Figure 1( Nestle India logo)

Introduction
• Purpose- Quality of food and quality of life go together. What and how people eat and drink
is fundamental to their health and well-being. We create good food to nurture good lives and
healthier, happier tomorrows.
• About- Nestlé India Limited, is the Indian subsidiary of Nestlé which is a Swiss
organization. The organization is settled in Gurgaon, Haryana. The organization's items
incorporate food, refreshments, chocolate, and candy stores.

Powdered
and liquid
beverage
23.2
Nutrition
Confection
and health
ery
science
7.9
What does 15.0
Nestle sell
(in CHF
Prepared billion)
dishes and
cooking PetCare
aids 13.6
12.2 Milk
Products
and Ice
cream
13.3

Number of Employees Number of countries Nestle sell

2,91,000 187
Total group salaries and social Corporate taxes paid in 2019
welfare expenses (in CHF) (in CHF)
16 Billion 2.9 Billion

• Ambition- Nestle has defined three overarching ambitions for 2030 which guide their
work and support the UN Sustainable Development Goals.

For individuals and Families For Communities For the Planet

Help Help to improve Strive for
50 Million 30 Million Zero
Children live healthier lives Livelihoods in communities Environmental impact in our
directly connected to our operations
business activities
History

Figure 2 (Nestle Logo in 1938)

• 1866-1959 – Nestle’s history begins with an Anglo-Swiss Condensed Milk

Company. Henry Nestle then merges an infant food company with Anglo-
Swiss which is now known as Nestle Group. In 1905, it expanded its
network to Africa, Asia, Latin America and Australia. During World War Ɪ,
demand of condensed milk and chocolate increased but due to shortage
of raw materials and limits on cross border trade, production of Nestle and
Anglo-Swiss got hampered after which it acquired 40 factories in Australia
and US. In 1921, Nescafe Coffee was launched. Post World War ꞮꞮ the
company adds Maggi soups and seasonings to its product range, and
adopts the name Nestlé Alimentana.

• 1960-2006- Acquisitions continued which lead to the business of frozen

foods, milk, coffee and Canned food. In 1970s, it expanded into
pharmaceuticals and cosmetics. Nestlé later becomes one the first
companies to apply the WHO code on breast-milk substitutes across its
business. Nestlé disposes of unprofitable brands and promotes those that
satisfy increasingly health conscious consumers, in line with its new
‘Nutrition, Health and Wellness’ ambition. The company expands in the
US, Eastern Europe and Asia, and targets for global leadership in water,
ice cream and animal food.

• Today- Nestlé articulates its Creating Shared Value approach to business

for the first time, and launches its Nestlé Cocoa Plan and Nescafé Plan to
further develop sustainable supply chains in cocoa and coffee. While
strengthening its position in traditional segments, infant formula and frozen
foods, Nestlé strengthens its focus on medical nutrition.
 Capital Structure of Nestle India

Year Class of Shares Authorized Issued Paid Up Shares Paid Paid Up

Capital Capital (Nos) Up Capital
(Crores) (Crores) Face (Crores)
Value
2019 Equity Shares 100.00 96.4 96415716 10.00 96.4
2018 Equity Shares 100.00 96.4 96415716 10.00 96.4
2017 Equity Shares 100.00 96.4 96415716 10.00 96.4
2016 Equity Shares 100.00 96.4 96415716 10.00 96.4
2015 Equity Shares 100.00 96.4 96415716 10.00 96.4
2014 Equity Shares 100.00 96.4 96415716 10.00 96.4
2013 Equity Shares 100.00 96.4 96415716 10.00 96.4
2012 Equity Shares 100.00 96.4 96415716 10.00 96.4
2011 Equity Shares 100.00 96.4 96415716 10.00 96.4
2010 Equity Shares 100.00 96.4 96415716 10.00 96.4
2009 Equity Shares 100.00 96.4 96415716 10.00 96.4
2008 Equity Shares 100.00 96.4 96415716 10.00 96.4
2007 Equity Shares 100.00 96.4 96415716 10.00 96.4
2006 Equity Shares 100.00 96.4 96415716 10.00 96.4
2005 Equity Shares 100.00 96.4 96415716 10.00 96.4
2004 Equity Shares 100.00 96.4 96415716 10.00 96.4
2003 Equity Shares 100.00 96.4 96415716 10.00 96.4
2000 Equity Shares 100.00 96.4 96415716 10.00 96.4
1998 Equity Shares 100.00 96.4 96415716 10.00 96.4
1995 Equity Shares 100.00 96.4 96415716 10.00 96.4
1992 Equity Shares 65.00 64.3 64277144 10.00 64.3
1991 Equity Shares 50.00 46.7 46670090 10.00 46.7
1988 Equity Shares 40.00 36.6 36618240 10.00 36.6
Shareholding Pattern Nestle India ltd

