COMPANY ANALYSIS ON NESTLE-INDIA LIMITED
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CONTENTS Chapter-1 INTRODUCTION •
Over view of the food industry
•
Company overview
•
Vision, mission and objectives
•
History and growth of the company
•
Milestones
•
Products
•
Research and development
Chapter-2 •
Human resource management in NESTLE-INDIA LIMITED
Chapter-3 •
Marketing activities and management in NESTLE-INDIA LIMITED
Chapter-4 •
Financial data analysis
•
SWOT analysis
•
Reference
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OVERVIEW OF FOOD PROCESSING INDUSTRY
India is one of the key k ey food producers in the world, with the second largest arable land area. It is the largest producer of milk, pulses, sugarcane and tea in the world and the second largest producer of wheat, rice, fruits and vegetables. India’s Food Processing industry is one of the largest industries in the country - it is ranked fifth in terms of production, consumption, export and expected growth. The Indian food industry is estimated to be worth over US$ US$ 200 billion and is expected to grow to US$ 310 billion by 2015. India is one of the world’s major food producers but accounts accou nts for only 1.7 per cent (valued at US$ 7.5 billion) of world trade in this sector – this share is slated to increase to 3 per cent (US$ 20 billion) by 2015.
Food processing is a large sector that covers activities such as agriculture, horticulture, plantation, animal husbandry and fisheries. It also includes other industries that use agriculture inputs for manufacturing of edible products. The Ministry of Food Processing, Government of India has defined the following segments within the Food Processing industry: • Dairy, fruits & vegetable processing • Grain processing • Meat & poultry processing • Fisheries • Consumer foods including packaged foods, beverages
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And packaged drinking water.
While the industry is large in terms of size, it is still at a nascent stage in terms of development. Out of the country’s total agriculture and food produce, only 2 per cent is processed. The highest share of processed food is in the Dairy sector, where 37 per cent of the total produce is processed, of which 15 per cent is processed by the organized sector.
Primary food processing (packaged fruit and vegetables, milk, milled flour and rice, tea, spices, etc.) constitutes around 60 per cent of processed foods. It has a highly fragmented structure. Several processing units are in unorganized sector In comparison, with the organized sector .
NESTLE Group Background
Nestle SA, Switzerland is amongst the world’s largest food and beverages companies. The company is progressively evolving from a respected, trustworthy food and beverage company company to a respect respected, ed, trust trustwor worthy thy food, food, bevera beverage, ge, nutrit nutrition ion,, health health and wellne wellness ss company. This objective is encapsulated in “Good Food, Good Life”. The principle activities of the group encompass: beverages, milk products, nutrition and ice cream; prepared dishes and cooking aids; chocolate, confectionery and biscuits; water; and pet care. It has 511 factories in 86 countries around the world.
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Background - Nestle India
Nestle Nestle India is one of the leading companies companies in the FMCG space in India. India. The company is acknowledged amongst India’s ‘Most Respected Companies’. Nestle products are sold throughout India and are also exported to Russia, Hungary, Japan, USA and several other countries. These include certain international products like Nescafe and Lactogen, For three years in succession [from 1999-2000 to 2001-2002], Nestle India was recognised with the top Exporter Award for export of Instant Coffee, and for export of all coffees to Russia and CIS Countries.
Nes Nestl tléé set set up its its oper operat atio ions ns in Indi India, a, as a trad tradin ing g comp compan any y in 1959 1959 and and bega began n manufacturing at the Moga factory in 1962. The production started with the manufacture of Milkmaid and other products were gradually brought into the fold. Nestlé India Limited was formally incorporated in 1978 prior to which the manufacturing license was
issued in the name of the Food Specialties Limited . The corporate office is located at Gurgaon and the registered office at M-5A, Cannaught Circus, New Delhi.
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At present Nestlé has 7 manufacturing units countrywide which are successfully engaged in meeting the domestic as well as the exports demand. In addition there are several co packing units. Manufacturing units are located at,
Choladi (Tamilnadu) -- Instant Tea Export 1969 Nanjangud (Karnataka) -- Coffee & Milo 1989 Samalkha (Haryana) -- Cereals, Milkmaid Deserts 1992 Ponda (Goa) -- Chocolates & Confectionery 1995 Bicholim (Goa) -- Noodles and Cold Sauces 1997 Panth nagar (Uttranchal) -– Noodles 2006 Moga (panjab) -- Milkmaid and other products 1962.
