Slide -1 NESTLE INDIA LTD.

P P r r o o j j e e c c t t R R e e p p o o r r t t O O n n
Slide -2 NESTLE INDIA LTD.
Slide -3 NESTLE INDIA LTD.
Slide -4 NESTLE INDIA LTD. TABLE OF CONTENTS ? SYNOPSIS 1 ? INTRODUCTION 5 ? METHODOLOGY
103 ? FINDINGS 106 ? LIMITATION 143 ? CONCLUSION 153 ? APPENDICS 173 ? BIBLIOGRAPHY 177
Slide -5 NESTLE INDIA LTD. SYNOPSIS his report presents on in-depth analysis of marketing and Advertising and
public Relations of Nestle India Ltd.-one of the well known and esteemed organisations in the FMCG Sector in the
country. Nestle India Ltd. is a company which is multinational company and has its operations in many countries in
the world. Carlos Donati is the CEO & Managing Director of the N.I.L who is from suitzerland. It is one of the big
Companies in the FMCG Sector. The Nestle India Ltd. deals in chocolates, Milk products, Maggi, Soup, Sauce,
Cofee, Tea, Milkmaid and Mineral water etc. the Nestle I. Ltd. is working in India for the last 40 years. Nestle I. Ltd
has 51% holding in Nestle. The Company has 6 factories and 6 sales T
Slide -6 NESTLE INDIA LTD. Branches. The company is emphasizing on building new products to its customers &
satisfying them. The reports begin with Introduction, which deals with the objective of the product, Introduction to
marketing and Advertising and Public Relations. The Introduction to marketing comprises of the definition of
marketing, Marketing before and now, the marketing system, the emergence of marketing as a discipline, marketing
management and marketing Philosphies. It points out that the rules of the Past are no longer applicable in marketing
through the strategic Paradigm of marketing and the Views of Philip Kotler. The Introduction to Advertising and PR
comprises of the definition of advertising, the Need of Advertising, its Benefits, its role, its limitation, the future of
advertising in India. It also deals with the definition of Public Relations, the Need for PK, its limits, its scope & its
future in India.
Slide -7 NESTLE INDIA LTD. The company profile in which Nestle India Limited operates also form Part of the
Introduction. This section of the Report, provides an insight into the Nestle India Limited, its statistical profile, its
salient features, its products, Target Customer and its market size and growth. This Sector of the report also
discusses also deals with the competitors of the N.T.L in the FMCG sector in India. This is followed by the History of
N.T.L., Board of Directors, its Subdivision, network, its foreign collabrations, and the social welfare activities
undertaken by it. This is followed by the profile of the Carlos Donati, its areas of operations, finanancial performance
and future plans. The Introduction is followed by a detailed description of the methodology used to conduct the
research and getting
Slide -8 NESTLE INDIA LTD. the information required for the project in which the primary and secondary of data have
been specified. The methodology is followed by findings which entails an in depth analysis of marketing and
Advertising and public Relations of N.I.L. This section also discusses the 4p?s of marketing, Marketing Strategy of
N.I.L., Market Segmentation. This section also includes the Advertising strategy of N.I.L., and different
advertisements that has helped company in its growth. The is followed by the limitations, condusions and
Recommendations respectively. Bibliography and Appendics form the last two section of the report.
Slide -9 NESTLE INDIA LTD. Nestle India Ltd., is a part of the Nestle SA group, which is one of the largest
manufacturing companies in the world. The company (with its headquarters in Vevey, Switzerland) was founded by
Henri Nestle in 1867. Nestle has two major divisions-Le Societe des Produits which looks after the production and
marketing and Nesstec Ltd. which provides the technical assistance to the group companies. Since its inception in
1867, the company has diversified it product range from the infant weaning formula (which was its first product) to
beverages, confectionery, ice creams and pet foods among others. In a span of 130 years the company has ranked
26 th among the world's largest corporations and boasts of a turnover of $48932.5 million and an employee strength
of 221,144 people spread over 75 countries worldwide (Annexure A). Nestle has long been viewed as one of the most
multinational of the multinationals. This is because today only 2% of its turnover comes from Switzerland. Out of the
remaining 98%, Europe contributes 43.5%, North and South America contribute 36.5% and 18% is contributed by
Africa and Asia Pacific Regions.
Slide -10 NESTLE INDIA LTD. OVERVIEW Although Nestle has been associated with India since the beginning of the
century through the importing and trading of infant food and condensed milk, manufacturing in India only began with
the setting up of the factory in Moga in 1962. The first product to be manufactured was Milkmaid. In the last 35 years
the company has shown rapid progress and has increased its product range to 80 products as of October 1997.
Nestle India Ltd. now rank 22 nd amongst India's most valuable companies (Annexure B). Its gross revenue has
increased from Rs. 1001.1 crores to Rs. 1213.8 crores in 1996. This remarkable growth has been achieved
through: ? Rapidly creating greater manufacturing capacity, both at factories as well as with copackers. ? Taking
measures to ensure availability and improved quality of key raw materials-fresh milk in particular. ? Strengthening of

the sales and distribution network (particularly in smaller towns). ? Ambitious and cohesive manpower training and
development programs for the personnel of the company across all disciplines. The company's exports also resulted
in a very successful year in this area as exports grew by 27% to Rs. 250.8 crores in 1996. The main contributors to
this increase were the
Slide -11 NESTLE INDIA LTD. export of tea and coffee to USA, Japan, Russia, Hungary and Taiwan. Nestle India Ltd.
wants to further increase its operations in India and has started construction of its sixth Factory at Bicholim, Goa for
the manufacture of culinary products (a key thrust area) for this purpose. INTRODUCTION TO MARKETING 1. Much
of marketing concerned with the problem of profitably disposing off that is produced. 2. Marketing is a Phenomen
brought about by the pressure of mass production and increased spending Power. 3. Marketing is the performance of
business activities that direct the flow of goods and services from the producer to the consumer. Marketing was quite
simple subject in 1967, Consumer marketing largely operated on mass marketing principles, and business marketing
primarily concerned itself with how to build the best sales force. All the time marketers has faced a number of tough
decisions. The marketers had to determine product features and quality, establishing accompanying sources, set the
price, determine the distribution channels, decide how much to spend on marketing, & decide how to divide these
resources among advertising, sales force & other promotional tools.
Slide -12 NESTLE INDIA LTD. Today, the time has changed from the previous years. Today, the market place is
enormously more complex. Domestic markets, at on time safe from foreign invaders, are now the happy hunting
grounds of giant global coorporations as well as global Niche specialists. New products are launched at an
astonishing placed & are available worldwide in a short time. Communications media are proliferating. New
Distribution Channels and formats keep apparition. Competitors are every there & hungry. The whole marketing
system moves like this. In this diagram I will trying to show how marketing system moves between the seller & buyer.
In this Diagram there are buyers and sellers who transact over a particular product or particular class. These buyers
and sellers are connected by four flows. The seller send goods & services and communication to the marketing, in
return they receive money and Infrastructure. Evolution of marketing as a business discipline The evolution of
marketing as a business discipline provides an insight into it emergence as one of the most important functions of
management in any business. The evolution of marketing as a business discipline comprises of following stages :- a.
The stage of barter b. The stage of money economy
Slide -13 NESTLE INDIA LTD. c.The stage of industrial evolution d.The stage of competition e.The emergence of
marketing Marketing Management We will discuss the what exactly the marketing is in the language of ?Philip
Kotler?. ?Marketing is a Social and Managerial process by which individuals & groups obtain what they need & want
through creating, offering and exchanging products of value with others?. According to Philip Kotler, ?A human
activity directed at satisfying needs & wants through exchange process?. Basically there are different concepts of
marketing which are very important for marketing. These concepts are need, wants and Demand. The starting point
in the discipline of marketing is to identify the needs of consumer. Every person has some need. These needs are not
created by marketers or society, they exist in the very texture of human biology and human conditions. Wants are the
desires for specific satisfaction of these deeper needs people needs are few but there wants are many.
Slide -14 NESTLE INDIA LTD. Demands are wants for specific products that are backed up by the ability &
willingness to buy them. In marketing we pass through three stages. 1. Entrepreneurial marketing The entrepreneurial
marketing is first stage of marketing started by the entrepreneur who start his business by Direct selling of goods &
Public relations. He starts his business from the first stage of business & starts his business individually. In this stage
the company did not advertise because he cannot afford to spend money on advertising because he is in the first
stage of marketing. 2. Formulated marketing When a company achieves success in business, the company is in a
stage of formulated marketing i.e. the second stage of marketing. In this stage the company can afford advertising
Budget because the company has achieved success. Now the company is adopting some of the tools used in
professionally run marketing companies. 3. Entrepreneurial Marketing This is the third stage of marketing when
companies have to maintain success throughout there life of
Slide -15 NESTLE INDIA LTD. business. This is the last stage of marketing where company has a success or it can
fail. The companies main aim in this stage is that there brand & product managers need to get out of the office & start
living with their Customers & Visualize new ways to add value to their customer lives. MARKETING PHILOSPHIES
We Will be discussing about the five important marketing concepts used in marketing: 1. PRODUCTION CONCEPT
The production concept is one of the oldest concept guiding sellers. It holds that consumers will favour those
products that are widen available & low in cost. Managers of production oriented organisations concentrate on
achieving high production efficiency and wide distribution coverage. 2. The product concept This hold that consumers
will favour those products that offer the most quality or performance. Managers in these product oriented

organisations focus their energy on making good products & improving there over time. 3. The selling concept
Slide -16 NESTLE INDIA LTD. The selling concepts holds that consumers if left alone will ordinarily not buy enough of
the origin?s products. The organisation must therefore undertake an aggressive selling & promotion effort. 4. The
marketing concept The marketing concept holds that the key to achieving organisational goals consists in determining
the needs & wants of Target markets & delivering the desired satisfaction more efficiently and effectively then the
competitors. 5. The societal marketing concept The societal marketing Concept holds that the organisation task is to
determine the needs, wants & interest of target markets & to deliver the satisfactions more effectively & efficiently
then the competitors in a way that preseures or enchances the consumers & society?s well being.
Slide -17 NESTLE INDIA LTD. I IN NT TR RO OD DU UC CT TI IO ON N T TO O A AD DV VE ER RT TI IS SI IN NG
G ?Doing business without advertising is like working at a girl in the dark; you know what you are doing but no body
else does.? Advertising is Multi-dimensional. It is a form of mass Communication, a powerful marketing tool, a
component of the economic system, a means of financing the mass media a Social institution, an ART FORM, AN
INSTRUMENT OF Business management, a field of employment & a profession. Advertising today is very necessary.
Today we are exposed to large number of commercial messages that at any time in the past. Newspapers &
magazines are full of advertisements, today, from not only the quantity increased even the quality of advertising has
improved considerably. The means of advertising such as the radio, television, the cinema & BillBoards etc., have
also amply contributed to the growth of this industry. Advertising which has become a marketing force helping mass
selling & distribution. Now, I will be discussing the definition of advertising the simplest definition of advertising is
the ?Public announcement?. According to American Management Association, ?Advertising as any paid form of non
personal presentation of ideas Goods & Services by an identified Sponsor?.
Slide -18 NESTLE INDIA LTD. Advertising as a tool of Communication Advertising is as old as man. There is
Semblance of advertising in the many activities of a human being especially those activities, which influence other
either favourably or otherwise. A baby crying for its feed want to communicate to persuade, to influence & to lead to
some action. All this has been a part of human life almost from the time it took shape. Advertising is the most visible
marketing tool, which seeks to transmit an effective message from the marketer to a group of individuals. Though
marketers use advertising, basically it is a communication process. Benefits of advertising 1. Advertising establishes
a link between the manufacturer and the consumer. It is a form of mass communication. Through advertising, the
advertiser reaches a Vast Number of Consumers and makes his Product known to them. 2. Advertising keeps the
consumers well-informed about the products & Services-styles, features, sizes, colours, specifications, price etc. 3.
Advertising expands markets, builds up volume, gives a market share & profitability, and reduces prices.
Slide -19 NESTLE INDIA LTD. 4. Advertising guides the consumers in his product choice. It gives the information
about the product, the benefits it offers. 5. Advertising contributes to consumer welfare. It helps consumers in a
variety of ways. It tells what to buy, how to buy & why to buy.
Slide -20 NESTLE INDIA LTD. I IN NT TR RO OD DU UC CT TI IO ON N T TO O P PU UB BL LI IC C R RE EL LA AT
TI IO ON N The ultimate aim of Public Relation is to develop a favourable image in the eyes of public. It refers to a
company?s communication & relationships with various sections of the public-customers, suppliers, share-holders,
employees, governments, media, society at large. According to the Institute of Public Relation, London defines Public
Relation as? the deliberate, Planned & sustained effort to establish & maintain understanding between an
organisation & its public. Public Relation is low cost compared to advertising for the publicity obtained, say in the
press, through public relations is not directly paid for. Indirectly, the expenses involves keeping in close close touch
with people in the media through press conferences, press visits & press releases. There are four element to the
mechanics of Public Relation: 1. The message to be transmitted. 2. An independent third party endorser to transmit
the message. 3. A target audience that it is hoped will be motivated to buy whatever is being sold, and
Slide -21 NESTLE INDIA LTD. 4. A medium through which message is transmitted.
Slide -22 NESTLE INDIA LTD. THE SPIRIT OF NESTLE "Organizational excellence is never achieved through a one
time efforts; It is always a process of continuous improvement across a number of areas of operation." A key factor for
Nestle's success has been its quest for continuous improvement through ushering in greater productivity and more
efficiency in everyday operations Despite the infrastructure impediments in India, Nestle has set itself high standards
of business performance. This is reflected through the essence of the company-its mission statement. Nestle's
mission "To be in every way the leading company in the Indian food industry and a good corporate citizen by
providing our consumers with superior quality products, our shareholders with rapid growth and fair returns and our
employees with a challenging and satisfying work environment." To translate this spirit into a planned and measurable
process, Nestle has set up key objectives across all divisions.
Slide -23 NESTLE INDIA LTD. KEY OBJECTIVES Production ? To optimize production costs while enhancing product

