Colgate-Palmolive India Ltd Management Discussions

INDIAN ECONOMY

India upheld its position as the worlds fastest-growing major economy, achieving a real GDP growth rate of 7.7%. This strong performance, despite multiple global headwinds, was fueled by steady domestic demand, a resilient manufacturing sector, and significant progress in digital and infrastructure investments. Key factors such as strategic cuts in Income Tax and Goods and Services Tax (GST), a moderating inflation rate, and accommodative monetary policy helped enhance household disposable income, thereby accelerating private consumption.

Bolstered by strengthening domestic demand, India is expected to maintain its robust growth trajectory. Economic activity remains well-supported by various high- frequency indicators, such as robust GST collections, increased auto sales, rising consumer confidence, and a higher volume of E-way bills, alongside modest inflation outlook. However, the near term macroeconomic landscape could be impacted by external shocks such as persisting geopolitical tensions in the Middle-east, supply chain disruptions, fluctuating energy prices coupled with capital outflows from FPIs and currency depreciation.

Despite these hurdles, the long-term prospects for domestic consumption remain strong, underpinned by favorable demographic profile and rapid expansion of digital infrastructure. According to the International Monetary Fund (IMF), India is expected to retain its status as the fastest growing major economy in the current year as well. Driven by policy reforms and a reset in trade outlook, India is on track to become the fourth-largest economy by 2027 and is expected to reach the third position by 2031.

INDUSTRY OVERVIEW

The Indian oral care sector, valued at over 522,000 crore in 2025, continues to offer a long-term growth opportunity. This potential is underpinned by a combination of favorable demographics, increasing health awareness, and rising disposable incomes.

While toothpaste penetration is high, Indias per capita consumption lags behind global benchmarks. A significant proportion of consumers do not brush twice daily, indicating continued headroom for volume growth through behavior change and category development. Furthermore, the sector is experiencing a notable shift toward premiumization. This transition is fueled by a growing emphasis on preventive healthcare and a rising appetite for specialized products, including whitening, gum care, and sensitivity treatments. Growth in adjacent categories such as mouthwash, along with increasing adoption of channels of the future, is contributing to value expansion.

Beyond oral care, the personal care segment continues to present growth opportunities, particularly in categories such as body wash and hand wash, supported by rising hygiene awareness and evolving consumer preferences.

GOVERNMENT INITIATIVES

Aligned with the Government of Indias continued focus on strengthening preventive healthcare and expanding access, Colgate-Palmolive (India) Limited further advanced its support for public-private partnership models in FY 2025-26.

The Companys efforts remain aligned with national priorities such as the National Oral Health Program, which aims to integrate oral healthcare within the primary health system and improve access to affordable, preventive services. During the year, the Company also engaged with national stakeholders through platforms such as the Oral Health Movement Summit, reinforcing the importance of oral health within the broader public health agenda.

The Governments decision to reduce GST rates on oral care products from 18% to 5% during the year marked a significant step in recognizing oral health as a priority and improving affordability for consumers. The Company responded promptly by passing on the full benefit of this reduction.

In parallel, the Company continued to deepen its collaboration with state governments to expand the reach of its flagship Bright Smiles, Bright Futures? (BSBF) program. These efforts remain focused on embedding oral health awareness deeper into the education frameworks, enabling long-term behavioral change at scale.

COMPANY OVERVIEW

Colgate-Palmolive (India) Limited is a caring, innovative growth Company, committed to reimagining a healthier future for all people and the planet. For nearly 90 years in India, the Company has played a central role in shaping the countrys oral care habits, emerging as one of the most preferred and widely penetrated FMCG brands, reaching nine out of ten households.

Its diverse portfolio includes a wide range of oral care products such as toothpastes, toothbrushes, and mouthwashes, along with personal care offerings including hand washes and body washes.

