1.

Background of Host Organization

1.1 Introduction of the Host Organization Nestle with headquarters in Vevey, Switzerland was founded in 1866 by Henri Nestl and is today the world's leading nutrition, health and Wellness Company. Sales for 2009 were CHF 108 bn. We employ around 280 000 people and have factories or operations in almost every country in the world. The Company's strategy is guided by several fundamental principles. Nestl's existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential is never sacrificed for short-term performance. The Company's priority is to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives. Nestl Addresses will give you access to Nestl offices and websites around the world. We demonstrate through our way of doing business in all the countries where we are present a deep understanding of the local nature of nutrition, health and wellness; we know that there is no one single product for everyone - our products are tailored to suit tastes and habits wherever you are. History of the Host Organization 1866-1905 In the 1860s Henri Nestl, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mother's milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestl's new formula saved the child's life, and soon, Farine Lacte Henri Nestl was being sold in much of Europe. 1905-1918 In 1905 Nestl merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestl's production had more than doubled.

1918-1938 After the war Government contracts dried up and consumers switched back to fresh milk. However, Nestl's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestl's first expansion into new products, with chocolate the Company's second most important activity 1938-1944 Nestl felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the Company's newest product, Nescafe, which was a staple drink of the US military. Nestl's production and sales rose in the wartime economy. 1944-1975 The end of World War II was the beginning of a dynamic phase for Nestl. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in 1960, as did Findus (1963), Libby's (1971) and Stouffer's (1973). 1975-1981 Nestl's growth in the developing world partially offset a slowdown in the Company's traditional markets. Nestl made its second venture outside the food industry by acquiring Alcon Laboratories Inc... 1981-1995 Nestl divested a number of businesses1980 / 1984. In 1984, Nestl's improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. 1996-2002 The first half of the 1990s proved to be favorable for Nestl: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Pet foods (1998) and Ralston Purina (2002). There were two major acquisitions in North 2

America, both in 2002: in July, Nestl merged its U.S. ice cream business into Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef America, Inc. 2003 The year 2003 started well with the acquisition of Move pick Ice Cream, enhancing Nestl's position as one of the world market leaders in this product category. In 2006, Jenny Craig and Uncle Toby's were added to the Nestl portfolio and 2007 saw Novartis Medical Nutrition, Gerber and Henniez join the Company. NESTLE TODAY Nestle is now the world's largest food company. It is present on all five continents, has an annual turnover of 74.7 billion Swiss francs, runs 509 factories in 83 countries and employs about 231,000 people the world over. The Company owes its current status to the pioneering spirit inherited from its founders which continues to inspire it, to its concern with quality and to its constant search for new ways of satisfying man's nutritional needs. Wherever possible, it sets up factories locally, employs personnel from the country concerned and relies on indigenous raw materials. Its agricultural services provide assistance to improve the quality and yield of the raw materials it uses. Much attention is devoted to professional training and to the integration of the Company in its economic and social environment.

1.2 Vision Statement

The Nestle vision is to be the leading health, wellness, and Nutrition Company in the world. Nestle Pakistan aim is to meet the various needs of the consumer every day by marketing and selling food of a consistently high quality. The confidence that consumers have in our brands is a result of our companys many years of knowledge in marketing, research and development, as well as continuity consumers relate to this and feel they can trust our products. 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. Our milk collection and Agri services will continue to play the primary role in development of the dairy sector in rural Pakistan.

Mission Statement
To continuously exceed our customer expectation for quality products and services Our goal is to offer top quality brands and innovative packaging to meet the individual needs of consumer all over the world, whenever, wherever and however. At Nestle our research makes it possible for everyone to enjoy better food for a better life. Good Food is the primary source of Good Health throughout life. We strive to bring Consumers foods that are safe, of high quality and provide optimal nutrition to meet physiological needs. In addition to nutrition, health and wellness, Nestle products bring consumers the vital ingredients of taste and pleasure. As consumers continue to make choices regarding foods and beverages they consume, Nestle helps provide selections for all individual taste and lifestyle preferences. We know there is still much to discover about health, wellness and the role of food in our lives, and we continue to search for answers to bring consumers Good Food for Good Life.

1.3 Company Products

Milk Dairy and Chilled Dairy Products

NESVITA (pro-bones dairy milk that used for produce calcium in the body) CERELAC (Cerelac is used for every age of children to completing the vitamins) NESCAFE (It is creamy milk that is used for preparing the unique and blend of tea) MILO (Milo milk is used for children to be active it gives them the energy & vitamins) NESTLE FRUIT YOGURT (It is a treat with real fruit chunks in sweet creamy yogurt) NESTLE EVERY DAY (We love tea our day doesnt begin without it favourite cup) NIDO (NIDO is the nutritional needs of your children at all stages of growth) Nestle Raita (Raita its taste, guaranteed hygiene and simple convenience to dinner) Beverage Products Breakfast Cereals (It is used for children as breakfast nutrition) Kit Kat (Chocolate is that is most indulgences which delights the senses of all ages. POLO (Polo is right sweetness, fresh and minty and best for all-time favourite) Nestle Fruita Vitals (They are naturally low in calories, and an excellent source of Fibre and Vitamin C. 4.3 Food Products Maggi Noodle (feel the need of being more fun around their children it gives them a chance to break out from their mum mould. Nestle Pure Water Products Nestle Mineral Water (Nestle water with mineral healthy for every stage of people)

1.4 Company Competitors

The core competitors of Nestle Pakistan Limited are as follows: Haleeb food Company 5

Unilever Food Company Engro Food Company.

1.5 Company Banks

The company deals with the banks that are as follows: RBS Bank of Pakistan Habib Bank Limited of Pakistan Muslim Commercial Bank of Pakistan Allied Bank Limited of Pakistan etc. The company transfer payments by using these banks.

2. Business Operations
The business operations of Nestle Pakistan Limited are as follows: 2.1 Organizational Structure The Organizational Structure of Nestle Pakistan Limited is as:

Chairman

Chief Executive

Country Business Manager Nurititon

Country Business Manager Water

Country Business Manager

Business Manager Beverage

Head of Communication

Head of Finance and Control

Head of Legal Affairs

Head of Technical

Head of Supply Chain

Head of Corporate Affairs

Head of Human Resource

Head of Sales

Figure: 2.1 2.2 Introduction of the Departments The introduction of the Nestle departments is as follows: Nutrition Department This department is handled by country business manager and include controlled all the nutrition products. 7

Water Department This department is handled and controlled by country business manager. This department includes all water products such as nestle pure water etc. Beverage Department This department is handled and controlled by business manager and include all beverage products such as nestle cerelac, juices etc. Communication Department This department is handled and controlled by head of communication. It includes improving the communication among management, staff and labor during working and no unethical behavior is showed from any type of person. Finance and Control Department This department is handled and controlled by head of finance and control. He made all the financial statement and reports on this basis of quarterly, halfely and annually. Legal Affairs Department This department is handled and controlled by head of legal affaire. He solved all the legal problems of the company according to the rules and laws of the country during the working of the company. Technical Department The department is controlled by head of technical department. He handled all the technical affaires of the company during working. He provides technical skills and material to the company. Supply Chain Department This department is controlled by head of supply chain. He handled all the supply chain activities inside the country.

Corporate Department This department is controlled by head of corporate affairs department. He deals all the corporate affairs of the company as the company is working according to the corporate governance of the country. Department of Human Resources

This department is controlled by head of human resources. He handled all the human resources actives of the company. Sales Department This department is controlled by head of sales. He handled all the sales activities of company such as increasing and promotion of sales etc.

2.3 SWOT Analysis

STRENGTH

Nestle is socially responsible company as it construct two primary school in 13 and 14 chak of Kabirwala, install water purification plant in Dinyapur and provide quality products.