Standalone March September June 2019 December

2020 2019 2018
Promoters 62.76 62.76 62.76 62.76
Pledged 0 0 0 0
FII/FPI 11.81 12.61 12.95 12.36
Total DII 12.41 11.7 11.34 11.77

Financial 0.05 0.09 0.11 0.05

Institutions
Insurance Co 4.71 4.49 3.77 4.2
MF 4.19 3.79 3.45 3.08
Others DIIs 3.46 3.33 4.01 4.44
Others 13.02 12.92 12.95 13.1

Total 100 99.99 100 99.99

Stock Price Analysis of last 5 Years

Figure 3. (Nestle Stock Price as on sept,2,2016)

 Figure 4 (Nestle Stock Price as on Sept,4,2020)

Stock Price analysis helps investors to find potentially profitable stocks for buying and selling
decisions. By studying and evaluating past and current data, investors and traders attempt to gain
an edge in the markets by making informed decisions.
As in the case of Nestle India market stock price as on sept 2, 2016, is Rs 6439.65 per stock whereas
on sept 4, 2020, it is valued at Rs 16232.60 per stock which is a hike of 152.07%. A company like
Nestle which is known internationally, has mostly been bullish as depicted from these above charts
and has shown a high growth trend when it comes to increase in its market value of its shares.
When running stock analysis on a company’s financial statements, an analyst will usually be
checking for measure of a Company’s Profitability, Solvency, efficiency, growth trajectory and
leverage. Different ratios can be used to determine how healthy a company is. Following are a few
Ratios which will help us known better how Nestle Company has been performing in the above
aspects mentioned.

P/E Ratio
A common method to analyzing a stock is studying its price-to-earnings ratio. We calculate the P/E
ratio by dividing the stock’s market value per share by its earnings per share. To determine the value
of a stock, investors compare a stock’s P/E ratio to those of its competitors and industry standards.
Lower P/E ratios are seen as favorable by investors. Here in Nestle’s case a low P/E ratio depicts it
being investors choice for investment purpose.
 Stock Market Value Earnings Per share Price-to-Earning ratio
= Rs 16,718.60 = Rs 214.92 = 16718.60 / 214.92
= Rs 77.79

Earnings Per Share

A company’s earnings per share show how efficiently its revenue is flowing down to investors. An
increasing EPS is taken as a good sign by investors. According to NASDAQ, the higher a company’s
EPS, the more your shares are worth, because investors seek to purchase a company’s stock when
earnings are high. As in the Case of Nestle, 214.92 shows a high earning opportunity for investors
and thus a bullish share to invest.
Earnings Per share on 13th November, 2020= 214.92

PEG Ratio
The price-to-earnings growth ratio takes the P/E ratio a step further by considering the growth of a
company. To calculate the PEG, you divide the P/E ratio by the 12-month growth rate. We estimate
the future growth rate by looking at the company’s historical growth rate. Investors typically consider
a stock valuable if the PEG is lower than 1. As in the case of Nestle India, 0.518 seems a bullish sign
for investors as it’s below 1. Which is considered idle for investment in long term.
P/E 12 Month Growth Rate PEG Ratio
= 77.79 =150 77.79 / 150
= 0.518