The Company continues to invest in science-driven innovation, supported by a strong ecosystem of scientists, engineers, regulatory specialists, data scientists, and technologists. Its Mumbai-based research center remains integral to Colgates global R&D capabilities, enabling the development of products tailored to Indian consumer needs. These efforts are backed by robust testing infrastructure, clinical validation, and data-led consumer insights, ensuring consistent product performance and relevance. All of the Companys products are underpinned by best in class science, such as "Arginine plus Calcium boost" in Colgate strong teeth, "Ultra-Freeze Technology" in Max Fresh, "Dual-Zinc plus Arginine Technology" in Colgate Total and "Zinc Citrate plus Fluoride Technology" in PerioGard.

During the year, the Company navigated a challenging operating environment marked by softer demand mainly in the first half, increased competitive intensity, and GST-led disruptions. Maintaining financial rigor, the Company prioritized strategic brand investments, emphasizing innovation and premium portfolio expansion. It remained dedicated to delivering high quality, science backed superior products and brand experiences. The second half of the year witnessed a strong rebound in sales growth with broad based performance across core and premium portfolios. The Company remains focused on driving growth through innovation, execution excellence, and sustained investment in brand building, while continuing its commitment to long-term shareholder value creation.

Key product initiatives within the toothpaste portfolio this year featured the relaunch of Colgate Strong Teeth, enhanced by Arginine and the Calcium boost technology, Colgate Total Plaque engineered with a powerful Amino Foam and Zinc complex, Colgate Kids Squeeze Toothpaste designed for children aged 3-6 and Colgate Visible White Purple Serum that transforms teeth whitening into an on-demand grooming ritual using color theory. The Company strengthened its core portfolio through campaigns such as "Cavity-Proof" under Colgate Strong Teeth brand. The Company also launched MaxFresh Mouthwash Sachet Stick for on-the-go usage, Palmolive Moments body wash range with patented fragrance technologies, and access packs across our premium toothpaste portfolio to drive penetration.

The detailed update on product introductions is provided in the Directors Report on Page No 207.

BUSINESS OVERVIEW

Colgate-Palmolive (India) Limited continues to focus on delivering consistent and competitive performance in line with evolving market conditions by leveraging its strong brand equity, science-backed innovation, and disciplined execution. Its strategy remains anchored in sustainable growth, supported by a robust foundation of brands, technology, and people.

Strategic Pillars that Power Brand Leadership

The Companys strategic direction is guided by four core pillars that shape its operational priorities and growth initiatives:

1. Lead Oral Care Category Growth

With near-universal toothpaste penetration, increasing consumption remains the key growth lever. Low per capita consumption, relative to global benchmarks, is primarily driven by low brushing frequency. The Company continues to drive behavior change through initiatives such as promoting twice- daily brushing and positioning dentists as partners in preventive care.

The Oral Health Movement (OHM), launched in November 2024, expanded significantly, screening millions of individuals and improving awareness at scale. This initiative leverages digital tools, public engagement, and educational outreach to encourage proactive oral care. Building on this, the OHM Summit held in FY 2025-26 brought together policymakers, healthcare leaders, and the Indian Dental Association to reinforce the importance of oral health within the broader public health agenda.

The BSBF? program, now in its fifth decade, remains a cornerstone of the companys efforts to drive positive oral health habits. In 2025 alone, the program reached over 11 million children across 10 states, 80 districts, and 35,000 schools. Since inception, the program has touched 195+ million children, instilling essential foundational habits like twice-daily brushing and timely toothbrush replacement.

A key focus within this pillar is strengthening the core portfolio through product superiority. Colgate Strong Teeth was relaunched with superior formulation powered by arginine plus calcium boost and a revamped communication built around "24 Hours Cavity Protection". Colgate MaxFresh maintains its trajectory as the fastest-growing brand, supported by product superiority and a unique value proposition as the sole brand in India incorporating cooling crystals.