NPL enjoys strong brand image in the market as compare to competitors. Marketing strategies established by the company are innovative and financial, marketing and sales strategies are formulated according to the customer demands. An efficient Distribution network throughout the country is strength of the company.

Signifies the quality image high standard and quality milk collection from rural areas. Loyalty from farmers due to insurance is also the major strength for the company. Employees are also loyal due to the decentralized culture of company. People trust on products due to the proper health and safety measures. Being a multinational company it has the capability to attract more customer than the local companies. The NPL has the ability to compete in a dynamic environment. The NPL always adapts the new technology.

WEAKNESSES The NPL made selective investment due to political and economical uncertainty in the country. The Maggi Noodles plant that is installed has a higher capacity than actual demand of the Maggi product therefore the over head cost is higher due to less production. The NPL did not make credit sales to whole sellers and retailers. Obviously the sales of NPL products are less as compared to its rivals as Haleeb and Liver brothers. Low Sales margin due highly quality products and value added products. The employees of the company are not satisfied due to low salary package. Due to low salary packages the other local companies takeover the Nestle employees by offering the high salary packages and as well as incentives. OPPORTUNITIES

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The NPL has expanded its products range as it recently launched Nestle Plain yogurt, fruit yogurt and coffee etc. If NPL adopt the credit policies then it increases its sales of their products in the market. The NPL has the opportunity to expand or capture the market by adding its products line as ice cream products. The NPL can open separate stores to eliminate the retailers in the market. The NPL can increase it sales of their products by providing the incentives to the retailers.

THREATS The NPL bear the price fluctuation in the rupee due to material imported Due to political and economic uncertainty there is a great threat for NPL Due to economic crisis in the world made causes to withdrawal of foreign Existing companies like Haleeb, Engro and Liver brothers are increasing their The Haleeb food company is giving more discounts to retailers as compared The NPL bears high distribution cost as compare to its local rivals as it The local companies are competing on the basis of cost of production as it

because due to rupee devaluation it paid more currency to imported country. because the major funds invested in the country come from outside the Pakistan. management and investment from the company that is big halt for the company. product line that is a threat for the company in the coming years. to distributors so that retailers prefer Haleeb products for sales. maintain and obeys the Nestle quality standards. provides the qualitative products to its consumers.

Conclusion
I conclude that Nestle is leader in the market and having good repute in the market.

2.4 Nestle Marketing Strategy

The NPL install new plant to introduce a fresh marketing strategy the aimed to provide the more quality products because nestle concentrate more strictly on

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quality. The company introducing the projects to tailor diets to the health needs of each individual. The main hallmark of the company is the quality of the products which the company offers. Currently the company starts the rural development project with the cooperation of Swiss Development Corporation or animal growth and rural development of the farmers.

2.5 Nestle Competitive Strategy

Nestle is basically a food, nutrition, health and wellness company. Recently Nestle made the global Business organization designed to strength and focus on their core nutrition business. The company believes that strength is the leadership in this market is the key factor of their corporate strategy. The company made research and development project to access the individual preference of the nestle products and spend lot of the budget of this project. Nestle compete with Haleeb, Unilever and Engro food companies on the basis of quality products.

2.6 Business Process Analysis

The business process analysis of Nestle is as followed: Milk Collection

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In Pakistan it collects milk from rural areas. A wide channel of milk collection is spread all over country. The milk is collect in sub centers and after that all milk is collect in main center. Delivery of Milk After collecting milk in main center it sends to factory by using transportation system that is maintained by nestle. Nestle made contract with transport contractors and paid to monthly payments as agreed per kilometers. Receiving of Milk at Factory Before dispatch of milk to factory first investigate the quality of milk in the lab. After that the qualitative milk is received to the factory. All the record of milk receipts send to milk collection and Agri services department head office Lahore. Finance department activity After receiving the milk receipts note from the shed wise the head office staff maintains the record of milk receipt note on the statements and send this data in to SAP software for proper recording. Payments to Farmers and Transport Contractors After maintaining the final record and approval from the head of department the head office staff made online payment to the farmers accounts as shed wise and center wise. At the end of month the transport contractor send their monthly reports to the head office for payment. The head office staffs prepare the shed wise reports and after approval from the head of department send payment online their respective accounts.

3. Learning as a Student Intern

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Personal learning is a moral and ethical obligation set by a person to move in a mellow way to excel in present and future. During the internship I realized following duties.

3.1 Duties
The duties that I performed during internship are as follows: In Fix Cost Budgeting I registered the bank reconciliation statements with ledger accounts, tally financial documents with demand draft, investigate milk price control sheet, prepare approved and actual milk price sheet at regional level, tally all the voucher with purchase general summary, prepare key performance indicator sheet at regional level and calculate annually growth of milk. In Loaning and Financing Section I prepare sheets of all documents such as interest payment, installment payments, insurance premium payment and actual payment to farmers. Keeping, filing and recoding of agreement of financing and volume of supply of milk. In Fixed Assets Management System investigate the documents about repairs and maintenance of vehicles and maintain it in proper files. Entering data of stock report, Good received Note, Assets transferred Note etc Keeping filling of these reports. Investigate the documents about Transportation Management System and maintain it in proper files. Keeping filling of these TMS reports Investigate the documents about Raw Milk Procurement System and maintain it in proper files. Investigate the documents about Fresh Milk gain and loss System and maintain it.

3.2 Accomplishments
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The accomplishments of the whole my six weeks internship is as follows:

Week No.1
The Accomplishments that I performed during internship are as follows:

3.2.1 Fixed cost and KPI Budgeting

My Internship is in the Technical Division. Technical Division consists of five departments such as HRM, Engineering, MCAS, Admin and Procurement. But my working area is MCAS (Milk collection Agri Services). I learned about the Nestle milk collection setup as there are 41 regions and every regions have consists of 60 centers and sub centers and have 9 Zones and every Zones consists of 4 to 5 or Six regions. The Region is Controlled and Operate by RMCM (Regional milk collection manager) and the Zonal Manager Controlled and operates the Regions. The Zonal manager direct report to Head of Milk collection and Agri services department. There are 82 Accounts persons that handled 41 regions. It means that two person deals with one regions. Process Flow of KPI and Fix Cost Budgeting

Purchase Summaries

SAP Posting & Downloading

Assignment Application

Fix Cost Reporting Field

Figure of KPI Budgeting Comments

Fix Cost Budgeting

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The fixed cost is as follow: Listing assignment code, region wise purchase Journal Summaries are preparation, regions wise purchase journal summaries are combined on zonal level and forward it to zonal managers for their review and comments. The format of purchase journal summary is displayed in appendix 1. For adjustment purpose means the payment that is transferred in inpreset holder account should be adjusted and for Reimbursement purpose means the amount that is transferred in inpreset holder account is less as compared to expenses then the deficit amount should be transferred in that account. Every expense has unique code e.g. Energy Electricity code is 50112030. The payments are made through banks such as HBL, ABL, and UBL and received Payments by RBS. There are 14 head of expenses and every expense has unique code. These expenses heads are as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Admin Expense Chilling Expense Depreciation Expense Agri Services Expense Fuels Expense Insurance Expense Maintenance & & Repair Expense Office Supplies Expense Operating Supplies Expense Salaries expense Energy Expense

The details of these expenses are displayed in appendix 1. Sources of Milk Collections 1. Progressive Farmers (PF) 2. Village Milk Collections (VMC) 3. Dhodies 4. Mini Suppliers 5. Sub Centers Services (SCS) Price Control Sheet 16

