSUMER - ORAL HEALTH MONTH - BRIGHT SMILES BRIGHT FUTURES PROGRAM COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 20
360º Plan - 2006 Media, Website PR support Muskurahatein DD National Free Dental Check-ups - In dental clinics - Factories - Housing Societies - Corporates On pack messages BSBF+ Dental Checkups Trade visibility and CCP Mobile Vans - Under privileged areas COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 21
Significantly Increased Scale and Touch points OHM '04 OHM '05 OHM '06 PDC's (Public Dental Check-ups) No. of cities towns 6 50 102 No. of dentists 70 venues 3500 5000 PDC's - New Touchpoints Societies 70 Corporate 170 BSBF/Schools 1000 2500 3000 Spread a Smile No. of towns cities 7 14 14 planned Media Channel Hungama DD National COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 22
CLOSER TO THE PROFESSION COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 23
Closer to the Profession. Professional Oral Care Colgate BRMO Comp Colgate BUMO Comp Toothpaste 75% 5% 82% 6% Toothbrushes 54% 23% 62% 23% BRMO - Brand Recommended Most Often by Dentists BUMO - Brand Used Most Often by Dentists Source : Dentist Track 2005 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 24
Efficiency & Effectiveness in Everything. Rationalization of Supply Chain 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 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 25
FINANCIAL REVIEW COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 26
FINANCIAL STRATEGY Grow Topline Reduce Costs Invest in Brand Building / New Products Grow NPAT COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 27
Grow Topline 3500 (% = current year vs previous year) 3250 25.8% 19.9% 15.1% 3000 21.2% (Rs. MM) 2750 6.4% 13.2% 2500 3.9% 2250 2000 Rs MM 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 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 28
Grow NPAT 63.7% 475 425 46.2% 375 14.4% 29.4% (Rs. MM) 325-11.8% 10.0% 14.5% 275 225 175 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 - All numbers adjusted to reflect Operating Results for 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 29
UNAUDITED FINANCIAL RESULTS OF QUARTER ENDED SEPTEMBER 30, 2006 (Rs Crores) Quarter Quarter Half Year Half Year Year Ended 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% COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 30
Operating Results Rs. Crores Quarter Half Year Pre Tax Net of Tax Pre Tax Net of Tax Reported Per Clause 41 16.47 23.18 67.41 59.24 Increase (Y-o-Y) -62.8% -24.9% -21.8% 0.6% Add : VRS Cost 58.80 39.01 58.80 39.01 Contractor 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 3.98 Excess Provisions no longer required 8.50 5.64 8.50 5.64 Prior year's tax provisions no longer required 0.00 4.35 0.00 4.35 Profit 64.27 50.54 115.21 86.60 Increase (Y-o-Y) 45.2% 63.7% 33.7% 47.1% COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 31
Net Sales 1,200 +16.5% 1,000 +2.6% 1,124 (Rs. Crores) 800 600 400 939 964 536 +17.4% 630 200 0 2003-04 2004-05 2005-06 6 months 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 32
Costs (Excl. Advt. & Depre.) 800 700 68.7% 69.1% 753 (Rs. Crores) 600 500 400 300 645 666 66.9% 370 431 68.4% 200 69.0% 100 0 2003-04 2004-05 2005-06 6 months 2006-07 Cost % Sales - All numbers adjusted to reflect Operating Results for 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 33
Advertising (Rs. Crores) 200 185 170 155 140 125 110 95 80 65 50 15.7% 148 14.2% 137 17.6% 198 103 16.3% 2003-04 2004-05 2005-06 6 months 2006-07 Advertising +44.5% 97 % Sales +5.8% 18% 17% 16% 15% 14% 13% 12% 11% 10% - All numbers adjusted to reflect Operating Results for 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 34
EBITDA (Rs. Crores) 195 180 165 150 135 120 105 90 75 60 45 30 15.6% 146 16.7% 161 +10.2% 15.5% 174 +8.1% 69 15.2% 2003-04 2004-05 2005-06 6 months 2006-07 96 +38.6% 19% 17% 15% 13% 11% 9% 7% 5% EBITDA % Sales - All numbers adjusted to reflect Operating Results for 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 35
EBIT 150 17% (Rs. Crores) 130 110 90 70 50 139 122 13.0% 14.4% +2.2% 142 12.7% 63 14.1% +41.2% 89 15% 13% 11% 9% 7% 30 2003-04 2004-05 2005-06 6 months 2006-07 EBIT % Sales 5% - All numbers adjusted to reflect Operating Results for 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 36
Profit Before Tax 200 20% (Rs.Crores) 180 160 140 120 151 16.1% 18.5% 178 188 +5.6% 16.7% 18.3% 15% 100 115 +33.7% 80 86 60 2003-04 2004-05 2005-06 6 months 2006-07 PBT % Sales 10% - All numbers adjusted to reflect Operating results for 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 37
Income Tax (Rs. Crores) 80 70 60 50 40 30 20 10 0-10 59-15 29% 70 36% 47-5 -3 27% 6 27 25% 2 40% 35% 30% 25% 20% 15% 10% 5% -20 2003-04 2004-05 2005-06 6 months 2006-07 0% 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 38
Profit After Tax (Rs. Crores) 145 135 125 115 105 95 85 75 65 55 45 11.5% 11.7% 108 113 +4.62% 12.2% 138 13.8% 87 2003-04 2004-05 2005-06 6 months 2006-07 PAT +21.4% 59 % Sales +47.1% 15.0% 13.0% 11.0% 9.0% 7.0% 5.0% - All numbers adjusted to reflect Operating Results for 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 39
EPS, DPS & Payout (Rs.) 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 95% 10.1 85% 85% 8.3 7.9 7.5 7.0 6.4 6.0 2003-04 2004-05 2005-06 6 months 2006-07 EPS DPS Payout 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% - All numbers adjusted to reflect Operating results for 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 40
Net Working Capital 0 0.0% (Rs. Crores) -50-100 -150-200 -250-300 -133-123 -201-12.8% -14.2% -243-17.8% 2003-04 2004-05 2005-06 6 months 2006-07 NWC % Sales -5.0% -10.0% -15.0% -20.0% COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 41
Cash + Bank + Investments 390 370 350 374 (Rs. Crores) 330 310 290 270 299 302 250 260 2003-04 2004-05 2005-06 6 months 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 42
Average Yield 5.1% 4.6% 4.1% 4.2% 4.6% BSE Sensex Average - 1.4% 3.6% 3.1% 2.6% 2.7% 2.1% 1.6% 2.0% 1.1% 0.6% 0.1% 2003-04 2004-05 2005-06 2006-07 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 43
Average PE 30.0 25.0 27.3 20.0 15.0 17.8 18.3 Industry Average - 17.0 10.0 5.0 0.0 2003-04 2004-05 2005-06 COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 44
Thank You COLGATE-PALMOLIVE (INDIA) LIMITED ANALYST MEET OCT 2006 45