Project Proposal No.

_______________
(To be assigned by the School) MBA

School of Management Studies INDIRA GANDHI NATIONAL OPEN

UNIVERSITY Proforma for Approval of Project Proposal (MS-100)

Enrolment No. : Study Centre Code :

Regional Centre Code : 29
Name of the Student : Jaspreet Kaur

Address of the Student :

E-mail Address : jazzchawla76@gmail.com

Title of the Project : Financial statement analysis and interpretation of NESTLE INDIA Ltd.

Subject Area : Finance

Name of the Guide : Ankit Tiwari

Address of the Guide : House no-3, Street no-2, Laxmi nagar Delhi 110092

Is the Guide an Academic Counsellor of Management Programme of IGNOU? No

If Yes, Name and Code of :
Study _________________________________________________________
Centre, the courses s/he is __________________________________________________________
counselling, and period __________________________________________________________

No. of Students currently working : 2

under the guide for MS-100

Signature of Student Signature of Guide

Date: Date :

Please do not forget to enclose the Project Proposal and signed Bio-data of the guide.

For Office Use only

Proposal Guide
(SIGNATURE OF MANAGEMENT FACULTY)
Approved Approved
Date ..........................................
Not Approved Not Approved
 PROJECT SYNOPSIS

Financial statement analysis and interpretation

of NESTLE INDIA Ltd.

Submitted By:

Enrollment No:

Under The Guidance Of:

Mr. Ankit Tiwari

Submitted To:

INDIRA Gandhi National Open University

In partial fulfillment for the award of the Master’s Degree in Business

Administration (Finance)
 INTRODUCTION TO TOPIC

India is one of the fastest growing economies in the world. While we are moving

towards a services-led economy but still agriculture contributes 17 per cent of the total

GDP and employs 60 per cent of the population. India is one of the key food

producers in the world.

The Indian food industry is estimated to be worth over INR 8,80,000 crores. The

industry employs 1.6 million workers directly.

The process of reviewing and analyzing a company’s financial statements to make

better economic decisions is called analysis of financial statements. In other words,

the process of determining financial strengths and weaknesses of the entity by

establishing the strategic relationship between the items of the balance sheet, profit

and loss account, and other financial statements.

Fundamental Analysis involves examining the economic, financial and other

qualitative and quantitative factors related to a security in order to determine its

intrinsic value. It attempts to study everything that can affect the security's value,

including macroeconomic factors (like the overall economy and industry conditions)

and individually specific factors (like the financial condition and management of

companies). Fundamental analysis, which is also known as quantitative analysis,

involves delving into a company’s financial statements (such as profit and loss

account and balance sheet) in order to study various financial indicators (such as
revenues, earnings, liabilities, expenses and assets). Such analysis is usually carried

out by analysts, brokers and savvy investors.

Financial statements are records that provide an indication of the organization’s

financial status. It quantitatively describes the financial health of the company. It helps

in the evaluation of company’s prospects and risks for the purpose of making business

decisions. The objective of financial statements is to provide information about the

financial position, performance and changes in financial position of an enterprise that

is useful to a wide range of users in making economic decisions. Financial statements

should be understandable, relevant, reliable and comparable. They give an accurate

picture of a company’s condition and operating results in a condensed form. Reported

assets, liabilities and equity are directly related to an organization's financial position

whereas reported income and expenses are directly related to an organization's

financial performance. Analysis and interpretation of financial statements helps in

determining the liquidity position, long term solvency, financial viability, profitability

and soundness of a firm. There are four basic types of financial statements: balance

sheet, income statements, cash flow statements, and statements of retained earnings.

The analysis of financial statement is a process of evaluating the relationship between

component parts of financial statement to obtain a better understanding of firm

financial position. Analysis is a process of critically examining the accounting

information given in financial statements. For the purpose of analysis, individual

items are studied; their interrelationship with other related figures is established.
 Introduction to the organization

NESTLÉ's relationship with India dates back to 1912, when it began trading as The

NESTLÉ Anglo-Swiss Condensed Milk Company (Export) Limited, importing and

selling finished products in the Indian market.

NESTLÉ India manufactures products of truly international quality under

internationally famous brand names such as NESCAFÉ, MAGGI, MILKYBAR, KIT

KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has

also introduced products of daily consumption and use such as NESTLÉ Milk,

NESTLÉ SLIM Milk, NESTLÉ Dahi and NESTLÉ Jeera Raita.

Nestle India Limited (Nestle India) is a subsidiary to Nestlé S.A. a global food

products company based in Switzerland. Nestle India principally is engaged in the

manufacturing, marketing, exporting and sales of food & beverage products which

include milk products, nutrition products, beverages, chocolates and confectionery. It

markets its products under international brand names which include Nescafe, Milo,

Nestea Maggie, and Milky bar, Kit Kat, Milkmaid, Nestlé Milk, Nestlé Slim Milk and

Nestlé Fresh.