quality so as to make Nestle products even more competitive in the market place. Sales and Marketing ? To reach a
sales turnover of 3000 crores by the year 2000. ? To double the turnover every years. People ? To help employees to
retain a long-term perspective and integrate them fully with the company's business goals. ? To retain a broad
perspective while addressing individual needs ? To view growth as a continuous process. ? To concentrate on
attitudinal changes by developing leadership skills, an appreciation of interdependence between units and the
enhancement of a sense of belonging to Nestle.
Slide -24 NESTLE INDIA LTD. Finance ? To maintain profit levels above the average for the food industry in India.
Slide -25 NESTLE INDIA LTD. KEY FACT This section offers a quick and simple overview of NESTLE, making it an
excellent place to begin learning more about the World?s Largest Food Company. Here introduction is given with
some key facts and figures, including 2001 Financial Information, Company Profile, Historical Development and Main
Brand. Financial Information In millions of CHF 2001 Sales 81 422 EBITDA (a) 12 516 as % of sales 15.4% EBITA (b)
9600 as % of sales 11.8% Trading Profit 9 186 as % of sales 11.3% Net Profit 5 763
Slide -26 NESTLE INDIA LTD. as % of sales 7.1% Capital expenditure 3305 Equity 29 904 Total Assets 65 524
Research and development costs 1 038 Market Capitalization, end December 146 864 (a) Mainly Pharmaceutical
products and Water, managed on a worldwide basis. (b) Mainly corporate expenses, research and development
costs, amortisation of goodwill
Slide -27 NESTLE INDIA LTD. SALES ANALYSIS By Geographic Area In Million of CHF 2001 (%) Europe 25/706
36.7 North and South America 22/262 31.8 Africa, Asia and Oceania 13/493 19.3 Other Activities 8/537 12.2 69/998
BY MAIN PRODUCT GROUP Europe 36.7% North and South America 31.8% Africa, Asia and Oceania 19.3% Other
Activities 12.2%
Slide -28 NESTLE INDIA LTD. In Million of CHF 2001(%) Beverages 19/142 27.4 Milk Products, Nutrition and Ice
Cream 334 27.6 Prepared Dishes and Cooking Aids 17/660 25.2 Chocolate and Confectionery 10/663 15.2
Pharmaceuticals 3/1999 4.6 Beverages 27.4% Milk Products, Nutrition and Ice Cream 27.6% Prepared Dishes and
Cooking Aids 25.2% Chocolate and Cofectionary 15.2% Pharmaceutica ls 4.6%
Slide -29 NESTLE INDIA LTD. Breakdown of 2001 Trading Expenses (in %) Percentage Raw Materials 26.2
Packaging 8.8 Salaries and Welfare Expenses 16.6 Depreciation 4.1 Other Trading Expenses 34.5 Total Trading
Expenses 90.2 Trading Profit 9.8 Go to Financial Guide for additional facts and figures. Company Profile Raw
Materials 13.8% Packaging 4.6% Salaries and Welfare Expenses 8.7% Other Trading Expenses 18.1% Total Trading
Expenses 47.4% Trading Profit 5.2% Depreciation 2.2%
Slide -30 NESTLE INDIA LTD. ? Chairman of the Board: Helmut O. Maucher ? Chief Executive Officer: Peter
Brabeck-Letmathe ? World?s leading food company ? Switzerland?s largest industrial company ? Worldwide
operations ? 495 factories ? Group?s total work force: 225, 808 people. Historical Development 1866 Company?s
foundation 1905 Merger between Nestle and Anglo-Swiss Condensed Milk Company 1929 Merger with Peter-CaillerKohler Chocolates Suisses. S. A. 1947 Merger with Alimentana S.A. (Maggi) 1971 Merger with Ursina-Franck
(Switzerland) 1985 Acquisition of Carnation (USA) 1988 Acquisition of Buitoni-Perugina (Italy)
Slide -31 NESTLE INDIA LTD. 1988 Acquisition of Rowntree (GB) 1992 Acquisition of Perrier (France) 1998
Acquisition of Spillers (GB) 1999 Divestiture of Findus brand and parts of Nestl's frozen food business in Europe.
Divestiture of Hills Bros, MJB and Chase & Sanborn roast and ground coffee brands (USA). 2000 Acquisition of
PowerBar. Factories Nestle has 6 factories in India. These are 1. Moga (punjab) The Nestle factory in Moga has the
pride of being the first and most comprehensive factory of Nestle India. Set up in 1962, it represents the core
competence of Nestle India in the manufacture of milk products (Everyday, Milkmaid), beverages, culinary products
(Maggi sauces, noodles, soups etc.), weaning cereals (Cerelac) and infant milk formulae. 2. Choladi ( Tamil Nadu)
The factory in Choladi started production in 1967. Situated about 60 miles from Calicut, the factory today has 81
employees and produces 1.5% of the total turnover of Nestle
Slide -32 NESTLE INDIA LTD. India. It is a 100 percent export oriented unit which processes freshly picked tea
leaves into soluble instant tea. 3. Nanjagud (Karnataka) Production in this factory began in 1989 with the manufacture
of Nestle instant coffee and Sunrise. Today in addition to instant coffee the factory also manufactures health
beverages. The plant to manufacture MILO was also commissioned at this factory. This factory employs 145 people
and is cited as a model in terms of environment protection for its installations to purify waste water as well as for its
provisions for recycling coffee wastes. 4.Samalakha (Haryana) This factory was set up in 1993. Located 70
kilometres from Delhi , it manufactures weaning cereals , culinary products ,health beverages and milk products.
Recently the expansion of manufacturing capacity for Milkmaid Dessert Mixes was undertaken at this factory as this
new and unique product category is viewed to have great potential in the future. 5.Ponda (Goa) This Kit-Kat factory
was set up in Goa in 1995 at a cost of Rs. 50 crores. It represented a major step by Nestle towards becoming the

Number 1 Chocolates and Confectionery Company in India.

Slide -33 NESTLE INDIA LTD. 6.Bicholim (Goa) The construction work at this new factory is progressing with speed.
This factory will soon commence the manufacture of culinary products, which is a key thrust area for the company
and will include latest technological improvements relating to this category of products. As a part of Nestles efforts
towards continuous improvement and excellence in Manufacturing operation, a Moga Improvement team (MIT) was
put in place at the Moga factory. The team comprised of international experts from Nestle Technical Services
(NESTEC) and the local staff. In 1996, it embarked on a program with the single minded objective of optimizing
production costs while enhancing the product quality so as to make Nestle products even more competitive in the
market place. Drawing upon Nestle?s global experience and manufacturing expertise in 75 countries the team
identified the following areas for detailed study - ? Process improvement to ensure the optimal usage of resources ?
Improvement of operational efficiency ? Cost optimization A series of small but critically important initiatives ranging
from redesigning laboratories to palletisation of raw materials and packaging material utilization, manufacturing and
filling
Slide -34 NESTLE INDIA LTD. loses and labour man hours resulting in substantial savings and improved productivity
and machine utilization. In addition, several non tangible benefits in the form of systems for sustainable improvement
in areas like factory maintenance planning tools , down time recording systems and performance measurement tools
were also realized . This project was highly successful and the company is now implementing its key learning?s of
MIT in its other factories. In a country as vast and diverse as India, supply chain management is absolutely critical to
rapid growth. Through BECA, Nestle has concentrated heavily on streamlining and improving their supply chain
management in order to make it more dependable, more cost effective and most importantly, more responsive to
market needs. For better supply chain integration the planning of key operations - purchase, production, distribution
and sales are synchronised to ensure that everybody works towards a common business plan. Monthly objectives are
broken down into weekly and (wherever necessary) into daily plans and monitored regularly to ensure smooth
implementation and quick corrective action when needed . Major benefits accrued thus far include reduction in
working capital through lower inventories of finished goods and materials, better stock availability and reduction in
obsolescence of materials. In addition to traditional performance indicators, quantifiable performance measures have
been identified and implemented in all functional areas such as sales planning, production
Slide -35 NESTLE INDIA LTD. output, quality assurance, material ordering transportation and warehouse
management. These measures are monitored regularly to gauge the extent of improvement and identify root
problems for taking corrective actions. Teams have been put in place at all factories and sales offices to ensure the
implementation is continuous and self- sustaining. Areas of improvement are regularly identified and timebound
action plans established. For this purpose, standard tools such a Total Quality Management(TQM), Kaizen, 5S and
Small Group improvement activity (SGIA) are being extensively used. The efficacy of this hierarchical structure is
seen in Nestle?s performance over past few years of various products. By 1989 the company had achieved a sales
figure of approximately Rs. 258 crores. 1989 was the year of launches. Seven new product lines were launched in
this year. This was also the year in which the Nanjagud factory was set up. By the year 1992, this sales figure was
touching Rs 500 crores. In the 1990?s the pace of launches quickened and since the construction of the factory at
Samalakha, 20 new products have been introduced. By 1996, Nestle had about 76 different products in its portfolio
with various new products in the pipeline as well. The sales figure now touched Rs. 1214 crores. Thus sales grew by
450% over a period of one and a half decades.
Slide -36 NESTLE INDIA LTD. Nestle?s Product Range is detailed below - Product Year of inception Milkmaid 1962
Nescafe 1964 Lactogen 1968 Ricori 1972 Cerelac 1974 Maggi Cubes 1974 Nestum 1978 Nespray 1982 Lactogen 1
1982 Sunrise 1983 Maggi Noodles 1983 Maggi Sauces 1985 Everyday 1986 Cerelac (wheat-apple, orange) 1987
Maggi Sauces(Chilli Garlic Masala Chilli) 1987 Everyday Ghee 1989 Maggi soups( tomato,chicken) 1989
Slide -37 NESTLE INDIA LTD. Taster choice(leaf tea) 1989 Sunrise extra(originally Ricory) 1989 Nestogen 2 1989
Sunrise Premium 1989 Cerelac(Wheat-vegetable) 1989 Chocolates(Nestle Milky bar, crunch) 1990 Nestle eclairs
1991 Bar- one 1991 Maggi Soups( mixed vegetables, chicken noodles) 1991 Nestogen 1 1991 Everyday gold
(originally nespray) 1992 Maggi Super seasoning (originally Maggi cubes) 1993 Nestle Bonus 1993 POLO 1993
Nestle Bar one (roasted peanuts) 1993 Tasters choice (dust tea) 1993 Contadina Snack Dressing 1993 Cerelac
(wheat-soya) 1994
Slide -38 NESTLE INDIA LTD. Milkmaid Dessert Mixes (custard powder, gulab jamun , Kesar Kulfi, Shahi Rabri) 1994
Maggi Tonite?s special (Gravy sauces) 1994 Nescafe Premix 1994 Everyday premix 1994 Nestle Bonus(chocolate)
1995 Kit -Kat 1995 Toffo 1995 POLO (Paan) 1995 Nestle MILO 1996 Milkmaid Dessert mixes (Kalakand) 1996 Maggi
Pickles( lime ,mango , mixed , mango punjabi, lime sweet. 1996 Maggi Dosa Mixes (masala, plain, sambhar) 1996

