``There were no recoveries towards the principal amounts and recovery of interest was not as per stipulation,'' the auditors Ford, Rhodes, Parks & Co pointed out. The company had given ICDs to two companies -- Shaw Wallace Company (Rs 2.50 crore) and Searsole Chemicals (0.50 crore) in August 1995 and September 1995. ``ICDs and interest thereon worth Rs 3.48 crore is considered doubtful and fully provided for,'' the company said in a reply to queries from The Indian Express.

Indicating the tight market conditions, inventories of the company have shot up from Rs 97.88 crore to Rs 120.06 crore for the year ended March 1998. It may be recalled that sales of the company also stagnated at Rs 989 crore during the year 1997-98 as againstRs 960 crore in the previous year. ``The increase (in inventories) is solely due to an increase in the finished goods. This increase was largely due to a planned new product - Colgate Double Protection - launched in June 1998,'' said a company statement.

The company had faced tough competition from Hindustan Lever in its traditional toothpaste segment during the year. Hindustan Lever has an advantage in that it has a diversified product range while Colgate largely banks on toothpaste and related products.

Incidentally, Colgate is the only major multinational in the fast moving consumer goods (FMCG) segment which has taken a severe beating on the stock markets. The company's scrip had fallen to a 52-week low of Rs 180 on September 1, while Hindustan Lever quoted at Rs 1,613 on the same day.

As per the balance sheet, the sundry creditors have also shot up from Rs 98.86 crore to Rs 133.41 crore. ``This represents normal trade creditors, suppliers and contractors i.e amount that are falling due in Apriland May 1998,'' the company statement explained.

The tough market position is also evident from the rising advertising expenses of the company. Advertising expenses have shot up from Rs 103 crore to Rs 147 crore even though sales stagnated. ``This increase reflects heightened competitive activity in the market place, marketing investments in revitalising existing brands and launches of a series of new products. The company had embarked on a phase of investments during 1996-97 for enhancing market leadership. This was reflected in annual reports for 1996-97, for which the theme was `investing for the future','' the company said.

Moreover, current liabilities and provisions of the company have also shot up to Rs 198.35 crore from Rs 148.62 crore. However, the company deployed a lower amount of Rs 14.30 crore in the ICD market as against Rs 23 crore previously.