Rozar Finance

I am Rozar Maheshkumar Parmar studying in S.Y.B.B.A.
in Dharamsinh Desai University, Nadiad, have prepared this Finance Report of the Colgate-Palmolive (India) limited. As a student of such Professional course it is quite necessary for me to have knowledge about the practical aspects as well as theoretical too. It is an opportunity for me to prepare the Finance Report of one of the biggest Company of the world, I personally thankful to them for providing the opportunity and putting some great faith in me. I am please to submit this Finance Report for the purpose of evaluation by the examiner. At last I say that Experience is the best teacher.
Guided by : Prof. Bhavesh Pandiya
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Prepared by : Parmar Rozar M.
I am a second year B.B.A. student in to Dharamsinh Desai University; I was given a task to prepare a Finance Report of the Colgate-Palmolive (India) limited. It is one of the best things ever to do so. I am thankful to our dean sir Mr. G.S.Shah for giving me the opportunity to make this report. I am thankful to Colgate-Palmolive (India) limited and the members of the Company for being so cooperative in providing the required information. I am heartily thankful to Professor Pallavi Dave who has guided me. Without her help I could not have completed my report. I am kindly thankful to her for her timely support and guidance. At last, but not least I am extremely thankful to my group who helped me to collect information for report and their encouraging support.
Parmar Rozar M. Roll no. :- 114 S.Y.B.B.A.
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NO 1 2 3 4 5 6 7 8 9 10
NAME Company Profile Ratio Analysis & Interpretation Ratio Summary Accounting Policy Directors report Auditors Report Common Size Statement Cash Flow Statement Annexure Conclusion
Page No. 4 7 48 49 52 59 62 65 69 72
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COLGATE-PAMOLIVE (INDIA)PRIVATE LIMITED

Board of Directors

Chairman Vice-chairman Deputy Chairman Managing Director Whole-time Director Whole-time Director
J.Skala R. A. Shah P.K. Ghosh R.D. Calmeyer M.A.Elias K.V. Vaidyanathan J.K. Setna V.S. Mehta K.V. M.A.Elias R.D. Calmeyer P.Parameswaram S.Bharatwaj S.Manek L. Wheeler A.Singh
Management Committee
Managing director
Vaidyanathan Finance Legal Marketing Sales Research & Development Manufacturing & Supply chain Human Resources
Audit Committee
Chairperson
R. A. Shah P.K. Ghosh J.K. Setna V.S. Mehta K.V. Vaidyanathan
Secretary
Shareholder/Investor`s Grievance Committee

Chairperson
P.K.Ghosh R.D.Calmeyer J.K.Setna K.V.Vaidyanathan Crawford Bayley &
Solicitors
Company
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Auditors
Register Office
Price Waterhouse Chartered accountant Colgate Research Centre, Main Street, Hiranandani Gardens, Powai, Mumbai 400 076. Plot No. B 14/10 MIDC, Waluj Industrial Area, Aurangabad 431 136. Plot NO. 78, EPIP Phase I, Jharmajri, Baddi, District Solar, [H.P.]174 103. Registrars & Share Transfer Agents Sharepro services (INDIA) Pvt.Ltd.
Factories
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Meaning of Ratio Analysis

The Financial Statement as prepared and presented annually is of little use for guidance of prospective investors, creditor and even management. It relationship between various related item in these financial statement are established, they can provide useful clues to gauge accurately the financial health and ability for business to make profit. This relation between two related items of financial statement is known as ration. A ratio is thus one number expressed in from of another e.g. in order to obtain the rate of return on paid up capital, the net profit of the business is divided by the paid up share capital. A ratio is customarily expressed in these different ways. It may be expressed as a proportion between two figures. Second method is to express it in the form of percentage e.g. The rate of return on capital employed is 30 % Third method is to express it as rates. The use of ratio has become increasing popular during last few years only. Originally the bankers are used the current ratio to judge the capacity of the borrowing business enterprises to repay the loan and make regular interest payment. Today is has assumed such an importance the anybody connected with the business turn to ratio for measuring the financial strength and earning capacity for the business.
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Importance of Ratio
Profitability
Useful information about the trend of profitability of available from profitability ratio. The gross profit ratio, net profit ratio and ratio of return on investment give a good idea of a profitability of business.
Effectiveness
The turnover ratio are excellent guides to measure the efficiency of managers e.g. the stock turnover will indicate how efficiency the sale is being made, the debtors turnover will indicate the efficiency at collection department and assets turnover shares the efficiency with which the assets are used in business.
Helps in Budgetary control
Regular budgetary reports are prepared in a business where the system of budgetary control is in use. If various Ratios are presented in these reports, it will give fairly good ideas about various aspects of financial position.
Ratio is the management in making some of the important decision, suppose, the liquidity ratio shows can unsatisfactory position, the management may decide to get additional liquid funds.
Helps in Decision Making
Inter firm comparison

The absolute ratios of a firm are not at much use, unless they are compared with similar ratio at other firm belonging to the same industry. This is inter firm comparison which shares the strength and weakness of the firms as compared to other firms and will indicate corrective measure.
In fact, the use of ratios, are made initially ascertain the liquidity to ascertain the liquidity of business. The current ratio, liquid ratio and acid-test ratio will tell whether the business will be able to meet its current liquidities as and when they mature.
Liquidity
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Gross Profit Ratio Meaning

It is a ratio expressing relationship between gross profits earned to net sales. It is a useful indication of the profitability of business.
Importance
This ratio is usually expressed as a percentage. The ratios shows whether the mark up obtained on cost of production is sufficient. There is no standard showing reasonableness of Gross Profit.
Formula
Gross Profit Ratio = Gross Profit 100 Net Sales
2008
=
Calculation
Gross Profit Ratio
_92043.45_ 100 155321.10 = 59.26%
2009
101685.14 100 175815.90 = 57.84 %
Gross Profit Ratio =
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Interpretation
The ratio measures the gross earning of the company, as compared to its net sales. In the year 2008 the gross profit ratio was 59.26% and in 2009 it is decreased to 57.84%. So it is decreased by 1.42%. Current position of the company is not good. This shows that for a sale of Rs.100 a margin of 57.84 Rs. in 2009 is available from which operating expenses of business are to be recovered. This ratio is low; it indicates that the cost of sales is high or that the purchasing is inefficient.
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Net Profit Ratio Meaning