Maggi Soups (Chicken Sweet Corn, Hot and Sour, Rasam) 1996 POLO (Spearmint) 1996 Cerelac - Rice 1996
Taster?s Choice - Tea Bags 1996
Slide -39 NESTLE INDIA LTD. Tea mate - Dairy Whitener 1996 Splash - Candy 1996 Maggi Macaroni 1996
Mithaimagic 1996
Slide -40 NESTLE INDIA LTD. TODAY NESTLE IS PRESENT IN DIFFERENT MARKETS WITH THE FOLLOWING
MAIN BRANDS Soluble coffee Nescafe, Taster's Choice, Ricore, Ricoffy. Roast and Ground Coffee Hills Bros., MJB,
Bonka, Zoegas, Loumidis Mineral Water Perrier, Contrex, Vittel, Valvert, Quezac, Arrowhead, Poland Spring, Buxton,
Vera, Blaue Quellen, Calistoga, Santa Maria, San Pellegrino. Other beverages Nesquik, Nescau, Nestea, Milo,
Carnation, Libby's Caro.
Slide -41 NESTLE INDIA LTD. Dairy Product Nido, Nespray, Carnation, Milkmaid/ La Lechera, Gloria, Neslac,
Barenmarke. Breakfast Cereals Nestle Coffee Creamers Coffee-mate Infant Foods and Dietetic Products Nestle,
Nan, Lactogen, Cerelac, Nestum, Guigoz Culinary Products (Bouillons, soups, seasonings, prepared dishes, canned
food, pasta, sauces) Maggi, Crosse and Blackwell, Libby's, Thomy, Builtoni, Contadina Frozen Foods Findus,
Stouffer's Buitoni, Maggi Ice Cream
Slide -42 NESTLE INDIA LTD. Nestle, Frisco, Dairy Farm, Magnolia, Motta, Camy , ect. Refrigerated Products
(yogurts, desserts, pasta sauces) Nestle, Locatelli, Vismara, Buitoni, Contadina Chocolate and Confectionery Nestle,
Crunch, Cailler, Frigor, Chokito, Sarotti, Galak/Milkybar, Yes, Kit Kat, Quality Street, Smarties, Baci, After Eight, Baby
Ruth, Butterfinger, Lion, Nuts, Rolo, Aero, Polo, etc.
Slide -43 NESTLE INDIA LTD. Food Services and Professional Products Chef, Davigel, Santa Rica Pet Care Friskies,
Fancy Feast, Aplo, Mighty Dog, Gourmet. Specialized products for the food industry Food Ingredients Specialties
(FIS) Ophthalmological products Alcon Cosmetics L'Oreal
Slide -44 NESTLE INDIA LTD. NEW PRODUCT LAUNCHES To put all the product launches into perspective, Nestle
now has 80 products including various flavors and variants this awesome list of 80 products for most companies is an
overfull palate. Nestle India Ltd. still has a variety of new products in the pipelines. It believes in slowly colonizing as
much territory as fast as it can, adapting to native conditions and then work at 'Holding off the advancing herds'.
Nestle products can be broadly classified into 5 main ranges: ? Milk Product ? Chocolate and Confectionery ?
Beverages ? Culinary ? Food Service. Milk Products This category which comprises of condensed milk, baby milk
foods, milk powders, acidified infant food, and other milk products, showed a slump in 1996 as sales of milk products
fell from Rs. 31.4 crores in 1995 to Rs. 31.2 crores in the said year. Consumer off take remained depressed
throughout this year as a consequence of high price increases
Slide -45 NESTLE INDIA LTD. necessitated by substantial increases (+ 50%) in the cost of basic raw materials (fresh
milk), over the past two year. However Nestle retained its leadership in the infant food market with Cerelac Lactogen
and Nestum and even introduced a new flavor of Cerelac-Cerelac Rice in 1996.
Slide -46 NESTLE INDIA LTD. Chocolates and Confectionery Nestle pursues the objective of accounting for one in
every three rupees in its sales figures through chocolates and confectionery. This has thus been one of the thrust
areas in Nestle. Nestle this year widened its range of flavors in POLO, backed by its tremendous success in the
Indian Market by adding POLO Spearmint to its Portfolio. This new flavor has also received an encouraging response
in the market according to market analysts. Milkybar also retained its position as the number one white chocolate
brand in India, however it did not record a significant increase in sales, as a majority of Indian tastes still do not
accept this flavor. This year however, was a year of tremendous success for Kit Kat. This internationally renowned
brand gained a large increase in the Market share in the past year and Nestle officials are hopeful that this will further
increase in the coming years. However this brand along with its success has brought with it its share of Controversy
as the Union of India has launched a Litigation against the Kit Kat family pack. In 1997 Nestle added to its range of
confectionery by introducing SPLASH, "A soft hearted, hard boiled sweet" this is being promoted as a sweet unique
to India and is positioned to a target audience in the age group of 4 to 12 years and "anyone with a soft heart" is a
potential customer. Priced at Rs. 1 for a 7.5-gram candy Splash has been
Slide -47 NESTLE INDIA LTD. introduced selectively in the South and has been speculated to repeat Polo's
performance. Nestle's officials claim that this candy has the potential to grab a quarter of the 700 crores confectionery
market. The most recent of Nestle affairs with the confectionery market has been the introduction of Mithai Magic,
which is "a little Mithai, a little magic." This new product was launched in September 1997, in time for the Diwali
purchases of sweets. This brand has been positioned somewhere between chocolates and traditional sweets and the
company is employing a push strategy to promote this brand. The latest launch of Nestle in the Chocolate and
confectionery division is Charge. Beverages This year has been very successful in the beverages market for Nestle.
The sales of beverage have increased from Rs. 323.3 crores in 1995 to Rs. 398.8 crores in 1996. Nestles Flagship

Nescafe, which was pegged at Rupees 1040 per kilogram before the launch of Tata Cafe, met with stiff competition
from Tata Cafe priced at Rupees 550 per Kg., once it was introduced. Tata cafe claimed to have garnered a market
share of 17% by December 1996. This forced Nestle to cut prices of Nescafe to Rupees 840 per Kg. However
Nescafe still retains 83% market share in the Rs. 177 Crores market for pure instant coffee.
Slide -48 NESTLE INDIA LTD. Nestle Sunrise also showed an increase in sales and captured 20% of the Rs. 253
crores market in Mixed instant coffee. This year Nestle also launched MILO, an internationally renowned chocolate
energy drink, and the response for this has been encouraging. Nestle has introduced Tasters Choice tea bag pitched
against Taj Mahal Tea bags. Culinary Products The market in culinary products had witnessed a high growth
consequent to aggressive pricing decisions on existing products and the introduction of a variety of new products to
match the needs of the Indian Housewife. Encouraged by this success Nestle launched Maggi Macoroni Snack in
three flavors-Chicken, Masala and Tomato. Nestle official?s say that this would consolidate Maggis position as the
number 1 culinary brand in India. The product focuses on convenience and innovation as its Unique Selling
Proposition. This snack has opened a new segment for the maggi brands. The brand is positioned as Youthful and is
represented by the twists and curls of the macaronic snack. It is speculated to be introduced in a phase manner
nationwide to be place in the 7.5-lakh outlets that Maggi noodles sells in. In the spirit of catering to Indian tastes
Maggi introduced maggi pickles in five variants benchmarked to give the "ghar ka swad". Maggi Dosa Mix was also
introduced to offer
Slide -49 NESTLE INDIA LTD. superior quality and added convenience. Apart from this Milkmaid Kalakand Mix, a
traditional north Indian sweet of premium quality was added to the milkmaid dessert mixes. Maggi soup also launched
three new variants. Maggi Rassam in particular was noticeable as yet another attempt to make traditional Indian
cooking a little bit easier. Food Services Food service items basically deal with the out of home segments, which
would include vending machines. Nestle's food service business is poised for rapid expansion to meet the growing
need for such a reliable, time saving and cost effective service in this modern age. Nestle wants to sell 500 million
cups of tea and coffee through its vending machines in the year 2000. It currently has 3500 vending machines at
assorted locations (both public and private). In 1995 Nestle food service did well to vend 40 million cups of Nescafe
and Tasters Choice tea. Its 1996 sales were placed at 59 million cups of Nescafe and 36 million cups of tea; this
figure was however way below the expected sales for the year.
Slide -50 NESTLE INDIA LTD. In 2001 and 2002 nestle has come with a number of new products like it has come
with many of the diary products like milk. The milk is avaliable in the market in the full cream , toned and double toned
milk. The nestle has also come with the dahi, butter which is available in the market but at very few shops . NESTLE
has also come with the products which will target the children like FRUITIPS,MILKYBAR CHOO,NESTLE CHINESE
MAGGI NOODLES.
Slide -51 NESTLE INDIA LTD. NESTL CORPORATE BUSINESS PRINCIPLES Nestl is committed to the
following business principles in all countries, taking into account local legislation, cultural and religious practice: ?
Nestl's business objective and that of management and employees at all levels, is to manufacture and market the
company's products in such a way as to create value that can be sustained over the long term for consumers,
shareholders, employees, business partners and the large number of national economies in which Nestl
operates. ? Nestl does not favour short-term profit and at the expense of successful long term business
development, but recognises the need to generate profit each year in order to maintain the support of the financial
markets, and to finance investments. ? Nestl believes that, as a general rule, legislation is the most effective
safeguard of ethical conduct, although in certain areas, additional guidance to management and employees in the
form of voluntary business principles, is beneficial in order to ensure that the highest standards are met throughout
the organisation. ? Nestl is conscious of the fact that the success of a corporation is a reflection of the
professionalism, conduct and ethical values of its management and
Slide -52 NESTLE INDIA LTD. employees, therefore recruitment of the right people, and ongoing training and
development are crucial. ? Nestl recognises that consumers have a legitimate interest in the company behind the
Nestl brands, and the way in which the Nestl Company operates. Legislation and International
Recommendations Nestl: ? complies with the laws applicable in the countries in which it operates. ? ensures that
the highest standards of ethical conduct are met throughout the organisation, by complying in a responsible way with
the Business Principles, which guide company activities and relationships world-wide in each sector of business
interest. ? is aware that increasing globalisation is leading to the development of more and more international
recommendations. Although, as a general rule, these recommendations are addressed to governments, they
inevitably impact on business practices; Nestl has taken such recommendations as the ILO Basic Rights, and the
International Code of Marketing of Breast-milk Substitutes (WHO) into account in its policies.