In price control sheet some steps are followed: 1. The RMCM will take the prices or volume of his area as per competitive situation and if some special rate required for some specific supplier then the name of supplier is mentioned in the price control sheet according to registered source type. 2. RMCM will send comparison of price sheet required vs. previous approved on specified format to RMCM. 3. RMCM will review and forward MPCS (Milk price control sheet. 4. 5. 6. 7. 8. 9. CMAS will compare the prices control sheet with price approved limit and forward NMCM (National Milk collection Manager) for approval. NMCM will consider the prices and take decision to approve or reject and inform to CMACS. After approval form NMCM CMAs will record the prices for costing and one copy send to at main centre. RMCM will get the revised prices and implemented. Up to PKR 0.05 tolerance will be accepted form main centre if the milk rate exceeds PKR 0.05 against approved rate then RMCM proceed for new approval. At every Saturday centre will send their price control sheet to MCAS and MCAS will tally the sheet with approved price sheet and calculate variance Mr. Altaf Hussain told me about approved milk price sheet at regional level with effect to week wise. Approved Milk Price Sheet 1. 2. 3. 4. 5. 6. The approved milk price sheet is generated by the finance and control department and then approved by the head of MCAS. After approving it sent to ZM and RMCM. To purchase milk according to approved price. After that data is collected from ZM and RMCM on the basis of approved price and compare it with actual price. Required fat of milk is 5.7 % and required total solid of milk is 14 %. Approved price of milk is determined by the head of MCAS in every week i.e. fat of milk is 5.7 % then the approved rate is 32.55. The average milk price of the zone is calculated by cost over volume.

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7. 8. 9.

Next week the price is approved and according to price RMCM purchase from the farmer. The variance is calculated by comparison of previous week and current week. If the milk is purchased according to approved price then the variance is 0 otherwise, the variance is displayed if the price of milk is different by actual and approved.

Key Performance Indicator (KPI) In key performance indicator for costing or estimated target procurement of milk and after actual milk collection is compared with milk target. If it increase target collection then it displayed the growth. If not increase then display deficit of milk. The growth is calculated on the basis of consolidate 12 months milk collection. Investigation of Purchase General Summary 1. How payment is paid through bank, how payment is transferred to bank and how much payment is drawn by impressed holder. Drawn payment is 50 thousand because payment insurance is 50 thousand and how payment is paid though cheque and how much amount is paid by cash. 2. Investigation of electricity bills payment with the help electricity bills that are attached with the purchase general summary. Investigation of general sale tax for claim purpose because GST is registered in Excise and Taxation Department. Investigation of Income Tax for claim purpose because Nestle Paid Income Tax on their Revenues annually. 3. Investigation of all cash memos that are used for general expense and tally with purchase general summary. 4. Rectification of error from territory in charge if any entry is not matched with cash memo or voucher. 5. After investigation a consolidate statement is prepared is approved by authorized person such as controller of department and head of the department. This preparation of documents by budgeting and controlled department.

Inpreset Holder Payment Statements

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The funds are transferred as an advance in imprest holder account through bank such as ABL, UBL and HBL for utility bills. The inpreset holder has an account in particular bank where he is belonged to. The funds are transferred as advance for next week expenditure such as payments of milk and petty cash expenses. Financial Documents (FID) Financial document is used to collect the recoveries of rejected milk and weigh bridge and recoveries of milk advance payment. Recoveries of rejected milk FID It means some milk is rejected it reached in factory but the payment of this milk is paid by the farmer Nestle Pakistan. This rejected milk should be sold to other party such as military or other diaries because on the basis of already contracted. This party issued DD with the name of Nestle bank such as RBS and mentioned DD No., Amount, Name of Nestle and Bank Name from the which the DD is issued and provide this DD to the RMCM and RMCM send DD to Nestle head office and Nestle head office recover amount from these bank and deposit into its account. Note: Attached copper sheet that display payee name, account n. DD no. and bank name issue DD and its address. The demand draft as advance milk payment recovers FID It means that the person who has received advance payment such as farmers or Dhodies and provide milk to the Nestle but after some period of time they do not provide milk to the Nestle then the RMCM collect payment from the farmer and go to the bank and issued DD on the name of Nestle and send it to the head office. For recovery of payments the RMCM collect payment and go to the bank and issued demand draft on the name of the main bank of Nestle Pakistan Limited Lahore such as RBS.

Bank Reconciliation Statement

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Bank reconciliation statement consists of balances as per our bank books and balance as per bank statement. The transaction of the bank statement is tally with company ledger accounts that should be prepared by the RMCM and checked by the ZMCM and bank officer prepared bank statement at the end of the month. At the end of the month ledger accounts and bank statement transaction are compared as how much money is transferred from head office imprest holder account, opening balance, withdrawal and closing balance. Both statements are reconciled at the end of the month and errors are corrected. Bank reconciliation is prepared by the assistant account officer and approved by RMCM and checked by MCAS for proper recording purpose. On the basis of this statement the funds are transferred for the next week. Note: Bank Statement is attached with ledger account that should be prepared on daily basis.

Week No.2 3.2.2 Loaning/Financing to Farmer Section

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Objective of Loaning to Farmers Section The main objective of loaning/financing to farmers section is to provide loan to farmers free of interest if they provide milk to Nestle as required or above volume or provide subsidy on interest. For this purpose and provide this loan facility to farmers Nestle made agreement with ZTBL and KASB banks. Agreement with ZTBL Bank Nestle made agreement with ZTBL from October, 2007 to October, 2012 for five years with amount of five billions and this agreement is for only Punjab Farmers loaning. Agreement with KASB Bank Nestle made agreement with KASB Bank from 25 February, 2010 to 25 February, 2012 for three years with amount of 10 million and this agreement is for only Punjab Farmers loaning. Types of Agreements Nestle made two agreements with farmers 1) Agreement for financing of dairy cows 2) Agreement for commercial dairy development

Flow of Process of Loaning/Financing to Farmers Section The flow of process of loaning/financing to farmers is on the basis of Agreement for commercial dairy development and Agreement for financing of dairy cows.

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RMCM

AAO

Loaning and Financing Section

Bank

Figure of L and F

Farmers

Requirements for farmers: 1) A farmer is a registered supplier of Nestle and provides certain supply of milk to Nestle or average milk per day volume. E.g. above 30 liters. 2) He has eight adult animals. 3) He has three acers agricultural land. 4) He has an account in the ZTBL or KASB banks. 5) He did not defaulter of bank from previous years and payment of loan does not exceed 90 days. 6) He takes loan of Rs.1000000 for five years. 7) Then he says to ZMCM for applying of loan for purchasing of new cows. 8) ZMCM personally survey the shed where he has already animals. 9) Dairy development executive personally survey of shed. 10)After survey of ZMCM and DDE the agreements is made between Nestle and farmers on ishtam papers of Rs.50 on the basis of terms and conditions and these terms and conditions are attached with paper and send to nestle Head office for investigation and approval. Both are agree on these conditions. The terms and conditions are as follows: Terms and conditions between Nestle and farmers for agreement 22

