COMPANY HISTORY:

The company was incorporated in Pakistan on mid of February19, 1970 as a private limited company under the Companies Act,1913 and
subsequently converted into a public limited company under the Companies Ordinance,1984 by special resolution passed in the extraordinary
general meeting held on March 30, 1988. In 1991, With the aim of bringing constant value to our consumers, National Foods diversified its
product portfolio with the launch of the Pickle range. Guided by our founding principles of quality and purity (which remain intact), ween joyed
great success in our pioneering venture, which allowed us to steadily expand into other categories. In 1992, National Foods as a committed
and socially responsible organization joined hands with UNICEF to spread awareness about the use of iodized salt which helps fight against
wide spread Iodine related deficiencies and diseases. In 1997, National Foods added two more categories to its product portfolio, which
included a varied range of Jams and Ketchup. In 1998, National Foods became an ISO Certified Company that helped us in our pursuit of
excellence. In 2000 National Foods’ mainstream products were launched in Australia to offer a taste of ethnic food to our Non-Asian
consumers. In 2006, National Foods celebrated the opening of its brand new production facility in Port Qasim. This new factory is equipped
with state-of-the-art machinery and is spread over more than 10 acres. In 2010, National Foods successfully completed 40 years since its
inception, whilst displaying the highest standards of corporate behavior towards its employees, consumers and the society at large. In 2014,
An official inauguration ceremony of our first international subsidiary, NF DMCC, took place in Dubai. On the local front, National Foods
successfully pioneered as the first food company to establish strong system based controls for monitoring the presence of Allergens in its
products through the implementation of Allergen Management System. In line with new product
developments, National Foods also launched its first range of Halal frozen meals and traditional nimco snacks called National Authentic and
National Masala Snax respectively. Furthermore, National Food salso became an ACA authorized Training Employer by becoming an official
member of the Institute of Chartered Accountants in England and Wales (ICAEW). In 2015, National Foods continues to accelerate towards
accomplishing its Vision 2020 by conquering many more horizons through commitment to excellence, continuous innovation and quality
products for its consumers. The company is principally engaged in the manufacture and sale of
convenience based food products. It is listed on Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the company is
situated at 12 / CL - 6, Claremont Road, Civil Lines, Karachi. With a range of over 110 products in 13 major categories, National Foods is one of
the prominent food companies. With a history spanning over four decades, National Foods has trudged through various challenges of
economic booms/depressions, wars, globalization, changing consumer lifestyles, technological advancements and has successfully catered to
the changing needs of its customers. National Foods has managed this with its consumer centric and innovative product development which
keeps into account the ever changing market trends.

PURPOSE:

Winning the hearts of millions of consumers worldwide, National Foods strives to deliver excellence in food taste and quality. The company has
successfully expanded its global footprint across 40 countries in 5 continents. National Foods continues to spread happiness by offering
authentic flavors, thereby re-uniting individuals with their longstanding Pakistani heritage.

LOGO:

NATIONAL FOOD GLOBAL EXPENSION AND PAKISTANI MARKET COVERAGE:

VISION & MISSION STATEMENT:

Mission Statement:
“To grow business
consistently through positive relationship with customers to attain full customer satisfaction and to bring continual improvement by ad
opting only those business practices which add value to our customers, employees and shareholders.”
Vision Statement:
To be a Rs. 50 billion food company by the year 2020 in the convenience food segment by launching products and services in the
domestic and international markets that enhance lifestyle and create value for our customers through management excellence at all
levels.

