Colgate-Palmolive (India) Ltd Management Discussions

Management Discussion And Analysis

INDIAN ECONOMY

India continues to be a bright spot in the global economy, demonstrating resilience amidst persistent geopolitical tensions, tightening global financial conditions, and rising trade uncertainties. According to the International Monetary Fund (IMF), India is projected to remain the fastest-growing major economy with GDP growth expected at 6.2% in 2025 and 6.3% in 2026.1 The World Bank projects growth to slighltly moderate from 6.5% in FY 2024-25 to 6.3% in FY 2025-26, as gains from earlier monetary easing and regulatory reforms are tempered by global headwinds and policy uncertainty.2

This growth continues to be supported by strong domestic demand, a resilient services sector, and relatively limited dependence on exports, which buffers the economy from external shocks. After a period of high inflation, slowing wage growth, and elevated interest rates, some of these pressures are showing signs of easing. The Union Budget introduced measures aimed at reviving consumption and is expected to support recovery. The Reserve Bank of Indias shift to an accommodative monetary policy stance, signaled by an interest rate cut in early April 2025, aims to further support growth amid global headwinds. Indias consistent performance amid global turbulence reflects the strength of its macroeconomic fundamentals and reinforces its role as a key driver of global growth.

INDUSTRY OVERVIEW

The oral care market in India continues to present substantial headroom for growth, both in terms of volume and value. The toothpaste category, currently valued at approximately Rs.18,000 crores, has seen stable growth over recent years, though the broader FMCG sector faced headwinds in the latter half of FY 2025. Industry conditions in the early part of FY 2026 are expected to remain subdued but are considered temporary, with long-term fundamentals remaining strong. Indias oral care market is sizable and steadily growing, supported by increasing oral hygiene awareness, higher disposable incomes, and a rising prevalence of dental health concerns.

However, Indias oral hygiene habits continue to lag behind global standards. Despite near-universal toothpaste penetration, per capita consumption remains among the lowest globally. A significant portion of consumers do not brush daily, presenting a strong opportunity to drive category expansion through increased awareness and behavior change.

The category is also witnessing acceleration in premiumization, driven by rising health consciousness, urbanization, and demand for differentiated oral health solutions. Innovations in everyday protection and beauty- oriented toothpaste-such as whitening products-are gaining momentum, particularly in urban markets. In toothbrushes, increasing replacement frequency and growing adoption of premium handles present long-term growth levers.

Beyond oral care, the personal care segment offers significant potential, especially for high-awareness brands ^ like Palmolive, which is gaining traction in body wash and hand wash categories.

GOVERNMENT INITIATIVES

Aligned with the Government of Indias ongoing commitment to universal access to oral healthcare through the National Oral Health Programme, Colgate-Palmolive (India) Limited further strengthened its support of public-private partnership models in FY 2025. The Company deepened its collaboration with state governments to expand the reach of its flagship program Bright Smiles, Bright Futures?.

Notably, the Company achieved significant milestones partnering with the Governments of Uttar Pradesh and Goa to extend the reach of this flagship in-school program, aiming to positively impact Oral Health awareness amongst over 2 crore children in Uttar Pradesh and over 2 lakh children in Goa. These efforts align closely with the national agenda of embedding oral health promotion into primary healthcare systems and education frameworks and demonstrating the Companys commitment to enabling long-term oral health awareness and 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. With over 87 years in India, the Company has played a key role in shaping the countrys oral care culture through its commitment to science- backed products, making it Indias most preferred oral care brand and the most penetrated FMCG brand, reaching nine out of ten households.

Its diverse portfolio includes a wide range of oral care products-such as toothpastes, toothbrushes, and mouthwashes-as well as personal care items like hand washes and shower gels.