1) Total amount of loan Under this agreement the farmer can avail form the bank maximum up to Rs.10 millions (subject to terms and conditions of NPL and bank and value of the collateral) for purchase of local/cross breed cows. 2) Characteristics of Cows The farmer has agreed to purchase cows as per NPL; standards from NPL recommend/approved cow points. (NPL approved standards and list of NPL approved cow points are annexed) and cow worth is 80000. 3) Insurance of Cows The farmers shall pay to the bank the first year insurance premium of the cows purchased at the time of disbursement if loan. He shall also keep these animals insured for whole tenure of this agreement. In case the borrower fails to do so, the bank shall be entitled to get the animals insured on its own and claim the amount of the premium form the borrower along with mark up at the prevailing bank rate. Nestle shall guide the borrower on the request in insurance related documentation and filing of insurance claim, if any with in the specified time period prescribed by the insurance company. Nestle however shall not be held responsible either by the bank or the borrower for claim rejections/delays by the insurance. 4) Minimum volume of supply At the time of agreement, dairy farmer shall supply minimum average daily 50 liters milk NPL. Dairy farmer shall increase the daily milk volume supply to NPL as per agreed development plan mentioned in annexure c. 5) Pricing of Milk The milk rate applicable shall be the approved weekly milk rate of the relevant. In addition to the approved milk rate dairy farmer shall be entitled to receive incremental milk volume and loyalty incentives in case for eligibility with the mentioned criteria described in commercial dairy development scheme. 6) Calculation & Payment procedure of incremental milk volume incentive The incremental milk volume incentive shall be calculated and per as following: Incremental milk volume incentive shall be paid on the daily milk volume supply which shall be calculated on weekly purchased milk by NPL form the dairy farmers. Incremental milk volume incentive payment shall starts form daily milk of 100 liters or onwards. 23

Incremental milk volume incentive rates shall be applied in accordance with the criteria mentioned in annexure A or any amendments issued by NPL form time to time. Incremental volume incentive shall be calculated (separately form milk price) & paid by NPL on adjusted milk volume supplied by dairy farmer at announced milk quality norms of NPL alone with regular weekly milk payment to the dairy farmers designated by bank account. 7) Loyalty Incentive Subject to following terms and conditions the farmer shall be eligible for loyalty incentive Loyalty incentive payment calculation starts form the average daily milk supply of 25 liters or above. Loyalty incentive shall be calculated and paid PKR 1m (Rupee one only) per liters on adjusted volume purchased by NPL during the period. 8) Haulage Charges Under the agreement NPL shall pay Haulage Charges @ PKR 0.75 liter to dairy farmer if dairy transports the mike on his own ate nearby NPL chiller announced milk collection point. If NPL is picking up or collecting the milk form the farm or any other dairy farmers designate place as the case may be no haulage charges shall be paid to the dairy farmer. Haulage charges shall be paid on monthly basis is. The haulage charges of the last months shall be paid with in k15 days of the following months. 9) Chilling charges If farmer has its on chilling point the NPL paid Rs.50 per liter and Rs.50 per liter for other charge beard by farmer such as fuel, electricity charges and repairs charge etc. 10) Payment of Taxes and fees The farmer shall have sole responsibility to pay all types of taxes duties and market fee being imposed by market committee department. 11) Financial Assistance to farmers on bank loans

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However against the loan recommended by NPL to the bank for purchase of dairy animals NPL shall reimburse the markup the farmer subject to terms and conditions as per annexure D and events of default under this agreement. NPL reimburse the interest on loan is Rs1.5 rupee per liter in flash period of time that is September to April and Rs2 per liter in lean period that is May to August. Letter for confirmation about CIB Report After the investigation of agreement the loaning and financing section send letter for confirmation about CIB report about the farmers profile towards banking transactions for previous year to the Model branch Lahore. The model branch sends this letter to the local branch for CIB report where the farmer is residence. If CIB report is cleared then NPL asked to ZMCM to provide all necessary documents that are as follows: Irrevocable undertaking attaching Animal strength foam verified by RMCM a Original Agri Pass book Two passport size photograph Clear copy of CNIC In case of joint application paper is attached Last there years Ausat Bay of the property offered as collateral Khasra grdawari(evidence of collateral land in farmers possession) Cop of Naqal Intiqal of the property Does farmers Kacha/Pacca shed for keeps the animals Did farmers ever defaulted with any bank in past Repute of the farmer and his family is very good CF agreement in case new commercial farmers is already sent Local cows agreement is attached

Daily milk volume supply by CF(must be greater 30 liters per day) No o f total adult animals(total in first box and milking in other box CF code active and daily volume in the code No of canals of collateral offered and last three years Ausat Bay

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The documents are verified by Ms. Najia batool if any document is missing then inform to the regional RMCM and write in sheet that cod is pending. If documents are cleared then write in sheet code is active and checked by Mr. Kashif Sulman. Local Dairy Cows Financing Appraisal Foam After completion of documents Najia batool prepared performance appraisal foam on the basis of the documents that should be provided by farmers. Description of the farms is as follows: Farmers identification, region name, DDE name, RMCM name and code of farmers Existing volume of supply milk details, Collateral; details e.g. value of collateral 600000 of 70% of this value is approve and 30% is maintain as cushion. Following documents is missing Remarks such as code is inactive, case is pending, code is active in week # case is prepared in this date. Letter for Recommendation After Preparation of Performance appraisal foam if the cod is active then letter of recommendation is prepared and send to Model branch of ZTBL or KASB bank. The letter for recommendation is mentioned farmers name, fathers name, CINC #, address of farmers, Region name, date for supplying milk, average volume of milk and its cost, loan amount, no of purchased animals, expected quantity of milk and its costs. This foam approved by Dr Muhammad Ashraf (manager of milk agri services) and Usman Khalid (controller of milk agri services) to provide loan for five years of 70% of Rs.100000 that is 700000 of collateral security and 10% is contributed by farmer of loan amount that is 100000. After that the Model branch approved loan and send letter to provide loan. The local branch provide loan as prescribed on letter for mentioned period.

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Before the disbursement of loan the farmers paid one year insurance premium as advance or 1.9% for loan payment. Repayment of loan and Interest Payments Ms. Najia Batool told me about repayment of loan and interest payment of ZTBL and KASB banks. The NPL provide subsidy on interest to farmers as Rs1.5 per liter interest in flash period as farmers provide milk as required volume and remaining interest paid by farmers. If farmers provide milk above volume then NPL paid the whole interest of the farmers. The payment of interest is weekly. But first month is grace period for payment of installment of loan. It means that the farmers will not paid installment of loan in first month when he takes loan from the bank. The process for payment is as follows: When NPL receive milk from the farmers according to approved prince of the week and proper record is prepared by AAO and approved by RMCM send to head office MCAS department and receive RMPS section. The loaning and financing sections receive list of milk collection and then interest cost is calculated this is displayed in the appendix 3. In this sheet all information are displayed such as CF code, branch name, region name, farmer name, father name, date of disbursement of loan, total interest, week#, total amount of milk supply, interest cost per liter, payment by NPL and payment by farmer. Interest cost per liter is calculated by total interest cost/total milk supply, if interest is below Rs1.5 per liter than paid by nestle, if interest is above Rs1.5 than above paid by farmer. After preparation of interest cost sheet forward it to RMPS section, with subject to PLZ deduct the interest amount, weekly installment payment and insurance premium payment from the farmer milk payment. The RMPS prepare consolidate statement that showed the total interest payment, interest payment paid by NPL, interest payment paid by farmer, insurance premium, installment amount and after these deduction actual payment is mentioned and send this sheet to treasury department after approved by HOD of MCAS to made payment of interest to bank.