CEO’S MESSAGE:
Dear All,
Reacting on the year 2017, National Foods, despite a challanging year, made positive strides towards strengthening itself both in terms
growth and commitment. The report retains the theme of “Share Food, Share Love”, as this emphatically manifests our intentio ns, ethics,
strategy and future. We are very proud to share that the journey in 2017 was about soaring to new growth trajectories. Our topline for the
year stood at PKR 23 billion versus PKR 19 billion for last year. We grew organically as we sharpened our focus on enhancing the food
division by successfully launching Mayonnaise in the market. We also continued to meet changing taste preferences by offering new
products like diet jams that appeal to health-conscious consumers, hence unlocking new opportunities for our topline growth. Our very
popular recipe mixes were also enhanced, with the addition of Chatpatti Bombay Biryani, which became a hit became a hit instantly.
Besides enhancing our organic topline, we realized the strategic importance of investing in businesses which not only offer a larger
customer base, but also greater distribution channels which creates synergy and enhances the entire supply value chain. With this
realization, our major milestone of the year was the acquisition of 60% interest in A -1 Bags and Supplies Inc., through our Canadian
subsidiary, National Epicure Inc. Leveraging the growth potential of this synergy, we have already made headway by expanding the
current store of A-1 Cash and Carry to add another 50,000 sq. ft. to the existing covered area. The year witnessed robust technologi cal
improvements in systems, processes and machinery, as our teams continued to reap the benefits of automation. Our system switc h to
Office 365 was a big win as our IT team impeccably migrated our core communication and collaboration system from Google Ap ps to
Microsoft Office 365. While our online systems switched to the latest and the most efficient, our plant machineries also witn essed gr eat
improvements. The introduction of the “Titan Cut”, an automated mango cutting line assembled in -house by our team., was a tremendous
addition, as it doubles the prodution rate and reduces power consumption significantly. Keeping up with the challenges of a g rowing
business and an extremely competitive market, we are growing our core operations as well. Our focus thr oughout the year was
emphasized on building competencies, skills set, and in ensuring a constant learning environment. Focus on performance was ac centuated
through an interactive Town Hall session with the entire Company. The Town Hall session also provide d a great opportunity to connect
with the employees on a one on one basis, allowing improved communication, motivation and transparency. From holding ourselve s
accountable to the highest standards of excellence, to speaking with truth, and owning responsib ility, our people displayed great
commitment and moral values. With our consistent endeavor to streamline our processes to global best practices, we also ensur ed utmost
importance and attention towards our people’s health and safety. Our HSE teams enhanced the Company’s safety culture by
implementing an online Incident Reporting System by the name of “Safety First”. This system not only formalizes the process o f
identifying and reporting near misses but also helps document and generate safety records for be tter risk analysis. National Foods has
always maintained a strong focus on its impact beyond sales and numbers. As a socially responsible Company, we continue to en gage
with and serve our communities, aiming to add value to lives and livelihoods with initi atives in health, education, and community
development. We are proud to share that this year, our oldest initiative, “Aagahi Adult Literacy”, was featured as part of UN ESCO’s
Litbase, which is a collection of global literacy partners, who are recognized fo r their best practices and innovation. Till date 53,735
learners across 43 cities of Pakistan have benefitted from this literacy program. We also collaborated with Reckitt Benckiser Pakistan on
a joint effort to lead a sustainable community initiative which will advocate healthy living and eating in villages by offering inhabitants
cost effective solutions with the help of trained rural women. We also successfully completed our three years long support to Aga Khan
University Hospital for setting up a new Pediatric Intensive Care Unit (PICU) for children, which was inaugurated during the year. The
5,500 square foot, eight-bed facility is specially designed to treat children fighting life-threatening diseases.
We’re facing a challenging landscape that is continually being disrupted, as old players are dislodged and new entrants emerge. And the only
way we will continue succeeding is by forging even stronger relationships, collaborating even more closely with our partners.As we continue to
build upon the legacy of what is one of Pakistan’s leading companies today, I, along with my colleagues, look forward to another year of
exciting opportunities at National Foods as we strive to create greater value, in every sense of the word. Looking forward to another remarkable
year!
ABRAR HASAN
CEO

OUR BRANDS:
Complete Kitchen Solution
In a history that now spans over four decades, National Foods success is attributed to its ability to respond to changing nee ds of the
consumers, the technological advancements and its innovative product development. With its wide array of brands, National Food’s focus
on innovation has altered the kitchen habits of millions of consumers who now have the advantage of preparing healthy and del icious
food with a lot of convenience.