VISION:
“Respected, Trustworthy food, Nutrition, Health and Wellness Company”
To rapi rapidl dly y build build Nest Nestle le Indi Indiaa as the the resp respec ecte ted d and and trus trustw twor orth thy y lead leadin ing g food, food, nutrition, health and wellness company ensuring long term sustainable and profitable growth.
MISSION:
“ Nestle is dedicated to providing the best foods to people throughout the day, throughout their lives, throughout the world. With our unique experience of anticipating consumer’s needs and creating solutions, Nestle contributes to your well-being and enhances your quality of life”.
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OBJECTIVES:
To make company’s customers winners by constantly exceeding their expectations
Nestle India’s main objective is to manufacture and market the products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners.
Be a good corporate citizen and contribute positively to the society in which it operates.
Conservation of natural resources and minimization of waste.
HISTORY AND GROWTH
In 1959, on 28th March , the Company Company was incor incorpor porate ated d at New Delhi. Delhi.
The
company was promoted by Nestle Alimentana S.A. through a wholly Owned subsidiary Nestle Nestle Hold Holding ingss Ltd. Ltd. In 1989
The name name of of the comp company any was was chang changed ed from from `Food `Food
Specialties Ltd.' to `Nestle India Ltd.' on 24th March.
1990
- During During the year year compan company y entere entered d into into chocola chocolate te busine business ss by introd introduci ucing ng Nestl Nestlee premium chocolates.
1993
- Samalkha factory was commissio commissioned ned during the year and underwent underwent expansion for cereal based products. - 196,07,054 shares 47,51,625 No. of Equity shares of Rs 10 each allotted to M/s. Nestle SA Switzerland to raise the stake to 51%. 128,55,429 bonus shares issued in prop. 1:4. 1:4.
1994
-During -During the year company company launched a number of new products products viz., Cerelac Soya, Milk maid, maid, Desser Dessertt Mixes, Mixes, Maggo Maggo Tonit Tonit's 's Special Special Cookin Cooking g Bases, Bases, Maggi Maggi 1-2-3 1-2-3 noodles noodles,,
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Contodina snack dressing and the chocolate items, milky base marbles and bar one peanut. And also launched Bonus and Polo.
1995
- During the year company commenced construction of a new factory at Bicholim, Goa. At the same year, instant noodles factory was Installed and commissioned at Samalkha factory. - During the year company launched launched Kit Kat manufactures manufactures at the new factory factory at Ponda, Goa. -The Chennai-based Indian Food Fermentations tied up with Nestle India Ltd., to market its dosa and vada batter batter in consumer pack, pack, in the country. country. The company company has signed an agreement to this this effect recently. Nestle would sell the ready-to-use dosa, vada, sambhar and unique masala dosa batter in consumer packs, under its own brand name in the country.
1996
-During -During the year company launched MILO-Chocol MILO-Chocolate ate energy food drink in South India and a range of culinary products like, Dosa and Sambar mixes, pickles and new varieties of soups under the brand Maggi.
1997
- NIL stood as one of the top players in the processed food & beverages industry and the largest producer of instant coffee with a 49 percent market share.
2000
- Nestle is set to enter the domestic bottled water business and will launch the product under the brand name `Pure Life'. -The Company has launched its ultra heat treated liquid milk, `Nestle Pure Milk', in Bangalore, Chennai, Hyderabad and Kochi.
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- Nestle India Ltd. to launch Nescafe Gold and Nescafe Gold Decaffeinated. - Nestle India has launched a range of gift packs under the Fox confectionery brand name for the festival seasons.
2005
-Nestle India introduced new variants of Maggi into the market.
MILESTONES OF THE COMPANY:
Nestle India got Tetra Pak's annual dairy d airy and beverage industry award in 2004.
NIL is one of the top players in the processed food and beverages segment and the largest producer of instant coffee with a 49% market share.
MANAGEMENT OF NESTLE-INDIA LIMITED:
Mr. Mr. Mar Marti tial al G. Rol Rolland and Mr. Shob hobinder der Dugg uggal Mr. Michael Michael W.O. W.O. Garr Garrett ett Mr. Ravinder Narain Mr. Pradip Baijal Mr. Ra Rajendr ndra S. S. Pa Pawar war Mr. Richard Sykes
Chai Chairrman man & Man Manag agiing Dir Directo ector r Director - Finance nce & Cont ontrol Non Execut Executive ive Direct Director or Non Executive Director Non Executive Director Non Executive Director Alternate Director to Mr. Michael
PRODUCTS RANGE OF NESTLE-INDIA LIMITED
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Nestle operates in four key segments viz., Milk Products & Infant Nutrition, Prepared Dishes & Cooking Aids, Beverages and Chocolate & Confectionery. The company enjoys leadership position in its core categories like Baby F oods, Instant Noodles and Instant Coffee. Nestle enjoys distinct advantage over its competitors in the F&B space on account of its strong focus on developing products around the Nutrition, Health and Wellness platform and a culture of renovation and an d innovation in its offerings backed by strong parent support (largest Food company in the world).