The ratio is valuable for the purpose of ascertaining the over all profitability of business and shows the efficiency or otherwise of operating the business.
Importance
Generally, the ratio is computed on the basis of net profit earned from operation of business and non-operating expenses and incomes are excluded. The ratio indicated what portion of sales revenue is left to the proprietors after all operating expenses are not. The higher this ratio, the better will be the profitability.
Formula
Net Profit Ratio = Net Profit 100 Net Sales
Calculation
2008
= _ 231.71__100 155321.10 = 14.92 %
Net Profit Ratio
2009
= __290.22_ 100 175815.90
Net Profit Ratio
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= 16.51%
Interpretation
This ratio is useful to measure the overall profitability performance of the business and shows the efficiency of the company to earn amount of net profit earned on its net sales. This ratio indicates what portion of sales revenue is left to the proprietors after all operating expenses are met. In 2008, the net profit ratio was 14.92% and in 2009 it was 16.51%. This shows that for sale of Rs. 100 Company earned a net profit of Rs.14.92 in 2008and Rs.16.51 in 2009 is available which is favorable for the company.
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Operating Ratio Meaning

The ratio which shows the relationship between Cost of Goods Sold, Operating Expanses and Net Sales is called Operating Ratio.
Importance
By this Ratio we can find the efficiency level of the Management. The ratio indicated what portion of sales revenue is left to the proprietors after all operating expenses. The lower the ratio, the better will be the profitability.
Formula
Operating Ratio = Cost of Goods Sold + Operating Expanses 100 Net Sales
Calculation
2008
= = __63278+62838_ 100 155321 81.20 %
Operating Ratio
2009
= _74131+67154_ 100 175815
Operating Ratio
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80.36 %
Interpretation
This ratio is useful to measure the overall Operating Expanses of the business and shows the efficiency of the company to occurred Operating Expanse on its net sales. This ratio indicates what portion of sales revenue is left to the proprietors after all operating expenses are met. In 2008, the Operating Expanse ratio was 81.20% and in 2009 it was 80.36%. This shows that for sale of Rs. 100 Company occurred Operating Expanse of Rs.81.20 in 2008and Rs.80.36 in 2009 is available which is favorable for the company.
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Stock Turnover Ratio Meaning

The number of the time average stock is turned over during the year is called Stock Turn Over. We can find this Ratio by dividing Cost of Goods Sold to Average Stock.
Importance
By this Ratio we can find the efficiency level of the Production Department. The ratio indicated what portion of average stock is left to the proprietors after all expenses of Cost of Goods Sold. The higher the ratio, the lower the sales.
Formula
Stock Turn Over Ratio = Cost of Goods Sold Average Stock
Calculation
2008
= _63278_ 6052
Stock Turn Over Ratio
= 10.46 Times
2009
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Stock Turn Over Ratio
_74131_ 6043
= 12.27 Times
Interpretation
This ratio is useful to measure the overall Stock Turn Over of the business and shows the efficiency of the Production Management. This ratio indicates what portion of average stock is being produced after all expenses of costs of goods sold are met. In 2008, the Stock Turn Over ratio was 10.46 times and in 2009 it was 12.27 times. This shows that for cost of goods sold of Rs. 100 Companys Stock Turn Over in 2008 is 10.46 times and 12.27 times in 2009.
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Return on Capital Employed Meaning

It is an Index of profitability of business and is obtained by comparing net profit with capital employed. The ratio is normally expressed in the percentage. The term capital employed includes share capital, reserves and long term loans such as debentures.
Importance
The success or otherwise of the enterprise is judged with the help of this ratio. It is perhaps the most important ratio from the view point of management. It helps to know the profitability of the business.
Formula
Net Profit Capital Employed 100
Return On Capital Employed =
Calculation
2008
= 29205 100 16689 = % 175
Return on Capital Employed
2009
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Return on Capital Employed
_34531_ 100 22098 = 156.28%
Interpretation
The position of the company in the year 2008 and 2009 are 175% and 156.28% respectively. This indicated that if the companys employed capital of Rupees 100, it gets return in the form of EBIT of Rupees 175 and 156.28.The condition of the 2009 is not better than the year 2008. So, the company is not improving it.
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Return on Shareholders Fund Meaning

In order to judge the efficiency with which the proprietors funds are employed in business, the ratio is ascertained. It is of great practical importance to the prospective investors as it enables the profitability of a company to be compared with that of the other company. It also indicates whether the return on proprietors funds is enough in relation to the risks that they under take.
Importance
The Ratio indicates whether the return on properties funds is good enough in relation to the risk that they undertake.
Formula
Return On Shareholders Fund =
Net Profit 100 Shareholders Funds
Calcula tion
2008
_29205_ 100 16221
Return on Shareholders Fund =
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= 180.04%
2009
Return on Shareholders Fund = _34531_ 100 21630 = 159.64%
Interpretation
The ratio measures the return (that is net profit after tax) that the shareholder gets as compared to their investment. This ratio
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shows what amount of dividend is likely to be received on shares. The ratio of return on shareholders fund in the year 2008 was 180.04% which increases to 159.64% in the year 2009. This ratio shows that if a shareholder invests Rs.100 in the company than the profit available to him is Rs.180.04 and Rs.159.64 respectively for the year 2008 and 2009. This shows dissatisfactory position of the Company. This is not good for the companys shareholders and also it decreases companys reputation.
Return on Equity Shareholders Fund Meaning