The Company entered the chocolate business introducing Nestle Premium chocolate

in1990. Company's products are sold under brand names such as Milkmaid, Everyday,

Cereal, Nescafe, Maggie, Éclairs, etc. It launched the world famous Kitkat chocolates

in1995.In 2001, it launched Nestle Pure Life bottled water.

 RATIONALE OF THE STUDY

The report provides a comprehensive insight into the company, including business

structure and operations, executive biographies and key competitors. The hallmark of

the report is the detailed financial ratios of the company.

A financial situation analysis is the foundation of the company’s economic

performance analysis and usually proceeds down to primary fields and results as

effectivity, efficiency, production capacity utilisation, supplement management and

the like. Financial analysis detects weaknesses and strengths of the company, is the

tool of “health” diagnostics and provides essential information to business

management and to owners

Financial ratios are tools for interpreting financial statements to provide a basis for

valuing securities and appraising financial and management performance.

Thus analysis of financial statement refer to treatment of information contain in

financial statement in a way so as to afford a full diagnosis of the profitably and

financial position of the firm concern. An attempt has been carried out in this project

to analyze and interpret the financial statements of NESTLE INDIA LTD.

 PROBLEM STATEMENT

To understand, analyze and interpret the basic concepts of financial statements

of a company. This project mainly focuses in detail the basic types of financial

statements of NESTLE INDIA LTD. and calculation of financial ratios.

OBJECTIVES OF THE STUDY

 The report provides detailed financial ratios for the past five years as well
as interim ratios for the last four quarters.

 To calculate the important financial ratio of the Nestle as a part of the

ratio analysis thereby to understand the changes the needs and trends in
the firm’s financial position.

 Financial ratios include profitability, margins and returns, liquidity and

leverage, financial position and efficiency ratios.

 To identify the financial strengths and weaknesses of the organization.

 RESEARCH METHODOLOGY

The appropriate research design formulated is detailed below. We will mainly focus
on secondary data for evaluation and analysis purpose.

NATURE OF DATA: In research methodology data must be collected. And there are
two sources of collection of data i.e Primary & Secondary.

Study has been taken from secondary sources i.e. published annual reports of the
company editing, classifying and tabulation of the financial data. For this purpose
performance data of Nestle for the years 2016 to 2020 has been used.

Source of data

The data is collected from the following sources.

 Five year annual report of Nestle India from 20016-2020

 Interaction with the related finance department.

Techniques:

The technique used in the analysis of the company is excel sheets, graphs and tables of
financial statement for example balance sheet, profit loss a/c, cash flow statement,
dividend per share, ratio analysis, valuation ratio etc.

Analyzing financial statement involves evaluating three characteristics of the

company:
 
 Its liquidity
 
 Its profitability
 
 Its insolvency.

A short-term creditor, such as a bank, is primarily interested in the liquidity. A

long-term creditor, such as a bondholder, however, looks to profitability and
solvency measures that indicate the company’s ability to survive over a long
period of time

TOOLS OF FINANCIAL ANALYSIS

Various tools are used to evaluate the significance of financial statement data.
Three commonly used tools are these

 Ratio Analysis

 Fund Flow Analysis

 Cash Flow Analysis

The following are the fore step involved in the ratio analysis

Selection of the relevant data depending up on the

objectives of the analysis

Calculation of the ratio from the above data

comparison of the ratio with the past ratio

Interpretation of the ratio

 LIMITATIONS OF THE STUDY

The limitations of fundamental & ratio analysis should also be kept in mind while
implementing them. The impact of factors such as price level changes, change in
accounting policies, etc. should also be kept in mind when attempting to interpret the
financial analysis.

 Financial analysis provides misleading result in absence of absolute/exact data.

 Error in secondary data collected from various sources. While deliberate

falsification of data may be rare, subtle misrepresentation and concealment are

common.

 The study only covers past data available of Nestle electric while future

changes are largely unpredictable.

 Bio-Data of Guide

Name: Ankit Tiwari

Phone: 8377981837

E-mail: ankitt823@gmail.com

Father’s Name: Mr. Vinod Kumar

Date of Birth: 5th September, 1992
Address: House no-3, Street no-2, Laxmi nagar Delhi 110092

Working experience:

Designation Organisation Duration

Rockwell automation,
Senior Accounts payable April 2016 – till now
A66 sector 64 Noida 201301
Aon Hewitt
Accountant May 2014 – Apr 2016
Noida 126, UP- 201303

Educational Qualifications:
YEAR OF
Percen
INSTITUTION COMPLETIO
t
PROGRAM N
Delhi Business School Affiliated to Punjab
MBA (Finance) Technical University (Mathura Road, Badarpur 66 2014
Delhi)
Dayal Singh, Delhi University
B.com 62 2012
Lodhi road, Delhi- 110003

____________________

Ankit Tiwari