Macro Moves

While others Fire, Amazon Hires!

Created on 25 May 2020

Wraps up in 4 Min

Read by 3.4k people

Updated on 08 Sep 2020

Great leaders and thinkers have a trait that defines them. When others see a crisis, they see an opportunity. It is this important trait that makes them successful. It’s not possible that each time the opportunity knocks your door and you grab it. Many times you have to create it. And, it looks like Amazon India has learned this. You compare them with other e-commerce companies in India and you’ll see that Amazon India is not just any other e-commerce company, it’s in a different league.

Now, when the lockdown is going on and tech-led companies are on a ‘Firing Spree’, Amazon India is hiring 50 thousand temporary workers. The vacancies are for delivery and warehousing as the company is facing a surge in demand due to the ongoing lockdown. The seasonal workers being hired by Amazon India will be a part of the company’s fulfillment and delivery network that is responsible for picking, packing, shipping, and delivering the products to the customers.

What Does This Mean?

As the e-commerce firms have now been allowed to deliver non-essential items as well in Lockdown 4.0, Amazon India has grabbed this opportunity with both hands. The company has made procedural changes as well to make sure that its associates are safe. As per the industrial experts, the demand is going to revive soon, and hence, the companies will have to be ready by roping in manpower for warehousing and delivery. It’s not just Amazon India doing it, but grocery delivery platforms Grofers and Big Basket have also scaled up their hiring.

Colgate Palmolive India Limited (CPIL)

Colgate Palmolive India Limited (CPIL) is a subsidiary of Colgate Palmolive Company (CPC), the USA, with a 51% share. Its main business is manufacturing and marketing oral care products. With its strong branding and advertising campaigns, it has successfully penetrated its products for daily needs targeting every household especially the middle class, and positioned itself as a company that makes products for caring for its consumers.

Colgate has been ranked as the No. 1 oral care brand for consecutively 8th year by The Economic times brand equity survey 2018 in collaboration with Nielson, a market research firm. It is one of the few companies that have successfully connected with its customers in almost all segments ranging from value to the super-premium segment despite changes in consumer preferences.

Colgate became synonymous with the term “toothpaste” in India with one in every two consumers using it. The company has managed to increase its profits by using recyclable tubes in its state of the art manufacturing plant equipped with new generation high-speed automatic toothbrush machines.

The company is regularly coming up with new products and has been a consistent financial performer. CPIL with a market capitalization of ₹36,313 Crores has reported net sales of ₹4,487.6 Crores (2.56%, 5Yr-CAGR) FY2019-20. This low revenue growth over the last few years is a result of a loss of market share because of the launch of herbal products by close competitors.

However, CPIL has been able to see a stabilization of its toothpaste market share between 51-52% after it launched “Swarna Vedshakti” to combat in herbal care segment. Also, it has expanded its advertising activities by spending 14% (5.72%, 5Yr-CAGR) of revenue in FY20.

Company’s receivable days stood at 13.36 (3Yr-Average) and inventory days at 21.64 (3Yr-Average) which are better than industry averages of 24.82 and 36.16 days respectively. With its innovative product launches, proactive inventory, and receivables management and increasing budgets on branding activities, it can be concluded that it is committed to growing its market share which further can help in margin growths.

It has reported an EBITDA margin of 25.98% (5Yr-Average) and net profit after tax of ₹816 Crores (8.56%, 5Yr-CAGR) FY20. Also, the return on assets (ROA) was 56.50% (5Yr-Average), on equity (ROE) was 56.50% (5Yr-Average), and on capital employed (RoCE) was 81.36% (5Yr-Average) FY19. The company is consistently paying dividends and has an excellent interest coverage ratio of 458.88%.

What is good?

  • Market leadership:
    Strong market leadership with market share by volume of 52.4% in toothpaste and 45.2% in toothbrush categories

  • Continuous improvement:
    New product development through timely innovation has been a key driving force for its success from time to time.

  • Distribution network
    With its excellent reach and strong distribution network, its products have managed to reach 88% of households in India

  • Brand visibility:
    Through various branding activities and social initiatives, it has able to achieve a strong and loyal consumer base with 57.6% customer equity

What is Bad?

  • High dependence on a single category of products

  • Immense competition established and emerging brands means limited market share growth opportunity

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Ayushi Upadhyay

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A Keen Learner. Tiny, brainy, and studious, this quiet one stays in her zone until she pops. And once she does, boy, are her comebacks snappy! There is no financial question that she can't answer through her magical blog-writing. 

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