The Company is committed to science-driven innovation, supported by a diverse team of scientists, engineers, technologists, regulatory specialists, and data scientists. Its Mumbai-based research center, among the largest globally, plays a pivotal role in Colgates global R&D capabilities. This strong local understanding has helped launch some of the most effective oral and personal care products in the country. Scientific expertise is at the heart of the Companys innovation engine, with more than 900 patents granted annually and a team of over 900 scientists contributing to over 100 scientific publications. These efforts are supported by robust testing infrastructure, including 100+ clinical trials and state-of-the-art laboratories. Consumer-centricity remains key, with insights drawn from interactions with Indian consumers and supported by predictive models to anticipate emerging needs. Driving product superiority, the Company leverages cutting-edge science and patented technologies to ensure each product delivers on its promises. Through continuous innovation and clinical validation, it consistently leads the market in product performance.

Some of the recent innovations, include Colgate MaxFreshs new variants like Rainbow Fresh and Watermelon Blast, Colgate Lemon Fresh toothpaste with lemon-enriched fluoride, Visible White Whitening Booster with Active Oxygen Technology, Visible White Purple toothpaste with Purple optic brighteners inspired by color theory, and Colgate Strong Teeth toothpaste relaunched in selected right markets with Arginine technology for 2X stronger teeth.

The detailed update on product introductions is provided in the Directors Report on Page No 159.

Its commitment to sustainable growth is reflected in ethical business practices and increasing use of digital and e- commerce channels to expand reach. Strong ties with vendors, modern trade partners, and online platforms further strengthen its market presence. With a robust operational footprint and a science-backed strategy, Colgate-Palmolive (India) Limited is well-positioned to lead the oral and personal care space while making a lasting impact on consumers health and well-being.

BUSINESS OVERVIEW

Colgate-Palmolive (India) Limited continues its focus on delivering consistent, competitive performance in alignment with dynamic market conditions. The company operates with a clear intent to outperform the broader FMCG sector by leveraging its robust brand equity, scientific superiority, and execution capabilities. Central to its strategy is a commitment to sustainable growth built on a strong foundation of brand strength, advanced technology and people.

Strategic Pillars that Power Brand Leadership

The Companys strategic direction is structured around four core pillars, which guide its operational and growth initiatives:

1. Lead Oral Care Category Growth

With near-universal toothpaste penetration, increasing consumption is the key growth lever. Low per capita consumption compared to peer countries is driven by low brushing frequency. The Companys strategy involves behavior change initiatives like promoting twice-daily brushing and repositioning dentists as partners in preventive health rather than problem-solvers.

A major initiative launched under this pillar in November 2024 was the Oral Health Movement, a nationwide initiative aimed at reshaping oral health awareness and access across India. This groundbreaking program leveraged digital innovation, public engagement, and large-scale educational outreach to make proactive oral care a daily reality for millions. The AI-powered movement offered dental screenings via smartphones reaching more than 500 million consumers, supported by QR codes on more than 800 million product packs and outreach in 500+ on-ground locations. The campaign received tremendous response and generated 4.5 million dental screenings. A major focus in this pillar is to accelerate the superiority of our core brands. The Company is driving growth through its flagship products, each addressing specific consumer needs. Colgate Strong Teeth targets teeth demineralisation from frequent snacking, supported by new packaging, rural expansion, and affordable pack sizes. Colgate MaxFresh, the fastest-growing brand, has launched red and blue variants, with growth driven by wider distribution and freshness-led campaigns. Colgate Active Salt was relaunched with potassium nitrate to additionally address sensitivity as well. These initiatives have strengthened brand metrics-top-of-mind recall (70%), brand of first choice (63%), and oral care expertise (82%).

2. Premiumize through Science-backed Superior Innovation

The Company is advancing premiumization through innovation and accessibility. Colgate Total was relaunched with new packaging, offering 24-hour protection via patented dual zinc and arginine technology. Colgate Visible White Purple, using colour theory for instant whitening, gained strong traction in e-Commerce and Modern Trade channels through celebrity-initiated, socially-rooted campaign. With whitening penetration in India at ~2% versus 25% in developed markets, the whitening portfolio represents a key growth opportunity and continues to build a focused whitening portfolio to tap into this unmet consumer need.

