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Disclaimer
This presentation may contain statements which reflect
Management’s current views and estimates and could be
construed as forward looking statements. The future involves
certain risks and uncertainties that could cause actual results to
differ materially from the current views being expressed.
Potential risks and uncertainties include such factors as general
economic conditions, commodities and currency fluctuations,
competitive product and pricing pressures, industrial relations
and regulatory developments.

Responses can be given to questions, which are not price sensitive.
Calculations in this presentation are based on non-rounded figures.
Real Internal Growth (RIG) and Organic Growth (OG) are basis Nestlé
Internal Reporting Standards in relation to third party sales only.

9 months highlights
INR 45.8 Bio
INR 8.4 Bio

21.1
16.3 18.4% INR 4.6 Bio

Jan-Sep 10

+ INR 8.0 Bio Volumes + INR 0.9 Bio + 12.4%
+ 21.3% & Prices - 140 bps

INR 37.8 Bio
INR 7.5 Bio

17.0 INR 4.1 Bio
13.6 19.8%

Jan-Sep 09
Net Sales RIG% OG% OPBIT Economic
Profit

Includes figures from Nestlé Internal Reporting Standards

3 months highlights
INR 16.4 Bio
INR 3.0 Bio

26.2
19.6 INR 2.2 Bio
18.3%

Jul-Sep 10

+ INR 3.4 Bio Volumes + INR 0.6 Bio + 19.6%
+ 25.7% & Prices - 50 bps

INR 13.0 Bio INR 2.4 Bio

17.3 INR 1.8 Bio
14.9 18.8%

Jul-Sep 09
Net Sales RIG% OG% OPBIT Net Profit

Includes figures from Nestlé Internal Reporting Standards

7 16.6 19.2 21.2 16.0 43.2 51.0 17.0 23.3 13.3 37.8 2007 2008 2009 Jan-Sep 09 Jan-Sep 10 RIG & OG are basis Nestlé Internal Reporting Standards in relation to third party sales only .8 45. Healthy growth continues… Organic Growth (OG) (%) Real Internal Growth (RIG) (%) Net Sales (INR Bio) 18.3 20.8 35.1 24.

4 43. Volume (000’ Tons) Value (INR Bio) 252.0 297.4 12.8 Jan-Sep 09 Jan-Sep 10 Jan-Sep 09 Jan-Sep 10 .based on consistent domestic performance.. Volume (000’ Tons) Value (INR Bio) 11...8 2.8 35.4 2...0 …and recovery in exports.

.3 Jan-Sep 10 Jan-Sep 09 . Contribution to Net Sales % Share % Share Chocolate & 14.3 Beverages 14.1 25..1 Prepared Dishes 27.Sustained diversified portfolio across categories.0 Nutrition 46.5 & Cooking Aids 13.1 Milk Products & 45.6 Confectionery 14.

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3 Confectionery 20 20.9 Prepared Dishes 30 & Cooking Aids 12. A balanced performance 35 x = 17.4 Milk Products Value Growth (%) 25 & Nutrition Chocolate & 6.7 x = 21.6 15 6.1 10 Beverages 5 - 0 5 10 15 20 25 30 Volume Growth (%) Bubble shows Net Sales (INR Bio) Jan-Sep 10 .

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0 2.4 Effective 6.8 Materials Staff Cost Distribution Advertisment Power & Fuel Depreciation Cost & Sales Promotion Figures have been regrouped / reclassified to make them comparable.1 1.9 0.2 2.5 3.1 0. 3.7 2.2 Jan-Sep 2010 Jan-Sep 2009 % Operating Income 47.5 4.9 4.6 18.0 3. Our Cost Structure 49.5 .7 1.0 2.1 INR Bio 22.9 2.3 1.8 22.9 increase 7.5 4.6% 4.6 1. Not to scale .