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RECIPE MASALA RECIPE MASALA JARS FROZEN MEALS
 Chicken tikka masala  Fish fried  Butter chicken
 Haleem masala  Tandoori  Chicken biryani
 Bombay biryani masala  Tikka  Vegetable biryani
 Karhai gosht masala  Chicken Tikka  Chicken korma
 Korma masala

CHUTNEYS & SAUCES BASIC SPICES JAMS

 Plum chutney
 Mango chilli sauce
 Tamarind chutney
 Hot mango chutney
 Mint chutney
 Red chilli powder  Apple
 Cumin powder  Mango
 Pomegranate seeds  Mixed fruit
 Fcougreek leafs  blackcurrent

SALT KETCHUP RICE

 Table salt  Ttomato ketchup  Super kernal
 Iodized salt  Chilli garlic sauce banaspati
 Hot and spicy sauce  Long grain banaspati

GINGER AND GARLIC PASTES PICKLES CHINESE

 Garlic paste  Mixed  Chinese salt
 Ginger paste  Mango  Chilli sauce
 Ginger & garlic paste  Garlic  Soya sauce
 Kasundi  Veniger white
 Lasura chilli
 Hyderabadi mix
 karela

DESSERTS GOLDEN FRIED ONIONS

 Vanilla  Fried onion
 Strawberry
 Banana
 mango

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HIGH-LOW RATES OF SHARES:

FINANCIAL RATIOS CALCULATIONS:

CALCULATIONS
FORMULAE 2015 2016 2017

LIUIDITY RATIOS:

1- Current Ratio = C.A / C.L 3931164 / 2685229 = 1.46 4454221 / 3996913 = 1.11 4718695 / 4449639 = 1.06

2- Quick Ratio = C.A-Inventories-Prepaid / C.L 3931164 – 2254723- 50404 / 2685229 4454221 – 3250374- 95455 / 3996913 4718695 - 3008831 - 209476 / 4449639
=0.61 =0.30 =0.34

EFFICIENCY RATIOS:

1- Inventory Turnover = COGS/Inventories 7541804 / 2254723 = 3.34 8937467 / 3250374 = 2.75 9910969 / 3008831 = 3.29

2- Inventories in days = 365/Inv turnover 365 /3.34 =109.28 365 /2.75 = 132.72 365 / 3.29 = 110.94

3- Total Asset Turnover = Net sales / Total Asset 11581436 / 5555026 = 2.08 13183185 / 6575253 = 2.00 14801551 / 7918609 = 1.87

4- Receivable Turnover = Net credit sales / A/R 11581436 / 1,150,666 = 10.06 13183185 / 1,000,468 = 13.17 14801551 / 1273826 =11.62

5- Receivables in days = 365 / Rec turnover 365 / 10.06 = 36.28 365 / 13.17 = 27.71 365 /11.62 =31.41

PROFITABILITY RATIOS:

1- Gross profit ratio = G.P / Sales 4039632 / 11581436 = 34.9% 4254718 / 13183185 = 32.27% 4890582 / 14801551 = 33.04%

2- Op. profit margin = EBIT/sales 1469522 / 11581436 = 12.69% 1179291 / 13183185 = 8.95% 1381585 / 14801551 = 9.33%

3- Net profit margin = N.I / sales 993563 / 11581436 = 8.58% 773676 / 13183185 = 5.87% 984897 / 14801551 = 6.65%

4- ROA = N.I / total Asset 993563 / 5555026 = 17.89% 773676 / 6575253 = 11.77% 984897 / 7918609 = 12.44%

5- ROE = N.I / shareholder Equity 993563 / 2756888 = 36.04% 773676 / 2483772 = 31.15% 984897 / 3179689 = 30.97%

MARKET RATIOS:

1- P/E ratio = market value price per share / EPS 446.96 / 9.59 = 46.61 401.98 / 7.47 = 53.81 425 / 9.51 = 44.69

2- Div yield ratio = div per share / market value 13.14 / 446.96 = 2.94 3.939 / 401.98 = 0.98 6.672 / 425 = 1.57
price per share

3- Div payout ratio = Div per share / earning per 13.14 / 9.59 = 137 3.939 / 7.47 = 52.73 6.672 / 9.51 = 70.16
share

4- EPS = N.I/ No. of shares outstanding 993563 / 103606.8 = 9.59 773676 / 103606.8 = 7.47 984897 / 103606.8 = 9.51