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The treasury dept transfer the actual payment to the farmer account and paid the interest, insurance premium and installment to the bank weekly. Agreement for commercial dairy development The agreement is develop on ishtam paper between NPL and farmers to provide certain volume of milk average per day to NPL In this agreement the farmer is agree to provide certain volume of milk to NPL on daily All the terms and conditions are same as prescribed in Agreement for financing of dairy cows but insurance of animals and markup reimburse is not included. The farmers is made registered supplier and is eligible for receiving all incentive from NPL. This agreement is send to Head office by RMCM for approval. The loaning and financing section investigate the case and check the milk supply from RMPS section as this farmer is already supply the required supply of milk of not. After that the case is approved and signed by head of MCAS. The farmer is eligible to receive the incentives from NPL. The remaining time is spending on keeping the filling of agreements. Joint white Revolution of Loan Scheme of NPL and ZTBL 1. Mode for determination of installment and payment All loans would be back with in five years. First month is grace period and original loan backed in 256 weeks if your weekly supply of milk is lower than installment amount than the farmer would be considered as defaulter. 2. The NPL paid back your interest if interest did not exceed for following formula: September to April Rs1.50 or original interest which ever is less May to August Rs.2.00 or original interest which ever is less

3. Matters for Insurance The farmer would be insured your animals for loan paid, if farmer did not insured the animal than he will be considered as defaulter. 4. Mode for payment for insurance premium

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The farmer paid insurance premium 1.9% of loan amount every year and paid 485 insurance examination charges of site for once. The farmer send premium draft to the Adam Jee insurance company Ltd Lahore before receiving loan form bank. The NPL deduct the weekly installment of insurance premium from the farmer milk amount and send to bank or insurance company 5. Renew of Policy Adam Jee insurance company sends copy of new policy to farmer bank and policy in the name of farmer and bank. The farmers look after the animals according to insurance rules certainty. 6. Mode for look after and Claim Farmers would be curing the animal from the experienced DVM doctor if the animal is ill. If the animal death than tell the insurance company on mobile phone. After telling the insurance company would send doctor for examination of the death animal and represent report to the company. The farmer would send claim foam for animal to the insurance company. NPL provide guide if needed but did not responsible for claim of late or denied claim by insurance company. Mr. Kashif Sulman that is dealing with ZTBL & KASB banks transactions and handled told me about the process of payment of principal installment, interest paid by NPL Insurance premium by bank . How many cases are pending in local branch, in Zonal branch, in DDE etc? They made proper record of this information in excel sheets. How many cases are approved by banks? How many animals are deaths and how many are for claimed process and how many cases are going out for claimed process. How many farmers are continuing to milk business with NPL? How many farmers made problem in b business of milk? He told me about KIBOR (Karachi interest business operation ratio) determine by SBP in every daily basis that is normally 12%. When KASB or ZTBL bank provide loan to farmer than current KIBOR rate is charged and its margin by 3% also because the bank also borrow from SBP. The bank provide loan to farmer on normally 15%.

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Farms of NPL NPL have two harms that are as follows: Sarsabz farm In Sarsabz farm consist of imported cows of 250. In these farms NPL educate the farmers about care of animals such protect from heat of sunlight, feeding of animals, medicine of animals, growth of milk and adoption of innovative mode of milk growth. That is non profit farm. It is only for provision of knowledge about animals care and growth of milk. For care of animals, feeding, medicine, water, expenditures, profit and loss is controlled by Ali Imran. Sukheki Farm Sukheki farm is joint venture of NPL and Babar Ali Foundation. In Sukheki farm consist of 100 local cows and same procedure as mentioned above. Benefits by NPL by these Farms NPL is market leader in the world as milk production. There is no direct benefit by NPL from these farms but gain indirect benefit from farmers by providing milk in future and care animals and make growth of milk in future.

Week No.3 3.2.3 Fixed Assets Management

Objective of Fixed Assets management The main objective of Fixed Assets Management is to manage the Assets and cost allocation of these assets.

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Annual Capex Budget & Implementation of projects. Analysis of variance of Budget as annually and monthly M&R Budget Implementation and control. Fixed Assets Management (19,100 Assets worth 1.6 Billion PKR). Material Supplies central control. (Operating supply, Glassware, Chemical, Stationary) Energy Conversation Management. Functions of Fixed Assets Management The functions of fix assets management are aw follows: To control the assets as through standard operating procedure management Purchase of new assets, Sale of scrap assets, addition of assets, deletion of assets, issuance of assets, and transfer of assets from one center to another center or from one region to another region. Repairs & maintenance of fixed assets Material supply such as office equipment, chemical supply, stationary supply, operating supply etc and to maintain the proper record of fixed assets and supplies and vendor payments etc. Made payments to vendors or suppliers from where the material is purchased on monthly basis. To maintain the flow of information from regions to head office Fixed Assets The fixed assets are those that value is above 5000 but equipments such chair, table as its value is less than 5000 is considered as fixed assets. Fixed assets in NPL are Chiller, Generators, Electric Gerber machine, Electric milk loading pump, milk loading pump engine, water pump gold maticG-1, Weight bride capacity 20 ton, solar water heater model JA-1, Chain pullly one tone with triport and wire, Digital earth tester model 4103-H type, generator diesel 12 KVA, 24 KVA 3 phase, Stabilizers and motorcycle. Quantity of Fixed Assets Name of Assets Qty

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Total Assets Budget of Assets Chillers and its capacity Generators Road Weighing Tankers PHE Main Store Sub Stores Memorandum

19100 1.72 Billions 2200(2520) 2205 37 562 31 SPK 05

The assets that value is less than 5000 are called memorandum.

Process Flow of Milk Collection Engineering

HMCAS

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MCE

MS EXECUTIVE

FME

AAO

AAO

FMS

FMS

Figure of MCE Fixed Assets Budget Preparation Budget is estimated and prepared as annually MCE planned to consumed this budget After the budget preparation the Controller of the engineering department prepare the purchase request for purchase of new Assets and M&R supplies or material This request is send to HMCAS for approval After that this request sends to procurement department to review to which vendors material is purchased Procurement department select vendors

Budgeting of Fixed Assets All expenditures for Purchase of fixed assets and repairs and maintenance such as Chiller, Generators, Electric Gerber machine, Electric milk loading pump, milk loading pump engine, water pump gold maticG-1, Weight bride capacity 20 ton, solar water heater model JA-1, , Digital earth tester model 4103-H type, generator diesel

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12 KVA, 24 KVA 3 phase, Stabilizers, ,motor car and motorcycle etc are advance budgeted annually basis as head wise and maintain its records as region wise and send it to their respective regions as controlled cost as expected budget for the year. Purchase of material The regions purchase the R&M material from the approved vendors by NPL and vendors send their invoices as monthly basis to engineering departments in head office. Allocation of cost The engineering department can allocate the total monthly cost of R&M and purchased of new fixed assets as their respective heads on the basis of invoices send by vendors. Payment of Vendors The vendors payments are transferred in their respective accounts on monthly basis. Recoding of cost The engineering department maintains the total cost per month of R&M and new purchased of fixed asset and its quantity as previous and additions in this year. Variance of budgeted cost At the end of year cost of 12 month are calculated and compare with expected Budgeted cost and variance is also calculated. E.g. budget is 100% and consumed 80% than the variance is 20%. Reporting of Data After the assigning the annually budget to region the monthly report are prepared on the basis of vendor invoices that send the vendors at the end of month attached with vouchers. The budget is allocated to regions as monthly basis as annually budget/12= Monthly budget. On the end of month the monthly budget is compared with actual expense and variance is determined. Reporting of Data as (WBS) 34

The data is reported in excel sheets as following: Capitalizing of assets in the system Generate inventory code # Tagging list assets as steel or plastic send field to tag the asset as protected misuse Additions of Assets Transfer of Assets note Good received note SAP transfer inventory and change location of assets Deletion or Scrap of Assets Evaluation the stock inventory Now every report process is as follows: New Electric Connection Purchased Requisitions After budget allocation for purchasing of new assets and Repair and maintenance of assets the purchase request is prepared by Mr. Rashid sb and sends to Procurement department to acquisitive these things and procurement department select vendors as regions wise so that the center acquisitive the require material easily. But the assets that are purchased are sending to SKP store room. Now engineering department delivered the Assets where it is required. Vendors provisions of R&M Materials to the centers The vendors provide the repair and maintenance material to centers and at the end of month he goes filed maintenance engineer (FME) for verification of invoices. After verification of invoices the vendor send the sheet format their total amount with their invoices to engineering department Head office Lahore. Vendors provisions of Assets to the Centers The engineering department received request from centers as details wise through telephone or email as purchased request to the head office. The engineering department prepared purchase request orders on the basis of purchase request and approved form HMCAS and send to through email or courier to send these material to respective vendors centers of this region. After sending the goods centers the vendor goes to Field Maintenance Engineer for verification of invoices. 35