5 17.High commodity prices impact margins… but margins remain healthy and have… 19.5 8.4 2007 2008 2009 Jan-Sep 09 Jan-Sep 10 OPBIT (INR Bio) OPBIT % of Net Sales 17 .2 7.6 6.6 9.9 18.1 7.8 17.4 17.

6 47.0 49.3 18.4 Change 280 80 50 140 bps Material cost as % of Net Sales Year Qtr 1 Qtr 2 Qtr 3 YTD 2009 47.2 47.3 Change 260 140 130 180 bps .5 2010 49.8 2010 19.8 49.8 47.… improved over the quarters… OPBIT % Year Qtr 1 Qtr 2 Qtr 3 YTD 2009 22.8 19.0 18.8 18.6 18.2 17.1 49.

2 18.8 19.8 18.5 18. …margin recovery… 22.8 Q1 Q2 Q3 OPBIT Margin Quarterly Cumulative 2010 2009 2010 2009 .3 19.6 18.0 20.2 22.3 18.4 19.0 17.

3 6.3 19.9 Q1 '10 Q2 '10 Q3 '10 Real Internal Growth (RIG) Price Increase Organic Growth (OG) Basis Nestlé Internal Reporting Standards .3 14.6 5.6 16.2 17.6 14. Steady increase in selling prices 26.3 2.

5 33.5 28.Marginal & Effective tax rates move in tandem 33.0 34.4 28.3 2.8 28.1 2.1 2.4 2007 2008 2009 Jan-Sep 09 Jan-Sep 10 Tax Expense (INR Bio) Marginal Tax Rate (%) Effective Tax Rate (%) Excludes Fringe Benefit & Dividend Distribution Tax .0 34.6 2.9 34.5 29.2 2.0 33.

8 13.3 6.8 4.4 6.4 12.3 12.6 5.4 11.1 5.Impact of decline in OPBIT % partially offset by tax 14.2 2007 2008 2009 Jan-Sep 09 Jan-Sep 10 Net Profit (INR Bio) % of Net Sales .

4 5.6 4.4 2.3 2. Capex & Taxes) Sales are on rolling 4 quarters basis and Operating Working capital is average for rolling 4 quarters Basis Nestlé Internal Reporting Standards . Level impacted by margins but within tolerance 5.7 2.1 5.0 4.4 3.0 2007 2008 2009 Jan-Sep 09 Jan-Sep 10 Operating working capital (INR Bio) % of Net Sales Operating Working Capital = Inventories + Debtors – Trade Payables (excluding Staff Costs. Contingencies.0 2.

3 in 09 18. Reported 16.7 9.8 5.3 7. Healthy Cash flow.4 14.5 2007 2008 # 2009 Jan-Sep 09 Jan-Sep 10 Operating cash flows (INR Bio) % of Net Sales # excludes one off inflows.5 16.2 6.7% ...1 • Margins 15.3 7..albeit impacted by period end working capital & margins • Base effect of working capital • Non cash costs 19.

5 8.9 13.9 8.7 7.5 2.3 11. ROIC is 5 times ACC 70 66 61 62 62 57 53 50 51 49 3.5 8.0 3.5 Premium% Basis Nestlé Internal Reporting Standards .1 4.5 3.6 12.1 4.0 Risk Free rate % 7.8 12.9 4.0 Group risk 2.0 3.3 4.6 2007 2008 2009 Jan-Sep 09 Jan-Sep 10 Economic Profit (INR Bio) Economic Profitability (%) Return on Invested Capital (%) ACC % 11.

ROE amongst the top albeit ROE % declines… Average Share 1179 1544 1987 1797 2831 Price (INR) 119 113 113 104 99 33. Accretion to shareholders wealth continues.9 42. 7.5 55.1 4.0 42.0 63.9 36.2 36.5 (INR Bio) 2008 figures include special dividend of Rs.0 56.7 3.5 67.5 3.2 4.5/Share Jan-Sep includes dividend declared till Oct of each year .8 2007 2008 2009 Jan-Sep 09 Jan-Sep 10 DPS (INR) EPS (INR) ROE % Dividend 3.4 48.