Milk Products & Infant Nutrition : Everyday, Milkmaid, Nestle dahi, Nesvita (Probiotic dahi)
Aids : Maggi Prepared Dishes & Cooking Aids:
Beverages : Nescafe, Sunrise, Nestea, Milo
Chocolate & Confectionery Confectionery:: Kit Kat, Milkybar, Eclairs, Polo
NESTLE EVERYDAY
To targ target et the the mass massiv ivee poten potenti tial al offe offere red d by the the teatea-wh whit iten enin ing g segm segmen ent, t, NEST NESTLE LE EVERYDAY tea whitener was launched in 1992. Supported by aggressive marketing using multi-media activities, focused distribution with sampling drives and excellent consumer acceptance, the brand has shown strong growth and holds good promise for the future.
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Kat, Milkybar Milkybar,, Eclairs, Eclairs, Polo Polo CHOCLATE CHOCLATE AND CONFECTIONARY CONFECTIONARY:: Kit Kat,
are the strong strong
brands available in the market
MILO POWDER:
To provide convenience to consumers, NESTLE MILO was launched in its new 130gm. With an attractive airtight jar in February2000. This was done with a view to bring our packaging in line with the industry practice of making milk fortifiers and modifiers available in jars and tins and to reverse the trend of consumer preference for imported MILO or similar products over local MILO. Consumer response to the new initiative has been very positive.
NESCAFE CLASSIC
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NESCAFE, Nestlé’s international flagship brand, is locally repacked and marketed in 2gm. and25gm. Sachet, 75gm. bottles and 500gm. Soft packs. The brand enjoys a special position in the country's coffee consuming segment.
LACTOGEN
LACTOGEN LACTOGEN 1 and LACTOGEN 2 are infant and follow-up follow-up formulae formulae launched in 1991 and are available in two sizes. The brands provide both affordability and quality.
CERELAC
Launched in 1989, CERELAC is the dominant player in the growing infant cereal market. Available in 5 flavors, the brand provides balanced nutrition to infants from 4. months onwards.
MAGGI 2-MINUTE NOODLES:
Fast to cook, good to eat - MAGGI 2-MINUTE NOODLES were launched with local Production in 1992 and in doing so Nestle pioneered the category of instant noodles in India. MAGGI 2-MINUTE NOODLES have special appeal for children, are fun to eat and offer a range of interesting flavors, namely: Masala, Chilli and Chatkhara.Affordably priced and backed by focused marketing activities, MAGGI NOODLES have shown good progress in 2000. Research and development
The Nestlé Nestlé research research and develo developme pment nt centers centers have two main tasks: tasks: to create create new products and manufacturing processes and to improve those that already exist. These centers play a key role in product safety and quality and also have their role in conserving resources and protecting the environment. Environmental concerns are an integral part of
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any develop developmen mentt proces processs to ensure ensure that that our future future commer commercia ciall operat operation ionss meet meet the desired criteria. The Nestlé Research Center provides the scientific support needed to prevent prevent and solve environment environmental al problems problems arising in the development development groups as well as manufacturing. In addition, studies are carried out to find new ways of using industrial residues to create value added byproducts. This will reduce total emissions and effluents. The Nestlé development centers prepare environmental impact studies for new products and manufa manufactu cturin ring g proces processes ses.. These These cover cover all aspect aspects, s, from from raw materi materials als,, through through processing, to the final packed product. These analyses provide additional elements for use in deciding whether to commercialize a new product, or to introduce a new or modified process.
HANDLING OF RAWMATEREALS:
The Nestlé Group is in principle not directly involved in primary production of raw materials and other food ingredients. In general it uses locally available raw materials and purchases them either directly from producers or through existing trade channels.
Raw materials have to meet clearly established quality criteria and are checked for possible contaminants including environmental contaminants, purchasing specifications comply not only with legal requirements but go further to ensure highest safety and wholesomeness of our products.