After verification of invoices he sends these invoices to the head office. Preparation of purchase requisition by BSS At end of month the BSS prepared purchase requisition on the basis of invoices that are sends by the vendors and also verified it an approved from MCE. Payment by Vendors After that this sheet is send to budgeting and control section for payment of vendors. The budgeting a control verifies and made purchase journal summary and send to territory department for payment after approval of HMCAS. The territory department verifies it and transferred payment to respective vendors account. Goods received Note When asset is received by particular center then issue the good received note as asset is received the is prepared by RBBS as details of Assets is mentions an quantity of assets also mention and approved by RMCM and send to engineering department head office. The engineering department records it to its SAP system as where asset is located and its quantity and put into files as evidence. Assets Transfer Note Some assets that are not utilized as full capacity or being as spare in one center but the others center needed that assets then the assets are transferred from one center to another or from one region to another region. Then the RMCM inform the engineering department in head office for transfer of asset from one center to another or one region to another. RBBS prepared form to transfer the asset and send this form to engineering department. The engineering department records it into SAP system and also keeps it into file as evidence. The transfer assets note is showed in appendix 5. At the end of month the BSS of engineering department prepared stock report at the end of month as region wise. The head of stock report are stationary, chemical, glassware and operating supplies.

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The contents that are including in stock report are: Opening balance, issued, available for use and closing balance. New Electric Connection The new connections are requiring in center where the chiller are processed for milk. The cost for new connections is showed in appendix 5.

Week No.4 3.2.4 Transportations Management System

Transportation Management System Objective The main objective of the Transportation management System is to insure the smooth and timely transportation of fresh milk from sub centers to main centers and main center to factory.

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Functions of Transportation Management System The functions of Transportation Management System are aw follows: New route generation of vehicles Vehicle Registration with NPL Adjustments of extra vehicle kilometers Arrangement of vendors monthly wise payments Invoices generation of fresh milk vehicles per kilometers To maintain the flow of information from regions to head office Process Flow of TMS System

ZMCM

HMCAS

CMCAS

Figure of TMS

GTM

HOP Vendors Payments

HOSC

Finance and Control

The payment to vendors against transportation is paid as per kilometer that is displayed in appendix 7. Vehicle Wise Bill for Fresh Milk Transportation After that the data is entered in SAP as vehicle wise bill fresh milk transportation for every transporter as center wise by AAO and bill for fresh milk transportation is prepared AAO and soft copy is send to TMS department every month 29.The description of this bill is displayed in appendix 6.

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The soft copy of these bills sends to TMS department head office. The TMS department updates the bills in the system and compared with vouchers that are sending by AAO. The TMS department Staff calculate the per kilometers cost of milk tanker on the basis of bills send by AAO. After that the bills are prepared and soft copy is send to transporter and for payment bills sends to account payable department. The account payables department made verification of these bills and send to treasury department for payment. The treasury department transfer online payment to the respective account of the transporter as center wise. Petrol Pumps Invoice Summary The petrol, mobil oils and diesel is required for milk collection and agri services vehicles, generators, filters and loading pumps. For this purpose the NPL made contract or agreement as centers wise to the petrol pumps vendors to provide petrol to the NPL vehicles as daily base rate. The vendors deliver petrol or diesel to NPL vehicles when vendors approved vouchers is issue by AAO with signature and NPL stamp. At the end of month the vendors prepare vehicle sale ledger and send this send it to as hard copy with attached vouchers to AAO. The AAO prepare the petrol pumps summary and approved to line manager and sends to TMS department head office Lahore. The TMS department checked the vouchers of petrol as it is proper signed AAO with NPL stamp. If not then TMS staff communicates the reason to AAO. After checking the petrol voucher check petrol pumps summary as date, center name, cost center, vendor #, signature by AAO and Line manager and check total and subtotal and format is showed in appendix 7. New/Revised Route Toll Tax The NPL paid Tool Tax of milk collection vehicles to transporter as monthly basis. Some time the rates of toll tax expense are increase or new route is defined then transporter made request to AAO or RMCM for revised or new toll tax rate. The AAO or RMCM prepare revised or new tool tax rate and send to GTM for 39

verification and approved to SCM. After verification and approved it the AAO send to TMS department in head office for recording and updating into SAP software. The TMS department staff enters new/revised route toll tax in the SAP. The format is showed in appendix 8. Problem Sheet Vehicle Wise Bill Some time some errors are occurred in the vehicle wise bill for fresh milk transportation such as dispatch not missing, Extra Km but reason is not mentioned, sum of Km not mentioned, Gain or loss sheet not mentioned, photocopy of dispatch attached but receiving not is missing, sheet no not telly, dates not telly with supporting etc that errors are recoded in problem sheet. The format of problem sheet is as Sr#_____ Period No______ Date__________ Sheet #_________ Vehicle No______ Centername____________TransporterName__________ Problem______________ Requests for Opening New Vendors The petrol and diesel is required for milk collection and Agri services vehicles. When already vendor is far to the milk collection or vendor did not continuous business with NPL due to pay the amount of oil in 15 days but the NPL made payment to vendors then RMCM made request to GTM to opening new vendors. The GTM after verification sends request to TMS department in head office to opening new vendor. The TMS made request to head of procurement department to select new vendors with proper reason with approval of head of MCAS department. The head of procurement select the vendor and approved and give response to TMS department. The TMS department updates new vendor information in its system and gives response to RMCM about opening new vendors through email. Now the new vendors deliver oils the NPL vehicles. Vehicle Taker Registration The takers of the transport are registered with the name of NPL because the NPL is

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the owner of takers. When tankers are purchased by NPL then RMCM send request to TMS to register the particular taker. The TMS staff registered the tanker with assigning the tanker code, tanker location, tanker capacity and transporter name which vehicle tanker is attached.

Week No.5 3.2.5 Raw Milk Procurement System

Raw Milk Procurement System objective The main objective of the Raw Milk Procurement System is to insure the smooth and timely raw milk received at factory. Functions of Raw Milk Procurement System The functions of Raw Milk Procurement System are aw follows: Weekly Payments to suppliers till Wednesday 41

Weekly Payments of milk advance as per requirement Weekly OSS deduction and payments Weekly Vanda deductions and payments Weekly Can/G.Machines/M.Measures deduction Weekly LF/CD volume incentives Weekly Registration of new milk suppliers/Vanda/OSS vendors Weekly Stop/release of milk payments in case of emergency Weekly Reporting at shed level relating to fresh milk payments Monthly Payments of chilling charges Monthly VA haulage and room rent payments Monthly target incentive payment to CA/MCS/RMCM/ZMCM All types of recoveries through milk payments and DD

Process Flow of Raw Milk Procurement System

Dhodies, PF, CD, VA, CA

Main Center

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Data entry at Main Center

AAO at Regional Office

RMPS for Recording

Figure of MPS

Treasury Department

Milk Supplier Registration Foam The MCS goes to milk suppliers as large farmers, CDF, VMC, VA, DO and PF to provide milk to NPL. He tries to agree the suppliers with NPL. When he agrees then MCS fill up the milk registration foam from the supplier. The format of Milk Registration foam is showed in appendix 9. The MCS take copy of ID card and original check and attached it with the registration form. After fill the form and document attached it send to AAO. AAO call the respective branch for verification of account and profile of milk supplier and after that send it to the RMPS department Lahore for recoding purpose. The RMPS department investigates the registration form and approved it by the line manager and records it to the system and start deduction plan as weekly basis. Agreement of Advance against Milk Supply The NPL provides advance as loan to the registered milk suppliers as they purchased milk as better and made upper standard of milk. Loan is provided for motor cycle, Aluminum cane and milk advance. The NPL have certain terms and conditions against advance milk supply payment 43