This Ratio is obtained by dividing Net Profit after deducting Preference Share Dividend by the amount of ordinary Share Capital of plus free reserve. It is of great practical importance to the prospective investors as it enables the profitability of a company to be compared with that of the other company. It also indicates whether the return on proprietors funds is enough in relation to the risks that they under take.
Importance
This ratio shows what amount of dividend is likely to be received on share. We can find the earnings on capital invested by the ordinary Shareholders by this Ratio.
Formula
Net Profit Pref. dividend Equity Shareholders Funds
Return On Equity Share Capital = 100
Calcula
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tion
100 1359.93
2008
_2317.10_
Return on Equity Shareholders Fund =
= 170.38%
2009
Return on Equity Shareholders Fund = _2902.19_ 100 1359.93 = 213.41%
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Interpretation
The ratio measures the return (that is net profit after tax) that the shareholder gets as compared to their investment. This ratio shows what amount of dividend is likely to be received on shares. The ratio of return on Eq.shareholders fund in the year 2008 was 170.38% which increases to 213.41% in the year 2009. This ratio shows that if a Eq.shareholder invests Rs.100 in the company than the profit available to him is Rs.170.38 and Rs.213.41 respectively for the year 2008 and 2009. This shows satisfactory position of the Company. This is good for the companys shareholders and also it increases companys reputation.
Return on Equity Share Capital Meaning

This ratio is used to know the profitability from the viewpoint of equity shareholders. This ratio is useful to find the profitability of the business. This ratio obtained by net profit after tax in which preference dividend is deducted and also useful to know how much equity share capital is invested in the business.
Importance
This ratio shows the profitability from the view point of the equity shareholder. By this we can get the Net Return on Net Equity Capital.
Formula
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Return on Equity Capital 100
PAT Pref. dividend Eq. Share Capital
Calculation
2008
104.7%
The Return on Equity Share Capital is
2009
The Return on Equity Share Capital is 153.4%
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Interpretation
This ratio shows the profitability from the view point of the equity shareholder. In the year 2008 the profitability of the equity shareholder is the 104.7and the year 2009 the profitability of the equity shareholder is 153.4 it is increase in 2009 of the profitability of the company. The Return on Equity Share Capital in 2008 is Rs.104.7 and in 2008 Rs.153.4 against Rs.100.
Earning Per Share Meaning

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This ratio is useful to know the maximum amount on share earned to equity share holders. This ratio useful to find profitability of firm by profit after tax and deducted preference divide by number of equity share.
Importance
This ratio is useful to know what amount is being earned per equity in the Financial Year. The total earning per Share can be calculated.
Formula
Earning Per Share = PAT Preference Dividend Number of Equity Shares
Calculation
2008
Rs.17
The Earning Per Share is
2009
The Earning Per Share is Rs.21.3
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Interpretation
means the maximum by Rs.21.3 in a year Rs. and in year 2009 declares to equity
In a year 2009 EPS 21.3 Rs. so, it amount declare the equity share holders increase 2009 as compare to year 2008. In 2008 EPS is 17 Rs.21.3 is there so, amount increase which shareholder.
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Dividend Per Share Meaning

It measures the dividend available to the share holders as compare to their investment done per share the ratio shows how much they will earn as a dividend with the investment in a single share.
Importance
This ratio is useful to know what amount is paid or declare to equity shareholder in a way of dividend per share.
Formula
Dividend Per Share = Dividend Declared Number of Equity Shares
Calculation
2008
Rs.
The Dividend Per Share is 13
2009
Rs. 15
The Dividend Per Share is
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Interpretation
The ratio is increased in a year 2009 i.e. Rs.15 as compare to previous year i.e. Rs.13. It means that when the amount which declare to equity shareholder is Rs.100 then the DPS is Rs.13 as a dividend and In a year 2008 amount of dividend is low which is Rs.15 which is increase in a year 2009 It means profit of the firm may be increases in a year 2009 as compare to previous year.
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Current Ratio Meaning

This most widely used ratio shows the proportion of current assets to current liabilities. It is also known as working capital ratio as it is a measure of working capital available at a particular time. Idle ratio is 2:1. The Tondon Committee appointed by RBI recommended a current ratio of 2:1. But later on the Chore Committee appointed by RBI recommended a satisfactory current ratio of 1.33:1.
Importance
It is a measure of short term financial strength of the business and shows whether the business will be able to meet its current liabilities will as and when they mature. Liability which will be nature with in a period of 12 months is a current liability.
Formula
Current Ratio = __Current Assets__ Current Liabilities
Calculation
2008
= __25692__ 34693 = 0.74:1
Current Ratio
2009
= __36238__
Current Ratio
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39545 = 0.92:1
Interpretation
This ratio is the measure of capability of company to pay off the liability, which are due within 12 months period as compared to its current assets. It is a measure of short-term financial strength of the business and shows whether the business will be able to meet its current liabilities, as and when they mature. In the year 2008, for every Rs. 1 of current liability, there is available Rs.0.74 as current assets to meet the current liability. And same as in the year 2009 for every Rs.1 of current liability there is 0.92 Rs, in current assets to meet current liability. Idle ratio is 2:1.
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Liquid Ratio Meaning

A variant of current ratio is the liquid ratio or quick ratio which is designed to show the amount of cash available to meet immediate payments.
Importance
It is obtained by dividing the liquid assets by liquid liabilities. If the liquid assets are equal or more than liquid liabilities, the condition may be considered as satisfactory. Idle ratio is 1:1. It measures the liquid position for the company to pay off its debts within very short period as compared to its liquid liabilities.
Formula
Liquid Ratio = __Liquid Assets___ Liquid Liabilities
Calculation
2008
Liquid Ratio = _18128_ 34693 = 0.52:1
2009
Liquid Ratio = _27996_ 39454
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= 0.71:1
Interpretation
The liquid ratio of the company for the year 2008 and 2009 are 0.52 and 0.71 respectively. So in 2008, company was able to pay Rs.0.52 more against 1 Rs. liability same as in year 2009 it was 0.71. The liquid ratio is a better indication of liquid position of the company and shows whether the company will be able to meet its current obligations for immediate payment at a short notice. No standard nor is available for the liquid ratio. However, it is believed that liquid assets should at least cover the liquid liabilities. The ratio should be 1:1. It shows that the company will not have any problem in making payment of its liability. So, we can say that the companys liquidity position is good.
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Acid Test Ratio Meaning