NIL gives preference to those goods, for which environmental aspects have been taken into consideration. In those cases where the required agricultural raw materials are not availabl availablee locall locally, y, but the natura naturall produc productio tion n conditi conditions ons exist, exist, it encoura encourages ges local local production and provides assistance for cultivation and dairy farm management.
CORECOMPETENCIES OF THE COMPANY:
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The culture of innovation and renovation, continuous improvement and the thrust on value-for-money and affordability have helped the company to focus on adding value for the consumer. Its Competitive advantages are,
A pool of qualified suppliers that are directly aligned with under represented and emerging communities and can promote positive p ositive relationships with customers, Better er quali quality ty goo goods ds and and serv servic ices es at a lowe lowerr pric pricee as a resu result lt of incr increas eased ed Bett competition and an extended supply base,
Access to new capabilities and innovations, Competence in research and development: The company has access to Nestle Nestle group’s group’s technology, technology, brands, expertise expertise and the extensive centralized research and development facilities.
FUTURE PLANS:
The company continuously focuses its efforts to better understand the changing lifestyles of modern India and anticipate consumer needs in order to provide convenience, taste, nutrition and wellness through its product offerings.
Nestle aims to create value for consumers that can be sustained over the long term by offering a wide variety of high quality, safe food products at affordable prices.
Nestl tlee is focus focused ed on produ product ct expa expans nsio ion n and and impr improve oveme ment nt of dist distri ribu buti tion on Nes efficiency.
KEY COMPETETORS OF NESTLE-INDIA:
The growth potential of the food processing industry would attract domestic as well as multinational players in the the market. The present market is seeing players players like Heinz,
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Mars, Conagra, Hershey, Pepsi, ITC, Dabur, Britannia, Cadbury, HLL, Pillsbury, Nestle and Amul, Smithkline Beecham, etc and a host of local manufacturers offering competition with their established brands on national level. Key Competitors for Nestle- India are,
Key Competitors of Nestle-India Category
Competitors
Milk Products Chocolate Baby Food Prepared Dishes
Amul, Britannia Cadbury, Hershey, Parle, Wrigley, Perfetti Wockhardt HUL, ITC, Indo Nissin
Baby food and Instant coffee are categories where brand loyalties are very strong and Nestle is the market leader. HUL is a significant competitor to Nestle in instant coffee. While Wockhardt is the main competitor in the baby foods market. The market for culinary products, semi-processed foods such as noodles, ready mixes for Indian ethnic breakfast and sweets, is largely an urban market. HUL and Indo Nissin Foods are the main competitors in these product segments. Nestle has also achieved a significant 25% share in the chocolate/confectionery market. The company has recently expanded its dairy products portfolio to include, milk, curd and butter. The company’s entry into the mineral water segment is a concern, as the segment is already overcrowded and the company faces stiff competition especially from the Cola manufacturers.
HUMAN RESOURCES Nestlé India believes that people are most valuable assets in enriching, the company provides provides an extraordina extraordinary ry mix of cultures and nationaliti nationalities, es, we can
have a constant
access to people from all over the world. Nestlé India believes in giving as much responsibility as possible to the individual. This inherent trust means employee can quickly establish his/her own credibility, prove their professionalism and make a valuable contribution to the company. The working conditions at Nestlé India match or are above
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those in comparable companies, and the company encourages a healthy work / life balance for all employees.
Nestle-India as a manufacturing and marketing company, what counts is professional skills, personality and strength of character, and to contribute actively to the long term sustainable growth of the business. With With career career option optionss spanni spanning ng Sales, Sales, Market Marketing ing,, Supply Supply Chain, Chain, Human Human Resour Resources ces,, Finance & Control, Technical and various other functions, Nestlé India offers a wide range of opportunities for people. Technical Management Trainees are selected from reputed engineering institutes, specializing in the streams of Chemical, Electronics, and Automation & Industrial Engineering. They are required to undergo an intensive on-the job training programme in Factories and Head Office. To create a pool of high caliber mana manager geria iall tale talent nt,, Nest Nestlé lé Indi Indiaa hire hiress fres fresh h mana manage geme ment nt gradu graduat ates es from from prem premie ier r management institutes across the country. The Management Trainees are selected mainly in the areas of Sales & marketing, Human Resources and Supply Chain.