DEBT MMANAGGEMENT RATIOS:

1- Debt to Equity ratio = T.L / Total Equity 2798138 / 2756888 = 1.014 4091481 / 2483772 = 1.65 4738920 / 3179689 =1.49

2- TIE ratio = EBIT / Interest Expense 1469522 / 37269 = 39.43 1179291 / 67338 = 17.51 1381585 / 68567 = 20.149

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FINANCIAL RATIOS ANALYSIS:
Liquidity Ratios

Unit 2015 2016 2017

1- Current Ratio Times 1.46 1.11 1.06

 Current ratio is increased in 2015 but decreased in 2016 & 17. In 2014 and 2015 its value is increased which shows that assets are on
increasing trend which is good but in 2016 and 2017 its value is decreased which means assets are on declining trend and liabilities are
on increasing trend which represents the week position of the company as compare to the previous years. Because The higher the current
ratio, the more capable the company is of paying its obligations.

Unit 2015 2016 2017

2- Quick / Acid Test Ratio Times 0.61 0.30 0.34

 Quick ratio is increased in 2015 but its value is decreased in 2016 then increased by a little rate in 2017. Indicating that the inventory is
more in 2016 and 17 as compare to 2015. Keeping excess inventory is not good for the company as the capital amount is invested in
carrying and holding cost. Quick ratio in both the years is less than 1, which makes a company inefficient.

Unit 2015 2016 2017

3-Cash Flow from Operations to Sales % 12.09 3.63 8.48

 Cash flow from operation is increased in 2015 but in the next years 2016 its value is decreased. Which is due to increasing inventory as
indicated by current ratio relative to sales and becomes a source of decrease in cash.

Unit 2015 2016 2017

4- Working Capital Turnover Times 8.91 24.66 64.91

 Working capital turnover is also decreased in 2015 but in the next years 2016 its value increased from 9.3 to 28.83 which is very good.
A high turnover ratio indicates that management is being extremely efficient in using a firm's short-term assets and liabilities to support
sales.

Unit 2015 2016 2017

5- Cash to Current Liabilities Times (0.04) (0.16) (0.12)

 Cash to current liabilities values is in decreasing trend which shows that company has not enough cash to pay of its short-term
obligations.

GRAPHICALLY:

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Efficiency Ratios

Unit 2015 2016 2017

1- Inventory Turnover Times 3.34 2.75 3.29

 Inventory turnover is increased in 2015 but its value is decreased in 2016 & increases in 2017. It means that in 2017 it is holding its
inventory shorter than 2016 but longer than 2015.

Unit 2015 2016 2017

2- No. of Days in Inventory Days 109.28 132.72 110.94

 No of days in inventory is decreased in 2015, in 2016 it is increased but again decreases in 2017 but still greater than 2015. which is
good as compare to 2016 but somehow worse if compare to 2015 as 2-days increased in its inventory circulation.

Unit 2015 2016 2017

3- Asset Turnover Times 2.08 2.0 1.87

 Asset turnover is increased in 2015 and in 2016 &17 it’s decreased which is not good its mean that company is not utilizing its asset
efficiently in generating revenues.

Unit 2015 2016 2017

4-Receivables Turnover Times 10.06 13.17 11.62

 Receivable turnover decreased in 2015 but increased in 2016 indicating that a company is more effectively processing credit in 2016
than in 2015. But in 2017 its decreases again showing inefficiency of company in cash collecting of that year.

Unit 2015 2016 2017

5- No. of Days in Receivables Days 36.28 27.71 31.41

 No. of days in receivable decreased in 2016 which is better than 2015 showing that company receive its receivable in in less days than
2015 however in 2017 its value again increases which is worse but not so bad if compare to 2015.

GRAPHICALLY:

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Profitability Ratios

Unit 2015 2016 2017

1- Gross Profit Ratio % 34.9 32.27 33.04

 Gross profit margin is decreased in 2016 but is increase in 2017. There is no norm or standard to interpret gross profit ratio (GP ratio).
Generally, a higher ratio is considered better. The gross profit margin in 2015 was 34.9, while in 2016 it was 32.27, nd in 2017 it is 33.04
which is bad for the company because it indicates that in 2015 the cost of goods sold was 65.1% and profit was 34.9%, whereas in
2016 the cost of goods sold was 67.73% while the profit was 32.27% and in 2017 cost of goods sold is 66.96 whereas profit is 33.04.