The measure of absolute liquidity may be obtained by comparing only cash and bank balance as well as readily marketable securities with liquid liabilities. This is a very exacting standard of liquidity and it is satisfactory if the ratio is 0.5:1
Importance
It shows the immediate cash capability of the company only cash and bank balance as well as readily marketable securities with liquid liabilities.
Formula
Acid Test Ratio = __ Quick Assets__ Liquid liabilities
Calculation
2008
= _14426.28_ 34693.43 = 0.42:1
Acid Test Ratio
2009
= _25114.33_
Acid Test Ratio
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39545.14
= 0.64:1
Interpretation
In Quick ratio here, in quick assets only cash, bank & marketable securities taken which can easily convertible into cash. This shows the liabilities & capacity of the company to meet present obligation in times not later. Here the ratio is not satisfactory. The ratio in the year 2008 is 0.42:1 which means that the company has quick ratio of Rs.0.42 for the every quick liability of Rs.1. The ratio decrease to 0.64 in the year 2009 means that company has quick asset of Rs.0.64 for the quick liability Rs.1.
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Debt Equity Ratio

Meaning
It measures the portion of debt taken by the company as compared to owners fund debt equity ratio established relationship outside long term liabilities and owner fund. It shows portion of long term external funds and owners fund in entire capital structure. This ratio is obtained by debt dividing by equity. This ratio is another form of proprietary ratio and establishes relationship between the outside longterm liabilities and owners funds.
Importance
It shows the proportion of the long term External Equities and Internal Equities.
Formula
Debt Equity Ratio = _ Long Term Liabilities _ Eq.Shareholders Funds
Calculation
2008
= _468.75_ 16220.62 = 0.03:1
Debt Equity Ratio
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2009
= _468.75_ 21629.57 = 0.02:1
Debt Equity Ratio
Interpretation
It measures the portion of debt taken by the company as compared to owners fund. In a year 2009 the ratio is lower than as compare to previous year. So it indicates that every Rs.1 of owner fund our long term debts a 0.02 it establishes relation between outside long term liabilities and owner funds.
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Proprietory Ratio
Meaning
The ratio shows the proportion of proprietors funds to the total assets employed in the business. The proprietors funds or shareholder equity consist of share capital and reserve and surplus. Proprietors funds means the funds contributed by the owner less miscellaneous expenses at any.
Importance
The higher the ratio, the stronger financial position of the enterprise as it signifies that the proprietors have provided funds to purchase the assets.
Formula
Proprietor's Ratio = _Proprietors fund_ 100 Total assets
Calculation
2008
= 16221 100 16689 = 97.20%
Proprietory Ratio
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2009
_21630 100 22098
Proprietory Ratio =
= 97.88%
Interpretation
It measures the portion of contribution made by the proprietor as compared to the total asset of the business. The higher the ratio, the stronger the financial position of the enterprise, as it signifies that the proprietors have provided larger fund to purchase the assets. This ratio cannot exceed 100 percent. If it is 100%, it means that the business does not use any outside funds. In the year 2008 and 2009 the proprietary ratio are 97.20% and 97.88% respectively. So in 2009 every 100 Rs. the proportion of proprietors contribution to the total assets is 97.88 Rs.
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Debtors Turnover Ratio

Meaning
The ratio shows the number of days taken to collect the dues of credit sales. It shows the efficiency or of the collection policy of the enterprise. This ratio suggests the number of times the amount of credit sale is collected during the year.
Importance
In absence of information of credit sales actual sales will be taken as credit sales. It measures the number of times the ratios of debtors cycle are done during a year so.
Formula
Debtors Turnover Ratio = _ Credit Sales _ Average Debtors
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Debtors Velocity Ratio

Meaning
Debtors ratio indicates the number of days during which the dues for credit sales are collected.
Formula
Debtors Velocity Ratio = Debtors_+_Bills_Receivable 365 Credit sales
Calculation
2008
Debtors Velocity Ratio = _918.55_ 365 155321 = 2.16 2 days
2009
Debtors Velocity Ratio = _113.45_ 365 175816
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= 2.31 2 days
Interpretation
As company makes credit sales. We can see in 2008 debtors are able to pay credit in 2 days and in 2009it is also 2 days. This ratio shows that in how much days company is able to collect from debtors.
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Creditor Turnover Ratio

Meaning
The creditors turnover suggests the No. of times the amount of credit purchase is collected during the year while creditors ratio indicates the No. of days which the dues for credit purchase are collected the No. of dues within which we make payment to our creditors for credit purchase is obtained from creditors.
Importance
We can find the No. of days of the credit cycle done during the year.
Formula
Creditors Turnover Ratio = _Credit_Purchase_ Average Creditors
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Creditors Velocity Ratio

Meaning
Creditors ratio indicates the number of days during which the dues for Credit Purchase are to be paid.
Formula
Creditors Velocity Ratio = Creditors_+_Bills_Payable 365 Credit Purchase
Calculation
Creditors Velocity Ratio =
2008
_30472.41_ 365 35491.88 = 313 days
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2009
= _34172.77_ 365 35019.02 = 356 days
Creditors Velocity Ratio
Interpretation
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This ratio shows in how much days company is able to pay for credit purchase to creditors. We can see in 2008 it is 313 days and in 2009 it is also 356 days. So, the Company has enough time for repayment.
Fixed Assets Turnover Ratio

