NESTLE INDIA LTD.

A SUMMER TRAINING PROJECT REPORT

ON

MARKETING & ADVERTISING STRATEGY OF

NESTLE INDIA LIMITED

Submitted In Partial Fulfillment of the requirement of

Bachelor of Business Administration (BBA)

Guru Gobind Singh Inderprastha University, Delhi

Internal Guide: Submitted by:

Ms. Tanu Gupta Shubham Sharma

Enrollment No:-40120501715

BLS INTITUTE OF TECHNOLOGY MANAGEMENT

Bahadurgarh, Haryana (Affiliated to Guru Gobind Singh Indraprastha University)

(2015-2018)

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TO WHOM SO EVER IT MAY CONCERN

This is to certify that the project work title MARKETING & ADVERTISING
STRATEGY OF NESTLE INDIA LIMITED ” by Shubham Sharma,
40120501715 is an authentic work carried out by him under my guidance and
supervision in the Bachelor of Business Administration From BLS Institute of
Technology and Management . The report submitted has been founded satisfactory
for the partial fulfillment of the degree of B.B.A

-------------------------
DR. S.K SENAPATI
(PROJECT SUPERVISOR)

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STUDENT DECLARATION

I here by certify that the project report entitled on MARKETING &

ADVERTISING STRATEGY OF NESTLE INDIA LIMITED ” Submitted in
partial fulfillment of the requirement for the award degree of Bachelor in Business
Administration to BLS Institute of Technology and Management is my original
work and not submitted or the award of any other degree, diploma, fellowship, or
any other similar title or prizes anywhere else.

Shubham Sharma
ENROLLMENT NO.
40120501715

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ACKNOWLEDGEMENT

It is my pleasure to be indebted to various people, who directly or

indirectly contributed In the development of this work and who
influenced my thinking, behavior and acts During the course of study. I
express my sincere gratitude to Dr. Narinder sharma the worthy
Director of BLS Institute of Technology Management, for providing
me an opportunity to do major project. I also extend my sincere
indebtedness to Mr. Tanu Gupta who provided her valuable
Suggestion and precious time in accomplishing my project.
I also take the opportunity to express my sincere gratitude to each and
every person, who directly or indirectly helped me throughout the
project and without anyone of them.This project would not have been
possible.
The immense learning from this project would be indelible forever.

Name: - Shubham Sharma

Enroll no. :-40120501715

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TABLE OF CONTENTS

TOPICS PAGE
S.NO. NO.
1.
2. INTRODUCTION 7
3. THE SPIRIT OF NESTLE 12
4. KEY OBJECTIVES:
 Production 13
 Sales and marketing
 People
 Finance

5. SALES ANALYSIS 15
6. NEW PRODUCT LAUNCHES 23
 Milk Product
 Chocolate and Confectionery
 Beverages
 Culinary
 Food Service.

7. NESTLÉ CORPORATE BUSINESS PRINCIPLES 26

8. Legislation and International Recommendations 26

Nestlé
9. Children as Consumers 28
10. Human Resources and the Workplace 28

11. CEO'S VISION 29

12. THE NESTLÉ POLICY ON THE 29

ENVIRONMENT

13. Nestlé Corporate Business Principles 32

14. ALL ABOUT NESTLE 33

15. NESTLE'S CORPORATE CULTURE 33

16. GLOBAL OPERATION : COUNTRY WISE 35

17. THE PRICIPLES 37
THE RIGHTS AND RESPONSIBILITIES OF A
SHARE HOLDER

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18. Disclosure and transparency 39

19. METHODOLOGY 41

20. PRIMARY SOURCES 42

21. SECONDARY SOURCES 43
22. MARKETING STRATEGY 47
23. ADVERTISING STRATEGY 49

24. WORKING OF THE EXCLUSIVE 50

DISTRIBUTION SYSTEM

25. SALES ANALYSIS 50

26. PROFITABILITY ANALYSIS 53
27. FINANCIAL POSITION 54
28. SWOT ANALYSIS 55

29. RESULTS OF MARKET SURVEY 56

30. RECOMMENDATIONS AND SUGGESTIONS 58
31. LIMITATIONS 61

32. CONCLUSIONS 61

33. BIBLIOGRAPHY 69
34. QUESTIONNAIRE 71

INTRODUCTION TO MARKETING

1. Much of marketing concerned with the problem of profitably

disposing off that is produced.
2. Marketing is Phenomena brought about by the pressure of mass
production and increased spending Power.
3. Marketing is the performance of business activities that direct the
flow of goods and services from the producer to the consumer.
Marketing was quite simple subject in 1967,Consumer marketing largely
operated on mass marketing principles, and business marketing primarily
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concerned itself with how to build the best sales force. All the time
marketers has faced a number of tough decisions. The marketers had to
determine product features and quality, establishing accompanying
sources, set the price, determine the distribution channels, decide how
much to spend on marketing, & decide how to divide these resources
among advertising, sales force & other promotional tools.
Today, the time has changed from the previous years. Today, the market
place is enormously more complex. Domestic markets, at on time safe
from foreign invaders, are now the happy hunting grounds of giant global
corporations as well as global Niche specialists. New products are
launched at an astonishing placed & are available worldwide in a short
time. Communications media are proliferating. New Distribution
Channels and formats keep apparition. Competitors are every there &
hungry.
The whole marketing system moves like this. In this diagram I will trying
to show how marketing system moves between the seller & buyer. In this
Diagram there are buyers and sellers who transact over a particular
product or particular class. These buyers and sellers are connected by four
flows. The seller send goods & services and communication to the
marketing, in return they receive money and Infrastructure.
Evolution of marketing as a business discipline
The evolution of marketing as a business discipline provides an insight
into it emergence as one of the most important functions of management
in any business. The evolution of marketing as a business discipline
comprises of following stages:-
a. The stage of barter
b. The stage of money economy
c.The stage of industrial evolution
d.The stage of competition
e.The emergence of marketing
Marketing Management
We will discuss what exactly the marketing is in the language of “Philip
Kotler”.
“Marketing is a Social and Managerial process by which individuals &
groups obtain what they need & want through creating, offering and
exchanging products of value with others”.
According to Philip Kotler, “A human activity directed at satisfying needs
& wants through exchange process”.
Basically there are different concepts of marketing which are very
important for marketing. These concepts are need, wants and Demand.
The starting point in the discipline of marketing is to identify the needs of
consumer. Every person has some need. These needs are not created by
marketers or society, they exist in the very texture of human biology and
human conditions. Wants are the desires for specific satisfaction of these
deeper needs people needs are few but there wants are many.
Demands are wants for specific products that are backed up by the ability
& willingness to buy them.

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In marketing we pass through three stages.

1. Entrepreneurial marketing
The entrepreneurial marketing is first stage of marketing started by
the entrepreneur who start his business by Direct selling of goods
& Public relations. He starts his business from the first stage of
business & starts his business individually. In this stage the
company did not advertise because he cannot afford to spend
money on advertising because he is in the first stage of
marketing.
2. Formulated marketing
When a company achieves success in business, the company is in a
stage of formulated marketing i.e. the second stage of marketing.
In this stage the company can afford advertising Budget because
the company has achieved success. Now the company is adopting
some of the tools used in professionally run marketing
companies.
3. Entrepreneurial Marketing
This is the third stage of marketing when companies have to
maintain success throughout there life of business. This is the last
stage of marketing where company has a success or it can fail. The
companies main aim in this stage is that there brand & product
managers need to get out of the office & start living with their
Customers & Visualize new ways to add value to their customer
lives.
MARKETING PHILOSPHIES
We Will be discussing about the five important marketing concepts used
in marketing:
1. PRODUCTION CONCEPT
The production concept is one of the oldest concept guiding sellers. It
holds that consumers will favour those products that are widen available
& low in cost. Managers of production oriented organisations concentrate
on achieving high production efficiency and wide distribution coverage.
2. The product concept
This hold that consumers will favour those products that offer the most
quality or performance. Managers in these product oriented organisations
focus their energy on making good products & improving there over time.
3. The selling concept
The selling concepts holds that consumers if left alone will ordinarily not
buy enough of the origin’s products. The organisation must therefore
undertake an aggressive selling & promotion effort.
4. The marketing concept
The marketing concept holds that the key to achieving organisational
goals consists in determining the needs & wants of Target markets &
delivering the desired satisfaction more efficiently and effectively then
the competitors.
5. The societal marketing concept

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The societal marketing Concept holds that the organisation task is to

determine the needs, wants & interest of target markets & to deliver the
satisfactions more effectively & efficiently then the competitors in a way
that preseures or enchances the consumers & society’s well being.

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INTRODUCTION TO ADVERTISING
“Doing business without advertising is like working at a girl in the
dark; you know what you are doing but no body else does.”
Advertising is Multi-dimensional. It is a form of mass Communication, a
powerful marketing tool, a component of the economic system, a means of
financing the mass media a Social institution, an ART FORM, AN
INSTRUMENT OF Business management, a field of employment & a
profession.
Advertising today is very necessary. Today we are exposed to large
number of commercial messages that at any time in the past. Newspapers
& magazines are full of advertisements, today, from not only the quantity
increased even the quality of advertising has improved considerably.
The means of advertising such as the radio, television, the cinema &
BillBoards etc., have also amply contributed to the growth of this
industry. Advertising which has become a marketing force helping mass
selling & distribution.
Now, I will be discussing the definition of advertising the simplest
definition of advertising is the “Public announcement”.
According to American Management Association, “Advertising as any
paid form of non personal presentation of ideas Goods & Services by an
identified Sponsor”.
Advertising as a tool of Communication
Advertising is as old as man. There is Semblance of advertising in the
many activities of a human being especially those activities, which
influence other either favourably or otherwise. A baby crying for its feed
want to communicate to persuade, to influence & to lead to some action.
All this has been a part of human life almost from the time it took shape.
Advertising is the most visible marketing tool, which seeks to transmit an
effective message from the marketer to a group of individuals. Though
marketers use advertising, basically it is a communication process.
Benefits of advertising
1. Advertising establishes a link between the manufacturer and the
consumer. It is a form of mass communication. Through
advertising, the advertiser reaches a Vast Number of Consumers
and makes his Product known to them.
2. Advertising keeps the consumers well-informed about the products
& Services-styles, features, sizes, colours, specifications, price etc.
3. Advertising expands markets, builds up volume, gives a market
share & profitability, and reduces prices.
4. Advertising guides the consumers in his product choice. It gives
the information about the product, the benefits it offers.
5. Advertising contributes to consumer welfare. It helps consumers in
a variety of ways. It tells what to buy, how to buy & why to buy.

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INTRODUCTION TO PUBLIC RELATION

The ultimate aim of Public Relation is to develop a favourable image in
the eyes of public. It refers to a company’s communication &
relationships with various sections of the public-customers, suppliers,
share-holders, employees, governments, media, society at large.
According to the Institute of Public Relation, London defines Public
Relation as” the deliberate, Planned & sustained effort to establish &
maintain understanding between an organisation & its public.
Public Relation is low cost compared to advertising for the publicity
obtained, say in the press, through public relations is not directly paid for.
Indirectly, the expenses involves keeping in close close touch with people
in the media through press conferences, press visits & press releases.
There are four element to the mechanics of Public Relation:
1. The message to be transmitted.
2. An independent third party endorser to transmit the message.
3. A target audience that it is hoped will be motivated to buy
whatever is being sold, and
4. A medium through which message is transmitted.

