FINANCIAL MANAGEMENT TERM PROJECT REPORT ON NESTLE PAKISTAN LTD.

TABLE OF CONTENTS CHAPTER
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 EXECUTIVE SUMMARY INTRODUCTION NESTLE STORY NESTLE INTERNATIONAL NESTLE PAKISTAN VISION & STRATIGIES MISSION COMPANY PROFILE PRODUCTS FINANCIAL DATA FINANCIAL RATIO'S PRICE EARNING, DIVIDEND & SALES GRAPHS FINANCIAL PERFORMANCE SALES TURN OVER RECOMMENDATION CONCLUSOION BILBIOGRAPHY

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EXECUTIVE SUMMARY
This is an informative report on Nestle Pakistan Private Limited in this report I have described how Nestle came into being internationally and in Pakistan. Through my research I found out how much Nestle cares about its consumers. Good food Good life is the principle they always follow. l have described the complete list of Nestle products in Pakistan, the milestones that Nestle reached in Pakistan, the marketing strategies Nestle uses and I have explained the financial performance of Nestle. Nestle Pakistan Limited (NPI.), formerly known as Nestle Milkpak Limited is a subsidiary of Nestle SA - a company of Swiss origin headquartered in Vevey, Switzerland. It is listed on Karachi and Lahore stock exchanges. For the 5 years in a row, the company has placed among top 25 companies of the KSE. Its principal activities are to manufacture process and sell food products and ancillary equipment. The food products include dairy, confectionery and culinary products, coffee and beverage and drinking water. The major brands include Milkpak UHT, Nestle Everyday, Lactogen and Nescafe. Nestle has been serving Pakistani consumers since 1988, when its parent company, the Switzerland-based Nestle SA, first acquired a share in Milkpak Ltd. In line with its parent company's global philosophy, it is proudly committed to excellence in product safety, quality, and value. Today, the company is fully integrated in Pakistani life. And is recognized as producer of safe, nutritious and tasty food, and leader in developing and Uplifting the communities in which it operates.

INTRODUCTION
Nestle Pakistan Limited is a Pakistan- based food and beverages company. The Company is engaged in manufacturing, processing and sale of food products. Nestle has been serving Pakistani consumers since 1988, when their parent company, the Swiveledbased Nestle SA. First acquired a share in Milkpak Ltd. Nestle Pakistan Limited is registered on the Karachi and Lahore stock exchanges; for the past five years and has been declared one of the top 25 companies on the Karachi Stock Exchange by 2014. Nestle Pakistan aims to be a Rs. 100 billion company. Nestle s a human company and offers tremendous opportunities for career growth and learning at domestic and international levels. With over 8000 brands preferred for their good quality, taste and health benefits. Nestle is the number one food company in the world. Nestle is leading the change in the food industry as it is also the leading food company in terms of having the largest set up of research and development in food science and nutrition. They are uniquely positioned to provide products that help consumers live a good life. Many Nestle brands have benefited from the active ingredients developed by Nestle research and with over 130 years of expertise, consumers know they are getting the best in quality when they choose a Nestle brand. Happy and healthy consumers are at the heart of what they do. Their philosophy is summed up in the phrase "Good Food, Good Life: and they remain committed to help consumers choose better tasting and healthier products to help them enjoy happier, healthier lives.

THE NESTLE' S STORY
Ever since Nestle was established, they have been committed to nurturing people worldwide. Today, as the world's leading food and Beverages Company, and leaders in health and wellness, they try to cater to all your family's nutritional needs, no matter where in the world you live. Their story begins in 1867, when Henri Nestle developed a baby formula that saved a child's life and marked the beginning of Nestlé’s decades-old commitment to nutrition. In the 140 years since then, they have expanded around the world and developed a range of products designed to suit every taste, need and cultural preference. Their distinctive seal is recognized everywhere as a guarantee of quality and healthfulness. Their responsibility does not simply lie in perfecting the products they develop, but the role their products play in making lives better - both for their consumers and for communities in the countries they serve , they keep introducing new, exciting options worldwide. Nutrition, quality and convenience remain the keystones of their products and even as they confront the new century's challenges, they feel it is their duty to adapt to the changing needs of consumers. Understanding that people in every country have different tastes and needs, they have developed a range of food and lifestyle products. In India consumers enjoy healthy and convenient MAGGW Noodles Aria Noodles, in Pakistan you can find NESTLE {i.e. Raita and in China, flavored water is strengthened with period l dietary fiber and traditional Chinese ingredients such as Aloe Vera and Chrysanthemum. Their popularity has come not just from acquisition and corporate expansion, but also from a care for the ever-evolving needs of customers. Thus, along with old favorites such as NFSTLET" KITKAT® chocolates and NESCAFE®,the world's most popular coffee, they keep introducing new, exciting options worldwide.