Meaning
The Fixed Assets Turnover suggests the No. of times the amount of Fixed Assets purchase is collected during the year. To ascertain the efficiency and the Profitability of the business, the Fixed Assets are compared to Sales.
Importance
We can find the level of efficiency of the Management that how well they utilize the resources of the Company.
Formula
Fixed Assets Turn over Ratio = _ Sales _ Fixed Assets
Calculation
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2008
= 155321 19899 = 7.81:1
Fixed Assets Turn over Ratio
2009
= 175816 17859
Fixed Assets Turn over Ratio
= 9.84:1
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Interpretation
The ratio of Fixed Assets Turnover is comparatively increases as to the previous year. In 2008 the Fixed Assets Turnover Ratio is 7.81:1and in 2009 it is 9.84:1. The ratio is found to be higher; we can say that Company is not making full utilization of their Fixed Assets. It indicates the lower efficiency.
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No .
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Ratios
Gross Profit Ratio Net Profit Ratio Operating Ratio Stock Turnover Ratio Return on Capital Employed Return On Shareholders Fund Return On Equity Shareholders Fund Return On Equity Share Capital Earning Per Share Dividend per Share Current Ratio Liquid Ratio Acid Test Ratio Debt Equity Ratio Proprietary Ratio Debtors Turnover Ratio Creditors Turnover Ratio Fixed Assets Turnover Ratio
2008
59.26% 14.92% 81.20% 10.46 Times 175% 180.04% 170.38% 104.7% 17 Rs. 13 Rs. 0.74:1 0.52:1 0.42:1 0.03:1 97.20% 2 Days 313 Days 7.81:1
2009
57.84% 16.51% 80.36% 12.27 Times 156.26% 159.64% 213.41% 153.4% 21.3 Rs. 15 Rs. 0.92:1 0.71:1 0.64:1 0.02:1 97.88% 2 Days 356 Days 9.84:1
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Accounting Policies
I.
Basis of Accounting
The financial statements are prepared under historical cost convention on an accrual basis of accounting and in accordance with the generally accepted accounting principles in India and provisions of the companies Act, 1956 read with the companies (Accounting Standards) rules, 2006. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities as of the date of financial statements and the reported income and expenses during the reporting period. The management believes that estimates used in preparation of
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the financial statements are prudent and reasonable. Future results could differ from these estimates. II.
Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. The Company capitalizes all direct costs relating the acquisition and installation of Fixed Assets. Intangible Assets Goodwill and other Intangible Assets are amortized over the useful life of the Assets, not exceeding 10 years. Tangible Assets Lease hold land is being amortized over the period of lease. Depreciation is provided at Straight Line Method. Impairment For the purpose of assessing Impairment Assets are grouped at the levels for which there are separately identifiable Cash flow. III.
Investments
Long term Investments are valued at cost. Current Investments are valued at lower of cost and Fair value as on the date of the Balance sheet. The Company provides for diminution in value of Investment, other than temporary in nature.
IV.
Inventories
Inventories of raw materials and packing materials, work-in-process and finished goods are valued at lower of cost and Net responsible value cost in determining using standard cost method that approximate actual cost. Company accrues Custom Duty & Excise Duty in respect to stocks of finished goods lying in bond and warehouses. V.
Reverse Recognition
Sales are recognized upon delivery of goods & are recovered Net of Trade Discount, Rebates, Sales Tax and Value Added Tax and Excise Duty on manufactured and outsourced products.
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VI. Provisions and Contingent Liabilities There is a possible obligation or a present obligation that the like hood of out flow of resources is remote, no Provision or Disclosure as specified in Accounting Standard 29, - Provisions, Contingent Liabilities and Contingent Assets is made. VII. Expenditure Advertising expenditure is consistently accord and recognized in the year in which the related activities are carried out.
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The Directors Report

FINANCIAL RESULTS
(Rs : Crore) Particulars Total Revenue Sales(Excluding Excise Duty) Other Income Profit Before Taxation Provision For Taxation Profit After Taxation Balance brought forward Profit available for appropriation Appropriation : Dividend Dividend Tax General Reserve Balance carried forward 2008-09 1802.57 1694.81 107.76 345.31 55.09 290.22 5.77 295.99 203.99 34.14 29.02 28.84 295.99 2007-08 1558.16 1473.38 84.78 292.05 60.84 231.71 24.84 256.58 176.79 50.85 23.17 5.77 256.58
Business Performance
In the face of an intense competitive scenario and despite difficult economic conditions, your Companys business during the year grew in double digits. Your Company had to cope with the challenges of severe cost pressures and these were successfully tackled through active cost reduction programs across the entire organization, developing alternate sources for raw materials and vendor partnerships. Sales for the year increased by 15 per cent at Rs. 1,694.81 crore as against Rs. 1,473.38 crore. During the year, toothpaste registered an impressive volume growth of 13 per cent.
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The profit after tax for the financial year 2008-09 grew by 25 per cent at Rs. 290.22 crore as against Rs. 231.71 crore in the previous year. The underlying performance can be gauged from the following ratios: 2008-09 2007-08 Earning per share (Rs.) Dividend per share (Rs.) Return on Capital Employed (%) Return on Net worth (%) 21.3 15.0 155.0 153.4 17.0 13.0 110.9 104.7
Your Company continued to lay emphasis on cash generation and delivered strong operating cash flow during the year. Your Company is pleased with the continued strength of its Balance Sheet and Cash Flow. This was driven by strong business performance, efficiencies and cost saving across the organization and a continued efficient collection system. Your Company managed investments prudently by deployment of surplus funds in a balanced portfolio of safe and liquid debt market instruments after ensuring that such investments satisfy the Companys criteria of security and liquidity. Another factor instrumental for growing the Companys business was its sharp focus on the four clearly defined strategic initiatives, namely, getting closer to consumers, the profession and customers; driving innovation throughout all areas of business; increasing effectiveness and efficiency everywhere and strengthening the leadership. The benefits of this focus are not only reflected in the Companys business results during the year but also on the market shares of its Oral Care products the volume market share during January 2008- March 2009 of toothpaste
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significantly increased by 3 per cent to 52.2 per cent; toothpowder by 1.2 per cent to 48.9 per cent and maintained a high of 37.6 per cent in toothbrush. Looking to the future, your Board is confident that the Companys positive business momentum will continue and enable your Company to deliver better results.
Dividend
The Companys strong cash generation and positive growth momentum led your Board to declare two interim dividends of Rs. 9 and Rs. 6 per share aggregating Rs. 15 per share for the financial year 200809. These dividends were paid on December 30, 2008 and April 23, 2009. |Having declared two interim dividends, your Board has not recommended a final dividend for the financial year 2008-09.
Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors base on the representations received from the Operating Management, confirm: I. That in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same; II. That they have, in selection of the accounting policies, consulted the statutory auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for that period;
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III. That to the best of their knowledge and information, they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and IV.That they have prepared the annual accounts on a going concern basis.
Oral Health Month