All the Technical Management Trainees are selected, required to undergo an intensive on-the on-the-jo -job b traini training ng progra programme mme,, they they undergo undergo a prepla preplanne nned d traini training ng progra programme mme in Factories and Head Office. Nestlé India offers a wide range of opportunities for people. It believes in offering the best training and development that will enable people to grow continuousl continuously y and maximize maximize their potent. Nestle-India believes in empowering people . So employ employees ees are given given early early respons responsibi ibili litie ties, s, each each person person is encourag encouraged ed to take personal responsibility , and to contribute actively to the long term sustainable growth of
the business. Almost from their first day on the job, young managers have the opportunity to acquire and develop skills in leadership, people management, change management, and decision making. Nestlé India recognizes that people make the difference. The Company encoura encourages ges and suppor supports ts its people people to inculc inculcate ate the clearl clearly y laid laid down Nestlé Nestlé India India Leadership Principles to enable them to take up responsibilities and challenges early in their their career career.. Nest Nestlé lé does does give give thei theirr empl employ oyee eess a chanc chancee to disc discus usss thei theirr care career er devel developm opment ent for for futu future re acco accomp mpli lish shme ment nts. s. Th They ey send send thei theirr effi effici cien entt work worker erss and and
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employees abroad for the improvement in their career. They also conduct workshops and seminars for this purpose. Nestle has established a separate compensation department for its employees. They offer incentive incentive pay and special special bonuses bonuses to employees; employees; they also provide disability benefits to their employees.
The success of an individual is very much dependent on his ability, ability, willingness willingness to learn and align his objectives with that of the organization. In the course of career employees are encouraged constantly to learn more. Nestlé India will push every individual to broaden his/her horizon, both nationally & internationally. Everyone has an equal chance to move on to higher responsibilities. It is up to the individual to make the most of those opportunities.
MARKETING STRATEGIES
consumers in India with products products of Nestlé India is a Vibrant Company that provides consumers global global standa standards rds and is commit committed ted to long-t long-term erm sustai sustainab nable le growth growth and stakeho stakeholde lder r satisfaction.
PRODUCT DIFFERENTIATION STRATEGY:
Nestle is using the product differentiation strategy by providing the superior quality products. Their main focus is to keep the customers loyal. They bought shelve space in
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different departmental stores to attract the customers. They tried to reach each group of people in which they have succeeded.
MARKETING MIX
PRODUCT: NIL is well known for its rendered services in food sector . Nestlé has recognized the
special nutritional requirements which start from infants and covers the range to all age groups. They add specific nutrients to milk and encourage children to consume con sume nutritious Products with different flavors, colors and shapes. For small children, and families, Nestlé offers smaller sizes and portion able packs. Nestle milk and dairy products are recognized throughout the world.
PRICING
Nestle has its own set of techniques for setting the prices of the product. It does not prima primaril rily y focus focus on the compet competito itor’s r’s pricin pricing g strate strategie gies. s. It emphas emphasize izess on the market market demand of the product. The prices of the products are also subjected to the type of consumer product. If the product is a daily use then it can have a minimum price to attract the customer towards your product. Thus the company cannot influence much on the prices.
PLACE
Nestle’s products are available at every corner of the country regardless of rural or urban areas.
PROMOTION
Thee foll Th follow owin ing g are are some some of the the prom promot otio iona nall stra strate tegi gies es used used by Nest Nestle le for for mark market et expansion,
New consumption opportunities for chocolates and confectionery were identified and developed in areas like railway platforms, college canteens and major events.
Nestle set up ‘Café Nescafe’ and ‘Coffee Corners’across metros and mini-metros.