NESTLE INTERNATIONAL
Today, Nestle SA is the world's Ingest Food and Beverages Company, and a global leader in health, nutrition and wellness. Consumers around the world, from village squares in Nigeria to the skyscrapers of New York and Chicago, are united by the Nestle; promise of quality, taste, nutrition and convenience. Though headquartered in Vevey, Switzerland, they now have 487 factories dotted around the globe, employing over 250,000 people in 86 countries. Their products are available in almost every country, and in 2005 their global sales reached $73 billion. Their operations are spread across three global zones covering Europe. The Americas, Asia, Oceania and Africa. Recognizing that every region has its special needs, the three zones operate locally, but are united by a common vision and priorities. The voices of even the smallest local markets are heard at their headquarters in Vevey, Switzerland. Their immense popularity comes from their efforts to develop products that give quality and nutritional benefits at low prices, even in the most remote regions. They distribute those using local means; in Madagascar, for instance, backpacker salesmen sold over I2 million MAGGI tablets within six months, an approach that was duplicated in Pakistan and Mozambique. Their consumers know that they can rely on them to be there when they are needed.

NESTLE PAKISTAN
In line with their parent company's global philosophy, Nestle is proud of its commitment to excellence in product safety, quality, and value. From spreading awareness about nutrition and wellness to digging wells in the Thar Desert and succoring earthquake victims, they are committed to serving their country and its people. The consumer's voice is key to Nestle Pakistan's vision and working. Whether you live in the remotest village or the metropolis of Karachi, the consumer services team stands ready to listen to your concerns and provide answers about their products and guidance on matters of health and wellness. Their products are manufactured in five facilities scattered around the country, from Islamabad in the north, to Karachi in the south. Two state-of the-art multipurpose factories are located in the agricultural heartland of the Punjab, and the remaining three arcs dedicated to producing their trusted brands of bottled water. Sheikhupura Factory:The factory commenced operations as part of Milkpak Ltd in 1981. At the time it produced only UHT milk, but by 1988 had expanded to produce butter, cream and ghee, as well as fruit drinks. In 1988, it became part of the joint Nestle Milkpak venture and, soon after, NESTLE® NIDO® milk powder started being produced here. The factory started supplying dairy mixes to McDonald's in 1998. A plant to produce the popular Nestle NESTLE* PURE LIFET I bottled water was also commissioned. In recent years, the plant's capacity has been enhanced to produce fruit yoghurt, tea whitener, cream and raita, as well as lowfat, high-calcium dairy products, sold under the NESTLE® NESVITA® brand.

VISSIO &STRATIGIES N
The Nestle global vision is to be the leading health, wellness, and Nutrition Company in the world. Nestle Pakistan subscribes fully to this vision. In particular, they envision to: Lead a dynamic motivated and professional workforce - proud of its heritage and bullish about the future. Meet the nutritional needs of consumers of all age groups - from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality. Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country. Nestle have profitable and diversified high quality food and beverage product portfolio, delivering 60:40+ advantage to consumers, available across all sales channels. Nestle brands are the preferred choice in their categories. Consumer insight drives all aspects of their marketing and communication efforts. Their company is seen as the No. 1 career destination for talented, motivated and ambitious professionals. Their result-oriented organizational structure ensures effective communication and empowered selfmanagement.