Unit 2015 2016 2017

2- Operating Profit margin % 12.69 8.95 9.33

 Operating profit margin is decreased in 2016 than increases in 2017. ratio indicates how much profit a company makes after paying
for variable costs of production such as wages, raw materials, etc. Therefore as compare to 2016 it is no so good but as compare to 2015
it is too worst.

Unit 2015 2016 2017

3- Net Profit margin % 8.58 5.87 6.65

 Net profit margin is decreased in 2016 a low net profit margin means a company is unable to control its costs but in 2017 its value
slightly increased which is somehow good.

Unit 2015 2016 2017

3- Return on Assets % 17.89 11.77 12.44

 ROA is decreased in 2016 but in 2017 its value is increased. Indicate that its net income is decreased in 2016 and increases in 2017 but
as compare to 2015 it is still no so good because in 2015 net income is higher than these two years.

Unit 2015 2016 2017

4- Return on Equity % 36.04 31.15 30.97

 ROE is increased in 2015 but decreased in 2016 and again in 2017. Shows company’s net income is less than its equity.

Unit 2015 2016 2017

5- Return on Capital Employed % 55.92 43.89 42.37

 ROCE is increased in 2015 and in 2016 is decreased. A high ROCE indicates that a larger chunk of profits can be invested back into the
company for the benefit of shareholders.

GRAPHICALLY:

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Investment / Market Ratios

Unit 2015 2016 2017

1- Price Earning Ratio (recalc) Times 46.61 53.81 44.69

 Price earnings ratio is increased by a large amount in 2016 than decreases in 2017. its decreasing value shows that (by noting EPS) its
stock price higher in 2016 but in 2017 it is decreased by a large amount.

Unit 2015 2016 2017

2- Dividend Yield Ratio % 2.94 0.98 1.57

 Dividend yield ratio shows continous declining trend. The dividend yield ratio in 2016 is 1.57%. It means an investor would earn 1.57%
on his investment in the form of dividends less than 2015 or greater than 2016 if he buys the company’s common stock at current market
price.

Unit 2015 2016 2017

3- Dividend Payout Ratio (recalc) % 137 52.73 70.16

 Dividend payout ratio in 2015 is higher than 2016 &17 (If a company has a dividend payout ratio over 100% then its means that the
company is paying out more to its shareholders than earnings coming in). This is typically not a good recipe for the company's financial
health; it can be a sign that the dividend payment will be cut in the future. Which is shown is 2016 that the ratio decreased to 52.73.

Unit 2015 2016 2017

4- Earning Per Share (EPS) Rs 9.59 7.47 9.51

 EPS A company with a high earnings per share ratio is capable of generating a significant dividend for investors as shown in year 2015
& 17 ( by noticing div payout ratio ) or it may blow the funds back into its business for more growth; in either case, a high ratio indicates
a potentially worthwhile investment, depending on the market price of the stock.

GRAPHICALLY:

Debt Management Ratios

Unit 2015 2016 2017

1- Debt to equity ratio % 1.014 1.65 1.49

 Debt to equity ratio in 2016 increases shows liability of company increases while in 2017 its value decreases showing company paid
some of its debts.
Unit 2015 2016 2017

2-Interest coverage TIE-ratio Times 39.43 17.51 20.15

 TIE ratio shows how many times interest expense are earned or covered by company. In 2017 company covered its interest expense
more efficiently than in 2016 while as compare to 2015 it is going worse.

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EXPORT FROM PAKISTAN:
Winning the hearts of millions of consumers worldwide, National Foods strives to deliver excellence in food taste and quality. The company has
successfully expanded its global foot print across 40 countries in 5 continents. National Foods continues to spread happiness by offering
authentic flavors, thereby re-uniting individuals with their longstanding Pakistani heritage.