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THE SPIRIT OF NESTLE

"Organizational excellence is never achieved through a one time efforts;
It is always a process of continuous improvement across a number of
areas of operation."
A key factor for Nestle's success has been its quest for continuous
improvement through ushering in greater productivity and more efficiency
in everyday operations Despite the infrastructure impediments in India,
Nestle has set itself high standards of business performance. This is
reflected through the essence of the company-its mission statement.
Nestle's mission
"To be in every way the leading company in the Indian food industry and
a good corporate citizen by providing our consumers with superior quality
products, our shareholders with rapid growth and fair returns and our
employees with a challenging and satisfying work environment."
To translate this spirit into a planned and measurable process, Nestle has
set up key objectives across all divisions.

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KEY OBJECTIVES
Production
 To optimize production costs while enhancing product quality so as to
make Nestle products even more competitive in the market place.
Sales and Marketing
 To reach a sales turnover of 3000 crores by the year 2000.
 To double the turnover every years.
People
 To help employees to retain a long-term perspective and integrate
them fully with the company's business goals.
 To retain a broad perspective while addressing individual needs
 To view growth as a continuous process.
 To concentrate on attitudinal changes by developing leadership skills,
an appreciation of interdependence between units and the
enhancement of a sense of belonging to Nestle.
Finance
 To maintain profit levels above the average for the food industry in
India.

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KEY FACT
This section offers a quick and simple overview of NESTLE, making it an
excellent place to begin learning more about the World’s Largest Food
Company. Here introduction is given with some key facts and figures,
including 2001 Financial Information, Company Profile, Historical
Development and Main Brand.
Financial Information
In millions of CHF 2001
Sales 81 422
EBITDA (a) 12 516
       as % of sales 15.4%
EBITA (b) 9600
       as % of sales 11.8%
Trading Profit 9 186
       as % of sales 11.3%
Net Profit 5 763
       as % of sales 7.1%
Capital expenditure 3305
Equity 29 904
Total Assets 65 524
Research and development costs 1 038
Market Capitalization, end December 146 864
(a) Mainly Pharmaceutical products and Water, managed on a worldwide
basis.
(b) Mainly corporate expenses, research and development costs,
amortisation of goodwill

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SALES ANALYSIS
By Geographic Area
In Million of CHF 2001 (%)
Europe 25/706 36.7
North and South America 22/262 31.8
Africa, Asia and Oceania 13/493 19.3
Other Activities 8/537 12.2
69/998

BY MAIN PRODUCT GROUP

In Million of CHF 2001(%)

Beverages 19/142 27.4
Milk Products, Nutrition and Ice Cream 334 27.6
Prepared Dishes and Cooking Aids 17/660 25.2
Chocolate and Confectionery 10/663 15.2
Pharmaceuticals 3/1999 4.6

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Breakdown of 2001 Trading Expenses (in %)

Percentage
Raw Materials 26.2
Packaging 8.8
Salaries and Welfare Expenses 16.6
Depreciation 4.1
Other Trading Expenses 34.5
Total Trading Expenses 90.2
Trading Profit 9.8

Go to Financial Guide for additional facts and figures.

Company Profile
 Chairman of the Board: Helmut O. Maucher
 Chief Executive Officer: Peter Brabeck-Letmathe
 World’s leading food company
 Switzerland’s largest industrial company
 Worldwide operations

 495 factories
 Group’s total work force: 225, 808 people.
Historical Development
1866 Company’s foundation
1905 Merger between Nestle and Anglo-Swiss Condensed Milk
Company
1929 Merger with Peter-Cailler-Kohler Chocolates Suisses. S. A.
1947 Merger with Alimentana S.A. (Maggi)
1971 Merger with Ursina-Franck (Switzerland)
1985 Acquisition of Carnation (USA)
1988 Acquisition of Buitoni-Perugina (Italy)
1988 Acquisition of Rowntree (GB)
1992 Acquisition of Perrier (France)

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1998 Acquisition of Spillers (GB)

1999 Divestiture of Findus brand and parts of Nestlé's frozen food
business in Europe.
Divestiture of Hills Bros, MJB and Chase & Sanborn roast and
ground coffee brands (USA).
2000 Acquisition of PowerBar.
Factories
Nestle has 6 factories in India. These are
1. Moga (punjab)
The Nestle factory in Moga has the pride of being the first and most
comprehensive factory of Nestle India. Set up in 1962, it represents the
core competence of Nestle India in the manufacture of milk products
(Everyday, Milkmaid), beverages, culinary products (Maggi sauces,
noodles, soups etc.), weaning cereals (Cerelac) and infant milk formulae.
2. Choladi ( Tamil Nadu)
The factory in Choladi started production in 1967. Situated about 60
miles from Calicut, the factory today has 81 employees and produces
1.5% of the total turnover of Nestle India. It is a 100 percent export
oriented unit which processes freshly picked tea leaves into soluble
instant tea.
3. Nanjagud (Karnataka)
Production in this factory began in 1989 with the manufacture of Nestle
instant coffee and Sunrise. Today in addition to instant coffee the factory
also manufactures health beverages. The plant to manufacture MILO was
also commissioned at this factory. This factory employs 145 people and is
cited as a model in terms of environment protection for its installations to
purify waste water as well as for its provisions for recycling coffee
wastes.
4.Samalakha (Haryana)
This factory was set up in 1993. Located 70 kilometres from Delhi , it
manufactures weaning cereals , culinary products ,health beverages and
milk products. Recently the expansion of manufacturing capacity for
Milkmaid Dessert Mixes was undertaken at this factory as this new and
unique product category is viewed to have great potential in the future.
5.Ponda (Goa)
This Kit-Kat factory was set up in Goa in 1995 at a cost of Rs. 50 crores.
It represented a major step by Nestle towards becoming the Number 1
Chocolates and Confectionery Company in India.
6.Bicholim (Goa )
The construction work at this new factory is progressing with speed. This
factory will soon commence the manufacture of culinary products, which
is a key thrust area for the company and will include latest technological
improvements relating to this category of products.
As a part of Nestles efforts towards continuous improvement and
excellence in Manufacturing operation, a Moga Improvement team (MIT)
was put in place at the Moga factory. The team comprised of international
experts from Nestle Technical Services (NESTEC) and the local staff. In

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1996, it embarked on a program with the single minded objective of

optimizing production costs while enhancing the product quality so as to
make Nestle products even more competitive in the market place.
Drawing upon Nestle’s global experience and manufacturing expertise in
75 countries the team identified the following areas for detailed study -
 Process improvement to ensure the optimal usage of resources
 Improvement of operational efficiency
 Cost optimization
A series of small but critically important initiatives ranging from
redesigning laboratories to palletisation of raw materials and packaging
material utilization, manufacturing and filling loses and labour man hours
resulting in substantial savings and improved productivity and machine
utilization. In addition, several non tangible benefits in the form of
systems for sustainable improvement in areas like factory maintenance
planning tools , down time recording systems and performance
measurement tools were also realized .
This project was highly successful and the company is now implementing
its key learning’s of MIT in its other factories.
In a country as vast and diverse as India, supply chain management is
absolutely critical to rapid growth. Through BECA, Nestle has
concentrated heavily on streamlining and improving their supply chain
management in order to make it more dependable, more cost effective and
most importantly, more responsive to market needs.
For better supply chain integration the planning of key operations -
purchase, production, distribution and sales are synchronised to ensure
that everybody works towards a common business plan. Monthly
objectives are broken down into weekly and (wherever necessary) into
daily plans and monitored regularly to ensure smooth implementation and
quick corrective action when needed . Major benefits accrued thus far
include reduction in working capital through lower inventories of finished
goods and materials, better stock availability and reduction in
obsolescence of materials.
In addition to traditional performance indicators, quantifiable
performance measures have been identified and implemented in all
functional areas such as sales planning, production output, quality
assurance, material ordering transportation and warehouse management.
These measures are monitored regularly to gauge the extent of
improvement and identify root problems for taking corrective actions.
Teams have been put in place at all factories and sales offices to ensure
the implementation is continuous and self-sustaining. Areas of
improvement are regularly identified and timebound action plans
established. For this purpose, standard tools such a Total Quality
Management(TQM), Kaizen, 5S and Small Group improvement activity
(SGIA) are being extensively used.
The efficacy of this hierarchical structure is seen in Nestle’s performance
over past few years of various products.

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By 1989 the company had achieved a sales figure of approximately Rs.

258 crores. 1989 was the year of launches. Seven new product lines were
launched in this year. This was also the year in which the Nanjagud
factory was set up. By the year 1992, this sales figure was touching Rs
500 crores. In the 1990’s the pace of launches quickened and since the
construction of the factory at Samalakha, 20 new products have been
introduced. By 1996, Nestle had about 76 different products in its
portfolio with various new products in the pipeline as well. The sales
figure now touched Rs. 1214 crores. Thus sales grew by 450% over a
period of one and a half decades.

Nestle’s Product Range is detailed below -

Product Year of inception
Milkmaid 1962
Nescafe 1964
Lactogen 1968
Ricori 1972
Cerelac 1974
Maggi Cubes 1974
Nestum 1978
Nespray 1982
Lactogen 1 1982
Sunrise 1983
Maggi Noodles 1983
Maggi Sauces 1985
Everyday 1986
Cerelac (wheat-apple, orange) 1987
Maggi Sauces(Chilli Garlic Masala Chilli) 1987
Everyday Ghee 1989
Maggi soups( tomato,chicken) 1989
Taster choice(leaf tea) 1989
Sunrise extra(originally Ricory) 1989
Nestogen 2 1989
Sunrise Premium 1989
Cerelac(Wheat-vegetable) 1989
Chocolates(Nestle Milky bar, crunch) 1990
Nestle eclairs 1991
Bar- one 1991
Maggi Soups( mixed vegetables, chicken 1991
noodles)
Nestogen 1 1991
Everyday gold 1992
(originally nespray)
Maggi Super seasoning (originally Maggi 1993
cubes)
Nestle Bonus 1993

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POLO 1993
Nestle Bar one (roasted peanuts) 1993
Tasters choice (dust tea) 1993
Contadina Snack Dressing 1993
Cerelac (wheat-soya) 1994
Milkmaid Dessert Mixes (custard powder, 1994
gulab jamun , Kesar Kulfi, Shahi Rabri)
Maggi Tonite’s special (Gravy sauces) 1994
Nescafe Premix 1994
Everyday premix 1994
Nestle Bonus(chocolate) 1995
Kit -Kat 1995
Toffo 1995
POLO (Paan) 1995
Nestle MILO 1996
Milkmaid Dessert mixes (Kalakand) 1996
Maggi Pickles( lime ,mango , mixed , mango 1996
punjabi, lime sweet.
Maggi Dosa Mixes (masala, plain, sambhar) 1996
Maggi Soups (Chicken Sweet Corn, Hot and 1996
Sour, Rasam)
POLO (Spearmint) 1996

Cerelac - Rice 1996

Taster’s Choice - Tea Bags 1996
Tea mate - Dairy Whitener 1996
Splash - Candy 1996
Maggi Macaroni 1996
Mithaimagic 1996

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TODAY NESTLE IS PRESENT IN DIFFERENT MARKETS WITH

THE FOLLOWING MAIN BRANDS
Soluble coffee
Nescafe, Taster's Choice, Ricore, Ricoffy.
Roast and Ground Coffee
Hills Bros., MJB, Bonka, Zoegas, Loumidis
Mineral Water
Perrier, Contrex, Vittel, Valvert, Quezac, Arrowhead, Poland Spring,
Buxton, Vera, Blaue Quellen, Calistoga, Santa Maria, San Pellegrino.
Other beverages
Nesquik, Nescau, Nestea, Milo, Carnation, Libby's Caro.

