Colgate India To Appeal Rs 254.27 Crore Income Tax Demand

Colgate-Palmolive (India) Ltd. said on Tuesday that it plans to appeal a recent Income Tax Authority’s order demanding Rs 254.27 crore for the assessment year 2021-22. The order included an intimation for Rs 170 crore, communicated to the company.

The FMCG company said that it will challenge the order before the Income Tax Appellate Tribunal and confirmed that the tax liability does not impact its financial operations or any other business activities, according to its stock exchange filing.

The current demand followed a prior tax notice issued in July, where the Income Tax Authority raised a transfer pricing-related demand of Rs 248.74 crore for the financial year ending March 2021. Colgate-Palmolive (India) had acknowledged this earlier notice, affirming its intent to address the matter following the due process.

In its September quarter results, the toothpaste manufacturer reported a year-on-year revenue increase of 10%, reaching Rs 1,618 crore, close to Bloomberg's estimate of Rs 1,634 crore. The company’s operating income, or earnings before interest, tax depreciation, and amortisation, rose by 3.1% to Rs 496 crore, while its margin stood at 30.7%, down from 32.7% a year earlier. Colgate India’s profit rose by 16% to Rs 395 crore, approaching the estimate of Rs 399 crore.

Shares of Colgate-Pamolive (India) resumed declines on Tuesday after a one-day breather. The stock ended 0.4% lower at Rs 3,093 on the National Stock Exchange. That compared with 0.5% gains in the country’s benchmark NSE Nifty 50. The scrip declined 22.3% so far this year.

Among the 35 analysts tracked by Bloomberg, seven have a “buy” rating on the stock, 14, had a “hold” rating, and Reiding had a “sell” call. The analysts consensus 12-month price target tracked by Bloomberg was Rs 3,209.38, implying a potential upside of 3.7% from Monday’s close.