M ISSIO STATEM N ENT
Since Nestle came into being, health, nutrition and wellness have been central to the Nestle vision. 140 years after Henri Nestle, nutrition is, more than ever, the key to the company's future. . Consumers are at the heart of all that Nestle does. Their philosophy is summed up in four words: Good Food, Good life. In their quest to become the world's leading health, nutrition and wellness company, they do everything they can to help people live more fulfilling lives. Good Food, Good Life Henri Nestle chose his own coat of arms to represent the company's philosophy: a bird's nest, with a mother feeding her young. The image represents their core values: care, family values, nutrition, and healthy growth. Safety and comfort. It is a guarantee of quality and a commitment to their responsibilities as a food company and experts in nutrition. Over the years they have reaffirmed their commitment to wellness. Helping their consumers to live longer, healthier and more productive lives, no matter their age, gender or socioeconomic status. Good Ingredients Three vital ingredients lie at the heart of Nestle and come together in their brands: their people, their research and development, and their commitment to quality. The 250,000 dedicated people who make up the Nestle family are the source of strength and energy. Realizing this, Nestle offer them constant professional development. Nestle is one of the largest investors in food technology. R&D is the cornerstone of the Nestle guarantee of quality. They consider quality in three key dimensions: health, sensory pleasure, and social applicability. Thus they try to provide nutritious. Tasty meals that offer value and arc culturally relevant.

COM PANY PROFILE

Syed Yawar Ali Chairman of the Board Ronald Decorvet CEO & MD Haseeb Aslam Head of Marketing & Sales Peter Wuethrich Head of Technical Head
Shahab Bachani Country Business Manager (Water) Raymond Franke Head of Finance & Control Uzma Qaiser Butt Head of Human Resources Salman Nazir Head of Supply Chain

Syed Azeem Abbas Naqvi Secretary and Head of Legal Affairs

Cheema & Ibrahim (Advocates) Legal Advisor KPMG Taseer Hadi & Co Auditors

PRODUCTS
Most people know Nestle through their brands. Their portfolio covers practically all food and beverage categories. Nestle has a wide range of products across a number of markets. With over 140 years of experience and expertise; they take great pride in bringing us the best products because happy, healthy consumers are important to them. They develop their products keeping our preferences, tastes and needs in mind. Their products are carefully aligned to Pakistani tastes and needs. They always try hard to develop new products and improve existing ones, and serve their consumers in a better way.

List of Products:
MILK, DAIRY AND CHILLED DIARY

• • • • • •

Nestle MilkPak, Nestle Nido, Nestle Neslac, Nestle Everyday, Nestle Yogurt, Nestle Raita & Nestle Desi Ghee

BEVERAGES & BOTTLED WATER • Nescafe • Milo & Juices • Pure Life BREAKFAST & CEREALS

• •

Cornflakes’ Honey stars CHOCLATE, CONFECTIONARY & BABY FOOD • Kit Kat • Cerelac PREPARED MEALS

Maggi

FINANCIAL DATA
NESTLE PAKISTAN LTD. Current Assets Fixed Assets Total Assets Cash & Bank balances Inventory Current Liability Total Liability Owner Equity No. of Common Share Avg. owner’s equity Market Per Share 2007 5,623,823 10,045,611 15,848,574 406,225 436,573 5,978,522 5,978,522 4,111,705 750,000,00 0 453,496 10 2006 4,627,685 8,093,101 12,927,902 34,663 329,346 5,224,488 5,224,488 2,531,080 750,000,00 0 453,496 10 2005 3,518,718 5,087,375 8,836,780 858,995 249,921 4,333,228 6,879,733 1,957,047 750,000,00 0 453,496 10 2004 2,356,518 3,218,513 5,601,315 95,176 262,148 2,352,658 4,113,129 1,488,186 750,000,000 452,730 10

NESTLE PAKISTAN LTD. Cash Flow Dividend Paid

2007 1,231,574 633,418

2006 1,783,048 2,263,646

2005 262,046 1,132,770

2004 1,011,859 226,748

Sales Operating Expenses Operating Income EBIT Profit after Tax

28,235,39 3 171,086 39,980 2,549,756 1,805,212

22,030,95 8 536,636 53,151 2,005,455 1,363,290

17,142,36 3 692,924 57,961 163,600 1,148,722

12,857,001 1,027,348 65,959 1,409,688 984,279

FINANCIAL RATIOS

2007 LIQUIDITY RATIO'S Current Ratio Quick Ratio Operating Ratio ASSETS TEST RATIO'S Inventory Turnover Fix Assets Turnover Total Asset Ratio Assets Equity Ratio PROFITIBILITY RATIO'S Return on Assets Return on Equity Profit Margin Basic Earning Power 64.6 7 2.81 1.78 3.85

2006

2005

2004

C.A / C.L C.A-Inventory / C.L Operating Exp. / Operating Inc.

