Net sales, however, witnessed a marginal increase of 3 per cent to Rs 233.99 crore during the period from Rs 226.58 crore in the same period last year. Operating profit dropped from Rs 28.55 crore to Rs 18.25 crore during the period.

Both operating-profit margins and net-profit margins have slumped to 7.79 per cent and 4.17 per cent from 12.6 per cent and 8.2 per cent.

Interest burden has increased to Rs 6 lakh from Rs 3 lakh. Depreciation and amortisation at Rs 5.6 crore was nearly unchanged from Rs 5.15 crore in the previous period. Provision for taxation was lower at Rs 6.82 crore from Rs 11.18 crore in the same period last year.

The company said that despite the impact on profitability, it has sustained its new product momentum and high level of investments in strategicinfrastructure, marketing and brand building. The company said that it continues to aggressively pursue its goals of enhancing oral care leadership and expanding the market size.

The company continued to tap its global resources to launch internationally-successful products. During the quarter, the company launched "Colgate Sensation Whitening" toothpaste and "My First Colgate" toothbrush. It is test marketing "Colgate Herbal toothpowder", it said. Further, the company has initiated a massive house-to-house campaign for the new "Colgate Total".

The company feels that its initiatives from new product momentum and brand/marketing investments, as part of its "investment for the future" programme will be beneficial in increasing market share.

The company's performance during the nine-month period ended December 1998, was not any different with the net profit dropping 56 per cent to Rs 27.48 crore from Rs 62.52 crore in the same period last year.

Net sales during the nine monthsd too slumped to Rs 694.92crore from the previous level of Rs 734.70 crore.

Operating profit halved to Rs 51.95 crore from Rs 104.97 crore in the same period last year. Operating-profit margins dropped to 7.4 per cent from 14.28 per cent last year. Net-profit margins during the nine months dropped to 3.9 per cent from 8.5 per cent last year.

According to analysts, the company will have to adopt a more aggressive stand in view of the growing aggressiveness of competitors like Levers and emerging competition from companies like Nirma who is already test marketing its toothpaste brand. The company has shed some market share to the competition and is seen as being more defensive in its marketing strategies than offensive, say analysts.

Insight

That Colgate-Palmolive's profits and profitability would shrink in the quarter ending December 1998 was widely expected. In the face of stiff competition mainly from the rival, Hindustan Lever, the trend of declining profits and margins is likely to continue in the currentquarter. However, the extent of the fall in profits for the nine-months ending December 1998 appears to have been much more than market expectations. The stock closed at Rs 188.70 on the BSE, down 7.95 per cent from the previous close.