The supplier will provide milk to NPL according to its manage system and quality control until completed backed loan amount to NPL The NPL deny to accepted milk if it is not according to quality standard The loan is backed by supplier as weekly as predetermined installments by RMPS The supplier will not provide milk to another company until approved in writing by NPL The payment for milk to the supplier is made by means of bank. The payment is given against providing milk delivery vouchers to NPL The supplier will not any affect on weekly milk price The deduction of loan is according to NPL principles The NPL finished the agreement but supplier paid the remaining balance of loan amount to the NPL If supplier died then its legal heirs will be responsible for payment of advance for milk The NPL will not receive any interest on loan amount If any quarrel between NPL and Supplier then legal action will be under taken by NPL at Lahore. Format of Agreement of Advance against Milk Supply is showed in appendix 10. Milk advance Top Summary The milk advance payment is made to the supplier in installment by the NPL is mentioned as reporting foam is displayed in appendix 11. OSS (One Stop Shop) Deduction Top Summary This agreement is made between farmers and vendors for delivering of medicine for dairy animals The vendor gives form to the farmers and farmers filled up and sends to the RMCM and AAO prepared OSS deduction top summary and send it to the RMPS department Lahore. RMPS made the deductions from the respective farmers milk payment on the basis of information send by the AAO. Vanda Vendors shop Deductions and Payment The NPL provides Vanda to the farmers as weekly through vendors and made

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payment to the vendors as weekly. When farmers go to the vendors the vendor take an undertaking form and signed to the farmers and after that deliver Vanda to the farmers. The vendor sends vouchers to the AAO and AAO prepared Vanda vendors shop and send it to the RMPS in Lahore for deductions purpose. The RMPS deduct payment of Vanda from the weekly farmers milk supply amount and prepared region wise total amount of Vanda as Vanda shop and deductions and approved it to the HMCAS. After that it sends it to the territory department for payment The territory department transferred this amount as region wise or center wise to the vendors account. Format Vendor Code ________Center Name_______________Vendor Name___________ Closing balance______________ VMC (Village Milk Collection) Haulage Payment For milk collection purpose the NPL hire VMC that collect milk from the villages and deliver it to the main center. The NPL paid haulage charges per liter as .50 and rent of building where he collect milk as monthly Rs.300.The NPL paid haulage charges to VMC as monthly basis. The format of haulage payment is displayed in appendix 12. Requests for Stop Payment The NPL can stop payment to the farmers due to some certain reasons: The payment can be stop due to the SCA left job The AAO made request to RMPS did not transferred payment to the respective SCA account due to left job by SCA. The Payment can be stop due to wrong data entry in code 00T303 instead of 00T0308 The AAO made request to RMPS did not transferred payment due to wrong data entry to the respective account of the farmer. The payment can be stop due to bank account problem The AAO made request to RMPS to transferred payment to another account of the 45

farmers due to account operating problem. Or transferred payment to another account no. ZTBL Loan Installment Farmers Details new Plan The RMPS deduct amount of installment of loan from the supplier weekly milk payment and paid it to the ZTBL as weekly basis. Format of ZTBL loan installment farmers is displayed in appendix 14. Payment to Large Farmers and CDF weekly Increment volume inventive The incentive is provided to farmers if they provided milk to the NPL above limit then NPL paid one rupee per liter to the large farmers and CDF. Format is displayed in appendix 15. LF Chilling Charges The NPL paid chilling charges as Rs.1per liter if the chiller is not owned by NPL and paid Rs.50 per liter if chiller is owned by NPL. Format Sub area__________ CS code__________ CS Name__________ Volume________ Chiller owned (NPL, Farmer) ___________ Total amount____________ Financial Document (FID) The NPL used financial document for adjustment, close of account purpose. Some FIDs are as follows that is used by NPL Unpaid FMP transfer to 1040190 The payment is received and transfer to NPL account due to account holder deficiency in operating account. Sarsabz Milk income transferred to Sarsabz farm cost In this FID the income of farms is transferred to farm expenses on monthly basis Payment of interest to farmers against loaning program

46

In this FID the payment of interest against loan that is provided to commercial dairy farmers and cows loaning arrangement is paid to ZTBL Cost transfer to long term advance DD received against extra rate payment Provision of CD, CF inventive charges In this FID the incentive of VMC, CDF and VMC rent and chilling charge are transferred to the milk suppliers. Adjustment of Provision of loyalty paid The format of FID is displayed in appendix 17.

Week No.6 3.2.6 Fresh Milk Gain and Loss System

Fresh Milk Gain and Loss System Objective The main objective of the Fresh Milk Gain and Loss System is to insure the smooth and timely fresh milk purchased and intake to factory. Functions of Fresh Milk Gain and Loss System The functions of Fresh Milk Gain and Loss System are aw follows: Maintains the records of purchased fresh milk from the shed by using direct source (VMC, Progressive farmers, Sub centers, Commercial dairy farmers, large farmers etc) Maintains the records of purchased fresh milk from the shed by using indirect source 47

(Dhodies, Mini Suppliers) To achieve the target region and zone wise Push the region and zone to increase the quantity of fresh milk Dispatch fresh milk from centers to factory as daily basis Maintain the records of left over milk to the center as region wise Investigate the Talley sheet that is prepared at sub centers Investigate the loss and gain summary that is prepared at sub centers Investigate the dispatch note that is prepared at factory Prepared fresh milk loss and gain sheet as vehicle wise Prepared weekly consolidate fresh milk loss and gain sheet on the basis of regions To give daily fresh milk loss and gain report to the higher management till 9:00 am

Process Flow of Fresh Milk Loss and Gain Diagram

Dhodies, PF, CD, VA, CA

Milk is Dispatch at Main Center

Data entry at Main Center

Milk is Dispatch to the Factory

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AAO at Regional Office

Head Office

Milk Gain Loss Reports

RMPS for Payment of Milk

Figure of MLG Treasury Department

Milk Receipt Note (MRN) The NPL issued the Milk receipt note to the milk suppliers such as CF, CDF, MSA, PF, Dhodies and Mini suppliers against supply of fresh milk. The MRN have three copies as white, yellow and green. The white copy is given to the milk supplier, yellow copy is send to the head office and green copy is taken by sub centers for recording purpose. When fresh milk is received by VMC or MT then issued MRN to the milk supplier. The format of MRN is showed in appendix 16. Talley Sheet of fresh milk purchased register After issuing the MRN to the milk suppliers the MT/QAA prepared Talley sheet on the basis of MRN and calculate the total purchased of fresh milk received by MT. There are two copies of Talley sheet as white that is taken by main center and yellow copy that taken by sub center.

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The MT at main center prepared a sheet that is gain and loss sheet and sends it to the AAO at region. The format of Talley sheet is displayed in appendix 17. Sub center Loss/Gain and Quality Report When fresh milk is dispatch from sub centers to the main centers he MT prepared sub center loss/gain quality report. The purpose of sub center loss/gain quality report is to display fat, volume, LR and SNF of fresh milk and also calculate the difference as collect by MT, purchased by MT and also mentioned quality of milk as time and temperature, Org, APT and For +/-. The MT show the record of dispatch of milk from sub center to main center and calculate difference from sub centers to main centers and calculate the difference from main center to factory intake of fresh milk. After that the MT sends sheets to the AAO at region and AAO verify it and prepared the loss and gain sheet and send softy copy as mail to the head office Lahore. The format of sub center loss/gain quality report is showed in appendix 19.

