FINANCIAL MANAGEMENT TERM PROJECT REPORT

ON
NESTLE PAKISTAN LTD.
 TABLE OF CONTENTS

CHAPTER TOPIC PAGE

1 EXECUTIVE SUMMARY 1

2 INTRODUCTION 2

3 NESTLE STORY 3

4 NESTLE INTERNATIONAL 4

5 NESTLE PAKISTAN 5

6 VISION & STRATIGIES 6

7 MISSION 7

8 COMPANY PROFILE 8

9 PRODUCTS 9

10 FINANCIAL DATA 10

11 FINANCIAL RATIO'S 11

12 PRICE EARNING, DIVIDEND & SALES GRAPHS 12

13 FINANCIAL PERFORMANCE 13
14 SALES TURN OVER 14

15 RECOMMENDATION 15

16 CONCLUSOION 16

17 BILBIOGRAPHY 17

EXECUTIVE SUMMARY

This is an informative report on Nestle Pakistan Private Limited in this report I have described
how Nestle came into being internationally and in Pakistan. Through my research I found out
how much Nestle cares about its consumers. Good food Good life is the principle they always
follow. l have described the complete list of Nestle products in Pakistan, the milestones that
Nestle reached in Pakistan, the marketing strategies Nestle uses and I have explained the
financial performance of Nestle.
Nestle Pakistan Limited (NPI.), formerly known as Nestle Milkpak Limited is a subsidiary of
Nestle SA - a company of Swiss origin headquartered in Vevey, Switzerland. It is listed on
Karachi and Lahore stock exchanges. For the 5 years in a row, the company has placed among
top 25 companies of the KSE.
Its principal activities are to manufacture process and sell food products and ancillary
equipment. The food products include dairy, confectionery and culinary products, coffee and
beverage and drinking water. The major brands include Milkpak UHT, Nestle Everyday,
Lactogen and Nescafe.
Nestle has been serving Pakistani consumers since 1988, when its parent company, the
Switzerland-based Nestle SA, first acquired a share in Milkpak Ltd. In line with its parent
company's global philosophy, it is proudly committed to excellence in product safety, quality,
and value.
Today, the company is fully integrated in Pakistani life. And is recognized as producer of safe,
nutritious and tasty food, and leader in developing and
Uplifting the communities in which it operates.

INTRODUCTION

Nestle Pakistan Limited is a Pakistan- based food and beverages company. The Company is engaged
in manufacturing, processing and sale of food products.
Nestle has been serving Pakistani consumers since 1988, when their parent company, the Swiveled-
based Nestle SA. First acquired a share in Milkpak Ltd. Nestle Pakistan Limited is registered on the
Karachi and Lahore stock exchanges ; for the past five years and has been declared one of the top 25
companies on the Karachi Stock Exchange by 2014. Nestle Pakistan aims to be a Rs. 100 billion
company. Nestle s a human company and offers tremendous opportunities for career growth and
learning at domestic and international levels. With over 8000 brands preferred for their good quality,
taste and health benefits. Nestle is the number one food company in the world.
Nestle is leading the change in the food industry as it is also the leading food company in terms of
having the largest set up of research and development in food science and nutrition. They are
uniquely positioned to provide products that help consumers live a good life. Many Nestle brands
have benefited from the active ingredients developed by Nestle research and with over 130 years of
expertise, consumers know they are getting the best in quality when they choose a Nestle brand.
Happy and healthy consumers are at the heart of what they do. Their philosophy is summed up in the
phrase "Good Food, Good Life: and they remain committed to help consumers choose better tasting
and healthier products to help them enjoy happier, healthier lives.

THE NESTLE' S STORY

Ever since Nestle was established, they have been committed to nurturing people worldwide. Today,
as the world's leading food and Beverages Company, and leaders in health and wellness, they try to
cater to all your family's nutritional needs, no matter where in the world you live.
Their story begins in 1867, when Henri Nestle developed a baby formula that saved a child's life and
marked the beginning of Nestlé’s decades-old commitment to nutrition.
In the 140 years since then, they have expanded around the world and developed a range of products
designed to suit every taste, need and cultural preference. Their distinctive seal is recognized
everywhere as a guarantee of quality and healthfulness.
Their responsibility does not simply lie in perfecting the products they develop, but the role their
products play in making lives better - both for their consumers and for communities in the countries
they serve , they keep introducing new, exciting options worldwide.
Nutrition, quality and convenience remain the keystones of their products and even as they confront
the new century 's challenges, they feel it is their duty to adapt to the changing needs of consumers.
Understanding that people in every country have different tastes and needs, they have developed a
range of food and lifestyle products. In India consumers enjoy healthy and convenient MAGGW
Noodles Aria Noodles, in Pakistan you can find NESTLE {i.e. Raita and in China, flavored water is
strengthened with period l dietary fiber and traditional Chinese ingredients such as Aloe Vera and
Chrysanthemum.
Their popularity has come not just from acquisition and corporate expansion, but also from a care for
the ever-evolving needs of customers. Thus, along with old favorites such as NFSTLE T" KITKAT®
chocolates and NESCAFE®,the world's most popular coffee, they keep introducing new, exciting
options worldwide.