0.94 0.86 15.5 7

0.88 0.82 11.9 5

0.812 0.75 10.1

1 0.89 4.28

Sales / Avg. Inventory Sales / Fixed Assets Total Sales / Total Assets Total Assets / Owner Equity

66.8 9 2.72 1.7 5.1

68.59 3.36 1.94 4.51

49.04 3.99 2.29 3.76

Net Income / Total Assets Net Income / Avg. Owner Equity Net Income / Total Sale EBIT / Total Assets

0.11 3.98 0.64 0.16 1

0.11 3 0.06 2 0.16

0.13 2.53 0.067 0.18

0.176 2.17 0.076 0.252

DEBT RATIO'S Total Liability / Total Assets Total Liability / Owner Equity

Total Debt

0.38

0.4 2.06 4

0.78

0.73

Debt / Equity

1.45

3.5

2.76

PRICE EARNING &DIVIDEND S

SALE &PROFIT AFTER TAX

30,000,000 20,000,000 10,000,000 0 2007 2006 2005 2004 Sale

2,000,000 1,500,000 1,000,000 500,000 0 2007 2006 2005 2004 Profit after Tax

FINANCIAL PERFORM ANCE
By 2014, Nestle Pakistan aims to be a Rs. 100 billion Company. Nestle is the largest food and beverage company in the world. Marketing more than 9000 brands in 85 countries with a global workforce of 250,000. Nestle is a human company and offers tremendous opportunities for career growth and teaming at domestic and international levels. Nestle Pakistan Ltd. Is a standard-bearer of Nestle SA's global performance; registered on the Karachi and Lahore stock exchanges, for the past five years and have been declared one of the top 25 companies on the Karachi Stock Exchange. Nestle Pakistan Limited has posted Rs 1,805,212 million as profit after tax in 2007 as compared to Rs 1,363,920 million earned in the corresponding period last year. The board of directors of the company in its meeting declared that the earning per shark stood at Rs 39.01 in the period under review against Rs 30.06 in the same period last year.

SALES TURNOVER
Nestle Pakistan recorded excellent sales turnover for last 4 year, driven by its focused business strategies and expanded distribution and consumer reach. The portfolio of Nestle products also grew by new product launches including 'Maggi Atta' noodles, Maggi recipe mixes, Nido yogurt, Ceralac baby biscuits, and a new mango addition to the Nestle juices range. The company continued its dairy development initiatives in collaboration with the government and other institutions to accelerate fresh milk production in the country and to boost the ability to collect incremental quality milk. The company's net profit surged to Rs. 1,805 million in 2007 as compared to Rs. 1,363 million in last year. Total sales of the company increased to Rs. 28,235 million in this period, against Rs 22,031 million previously. Sales for the year exceeded Rs. 6 million, recording a growth of 78 percent, with contribution coming from each of the company's main product categories. In particular, excellent growth came from milks, baby food.

RECOM ENDATIONS M
Overall, the profit and net profit margins remained stable. Overall profit margin showed a slight increase but a slight decline in gross profit margin was witnessed. This was mainly due to cost pressure on some Product as both local and international prices have increased dramatically coupled with investment in commercial and operation infrastructure to support future growth and the resulting inflationary impact on its cost. This robust growth in sales translated into a solid increasing operating profit an increase of 33%. However, this primarily relates to higher fixed cost absorption from inventory that led to lower profitability. In addition, efforts for upcoming years include a favorable movement in sales mix and rigorous fixed cost control.

CO NCLUSION
This report is an informative report; our team described a brief back ground of how Nestle came into being and how it reached Pakistan. Good food good life is not just a part of their logo they make sure that they follow this principle. Their true commitment to their consumer to their consumer is a reason that company has developed so drastically not only, is an achievement in itself & shows how much the consumer love Nestle products. In Nestlé’s view, it must be fully integrated in the social, cultural & economic fabric of the countries in which it operates. Thus no matter which country its operates in it is committed to strengthening local communities. At Nestlé’s Pakistan they are whole heartedly committed to meet their obligation to Pakistan society and be a good corporate citizen of the country. Their strategy is to provide the finest quality, while consultancy reinventing their products to suit consumer need better their extra care of their consumer need its secret of their success.

BIBLIO GRAPHY

Annual report 2004 to 2007

www.nestle.pk

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