3. Lead Category Growth in Toothbrushes and Devices

To address low toothbrush consumption in India, the Company is focused on shifting consumer behavior around brush replacement, which currently averages 6-7 months in urban areas and up to 15 months in rural regions. Key initiatives include the relaunch of the Colgate ZigZag toothbrush, reinforcing leadership in the premium segment, and promoting regime-based oral care by pairing specific toothbrushes with corresponding toothpaste variants to enhance efficacy.

4. Build Personal Care

The Palmolive brand, focused on body wash and hand wash, First-time national advertising and an exciting innovation pipeline support future expansion. The Company is also exploring entry into other global Colgate categories relevant to India.

Digital Transformation

Colgate-Palmolive (India) Limited continued to accelerate its digital transformation journey, integrating advanced technologies across the value chain to enhance operational agility, distribution precision, and consumer engagement. Our AI- and ML-powered recommendation engine played a pivotal role in tailoring product assortments across 1.7 million outlets, driving an 11% CAGR in assortment expansion over the past three years. Image recognition-led execution through our flagship tool AmaZing has been further scaled to independent Modern Trade stores, ensuring consistently high in-store standards and improved brand visibility.

On the distribution front, machine learning continues to optimize physical availability and streamline stock deployment across both urban and rural markets. Packaging innovations and digital shelf enhancements have elevated the in-store experience, translating consumer need-spaces into intuitive shopping journeys. In digital commerce, the Company has made significant strides, with tailored eCommerce offerings contributing over 19% share of business within the channel by year-end. Additionally, we are tapping into emerging platforms like quick commerce to meet evolving consumer behaviors with greater speed and relevance.

As per the internal company data

Risk Management

At Colgate-Palmolive (India) Limited, risk management is a core component of the Companys long-term strategy and overall objectives. The Companys success depends on its ability to recognize and capitalize on the opportunities present within its business and operating markets. Accordingly, 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.

To safeguard stakeholder interests, the Company has established a robust risk management system focused on identifying, analyzing, and addressing key business risks. This system includes tools and methodologies such as risk identification surveys, environmental analyses, and feedback collection from both internal and external stakeholders.

An Enterprise Risk Management Committee has been set up to proactively address emerging risks. The Committee convenes regularly to evaluate potential threats and devise mitigation strategies. Each risk is assessed based on factors such as likelihood, potential impact, and the Companys readiness to respond. Risks are mapped on a matrix to illustrate their positioning and monitoring requirements. The evaluation process includes both current and evolving risks, assessed regularly-and formally reviewed at least once annually-by the Risk Management Committee and the Board.

Opportunities

Colgate-Palmolive (India) Limited is strategically positioned to capitalize on several growth opportunities across its segments. For the Oral Care Category Expansion, despite near-universal toothpaste penetration, Indias per capita consumption remains low, providing significant room for volume growth through behavior-change initiatives like the Oral Health Movement. The Companys broad oral care portfolio - spanning everyday protection, freshness, whitening, and everyday protection segments - provides a clear pathway for value growth. With premium offerings like Colgate Visible White and Colgate Total, the portfolio is growing at twice the rate of the broader category, supported by scientific innovation. In the toothbrush segment, the Company sees significant potential in accelerating replacement cycles and upgrading consumers to premium formats. Regime-based solutions pairing specific toothbrushes with corresponding toothpaste variants further enhance this opportunity.

Additionally, the Palmolive brand, with 60-65% awareness, is underutilized in the personal care market. This presents a compelling opportunity to expand and scale Palmolives premium portfolio, particularly in body wash and hand wash, within a fragmented market that lacks strong brand differentiation. The detailed explanation and outcomes of each of these opportunities, as well as the associated risks, are available in the Business Responsibility and Sustainability Report forming part of the Boards Report.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

In FY 2025, Colgate-Palmolive (India) Limited continued its strategic focus on nurturing a high-performing, inclusive, and future-ready workforce. A range of new initiatives were introduced to support employee well-being, deepen inclusivity, and accelerate skill development, all of which contribute meaningfully to business resilience and agility.

