Companies & Sectors
Colgate expected to grow but valuation at a premium

The oral care segment will likely remain a profitable but a competitive segment over the next 3-5 years, says Nomura Equity Research

Colgate Palmolive (India) is the dominant market leader in the oral care segment in India. Category growth is still attractive and profitable, and it is expected that the company holds its market share and deliver stable earnings growth over the next couple of years, says Nomura Equity Research in its report on Colgate Palmolive.


According to Nomura analysts, “While we expect Colgate Palmolive to continue to deliver stable earnings growth, we believe current valuations build in a significant premium versus the long-term average.”


Positive catalysts for the share could come if the company is able to gain significant a market share in the toothpaste segment. The oral care segment will likely remain profitable but a competitive segment over the next 3-5 years. Downside risk could come from disruptive competition from other players, which could force Colgate Palmolive to increase its A&P (advertising and promotion) spend. However, the company has already demonstrated its ability to face heightened competition, and Nomura is confident about the company’s ability to maintain this over the medium term.


The strong market share performance has not been at the expense of margins. Although Colgate Palmolive spends a significant level of money on A&P, over the past five years it has only grown in line with the sales CAGR (compounded annual growth rate). This has been the most impressive growth recorded by the company, and has surprised positively.


Colgate Palmolive trades at 25.6x FY15F EPS (earnings per share). The stable and attractive nature of the business has already been captured in the current premium valuation versus the sector. Nomura has upgraded the stock to Neutral, but it believes that valuations leave only limited upside potential from current levels.


Over the past year, Colgate Palmolive has seen a significant re-rating, partly driven by the open offer made by GlaxoSmithKline Plc for its listed Indian subsidiary GlaxoSmithKline Consumer Healthcare for which the parent increased its stake from 43.16% to 72.46%. Colgate Palmolive’s current valuation may be building in the possibility of a similar open offer from parent company Colgate. However, Nomura analysts consider such an offer unlikely.


CBI registers fresh case in coal scam

A CBI probe revealed several irregularities in the allotment of a coal block to Jharkhand Ispat Private Limited, for its sponge iron plant

The Central Bureau of Investigation (CBI) on Monday carried out searches in five cities after registering a new case against Jharkhand Ispat Private Limited for alleged irregularities in the allotment of coal blocks.


CBI sources said that Jharkhand Ispat Private Limited, a company of the RC Rungta Group, was allotted North Dhadu coal block on 13 January 2006 for its sponge iron plant.


They said the agency detected several irregularities in the allotment after which a case was filed against it and unknown public officials.


The sources said details of the FIR could not be revealed as searches were still going on at Varanasi, Hazaribagh, Kolkata, Ranchi and Delhi.


The CBI has so far registered 10 FIRs, including this one, in connection with the coal scam.


The agency had earlier also booked some companies for alleged cheating, forgery and misrepresentation of facts in their applications for coal blocks.


RTI Judgement Series: How MCD officers kept pushing papers for three years

In one representative case it was revealed how officers from the MCD kept pushing papers from one desk to another for over three years without any productive work. This is the 53rd in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while disposing off an appeal, stated that this was a representative case of how officers from the Municipal Corporation of Delhi (MCD) kept pushing papers from one desk to another without any productive work.
While giving this important judgement on 30 September 2009, Shailesh Gandhi, the then Central Information Commissioner said, “The deemed Public Information Officer (PIO) showed that a number of man-hours in the MCD are being wasted by moving the files from one table to another."
Bahadurgarh (Haryana) resident Vipin Gupta, on 20 April 2009 sought information related to payment of bills from the Municipal Corporation of Delhi. Gupta was also a contractor of the MCD. Here is the information he sought and the reply given by the PIO...
1. Face-lifting of maternity centre & child welfare centre Dr. staff Qtrs. in Old Rajinder Nagar in C-127/KBZ/Div. now EEM-I/KBZ H/A XVI.J. VII.I W.O. No.-10/EEI/TC/KBZ/05-06 dt.1/04/05.  What is the Status of above said H/A.
PIO's reply- Non Plan demands under all heads of accounts received in this office up to October 2008 have already been released. Status of Head of Account pertains to DHA.
2. The above said work was completed in 2005 & bill was passed on 28/03/2006.  How long you will take to release the payment.
PIO's reply-Non Plan demands under all heads of accounts received in this office up to October 2008 have already been released. However, details regarding passing of bill, whether send in demand etc. can be given by EE-M-I/KBZ.
Due to non-receipt of information from the PIO, Gupta filed his first appeal. The First Appellate Authority (FAA) in his order directed the Executive Engineer-I to ensure that the pending payments of Gupta are released at the earliest, under his intimation.
Not satisfied with the reply, Gupta then approached the CIC with his second appeal.
During the hearing, Gupta said he was contracted with the MCD and raised a bill of Rs1.39 lakh in March 2006 which was not paid. The PIO and FAA, both admitted that the amount was due to Gupta.
However, Gupta contended that since the budget of the particular head had been exhausted in 2006, the MCD was unable to make the payment even three years later.
During the hearing, the PIO also showed Mr Gandhi, the then CIC, the number of man hours wasted in MCD by moving the files from one table to another.  
“This is a representative case of how MCD officers keep pushing papers from one to another without any productive work. The respondent states that the payment will be made soon but he is unwilling to define how much time ‘soon’ means," the CIC said while disposing the appeal.
Decision No. CIC/SG/A/2009/001933/4973
Appeal No. CIC/SG/A/2009/001933
Appellant                                                         : Vipin Gupta
                                                                               Bahadurgarh, Haryana
Respondent                                                     : Suresh Chandra
                                                                               Municipal Corporation of Delhi
                                                                               Office of the CA cum FA
                                                                               Town Hall, Delhi-110006


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