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It also uses other below line activities to promote its product like by using the Following techniques: •
Free sampling
•
Door to selling
•
Prizes
DISTRIBUTION:
The distribution comprises of six branches located in Calcutta, Delhi, Mumbai, Chennai, Bangalo Bangalore re and Chandig Chandigarh arh.. The distr distribu ibutio tion n networ network k functi functions ons effici efficient ently ly with with the transfer of goods from the factories to the Mother Godowns, which in turn are transferred to the clearing and the sales agents. The C&S agents sell it to the cash distribution that makes the secondary sale in the market. Distribution Situation:
Company is using 2 channels for distribution, •
Retail outlets (indirect channel)
•
Sales promotion officers
FINANCIAL PERFORMANCE AND DATA ANALYSIS OF NESTLEINDIA: Financial statements:
Profit & Loss account of Nestle India
------------------------------------- in Rs. Cr. -------------------
' 04
D e c ' 05
Dec '06
Dec '07
Dec '08
12 mths
12 mths
12 mths
12 mths
12 mths
Dec
Income
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Sales Turnover Excise Duty
2,373.17 1 4 3 .7 5 2,229.42 8 .2 1 6 .5 5 2,244.18
2,643.96 168.87 2,475.09 23.67 16.73 2,515.49
2,944.20 1 2 5 .0 4 2,819.16 1 5 .33 13 .42 2,847.91
3,647.49 146.53 3,500.96 21.24 71.01 3,593.21
4,472.04 143.39 4,328.65 29.88 31.11 4,389.64
1,047.99 85 .07 1 6 4 .2 5 41 .0 8 4 23 .06 4 2 .7 6 0 .0 0 1,804.21 Dec '04
1,135.80 103.91 183.29 49.06 460.53 56.78 0.00 1,989.37 D e c ' 05
1,348.21 11 5 .56 216 .16 5 2 .65 48 0 .14 8 7 .5 5 0 .0 0 2,300.27 Dec '06
1,763.54 123.94 269.44 62.14 496.22 172.54 0.00 2,887.82 Dec '07
2,153.85 159.76 314.58 73.46 736.73 81.40 0.00 3,519.78 Dec '08
12 mths
12 mths
12 mths
12 mths
12 mths
Operating Profit PBDIT Interest P BD T Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs)
4 3 1 .7 6 439 .97 0 .78 4 3 9 .1 9 4 9 .14 0 .00 390 .05 0 .0 0 3 9 0 .0 5 1 34 .5 8 251 .92 756 .21 0 .00 2 36 .2 2 31 .29
502.45 526.12 0.21 525.91 56.84 0.00 469.07 0.00 469.07 159.49 309.57 853.58 0.00 241.04 33.81
5 32 .31 54 7 .64 0 .44 5 4 7 .2 0 6 6 .2 8 0 .00 48 0 .9 2 0 .00 4 8 0 .9 2 1 6 5 .4 3 31 5 .10 95 2 .06 0 .00 2 4 5 .8 6 3 4 .4 8
684.15 705.39 0.85 704.54 74.74 0.00 629.80 0.00 629.80 214.80 413.81 1,124.29 0.00 318.17 52.21
839.98 869.86 1.64 868.22 92.36 0.00 775.86 0.00 775.86 238.74 534.08 1,365.92 0.00 409.77 69.64
96 4 .16 26 .13
964.16 32.11
9 6 4 .1 6 3 2 .6 8
964.16 42.92
964.16 55.39
Equity Dividend (%)
2 4 5 .0 0
250.00
255 .00
330.00
425.00
Net Sales
Other Income Stock Adjustments Total Income Expenditure Rawmaterials
Power & Fuel Cost Employee Cost
Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
Balance Sheet of Nestle ------------------------------------- in Rs. Cr. ------------------------------------India '04
D e c ' 05
Dec '06
12 mths
12 mths
12 mths 12 mths 12 mths
Dec
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Dec '07 Dec '08
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans
Total Debt Total Liabilities
96.42 96.42 0.00 0.00 222.99 0.00 319.41 7.91 0.00 7.91 327.32 Dec '04
96.42 96.42 0.00 0.00 257.72 0.00 354.14 14.30 0.00 14.30 368.44 D e c ' 05
96.42 96.42 0.00 0.00 292.47 0.00 388.89 16.27 0.00 16.27 405.16 Dec '06
96.42 96.42 0.00 0.00 322.01 0.00 418.43 2.87 0.00 2.87 421.30 Dec '07
96.42 96.42 0.00 0.00 376.93 0.00 473.35 0.82 0.00 0.82 474.17 Dec '08
12 mths
12 mths
12 mths 12 mths 12 mths
838.16
942.40
440.94 397.22 34.09 154.86 216.67 26.17 9.45 252.29 168.91 0.00 421.20 0.00 331.18 348.87
468.63 473.77 22.83 104.43 253.10 30.52 3.64 287.26 194.33 33.00 514.59 0.00 381.68 365.50
516.48 541.79 38.24 77.77 276.22 55.76 6.53 338.51 175.12 69.82 583.45 0.00 440.82 395.28
680.05
747.18
836.10
-258.85 0.00 327.32
-232.59 0.00 368.44
-252.65 0.00 405.15
10.39 33.13
50.04 36.73
35.93 40.33
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
FINANCIAL PERFORMANCE
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1,404.8 5 577.96 651.85 601.81 753.00 73.70 109.17 94.40 34.90 401.22 434.91 53.49 45.59 15.75 12.66 470.46 493.16 186.23 162.67 22.01 181.03 678.70 836.86 0.00 0.00 529.51 582.44 497.79 677.32 1,259.7 1,027.30 6 -348.60 -422.90 0.00 0.00 421.31 474.17
1,058.27 1,179.77
63.27 43.40
84.90 49.09
Thee anal Th analys ysis is of the the fina financ ncia iall perf perfor orma manc ncee for for the the year year ende ended d Marc March h 31, 31, 200 2008 8 in comparison to the previous year is as under : INCOME
Total Income for the year at Rs.4,389.64 crores increased increased by 28% over the total income of Rs.3593.29 crores in the previous year, the Net Income from sales, work bills, service and commis commissio sion n increa increased sed by 24% from Rs.4328 Rs.4328.65 .65 crores crores in the previo previous us year year to Rs3593.21 crores in 2007-08.