Book Value
Another method used to analyze a stock is determining a company’s price-to-book ratio. Investors
typically use this method to find high-growth companies that are undervalued. The formula for P/B
ratio equals the market price of a company’s stock divided by its book value of equity. Book value of
equity is derived by subtracting the book value of liabilities from the book value of assets. Investors
view a low P/B ratio as a sign that the stock is potentially undervalued. As in the Case of Nestle, its
Book value doesn’t seems to be undervalued but does show a sign of potentially profitable share.
Market price of share Book value of Equity Book Value (Rs)
= 16,718.60 = 83.40 16718.60/83.40
= 200.41
Ratio Analysis of Nestle India
Liquidity Ratio
Liquidity Ratios DEC 2019 DEC 2019 DEC 2019 DEC 2019 DEC 2019
Current Ratio (X) 1.78 2.55 2.64 2.01 1.68
Quick Ratio(X) 1.18 2.03 2.03 1.43 1.12

These ratios are measurements used to examine the ability of an organization to pay off its
short-term obligations. Liquidity ratios are commonly used by prospective creditors and
lenders to decide whether to extend credit or debt, respectively, to companies. Examples of
liquidity ratios are the cash ratio, current ratio, and quick ratio.
In case Of Nestle, Current ratios show us a very good condition of it to pay of its liabilities,
through the enough cash it has.
Quick Ratio, it measures the ability of Nestle to pay short-term obligations using the more
liquid types of current assets or "quick assets" (cash, marketable securities, and current
receivables).

Margin Ratio
Margin Ratios DEC 2019 DEC 2018 DEC 2017 DEC 2016 DEC 2015
Gross Profit Margin 25.15 25.47 22.71 20.71 20.36
%
Operating Margin % 25.59 22.50 19.29 16.34 16.11

Net Profit Margin % 15.92 14.23 12.24 10.04 6.88

Margin ratios are a set of measurements used to determine the ability of a business to create
earnings. Margin ratios are derived from a comparison of revenues to difference groupings of
expenses within the income statement. Examples of profitability ratios are the contribution
margin ratio, gross profit ratio, and net profit ratio.
Here in case Of Nestle, Gross Profit Margin, Evaluates how much gross profit is generated
from sales. Gross profit is equal to net sales (sales minus sales returns, discounts, and
allowances) minus cost of sales.
Net profit margin or "net profit rate", it measures the percentage of income derived from dollar
sales. Generally, the higher the ROS the better.

Leverage Ratio
Leverage DEC 2019 DEC 2018 DEC 2017 DEC 2016 DEC 2015
Ratios
Debt to Equity 0.03 0.01 0.01 0.01 0.01
(X)
 Interest 23.32 22.70 21.01 429.40 400.53
Coverage
Ratios (%)

These ratios are used to determine the relative level of debt load that a business has incurred.
These ratios compare the total debt obligation to either the assets or equity of a business.
Examples of leverage ratios are the debt ratio and debt to equity ratio.
Debt-Equity Ratio = Total Liabilities ÷ Total Equity
Evaluates the capital structure of a company. A D/E ratio of more than 1 implies that the
company is a leveraged firm; less than 1 implies that it is a conservative one.
As in the case of Nestle, Interest Coverage Ratio = EBIT ÷ Interest Expense
Measures the number of times interest expense is converted to income, and if the company
can pay its interest expense using the profits generated. EBIT is earnings before interest and
taxes.

