Colgate buys supplier to improve control on supply chain

Colgate Palmolive plans to acquire the remaining 25-per cent stake in Hyderabad-based SS Oral Hygiene Products Pvt Ltd that it does not own and amalgamate its  operations with itself, with retrospective effect from 1 April  2008.

Upon the amalgamation becoming effective the sahres of SS Oral will stand automatically cancelled extinguished and the company would be would be merged with Colgate Palmolive.

In November 2007, Colgate Palmolive had acquired 75 per cent equity shareholding in three companies - Advanced Oral Care Products Pvt. Ltd, Professional Oral Care Products Private Limited and SS Oral Hygiene Products Private Limited for Rs6.3 crore, eventually taking them over. These companies have been manufacturing and supplying toothpaste to the Company for several years.

With the acquisition of these three contract manufacturers, it is quite evident that Colgate Palmolive is attempting to strengthen its supply chain management and improve the stock availability at all the point of sales in the country.

On the growth path
Colgate Palmolive India Ltd, a wholly owned subsidiary of US -based Colgate Palmolive Company, is engaged in oral care and personal care business. It has been present in Indian oral care market for the last 70 years and its oral care brands enjoy strong brand equity in the market.

The size of Indian Oral care industry is around Rs3,840 crore and toothpaste accounts for 70 per cent of the total market. The toothpaste market is dominated by two players - Colgate & HUL.

Colgate has market share of 49 per cent whereas HUL occupies 30 per cent of the market share. Rest is being with players like Dabur, Ajanta and Amar Remedies who are primarily in the lower segment. The lower segment accounts for 21 per cent of the total market. The market strategy being adopted in the lower segment is aggressive pricing and promotional schemes.