NESTLE

Product Mix :

NESTLE India Ltd is all set to expand its product-mix in the domestic market by venturing into new areas such as sugar confectionery, pickles and chutneys under its brand name. The company, however, will have to source these items from SSI units because these are items reserved for the small-scale sector. The proposal submitted by the company has been cleared by the Government. It includes regularisation of royalty payments by the company to its parent. Nestle India is a wholly-owned subsidiary of the Swiss multinational, Nestle SA. The company had, in its application to FIPB, sought permission for sourcing these products from some SSI unit or from units which manufacture these items under `carry on bus iness' (COB) licence. The Department of Food Processing, however, has inserted the provision that Nestle will not be allowed to source sugar confectionery, pickles and chutneys from units manufacturing these products under COB licence but only from SSI units. It has also included a stipulation in the FIPB approval that Nestle will also have to take up an export obligation of 50 per cent of their annual production of these items which are otherwise reserved for the small sector. The department also stated that Nestle India will not be allowed to have equity participation of more than 24 per cent in any SSI unit. As for royalty payment, Nestle had sought permission for regularisation of royalty payment with effect from February 6, 1999 to February 3, 2000. It has also sought permission for payment of royalty for a period of 10 years from the date of agreement i.e . up to November 2002, which has been okayed by the Government.