4 3.7 2.7 0.5 (INR Bio) 5.8 5. 0.4 1.5 5.7 2007 2008 2009 Jan Sep 09 Jan Sep 10 Capex (INR Bio) Capex as % of Net sales FA Rotation Dep.73 0.88 (INR Bio) Fixed Assets exclude Intangibles .8 5.01 0.6 5.8 2. Effective CAPEX is up Commitments 0.9 5.8 4.8 1.64 0.82 1.8 4.9 6.7 1.0 0.8 1.7 4.

2% of sales. Stepping up CAPEX • In the last 5 years we have spent INR 9. • Expansions at existing manufacturing locations are underway. • Capacity utilization across most plants and products categories are at all time high. Averaging at 5. .2 Bio on CAPEX.

Expansion at Samalkha Factory .

Expansion at Nanjangud Factory .

Expansion at Ponda Factory .

Expansion at Bicholim Factory .

Chocolate & Confectionery • CAPEX foreseen on existing & new products spread across Premium.Prepared Dishes & Cooking Aids . In particular: . • CAPEX is planned across product categories. .Milk Products & Nutrition . Mainstream & PPP segments. Stepping up CAPEX • Greenfield sites are also under consideration.

Stepping up CAPEX CAPEX foreseen to ‘significantly’ increase in near future… and is naturally based on the potential growth foreseen in the domestic consumption in India… .

5 1.7 8.0 Dividend # 9.8 5.’s % net sales 18.8 Free Cash Flows 9.7 9.1 16.0 Dividend Tax (DDT) # 1. Financing CAPEX Last 5 years the Operating Cash Flows were sufficient to meet CAPEX and maximize Dividends.4 1. All fig.9 14.9 5.1 11.0 10.3 5.8 10.3 16.1 CAPEX cash flows 5.5 2005 2006 2007 2008 2009 # on appropriation basis .7 Operating Cash 14.2 1.1 4.5 9.8 Flows 13.1 9.6 1.

9 48.4 42.0 55.9 33.5 67.5 9 32 2005 2006 2007 2008 2009 10 9 EPS (INR) DPS (INR) Payout Ratio (%) * * Payout Ratio (Dividend Paid + Dividend Distribution Tax) / PAT less statutory transfer to Reserves . Financing CAPEX Last 5 years the average dividend payout has been ~ 98% 4 yr average 99 100 100 Div Payout % 99 93 Nestle India 97 FMCG 1 97 2 94 One Equity Share = INR 10 3 76 4 76 5 66 6 54 7 51 8 42 32.5 42.7 25.0 32.1 25.

0 10.5 23 35.4 15.1 1.8 13.4 2.3 Nestle FMCG1 FMCG2 FMCG3 FMCG4 FMCG5 FMCG6 Reserves & Surplus to Share Capital 5. Financing CAPEX Our Sales to Net Worth turns are high 8.8 (times) .8 Our Reserves & Surplus to Share Capital are low. Sales to Equity (N.5 20.W) 6.8 6.7 1.0 Turns 3.

Ranking in India's top 500 companies in 2008 Ranking Criteria Total Income Net Profit Net Worth Market Cap RONW PAT Margin Nestle India 113 91 344 74 4 193 Source .Dunn & Bradstreet's Business Insight Series 2008 . Financing CAPEX Our ROE/ RONW is amongst the highest but we are low in ranking in terms of absolute amount of Net Worth Nestle India .

. Financing Strategy Nestle India’s Balance Sheet will require ‘Capitalization’( Net Worth) ‘Leveraging’ to support the acceleration in CAPEX.

• Credit Ratings. Financing Strategy Will need a judicious mix of ‘Internal Accruals’ & ‘Debt’. Nestle India (locally AAA) Nestle SA (AA) . Following elements will be key to the financing strategy: • Dividend Payout • Debt :Equity • Local foreign currency debt.