NESTLE INTERNATIONAL

Today, Nestle SA is the world's Ingest Food and Beverages Company, and a global leader in health,
nutrition and wellness. Consumers around the world, from village squares in Nigeria to the
skyscrapers of New York and Chicago, are united by the Nestle; promise of quality, taste, nutrition
and convenience. Though headquartered in Vevey, Switzerland, they now have 487 factories dotted
around the globe, employing over 250,000 people in 86 countries. Their products are available in
almost every country, and in 2005 their global sales reached $73 billion. Their operations are spread
across three global zones covering Europe. The Americas, Asia, Oceania and Africa. Recognizing
that every region has its special needs, the three zones operate locally, but are united by a common
vision and priorities. The voices of even the smallest local markets are heard at their headquarters in
Vevey, Switzerland.
Their immense popularity comes from their efforts to develop products that give
quality and nutritional benefits at low prices, even in the most remote regions. They distribute those
using local means; in Madagascar, for instance, backpacker salesmen sold over I2 million MAGGI
tablets within six months, an approach that was duplicated in Pakistan and Mozambique. Their
consumers know that they can rely on them to be there when they are needed.

NESTLE PAKISTAN

In line with their parent company's global philosophy, Nestle is proud of its commitment to excellence in
product safety, quality, and value. From spreading awareness about nutrition and wellness to digging
wells in the Thar Desert and succoring earthquake victims, they are committed to serving their country
and its people.
The consumer's voice is key to Nestle Pakistan's vision and working. Whether you live in the remotest
village or the metropolis of Karachi, the consumer services team stands ready to listen to your concerns
and provide answers about their products and guidance on matters of health and wellness.
Their products are manufactured in five facilities scattered around the country, from Islamabad in the
north, to Karachi in the south. Two state-of the-art multipurpose factories are located in the agricultural
heartland of the Punjab, and the remaining three arcs dedicated to producing their trusted brands of
bottled water.

Sheikhupura Factory:-

The factory commenced operations as part of Milkpak Ltd in 1981. At the time it produced only UHT
milk, but by 1988 had expanded to produce butter, cream and ghee, as well as fruit drinks. In 1988, it
became part of the joint Nestle Milkpak venture and, soon after, NESTLE® NIDO® milk powder started
being produced here. The factory started supplying dairy mixes to McDonald 's in 1998. A plant to produce
the popular Nestle NESTLE* PURE LIFET I bottled water was also commissioned. In recent years, the
plant's capacity has been enhanced to produce fruit yoghurt, tea whitener, cream and raita, as well as low-
fat, high-calcium dairy products, sold under the NESTLE® NESVITA® brand.

VISSION & STRATIGIES

The Nestle global vision is to be the leading health, wellness, and Nutrition Company in the world.
Nestle Pakistan subscribes fully to this vision. In particular, they envision to:
Lead a dynamic motivated and professional workforce - proud of its heritage and bullish about the
future.
Meet the nutritional needs of consumers of all age groups - from infancy to old age, from nutrition to
pleasure, through an innovative portfolio of branded food and beverage products of the highest
quality.
Deliver shareholder value through profitable long-term grow th, while continuing to play a significant
and responsible role in the social, economic and environmental sectors of the country.
Nestle have profitable and diversified high quality food and beverage product portfolio, delivering
60:40+ advantage to consumers, available across all sales channels.
Nestle brands are the preferred choice in their categories. Consumer insight drives all aspects of their
marketing and communication efforts.
Their company is seen as the No. 1 career destination for talented, motivated and ambitious
professionals.
Their result-oriented organizational structure ensures effective communication and empowered self-
management.
MISSION STATEMENT

