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National Foods A Success Story A Pakistans Case Study

Fact Sheet

National Foods - Facts


37 years of innovation Rs. 3 billion in sales 300 product SKUs 6 manufacturing units (Karachi, Bin Qasim, Lahore) Central Warehousing (Lahore, Gujranwala, Multan, Islamabad) Rs. 1 million to the economy everyday in shape of taxes 350 towns covered across Pakistan 1500 employees Annualized Growth Rate of 23% for the last 35 years

Our Footprint

30 countries around world

409 distributors

Return on Capital Employed


45.00%

40.00%

35.00%
Percentage

30.00%

25.00%

20.00%

15.00% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Period

Earnings Per Share


18.00 16.00 14.00 12.00
Rupees

10.00 8.00 6.00 4.00 2.00 0.00 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Period

Sales
NFL Sales History

2,500,000,000

2,000,000,000

1,500,000,000 Rupees 1,000,000,000

Gross Export Sales Gross Local Sales

500,000,000

0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Years

Product Categories
Plain Spices
Recipes Ronaq Ketchups Salts Curry Pastes Snacks

Pickles
Jams Desserts Basmati Rice Sauces Vinegars

Our History

Philosophy

Founders Philosophy
National Foods must focus on customers needs and serve them with quality products at affordable prices at their doorsteps. Our products must be pure and conform to international standards. Our research must continuously produce new adventurous products scientifically tested, hygienically produced in safe and attractive packaging. We must create environment in our offices and factories where talents are groomed and have opportunity to advance in their careers. We must prove to be recognized as good corporate citizens, support good causes-charity and bear fair share of taxes. Reserves must be built, new factories created, sound profits made and fair dividend paid to our stock holders through building a reliable brand. National Foods Ltd. must get itself recognized as leader in Pakistan and abroad. With the help of almighty God, the company can achieve its targets in years to come.

Purpose National Foods must focus on Customers needs and serve them with Quality Products at affordable prices at their doorsteps.

Core Values
Passion
We act with intense positive energy and are not afraid of taking risks. We challenge ourselves continuously and have pride for what we do and are good at it. We see the world through the eyes of our customers. We do everything possible that makes them happy. We put our people first. Treat them with respect and actively contribute towards their development.

Leadership
We are a part of the solutionnever the problem. We act like owners and have a positive influence on others. We dont run our business at the cost of human or ethical values. We saywe do we deliver. We talk with our actions. We strive for nothing but the best. Execution is the key to winning! We see, we act. We take full responsibility for our actions and results. We dont blame others for our mistakes; we analyze them and correct them.

Ethics

Customer Focus

Excellence in Execution

People Centric

Accountability

Teamwork
Our roles are defined, not our responsibilities. We believe in going the extra mile to accomplish our goals. We coach and support each other ensuring everyone wins. We have a WE versus I mindset.

Humble Beginnings
Dinar Chambers

This is where it all began

Present Infrastructure
S.I.T.E Port Qasim

National Foods as it stands today

Milestones
Evolution 1970 1978 1982 1985 1986 1988 1989 1990
Plain Table Basic Spices Salt Recipes

Ingredients Pickles Iodized Salt Recipes Health Food & Snacks

1993 1997 1998 1999 2000 2002 2005 2006


Raj Masala Ronaq Vermicelli Ketchup Custards Squeezy Jams & Jellies & Rivaaj Chinese Range
Moving towards House of Brands Strategy

Brand Promise

Convenience

Purity

Hygiene

Challenges

Brand Positioning
Quality, Hygiene and Purity

Commodity to Value Addition


Concept of packaged commodities under the National Brand- The Big Idea

Trade Resistance
Biggest Competition Lesser Margins as against loose

Convincing consumers for convenience


Price Gap
Perceived Quality > Perceived Price Free From Impurities Commonly available, the distribution challenge

Decades of Performance
The Big Idea
Changing consumer mindset Competing with the loose The fight to survive The move towards value addition -Salt & Recipes Public Limited company International alliances

1970-80

1980-90

UNICEF Alliance

1990-00

Diversification of product range ISO Certification Separate SBU for Export- Raj Masala Move to professionalism

JCR VIS

2000-07

Launch of Ronaq and Squeezy Automation Port Qasim

Success Through Management Excellence

Management Excellence

Financial Planning Product Development Branding Marketing and Selling Operations

FINANCIALS The Focal Point

BRAND INVESTMENTS

PRODUCT DEVELOPMENT

FINANCIAL OBJECTIVES

OPERATIONAL INVESTMENTS

FINANCIALS The Center Point

The whole business plan is designed around financial parameters:


Sustainable Growth Model A practical approach to achieving top-line growth and bottom-line results. It looks at how much growth an entity can generate by maintaining the same financial relationships as the year before.
Growth Rate = Return on Equity (Base year) X Retention Ratio %

45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

Sustainable Growth Rate

19 98 19 99 99 20 00 00 20 01 01 20 02 02 20 03 03 20 04 04 20 05 05 20 06 06 20 07 07 20 08 08 20 09 09 -1 0

FINANCIALS The Center Point


Maintaining Financial Discipline Is The Key ..which is achieved through optimizing Equity Growth Minimum target is 30% per annum Cash flows Through sustainable growth model achieve self sufficiency through own cash generation from operations Bottom Line Minimum EBIT KPIs .. and through minute analysis of CBM / CAM (Contribution Before / After Marketing Investment) for each Division; Region; Product Category; and even SKU & Customer

FINANCIALS The Center Point


Balanced approach for all automation and expansion projects maintaining sustainable debt / equity ratio Controlled utilization of available external financial resources for working capital requirements Optimum return on investment (ROI) model Efficient financial planning Maximum utilization of export credits LIBOR based financing with exchange risk hedging Online collection system Above average credit rating of A+ by JCR VIS

FINANCIALS The Center Point

Better tax planning yet contributing over Rs.350 million / annum to the government treasury Cost controlling through responsibility accounting via .Proper accounting of cost at various cost centers and their timely reporting

Product Development

Product Development
R&D
State-of-the-art facilities (HPLC, FTIR) All our products conform to US FDA, CFIA, Canada, EU and AQIS standards Formal Procedures

Global Sourcing and Alliances


Certified Vendor Program UNICEF Oriental Merchants Cerebos Foods

Effective Supply Chain Management

Manufacturer

Branding

Branding

Moving gradually towards House of Brands since 2000


National Rivaaj Ronaq Raj Squeezy

Branding
Marketing and Selling Building the finest Selling and distribution network Retail coverage of more than 80,000 outlets Coverage of 350 towns across Pakistan Direct Reach up to 50 % of Pakistan Clear and focused marketing message More focus on functional benefits and fitting the brand into consumers lifestyle Not afraid to experiment Rivaaj Innovation of ideas First company to introduce packaged spices Squeezy Iodized Salt

Marketing Research
Research Methods: CLTs (Central Location Testing) and HUTs (Home Usage Testing) Culinary Experts and Consumers are on Product Development Panel Brand Health Trackers Brand awareness Advertisement Awareness Top of mind recall Consumer Panel Category Maps Market and segment penetration Shares Volume and tonnage consumption Pre & Post Launch Ad Testing AdWiser (Certified Software of AC Nielsen) Post Launch Evaluation Learn from Mistakes

Brand Building Activities


Brand building Activities
360 degree communication TV advertising Brand Activation In Store Promotions Merchandising Drive

Operations

Operations: Quality Assurance

ISO 9001 Certified Good Manufacturing Practices

HACCP Certified

Microbial Testing Capability

Operations: Human Resources

People Philosophy
Getting the right people Competitive pay systems Reward mechanism Empowerment

Training and Development


Internal Programs Cross functional exposure Skill Development

Operations: Human Resources


Performance Management
Goals strategically aligned from functional to individual level Regular quarterly reviews of business KPIs Celebrating success

Organizational Development
Benchmarking best practices Restructuring and realignment of business processes Consultants to source know-how

Operations: IT Infrastructure

Operations: Information System

BUSINESS PERFORMANCE & CONTROL

Dashboards, KPIs, Benchmark


Data Mining Business Intelligence DSS

ANALYSIS

STORAGE

DATA WAREHOUSE XML

OPERATIONAL

ERP

CRM

SCM

SFA

Corporate Social Responsibility


Mission The primary objective of our social initiative is to improve the quality of life in Pakistan by eradicating illiteracy throughout Pakistan.

Adult Literacy Womens Education Nutrition Awareness

Key Performance Indicators


R&D Financials
EPS ROE GP by Category Net Profit Same Category Sales Growth Cash flow Generation Equity Growth

No of New Product Introductions Product and Process Improvement Index

Procurement
Out of Stock Index Material Sourcing Quality Index

Supply Chain
Warehouse Utilization Freight Monitoring Cost/Ton

Futurist Vision
Emerging Scenario Free Trade Global Village Emphasis on Lifestyle enhancing products Convenience the major key Opportunities South East Asia (SAARC) Major Growth Segment Pakistan India Africa and CAS Next wave of growth

Our Vision

To be a Rs. 50 billion food company by the year 2020 in the convenience food segment by launching products and services in the domestic and international markets that enhance lifestyle and create value for our customers through management excellence at all levels.