Slide -53 NESTLE INDIA LTD. ? generally endorses commitments and recommendations for voluntary self regulation
issued by competent sectoral organisations, provided they have been developed in full consultation with the parties
concerned; these include the ICC Business Charter for Sustainable Development, and the OECD Guidelines for
Multinational Enterprises. Consumers ? Nestl 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 believes that
advertising and other communications play an important role in encouraging consumers to exercise their right to
informed choice. In order to fulfil this role in a responsible way, the Company makes a determined effort to ensure
that Nestl advertising: ? does not mislead as to the benefits derived from use of the product ? does not use
gratuitous violence, sex or profanity ? does not depict discriminating or offensive attitudes to religious, political,
ethnic, cultural or social groups
Slide -54 NESTLE INDIA LTD. ? avoids demonstrations that encourage dangerous, or inappropriate use of the
product ? does not portray competitors' products inaccurately, nor denigrate competitors' products ? avoids the
exploitation of media events which could be in bad taste or conflict with the corporate image. In addition to the above
principles, Nestl does not sponsor TV and radio programmes or magazines whose strategy of attracting viewers or
readers lies clearly in the use of gratuitous violence, sex or offensive attitudes to either majority or minority groups.
Slide -55 NESTLE INDIA LTD. Children as Consumers Nestl has developed the following principles for advertising
to children: ? communications (including advertising, events, sponsorships) to children should should not be
disguised as programming or editorial; ? advertising to children should not attempt to undermine the authority,
responsibility or judgement of parents or care providers; ? advertising to children should not portray children in unsafe
situations nor encourage them to accept invitations from people they do not know; ? food and beverage
communication should not demonstrate either unsafe or irresponsible consumption. Human Resources and the
Workplace Nestl regards its management and employees as its most valuable assets. Involvement at all levels
starts with open communication, whether on specific aspects of the business, or about the activities of the Company
in general. Suggestions for changes and proposals for improvements of Nestl's practices are encouraged.
Slide -56 NESTLE INDIA LTD. The Company's business practices are designed to: ? promote a sense of
identification among all employees all over the world, and apply a number of common rules while at the same time
adapting the expression of these rules to local customs and traditions; ? encourage training, and the improvement of
professional skills; ? offer opportunities for promotion based upon merit, irrespective of race, religion, sex or
nationality. Professional skills, experience, and the capacity and willingness to apply Nestl management principles
are the criteria for promotion. ? offer competitive salaries and social benefits. Working hours, wages and overtime pay
comply with applicable local laws and are in line with conditions offered by similar companies. ? limit factory overtime
to a reasonable level; ? create a safe working environment for each employee; ? respect the right of employees to
join legally recognised labor unions; ? treat every employee with respect and dignity, and not tolerate any form of
physical or sexual harassment or
Slide -57 NESTLE INDIA LTD. abuse; preclude the use of forced labor or involuntary prison labor.
Slide -58 NESTLE INDIA LTD. CEO'S VISION According to Mr. Carlo Mavia Donati Opportunities (CEO) "New
opportunities have opened up with the emergence of a new middle class. Today the Indian youth is much more open
to international trends the media and communication revolution has also exposed the Indian people to new life styles.
And in the process, this has created new opportunities for our products" and Donati is pretty clear-he will ensure that
Nestle grabs these opportunities. THE NESTL POLICY ON THE ENVIRONMENT CEO's Statement Over the past
several decades, significant progress has been achieved towards protecting the world's environment. This objective
remains a fundamental duty and a collective responsibility that must be shared between the public, governments and
the private sector. As the World Food Company, Nestl is dedicated to providing consumers with the best food
throughout life. Our Company's primary function is the transformation of perishable raw materials into finished
products that meet consumers' expectations for safety, quality, convenience, and value. From our earliest days, we
have recognized the need to protect the environment in our business activities. Exercising this commitment, which is
part of our broader commitment
Slide -59 NESTLE INDIA LTD. towards the good of the community, remains central to our business today and
tomorrow. The Nestl Policy on the Environment was published in 1991 to define our world-wide strategy on
environmental issues and to state our long-standing commitment to environmentally sound business practices. It is
communicated internally within the Nestl Group and externally to all interested parties and institutions. Following its
publication, the Nestl Environmental Management System (NEMS) was established to consolidate all
environmental measures taken by the Nestl Group. The NEMS is being implemented across our entire business.
Today, preserving natural resources and minimizing waste has become a part of day-to-day business for our

employees and is an integral part of our strategy to achieve global competitiveness. The 1999 update of the Nestl
Policy on the Environment reiterates our strong environmental commitment and reflects our priorities as we move into
the new millennium. It also recognises developments in the international environmental arena. The application of the
Nestl Policy on the Environment at every level of our operation forms an essential part of the Nestl Corporate
Business Principles and enables us to contribute to sustainable development ? meeting the needs of the present,
without compromising the ability of future generations to meet their own needs Compliance
Slide -60 NESTLE INDIA LTD. Nestl is committed to the application of these principles in all countries, and
wherever they are not in conflict with relevant local legislation where it operates. Nestl compliance with its
Corporate Business Principles is regularly monitored by its internal auditors on the basis of clear auditing instructions,
which are certified by the external auditing firm KPMG. Findings and recommendations are reported to the Nestl
S.A. Board of Directors. Nestl's Environment Progress Report 2001, many years of real work experience Nestl is
committed to environmentally sound business practices Environmental Update Message from the CEO Nestl was
founded in 1867 by pharmacist Henri Nestl on the shores of Lake Geneva in Vevey, Switzerland. One hundred and
thirty-four years later, our headquarters are still in Vevey, surrounded by the Swiss Alps in one of the world?s bestpreserved environmental settings.
Slide -61 NESTLE INDIA LTD. As they have grown from humble beginnings into the world?s largest food company,
we have attempted to take the fundamental cultural values of environmental preservation and cleanliness into every
country where we operate. They spend a great deal of time travelling to these countries and have personally visited
many of the 479 Nestl factories currently in operation. One of the reasons for doing so is to see for myself that our
facilities reflect the environmental values basic to our Company. Nestl announces publication of the Environment Progress Report 2000. The Nestl Environment Progress Report 2000 has been published and can be ordered from
the Nestl Environmental Affairs Department. The Environment Progress Report 2000 - Highlights was distributed
together with the Nestl Management Report 2000. Moreover, the company follows environmental performance,
including the results of our environmental performance indicators. The Environmental Officer reports directly to
General Management to ensure there is on-going awareness regarding environ mental affairs. Also, the Nestl
Environmental Advisory Group (made up of corporate experts from many functions) meets regularly to review current
environmental issues and to anticipate potential concerns. This allows us to maximise control over our activities and
contribute to sustainable development in the countries where we operate.
Slide -62 NESTLE INDIA LTD. The Nestl Environment ? Progress Report 2000 describes the results of continuous
improvement in our environmental practices. The progress in a number of key areas, including a significant decline in
the amounts of water and energy used to bring each kilo of Nestl products into your home, and a similar reduction
in factors which potentially affect global warming. However, however they were never completely satisfied with their
current performance, and are committed to further environmental improvements. The try to remain sensitive to the
environmental concerns of our consumers and the public as a whole. As a charter member of the World Business
Council for Sustainable Development, They attempt to keep their policies at the forefront of industrial companies. For
this reason, they have pledged their adherence to The Business Charter for Sustainable Development of the
International Chamber of Commerce, and we are committed to being a leader in environmental performance. This
leadership is only possible through the collective commitment of the tens of thousands of individual Nestl
employees who, on a daily basis, work to make this a better planet on which to live. This Report is dedicated to
them.
Slide -63 NESTLE INDIA LTD. Peter Brabeck-Letmathe Chief Executive Officer Nestl Corporate Business
Principles Nestl is committed to the following business principles in all countries, taking into account local
legislation, cultural and religious practice: ? Nestl's business objective and that of management and employees at
all levels, is to manufacture and market the company's products in such a way as to create value that can be
sustained over the long term for consumers, shareholders, employees, business partners and the large number of
national economies in which Nestl operates. ? Nestl does not favour short-term profit and at the expense of
successful long term business development, but recognises the need to generate profit each year in order to maintain
the support of the financial markets, and to finance investments.
Slide -64 NESTLE INDIA LTD. ? Nestl believes that, as a general rule, legislation is the most effective safeguard of
ethical conduct, although in certain areas, additional guidance to management and employees in the form of
voluntary business principles, is beneficial in order to ensure that the highest standards are met throughout the
organisation. ? Nestl is conscious of the fact that the success of a corporation is a reflection of the professionalism,
conduct and ethical values of its management and employees, therefore recruitment of the right people, and ongoing
training and development are crucial. ? Nestl recognises that consumers have a legitimate interest in the company

behind the Nestl brands, and the way in which the Nestl Company operates.
Slide -65 NESTLE INDIA LTD. Vevey, October 23, 2001 Nestl To Invest CHF 100 Million in New Swiss Airline
Vevey, October 23, 2001 ? Nestl S.A. will take a participation of up to CHF 100 million in the new Swiss airline, fully
expecting this investment to yield a return to its shareholders after the initial launch phase. The project appears to be
based on a reasoned, viable business plan, with a fair chance of attaining its objectives. Nestl will assume no
responsibility of any kind at management or board level of the airline. Nestl sees its limited investment in the new
venture in the following context: as all internationally active corporations based in Switzerland, Nestl needs
frequent intercontinental airline connections. Nestl is often identified by authorities and consumers as a Swiss
corporation whose products stand for quality and reliability. The company cannot be indifferent to the quality of the
image of Switzerland abroad, which would have substantially suffered from the inability to find a constructive solution.
Nestl is an international company with a substantial Swiss shareholding and it is based in Switzerland. As such,
it does not operate in a vacuum and is well aware of the social,
Slide -66 NESTLE INDIA LTD. political and economic environment in which it functions. Participating in an effort that
encompasses all the major players in the Swiss economy, is consistent with the position it occupies in its country of
origin as well as with its attitude of responsible corporate citizenship. During the earlier attempts to solve the
difficulties resulting from the impending failure of Swissair, Nestl has consistently signaled that, in view of its
responsibility vis--vis its own shareholders, it would not commit shareholders' funds on a gratuitous base, simply to
"rescue" Swissair. Over the past weeks, however, the Swiss government as well as representatives of the Swiss
economy, discussed the creation of a new Swiss airline that would ensure that Switzerland remains well served with
intercontinental flights and that the existing infrastructures would continue to function. Nestl's small minority stake
in the new venture corresponds to about three percent of the Nestl Group's yearly investment volume in fixed
assets. NESTLE'S CORPORATE CULTURE As we had discussed before, Nestle is one of the most multinational of
multinationals and is spread over 75 countries worldwide. This implies that it has employees from diverse cultural
backgrounds. Nestle respects the distinctive culture, mentality and traditions of every employee in every country.
What Nestle aims at is to incorporate its own culture into its employees without stifling the individual employee's
culture and identity. When we went to Nestle we could feel the existence of a distinctive work culture amongst the
management-the staff seemed highly motivated and cheerful and everybody had pin up boards in front of their tables
with
Slide -67 NESTLE INDIA LTD. reminders, motivational messages and even timelogs (the Nestle people seemed as if
they availed of the benefits of time management). Nestle has a diverse product range and so it also has diversified
risks. Thus Management on Information System plays a vital role in Nestle to provide information to the Sales and
marketing as well a finance department. The Electronic Data Processing Department looks after Management
Information Systems. The Hierarchy of this department is given below; Controller Head of E.D.P. Controller Apart
from this, Nestle has a vast distribution network. In order to support the BECA process, an integrated computer
system has been put in place across the company to link all functional areas and locations. This common linked
system will improve information availability, aid quick decision-making and improve supply chain integration.
Slide -68 NESTLE INDIA LTD. GLOBAL OPERATION : COUNTRY WISE Company Description : Nestle India Nestle
India. The principal activity of the company is the manufacture of soluble beverage powder, milk products, surplus fat
and other food products. Products of the company include soluble coffees, coffee blends, tea, preparation of milk,
cream and cereals and milk concentrated/condensed. The manufacturing plants are located at Moga, Samalkha,
Nanjangud, Choladi, Ponda and Bicholim. The company exports it's products to Russia, Nepal and Bhutan. Soluble
beverage powder accounted for 29% of 2000 revenues; milk products, 26%; surplus fat, 3% and other foods, 42%.
Competitor Analysis Nestle India operates within the Dry, condensed, evaporated products sector. This analysis
compares Nestle India with three other dairy companies in Asia: Alaska Milk Corporation of Philippines (2000 sales of
3.79 billion Philippine Pesos [US$73.12 million] ), Smithkline Beecham Consumer Healthcare (8.58 billion Indian
Rupees [US$178.71 million] of which 95% was Malted Milkfood/Food), and Pure Foods Corporation which is based in
Philippines (12.65 billion Philippine Pesos [US$243.90 million] ). Officers
Slide -69 NESTLE INDIA LTD. Executive Chairman & Managing Director Carlo M.V. Donati Executive Director
Finance Jean Marc Waelti Secretary B. Murli
Slide -70 NESTLE INDIA LTD. USA MARKET Nestl USA is named America's Most Admired Food Company for the
fourth consecutive year. As many of its rivals seek growth through consolidation, Nestl instead looks within for ways
to boost sales...In the process, it has posted sales growth of more than 4%, higher than the industry average of 2.5%.
Together, Nestl's disparate Internet ventures present a mountain of opportunity...U.S. CEO Weller's Net-savvy unit
is leading the global company in its e-enterprise Their vision as part of the world's leading food company is to provide