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Dairy Product
Nido, Nespray, Carnation, Milkmaid/ La Lechera, Gloria, Neslac,
Barenmarke.
Breakfast Cereals
Nestle
Coffee Creamers
Coffee-mate
Infant Foods and Dietetic Products
Nestle, Nan, Lactogen, Cerelac, Nestum, Guigoz
Culinary Products (Bouillons, soups, seasonings, prepared
dishes, canned food, pasta, sauces)
Maggi, Crosse and Blackwell, Libby's, Thomy, Builtoni,
Contadina
Frozen Foods
Findus, Stouffer's Buitoni, Maggi
Ice Cream
Nestle, Frisco, Dairy Farm, Magnolia, Motta, Camy , ect.
Refrigerated Products (yogurts, desserts, pasta sauces)
Nestle, Locatelli, Vismara, Buitoni, Contadina
Chocolate and Confectionery
Nestle, Crunch, Cailler, Frigor, Chokito, Sarotti, Galak/Milkybar, Yes,
Kit Kat, Quality Street, Smarties, Baci, After Eight, Baby Ruth,
Butterfinger, Lion, Nuts, Rolo, Aero, Polo, etc.
Food Services and Professional Products
Chef, Davigel, Santa Rica
Pet Care
Friskies, Fancy Feast, Aplo, Mighty Dog, Gourmet.
Specialized products for the food industry
Food Ingredients Specialties (FIS)
Ophthalmological products
Alcon
Cosmetics
L'Oreal

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NEW PRODUCT LAUNCHES

To put all the product launches into perspective, Nestle now has 80
products including various flavors and variants this awesome list of 80
products for most companies is an overfull palate. Nestle India Ltd. still
has a variety of new products in the pipelines. It believes in slowly
colonizing as much territory as fast as it can, adapting to native
conditions and then work at 'Holding off the advancing herds'. Nestle
products can be broadly classified into 5 main ranges:
 Milk Product
 Chocolate and Confectionery
 Beverages
 Culinary
 Food Service.
Milk Products
This category which comprises of condensed milk, baby milk foods, milk
powders, acidified infant food, and other milk products, showed a slump
in 1996 as sales of milk products fell from Rs. 31.4 crores in 1995 to Rs.
31.2 crores in the said year. Consumer off take remained depressed
throughout this year as a consequence of high price increases necessitated
by substantial increases (+ 50%) in the cost of basic raw materials (fresh
milk), over the past two year.
However Nestle retained its leadership in the infant food market with
Cerelac Lactogen and Nestum and even introduced a new flavor of
Cerelac-Cerelac Rice in 1996.

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Chocolates and Confectionery

Nestle pursues the objective of accounting for one in every three rupees
in its sales figures through chocolates and confectionery. This has thus
been one of the thrust areas in Nestle. Nestle this year widened its range
of flavors in POLO, backed by its tremendous success in the Indian
Market by adding POLO Spearmint to its Portfolio. This new flavor has
also received an encouraging response in the market according to market
analysts.
Milkybar also retained its position as the number one white chocolate
brand in India, however it did not record a significant increase in sales, as
a majority of Indian tastes still do not accept this flavor.
This year however, was a year of tremendous success for Kit Kat. This
internationally renowned brand gained a large increase in the Market
share in the past year and Nestle officials are hopeful that this will further
increase in the coming years. However this brand along with its success
has brought with it its share of Controversy as the Union of India has
launched a Litigation against the Kit Kat family pack.
In 1997 Nestle added to its range of confectionery by introducing
SPLASH, "A soft hearted, hard boiled sweet" this is being promoted as a
sweet unique to India and is positioned to a target audience in the age
group of 4 to 12 years and "anyone with a soft heart" is a potential
customer. Priced at Rs. 1 for a 7.5-gram candy Splash has been introduced
selectively in the South and has been speculated to repeat Polo's
performance. Nestle's officials claim that this candy has the potential to
grab a quarter of the 700 crores confectionery market.
The most recent of Nestle affairs with the confectionery market has been
the introduction of Mithai Magic, which is "a little Mithai, a little magic."
This new product was launched in September 1997, in time for the Diwali
purchases of sweets. This brand has been positioned somewhere between
chocolates and traditional sweets and the company is employing a push
strategy to promote this brand.
The latest launch of Nestle in the Chocolate and confectionery division is
Charge.
Beverages
This year has been very successful in the beverages market for Nestle.
The sales of beverage have increased from Rs. 323.3 crores in 1995 to Rs.
398.8 crores in 1996.
Nestles Flagship Nescafe, which was pegged at Rupees 1040 per kilogram
before the launch of Tata Cafe, met with stiff competition from Tata Cafe
priced at Rupees 550 per Kg., once it was introduced. Tata cafe claimed
to have garnered a market share of 17% by December 1996. This forced
Nestle to cut prices of Nescafe to Rupees 840 per Kg. However Nescafe
still retains 83% market share in the Rs. 177 Crores market for pure
instant coffee.
Nestle Sunrise also showed an increase in sales and captured 20% of the
Rs. 253 crores market in Mixed instant coffee.

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 NESTLE INDIA LTD.

This year Nestle also launched MILO, an internationally renowned

chocolate energy drink, and the response for this has been encouraging.
Nestle has introduced Tasters Choice tea bag pitched against Taj Mahal
Tea bags.
Culinary Products
The market in culinary products had witnessed a high growth consequent
to aggressive pricing decisions on existing products and the introduction
of a variety of new products to match the needs of the Indian Housewife.
Encouraged by this success Nestle launched Maggi Macoroni Snack in
three flavors-Chicken, Masala and Tomato. Nestle official’s say that this
would consolidate Maggis position as the number 1 culinary brand in
India. The product focuses on convenience and innovation as its Unique
Selling Proposition. This snack has opened a new segment for the maggi
brands. The brand is positioned as Youthful and is represented by the
twists and curls of the macaronic snack. It is speculated to be introduced
in a phase manner nationwide to be place in the 7.5-lakh outlets that
Maggi noodles sells in.
In the spirit of catering to Indian tastes Maggi introduced maggi pickles
in five variants benchmarked to give the "ghar ka swad". Maggi Dosa Mix
was also introduced to offer superior quality and added convenience.
Apart from this Milkmaid Kalakand Mix, a traditional north Indian sweet
of premium quality was added to the milkmaid dessert mixes. Maggi soup
also launched three new variants. Maggi Rassam in particular was
noticeable as yet another attempt to make traditional Indian cooking a
little bit easier.
Food Services
Food service items basically deal with the out of home segments, which
would include vending machines. Nestle's food service business is poised
for rapid expansion to meet the growing need for such a reliable, time
saving and cost effective service in this modern age.
Nestle wants to sell 500 million cups of tea and coffee through its
vending machines in the year 2000. It currently has 3500 vending
machines at assorted locations (both public and private). In 1995 Nestle
food service did well to vend 40 million cups of Nescafe and Tasters
Choice tea. Its 1996 sales were placed at 59 million cups of Nescafe and
36 million cups of tea; this figure was however way below the expected
sales for the year.
In 2001 and 2002 nestle has come with a number of new products like it
has come with many of the diary products like milk. The milk is avaliable
in the market in the full cream , toned and double toned milk. The nestle
has also come with the dahi, butter which is available in the market but at
very few shops .
NESTLE has also come with the products which will target the children
like FRUITIPS,MILKYBAR CHOO,NESTLE CHINESE MAGGI
NOODLES.

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 NESTLE INDIA LTD.

NESTLÉ CORPORATE BUSINESS PRINCIPLES

Nestlé is committed to the following business principles in all countries,
taking into account local legislation, cultural and religious practice:
 Nestlé's business objective and that of management and employees
at all levels, is to manufacture and market the company's products
in such a way as to create value that can be sustained over the long
term for consumers, shareholders, employees, business partners and
the large number of national economies in which Nestlé operates.
 Nestlé does not favour short-term profit and at the expense of
successful long term business development, but recognises the need
to generate profit each year in order to maintain the support of the
financial markets, and to finance investments.
 Nestlé believes that, as a general rule, legislation is the most
effective safeguard of ethical conduct, although in certain areas,
additional guidance to management and employees in the form of
voluntary business principles, is beneficial in order to ensure that
the highest standards are met throughout the organisation.
 Nestlé is conscious of the fact that the success of a corporation is a
reflection of the professionalism, conduct and ethical values of its
management and employees, therefore recruitment of the right
people, and ongoing training and development are crucial.
 Nestlé recognises that consumers have a legitimate interest in the
company behind the Nestlé brands, and the way in which the Nestlé
Company operates.
Legislation and International Recommendations
Nestlé:
 complies with the laws applicable in the countries in which it
operates.
 ensures that the highest standards of ethical conduct are met
throughout the organisation, by complying in a responsible way
with the Business Principles, which guide company activities and
relationships world-wide in each sector of business interest.
 is aware that increasing globalisation is leading to the development
of more and more international recommendations. Although, as a
general rule, these recommendations are addressed to governments,
they inevitably impact on business practices; Nestlé has taken such
recommendations as the ILO Basic Rights, and the International
Code of Marketing of Breast-milk Substitutes (WHO) into account
in its policies.
 generally endorses commitments and recommendations for
voluntary self regulation issued by competent sectoral
organisations, provided they have been developed in full
consultation with the parties concerned; these include the ICC
Business Charter for Sustainable Development, and the OECD
Guidelines for Multinational Enterprises.
Consumers

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 NESTLE INDIA LTD.

 Nestlé aims to create value for consumers that can be sustained

over the long term by offering a wide variety of high quality, safe
food products, at affordable prices.
 Nestlé believes that advertising and other communications play an
important role in encouraging consumers to exercise their right to
informed choice. In order to fulfil this role in a responsible way,
the Company makes a determined effort to ensure that Nestlé
advertising:
 does not mislead as to the benefits derived from use of the product
 does not use gratuitous violence, sex or profanity
 does not depict discriminating or offensive attitudes to religious,
political, ethnic, cultural or social groups
 avoids demonstrations that encourage dangerous, or inappropriate
use of the product
 does not portray competitors' products inaccurately, nor denigrate
competitors' products
 avoids the exploitation of media events which could be in bad taste
or conflict with the corporate image.
In addition to the above principles, Nestlé does not sponsor TV and radio
programmes or magazines whose strategy of attracting viewers or readers
lies clearly in the use of gratuitous violence, sex or offensive attitudes to
either majority or minority groups.

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 NESTLE INDIA LTD.

Children as Consumers
Nestlé has developed the following principles for advertising to children:
 communications (including advertising, events, sponsorships) to
children should should not be disguised as programming or
editorial;
 advertising to children should not attempt to undermine the
authority, responsibility or judgement of parents or care providers;
 advertising to children should not portray children in unsafe
situations nor encourage them to accept invitations from people
they do not know;
 food and beverage communication should not demonstrate either
unsafe or irresponsible consumption.
Human Resources and the Workplace
Nestlé regards its management and employees as its most valuable assets.
Involvement at all levels starts with open communication, whether on
specific aspects of the business, or about the activities of the Company in
general. Suggestions for changes and proposals for improvements of
Nestlé's practices are encouraged.
The Company's business practices are designed to:
 promote a sense of identification among all employees all over the
world, and apply a number of common rules while at the same time
adapting the expression of these rules to local customs and
traditions;
 encourage training, and the improvement of professional skills;
 offer opportunities for promotion based upon merit, irrespective of
race, religion, sex or nationality. Professional skills, experience,
and the capacity and willingness to apply Nestlé management
principles are the criteria for promotion.
 offer competitive salaries and social benefits. Working hours,
wages and overtime pay comply with applicable local laws and are
in line with conditions offered by similar companies.
 limit factory overtime to a reasonable level;
 create a safe working environment for each employee;
 respect the right of employees to join legally recognised labor
unions;
 treat every employee with respect and dignity, and not tolerate any
form of physical or sexual harassment or abuse; preclude the use of
forced labor or involuntary prison labor.