Since Nestle came into being, health, nutrition and wellness have been central to the Nestle vision. 140
years after Henri Nestle, nutrition is, more than ever, the key to the company's future. . Consumers are at
the heart of all that Nestle does.
Their philosophy is summed up in four words: Good Food, Good life. In their quest to become the world's
leading health, nutrition and wellness company, they do everything they can to help people live more
fulfilling lives.
Good Food, Good Life
Henri Nestle chose his own coat of arms to represent the company's philosophy: a bird's nest, with a
mother feeding her young. The image represents their core values: care, family values, nutrition, and
healthy growth. Safety and comfort. It is a guarantee of quality and a commitment to their responsibilities
as a food company and experts in nutrition. Over the years they have reaffirmed their commitment to
wellness. Helping their consumers to live longer, healthier and more productive lives, no matter their age,
gender or socioeconomic status.
Good Ingredients
Three vital ingredients lie at the heart of Nestle and come together in their brands: their people, their
research and development, and their commitment to quality.
The 250,000 dedicated people who make up the Nestle family are the source of strength and energy.
Realizing this, Nestle offer them constant professional development. Nestle is one of the largest investors
in food technology. R&D is the cornerstone of the Nestle guarantee of quality. They consider quality in
three key dimensions: health, sensory pleasure, and social applicability. Thus they try to provide
nutritious. Tasty meals that offer value and arc culturally relevant.
COMPANY PROFILE

Syed Yawar Ali

Chairman of the Board
Syed Azeem Abbas Naqvi
Ronald Decorvet Secretary and Head of
CEO & MD Legal Affairs

Haseeb Aslam
Head of Marketing & Sales

Peter Wuethrich Head of Salman Nazir

Technical Head Head of Supply Chain

Shahab Bachani
Country Business Manager
(Water)

Raymond Franke Uzma Qaiser Butt

Head of Finance & Control Head of Human Resources

Cheema & Ibrahim

(Advocates)
Legal Advisor
 KPMG Taseer Hadi &
Co
Auditors

PRODUCTS

Most people know Nestle through their brands. Their portfolio covers practically all food and
beverage categories. Nestle has a wide range of products across a number of markets. With over
140 years of experience and expertise ; they take great pride in bringing us the best products
because happy, healthy consumers are important to them. They develop their products keeping our
preferences, tastes and needs in mind. Their products are carefully aligned to Pakistani tastes and
needs. They always try hard to develop new products and improve existing ones, and serve their
consumers in a better way.

List of Products:

MILK, DAIRY AND CHILLED DIARY

 Nestle MilkPak,
 Nestle Nido,
 Nestle Neslac,
 Nestle Everyday,
 Nestle Yogurt,
 Nestle Raita & Nestle Desi Ghee

BEVERAGES & BOTTLED WATER

 Nescafe
 Milo & Juices
 Pure Life
BREAKFAST & CEREALS
 Cornflakes’
 Honey stars
CHOCLATE, CONFECTIONARY & BABY FOOD
 Kit Kat
 Cerelac
PREPARED MEALS
  Maggi

FINANCIAL DATA

NESTLE PAKISTAN LTD. 2007 2006 2005 2004

Current Assets 5,623,823 4,627,685 3,518,718 2,356,518

Fixed Assets 10,045,611 8,093,101 5,087,375 3,218,513

Total Assets 15,848,574 12,927,902 8,836,780 5,601,315

Cash & Bank balances 406,225 34,663 858,995 95,176
Inventory 436,573 329,346 249,921 262,148

Current Liability 5,978,522 5,224,488 4,333,228 2,352,658

Total Liability 5,978,522 5,224,488 6,879,733 4,113,129

Owner Equity 4,111,705 2,531,080 1,957,047 1,488,186

No. of Common Share 750,000,000 750,000,000 750,000,000 750,000,000

Avg. owner’s equity 453,496 453,496 453,496 452,730
Market Per Share 10 10 10 10

NESTLE PAKISTAN LTD. 2007 2006 2005 2004

Cash Flow 1,231,574 1,783,048 262,046 1,011,859

Dividend Paid 633,418 2,263,646 1,132,770 226,748

 Sales 28,235,393 22,030,958 17,142,363 12,857,001

Operating Expenses 171,086 536,636 692,924 1,027,348

Operating Income 39,980 53,151 57,961 65,959

EBIT 2,549,756 2,005,455 163,600 1,409,688

Profit after Tax 1,805,212 1,363,290 1,148,722 984,279

FINANCIAL RATIOS

2007 2006 2005 2004

LIQUIDITY RATIO'S
Current Ratio C.A / C.L 0.94 0.88 0.812 1
Quick Ratio C.A-Inventory / C.L 0.86 0.82 0.75 0.89
Operating Exp. / Operating
Operating Ratio Inc. 15.57 11.95 10.1 4.28