families with the best food and beverages throughout their lives. Our success is based on the quality of our products
and on relationships we continually build with our customers, our employees, our communities and our suppliers who continually look to our company to be the very best. Our commitment to achieving this vision is a source of
Nestl pride. For well over a century, Nestl has been making the very best food and beverage products for
families around the world. We believe that food should provide for the spirit as well as the body, and strive to ensure
that every product we prepare also enriches the experience of life itself. We believe it is our unique understanding of
the integral role of food in good
Slide -71 NESTLE INDIA LTD. living that's helped us to become a part of the world's largest food company. Corporate
Governance Principles Since its foundation in 1866, Nestl has ? built consumers' trust through the quality of its
products; ? respected the social, political and cultural tradition of all countries in which it operates; ? taken a longterm approach to strategic decision- making, which recognises the interests of our shareholders, consumers,
employees, business partners as well as those of all the national economies in which we operate. Nestl's
commitment to good Corporate Governance goes back to its very early days. Today, as both legislation and
international recommendations indicate growing public interest in the issue, we take the opportunity to publish the
Nestl "Corporate Governance Principles" that reflect and highlight our ongoing commitment. Legislation and
International Recommendations Nestl complies with the laws applicable in the countries in which it operates;
Slide -72 NESTLE INDIA LTD. ? ensures that the highest standards of conduct are met throughout the organisation
by complying in a responsible way with the Nestl Corporate Business Principles, which guide company activities
and relationships world-wide in each sector of business interest; ? is aware that increasing globalisation is leading to
the development of more and more international recommendations. Although, as a general rule, these
recommendations are addressed to governments, they inevitably have an impact on business practices. Nestl
takes such recommendations into account in its policies; ? generally endorses commitments and recommendations
for voluntary self-regulation issued by competent sectoral organisations, provided they have been developed in full
consultation with the parties concerned; these include the ICC Business Charter for Sustainable Development (1991),
the OECD Guidelines for Multinational Enterprises (1976), and the OECD Principles of Corporate Governance
(1999). The Principles They cover four areas: I. The rights and responsibilities of shareholders
Slide -73 NESTLE INDIA LTD. II. The equitable treatment of shareholders III. The duties and responsibilities of the
Board of Directors IV. Disclosure and transparency and are based on Swiss legislation, since Nestl S.A. has its
registered offices in Switzerland (Cham and Vevey), as well as on Nestl S.A.'s Articles of Association. The rights
and responsibilities of shareholders The shareholders' rights are protected by law, by the Articles of Association, and
by the Corporate Governance Principles, which are also intended to ensure the sustainable development of Nestl
S.A. Nestl S.A.'s basic shareholders' rights and responsibilities include the right to: ? secure methods of ownership
registration; ? obtain relevant information on Nestl S.A. on a regular and timely basis; ? participate in and vote at
General Meetings of the Shareholders in person or in absentia (by proxy), subject the Nestl S.A.'s Articles of
Association; ? approve the annual report and the annual financial statements of Nestl S.A.;
Slide -74 NESTLE INDIA LTD. ? approve the consolidated financial statements of the Group; grant the discharge to
the Board of Directors (hereafter referred to as the "Board") and to the Management; decide on the appropriation of
profits resulting from the balance sheet of Nestl S.A., in particular determine the amount of the dividend; ? elect
and remove the members of the Board and the Auditors of the annual financial statements, and of the consolidated
financial statements; ? adopt and amend the Articles of Association; ? take all decisions, which by law or under its
Articles of Association, are within the jurisdiction of the General Meeting; ? participate in the decisions in
extraordinary meetings; ? be informed sufficiently ahead of time of the date, location and agenda of General
Meetings; ? place items on the agenda and ask questions at General Meetings in accordance with the Articles of
Association, and - for the questions - subject to reasonable limitations inasmuch as the topics are related to the
business activities.
Slide -75 NESTLE INDIA LTD. ? Any Nestl S.A. shareholder has the right to request effective redress of violation of
his/her rights in accordance with the Swiss law.
Slide -76 NESTLE INDIA LTD. The duties and responsibilities of the Board The Board ensures the strategic guidance
of Nestl S.A. and the effective monitoring of its management. The Board is accountable to the shareholders. In
order to fulfil their duties and their responsibilities, Board members receive and can request accurate, relevant and
timely information. Board members act on a fully informed basis, in good faith, with due diligence and care, and in the
best interest of Nestl S.A. Disclosure and transparency ? Nestl S.A. aims to ensure that shareholders have
access to relevant, up-to-date and consistent information. This information should allow shareholders as well as
prospective investors to make an informed judgement about Nestl S.A. shares. ? Nestl S.A. will pursue a policy

of disclosure and transparency. This policy will be modified only when it is necessary to protect the company's
competitive, commercial or legal position. ? Nestl S.A. complies with all legal and regulatory requirements
applicable where its shares are listed. Nestl S.A. will monitor all changes and take part
Slide -77 NESTLE INDIA LTD. whenever possible in the discussion preceding such changes in legislation and listing
regulations. ? Nestl S.A. is aware of its obligation to make information that is relevant to the market publicly
available in simultaneous fashion. To this effect, "quiet periods", during which no relevant financial information will be
provided to third parties, have been introduced. ? Independent auditors elected by the shareholders conduct the
annual audit in order to provide an external and objective assurance on the way in which financial statements have
been prepared and presented.
Slide -78 NESTLE INDIA LTD. DISTRIBUTION NETWORK THE DISTRIBUTION CHAIN NOW FMCG Manufacture
Clearing and forwarding agents (1-3% margins) Super stockists (3-6% margins) Stockists (3-5%) Distributor (4-7%)
Organized retailer (6-15%) WHAT RETAIL CHAINS WANT FMCG manufacturer Organized retailer (current 6-15%
margin + 11-21% savings from disintermediation) THE RETAIL DEMANDS What FMCG companies give What retail
chains wants
Slide -79 NESTLE INDIA LTD. 6% to 15% Margins At least 20% 7-10 days Credit days 15-30 days 12 days Minimum
stock levels 7 days 20% to 25% Stock outs Less than 5%
Slide -80 NESTLE INDIA LTD. Methodology The nature of the project work has been exploratory as no hypothesis, is
taken to be tested. Though the conclusions drawn could be taken as the hypothesis and further tested by the
research work undertaken in the relevant field. The reason for choosing the exploratory research design is the fact
the project report has been primarily based upon the secondary sources of data and whose authenticity could be
assured of. The reluctance of the company's personnel in parting with much of information led the project report to be
based substantially on the secondary source of data. The sources of data used in data collection are the following:

Slide -81 NESTLE INDIA LTD. Primary sources In order to gather information about
the various products, I personally visited a number of retail markets and collected
data pertaining to the prices of the products o
red. The market visits were useful in knowing the comparative prices and quality of
the offered brands vis--vis the competitive brands. Detail regarding the packaging of the
products were collected were collected and I also inquired about the various sales
promotion schemes followed by the three companies. By interviewing these
retailers valuable information was collected. I inquired from them about their
marketing advertising and distribution strategies.
Slide -82 NESTLE INDIA LTD. Secondary sources Information was collected from secondary sources such as public
libraries, newspapers, business magazines. Beside these the use of Internet was also made in collecting relevant
information. The data collected from the above mentioned sources has been adequately structured and used at
appropriate places in the report. This particular way of data collection was used because of its low cost (except data
collected through surfing the internet) and less time consumption. The information gathered included: ? Their annual
reports (Procter & Gamble and Johnson and Johnson). ? Pamphlets. ? Posters. ? Press clippings. ? News
releases. ? Newsletters. ? Pictures. Mc Curtty has popularized a four factor classification of these loots called the 4 p.
These are: MARKETING MIX PRODUCT Product variety quality design features brand PLACE Channels coverage
Assortments Locations
Slide -83 NESTLE INDIA LTD. Once should note that the 4P?s represent the seller?s view of the marketing tools
available for influencing buyers. From a buyers point of view, each marketing tool is designed to deliver a custom
benefit. The 4 P?s correspond to the customer?s 4 C?s as: 4Ps 4Cs Product Customer needs and wants Price Cost
to the customers Place Convenience TARGET MARKET PRICE List price discounts allowances payment period
credit terms PROMOTION Sales promotion advertising sales force PR direct marketing
Slide -84 NESTLE INDIA LTD. Promotion Communication Product In the product the companies started a spate of
freebies with their products e.g. Godrej offered a cordless Rx 1234 off with its refrigerators. Peter England gave Rs
100 off on for its sheets. One must try to create new segments for people who want to go to a higher segment but are
not in a position to do so.Nestle introduces milk and dahi for higher segment people. Many companies are bringing in
cheaper ranges to the existing ranges so that once the people have tried & tested their products they can be made to
upgrade to their premium ranges. One must also target the others customers because this is not exactly the right time

to expand the market but to make the existing customers buy again. For grabbing others share one must try to attack
on the rivals achelles heal with high dose of speed & surprise, catching him unawares e.g. LML followed the same
strategy in UP, MP & Rajasthan where its competitors position was relatively weak. Nestle again repositioned the
chocolate bar one. Nestle has been coming with the different productsand trying to target the different segments.
Nestle is also trying to give the customer more choice, so that they can choose the product which they like. The
company is also trying to bring a variety of products in every segment.
Slide -85 NESTLE INDIA LTD. The companies should also try to offer emotional value to the customer a Pt. New
customers can't be attracted with the same benefits as in good tones. For, the resistance to experiment, whether with
a new product or a brand is much higher unless that is, the benefit can mow down the barrier. According to Puris
Lintas Mehra consumers look for safe choices during a recession. This is not the time for new brands to come in,
unless their attributes are very strong. Price: Is an important tool to break down barrier to a product or brand
acceptance. According to Siddhartha 'Shunv' Sen,59, the CEO of Suadra Advisory Services "Statinzg the price
upfront can lower the consumer's expectation from a brand". But one can't be convinced of the value connotation of
year brand, the customer will still use the expensive, but more trusted product although in smaller quantities or a
fewer occasions than before to project her budget So what next ? The price warriors must make their offer either
qualitatively different or quantitatively superior to the competition. And then slip in the lower price to seal the deal.
This double differentiation will double your impression in the customer's mind. In consumer durables the demand for
these goods falls rapidly in a recession the consumer postponing his buy as long as he can. The marketers in this
time must lure the customers with much more than then their lower prices but by schemes such as exchange offers.
Slide -86 NESTLE INDIA LTD. Nestlae has been always pricing the products as premium price. The strategy of the
nestle is to set the priceas premium. The price is always set as that price that can be afforded by the customers .the
company should set the price for those also who have low spending budgets, they can not only service the old
customers but also bring in new for whom earlier price was the main barrier. Price One can reach for the consumers
purse on the basis of price but to stay there on the basis of price is pretty cough.az Because every one tries to imitate
the low prices if the players are new. To ensure price as a sustained competitive advantage, the differentiation should
be continuos. Imitation should be warded off, consumers kept interested & build image around price rather than as a
discount player. Promotion:- In recession the marketers must find innovative ways to promote its product because the
promotion must and from the clutter. The marketer has to make the consumer try his product & in order to make them
try marketer's uses giving samples of his product. If the product is worthy or the customer finds the product
satisfactorily then the product gets listed on his list & it can be considered in the next purchase. The marketer has
also the use different media to catch the attention of the buyers apart from T.V. & the print media. He has to use new
methods of promotions in order to get the consumers attention.
Slide -87 NESTLE INDIA LTD. Nestle has also implemented many promotion schemes . the company has also
promoted there products like giving free samples of the new products. or giving the new product free wiyh old popular
and famous product. Place:- In recession times when the demand in urban markets is not growing at a fast rate the
marketer must find new markets where he can sell his products. For today's Urban-centric marketer, one way to beat
the recession is to tune into rural markets. Many companies have resorted to direct selling . This is because
companies can save on costs of distribution channel. The company chose direct marketing or what is presently called
as mutti-level-marketing where customer doubles as distributors. The advantage the distributors in addition to being a
seller also doubles as a customer & his giving away of experiences is genuine. So one can finally say PRODU CT
PRICE PROMOTI ON PLACE PAYMEN T PACKING Consum er Non- durables Create new segments within Use
sampling and multiple Go rural; use shops- Designs small units oat lower
Slide -88 NESTLE INDIA LTD. earlier segments media in ? shops prices Consum er Durable s Offer no- frills options
Use exchange offers Use announce ment advertisin g Use dired selling Offer financing and installme nts Bundle
products into single units MARKETING Sales and Marketing are amongst the main strengths of Nestle It is the
hierarchy, which has strengthened the foundation of Nestle?s marketing force, is as in fig 1: Managing director Vice
President (Marketing) The efficacy of this hierarchical structure is seen in Nestle's performance over past few years of
various products.
Slide -89 NESTLE INDIA LTD. By 1989 the company had achieved a sales figure of approximately Rs. 258 crores.
1989 was the year of launches. Seven new product lines were launched in this year. This was also the year in which
the Nanjagud factory was set up. By the year 1992, this sales figure was touching Rs. 500 crores. In the 1990's the
pace of launches quickened and since the construction of the factory at Samalakha, 20 new products have been
introduced. By 1996, Nestle had about 76 different products in its portfolio with various new products in the pipeline
as well. The sales figure now touched Rs. 1214 crores. Thus sales grew by 450% over a period of one and a half