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 NESTLE INDIA LTD.

CEO'S VISION
According to Mr. Carlo Mavia Donati Opportunities (CEO) "New
opportunities have opened up with the emergence of a new middle class.
Today the Indian youth is much more open to international trends the
media and communication revolution has also exposed the Indian people
to new life styles. And in the process, this has created new opportunities
for our products" and Donati is pretty clear-he will ensure that Nestle
grabs these opportunities.
THE NESTLÉ POLICY ON THE ENVIRONMENT
CEO's Statement
Over the past several decades, significant progress has been achieved
towards protecting the world's environment. This objective remains a
fundamental duty and a collective responsibility that must be shared
between the public, governments and the private sector.
As the World Food Company, Nestlé is dedicated to providing consumers
with the best food throughout life. Our Company's primary function is the
transformation of perishable raw materials into finished products that
meet consumers' expectations for safety, quality, convenience, and value.
From our earliest days, we have recognized the need to protect the
environment in our business activities. Exercising this commitment,
which is part of our broader commitment towards the good of the
community, remains central to our business today and tomorrow.
The Nestlé Policy on the Environment was published in 1991 to define
our world-wide strategy on environmental issues and to state our long-
standing commitment to environmentally sound business practices. It is
communicated internally within the Nestlé Group and externally to all
interested parties and institutions. Following its publication, the Nestlé
Environmental Management System (NEMS) was established to
consolidate all environmental measures taken by the Nestlé Group. The
NEMS is being implemented across our entire business.
Today, preserving natural resources and minimizing waste has become a
part of day-to-day business for our employees and is an integral part of
our strategy to achieve global competitiveness. The 1999 update of the
Nestlé Policy on the Environment reiterates our strong environmental
commitment and reflects our priorities as we move into the new
millennium. It also recognises developments in the international
environmental arena.
The application of the Nestlé Policy on the Environment at every level of
our operation forms an essential part of the Nestlé Corporate Business
Principles and enables us to contribute to sustainable development —
meeting the needs of the present, without compromising the ability of
future generations to meet their own needs
Compliance
Nestlé is committed to the application of these principles in all countries,
and wherever they are not in conflict with relevant local legislation where
it operates.

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 NESTLE INDIA LTD.

Nestlé compliance with its Corporate Business Principles is regularly

monitored by its internal auditors on the basis of clear auditing
instructions, which are certified by the external auditing firm KPMG.
Findings and recommendations are reported to the Nestlé S.A. Board of
Directors.
Nestlé's Environment Progress Report 2001, many years of real work
experience
Nestlé is committed to environmentally sound business practices
Environmental Update

Message from the CEO

Nestlé was founded in 1867 by pharmacist Henri Nestlé on the shores of
Lake Geneva in Vevey, Switzerland. One hundred and thirty-four years
later, our headquarters are still in Vevey, surrounded by the Swiss Alps
in one of the world’s best-preserved environmental settings.
As they have grown from humble beginnings into the world’s largest
food company, we have attempted to take the fundamental cultural values
of environmental preservation and cleanliness into every country where
we operate.
They spend a great deal of time travelling to these countries and have
personally visited many of the 479 Nestlé factories currently in
operation. One of the reasons for doing so is to see for myself that our
facilities reflect the environmental values basic to our Company. Nestlé
announces publication of the Environment - Progress Report 2000.
The Nestlé Environment Progress Report 2000 has been published and
can be ordered from the Nestlé Environmental Affairs Department. The
Environment Progress Report 2000 - Highlights was distributed together
with the Nestlé Management Report 2000.
Moreover, the company follows environmental performance, including
the results of our environmental performance indicators. The
Environmental Officer reports directly to General Management to ensure
there is on-going awareness regarding environ mental affairs. Also, the
Nestlé Environmental Advisory Group (made up of corporate experts
from many functions) meets regularly to review current environmental
issues and to anticipate potential concerns. This allows us to maximise
control over our activities and contribute to sustainable development in
the countries where we operate.
The Nestlé Environment – Progress Report 2000 describes the results of
continuous improvement in our environmental practices. The progress in
a number of key areas, including a significant decline in the amounts of
water and energy used to bring each kilo of Nestlé products into your
home, and a similar reduction in factors which potentially affect global
warming. However, however they were never completely satisfied with
their current performance, and are committed to further environmental
improvements.
The try to remain sensitive to the environmental concerns of our
consumers and the public as a whole. As a charter member of the World

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Business Council for Sustainable Development, They attempt to keep

their policies at the forefront of industrial companies. For this reason,
they have pledged their adherence to The Business Charter for
Sustainable Development of the International Chamber of Commerce,
and we are committed to being a leader in environmental performance.
This leadership is only possible through the collective commitment of
the tens of thousands of individual Nestlé employees who, on a daily
basis, work to make this a better planet on which to live. This Report is
dedicated to them.

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 NESTLE INDIA LTD.

Peter Brabeck-Letmathe
Chief Executive Officer
Nestlé Corporate Business Principles

Nestlé is committed to the following business principles in all countries,

taking into account local legislation, cultural and religious practice:
 Nestlé's business objective and that of management and employees
at all levels, is to manufacture and market the company's products
in such a way as to create value that can be sustained over the long
term for consumers, shareholders, employees, business partners and
the large number of national economies in which Nestlé operates.
 Nestlé does not favour short-term profit and at the expense of
successful long term business development, but recognises the need
to generate profit each year in order to maintain the support of the
financial markets, and to finance investments.
 Nestlé believes that, as a general rule, legislation is the most
effective safeguard of ethical conduct, although in certain areas,
additional guidance to management and employees in the form of
voluntary business principles, is beneficial in order to ensure that
the highest standards are met throughout the organisation.
 Nestlé is conscious of the fact that the success of a corporation is a
reflection of the professionalism, conduct and ethical values of its
management and employees, therefore recruitment of the right
people, and ongoing training and development are crucial.
 Nestlé recognises that consumers have a legitimate interest in the
company behind the Nestlé brands, and the way in which the Nestlé
Company operates.

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 NESTLE INDIA LTD.

Vevey, October 23, 2001

Nestlé To Invest CHF 100 Million in New
Swiss Airline
Vevey, October 23, 2001 – Nestlé S.A. will
take a participation of up to CHF 100 million in the new Swiss airline,
fully expecting this investment to yield a return to its shareholders after
the initial launch phase. The project appears to be based on a reasoned,
viable business plan, with a fair chance of attaining its objectives. Nestlé
will assume no responsibility of any kind at management or board level of
the airline. Nestlé sees its limited investment in the new venture in the
following context: · as all internationally active corporations based in
Switzerland, Nestlé needs frequent intercontinental airline connections. ·
Nestlé is often identified by authorities and consumers as a Swiss
corporation whose products stand for quality and reliability. The company
cannot be indifferent to the quality of the image of Switzerland abroad,
which would have substantially suffered from the inability to find a
constructive solution. · Nestlé is an international company with a
substantial Swiss shareholding and it is based in Switzerland. As such, it
does not operate in a vacuum and is well aware of the social, political and
economic environment in which it functions. Participating in an effort
that encompasses all the major players in the Swiss economy, is
consistent with the position it occupies in its country of origin as well as
with its attitude of responsible corporate citizenship. During the earlier
attempts to solve the difficulties resulting from the impending failure of
Swissair, Nestlé has consistently signaled that, in view of its
responsibility vis-à-vis its own shareholders, it would not commit
shareholders' funds on a gratuitous base, simply to "rescue" Swissair.
Over the past weeks, however, the Swiss government as well as
representatives of the Swiss economy, discussed the creation of a new
Swiss airline that would ensure that Switzerland remains well served with
intercontinental flights and that the existing infrastructures would
continue to function. Nestlé's small minority stake in the new venture
corresponds to about three percent of the Nestlé Group's yearly
investment volume in fixed assets.
NESTLE'S CORPORATE CULTURE
As we had discussed before, Nestle is one of the most multinational of
multinationals and is spread over 75 countries worldwide. This implies
that it has employees from diverse cultural backgrounds. Nestle respects
the distinctive culture, mentality and traditions of every employee in
every country. What Nestle aims at is to incorporate its own culture into
its employees without stifling the individual employee's culture and

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 NESTLE INDIA LTD.

identity. When we went to Nestle we could feel the existence of a

distinctive work culture amongst the management-the staff seemed highly
motivated and cheerful and everybody had pin up boards in front of their
tables with reminders, motivational messages and even timelogs (the
Nestle people seemed as if they availed of the benefits of time
management).
Nestle has a diverse product range and so it also has diversified risks.
Thus Management on Information System plays a vital role in Nestle to
provide information to the Sales and marketing as well a finance
department. The Electronic Data Processing Department looks after
Management Information Systems. The Hierarchy of this department is
given below;
Controller Head of E.D.P. Controller
Apart from this, Nestle has a vast distribution network. In order to
support the BECA process, an integrated computer system has been
put in place across the company to link all functional areas and
locations. This common linked system will improve information
availability, aid quick decision-making and improve supply chain
integration.

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 NESTLE INDIA LTD.

GLOBAL OPERATION : COUNTRY WISE

Company Description : Nestle India
Nestle India. The principal activity of the company is the manufacture of
soluble beverage powder, milk products, surplus fat and other food
products. Products of the company include soluble coffees, coffee blends,
tea, preparation of milk, cream and cereals and milk
concentrated/condensed. The manufacturing plants are located at Moga,
Samalkha, Nanjangud, Choladi, Ponda and Bicholim. The company
exports it's products to Russia, Nepal and Bhutan. Soluble beverage
powder accounted for 29% of 2000 revenues; milk products, 26%; surplus
fat, 3% and other foods, 42%.
Competitor Analysis
Nestle India operates within the Dry, condensed, evaporated products
sector. This analysis compares Nestle India with three other dairy
companies in Asia: Alaska Milk Corporation of Philippines (2000 sales of
3.79 billion Philippine Pesos [US$73.12 million] ), Smithkline Beecham
Consumer Healthcare (8.58 billion Indian Rupees [US$178.71 million] of
which 95% was Malted Milkfood/Food), and Pure Foods Corporation
which is based in Philippines (12.65 billion Philippine Pesos [US$243.90
million] ).
Officers
Executive Chairman & Managing Director
Carlo M.V. Donati
Executive Director Finance
Jean Marc Waelti
Secretary
B. Murli

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 NESTLE INDIA LTD.