ASSETS TEST RATIO'S

Inventory
Turnover Sales / Avg. Inventory 64.67 66.89 68.59 49.04
Fix Assets
Turnover Sales / Fixed Assets 2.81 2.72 3.36 3.99
Total Asset
Ratio Total Sales / Total Assets 1.78 1.7 1.94 2.29
Assets Equity
Ratio Total Assets / Owner Equity 3.85 5.1 4.51 3.76

PROFITIBILITY RATIO'S

Return on
Assets Net Income / Total Assets 0.11 0.11 0.13 0.176
Return on Net Income / Avg. Owner
Equity Equity 3.98 3 2.53 2.17
Profit Margin Net Income / Total Sale 0.64 0.062 0.067 0.076
Basic Earning
Power EBIT / Total Assets 0.161 0.16 0.18 0.252

DEBT RATIO'S

Total Liability / Total

Total Debt Assets 0.38 0.4 0.78 0.73
 Total Liability / Owner
Debt / Equity Equity 1.45 2.064 3.5 2.76

PRICE EARNINGS & DIVIDEND

SALE & PROFIT AFTER TAX

FINANCIAL PERFORMANCE

By 2014, Nestle Pakistan aims to be a Rs. 100 billion Company. Nestle is the largest food and
beverage company in the world. Marketing more than 9000 brands in 85 countries with a global
workforce of 250,000. Nestle is a human company and offers tremendous opportunities for career
growth and teaming at domestic and international levels. Nestle Pakistan Ltd. Is a standard-bearer
of Nestle SA's global performance; registered on the Karachi and Lahore stock exchanges, for the
past five years and have been declared one of the top 25 companies on the Karachi Stock
Exchange.
Nestle Pakistan Limited has posted Rs 1,805,212 million as profit after tax in 2007 as compared to
Rs 1,363,920 million earned in the corresponding period last year.
The board of directors of the company in its meeting declared that the earning per shark stood at
Rs 39.01 in the period under review against Rs 30.06 in the same period last year.
SALES TURNOVER

Nestle Pakistan recorded excellent sales turnover for last 4 year, driven by its focused business
strategies and expanded distribution and consumer reach.
The portfolio of Nestle products also grew by new product launches including 'Maggi Atta' noodles,
Maggi recipe mixes, Nido yogurt, Ceralac baby biscuits, and a new mango addition to the Nestle
juices range.
The company continued its dairy development initiatives in collaboration with the government and
other institutions to accelerate fresh milk production in the country and to boost the ability to collect
incremental quality milk.
The company's net profit surged to Rs. 1,805 million in 2007 as compared to Rs. 1,363 million in last
year.
Total sales of the company increased to Rs. 28,235 million in this period, against Rs 22,031 million
previously. Sales for the year exceeded Rs. 6 million, recording a growth of 78 percent, with
contribution coming from each of the company's main product categories. In particular, excellent
growth came from milks, baby food.
RECOMMENDATIONS

Overall, the profit and net profit margins remained stable. Overall profit margin showed a slight increase
but a slight decline in gross profit margin was witnessed. This was mainly due to cost pressure on some
Product as both local and international prices have increased dramatically coupled with investment in
commercial and operation infrastructure to support future growth and the resulting inflationary impact on
its cost.

This robust growth in sales translated into a solid increasing operating profit an increase of 33%.
However, this primarily relates to higher fixed cost absorption from inventory that led to lower
profitability. In addition, efforts for upcoming years include a favorable movement in sales mix and
rigorous fixed cost control.
CONCLUSION

This report is an informative report; our team described a brief back ground of how Nestle came into
being and how it reached Pakistan. Good food good life is not just a part of their logo they make sure that
they follow this principle. Their true commitment to their consumer to their consumer is a reason that
company has developed so drastically not only, is an achievement in itself & shows how much the
consumer love Nestle products.

In Nestlé’s view, it must be fully integrated in the social, cultural & economic fabric of the countries in
which it operates. Thus no matter which country its operates in it is committed to strengthening local
communities. At Nestlé’s Pakistan they are whole heartedly committed to meet their obligation to
Pakistan society and be a good corporate citizen of the country. Their strategy is to provide the finest
quality, while consultancy reinventing their products to suit consumer need better their extra care of their
consumer need its secret of their success.
BIBLIOGRAPHY

Annual report 2004 to 2007

www.nestle.pk