decades.
Slide -90 NESTLE INDIA LTD. MARKETING STRATEGY Nestle has adopted a four pronged growth strategy: 1.
Gunning the market with new products and brand extensions. 2. Expansion of the distribution network to small towns
for extensive availability 3. Reduce prices and introduce smaller packages for products to make them more affordable
(a tool to enter price sensitive markets). 4. Focus on employ training and develop a positive attitude through
enhanced manpower development. 5. By year 2000 it expects chocolate and confectionery to account for one in
every third rupee in sale. In the late 1996 fear of breading complacency by not having a continuous improvement,
gave birth to an international sales and marketing improvement teams (SMIT). SMIT maps the latest in helping
towards the target of year 2000. The SMIT exercise is a major global initiative of Nestle to enhance sales and
marketing productivity. Linked with the already existing BECA project, which in turn emphasizes on excellence by
improving the distribution set up, this gave rise to the following growth objectives for the year 2000: ? Ensure direct
coverage of all urban towns in India.
Slide -91 NESTLE INDIA LTD. ? Expand distribution to reach I million retail outlet on a regular basis. ? Work in
partnership with the distributor for the achievement of these objectives. ? Provide sustainable solution to optimize our
secondary sales from distributor to retailer. PRODUCTION As a part of Nestles efforts towards continuous
improvement and excellence in Manufacturing operation, a Maga Improvement Team (MIT) was put in place at the
Maga factory. The team comprised of international experts from Nestle Technical Service (NESTEC) and the local
staff. In 1996, it embarked on a program with the single-minded objective of optimizing production costs while
enhancing the product quality so as to make Nestle products even more competitive in the market place. Drawing
upon Nestle's global experience and manufacturing expertise in 75 countries the team identified the following areas
for detailed study: ? Process improvement to ensure the optimal usage of resources ? Improvement of operational
efficiency ? Cost optimization.
Slide -92 NESTLE INDIA LTD. As series of small but critically important initiatives ranging from redesigning
laboratories to palletisation of raw materials and packaging material utilization, manufacturing and filling loses and
labor man-hours resulting in substantial savings and improved productivity and machine utilization. In addition,
several non-tangible benefits in the form of systems for sustainable improvement in areas like factory maintenance
planning tools, down time recording systems and performance measurement tools were also realized. This project
was highly successful and the company is now implementing its key learning's of MIT in its other factories. In a
country as vast and diverse as India, Supply Chain Management is absolutely critical to rapid growth. Through BECA,
Nestle has concentrated heavily on streamlining and improving their supply chain management in order to make it
more dependable, more cost effective and most importantly, more responsive to market needs. For better supply
chain integration the planning of key operations-purchase, production, distribution and sales are synchronized to
ensure that every body works towards a common business plan. Monthly objectives are broken down into weekly and
9wherever necessary) into daily plans and monitored regularly to ensure smooth implementation and quick corrective
action when needed. Major benefits accrued thus far include reduction in working capital through lower inventories of
finished goods and materials, better stock availability and reduction in obsolescence of materials.
Slide -93 NESTLE INDIA LTD. In addition to traditional performance indicators, quantifiable performance measures
have been identified and implemented in all functional areas such as sales planning, production output, quality
assurance, material ordering transportation and warehouse management. These measure are monitored regularly to
gauge the extent of improvement and identify root problems for taking corrective actions. Teams have been put in
place at all factories and sales offices to ensure the implementation is continuous and self- sustaining. Areas of
improvement are regularly identified and time bound action plans established. For this purpose, standard tools such a
Total Quality Management (TQM), Kaizen, 5S and Small Group improvement activity (SGIA) are being extensively
used.
Slide -94 NESTLE INDIA LTD. ADVERTISING STRATEGY Nestle, a cash rich company has plenty of marketing
prowess. This can be credited to a strong and sound advertising strategy. Nestle in the year 1995 had an
advertisement spending of Rs. 43.3 crores (net). Tracing Nestle advertising responses the ad campaign by HTA of
'Hot and Sweet' was a runway success this ad was actually meant to fend off a challenge from H.J. Heinz. The Maggi
range of sauces were introduced in 1985 but sales didn't catch up until 1990. At this point the popular and memorable
campaign of Javed Jaffrey and Pankaj Kapoor was launched by Producer Pralad Kakkar. This commercial was an
instant success. The volume of sales kept rising from an initial growth of 13% to 20% in the next year. Today the
sales figure for Maggi Sauces is growing at a steady 6% per year. Another noteworthy campaign was that of POLO
(the mint with a hole), devised by Mudra advertising agency. This campaign was awarded 11 industry ad awards. In
1996 the advertisement budget has been approximately Rs. 56 crores where again innovation was the main focus.

The new nationwide product launch of Maggi Macaroni Snack and Mithai Magic have been designed by Mudra. The
macaroni ad with its use of "Hinglish" and a catchy beat (which is the latest trend amongst the Indian Advertisers)
appeals well to
Slide -95 NESTLE INDIA LTD. the target audience and the Mithai Magic Commercial does keep the secret of the
contents in the box, intact.
Slide -96 NESTLE INDIA LTD. WORKING OF THE EXCLUSIVE DISTRIBUTION SYSTEM What is an exclusive
distribution system? Exclusive distribution runs on a line similar to the Trade Distribution System. It is when the goods
reach the cash distributors' godown that the difference first shows up. When a company is into a number of different
category products, with a wide range in each of the categories, it becomes increasingly difficult for it?s to pay
attention to each and every product of each and every category. In order to maintain its stress on each category and
monitor them in a more organized manner it is necessary to create an exclusive distribution for each of these
categories i.e., each category has a distribution network exclusive to itself. There are separate units/vans, with
separate categories of products of the same brand, plying to the same dealers. The dealer thus can concentrate
better on the variety of products in each category. Similar categories can be clubbed together e.g., chocolate and
confectionery. The exclusive distribution system developed by Nestle has the following salient features: ? The
Chocolate and Confectionery division was separated from the Instant drink and Culinary divisions to start the
Exclusive distribution for the former, sometime during the end of the year 1997.
Slide -97 NESTLE INDIA LTD. ? Four metros and around 37 semi metro towns have been covered under the
exclusive distribution. Seventeen Cash Distributors were appointed in Delhi itself to carry out this new system. ? The
chocolate and confectionery are transferred from the factories, where they are manufactured to the Mother godown
after they are quality approved. From the Mother godown the products are transferred to the respective cash
Distributors godown. ? According to the company norms a cash distributor holds the stock of two week and therefore
the stocks are replenished every fortnight. Sales Analysis During the year ended December of 2000, sales at Nestle
India were 15.82 billion Indian Rupees (US$329.38 million). This is an increase of 8.0% versus 1999, when the
company's sales were 14.65 billion Indian Rupees. Sales of Surplus Fat saw an increase that was more than double
the company's growth rate: sales were up 1,174.6% in 2000, from 546.01 million Indian Rupees to 6.96 billion Indian
Rupees. Not all segments of Nestle India experienced an increase in sales in 2000: sales of Milk Products fell 86.3%
to 569.45 million Indian Rupees. Recent Sales at Nestle India
Slide -98 NESTLE INDIA LTD. 9.5 11.5 13.7 15.3 14.6 15.8 1995 1996 1997 1998 1999 2000 (Figures in Billions of
Indian Rupees) Nestle India has changed its product mix within the past five years. In 2000, the largest segment was
Surplus Fat, while in 1996, the largest segment was Other Foods. During the past four years, sales of Surplus Fat
increased 1,374.2% (from 472.07 million Indian Rupees to 6.96 billion Indian Rupees), while during the same period,
sales of Other Foods experienced an increase of only 22.8% (from 3.99 billion Indian Rupees to 4.90 billion Indian
Rupees). Although sales at this company increased, they increased at a slower rate than the three comparable
companies in 2000. The sales increase of 8.0% was less than those at Alaska Milk 0 2 4 6 8 10 12 14 16 Figures in
Billion 1995 1996 1997 1998 1999 2000
Slide -99 NESTLE INDIA LTD. Corporation (up 14.7%), Smithkline Beecham Consumer Healthcare (41.2%), and
Pure Foods Corporation (18.9%). The company currently employs 2,963. With sales of 15.82 billion Indian Rupees
(US$329.38 million) , this equates to sales of US$111,164 per employee. Sales Comparisons (Fiscal Year ending
2000) Company Sales (US$mlns) Sales Growth Sales/ Emp (US$) Largest Region Nestle India 329.379 8.0%
111,164 India (100.0%) Alaska Milk Corporation 73.122 14.7% 93,268 N/A Smithkline Beecham Consumer
Healthcare 178.707 41.2% N/A (100.0%) Pure Foods Corporation 243.899 18.9% 64,729 N/A
Slide -100 NESTLE INDIA LTD. Recent Stock Performance For the 52 weeks ending 10/19/01, the stock of this
company was down 0.3% to 505.95 Indian Rupees. During the past 13 weeks, the stock has fallen 4.5%. During the
12 months ending 12/31/00, earnings per share totalled 12.30 Indian Rupees per share. Thus, the Price / Earnings
ratio is 41.13. Earnings per share rose 20.4% in 2000 from 1999. Note that the earnings number includes a $.35 pretax charge and $.11 pre-tax credit in 2000. This company is currently trading at 3.08 times sales. This is at a higher
ratio than all three comparable companies, which are trading between 0.51 and 2.15 times sales. Nestle India is
trading at 18.91 times book value. The company's price to
Slide -101 NESTLE INDIA LTD. book ratio is significantly higher than that of all three comparable companies, which
are trading between 0.81 and 4.94 times book value. Summary of company valuations Company Date P/E Price/
Book Price/ Sales 52 Wk Pr Chg Nestle India 10/19/0 1 41.1 18.91 3.08 -0.30% Alaska Milk Corporation 10/19/0 1 7.2
0.81 0.51 10.53% Smithkline Beecham Consumer Healthcare 10/19/0 1 N/A 4.94 2.15 N/A Pure Foods Corporation
10/9/01 7.9 1.83 0.60 35.00% The market capitalization of this company is 48.78 billion Indian Rupees (US$1.02