USA MARKET
Nestlé USA is named America's Most Admired Food Company for the
fourth consecutive year.
As many of its rivals seek growth through consolidation, Nestlé instead
looks within for ways to boost sales...In the process, it has posted sales
growth of more than 4%, higher than the industry average of 2.5%.
Together, Nestlé's disparate Internet ventures present a mountain of
opportunity...U.S. CEO Weller's Net-savvy unit is leading the global
company in its e-enterprise
Their vision as part of the world's leading food company is to provide
families with the best food and beverages throughout their lives. Our
success is based on the quality of our products and on relationships we
continually build with our customers, our employees, our communities
and our suppliers - who continually look to our company to be the very
best. Our commitment to achieving this vision is a source of Nestlé pride.
For well over a century, Nestlé has been making the very best food and
beverage products for families around the world. We believe that food
should provide for the spirit as well as the body, and strive to ensure that
every product we prepare also enriches the experience of life itself. We
believe it is our unique understanding of the integral role of food in good
living that's helped us to become a part of the world's largest food
company. Corporate Governance Principles
Since its foundation in 1866, Nestlé has
 built consumers' trust through the quality of its products;
 respected the social, political and cultural tradition of all countries
in which it operates;
 taken a long-term approach to strategic decision-making, which
recognises the interests of our shareholders, consumers, employees,
business partners as well as those of all the national economies in
which we operate.
Nestlé's commitment to good Corporate Governance goes back to its very
early days. Today, as both legislation and international recommendations
indicate growing public interest in the issue, we take the opportunity to
publish the Nestlé "Corporate Governance Principles" that reflect and
highlight our ongoing commitment.
Legislation and International Recommendations
Nestlé complies with the laws applicable in the countries in which it
operates;
 ensures that the highest standards of conduct are met throughout
the organisation by complying in a responsible way with the Nestlé
Corporate Business Principles, which guide company activities and
relationships world-wide in each sector of business interest;

 is aware that increasing globalisation is leading to the development

of more and more international recommendations. Although, as a
general rule, these recommendations are addressed to governments,

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they inevitably have an impact on business practices. Nestlé takes

such recommendations into account in its policies;
 generally endorses commitments and recommendations for
voluntary self-regulation issued by competent sectoral
organisations, provided they have been developed in full
consultation with the parties concerned; these include the ICC
Business Charter for Sustainable Development (1991), the OECD
Guidelines for Multinational Enterprises (1976), and the OECD
Principles of Corporate Governance (1999).
The Principles
They cover four areas:
I. The rights and responsibilities of shareholders
II. The equitable treatment of shareholders
III. The duties and responsibilities of the Board of Directors
IV. Disclosure and transparency and are based on Swiss legislation,
since Nestlé S.A. has its registered offices in Switzerland (Cham
and Vevey), as well as on Nestlé S.A.'s Articles of Association.
The rights and responsibilities of shareholders
The shareholders' rights are protected by law, by the Articles of
Association, and by the Corporate Governance Principles, which are also
intended to ensure the sustainable development of Nestlé S.A.

Nestlé S.A.'s basic shareholders' rights and responsibilities include the

right to:
 secure methods of ownership registration;
 obtain relevant information on Nestlé S.A. on a regular and timely
basis;
 participate in and vote at General Meetings of the Shareholders in
person or in absentia (by proxy), subject the Nestlé S.A.'s Articles
of Association;
 approve the annual report and the annual financial statements of
Nestlé S.A.;
 approve the consolidated financial statements of the Group;
grant the discharge to the Board of Directors (hereafter referred to
as the "Board") and to the Management;
decide on the appropriation of profits resulting from the balance
sheet of Nestlé S.A., in particular determine the amount of the
dividend;
 elect and remove the members of the Board and the Auditors of the
annual financial statements, and of the consolidated financial
statements;
 adopt and amend the Articles of Association;
 take all decisions, which by law or under its Articles of
Association, are within the jurisdiction of the General Meeting;
 participate in the decisions in extraordinary meetings;
 be informed sufficiently ahead of time of the date, location and
agenda of General Meetings;
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 place items on the agenda and ask questions at General Meetings in

accordance with the Articles of Association, and - for the questions
- subject to reasonable limitations inasmuch as the topics are
related to the business activities.
 Any Nestlé S.A. shareholder has the right to request effective
redress of violation of his/her rights in accordance with the Swiss
law.

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The duties and responsibilities of the Board

The Board ensures the strategic guidance of Nestlé S.A. and the effective
monitoring of its management.
The Board is accountable to the shareholders. In order to fulfil their
duties and their responsibilities, Board members receive and can request
accurate, relevant and timely information.
Board members act on a fully informed basis, in good faith, with due
diligence and care, and in the best interest of Nestlé S.A.
Disclosure and transparency
 Nestlé S.A. aims to ensure that shareholders have access to
relevant, up-to-date and consistent information. This information
should allow shareholders as well as prospective investors to make
an informed judgement about Nestlé S.A. shares.
 Nestlé S.A. will pursue a policy of disclosure and transparency.
This policy will be modified only when it is necessary to protect
the company's competitive, commercial or legal position.
 Nestlé S.A. complies with all legal and regulatory requirements
applicable where its shares are listed. Nestlé S.A. will monitor all
changes and take part whenever possible in the discussion
preceding such changes in legislation and listing regulations.

 Nestlé S.A. is aware of its obligation to make information that is

relevant to the market publicly available in simultaneous fashion.
To this effect, "quiet periods", during which no relevant financial
information will be provided to third parties, have been introduced.
 Independent auditors elected by the shareholders conduct the
annual audit in order to provide an external and objective assurance
on the way in which financial statements have been prepared and
presented.

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 NESTLE INDIA LTD.

DISTRIBUTION NETWORK
THE DISTRIBUTION CHAIN NOW
FMCG Manufacture
Clearing and forwarding agents (1-3% margins)
Super stockists (3-6% margins)
Stockists (3-5%)
Distributor (4-7%)
Organized retailer (6-15%)
WHAT RETAIL CHAINS WANT
FMCG manufacturer
Organized retailer (current 6-15% margin + 11-21% savings from
disintermediation)
The retail demands
What FMCG companies What retail chains
give wants
6% to 15% Margins At least 20%
7-10 days Credit days 15-30 days
12 days Minimum stock levels 7 days
20% to 25% Stock outs Less than 5%

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NESTLE INDIA LTD.

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 NESTLE INDIA LTD.

Methodology
The nature of the project work has been exploratory as no hypothesis, is
taken to be tested. Though the conclusions drawn could be taken as the
hypothesis and further tested by the research work undertaken in the
relevant field. The reason for choosing the exploratory research design is
the fact the project report has been primarily based upon the secondary
sources of data and whose authenticity could be assured of.
The reluctance of the company's personnel in parting with much of
information led the project report to be based substantially on the
secondary source of data. The sources of data used in data collection are
the following:

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 NESTLE INDIA LTD.

Primary sources
In order to gather information about the various products, I personally
visited a number of retail markets and collected data pertaining to the
prices of the products offered. The market visits were useful in knowing
the comparative prices and quality of the offered brands vis-à-vis the
competitive brands. Detail regarding the packaging of the products were
collected were collected and I also inquired about the various sales
promotion schemes followed by the three companies.
By interviewing these retailers valuable information was collected. I
inquired from them about their marketing advertising and distribution
strategies.

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Secondary sources
Information was collected from secondary sources such as public
libraries, newspapers, business magazines.
Beside these the use of Internet was also made in collecting relevant
information. The data collected from the above mentioned sources has
been adequately structured and used at appropriate places in the report.
This particular way of data collection was used because of its low cost
(except data collected through surfing the internet) and less time
consumption.
The information gathered included:
 Their annual reports (Procter & Gamble and Johnson and Johnson).
 Pamphlets.
 Posters.
 Press clippings.
 News releases.
 Newsletters.
 Pictures.
Mc Curtty has popularized a four factor classification of these loots called
the 4 p. These are:

MARKETING MIX

PRODUCT TARGET MARKET PLACE

Product variety quality Channels coverage

design features brand Assortments Locations

Once PRICE
should PROMOTION view of the
name packaging sizes note that the 4P’s represent the seller’s
Inventory
Listtools
marketing priceavailable
discountsfor influencing Sales From a transport
promotion
buyers. buyers
point of view, each marketing tool is designed to deliver a custom
benefit.allowances
The 4 P’s correspond
payment to the customer’s 4 C’s
advertising as: force
sales
4Ps 4Cs
Product Customer needs and wants
period credit terms PR direct marketing
Price Cost to the customers
Place Convenience
Promotion Communication
Product
In the product the companies started a spate of freebies with their
products e.g. Godrej offered a cordless Rx 1234 off with its refrigerators.
Peter England gave Rs 100 off on for its sheets. One must try to create
new segments for people who want to go to a higher segment but are not
in a position to do so.Nestle introduces milk and dahi for higher segment
people. Many companies are bringing in cheaper ranges to the existing
ranges so that once the people have tried & tested their products they can
be made to upgrade to their premium ranges.

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 NESTLE INDIA LTD.

One must also target the others customers because this is not exactly the
right time to expand the market but to make the existing customers buy
again. For grabbing others share one must try to attack on the rivals
achelles heal with high dose of speed & surprise, catching him unawares
e.g. LML followed the same strategy in UP, MP & Rajasthan where its
competitors position was relatively weak. Nestle again repositioned the
chocolate bar one. Nestle has been coming with the different productsand
trying to target the different segments.
Nestle is also trying to give the customer more choice, so that they can
choose the product which they like. The company is also trying to bring a
variety of products in every segment.
The companies should also try to offer emotional value to the customer a
Pt. New customers can't be attracted with the same benefits as in good
tones. For, the resistance to experiment, whether with a new product or a
brand is much higher unless that is, the benefit can mow down the barrier.
According to Puris Lintas Mehra consumers look for safe choices during a
recession. This is not the time for new brands to come in, unless their
attributes are very strong.
Price:
Is an important tool to break down barrier to a product or brand
acceptance. According to Siddhartha 'Shunv' Sen,59, the CEO of Suadra
Advisory Services "Statinzg the price upfront can lower the consumer's
expectation from a brand". But one can't be convinced of the value
connotation of year brand, the customer will still use the expensive, but
more trusted product although in smaller quantities or a fewer occasions
than before to project her budget So what next ? The price warriors must
make their offer either qualitatively different or quantitatively superior to
the competition. And then slip in the lower price to seal the deal. This
double differentiation will double your impression in the customer's mind.
In consumer durables the demand for these goods falls rapidly in a
recession the consumer postponing his buy as long as he can. The
marketers in this time must lure the customers with much more than then
their lower prices but by schemes such as exchange offers.
Nestlae has been always pricing the products as premium price. The
strategy of the nestle is to set the priceas premium. The price is always
set as that price that can be afforded by the customers .the company
should set the price for those also who have low spending budgets, they
can not only service the old customers but also bring in new for whom
earlier price was the main barrier.
Price One can reach for the consumers purse on the basis of price but to
stay there on the basis of price is pretty cough.az Because every one tries
to imitate the low prices if the players are new. To ensure price as a
sustained competitive advantage, the differentiation should be continuos.
Imitation should be warded off, consumers kept interested & build image
around price rather than as a discount player.
Promotion:-

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 NESTLE INDIA LTD.

In recession the marketers must find innovative ways to promote its

product because the promotion must and from the clutter. The marketer
has to make the consumer try his product & in order to make them try
marketer's uses giving samples of his product. If the product is worthy or
the customer finds the product satisfactorily then the product gets listed
on his list & it can be considered in the next purchase. The marketer has
also the use different media to catch the attention of the buyers apart from
T.V. & the print media. He has to use new methods of promotions in order
to get the consumers attention.
Nestle has also implemented many promotion schemes . the company has
also promoted there products like giving free samples of the new
products. or giving the new product free wiyh old popular and famous
product.
Place:-
In recession times when the demand in urban markets is not growing at a
fast rate the marketer must find new markets where he can sell his
products. For today's Urban-centric marketer, one way to beat the
recession is to tune into rural markets.
Many companies have resorted to direct selling . This is because
companies can save on costs of distribution channel. The company chose
direct marketing or what is presently called as mutti-level-marketing
where customer doubles as distributors. The advantage the distributors in
addition to being a seller also doubles as a customer & his giving away of
experiences is genuine.
So one can finally say
PRODU PRICE PROMOTI PLACE PAYMEN PACKING
CT ON T
Consumer Create new Use Go Designs
Non- segments sampling rural; small units
durables within and use oat lower
earlier multiple shops-in prices
segments media – shops
Consumer Offer no- Use Use Use Offer Bundle
Durables frills exchange announcem dired financing products
options offers ent selling and into single
advertising installment units
s
MARKETING
Sales and Marketing are amongst the main strengths of Nestle
It is the hierarchy, which has strengthened the foundation of Nestle’s
marketing force, is as in fig 1:
Managing director

Vice President
(Marketing)

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 NESTLE INDIA LTD.

