Mumbai, India – In a surprising turn of events, Colgate-Palmolive (NYSE: CL) (India) witnessed a 2% surge in its shares, reaching Rs 2,073.25 per share on the National Stock Exchange (NSE) as of Monday, following the disclosure of a significant transfer pricing order by the Income Tax Department for the fiscal year 2021-22. The order, amounting to Rs 170 crore, raised concerns by disallowing certain international transactions between related entities where prices deviated from those in unrelated party transactions, necessitating price adjustments.
Despite this setback, Colgate-Palmolive remains resolute in its commitment to maintaining business as usual. The company has affirmed that the transfer pricing order will not disrupt its operations and is planning to engage with the Dispute Resolution Panel as the proceedings continue. Currently, the company is awaiting the conclusion of draft assessment proceedings before taking this next step.
This latest development unfolds in the wake of Colgate-Palmolive’s robust financial performance in the second quarter of the fiscal year 2023-24. The company reported a noteworthy year-on-year net profit of Rs 340.05 crore, representing a substantial increase of 22.31%. Furthermore, its revenue for the same period stood at Rs 1,462.38 crore, marking an impressive growth of 6.09%. Notably, the EBITDA increased from Rs 408 crore in the second quarter of the previous fiscal year to Rs 482.2 crore, resulting in a notable margin of 32.8%.
Despite the pronounced tax-related challenge from the Income Tax Department, Colgate-Palmolive’s stock experienced a marginal decline of 0.92% on Monday. The company remains steadfast in asserting that this order will have no detrimental impact on its financial stability or operational efficiency.