Employee Well-being

In line with our commitment to promoting equal parenting and holistic employee care, we enhanced our Supporting Caregiver Leave policy. Employees are now eligible for 12 weeks of leave, which can be taken in up to three tranches within a year of childbirth. This industry-aligned enhancement gives greater flexibility across reporting periods and reinforces our belief in shared parenting responsibilities.

Workplace Inclusivity (WIN) Policies

As part of our WIN Policy framework, we made impactful updates to further promote inclusion:

• New & Expectant Parents: To ensure a smooth transition back to work for new parents, we introduced increased flexibility, including remote working provisions. These changes support employee well-being while retaining talent during critical life stages.

• Employees with Disabilities: We continued to strengthen support under our WIN Policy for Employees with Disabilities by enabling reimbursement for assistive technologies, thereby fostering a barrier-free environment where all employees can thrive.

These policies reflect our enduring belief that an inclusive workplace is a productive and high-performing one.

Diversity, Equity and Inclusion (DE&I)

Colgate has remained committed to advancing gender diversity across functions. One area of particular focus has been Field Sales, traditionally male-dominated. We introduced enabling policies such as hygiene kits and travel assistance tailored for women, leading to a notable increase in gender diversity - from 10% to 17% in our Field Sales team by the end of 2024. This shift not only promotes equity but also brings diverse perspectives closer to our consumers.

Capability Building and Career Development

We invested significantly in building future-ready capabilities and enhancing career visibility across the organization:

• Project BIG: Partnering with BCG-X, we launched a series of live, cross-functional projects to foster innovation, disruptive thinking, and process excellence.

• Colgate Career Framework: A new, structured approach was rolled out to help employees visualize career paths, understand role expectations, and make informed development choices. This framework supports transparent career progression and helps align individual aspirations with organizational needs. •

• Mentorship Program - Sarathi: To further enable growth, we introduced Sarathi, a structured mentorship initiative pairing young managers with senior leaders. Focused on personal branding, networking, and emotional intelligence, the program has received strong positive feedback and has helped strengthen internal talent pipelines.

Regular career development conversations and quarterly performance check-ins have also been institutionalized to ensure that every employee has clarity on goals, progress, and development priorities, thereby embedding a culture of continuous growth. By deepening our commitment to inclusivity, enabling equal opportunities, and building future- ready capabilities, we have continued to nurture a workforce that is agile, engaged, and aligned with our business goals. These human resource advancements play a pivotal role in strengthening our ability to respond to market challenges, innovate with purpose, and sustain long-term growth. The total number of employees as on March 31, 2025 were 2,198.

Sustainability

Sustainability remains a core strategic priority for Colgate- Palmolive (India) Limited, embedded across its operations and purpose-led mission. The Company continues to take meaningful action across environmental stewardship, social impact, and governance excellence, with measurable progress towards its 2025 ESG goals.

In FY 2025, the Company advanced its commitment to circularity by nearing the completion of its transition to 100% recyclable toothpaste tubes, making it the first and only company in India to achieve this milestone by FY 2025. This patented technology, open-sourced globally, reflects the Companys intent to enable industry-wide change. Further, the Company continues to invest in energy efficiency, water conservation, and the adoption of renewable energy, alongside leveraging Internet of Things-based predictive maintenance to reduce resource usage and waste. As part of its Net Zero Water ambition, three out of four of the Companys manufacturing plants-Sri City, Sanand, and Goa achieved water positivity through harvesting initiatives, reinforcing its commitment to sustainable water management and resilience in operations.

On the social front, the Company scaled its flagship Bright Smiles, Bright Futures? program - now expanding from 10,000 to 23,000 schools across three state partnerships, targeting 10 million children. The Company also launched a national AI- powered Oral Health Movement, democratizing preventive dental care access. Community initiatives continued to focus on womens empowerment, water augmentation, and waste management.