2. Transformatively Accelerate Oral Care Premiumization

Driven by advanced technology and a focus on innovation, the Companys premium portfolio remains an important driver of growth. A prime example is Colgate Total, which is the worlds most patented toothpaste brand, featuring an advanced formula of "Dual Zinc and Arginine". By partnering with Rahul Dravid and other elite athletes for Colgate Total, the Company is highlighting oral health as a critical "hidden edge" for peak performance and recovery. Significant growth potential also exists within the whitening category in India with penetration at approximately 2% compared to 25% in developed markets. The Company is a pioneer in the whitening segment in India. To capitalize on this opportunity, the Company has introduced various innovative products and formats, with Colgate Visible White Purple being one of the best performing innovative products for the Company.

3. Lead Category Growth in Toothbrushes and Devices

Toothbrushes present a major opportunity as urban and rural consumers replace them only every 6 and 15 months, respectively. Since a new toothbrush cleans 95% better than an old & flared one, nudging consumers toward timely replacement offers substantial incremental consumption potential. The Company maintains a comprehensive presence across all segments, including value, mid-tier, premium, and kids toothbrushes, ensuring the best offerings are available at every price point to drive this behavioral shift. The Company launched the first-ever mid-tier whitening toothbrush "Brilliant Star", featuring a unique polishing star bristle arrangement and an ergonomic handle to improve stain removal and user experience.

4. Build Personal Care

In personal care, the Company continues to expand its presence in the Body wash and Hand wash segments through the Palmolive brand. During the year, the Palmolive Moments range was launched featuring 100% natural extracts, no parabens or silicones, and distinctive fragrances positioned to enhance the daily bathing experience.

Digital Transformation

Colgate-Palmolive (India) Limited continues to advance its digital transformation agenda, leveraging technology to enhance operational efficiency, strengthen distribution, and improve consumer engagement across channels. Digital capabilities remain central to driving scale, precision, and responsiveness across the value chain.

The Companys AI- and ML-powered recommendation engine continues to support assortment planning across approximately 1.7 million outlets, enabling more targeted product availability. Image recognition-led execution through the AmaZing platform has been further scaled across Modern Trade, including independent outlets, supporting improved in-store execution and visibility.

On the distribution front, machine learning models are being used to optimise stock deployment and improve physical availability across both urban and rural markets. Packaging innovations and shelf enhancements continue to strengthen the in-store experience by aligning product presentation with consumer need-states. In digital commerce, the Company continues to build its presence across established and emerging platforms. The Company is also expanding its presence in quick commerce, enabling faster fulfilment and improving responsiveness to evolving consumer purchasing behaviour.

Risk Management

At Colgate-Palmolive (India) Limited, risk management is a fundamental component of its long-term strategy and a key driver in achieving its strategic objectives. The Company believes that a robust risk management framework is essential for creating sustainable value for its customers, distributors, employees, shareholders, and the communities in which it operates. The approach focuses on navigating the uncertainties of an evolving business landscape and varying regulatory requirements through a structured and disciplined Enterprise Risk Management framework.

The Risk Management Framework not only aims to ensure timely identification and mitigation of potential risks but also supports the development of a risk-aware business approach that leverages emerging opportunities. A Risk Management Committee has been set up to proactively address emerging risks and potential threats. The Committee convenes regularly to evaluate the Companys risk profile, devise mitigation strategies, and ensure that our risk exposure remains within established appetite levels.

The Company follows a structured process that begins with identifying a comprehensive range of strategic, operational, financial, and emerging risks. These risks are analysed based on their impact, likelihood, and velocity to be prioritized into High, Medium, and Low Alert categories. This prioritization ensures that key residual risks receive focused management attention and appropriate resource allocation. Following this, specific response plans are implemented to reduce the probability or impact of risk events. Finally, the process is sustained through continuous monitoring, with the status of key residual risks and the progress of mitigation plans formally reviewed by the Risk Management Committee and the Board on a periodic basis.

Opportunities

Colgate-Palmolive (India) Limited remains well positioned to capitalize on growth opportunities across its key segments. In oral care, despite near-universal toothpaste penetration, per capita consumption in India continues to remain low, indicating significant headroom for volume growth through sustained behaviour-change initiatives such as the Oral Health Movement.