Turnover Ratio
Turnover DEC 2019 DEC 2018 DEC 2017 DEC 2016 DEC 2015
Ratio
Asset 175.24 139.61 135.95 135.52 134.45
Turnover
Ratio (%)
Inventory 11.70 11.09 9.78 9.96
Turnover 9.96
Ratio (X)

These ratios measure the ability of a business to use its assets and liabilities to generate sales.
A highly efficient organization has minimized its net investment in assets, and so requires less
capital and debt in order to remain in operation. Examples of efficiency ratios are accounts
receivable turnover, inventory turnover, fixed asset turnover, and accounts payable turnover.
As in the case of Nestle, Asset Turnover Ratio= Net Sales ÷ Average Total Assets
Measures overall efficiency of a company in generating sales using its assets. The formula is
similar to ROA, except that net sales is used instead of net income.
Inventory Turnover Ratio = Cost of Sales ÷ Average Inventory
Represents the number of times inventory is sold and replaced. Take note that some authors
use Sales in lieu of Cost of Sales in the above formula. A high ratio indicates that the company
is efficient in managing its inventories.
 Financial Statements of Nestle India

Balance Sheet
BALANCE SHEET OF NESTLE INDIA (in Rs. Cr.) DEC 19 DEC 18 DEC 17 DEC 16 DEC 15
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 96.42 96.42 96.42 96.42 96.42
TOTAL SHARE CAPITAL 96.42 96.42 96.42 96.42 96.42
Reserves and Surplus 1,835.84 3,577.32 3,324.17 2,917.28 2,721.42
TOTAL RESERVES AND SURPLUS 1,835.84 3,577.32 3,324.17 2,917.28 2,721.42
TOTAL RESERVES AND SURPLUS 1,835.84 3,577.32 3,324.17 2,917.28 2,721.42
NON-CURRENT LIABILITIES
Long Term Borrowings 53.14 35.14 35.14 33.15 16.79
Deferred Tax Liabilities [Net] 17.95 58.82 121.96 154.21 172.93
Other Long Term Liabilities 0.43 0.51 0.60 0.00 0.00
Long Term Provisions 2,906.91 2,464.92 2,291.59 1,972.21 1,597.17
TOTAL NON-CURRENT LIABILITIES 2,978.43 2,559.39 2,449.29 2,159.57 1,786.89
CURRENT LIABILITIES
Short Term Borrowings 0.00 0.00 0.00 0.00 0.94
Trade Payables 1,494.69 1,240.37 984.64 799.16 743.54
Other Current Liabilities 567.36 457.32 420.61 512.84 465.93
Short Term Provisions 85.46 157.26 87.46 320.70 265.32
TOTAL CURRENT LIABILITIES 2,147.51 1,854.95 1,492.71 1,632.70 1,475.73
TOTAL CAPITAL AND LIABILITIES 7,058.20 8,088.08 7,362.59 6,805.97 6,080.46
ASSETS
NON-CURRENT ASSETS
Tangible Assets 2,226.71 2,400.62 2,616.18 2,729.46 2,897.85
Intangible Assets 0.00 0.00 0.00 0.00 0.00
Capital Work-In-Progress 143.30 105.20 94.16 188.17 230.79
Other Assets 0.00 0.00 0.00 0.00 0.00
FIXED ASSETS 2,370.01 2,505.82 2,710.34 2,917.63 3,128.64
Non-Current Investments 743.60 733.36 585.28 474.31 341.78
Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00
Long Term Loans And Advances 46.98 40.14 46.35 135.04 130.43
Other Non-Current Assets 80.44 71.81 83.23 0.00 0.00
TOTAL NON-CURRENT ASSETS 3,241.03 3,351.13 3,425.20 3,526.98 3,600.85
CURRENT ASSETS
Current Investments 1,007.45 1,925.13 1,393.59 1,275.04 983.14
Inventories 1,283.07 965.55 902.47 943.18 820.81
Trade Receivables 124.33 124.59 88.97 97.93 78.42
Cash And Cash Equivalents 1,308.05 1,610.06 1,457.42 880.00 499.55
Short Term Loans And Advances 12.46 17.89 28.80 57.02 82.97
OtherCurrentAssets 81.81 93.73 66.14 25.82 14.72
TOTAL CURRENT ASSETS 3,817.17 4,736.95 3,937.39 3,278.99 2,479.61
TOTAL ASSETS 7,058.20 8,088.08 7,362.59 6,805.97 6,080.46
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 394.48 47.91 32.24 81.44 0.00
CIF VALUE OF IMPORTS
Raw Materials 0.00 0.00 0.00 291.91 301.03
Stores, Spares And Loose Tools 0.00 0.00 0.00 46.21 40.38
Trade/Other Goods 0.00 0.00 0.00 46.21 40.38
Capital Goods 0.00 0.00 0.00 77.16 14.85
EXPENDITURE IN FOREIGN EXCHANGE
Expenditure In Foreign Currency 2,942.95 1,717.13 0.00 476.95 402.28
REMITTANCES IN FOREIGN CURRENCIES FOR
DIVIDENDS
Dividend Remittance In Foreign Currency -- -- -- 354.01 257.18
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods 638.48 708.69 -- 477.32 482.78
Other Earnings -- -- -- 178.40 150.66
BONUS DETAILS
Bonus Equity Share Capital 73.41 73.41 73.41 73.41 73.41
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market Value 765.58 727.81 589.32 478.76 304.46
Non-Current Investments Unquoted Book Value -- -- -- 51.88 51.88
CURRENT INVESTMENTS
Current Investments Quoted Market Value 1,007.39 1,925.13 1,393.46 1,281.13 987.09
Current Investments Unquoted Book Value -- -- -- -- --