As part of its ongoing transparency efforts, Colgate-Palmolive (India) Limited publishes its Environmental, Social and Governance (ESG) Report and Business Responsibility and Sustainability Report (BRSR) for the fourth 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.

Particulars	FY 2024-25	FY 2023-24
Debtors Turnover	30.48	34.76
Inventory Turnover	5.40	5.45
Interest Coverage RatioA	431.92	346.85
Current Ratio	1.38	1.54
Debt Equity Ratio*	0.04	0.04
Return on Capital Employed (%)	121%	99%
Operating Profit Margin (%)	30%	31%
Net Profit Margin (%) (after tax)	24%	23%

AInterest 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.

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 are crucial for fostering best practices and strengthening governance within an organization. The Company has a dedicated team of internal auditors who oversee financial processes and policies, offering recommendations to enhance financial controls. By implementing these strong controls, the Company ensures compliance with its policies and procedures, promoting smooth and efficient operations.

These controls play a key role in protecting assets, identifying and preventing fraud or mistakes, and ensuring the accuracy and completeness of financial records. They also support the timely preparation of clear, comprehensive, and accurate financial statements, in line with established accounting standards. To ensure the continued effectiveness and relevance of the internal control system, the Companys Audit Committee regularly conducts assessments and evaluations to review its performance.

OUR APPROACH

Colgate-Palmolive (India) Limiteds approach to long-term value creation remains steadfast, purpose-led, and focused on sustainable, profitable growth. FY 2025 marks the continuation of a strategy that has delivered consistent growth over the past two years, even amidst evolving market conditions and short-term sectoral volatility. A central pillar of the Companys approach is elevated investment in brand equity and portfolio expansion. The Company is committed to building and nurturing both the Colgate and Palmolive brands, ensuring deeper emotional connect, stronger recall, and greater preference. This includes sustained high investment in advertising, omnichannel media, and shopper experience enhancements.

Alongside brand equity, the Company continues to advance its portfolio strategy-strengthening core offerings while expanding into adjacencies such as personal care. Flagship brands like Colgate Strong Teeth remain a key focus area, with increased investments in packaging, communication, and rural penetration.

Colgate-Palmolive (India) Limited will prioritize innovation and premiumization to drive category growth and margin expansion, with new launches like Visible White Purple and refreshed Colgate Total showcasing its blend of science and consumer insight. Simultaneously, investments in AI-powered diagnostics, educational outreach, and consumer incentives aim to boost usage frequency and deepen trust in the brands efficacy and purpose.

The investments necessary to support growth are cultivated through continuous, company-wide initiatives aimed at enhancing realizations, reducing costs, and optimizing asset utilization. These initiatives, known as the Companys Revenue Growth Management and Funding the Growth programs, focus on cost reduction across multiple areas, including direct materials, indirect expenses, distribution and logistics, advertising, and promotions. They encompass projects such as raw material substitution, formulation simplification, reduced packaging, supplier consolidation, automation, and sourcing localization.

While macroeconomic conditions are expected to remain volatile, the Company believes it is well-prepared to face challenges due to its strong financial condition, experience operating under difficult circumstances, and ongoing focus on key priorities. These priorities include increasing sales through improved consumer engagement, delivering innovation, leveraging digitization, and collaborating with distributors and retail partners.

The Company aims to drive efficiency across all aspects of its income statement to boost margins while generating strong cash flow and utilizing that cash effectively to enhance shareholder returns.

Central to this approach is a commitment to its purpose: "Reimagining a healthier future for all Indians," which guides brand investments, innovation priorities, and operational decisions. Backed by robust cash flows, strong return on capital, and disciplined capital allocation, the Company is well-positioned to navigate anticipated volatility. FY 2026 will be a year of continued investment, thoughtful innovation, and disciplined execution, with the Companys approach grounded in purpose, resilience, and long-term ambition.