The Companys portfolio-spanning everyday protection, freshness, whitening, and gum care-provides a clear pathway for value growth. Premium offerings such as Colgate Visible White and Colgate Total continue to grow ahead of the broader category, supported by science-led innovation.

In the toothbrush segment, the Company sees continued opportunity to drive higher replacement frequency and premiumization. Regime-based solutions, pairing toothbrushes with complementary toothpaste variants, further support category development and consumer upgrade.

Beyond oral care, the Palmolive brand presents a meaningful opportunity in the personal care segment. With awareness levels of approximately 65%, the brand remains under-penetrated relative to its potential. This creates scope to expand its presence, particularly in body wash and hand wash categories, within a fragmented market.

Further details on these opportunities, along with associated risks, are provided in the Business Responsibility and Sustainability Report forming part of the Boards Report.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Colgate-Palmolive (India) Limited continued its strategic focus on building a high-performing, inclusive, and future- ready workforce. During the year, several initiatives were strengthened to support employee well-being, further inclusivity, and enhance capability development, contributing to organizational resilience and agility.

Employee Well-being

Advancing its Culture of Caring, the Company continued to invest in employee benefits that support physical, mental, and financial well-being, while enabling better work-life integration. The Supporting Caregiver Leave reinforces the Companys commitment to equal parenting, providing employees with 12 weeks of leave within one year of childbirth, which can be availed in up to three tranches across reporting periods.

Workplace Inclusivity (WIN) Policies

The Companys WIN Policy framework continued to promote inclusion:

• New & Expectant Parents: To support a smooth transition back to work, enhanced flexibility measures, including remote working provisions, were introduced. These initiatives help retain talent during critical life stages while supporting employee well-being.

• Employees with Disabilities: The Company continued to strengthen support through reimbursement for assistive technologies, enabling a more accessible and inclusive workplace.

These initiatives reflect the Companys belief that an inclusive environment drives engagement and performance.

Diversity, Equity and Inclusion (DE&I)

The Company remained focused on improving gender diversity across functions, with particular emphasis on Field Force, a traditionally male-dominated area. The introduction of the JetSetGo Hygiene Kit provided a practical solution to support women employees in managing on-the-go requirements. Each kit is complemented with a gift card for replenishment, ensuring continued access to essential products.

Capability Building and Career Development

The Company continued to invest in capability building and career development to strengthen internal talent pipelines:

• Gurukul Rise: A self-paced learning and assessment platform enabling employees to build skills and prepare for future roles.

• Leadership Acceleration: We partnered with IIM-A to create a program to develop capability of Regional Managers in Sales.

• Colgate Career Framework: A structured framework to provide clarity on career paths, role expectations, and development opportunities, supporting informed career progression.

• Alchemist: We have built a program for mid level managers to develop them for senior leadership roles focused on our values of care and courage.

• BetterUp: A global partnership providing personalized leadership coaching for Colgate leaders.

• We have global partnerships with Stanford, Wharton and INSEAD to develop senior leaders in the organization.

Regular career conversations and half-yearly performance reviews continue to provide clarity on goals and development priorities, reinforcing a culture of continuous improvement.

By strengthening inclusivity, enabling equal opportunities, and building future-ready capabilities, the Company continues to develop an agile and engaged workforce aligned with business priorities. These initiatives support the Companys ability to respond to evolving market conditions, drive innovation, and deliver sustained growth.

The total number of employees as on March 31, 2026 were 2,276.

Sustainability

Sustainability remains a core strategic priority for the Company, embedded across its operations and aligned with its purpose-led mission. The Company continues to drive progress across environmental stewardship, social impact, and governance excellence, while transitioning from its 2025 to its 2030 Sustainability and Social Impact Strategy.

In FY 2025-26, the Company strengthened its commitment to circularity by maintaining TRUE? Certification for Zero Waste across all Colgate-owned plants. Additionally, 95% of its total packaging, by weight, was recyclable, while 100% of its toothpaste portfolio, by volume, transitioned to recyclable tubes. This patented technology, open-sourced globally, reflects the Companys intent to enable industrywide change.