Findings
• Total Sales and Domestic Sales for the year increased by 10.7% and 10.9%,
respectively. These growth rates are adversely impacted due to lower reported sales
by the change in structure of indirect taxes.
• Domestic Sales growth is volume led and broad based. “Export Sales” increased by
6.9%.Other Income has increased due to higher average liquidities as well as higher
yields.
• Nestle has created a contingency provision of Rs.1,242.5 million for various
contingencies resulting mainly from matters, which are under litigation / related
disputes and other uncertainties requiring management judgement. Your Company
has also reversed, utilised/settled contingency provision of Rs.205.7 million due to the
satisfactory settlement of certain litigations and settlement of obligations under free
replacement warranty for which provision was no longer required.
• Dividends- The Board of Directors have recommended a final dividend of Rs.25.0 per
equity share amounting to Rs.2,410.4 million for the year 2018. The total dividend for
2018 aggregates to Rs.115.00 per equity share which includes first interim dividend of
Rs.20.00 per equity share paid on 1st June, 2018, second interim dividend of Rs.20.00
per equity share paid on 24th August, 2018 and third interim dividend Rs.50.00 per
equity share paid on 21st December, 2018.
• Exports -The exports for your Company registered growth of 6.9 % in 2018. Your
Company continued to extend the MAGGI brand beyond India in 13 geographies. In
 2018, the culinary category registered strong growth in markets with sizeable Indian
diaspora contributing the highest quantum. Your Company also registered growth in
the exports of infant nutrition products to Bangladesh.
• Contribution to the Exchequer- Nestle has over the years has been enabling significant
contribution to various taxes. During the year 2018, the Company through its business,
enabled tax collections at Central and State level close to Rs.30.76 billion, in
aggregate.

References
• https://www.nestle.com/aboutus/history/nestle-company-
history
• https://www.goodreturns.in/company/nestle-india/capital-
structure.html
• https://economictimes.indiatimes.com/nestle-india-
ltd/capitalstructure/companyid-13330.cms
• https://economictimes.indiatimes.com/nestle-india-
ltd/shareholding/companyid-13330.cms
• https://www.accountingverse.com/managerial-
accounting/fs-analysis/financial-ratios.html
• https://www.moneycontrol.com/financials/nestleindia/ratios
VI/NI
• https://www.accountingtools.com/articles/ratio-
analysis.html#:~:text=Ratio%20analysis%20is%20the%20
comparison,efficiency%20of%20operations%2C%20and%
20profitability.
• https://www.moneycontrol.com/annualreport/nestleindia/dir
ectors-report/NI#NI