The exports of the food group grew by 22.4% contributing 26.1% in the overall exports growth. However, imports accounted for 11% of the
total imports thus contributing 16.3% in the overall growth of imports. The exports however stood at US $3.3 Billion. Being a highly viable
marketing the country the food industry attracted foreign direct investment of US $ 108.3 million.

SWOT ANALYSIS:

STRENGTHS:
BROAD PRODUCT LINE:

National foods has very broad line that includes different types of masala powders, Kheer mix, ketchup, custard powders, pastes, achar and
many more.

BROAD MARKET COVERAGE:

National foods occupies 80% market share in powder mix market and one very obvious reason for that is strong and very broad market
coverage. According to sales and purchase manager national food, they have excellent market coverage all over Pakistan and citizens of each
city have easy access to sales and display centers.

MANUFACTURING COMPETENCE:

National food has engineering and technical staff of the highest caliber that is capable of manufacturing such product that differentiates national
food product from its competitors. National food posses specific manufacturing competence for example uses of imported machinery and a high
quality ingredients in manufacturing of powder mix that maintain the quality of product.

GOOD MARKETING SKILLS:

National food’s efficient marketing team in Pakistan has over the years played a crucial role in developing public awareness. National food has
its own in-house advertising agency for promoting all national food’s products

ENHANCED RESEARCH AND DEVELOPMENT:

National food emphasizes on research and development to a great idea. Chief executive of national food has hired a team of R&D himself and
he makes sure that ongoing improvements in the existing national food products range is a continuous activity. Efficient R&D department is
considered as a vital strength of company.

BRAND NAME REPUTATION:

National food is among those few brand names that earn a lot on the basis of its brand reputation.however the fact is that company has seen
tiring 34 years of hard work to achieve this brand image. Brand name is a source of vital strength for the company and is known all over the
market place.

APPROPRIATE ORGANIZATIONAL STRUCTURE:

Organizational hierarchy at national food is very functional and appropriate.

Company top management consists of the chief executive and managing director. Then there are middle managers of concerned departments like
marketing, production, R&D and finance. Company believes strongly on good relationship with its human resource.

GOOD FINANCE MANAGEMENT:

Finance department of national food is efficiently working to allocate resources to each of its business portfolio. Good finance management is
yet strength of company that is helping company out in assessing the exact financial situation.

WEAKNESS:
Currently national food is operating with its full capabilities and company’s sales manager does not think that there is any internal weakness in
the organization. Because company has a good repute in market and working with full concentration to improve its image in the minds of people.

OPPOURTUNITY:
EXPANDING INTO FOREIGN MARKETS:

The biggest opportunity for national food currently is exploiting new market segments. After achieving good market coverage all over Pakistan,
national food is now trying to expand its business in middle east and central Asian states.

EXPANSION OF CORE BUSINESS:

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National food started as powder mix producers but soon after gaining rapid market shares in powder mix, company considered expansion of core
business as a major opportunity. Today company has wide range of products that it has achieved by expanded the core business.

ENTERING RELATED BUSINESS:

Entering those new business that are related to current business is a high potential opportunity. For example company has entered the related
businesses like kheer mix, ketchup, custard powder, pastes, achar and many other things.

THREATS:
NEW ENTRANTS:

The biggest threat of company has been the entry of new competitors in the market has made national food management think that they will have
to adjust the pricing the pricing or to provide some handsome incentives to customers in competition with other brands in market because
company does not want to lose its market share.

NO BARRIERS ON ENTRY:

Government has not fixed any hard rules upon the entrants in this industry. Any group of companies that is financially strong can enter this
industry without facing any strict barriers. This is another threat for national food that more and more entrants coming in this industry and the
profit margin shirking gradually.

NEW FORM OF INDUSTRY COMPETITION:

In Pakistan, some other companies like star has competing national food with its custard powder and achar. It has formed a new form of
industry competition. Star is producing its products at a cheaper price and price war is already on.

GOVERNMENT LEGISLATION:

The production department of national food uses special machinery that has to be imported from abroad. Government has fixed a quota system
that company cannot import. It more than a specific ratio. This quota system is creating a threat for company and soon company needs to find an
alternative.

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