billion) . The capitalization of the floating stock (i.e., that which is not closely held) is 34.89 billion Indian Rupees
(US$726.33 million) . Dividend Analysis During the 12 months ending 12/31/00, Nestle India paid dividends totalling
14.00 Indian Rupees per share. Since the stock is currently trading at 505.95 Indian Rupees, this
Slide -102 NESTLE INDIA LTD. implies a dividend yield of 2.8%. Nestle India has increased its dividend during each
of the past 5 fiscal years (in 1995, the dividends were 3.33 Indian Rupees per share). During the same 12 month
period ended 12/31/00, the Company reported earnings of 12.30 Indian Rupees per share. Thus, the company is
paying out dividends that are higher than the earnings. Profitability Analysis On the 15.82 billion Indian Rupees in
sales reported by the company in 2000, the cost of goods sold totalled 12.61 billion Indian Rupees, or 79.7% of sales
(i.e., the gross profit was 20.3% of sales). This gross profit margin is better than the company achieved in 1999, when
cost of goods sold totalled 81.2% of sales. In 2000, the gross margin was the highest of the previous five years (and
in 1996 was as low as 13.9%). Nestle India's 2000 gross profit margin of 20.3% was lower than all three comparable
companies (which had gross profits in 2000 between 25.5% and 57.1% of sales). The company's earnings before
interest, taxes, depreciation and amorization (EBITDA) were 2.47 billion Indian Rupees, or 15.6% of sales. This
EBITDA to sales ratio is roughly on par with what the company achieved in 1999, when the EBITDA ratio was 15.7%
of sales. The three comparable companies had EBITDA margins that were all fairly close (between 13.2% and
17.0%) to that achieved by Nestle India.
Slide -103 NESTLE INDIA LTD. In 2000, earnings before extraordinary items at Nestle India were 1.19 billion Indian
Rupees, or 7.5% of sales. This profit margin is an improvement over the level the company achieved in 1999, when
the profit margin was 6.7% of sales. Earnings before extraordinary items have grown for each of the past 5 years
(and since 1996, earnings before extraordinary items have grown a total of 119%). The company's return on equity in
2000 was 41.1%. This was significantly better than the already high 35.7% return the company achieved in 1999.
(Extraordinary items have been excluded). Profitability Comparison Company Year Gross Profit Margin EBITDA
Margin Earns bef. extra Nestle India 2000 20.3% 15.6% 7.5% Nestle India 1999 18.8% 15.7% 6.7% Alaska Milk
Corporation 2000 31.4% 13.2% 10.2%
Slide -104 NESTLE INDIA LTD. Smithkline Beecham Consumer Healthcare 2000 57.1% 17.0% 13.1% Pure Foods
Corporation 2000 25.5% 14.3% 7.0% Inventory Analysis As of December 2000, the value of the company's inventory
totalled 2.06 billion Indian Rupees. Since the cost of goods sold was 12.61 billion Indian Rupees for the year, the
company had 60 days of inventory on hand (another way to look at this is to say that the company turned over its
inventory 6.1 times per year). This is an increase in days in inventory from December 1999, when the company had
1.62 billion Indian Rupees, which was only 50 days of sales in inventory. The 60 days in inventory is lower than the
three comparable companies, which had inventories between 91 and 106 days at the end of 2000. Financial Position
At the end of 2000, Nestle India had negative working capital, as current liabilities were 3.73 billion Indian Rupees
while total current assets were only 3.35 billion Indian Rupees. The fact that the company has negative working
capital could indicate that the company will have problems in expanding.
Slide -105 NESTLE INDIA LTD. However, negative working capital in and of itself is not necessarily bad, and could
indicate that the company is very efficient at turning over inventory, or that the company has large financial
subsidiaries. As of December 2000, the company's long term debt was 790.06 million Indian Rupees and total
liabilities (i.e., all monies owed) were 4.94 billion Indian Rupees. The long term debt to equity ratio of the company is
0.31. As of December 2000, the accounts receivable for the company were 1.17 billion Indian Rupees, which is
equivalent to 27 days of sales. This is an improvement over the end of 1999, when Nestle India had 36 days of sales
in accounts receivable. The 27 days of accounts receivable at Nestle India are lower than all three comparable
companies: Alaska Milk Corporation had 72 days, Smithkline Beecham Consumer Healthcare had 46 days, while
Pure Foods Corporation had 62 days outstanding at the end of the fiscal year 2000. Financial Positions Company
Year LT Debt/ Equity Days AR Days Inv. Nestle India 2000 0.31 27 60
Slide -106 NESTLE INDIA LTD. Alaska Milk Corporation 2000 0.01 72 106 Smithkline Beecham Consumer
Healthcare 2000 0.15 46 91 Pure Foods Corporation 2000 0.07 62 104
Slide -107 NESTLE INDIA LTD. SWOT ANALYSIS Strength The basic Aim of Nestle is to become the leading
company in the Indian food industry. It was linked to India from the starting of the century (1900). Through exports,
manufacturing in India only began in 1962. In very short span it had established itself as a major player in Indian food
industry. The remarkable growth has been achieved through. a. Rapidly creating greater has manufacturing capacity.
b. Taking steps to ensure availability of good quality of products. c. Strengthening of distribution and sales network
particularly in rural areas. d. Sales and marketing are among the major strength of the Nestle. Weakness a. Nestle
aims only of capturing young market, which is quiet clear from the advertisements in India.
Slide -108 NESTLE INDIA LTD. Opportunities Threats a. Cadbury In creasing popularity of Cadbury's products in

markets is a major threat to Nestle. b. Introduction of foreign food product in India is another threat to Nestle.
Slide -109 NESTLE INDIA LTD. RESULTS OF MARKET SURVEY PEOPLE LISTINGS 0 5 10 15 20 25 30 35 40
Nestle HLL Amul 0 5 10 15 20 25 30 35 40 Chocolates Maggi Milkmaid Coffee
Slide -110 NESTLE INDIA LTD. 0 10 20 30 40 50 60 70 80 Yes No Munch 23% Classic 11% Kit Kat 22% Bar One
22% Milky bar 22%
Slide -111 NESTLE INDIA LTD. RECOMMENDATIONS AND SUGGESTIONS Recommendation and suggestions
forms the most critical part of the report. These are based on hard nose feedback collected from the retailers and
distributors and my personal experiences in the market. 1. It has been found for increasing the sales Displays and
Consumer offers have to be given simultaneously this helps in two ways, attracts the customer attention through
product display and prompts him to buy, the offer on the product further strengthens this feeling to indulge in buying.
But both the tools should be used with adequate planning and precision and only then would they reap benefits. We
can provide the trade loads as the Displays. As has been found retailers are more satisfied with the displays. It would
also improve the image of the company as the one that cares for its channel members. But whole process should be
cautiously handled with prompt payments. Delay in payments would lead to bad reputation in the market. 2. Inspite of
the best of the marketing communication strategies adopted by us we are not doing well. Possible reason could be
lack of motivation at the lowest possible but the most important level that is the sales officer and the RS salesman.
We should organize a contest for weeks or month time between the entire RS salesman and the sales officers
separately. Whoever makes the maximum sales during the week/month would be entitled for a vacation or cash
incentives by the company. He would
Slide -112 NESTLE INDIA LTD. have to generate a list of retailers/wholesalers where he has made the sales. This
would act as a tool to keep a check on the stock being dumped in the wholesale market. 3. It has been found that the
sales officers often fail to carry the catalogs and samples with them. We can design a sales promotion kit, which
would act as a handy tool for them in the market. It would consist of advertisement proofs, product samples,
illustrations of POP displays, description of special deal or contest featured in the promotion. I feel that all the sales
process revolve around the following basic seven steps: Get set to sell. Spark the interest. Dramatize the need.
Prepare the proposal Capitalize on objections. Cut the order Follow through 4. Our department could print a dealers
manual which would elaborate on the above points.
Slide -113 NESTLE INDIA LTD. For EG: Capitalize on objections would list all the possible objections that that
prospect may voice and each of the corresponding well thought of answer. These small efforts on our part would help
us overcome barriers and clear out the most taken for granted things. This would also come in handy for the
managers when they feel like building pressure on the channel members. 5. It has been my experience that there is
an flaw in the working of the sales officers. They are often unclear about the targets and the schemes. They have to
be briefed more frequently and trained accordingly. They should be provided a company T-shirt that would distinguish
them from other salesman. 6. There is a dire need of the Institutional selling unit which all major companies have.
NESTLE in Delhi has a lot of distributors specifically for this purpose. They cater to demand from super bazaars,
kendriya bhandars, railway canteens and other cooperative stores. 7. The display windows provided by us are not a
least bit attractive to draw attention of any customer standing in the shop. We should have really skilled team of
workers (or single person) doing up the windows. This would also act as a safeguard for proper utilization of display
budget. If we are spending on displays then we must capitalize on these things, which is not happening now. Hence
professional merchandisers should be appointed.
Slide -114 NESTLE INDIA LTD. 8. Distributors image in a area plays a major role in boosting sales. Company should
take strict action against those distributors with tarnished image as they spoil the companies? reputation also. If the
need be they should replace the distributor. The company should in regular interval take feedback from the retailers
as regards to the distributor. 9. There should be adequate supply of the POP material. The sales officers and
merchandizers should properly put them on the outlets visited during the day. 10. As found in the study that the
displays are a major motivating factor, the display claims should be promptly cleared on time. This maintains the
companies? image across the retail outlets and keeps the retailers satisfied. It was a general feeling across the Delhi
metro. 11. At present the company does not have any ?Target based incenti ves? to the retailers. We give trade loads
at the time of purchase by the retailer and then forget him for 15 days. It should be other way round. On selling
certain units the retailers should be offered incentives in form of gifts like Cameras, Walkman, Mobile phones etc.
This would motivate him to push the companies? product as compared to the competitors. It would also ensure actual
consumption of the product and control dumping at the retailers outlet. 12. The company can prepare Cardboard
stands on which the nivea products could be placed. These stands should
Slide -115 NESTLE INDIA LTD. be placed at the front of retailer?s desk. Recently FA has prepared such stands. This

ensures high visibility of the product category and prompts the customer to take impulse decisions. They are cost
effective too. 13. HOME TO HOME SELLING The success mantra of HLL is that it applies all possible channels of
selling emphasizing on direct selling whereby company employed people interact with the customer personally. They
sell the product and offer discount coupons on next purchases. Our company must explore this channel that ensures
sales and builds repeat purchases. Discount coupons should be distributed across the household in Delhi Metro. This
would build awareness about thechocolates products and would overcome its major weakness of lack of awareness
on part of customer about the range of products. The retail outlets in the areas where coupon are distributed must be
flooded with our range of products so that there is no shortage of supply. 14. As revealed by the survey Spot
Promotions are a cheap and effective way of sales promotion. For this purpose the company should make one time
investment in preparing maggi stalls, chocolates stalls,new range of products stalls (we know your skin better) and
placing them at prominent places at regular intervals. To begin with 2 mobile stalls could be prepared and the concept
be tested across the Delhi metro. Each stall would cost approx Rs 1200. The stall would sell our range of items at
Slide -116 NESTLE INDIA LTD. Discounted price (Minus the retailers and distributors margin as the products would
be directly sourced from the C&F agents). Nestle representative wearing nestle T-shirts and Blue colored caps would
counsel the public. It would serve twin objective of increasing the awareness of the product as well as boosting the
sales. The sales officers should be asked to identify crowded market places in their areas where such efforts could be
made. Specially, On festival occasions when the expenditure by public increases we could cash on the opportunity.
15. The wholesalers are found to undercut whatever extra margin he gets in form of Schemes etc, So for proper
channel balance we need to keep strict control over our sales to the wholesalers. This would also help the distributors
to maintain their ROI. .
Slide -117 NESTLE INDIA LTD. LIMITATIONS Sample size: The sample size chosen was 250 for the whole Delhi
metro where there are so many people. This could have affected the results, which may not hold true in all parts.
Concerned persons were not available despite appointments at some times. It was difficult to tap the distributors and
the ASM of nestle. The marketing and the advertising managers were not ready to give any infomationabout the
company . They were not willing to tell about any strategy of marketingand advertising . so very less information can
be gas\thered about the strategy of marketing. The distributors were reluctant to share information regarding the
trade insights. CONCLUSIONS Sales growth in 2001 led by a robust 20% growth in volumes Nestle?s domestic sales
registered a 18.5% volume growth during the first 9 months of 2001. Exports registered a 31% yoy volume growth. In
value terms, domestic sales grew by
Slide -118 NESTLE INDIA LTD. 15.8% yoy to Rs12.1bn, while Exports grew by 26.4% yoy to Rs2.4bn. Jan-Sep JanSep % yoy Volume Growth (tons) 2001 2000 Domestic 105718 89176 18.5 Exports 13402 10216 31.2 Total 119120
99392 19.8 Value Growth (Rs mn)Domestic 12107 10454 15.8 Exports 2424 1918 26.4 Total 14531 12372 17.5
Beverages leading volume growth, value growth being led by culinary segment Beverage sales have grown at a fast
pace of 42% in the first 9 months of 2001 driven by rising exports and revised pricing strategy in domestic market.
Growth in value terms is however lower due to a sharp 15% decline in realizations. Culinary product sales grew by
20% in volumes and 22% in value. Volume growth in chocolate & confectionery segment was 12%, which was higher
then market leader and average
Slide -119 NESTLE INDIA LTD. industry growth, signifying that the company has been able to improve market share
in the category.
Slide -120 NESTLE INDIA LTD. Turnover Contribution by Turnover contribution Growth Volum e Value Volume Value
Realization Milk & Nutrition Products 47 43 15 13 -1.4 Beverages 18 29 42 21 -15.1 Culinary Products 24 14 20 22
1.9 Chocolates & Confectionery 11 14 12 20 6.8 Milk products, which account for a significant 43% of Nestle?s
revenues have grown at steady 15% in volume terms. Turnover contribution of beverages is 29%, while culinary
products and chocolate & confectionery each contribute 14% to Nestle Rs14.5bn turnover in the first 9 months of
2001..
Slide -121 NESTLE INDIA LTD. Profit Margin Operating margins have improved from 18.1% to 18.5% in 2001 driven
by lower material cost. Raw material cost declined from 44.4% of sales in F12/00 to 43.1% of sales in F12/01.
Operating Margins 2001 2000 EBITDA 18.5 18.1 Adjusted EBITDA 18.5 17.7 Improved working capital and asset
management The company has been able to improve working capital management. Operating cash flow has
registered a CAGR of 15% in the last 4 years. Fixed asset turnover has also gradually improved over the last 3 years.
Net indebtedness (total financial liabilities net of liquid assets) has declined from a high 2.5x in 1998 to 0.3z currently.
1998 1999 2000 2001- Sep Operating Cash Flow 1743 2391 2420 1966 Rotation of Operating Net Working Capital
7.1 9.6 14.7 18.1
Slide -122 NESTLE INDIA LTD. Rotation of Fixed Assets 4.0 3.9 4.2 4.7 Net Indebtedness 2.5 1.0 0.9 0.3 1.