Conculsions • Nestle India has doubled turnover in 4 years. • Operating margins have been healthy. • Annualized return to the shareholders has been over 35%. • India growth story is compelling • CAPEX is being stepped up across most locations & products. • Has generated strong cash flows. • Current capacity utilizations are at all time high. • Financing is foreseen through a judicious mix of ‘Internal Accruals’ ‘Debt’ .

THANK YOU .

Nestlé Commodity Basket Price Index 155 136 138 123 110 100 2005 2006 2007 2008 2009 YTD 2010 .

9 Palm Oil Fats 0.6 (1600) Price indices (%) Bubble size represents the consumption in Jan-Sep 10 (INR Bio) Impact of price change & Price indices reflect YoY change .6 Sugar Flour (800) Fresh Milk (1200) 6.8 (400) Wheat 1.6 MSK (30) (20) (10) 0 30 40 50 60 70 80 0.2 1.5 Cocoa 1.7 Impact of price change (INR Mio) 0. Evolution of Commodity Cost 800 Green Jan-Sep 10 Coffee 400 1.

8 115.1 105.4 122.9% 138.0 111.5 118.5 152.4 118.1 110.0 Q1 Q2 Q3 Q4 2007 2008 2009 2010 Indexed with base Q1-07 .5 155.2 123.8 115.6 +23.7 132. Evolution – Fresh Milk Fat Prices 155.2 100.4 Current 152.

0 98.3 95.6 96.2% 106.4 108.5 Q1 Q2 Q3 Q4 2007 2008 2009 2010 Indexed with base Q1-07 .3 109. Evolution – MSK Prices 125.7 105.7 110.6 96.3 98.1 100.7 +13.2 108.4 109.3 105.7 Current 113.

6 100.3 104.1 100.7 117.4 Q1 Q2 Q3 Q4 2007 2008 2009 2010 Indexed with base Q1-07 .1 99.4 119.0 102.1 135.3 -16.8 101.5 131.9 132.0 100. Evolution – Green Coffee Prices Current 136.7% 109.0 128.0 114.

8 89.0 96.2 115.8 107.4 201.6 145.8 198.6 91.1 Q1 Q2 Q3 Q4 2007 2008 2009 2010 Indexed with base Q1-07 .4 Current +43.6 130.Sugar Prices 222. Evolution .4 196.3 84.2% 183.0 92.0 100.4 157.

0 97.0 120.9 101.2 93.4 +13. Evolution – Wheat Flour Prices 128.0 100.4 102.4 102.1 102.1 101.1 116.1 Current 115.5 102.5% 106.8 100.0 Q1 Q2 Q3 Q4 2007 2008 2009 2010 Indexed with base Q1-07 .2 103.

7 119.8 88.2% 90.5 107.0 Q1 Q2 Q3 Q4 2007 2008 2009 2010 50 Indexed with base Q1-07 . Evolution – Palm Oil Prices 121.2 114.0 119.2 87.2 Current 119.0 100.8 82.6 87.0 100.7 -12.4 106.3 102.1 99.

3 USD/Barrel 76.Evolution – Crude Oil Prices [NYMEX] Q3 10 Mean Jan-Sep 10 77.0 USD/Barrel + 35.6% New York Mecantile Exchange .0 +12% USD/Barrel Mean Jan-Sep 09 57.1 USD/Barrel Q3 09 68.

Fuel Oils 30.8 +11.1 +38.5 Furnace Oil HSD Price .Rs./ltr Jan-Sep 10 Jan-Sep 09 Share % in total Power & Fuel cost Furnace Oil ~ 49% HSD ~ 14% .1 30.8% 34.1% 21.

COFFEE – ROBUSTA [LIFFE] London International Financial Futures Exchange .

COFFEE – ARABICA [ICE] Inter Continental Exchange .

SUGAR – [ICE] Inter Continental Exchange .

WHEAT – [CBOT] Chicago Board Of Trade .

PALM OIL – [BMD] Bursa Malaysia Derivatives .