The efficacy of this hierarchical structure is seen in Nestle's performance

over past few years of various products.
By 1989 the company had achieved a sales figure of approximately Rs.
258 crores. 1989 was the year of launches. Seven new product lines were
launched in this year. This was also the year in which the Nanjagud
factory was set up. By the year 1992, this sales figure was touching Rs.
500 crores. In the 1990's the pace of launches quickened and since the
construction of the factory at Samalakha, 20 new products have been
introduced. By 1996, Nestle had about 76 different products in its
portfolio with various new products in the pipeline as well. The sales
figure now touched Rs. 1214 crores. Thus sales grew by 450% over a
period of one and a half decades.

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 NESTLE INDIA LTD.

MARKETING STRATEGY
Nestle has adopted a four pronged growth strategy:
1. Gunning the market with new products and brand extensions.
2. Expansion of the distribution network to small towns for extensive
availability
3. Reduce prices and introduce smaller packages for products to make
them more affordable (a tool to enter price sensitive markets).
4. Focus on employ training and develop a positive attitude through
enhanced manpower development.
5. By year 2000 it expects chocolate and confectionery to account for
one in every third rupee in sale.
In the late 1996 fear of breading complacency by not having a continuous
improvement, gave birth to an international sales and marketing
improvement teams (SMIT).
SMIT maps the latest in helping towards the target of year 2000. The
SMIT exercise is a major global initiative of Nestle to enhance sales and
marketing productivity. Linked with the already existing BECA project,
which in turn emphasizes on excellence by improving the distribution set
up, this gave rise to the following growth objectives for the year 2000:
 Ensure direct coverage of all urban towns in India.
 Expand distribution to reach I million retail outlet on a regular basis.
 Work in partnership with the distributor for the achievement of these
objectives.
 Provide sustainable solution to optimize our secondary sales from
distributor to retailer.
PRODUCTION
As a part of Nestles efforts towards continuous improvement and
excellence in Manufacturing operation, a Maga Improvement Team (MIT)
was put in place at the Maga factory. The team comprised of international
experts from Nestle Technical Service (NESTEC) and the local staff. In
1996, it embarked on a program with the single-minded objective of
optimizing production costs while enhancing the product quality so as to
make Nestle products even more competitive in the market place.
Drawing upon Nestle's global experience and manufacturing expertise in
75 countries the team identified the following areas for detailed study:
 Process improvement to ensure the optimal usage of resources
 Improvement of operational efficiency
 Cost optimization.
As series of small but critically important initiatives ranging from
redesigning laboratories to palletisation of raw materials and packaging
material utilization, manufacturing and filling loses and labor man-hours
resulting in substantial savings and improved productivity and machine
utilization. In addition, several non-tangible benefits in the form of
systems for sustainable improvement in areas like factory maintenance
planning tools, down time recording systems and performance
measurement tools were also realized.

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 NESTLE INDIA LTD.

This project was highly successful and the company is now implementing
its key learning's of MIT in its other factories.
In a country as vast and diverse as India, Supply Chain Management is
absolutely critical to rapid growth. Through BECA, Nestle has
concentrated heavily on streamlining and improving their supply chain
management in order to make it more dependable, more cost effective and
most importantly, more responsive to market needs.
For better supply chain integration the planning of key operations-
purchase, production, distribution and sales are synchronized to ensure
that every body works towards a common business plan. Monthly
objectives are broken down into weekly and 9wherever necessary) into
daily plans and monitored regularly to ensure smooth implementation and
quick corrective action when needed. Major benefits accrued thus far
include reduction in working capital through lower inventories of finished
goods and materials, better stock availability and reduction in
obsolescence of materials.
In addition to traditional performance indicators, quantifiable
performance measures have been identified and implemented in all
functional areas such as sales planning, production output, quality
assurance, material ordering transportation and warehouse management.
These measure are monitored regularly to gauge the extent of
improvement and identify root problems for taking corrective actions.
Teams have been put in place at all factories and sales offices to ensure
the implementation is continuous and self-sustaining. Areas of
improvement are regularly identified and time bound action plans
established. For this purpose, standard tools such a Total Quality
Management (TQM), Kaizen, 5S and Small Group improvement activity
(SGIA) are being extensively used.

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 NESTLE INDIA LTD.

ADVERTISING STRATEGY
Nestle, a cash rich company has plenty of marketing prowess. This can be
credited to a strong and sound advertising strategy.
Nestle in the year 1995 had an advertisement spending of Rs. 43.3 crores
(net). Tracing Nestle advertising responses the ad campaign by HTA of
'Hot and Sweet' was a runway success this ad was actually meant to fend
off a challenge from H.J. Heinz. The Maggi range of sauces were
introduced in 1985 but sales didn't catch up until 1990. At this point the
popular and memorable campaign of Javed Jaffrey and Pankaj Kapoor was
launched by Producer Pralad Kakkar. This commercial was an instant
success. The volume of sales kept rising from an initial growth of 13% to
20% in the next year. Today the sales figure for Maggi Sauces is growing
at a steady 6% per year.
Another noteworthy campaign was that of POLO (the mint with a hole),
devised by Mudra advertising agency. This campaign was awarded 11
industry ad awards.
In 1996 the advertisement budget has been approximately Rs. 56 crores
where again innovation was the main focus. The new nationwide product
launch of Maggi Macaroni Snack and Mithai Magic have been designed
by Mudra. The macaroni ad with its use of "Hinglish" and a catchy beat
(which is the latest trend amongst the Indian Advertisers) appeals well to
the target audience and the Mithai Magic Commercial does keep the
secret of the contents in the box, intact.

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 NESTLE INDIA LTD.

WORKING OF THE EXCLUSIVE DISTRIBUTION SYSTEM

What is an exclusive distribution system?
Exclusive distribution runs on a line similar to the Trade Distribution
System. It is when the goods reach the cash distributors' godown that the
difference first shows up.
When a company is into a number of different category products, with a
wide range in each of the categories, it becomes increasingly difficult for
it’s to pay attention to each and every product of each and every category.
In order to maintain its stress on each category and monitor them in a
more organized manner it is necessary to create an exclusive distribution
for each of these categories i.e., each category has a distribution network
exclusive to itself. There are separate units/vans, with separate categories
of products of the same brand, plying to the same dealers. The dealer thus
can concentrate better on the variety of products in each category. Similar
categories can be clubbed together e.g., chocolate and confectionery.
The exclusive distribution system developed by Nestle has the following
salient features:
 The Chocolate and Confectionery division was separated from the
Instant drink and Culinary divisions to start the Exclusive
distribution for the former, sometime during the end of the year 1997.
 Four metros and around 37 semi metro towns have been covered under
the exclusive distribution. Seventeen Cash Distributors were
appointed in Delhi itself to carry out this new system.
 The chocolate and confectionery are transferred from the factories,
where they are manufactured to the Mother godown after they are
quality approved. From the Mother godown the products are
transferred to the respective cash Distributors godown.
 According to the company norms a cash distributor holds the stock of
two week and therefore the stocks are replenished every fortnight.
Sales Analysis
During the year ended December of 2000, sales at Nestle India were 15.82
billion Indian Rupees (US$329.38 million). This is an increase of 8.0%
versus 1999, when the company's sales were 14.65 billion Indian Rupees.
Sales of Surplus Fat saw an increase that was more than double the
company's growth rate: sales were up 1,174.6% in 2000, from 546.01
million Indian Rupees to 6.96 billion Indian Rupees. Not all segments of
Nestle India experienced an increase in sales in 2000: sales of Milk
Products fell 86.3% to 569.45 million Indian Rupees.
Recent Sales at Nestle India
9.5 11.5 13.7 15.3 14.6 15.8

1995 1996 1997 1998 1999 2000

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 NESTLE INDIA LTD.

(Figures in Billions of Indian Rupees)

Nestle India has changed its product mix within the past five years. In
2000, the largest segment was Surplus Fat, while in 1996, the largest
segment was Other Foods. During the past four years, sales of Surplus Fat
increased 1,374.2% (from 472.07 million Indian Rupees to 6.96 billion
Indian Rupees), while during the same period, sales of Other Foods
experienced an increase of only 22.8% (from 3.99 billion Indian Rupees
to 4.90 billion Indian Rupees).
Although sales at this company increased, they increased at a slower rate
than the three comparable companies in 2000. The sales increase of 8.0%
was less than those at Alaska Milk Corporation (up 14.7%), Smithkline
Beecham Consumer Healthcare (41.2%), and Pure Foods Corporation
(18.9%).
The company currently employs 2,963. With sales of 15.82 billion Indian
Rupees (US$329.38 million) , this equates to sales of US$111,164 per
employee.
Sales Comparisons (Fiscal Year ending 2000)
Sales Sales Sales/ Largest
Company
(US$mlns) Growth Emp (US$) Region
India
Nestle India 329.379 8.0% 111,164
(100.0%)
Alaska Milk Corporation 73.122 14.7% 93,268 N/A
Smithkline Beecham
178.707 41.2% N/A (100.0%)
Consumer Healthcare
Pure Foods Corporation 243.899 18.9% 64,729 N/A

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 NESTLE INDIA LTD.

Recent Stock Performance

For the 52 weeks ending 10/19/01, the stock of this company was down
0.3% to 505.95 Indian Rupees. During the past 13 weeks, the stock has

fallen 4.5%.
During the 12 months ending 12/31/00, earnings per share totalled 12.30
Indian Rupees per share. Thus, the Price / Earnings ratio is 41.13.
Earnings per share rose 20.4% in 2000 from 1999. Note that the earnings
number includes a $.35 pre-tax charge and $.11 pre-tax credit in 2000.
This company is currently trading at 3.08 times sales. This is at a higher
ratio than all three comparable companies, which are trading between
0.51 and 2.15 times sales. Nestle India is trading at 18.91 times book
value. The company's price to book ratio is significantly higher than that
of all three comparable companies, which are trading between 0.81 and
4.94 times book value.
Summary of company valuations
Price/ Price/ 52 Wk
Date P/E
Company Book Sales Pr Chg
Nestle India 10/19/01 41.1 18.91 3.08 -0.30%
Alaska Milk Corporation 10/19/01 7.2 0.81 0.51 10.53%
Smithkline Beecham Consumer
10/19/01 N/A 4.94 2.15 N/A
Healthcare
Pure Foods Corporation 10/9/01 7.9 1.83 0.60 35.00%
The market capitalization of this company is 48.78 billion Indian Rupees
(US$1.02 billion) . The capitalization of the floating stock (i.e., that
which is not closely held) is 34.89 billion Indian Rupees (US$726.33
million) .
Dividend Analysis

54
 NESTLE INDIA LTD.

During the 12 months ending 12/31/00, Nestle India paid dividends

totalling 14.00 Indian Rupees per share. Since the stock is currently
trading at 505.95 Indian Rupees, this implies a dividend yield of 2.8%.
Nestle India has increased its dividend during each of the past 5 fiscal
years (in 1995, the dividends were 3.33 Indian Rupees per share).
During the same 12 month period ended 12/31/00, the Company reported
earnings of 12.30 Indian Rupees per share. Thus, the company is paying
out dividends that are higher than the earnings.
Profitability Analysis
On the 15.82 billion Indian Rupees in sales reported by the company in
2000, the cost of goods sold totalled 12.61 billion Indian Rupees, or
79.7% of sales (i.e., the gross profit was 20.3% of sales). This gross profit
margin is better than the company achieved in 1999, when cost of goods
sold totalled 81.2% of sales. In 2000, the gross margin was the highest of
the previous five years (and in 1996 was as low as 13.9%).
Nestle India's 2000 gross profit margin of 20.3% was lower than all three
comparable companies (which had gross profits in 2000 between 25.5%
and 57.1% of sales).
The company's earnings before interest, taxes, depreciation and
amorization (EBITDA) were 2.47 billion Indian Rupees, or 15.6% of
sales. This EBITDA to sales ratio is roughly on par with what the
company achieved in 1999, when the EBITDA ratio was 15.7% of sales.
The three comparable companies had EBITDA margins that were all fairly
close (between 13.2% and 17.0%) to that achieved by Nestle India.
In 2000, earnings before extraordinary items at Nestle India were 1.19
billion Indian Rupees, or 7.5% of sales. This profit margin is an
improvement over the level the company achieved in 1999, when the
profit margin was 6.7% of sales. Earnings before extraordinary items have
grown for each of the past 5 years (and since 1996, earnings before
extraordinary items have grown a total of 119%).
The company's return on equity in 2000 was 41.1%. This was
significantly better than the already high 35.7% return the company
achieved in 1999. (Extraordinary items have been excluded).