Operations: Domestic Sales grew by 7% in value and 15% in volume terms, during the year. Export Sales grew by
16% in value and 32% in volume. Profit After Tax grew by 20% from Rs985mn to Rs1186mn. During the year, the
Company retired certain fixed assets from active use at various locations and the impairment loss on such fixed
assets has been charged to the Profit and Loss Account. Out of business prudence, the Company supplemented the
Contingency Provision with further amount in 2000 of Rs295mn (net) to provide for various contingencies resulting
from matters mainly relating to issues under litigation, dispute and management discretion. The current year has
commenced as per plan in the domestic market and your Directors are hopeful of continued good results. However,
with the current level of inflation and economic indicators pointing towards a sluggish market, it would be difficult for
the Company to maintain the level of earnings unless the Company takes price increase on finished
Slide -123 NESTLE INDIA LTD. products which would depend on market conditions and competitor activities.
Slide -124 NESTLE INDIA LTD. 2. Exports: Export Sales for the year at Rs2655mn have grown by 32% in volume
terms, over the last year. This has been mainly due to the higher exports of NESCAFE to Russia, buoyant sales of
Instant Tea and good performance of the culinary products. However, depressed green coffee prices in domestic and
international markets kept the export realisations low. Measures taken for tapping new market and product
opportunities have also contributed to this growth. The export competitiveness of value added instant coffee
manufactured in India continues to be adversely affected by the purchase tax levied on green coffee. Efforts continue
to tap new market and product opportunities. 3. Dividends: Interim dividend of Rs. 8.00 per equity share, including
Rs4.50 per equity share out of undistributed profits of the previous financial years, was paid during 2000. 4. Business
Development: In line with the Company's objective to provide superior value in every product category and market
sector, efforts were focussed to provide quality products to customers at attractive price points. While the Company
continued to generally maintain price points across all the product categories, the pricing of some products were also
reduced to meet consumer expectations.
Slide -125 NESTLE INDIA LTD. MAGGI Noodles re launched in 1999 in response to popular consumer taste
preference, continued to boost sales during 2000 in the culinary segment. New flavour profiles were introduced in the
bouillon business. The market continued to react positively to the initiatives taken in the recent past to grow the
consumption of instant coffee in the domestic market. The new NESCAFE pricing and bringing the popular SUNRISE
brand under NESCAFE umbrella to benefit from its association continued to strengthen the category. NESCAFE
Frappe a blend of coffee, mocha and vanilla, which makes a delicious frothy cold coffee was launched in select
metropolitan cities in the third quarter. This was another strategic launch and seeks to address consumer with
preference for cold drinks. NESCAFE Frappe has received encouraging response. In the area of Chocolate and
Confectionery NESTLE MUNCH Crisp wafer biscuit with chocolayer, which was launched in select markets in1999,
was rolled out nationally during 2000 and had good growth. Continuing with the efforts to meet consumer expectation
on price points, the pricing of KITKAT was also reduced during the later half of the year. Moulded Chocolates and
Eclairs also showed satisfactory growths. This has also helped in improving the infrastructure and distribution reach
of the Company in the Chocolate and Confectionery segment. In the milk and cereal categories, EVERYDAY Dairy
Whitener and cereals had satisfactory growth. NESTLE Growing up
Slide -126 NESTLE INDIA LTD. Milk, a new product offering superior nutrition, launched in 1999 was rolled out
nationally during the year. The Company has also entered the Chilled Dairy business with the recent launch of
NESTLE Dahi in select cities of the North. The initial response has been very encouraging and the Company is
working on plans to further leverage the international expertise of Nestle Group, Switzerland in the area of Chilled
Dairy. The performance of other products were generally in line with expectations. A few products whose performance
was not considered satisfactory are under constant review for corrective action. The directors were pleased to report
the implementation of the two new projects undertaken by the Company during 2000 packaged milk and packaged
drinking water. Both the projects seek to leverage the worldwide experience and knowledge of Nestle Group,
Switzerland who are the leaders in these product categories. In line with its objective of long term growth and entry in
significant value added food segments, the Company forayed into the Ultra Heat Treated (UHT) liquid milk business
in April 2000 by launch in Mumbai. Packaged UHT milk seeks to address growing consumer concerns on adulteration
and product safety and brings with it reliability, complete hygiene and safety. It offers convenience to the consumer, in
terms of a shelf life without any deterioration in the product quality and easy usage without refrigeration or boiling.
UHT Milk has
Slide -127 NESTLE INDIA LTD. received encouraging response and has been rolled out in select cities of the West,
South and North. The project for bottled water was implemented at the Samalkha factory and water launched in
February, 2001 under the brand NESTLE PURE LIFE and is available in select cities. NESTLE PURE LIFE contains
a balance of essential minerals and a light pleasant taste and is manufactured under stringent quality control. The

packaging has been specially designed to maximise safety for the consumer and protect from possible tampering.
The new categories like bottled water and liquid milk are lower margin categories and will require considerable
investments. The Company sees them as strategic and as requiring support on a sustained basis. The two new Sales
Branches at Bangalore and Chandigarh set up in 1999 to further strengthen the flexibility of the Sales organisation
and for speedier response to the market conditions, have started showing positive results during the year. With a view
to expand distribution and increase penetration in smaller towns, a concerted drive was undertaken to make products
affordable and accessible to consumers. Initiatives taken include more penetrative pricing and smaller packs covering
brands such as EVERYDAY Dairy Whitener, MAGGI Noodles, MILO Chocolate Energy Drink and NESCAFE Instant
Coffee. The response has been encouraging. The Alternative Trade Channel unit created in 1999 undertook initiatives
to tap the opportunities for out of home
Slide -128 NESTLE INDIA LTD. consumption, particularly for instant coffee and chocolate and confectionery and to
extend availability of product to nontraditional outlets. The outcome of these initiatives has been encouraging and is
being consolidated. Availability of NESCAFE has been enhanced through an expansion of the vending machine
network and new consumption opportunities for Chocolates and Confectionery were identified and developed in
areas like railway platforms, college canteens and major events. On the manpower development front, programmes
during the year continued to be focussed on the operational front more particularly sales and production. To support
the growth plans and distribution strategy, and simultaneously improve the operational efficiency, the thrust on
strengthening supply chain continued to receive attention during the year. In addition to consolidating the
improvements made over the last two years, significant progress was recorded in following areas: a) Reduction in
finished goods inventory pipeline to improve freshness of stocks and reduce working capital. b) Control of distribution
costs through innovative measures, despite steep increases in cost of fuel.
Slide -129 NESTLE INDIA LTD. c) Sustained improvement in customer service level to improve product availability
across all geographies and channels. d) Reduction in obsolescence of materials. 5. Technology from Nestle: The
Company benefits from its access to proprietary technology, technical and non technical expertise and the fruits of
the extensive centralised Research and Development. The diversified knowledge and expertise have contributed
significantly to the operations of your Company over the years. Some of the key areas, which have benefited are: a)
Manufacture of products of truly international quality. Product quality, which encompasses taste, appearance,
convenience and overall value for money, is a critical factor in consumer choice and in a competitive market like India
could determine the very survival of the products. The high quality of products of your Company is borne out by the
position and image the products enjoy in the market and your Company continuing to be a leading exporter of value
added Instant Coffee in the country. b) Benchmarking of products against competition to achieve an advantage in
product quality, for increasing competitiveness.
Slide -130 NESTLE INDIA LTD. c) Access to latest technological developments, such as Spearpoint Technology for
Cocoa based products implemented during 2000 which would improve product quality and competitiveness and the
MUCH technology for instant coffee manufacture implemented during 1999, which would enhance the productivity by
increased extraction of coffee solids from coffee beans. d) Implementation of project for bottled drinking water. e)
Product innovation and renovation some illustrations are MUNCH Crisp wafer biscuit with chocolayer; Nestle Dahi;
Nestle Milk (UHT); Junior Foods; NESCAFE Frappe; KITKAT Milky; newand improved flavours profiles of bouillons;
and relaunch of MAGGI Noodles. f) Enhancement of skill and competence of Company personnel due to the training
received. g) Implementation of environmentally sound business practices. h) Technical expertise in various forms
including Information Technology, which has enabled the business of your Company to grow and sustain. i) Providing
assistance by way of improved technical and quality standards to local manufacturers, who have contract
manufacturing arrangements with your Company.
Slide -131 NESTLE INDIA LTD. 6. Information Technology: The Company continued to make significant investments
in the Information Services of Technology area to cope with the growing information needs necessary to manage
operations more effectively in a complex supply chain environment.
Slide -132 NESTLE INDIA LTD. 7. Community Health: Recognising its responsibility to the community in which it
operates, the Company over the years has been taking initiatives in the area of community health at locations around
its factories. Some of the initiates taken in the recent past are: a) Provide Government and village schools with
facilities for toilets and hygiene drinking water including deep bore wells, where necessary. b) Support to health
officials in Pulse Polio programmes. c) Sponsorship of treatment of TB patients at clinic run by NGO. d) Healthcare
Programmes with focus being on well being of employees and their families covering vaccination, awareness
programmes and health check up. The company performance is much better in comparison to its competitors.
Slide -133 NESTLE INDIA LTD. QUESTIONNAIRE Tel.: Name : Personal: Age : Class : School/ college : Tel.: 1. How

many Nestle Products Have your consumed so far? 2. How do you like those products? Good ? Bad ? 3. Which of
these Nestle products do you like? a) Chocolates b) Maggi c) Milk product d) Mineral water e) Coffee f) Infant
products g) Milkmaid h) Soups 4. Why do you like the nestle products? It is due to its. ? Colour ? Taste ?Packing
/Pack Size ? Advertisement 5. Which brand of Particular product do you like? Specify the name_____________
Product _______ Brand 6. Do you like the advertisement of Nestle?
Slide -134 NESTLE INDIA LTD. ? Yes ? No 7. Which advertisement do you like and why?
_______________________________________________________
_________________________________________ 8. Do you think some brand ambassador Should come in the
advertisement of Nestle? ? Yes ? No 9. Whom do you think should endorse the brand Nestle? 1.
____________________________________________ 2. ____________________________________________
10. What strikes to your mind, when you think "Good Food Good Life"
________________________________________________ 11. Will you switch over to some other brand, if there is
a gift/offer with the other brand ? Yes ? No 12. Have you tried the new range of Products from Nestle? If yes specify
the name. ? Yes ? No 13. How do you like the new range of products from other competitors products which are
same? ________________________________________________
Slide -135 NESTLE INDIA LTD. 14. Do you think Nestle should come with some new products? If yes specify some
name ________________________________________________ 15. Are you satisfied from quality of Nestle
products? ? Yes ? No 16. Where you rank Nestle from others? ?Very Good ?Good ?Satisfactory ?Bad
Slide -136 NESTLE INDIA LTD. BIBLIOGRAPHY MARKETING MANAGEMENT: PHILIP KOTTLER BUSINESS
INDIA BUSINESS TIMES BUSINESS TODAY Business world NEWSPAPERS & JOURNALS (TIMES OF INDIA,
ECONOMICS TIMES) IIM LIBRARY (DELHI)