Your Company in partnership with the Indian Dental Association, once again, organized a month-long program during the year covering a wide spectrum of activities designed to spread oral health awareness and good oral hygiene practice. The mission of this activity continued to be Zero Tooth Decay involving 10,000 dentists spread across 200 towns and covered 1.5 lack children from 190 schools across seven cities.
Corporate Governance
A separate report on Corporate Governance along with the Auditors Certificate on its compliance is attached as Annexure 1 to this Report.
Employee Relations
Relations between the employees and the management continued to be cordial during the year. Information as per Section 217(2A) of the Companies Act, 1956 (the Act) read with the Companies (Particulars of Employees) Rules, 1975 forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders of the Company excluding the statement on particulars of employees under
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Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said statement may write to the Secretarial Department at the Registered Office of the Company .
Trade relations
Your Directors wish to record appreciation of the continued unstinted support and co-operation from its retailers, stockists, suppliers of goods/services, clearing and forwarding agents and all others associated with it. Your Company will continue to build and maintain strong links with its business partners.
Energy, Technology Absorption and Foreign Exchange

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings/outgo is appended hereto as Annexure 2 and forms part of this Report.
Directors
Under Article, 124 of the Companys Articles of Association, Mr. R. A. Shah and Mr. K.V Vaidyanathan retire by rotation at the 68th Annual General Meeting and, being eligible, offer themselves for re-appointment.
Auditors
Messrs. Price Waterhouse, Chartered Accountants, retire and are eligible for re-appointment as Auditors.
Page 59
Acknowledgements
Your Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels. The Directors also wish to place on record their gratitude to the Members for their continued support and confidence.
Page 60
Page 61
Auditors Report
They have audited the attached Balance Sheet of Colgate-Palmolive
(India) Limited (the Company) as at March 31, 2009, the related Profit and Loss Account and Cash flow Statement for the year ended on that date annexed there to, which they have signed under reference to this report. These financial statements are the responsibility of the Management of the Company. Their responsibility is to express an opinion on these financial statements based on their audit.
They
conducted their audit in accordance with the auditing
standards generally accepted in India. Those Standard require that they plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall financial statements presentation. They believe that their audit provides a reasonable basis for their opinion.
As required by the Companys (Auditors Report) Order, 2003 a
amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together, the Order) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, of India (the Act), and on the basis of such checks of the books and records of the Company as they considered appropriate and according to the information and explanations given to us, they set
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out in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
Further to their comments in the Annexure referred to in
Paragraph 3 above, they report that:
They have obtained all the information and explanations, which to the best of their knowledge and belief were necessary for the purpose of their audit;
In their opinion, proper books of account as required by law have been kept by the Company so far as appears from their examination of those books;
The Balance Sheet, Profit and Loss Account and Cash flow Statement dealt with by this report are in agreement with the books of account;
In their opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section \(3C) of Section 211 of the Act.
On the basis of written representations received from the Directors as on March 31, 2009 and taken on record by the Board of Directors of the company, none of the Directors is disqualified as on March 31, 2009 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act.
In their opinion and to the best of their information and according to the explanations given to us, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement, together with the Notes thereon and annexed thereto give in the prescribed manner the information required by the Act and give a true and fair view in
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conformity with the accounting principles generally accepted in India:
In the case of the Balance sheet of the state of affairs of
the Company as the March 312, 2009; In the case of the Profit and Loss Account, of the profit for
the year ended on that date; and In the case of the Cash flow Statement, of the cash flows
for the year ended on that date.
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Summarized Profit and Loss Account for the Year Ended March 31, 2009
Page 65
Particular Income Sales Less: Excise Duty
Sch Rs. .No Lacks
Rs. Lacks
2009 IN (%)
2008 IN (%)
In 2008 Rs. Lacks 155321. 1 7983.2 8478.12
175815 .9 6334.5 5 13 10775.7 2 180257. 1 100 100
6.36 106.36
5.75 105.7 5 42.94 8.03 33.61 1.35 85.93
155816. 02
Expenditure Cost of sales Employee cost Other expenses Depreciation\Amortization [includes impairment of Fixed Rs.36.73 Lacs(previous year: Nil)] Profit before tax Current Tax Deferred Tax Fringe Benefit Tax
14 15 16 4
74130. 76 14340. 65 54960. 12 145726. 4 34530.6 5 4107.5 1031.2 1 370 5508.71
43.74 8.46 32.43 1.35 85.98
63277.6 5 11827.6 8 49521.2 9 126611. 11 29204.9 1 5824.68 -215.77 425 6033.89 33171.0 2 2486.96 25657.9 8 8159.57 -9519.5 5084.64
Assets
20.38 2.42 0.6 0.22 3.24 17.12 0.34 17.46
19.82 3.95 -0.15 0.29 4.05 15.73 1.69 17.42
Profit after Taxation Balance Brought Forward Available for Appropriation Appropriation: First Term Dividend Second Term Dividend Final Dividend-proposed
Profit
29021.9 4 577.17 29599.1 1 12239.3 5 8159.57 -3414.02
7.22 4.82 -2.01
5.44 --6.46 3.45
Dividend Tax[ includes Rs. Nil (previous y year:2080.08 Lacs)on Reduction of Share Capital Transfer to General Reserve Guided by : Carried Forward Balance Prof. Bhavesh Pandiya
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2902.19 1.71 1.58 3217.1 Prepared by : 577.17 2883.98 1.7 0.39 Parmar Rozar M. 29599.1 17.46 14.42 25657.9 1 8
Summarized Balance Sheet As on 31, March 2009.