Profitability Comparison
Gross Earns
EBITDA
Company Year Profit bef.
Margin
Margin extra
Nestle India 2000 20.3% 15.6% 7.5%
Nestle India 1999 18.8% 15.7% 6.7%

Alaska Milk Corporation 2000 31.4% 13.2% 10.2%

Smithkline Beecham
2000 57.1% 17.0% 13.1%
Consumer Healthcare
Pure Foods Corporation 2000 25.5% 14.3% 7.0%
Inventory Analysis

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 NESTLE INDIA LTD.

As of December 2000, the value of the company's inventory totalled 2.06

billion Indian Rupees. Since the cost of goods sold was 12.61 billion
Indian Rupees for the year, the company had 60 days of inventory on
hand (another way to look at this is to say that the company turned over
its inventory 6.1 times per year). This is an increase in days in inventory
from December 1999, when the company had 1.62 billion Indian Rupees,
which was only 50 days of sales in inventory.
The 60 days in inventory is lower than the three comparable companies,
which had inventories between 91 and 106 days at the end of 2000.
Financial Position
At the end of 2000, Nestle India had negative working capital, as current
liabilities were 3.73 billion Indian Rupees while total current assets were
only 3.35 billion Indian Rupees. The fact that the company has negative
working capital could indicate that the company will have problems in
expanding. However, negative working capital in and of itself is not
necessarily bad, and could indicate that the company is very efficient at
turning over inventory, or that the company has large financial
subsidiaries.
As of December 2000, the company's long term debt was 790.06 million
Indian Rupees and total liabilities (i.e., all monies owed) were 4.94
billion Indian Rupees. The long term debt to equity ratio of the company
is 0.31.
As of December 2000, the accounts receivable for the company were 1.17
billion Indian Rupees, which is equivalent to 27 days of sales. This is an
improvement over the end of 1999, when Nestle India had 36 days of
sales in accounts receivable.
The 27 days of accounts receivable at Nestle India are lower than all three
comparable companies: Alaska Milk Corporation had 72 days, Smithkline
Beecham Consumer Healthcare had 46 days, while Pure Foods
Corporation had 62 days outstanding at the end of the fiscal year 2000.
Financial Positions
LT Debt/ Days Days
Company Year
Equity AR Inv.
Nestle India 2000 0.31 27 60
Alaska Milk
2000 0.01 72 106
Corporation
Smithkline Beecham
Consumer 2000 0.15 46 91
Healthcare
Pure Foods
2000 0.07 62 104
Corporation

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 NESTLE INDIA LTD.

SWOT ANALYSIS
Strength
The basic Aim of Nestle is to become the leading company in the Indian
food industry. It was linked to India from the starting of the century
(1900). Through exports, manufacturing in India only began in 1962. In
very short span it had established itself as a major player in Indian food
industry.
The remarkable growth has been achieved through.
a. Rapidly creating greater has manufacturing capacity.
b. Taking steps to ensure availability of good quality of products.
c. Strengthening of distribution and sales network particularly in rural
areas.
d. Sales and marketing are among the major strength of the Nestle.
Weakness
a. Nestle aims only of capturing young market, which is quiet clear from
the advertisements in India.
Opportunities
Threats
a. Cadbury In creasing popularity of Cadbury's products in markets is a
major threat to Nestle.
b. Introduction of foreign food product in India is another threat to
Nestle.

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 NESTLE INDIA LTD.

RESULTS OF MARKET SURVEY

PEOPLE LISTINGS

58
NESTLE INDIA LTD.

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 NESTLE INDIA LTD.

RECOMMENDATIONS AND SUGGESTIONS

Recommendation and suggestions forms the most critical part of the
report. These are based on hard nose feedback collected from the retailers
and distributors and my personal experiences in the market.
1. It has been found for increasing the sales Displays and Consumer
offers have to be given simultaneously this helps in two ways,
attracts the customer attention through product display and prompts
him to buy, the offer on the product further strengthens this feeling to
indulge in buying. But both the tools should be used with adequate
planning and precision and only then would they reap benefits . We can
provide the trade loads as the Displays. As has been found retailers
are more satisfied with the displays. It would also improve the image
of the company as the one that cares for its channel members. But
whole process should be cautiously handled with prompt payments.
Delay in payments would lead to bad reputation in the market.
2. Inspite of the best of the marketing communication strategies adopted
by us we are not doing well. Possible reason could be lack of
motivation at the lowest possible but the most important level that is
the sales officer and the RS salesman. We should organize a contest
for weeks or month time between the entire RS salesman and the
sales officers separately. Whoever makes the maximum sales during
the week/month would be entitled for a vacation or cash incentives by
the company. He would have to generate a list of retailers/wholesalers
where he has made the sales. This would act as a tool to keep a check
on the stock being dumped in the wholesale market.
3. It has been found that the sales officers often fail to carry the catalogs
and samples with them. We can design a sales promotion kit, which
would act as a handy tool for them in the market. It would consist of
advertisement proofs, product samples, illustrations of POP displays,
description of special deal or contest featured in the promotion. I feel
that all the sales process revolve around the following basic seven
steps:
Get set to sell.
Spark the interest.
Dramatize the need.
Prepare the proposal
Capitalize on objections.
Cut the order
Follow through
4. Our department could print a dealers manual which would elaborate
on the above points.
For EG: Capitalize on objections would list all the possible objections
that that prospect may voice and each of the corresponding well
thought of answer. These small efforts on our part would help us
overcome barriers and clear out the most taken for granted things. This
would also come in handy for the managers when they feel like
building pressure on the channel members.

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 NESTLE INDIA LTD.

5. It has been my experience that there is an flaw in the working of the

sales officers. They are often unclear about the targets and the
schemes. They have to be briefed more frequently and trained
accordingly. They should be provided a company T-shirt that would
distinguish them from other salesman.
6. There is a dire need of the Institutional selling unit which all major
companies have. NESTLE in Delhi has a lot of distributors
specifically for this purpose. They cater to demand from super
bazaars, kendriya bhandars, railway canteens and other cooperative
stores.
7. The display windows provided by us are not a least bit attractive to
draw attention of any customer standing in the shop. We should have
really skilled team of workers (or single person) doing up the
windows. This would also act as a safeguard for proper utilization of
display budget. If we are spending on displays then we must capitalize
on these things, which is not happening now. Hence professional
merchandisers should be appointed.
8. Distributors image in a area plays a major role in boosting sales.
Company should take strict action against those distributors with
tarnished image as they spoil the companies’ reputation also. If the
need be they should replace the distributor. The company should in
regular interval take feedback from the retailers as regards to the
distributor.
9. There should be adequate supply of the POP material. The sales
officers and merchandizers should properly put them on the outlets
visited during the day.
10. As found in the study that the displays are a major motivating factor,
the display claims should be promptly cleared on time. This maintains
the companies’ image across the retail outlets and keeps the retailers
satisfied. It was a general feeling across the Delhi metro.
11. At present the company does not have any “Target based incentives”
to the retailers. We give trade loads at the time of purchase by the
retailer and then forget him for 15 days. It should be other way round.
On selling certain units the retailers should be offered incentives in
form of gifts like Cameras, Walkman, Mobile phones etc. This would
motivate him to push the companies’ product as compared to the
competitors. It would also ensure actual consumption of the product
and control dumping at the retailers outlet.
12. The company can prepare Cardboard stands on which the nivea
products could be placed. These stands should be placed at the front of
retailer’s desk. Recently FA has prepared such stands. This ensures
high visibility of the product category and prompts the customer to
take impulse decisions. They are cost effective too.
13. HOME TO HOME SELLING
The success mantra of HLL is that it applies all possible channels of
selling emphasizing on direct selling whereby company employed
people interact with the customer personally. They sell the product and

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offer discount coupons on next purchases. Our company must

explore this channel that ensures sales and builds repeat
purchases. Discount coupons should be distributed across the
household in Delhi Metro. This would build awareness about
thechocolates products and would overcome its major weakness of
lack of awareness on part of customer about the range of products.
The retail outlets in the areas where coupon are distributed must be
flooded with our range of products so that there is no shortage of
supply.
14. As revealed by the survey Spot Promotions are a cheap and effective
way of sales promotion. For this purpose the company should make
one time investment in preparing maggi stalls, chocolates stalls,new
range of products stalls (we know your skin better) and placing them
at prominent places at regular intervals. To begin with 2 mobile stalls
could be prepared and the concept be tested across the Delhi metro.
Each stall would cost approx Rs 1200. The stall would sell our range
of items at Discounted price (Minus the retailers and distributors
margin as the products would be directly sourced from the C&F
agents). Nestle representative wearing nestle T-shirts and Blue colored
caps would counsel the public.
It would serve twin objective of increasing the awareness of the
product as well as boosting the sales. The sales officers should be
asked to identify crowded market places in their areas where such
efforts could be made. Specially, On festival occasions when the
expenditure by public increases we could cash on the opportunity.
15. The wholesalers are found to undercut whatever extra margin he gets
in form of Schemes etc, So for proper channel balance we need to keep
strict control over our sales to the wholesalers. This would also help
the distributors to maintain their ROI. .

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 NESTLE INDIA LTD.

LIMITATIONS
Sample size: The sample size chosen was 250 for the whole Delhi metro
where there are so many people. This could have affected the results,
which may not hold true in all parts.
Concerned persons were not available despite appointments at some
times. It was difficult to tap the distributors and the ASM of nestle.
The marketing and the advertising managers were not ready to give any
infomationabout the company . They were not willing to tell about any
strategy of marketingand advertising . so very less information can be
gas\thered about the strategy of marketing.
The distributors were reluctant to share information regarding the trade
insights.

CONCLUSIONS
Sales growth in 2001 led by a robust 20% growth in volumes
Nestle’s domestic sales registered a 18.5% volume growth during the first 9 months of 2001.
Exports registered a 31% yoy volume growth. In value terms, domestic sales grew by 15.8% yoy to
Rs12.1bn, while Exports grew by 26.4% yoy to Rs2.4bn.
Jan-Sep Jan-Sep % yoy
Volume Growth (tons) 2001 2000
Domestic 105718 89176 18.5
Exports 13402 10216 31.2
Total 119120 99392 19.8
Value Growth (Rs mn)Domestic 12107 10454 15.8
Exports 2424 1918 26.4
Total 14531 12372 17.5
Beverages leading volume growth, value growth being led by culinary
segment
Beverage sales have grown at a fast pace of 42% in the first 9 months of
2001 driven by rising exports and revised pricing strategy in domestic
market. Growth in value terms is however lower due to a sharp 15%
decline in realizations. Culinary product sales grew by 20% in volumes
and 22% in value. Volume growth in chocolate & confectionery segment
was 12%, which was higher then market leader and average industry
growth, signifying that the company has been able to improve market
share in the category.