Main Center Receiving/Vehicle Wise Loss/Gain Summary Report When milk is dispatch from sub center to main center then QAA prepared the main center receiving vehicle wise loss/gain summary report that display how much milk is dispatch from sub center to main center and calculate the difference from sub center to main center. When fresh milk is dispatch from main center to factory the QAA display how much milk is intake to the factory and also calculate the difference of fat from dispatch of milk from main center to factory. After that the QAA send this sheet to the AAO as he checked it and forward it to the RMCM for verification and after verification the AAO send it to the head office Lahore. The format is showed in appendix 20. Dispatch Note of Fresh Milk

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When fresh milk is dispatch form main center to factory intake then MT or QAA prepared the dispatch note as milk for processing not for sale and also mentioned the lab test results as temperature, APT, COB, Ph and Acidity etc and calculate the variance of fat from main center to factory dispatch. QAA at factory also verified lab test of fresh milk and check the quality of fresh milk. MT send dispatch note to the AAO for verification and QAA received it at factory. The format of Dispatch note of fresh milk is displayed in appendix 18. VMC Fresh Milk Purchase Register The VMC collect milk from different suppliers of milk then he maintains the records of these suppliers as VMC fresh milk purchase register and verified it form MCS and VMC send the original copy to the main center and duplicate copy is taken by VMC as evidence. The NPL transfer payment of VMC account as weekly basis so that he made payment to mini milk supplier. This sheet is verified by MCS and MCS send it to the AAO. Sub Center Fresh Milk Purchased Register When VMC deliver milk to the sub center then MSA prepared the sub center fresh milk purchase register on the basis of VMC fresh milk purchase register and made consolidate statement of VMC fresh milk purchase register as how many VMC supply milk to the sub centers and mentioned suppliers name wise. It is verified by MCS and sends it to the AAO. Original copy is send to the main center and duplicate copy is taken by sub center as evidence. Fresh Milk Gain and Loss Report In head office he fresh milk gain and loss system staff prepared the daily gain and loss report as how many milk is purchased in the shed, how much milk is left over at main center, how much milk is loss due to accident, how much milk rejected at main center and at factory, how much milk is dispatch from main center to factory and how much milk is intake to the factory on the basis of above documents that are sending by AAO as region wise. This report is send to the higher management as daily basis.

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On 23 July, 2010 I give the presentation of 6 weeks learning to the controller manager of milk collection and Agri services department.

3.3 New knowledge Acquired

So I acquired the knowledge which will help in this field of my life. Some of the traits are following: I learned all the procedure and financial statements that are related to the MCAS. I learned the whole process of loaning/financing to farmers. I learned the objectives, functions and whole process of Fixed Assets Management. I learned the objectives, functions and whole process of Transportation Management System. I leaned the objectives, functions and whole process of Raw Milk Procurement System.

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I learned the objectives, functions and whole process of Fresh Milk gain and loss System and how to interact with different kinds of people. Increase motivation and confidence to done job on time (task identity). How to make relations with others also make these relations stronger. Know about different types of software which are useful for lifetime. How to work 9 hours consistently on a seat. Little bit knowledge of different steps of import procedure.

3.4 Problems Encountered

This experience brings change in my life. Because on the job or off the job, different problems encountered in this period which gave me great knowledge of how people works in reality. What types of problems they face while they work on any type of the organization or doing their own business. During my internship Period, I have encountered some problems. One of the main reasons is that in this internship, I enjoy the time period that I spend in head office Lahore. Thats why I remember this experience in future because it is filled with so many mistakes made by me. Some of the problems which I ever remember are following: I face how to work with the employees of a company. How to behave with them during working. Practical life in the organization is very difficult. Managed myself is very difficult.

3.5 How Experience Impacts your Career

This six weeks internship in Nestle head office makes a broad impact on my future career because I develop the management in my every work activity. Now I believe that phrase Past is the history future is the mystery, but today is the gift. This is a great phrase said by the Muslim scholar. I have to analyze in this internship period that how people make things happened which are never to be imagine before that.

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At this time, I have developed confidence and knowledge about Finance activities performing in any organization. So I am more excited about this field because I have clear about my professional goals now. The thing is this that how people work on that department, I have established my behavior and attitude to work on the job like that. This will helps me to lead on my career goals. This is not a big experience in terms of time. But one thing I want to say that it will get change in my life. Because for the first time, I have to see that how people work for live in the world. I had made so many mistakes and these mistakes help me to get more experience in short span of time. Because people bring name to their mistakes called EXPERIENCE. The experience which I have got from internship period will cause positive impact on my career. Today; I know that Doing work in reality is something more than just reading in books.

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4. Conclusion
I leaned hallmark knowledge during my internship. The NPL is a multinational company in Pakistan and each aspect of working with standard operating system. Every department and every section is equipped with SOP. SOP defines the working conditions and responsibilities of the employees as who is responsible for that working. As a result the employees are very cooperative with each other and loyal with the company.

5. Recommendations
There are some recommendations that are as follows: Employees should be trained according to the changing standard Operating System of the organization. The N shoul d conduct research f ormt i m t o t i m t o observe t he em oyees PL e e pl w orki ng condi t i on and t hei r w of w ay orki ng. The NPL should concentrate the compensation reward and incentives in order to keep loyal with the company. The NPL should involve the employees in decision making to become more differentiated.

6. Suggestions
My suggestions about NPL are as follows: As a multinational company it provides corporate social responsibility to the people of the Pakistan to make them loyal with the company. The NPL provides the more margins to the retailers so that they can sale more products of NPL as compared to rivals products. The NPL conduct research from time to time to observe the demand of their products from consumer mind. To observe the loyalty with the company about employees each month fill up performance appraisal foam.

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7. REFERENCES
I have collected all the data from the following sources, History of NPL, Mission Statement and Business Process analysis available Basic introduction of MCAS Department; Personal communication: Discussion Key performance indicator; Personal communication: Discussion with Mr. Farmers Loaning and Financing; Personal communication: Discussion with Fixed Assets Management; Personal communication: Discussion with Mr. Transportation Management System; Personal communication: Discussion Raw Milk Procurement System; Personal communication: Discussion with Milk Gain and Loss; Personal communication: Discussion with Azhar Hussain online at www.nestle.com viewed on 30 June, 2010. with Mr. Naeem Shekish on 14 June, 2010 Altaf Hussain on 17 June, 2010 Malik Abbas Sb Head of Loaning & Financing Dept on 22 June, 2010 Raheel and Rashid Sb on 30 June, 2010 with Sheraiz Gilliani and Waqar Rana on 5 July, 2010 Haroon Chaudhary and M Kashif Sb on 12 July, 2010 from Haroon Chaudhary on 19 July, 2010.

Glossary
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1. NPL: Nestle Pakistan Limited 2. MCAS: Milk Collection Agri Services 3. VMC: Village Milk Collection 4. RMCM: Regional Milk Collection Manager 5. ZMCM: Zonal Milk Collection Manager 6. PHE: Plate Heat Exchanger 7. KPI: Key Performance Indicator 8. PF: Progressive Farmers 9. SCS: Sub Center Services 10. CMCAS: Controller Milk Collection Agri Services 11. NMCM: National Milk Collection Manager 12. FID: Financial Document 13. DD: Demand Draft 14. CF: Commission Farmer 15. AAO: Assistant Account Officer 16. FME: Field Maintenance Engineer 17. MCTS: Manager Collection and Transport System 18. HMCAS: Head of Milk Collection Agri Services 19. MCE: Milk Collection Engineer 20. GTM: Group Transport Manager 21. HOSC: Head of Supply Chain 22. MS: Mini Supplier 23. CF: Commercial Former 24. CDF: Commercial Dairy Farmer 25. MT: Mobile Tester 26. QAA: Quality Assistant Assurance

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