The Company also continues to invest in energy efficiency, water conservation, and renewable energy adoption, alongside leveraging IoT-based predictive maintenance to reduce resource use and waste. In FY 2025-26, the share of renewable energy in total consumption increased to 50.38%. As part of its Net Zero Water ambition, Colgate Palmolive India is water positive at a country level.

On the social front, the Company scaled its flagship Bright Smiles, Bright Futures? (BSBF) program. Since 1991, the Program has empowered 195+ million children across India, and the Company is committed to reaching 10 million more each year. The AI-powered Oral Health Movement is further improving access to preventive dental care at scale. Community initiatives remain focused on womens empowerment, water augmentation, and waste management.

As part of its transparency agenda, the Company continues to publish its Environmental, Social and Governance (ESG) Report for the fifth consecutive year, reinforcing its commitment to responsible growth and stakeholder trust.

KEY FINANCIAL RATIOS

Details of changes in key financial ratios as compared to immediate previous financial year.

interest expenses appearing in the Financial Statements for the current year relate to the lease liability as per Ind AS 116.

*Debt mainly pertains to lease liabilities as per Ind AS 116 which are on reducing balance.

**The Return on Net Worth is computed as percentage of Net Income by Average Shareholders Equity.

A comprehensive analysis of the Companys financial performance, including operational performance, adequacy of internal control systems, product-wise performance, and the use of innovation & technology is included in the Boards Report.

INTERNAL CONTROL SYSTEMS

Internal control systems remain integral to strengthening governance and ensuring adherence to established processes. The Company has a dedicated internal audit function that oversees financial processes and policies and provides recommendations to enhance control effectiveness. These systems support compliance with internal policies and procedures, enabling efficient and consistent operations.

The Companys internal controls are designed to safeguard assets, prevent and detect fraud or errors, and ensure the accuracy and completeness of financial records.

To maintain their effectiveness and relevance, the internal control framework is subject to periodic review. The Audit Committee regularly evaluates the adequacy and performance of these systems and provides oversight to ensure continuous improvement.

OUR APPROACH

Colgate-Palmolive (India) Limiteds approach to long-term value creation remains purpose-led and focused on delivering sustainable and profitable growth. This approach builds on a strategy that has supported consistent performance over recent years, while adapting to evolving market conditions and near-term volatility.

A key element of this strategy is continued investment in brand equity and portfolio development. The Company remains focused on strengthening the Colgate and Palmolive brands through sustained investments in advertising, omnichannel media, and enhancements in shopper experience, with the objective of driving preference and improving consumer engagement.

Alongside brand investments, the Company continues to advance its portfolio strategy by strengthening core categories while expanding into adjacencies such as personal care. Flagship brands, including Colgate Strong Teeth, remain a priority, supported by targeted investments in communication, packaging, and rural reach.

The Company continues to prioritize innovation and premiumization to drive category growth. Recent communication on the Colgate Total and the Visible White Purple reflects a combination of scientific capability and consumer insight. In parallel, initiatives in digital engagement, education, and consumer activation are aimed at increasing usage frequency and strengthening brand trust.

Growth investments are supported by ongoing efficiency initiatives across the organization. Through its Revenue Growth Management and Funding the Growth programs, the Company focuses on improving realization, reducing costs, and optimizing asset utilization. These efforts span multiple areas, including materials, supply chain, distribution, and marketing, and include initiatives such as formulation simplification, packaging optimization, supplier consolidation, automation, and localization of sourcing.

While macroeconomic conditions may remain uncertain, the Company believes it is well positioned to manage volatility, supported by its financial strength, operational experience, and disciplined execution. Key priorities continue to include driving sales through improved consumer engagement, accelerating innovation, leveraging digital capabilities, and strengthening partnerships across the value chain.

The Company remains focused on improving efficiency across its cost structure to support margin expansion, while maintaining strong cash flows and disciplined capital allocation to enhance shareholder returns. Guided by its purpose of reimagining a healthier future for all, the Company continues to align its investments and operations with long-term value creation.