NETSALES
Total nets ales for the year at Rs 4328.65 crores increased by 28.59% over the total net sales of Rs 3500.96 crores in the previous year.
SALES
4500 4000 3500 3000 2500 SALES
2000 1500 1000 500 0 1
2
3
4
OPERATING AND GENERAL EXPENSES:
Operating Operating and General expenses expenses amounted amounted to Rs.153.01 Rs.153.01 crores, crores, increasing increasing by over the previous year. As a percentage of Total Income, the Operating and General expenses for the year were increased 6% as compared c ompared to 5.2% in the previous year.
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NET PROFIT
Net profit for the year was Rs.534.08 crores as compared to Rs.413.81 crores in the previous year, representing an increase of 169.48%. Excluding an amount of Rs.27.32 crores being the profit on the sale of shares (net of tax thereon), the Net Profit was Rs.413.81 crores, an increase of 131.32% over the previous year. Profit before Tax for the year stood at Rs.775.86 crores, a rise of 161.31% over the previous year.
RATIOANALISYS: NET PROFIT RATIO: Indicates the overall profitability of the company.
Net profit Net profit ratio = ------------------------- X 100 Sales
YEAR/PARTICULARS 2008 NET PROFIT 534.08 SALES 4,328.65 RATIO 1 2 .3 3
2007 413.81 3500.96 11.81
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2006 315.10 2 819 .16 11.17
This ratio indicates the overall profitability of the company; Nestle-India is maintaining an increasing profitability ratio from year to year. As sales are increasing , net profit of the company is also increasing on path, hence it shows the growth of the company is satisfactory.
OPERATING PROFIT RATIO:
Operating profit Operating profit profit ratio ratio = ------------------------------------------- X 100 Sales Operating profit = gross profit – (employee remuneration and benefit + operating and general expenses + depreciation) YEAR/PARTICULARS OOPERATING PROFIT SALES RATIO
2008 839.98 4,328.65 1 9 .4 0
2007 684.15 3500.96 19.54
ratio
19.6
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2006 532.31 2 819 .16 18.84
Operati Operating ng profit profit ratio has a stable stable growth growth from from past past three years. years. This increase in operating profit is attributed attributed to increase in sales. sales. The ratio indicated that despite despite increase in sales value the operating operating expenses like office office and selling have been contained contained effect effect on operating profit.
CURRENT RATIO: This ratio indicates the ability to repay short term commitments promptly. Current asset Current ratio = ----------------------------------------Current liability
YEAR/PARTICULARS CUREENT ASSETS CURRENT LIABILITIES RATIO
2008 836.86 1 2 5 9 .7 6 .6 6
2007 678.70 1027.30 .6 6
2006 583.45 836.10 .6 9
0 .6 9 5
Ideal current ratio is 2:1, the ratio of the company for the previous 2 years and current year is also less than ideal, but when we see that, the reason for increase in current liabilities are because of increased provisions. Total current liabilities without provisions are less than the total current assets. So, the company has sufficient liquid assets, there is no threat of temporary insolvency. However in this rapidly changing world of finance, with E-Banking system, they are providing protection against the risk of technical solvency without sacrificing the opportunities of earnings of substantial returns from multiple investment avenues.
RETURN ON NETWORTH:
Net profit Return on equity = ----------------------------------------*100 -*100 Shareholders equity
O I T
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The return on net worth captures the return being earned by investors who have borne risk of business. It indicates the return which the shareholders are earning on their resources invested in the business. Net worth = Equity share capital + Preferential share capital+ Reserves and surplus Net profit = Earnings after tax
YEAR/PARTICULARS Net profit Net worth RATIO
2008 534.08 473.35 112.82
2007 413.81 418.43 9 8 .8
2006 315.10 388.89 8 1 .02
120
The company has an increasing return on net worth ratio, there is an incline in RONW during three years, this indicates that company is making best use of assets(NW) to increase the profits this ratio indicates value addition ,because market price of share is dependent on earnings per share and price earning principle.