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Turnover Contribution by
Turnover Growth
contribution
Volume Value Volume Value Realization
Milk & Nutrition 47 43 15 13 -1.4
Products
Beverages 18 29 42 21 -15.1
Culinary Products 24 14 20 22 1.9
Chocolates & 11 14 12 20 6.8
Confectionery

Milk products, which account for a significant 43% of Nestle’s revenues

have grown at steady 15% in volume terms. Turnover contribution of
beverages is 29%, while culinary products and chocolate & confectionery
each contribute 14% to Nestle Rs14.5bn turnover in the first 9 months of
2001..
Profit Margin
Operating margins have improved from 18.1% to 18.5% in 2001 driven by lower material cost.
Raw material cost declined from 44.4% of sales in F12/00 to 43.1% of sales in F12/01.
Operating Margins 2001 2000
EBITDA 18.5 18.1
Adjusted EBITDA 18.5 17.7
Improved working capital and asset management
The company has been able to improve working capital management.
Operating cash flow has registered a CAGR of 15% in the last 4 years.
Fixed asset turnover has also gradually improved over the last 3 years.
Net indebtedness (total financial liabilities net of liquid assets) has
declined from a high 2.5x in 1998 to 0.3z currently.
1998 1999 2000 2001-Sep
Operating Cash Flow 1743 2391 2420 1966
Rotation of Operating Net 7.1 9.6 14.7 18.1
Working Capital
Rotation of Fixed Assets 4.0 3.9 4.2 4.7
Net Indebtedness 2.5 1.0 0.9 0.3
1. Operations:
Domestic Sales grew by 7% in value and 15% in volume terms, during the
year. Export Sales grew by 16% in value and 32% in volume. Profit After
Tax grew by 20% from Rs985mn to Rs1186mn.
During the year, the Company retired certain fixed assets from active use
at various locations and the impairment loss on such fixed assets has been
charged to the Profit and Loss Account.
Out of business prudence, the Company supplemented the Contingency
Provision with further amount in 2000 of Rs295mn (net) to provide for
various contingencies resulting from matters mainly relating to issues
under litigation, dispute and management discretion.
The current year has commenced as per plan in the domestic market and
your Directors are hopeful of continued good results. However, with the

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current level of inflation and economic indicators pointing towards a

sluggish market, it would be difficult for the Company to maintain the
level of earnings unless the Company takes price increase on finished
products which would depend on market conditions and competitor
activities.

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2. Exports:
Export Sales for the year at Rs2655mn have grown by 32% in volume
terms, over the last year. This has been mainly due to the higher exports
of NESCAFE to Russia, buoyant sales of Instant Tea and good
performance of the culinary products. However, depressed green coffee
prices in domestic and international markets kept the export realisations
low. Measures taken for tapping new market and product opportunities
have also contributed to this growth. The export competitiveness of value
added instant coffee manufactured in India continues to be adversely
affected by the purchase tax levied on green coffee. Efforts continue to
tap new market and product opportunities.
3. Dividends:
Interim dividend of Rs. 8.00 per equity share, including Rs4.50 per equity
share out of undistributed profits of the previous financial years, was paid
during 2000.
4. Business Development:
In line with the Company's objective to provide superior value in every
product category and market sector, efforts were focussed to provide
quality products to customers at attractive price points. While the
Company continued to generally maintain price points across all the
product categories, the pricing of some products were also reduced to
meet consumer expectations.
MAGGI Noodles re launched in 1999 in response to popular consumer
taste preference, continued to boost sales during 2000 in the culinary
segment. New flavour profiles were introduced in the bouillon business.
The market continued to react positively to the initiatives taken in the
recent past to grow the consumption of instant coffee in the domestic
market. The new NESCAFE pricing and bringing the popular SUNRISE
brand under NESCAFE umbrella to benefit from its association continued
to strengthen the category. NESCAFE Frappe a blend of coffee, mocha
and vanilla, which makes a delicious frothy cold coffee was launched in
select metropolitan cities in the third quarter. This was another strategic
launch and seeks to address consumer with preference for cold drinks.
NESCAFE Frappe has received encouraging response.
In the area of Chocolate and Confectionery NESTLE MUNCH Crisp
wafer biscuit with chocolayer, which was launched in select markets
in1999, was rolled out nationally during 2000 and had good growth.
Continuing with the efforts to meet consumer expectation on price points,
the pricing of KITKAT was also reduced during the later half of the year.
Moulded Chocolates and Eclairs also showed satisfactory growths. This
has also helped in improving the infrastructure and distribution reach of
the Company in the Chocolate and Confectionery segment.
In the milk and cereal categories, EVERYDAY Dairy Whitener and
cereals had satisfactory growth. NESTLE Growing up Milk, a new
product offering superior nutrition, launched in 1999 was rolled out
nationally during the year.

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The Company has also entered the Chilled Dairy business with the recent
launch of NESTLE Dahi in select cities of the North. The initial response
has been very encouraging and the Company is working on plans to
further leverage the international expertise of Nestle Group, Switzerland
in the area of Chilled Dairy.
The performance of other products were generally in line with
expectations. A few products whose performance was not considered
satisfactory are under constant review for corrective action.
The directors were pleased to report the implementation of the two new
projects undertaken by the Company during 2000 packaged milk and
packaged drinking water. Both the projects seek to leverage the
worldwide experience and knowledge of Nestle Group, Switzerland who
are the leaders in these product categories.
In line with its objective of long term growth and entry in significant
value added food segments, the Company forayed into the Ultra Heat
Treated (UHT) liquid milk business in April 2000 by launch in Mumbai.
Packaged UHT milk seeks to address growing consumer concerns on
adulteration and product safety and brings with it reliability, complete
hygiene and safety. It offers convenience to the consumer, in terms of a
shelf life without any deterioration in the product quality and easy usage
without refrigeration or boiling. UHT Milk has received encouraging
response and has been rolled out in select cities of the West, South and
North.
The project for bottled water was implemented at the Samalkha factory
and water launched in February, 2001 under the brand NESTLE PURE
LIFE and is available in select cities. NESTLE PURE LIFE contains a
balance of essential minerals and a light pleasant taste and is
manufactured under stringent quality control. The packaging has been
specially designed to maximise safety for the consumer and protect from
possible tampering.
The new categories like bottled water and liquid milk are lower margin
categories and will require considerable investments. The Company sees
them as strategic and as requiring support on a sustained basis.
The two new Sales Branches at Bangalore and Chandigarh set up in 1999
to further strengthen the flexibility of the Sales organisation and for
speedier response to the market conditions, have started showing positive
results during the year. With a view to expand distribution and increase
penetration in smaller towns, a concerted drive was undertaken to make
products affordable and accessible to consumers. Initiatives taken include
more penetrative pricing and smaller packs covering brands such as
EVERYDAY Dairy Whitener, MAGGI Noodles, MILO Chocolate Energy
Drink and NESCAFE Instant Coffee. The response has been encouraging.
The Alternative Trade Channel unit created in 1999 undertook initiatives
to tap the opportunities for out of home consumption, particularly for
instant coffee and chocolate and confectionery and to extend availability
of product to nontraditional outlets. The outcome of these initiatives has
been encouraging and is being consolidated.

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Availability of NESCAFE has been enhanced through an expansion of the

vending machine network and new consumption opportunities for
Chocolates and Confectionery were identified and developed in areas like
railway platforms, college canteens and major events.
On the manpower development front, programmes during the year
continued to be focussed on the operational front more particularly sales
and production.
To support the growth plans and distribution strategy, and simultaneously
improve the operational efficiency, the thrust on strengthening supply
chain continued to receive attention during the year. In addition to
consolidating the improvements made over the last two years, significant
progress was recorded in following areas:
a) Reduction in finished goods inventory pipeline to improve freshness of
stocks and reduce working capital.
b) Control of distribution costs through innovative measures, despite
steep increases in cost of fuel.
c) Sustained improvement in customer service level to improve product
availability across all geographies and channels.
d) Reduction in obsolescence of materials.
5. Technology from Nestle:
The Company benefits from its access to proprietary technology,
technical and non technical expertise and the fruits of the extensive
centralised Research and Development. The diversified knowledge and
expertise have contributed significantly to the operations of your
Company over the years. Some of the key areas, which have benefited
are:
a) Manufacture of products of truly international quality. Product quality,
which encompasses taste, appearance, convenience and overall value for
money, is a critical factor in consumer choice and in a competitive market
like India could determine the very survival of the products. The high
quality of products of your Company is borne out by the position and
image the products enjoy in the market and your Company continuing to
be a leading exporter of value added Instant Coffee in the country.
b) Benchmarking of products against competition to achieve an advantage
in product quality, for increasing competitiveness.
c) Access to latest technological developments, such as Spearpoint
Technology for Cocoa based products implemented during 2000 which
would improve product quality and competitiveness and the MUCH
technology for instant coffee manufacture implemented during 1999,
which would enhance the productivity by increased extraction of coffee
solids from coffee beans.
d) Implementation of project for bottled drinking water.
e) Product innovation and renovation some illustrations are MUNCH
Crisp wafer biscuit with chocolayer; Nestle Dahi; Nestle Milk (UHT);
Junior Foods; NESCAFE Frappe; KITKAT Milky; newand improved
flavours profiles of bouillons; and relaunch of MAGGI Noodles.

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f) Enhancement of skill and competence of Company personnel due to the

training received.
g) Implementation of environmentally sound business practices.
h) Technical expertise in various forms including Information
Technology, which has enabled the business of your Company to grow
and sustain.
i) Providing assistance by way of improved technical and quality
standards to local manufacturers, who have contract manufacturing
arrangements with your Company.
6. Information Technology:
The Company continued to make significant investments in the
Information Services of Technology area to cope with the growing
information needs necessary to manage operations more effectively in a
complex supply chain environment.

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7. Community Health:
Recognising its responsibility to the community in which it operates, the
Company over the years has been taking initiatives in the area of
community health at locations around its factories. Some of the initiates
taken in the recent past are:
a) Provide Government and village schools with facilities for toilets and
hygiene drinking water including deep bore wells, where necessary.
b) Support to health officials in Pulse Polio programmes.
c) Sponsorship of treatment of TB patients at clinic run by NGO.
d) Healthcare Programmes with focus being on well being of employees
and their families covering vaccination, awareness programmes and health
check up.
The company performance is much better in comparison to its
competitors.

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Questionnaire
Tel.: Name :
Personal: Age :
Class :
School/
college :

Tel.:

1. How many Nestle Products Have your consumed so far?

2. How do you like those products?
Good  Bad 
3. Which of these Nestle products do you like?
a) Chocolates b) Maggi
c) Milk product d) Mineral water
e) Coffee f) Infant products
g) Milkmaid h) Soups

4. Why do you like the nestle products? It is due to its.

 Colour  Taste Packing /Pack Size  Advertisement
5. Which brand of Particular product do you like?
Specify the name_____________ Product _______ Brand
6. Do you like the advertisement of Nestle?
 Yes  No
7. Which advertisement do you like and why?
_______________________________________________________
_________________________________________
8. Do you think some brand ambassador Should come in the
advertisement of Nestle?
 Yes  No
9. Whom do you think should endorse the brand Nestle?
1. ____________________________________________
2. ____________________________________________
10. What strikes to your mind, when you think "Good Food Good Life"
________________________________________________
11. Will you switch over to some other brand, if there is a gift/offer with
the other brand
 Yes  No
12. Have you tried the new range of Products from Nestle? If yes specify
the name.
 Yes  No
13. How do you like the new range of products from other competitors
products which are same?
________________________________________________
14. Do you think Nestle should come with some new products? If yes
specify some name
________________________________________________
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15. Are you satisfied from quality of Nestle products?

 Yes  No
16. Where you rank Nestle from others?
Very Good Good Satisfactory Bad

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