Particular Sc h. Rs. in Lacs Rs. in Lacs Rs in % 2009 Rs. In % 2008 As March 31,200 8 Rs. Lacs
Sources of funds Shareholders funds Share capital Reserves and surplus 1 2 1359.9 3 20269. 6 21629. 6 Loan funds Unsecured loans Total Applications of funds Fixed assets Gross block Less: depreciation/amortizati on Net block Capital work-in-progress and adv for cap. expenditure Investments Deferred tax assets 5 6 3 468.75 22098. 3 4 42525. 6 25132. 8 17392. 8 466.84 17859. 6 3832.8 9 1768.8
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97.88
97.1 9 2.81 100
1359.9 3 14860. 69 16220. 62 468.75 16689. 37
2.12 100
192.44 113.73 78.71 2.11 82.84 17.34
269. 39 154.7 114. 69 4.55 119. 23 43.5 16.6
44959. 43 25818. 85 19140. 58
19899. 42 7258.7 7 2782.7
(net) Current assets, loans and adv Inventories Sundry debtors Cash and bank balance Interest accrued on invest Loans and advances
8 106.16
7 179. 4 45.3 2 5.5 86.4 4 1.58 101.84 240. 68
7 8 9
8242.3 3 1113.4 5 25114. 3 718.76 19021. 4 54210. 3
37.3 5.04 3.25 113.65 86.08 245.32
7563.8 5 918.55 14426. 28 264.2 16995. 67 40168. 55
10
Less: Current liabilities and Prov Liabilities Provisions
11 12
39454. 1 16119. 2 55573. 3 22098. 3
178.54 72.94 251.48 100
207. 88 112 .2 320.08 1 00
Total
34693. 43 18726. 66 53420. 09 16689. 37
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Cash Flow Statement

Meaning
A cash flow statement shows on entitys cash receipt classified by major source of cash inflow and cash outflow during the last years what was the actual cash balance on hand asset the end of the last year.
Importance
Efficiency Cash Management:If the finance mange has clear idea of cash receipts and payments cash resources can be efficiently managed. If the cash payments are planned at a time when enough cash inflow is likely it is possible manage business with minimum of working capital. Excess cash fund at any time may be profitability invested for the time being and profitability is increased. 2. Helpful For Internal Financial Management:The management can plan out payment of dividend repayment of long term loans, purchase of machines our equipments etc. it has good idea about the timing when enough cash will be on hand. This will avoid the possibility of borrowing funds at high rate of interest. 3. Information about Receipts and Payment:Such a statement will give information about the tend of cash receipts and payments. Such information is useful to the management in meeting any future contingencies and also in seizing any profitable opportunity. 4. Helpful for Control:This historical cash flow statement prepared term last year is useful comparing the figures of cash budgets and point of differences may be located. This facilities management managerial control on the use of cash. 5. Easy in Obtaining Funds:By comparing the figures of cash flow statement and cash midgets, the cash planning and control becomes more effective liabilities are easily paid as and when they mature. This position improves and
Page 69
raises the prestige of the firm rising of addition funds easily when needed.
Page 70
Cash Flow Statement For the year ended 31st March, 2009.
Particular
Cash flow from operating activities: Net Profit Before Tax Adjustments for: Unrealized Foreign Exchange Loss (Net) Depreciation Reversal for diminution in value of Investments Interest Expanse Profit on Sales of Fixed Assets (Net) Interest Income Dividend From Subsidiaries (Net) Gain On Maturity of Investment (Net) Operating Profit Before W.C. Changes Adjustments for (Increase)/Decrease inW.C. Inventories Sundry Debtors Loans & Advances Current Liabilities & Provisions Cash Generated From Operations Direct Taxes Paid (Net) Net Cash From/(use in) Operating Activities (A) Cash Flow From Investing Activities Purchase of Fixed Assets Sales of Fixed Assets (Purchase)/Sale of Investment in Subsidiaries Sales of Other Investments Capital Repatriation by Wholly-Owned Subsidiary Inter Corporate Deposits (Placed)/Refunded Loans to Subsidiaries Interest received Dividend from Subsidiaries Net cash from/(used in) Investing Activities (B) Cash Flow From Financing Activities: Long Term Loans Availed/(Paid) (Net) Interest paid Dividend paid Repayment of Capital Dividend Tax Paid Net Cash From/(Used in) Financing Guided by : Prof. Bhavesh Pandiya
Page 71
2008-09 Rs.Lacs
34530.65 875.44 2294.89 110.01 (980.54) (3136.57) (397.56) (39.13) 33257.19 (420.74) (194.90) 933.82 3186.50 36761.87 (4823.45) 31938.42 (243.50) 1107.27 (165.28) 3071.48 290.00 (3335.00) 2682.08 775.61 4182.66 (110.01) (21746.08) (3657.04) (25513.13)
2007-08 Rs.Lacs
29204.91 23.19 1984.49 (750.00) 143.51 (83.70) (2144.87) 28377.53 468.78 14.08 473.23 3146.23 32479.85 (4339.56) 28140.29 (2716.88) 119.45 5868.61 956.25 (3885.00) 2266.99 2609.32 41.25 (143.51) (11333.41) (12130.53) (3929.04) (27495.24)
Activities (C) Net Increase in Cash and Cash Equivalents (A+B+C) Cash and Cash Equivalents at the beginning of the Year Cash and Cash Equivalents taken over as per the scheme of Amalgamation Cash and Cash Equivalents at the end of the Year Cash and Cash Equivalents Comprise : Balances with Scheduled Banks in Current Accounts Deposit Accounts Unpaid Dividend Accounts Cash and Cash Equivalents at the end of the Year
10607.95 14426.28 80.10 25114.33 3743.77 20745.23 625.33 25114.33
3254.37 11171.91 14426.28 3571.57 10259.65 595.06 14426.28
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Profit and Loss Account for the year ended 31stMarch, 2009
Particular
INCOME
Schedu le
200809 Rs.Lacs
175815.9
2008-09 Rs.Lacs
2007-08 Rs.Lacs
155321.10
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Sales Less: Excise Duty 13 Other Income EXPENDITURE Cost of Goods Sold Employee Costs Other Expanceses Depreciation PROFIT BEFORE TAXATION Current Tax Deferred Tax Fringe Benefit Tax PROFIT AFTER TAXATOIN Balance brought forward PROFIT AVAILABLE FOR APPROPRIATION APPROPRIATION : First Interim Dividend Second Interim Dividend Final Dividend - Proposed Dividend Tax Transfer to general reserve Balance carried forward EARNING PER SHARE Basic & diluted 14 15 16
6334.55 169481.35 10775.72 180257.07 74130.76 14340.65 54960.12 2294.89 145726.42 34530.65 4107.5 1031.21 370.00 5508.71 29021.94 577.17 29599.11 12239.35 8159.57 3414.02 2902.19 2883.98 29599.11 21.34
7983.20 147337.90 8478.12 155816.02 63277.65 11827.68 44921.29 1984.49 126611.11 29204.91 5824.66 (215.77) 425.00 6033.89 23171.02 2486.96 25657.98 8159.57 9519.50 5084.64 2317.10 577.17 25657.98 17.04
Balance Sheet as 31st March, 2009