ASSETS TURNOVER RATIO:
Cost of goods sold Asset turnover ratio = -------------------------------------------Total assets
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YEAR/PARTICULARS CGS TOTAL ASSETS RATIO
2008 3 606 .86 836.86 4.30
2007 2944.14 678.70 3 .33
2006 2397.39 583.45 4.10
Cost of goods sold = sales-gross profit profit (or) opening stock+ stock+ purchases + manufacturing – closing stock.
5
Assets turnover ratio helps in identifying, how the available assets are managed to yield better results. There is a little bit increase in this ratio from past three years, this indicates that the potential of the total assets are not fully exploited to improve this ratio, subject to other constraints if any. RETURN ON INVESTMENT: This ratio reveals the earning capacity of the firm’s capital employed in the business. YEAR/PARTICULARS NP+INTREST CAPITAL EMPLOYED RATIO
2008 535.72 474.17 112.98
2007 414.66 418.43 99.09
2006 315.54 388.89 8 1 .1 3
CAPITAI CAPITAI EMPLOYE EMPLOYED D = Equity Equity share share capital capital + pref.S pref.Shar haree capita capitall + Reserv Reserves es and surplus + debentures and long term loans – accumulated losses – non trade investments.
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ROI
120 100 80 60
RATIO
40 20 0 1
2
3
4
Higher and increasing ROCE indicates the management efficiency of the firm , this is bec becau ause se of the the stra strate tegi gies es deve develo lope ped d by the the comp compan any y to gene genera rate te retu return rn for for its its shareholders. strategies developed to increase ROI might be, Increasing volume of sales, (or) Reducing the cost of production.
DEBTORS TURNOVER RATIO;
Average a/c receivable Debtors turnover ratio = -------------------------------------------------------------------- X 365 days Net sales Sundry debtor opening + sundry debtor deb tor closing Average a/c receivable = -----------------------------------------------------------------------------------------------2 YEAR/PARTICULARS RATIO
2008 77.05 days
2007 87.32 days
100
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2006 65.35 days
Ther is an increase in debtors turnover ratio in 2008 when compared to 2006, it might be that the company has extended their credit period to customers /dealers to increase sales, the percentage increase in sales in 2008 supports this view. INVENTORY TURN OVER RATIO:
Average inventory Inventory turnover ratio = --------------------------------------------------- X 12 months Cost of goods sold Opening inventory + closing inventory Average inventory = ---------------------------------------------------------------------------------------------------2
YEAR/PARTICULARS CGS AVERAGE STOCK RATIO
2008 3 606 .86 418.06 10.34
2007 2944.14 338.72 8 .6 9
2006 2397.39 264.66 9.05
ratio
10.5 10 9.5 9
ratio
8.5 8 7.5 1
2
3
4
The stock turnover ratio indicates, the extent of stock requirements to be held in order to achieve a desired level of sales. In order to meetthe growing cost of goods sold the management should keep sufficient stock to avoid a stock out situation. The higher inve invent ntor ory y turn turnov over er rati ratio o indi indica cate tess the the good good manag managem ement ent poli policy cy in holdi holding ng thei their r requirements of stock , organizations always strive to have higher turnover ratio ,as it gives gives more more profit profitss becaus becausee invent inventory ory holdin holding g costs costs are reduce reduced d and profit profitss can be increased. Ideal ratio for food industry is 8, the company having more than ideal ratio indicates that the stocks are fast moving and get converted into sales and it is increasing year by year.
SWOT ANALYSIS OF NESTLE-INDIA LIMITED
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STRENGTHS:
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High quality and safe food products at affordable prices, endorsed by the Nestle Seal of Guarantee.
•
Access to Nestle's Proprietary technology brands and expertise
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Strong & well differentiated brands with leading market shares
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Ongoing product innovation and renovation to convert consumer insights
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Distribution structure that allows wide reach and coverage in the target markets
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Well diversified product portfolio.
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Efficient supply chain.
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Capable and committed human resources.
WEAKNESS:
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Ability to pass through cost increases in price points SKU
OPPORTUNITIES:
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Potential for growth through increased penetration.
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Growing trend for “Out of Home” consumption.
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Potential for expansion in the smaller towns and other geographies
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Development of modern retail formats
THREATS:
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Competitive environment with diverse players
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•
Rising prices of commodities, and raw materials
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