2008-09 Rs.Lacs 2008-09 Rs.Lacs 2007-08 Rs.Lacs
Particular Sources of Funds Shareholders Funds Share Capital Reserve and surplus
Schedule
1 2
1359.93 20269.64
1359.93 14860.69
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21629.57 Loan Funds Unsecured Loans Total Application of Funds: Fixed Assets Gross Block Less: Depreciation Net Block Capital work in progress Investments Deferred Tax Assets (Net) C.A Loan and advances Inventories Sundry Debtors Cash and Bank Interest Accrued on Investments/Deposits Loans and Advances Less : Current Liability and Provisions Liabilities Provisions Net Current Assets Total 11 12 39454.14 16119.18 55573.32 (1363.03) 22098.32 7 8 9 8242.33 1113.45 25114.33 718.76 10 19021.42 54210.29 5 6 4 42525.56 25132.76 17392.80 466.84 17859.64 3832.89 1768.72 3 468.73 22098.32
16220.62 468.75 16689.37
44959.43 25818.85 19140.58 758.84 19899.42 7258.77 2782.72 7563.85 918.55 14426.28 264.20 16995.69 40168.55
34693.43 18726.66 53420.09 (13251.54) 16689.37
It is an opportunity for us to prepare Financial Report of such prestigious and well known Company like Colgate Palmolive (India)
Page 75
Limited. It is practical work for us to do for the purpose of clearing the fundamental aspects. After studying, observing & analyzing the data & company profile, their management seems well managed. We have analyzed the different ratios. The profitability ratio shows satisfactory condition. The turnover ratio shows most stability stage in the company. The financial ratios which shows very good position for the company. Gross profit & Net profit ratios sound is enough to maintain better ratios at a satisfactory level. The liquid ratio of the company is also good and it shows the satisfactory of the firm. In the liquid ratio company investment more cash. So, one can take advantage of it in future period of time. The solvency ratio shows the dissatisfactory position of the company. It will influence in maintaining its standard in current position capacity of capital sources. The Colgate - Palmolive is famous through out the world for its products like tooth pastes, tooth powder, tooth brushes etc. The Colgate Palmolive (India) Limited is the top brand of its type in the Indian Market today. The company has maintained fair and healthy relationship between their employees and the management and even with their customers. This is one of the reasons of company getting profit every year. So, at last we can conclude that all the ratios show the satisfactory level and efficiency of the company. And it always tries to get better, expand & providing the best products and services to the people.
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I am Rozar Maheshkumar Parmar studying in S.Y.B.B.A.

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

COLGATE-PAMOLIVE (INDIA)PRIVATE LIMITED

R. A. Shah P.K. Ghosh J.K. Setna V.S. Mehta K.V. Vaidyanathan

Shareholder/Investor`s Grievance Committee

P.K.Ghosh R.D.Calmeyer J.K.Setna K.V.Vaidyanathan Crawford Bayley &

Prepared by : Parmar Rozar M.

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Meaning of Ratio Analysis

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Helps in Budgetary control

Helps in Decision Making

Inter firm comparison

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Gross Profit Ratio Meaning

Gross Profit Ratio

_92043.45_ 100 155321.10 = 59.26%

Gross Profit Ratio =

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Net Profit Ratio Meaning

Net Profit Ratio

Net Profit Ratio

Guided by : Prof. Bhavesh Pandiya

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Operating Ratio Meaning

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Stock Turnover Ratio Meaning

Stock Turn Over Ratio

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Stock Turn Over Ratio

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Return on Capital Employed Meaning

Return On Capital Employed =

Return on Capital Employed

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Return on Capital Employed

_34531_ 100 22098 = 156.28%

Guided by : Prof. Bhavesh Pandiya

Prepared by : Parmar Rozar M.

Return on Shareholders Fund Meaning

Return On Shareholders Fund =

Net Profit 100 Shareholders Funds