Information Report on Nestle India Limited

Submitted to:Prof. M Kannadhsan Assistant Professor

Submitted by Kumar Vikas PGPWE 2012-14 Roll No. 020 Phone No: 9669208300 Email:- 12pgpwe020.kumarv@iimraipur.ac.in IIM Raipur

Introduction:Nestl India Limited is one of the largest food processing company in the India with market capitalization of INR 402 billion. It is the subsidiary of Nestl S.A. of

Switzerland, which holds 62.76% of share holding. Nestle India Limited is professionally managed company and listed at The Bombay Stock Exchange Limited, Mumbai. Nestl India is a vibrant Company that provides consumers in India with products of global standards and is committed to long-term sustainable growth and shareholder satisfaction. Nestle India Limited has earned the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'.

History:Nestl's relationship with India dates back to 1912, when it began trading as The Nestl Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market including chocolates and condensed milk. After India's independence in 1947, the economic policies of the Indian Government emphasized the need for local production. Nestl responded to India's aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab. Nestl has been a partner in India's growth for over nine decades now and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods.

Production Facilities:Nestl India has presence across India with 7 state of art manufacturing facilities and 4 branch offices spread across the region. Nestl Indias first production facility, set up in 1961 at Moga (Punjab), was followed soon after by its second plant, set up at Choladi (Tamil Nadu), in 1967. Consequently, Nestl India set up factories in Nanjangud (Karnataka), in 1989, and Samalkha (Haryana), in 1993. This was succeeded by the commissioning of two more factories - at Ponda and Bicholim, Goa, in 1995 and 1997 respectively. The seventh factory was set up at Pantnagar, Uttarakhand, in 2006. The 8th Factory was set up at Tahliwal, Himachal Pradesh, in 2012. Nestle India Limited is holding 4 branch offices in the country help facilitate the sales and marketing of its products. They are in Delhi, Mumbai, Chennai and Kolkata. The Nestl India head office is located in Gurgaon, Haryana. The production facilities are as state of art as per global standards backed by Nestles international expertise. The firm had been focusing on volume growth even when input costs were rising, using scale economies to drive profit growth.

Raw materials: Core raw materials include milk and agricultural products like cereals
grains & coffee etc. In order to ensure adequate enormous supply of raw materials and to have better relationship with the producers Nestle India has undertaken Rural Development program, which under takes various activities like: Establishing milk and commodity collection centers. Providing loans to farmers at affordable rate to enable them to build up resources for milk production and farming.

Conducting skill-enhancing programs for farmer. Set up advisory centers for providing better input for farming practices. Working on community development to build up confidence.

Nestls approach to rural development aims at ensuring thriving farmers and thriving communities while respecting natural capital. Nestle India is working at both a farm and community level to improve yields, safeguard incomes, contribute investment and make a difference to peoples quality of life.

Product range:Nestl India product range incudes mix of its globally leading products like noodles, coffee, chocolates, condense milk etc. and product developed according to Indian preference like Dahi and Jeera Raita. The total product range can be categorizes as follows: Milk Products and Nutrition Beverages Prepared Dishes and Cooking Aids Chocolates and Confectionery Vending and Food Services

Its biggest economic moat of Nestle India is that it possesses a number of powerful brands, which are category leaders by a wide margin. Maggi Noodles is the biggest of them all. Lactogen, Cerelac, and Milkmaid are some of its other category leaders. Brand/ Product Maggi Baby food products (Cerelac, Lactogen, Nestum Nan) Milkmaid Nestle Milk Nestle curd Every day Nescafe Market Share 88% 85% 55% 21% 25% 25% 41%

Product Distribution:-Nestle India has strong marketing and distribution network which
covers general and organized trade. Nestls products are available in more than 3.7 million outlets across the India. Nestle India is continuously focused on improving the supply chain to reduce wastage, improve efficiencies and provide consumers with fresh stocks all the time. Reduction in the finished goods inventory pipeline to improve freshness of stocks and reduce working capital Control on distribution costs through innovative measures Sustained improvement in customer service levels to improve product availability across all geographies and channels

 Reduction in obsolescence of materials Research and development: The company has access to the Nestl Groups proprietary technology/brands, expertise and the extensive centralized research and development facilities. With the aim to develop products according to Indian taste and preference Nestle India is setting up state of art R&D center at Manesar, Haryana.

Factors for success:- The culture of innovation and renovation, continuous improvement
and the thrust on value-for-money and affordability have helped the company to focus on adding value for the consumer. The company has continuously focused on operational efficiency; improving product availability and visibility and initiated efforts to make its products more relevant to the consumers. This has been supported by the distribution of smaller stock-keeping units (SKUs). There has been continuous focus on the seven value drivers, namely: Sales growth Profit margin Working capital intensity Fixed capital intensity Income tax rate Cost of capital Value growth duration Promotion strategy: The following are some of the strategies used by Nestle for market expansion: Availability of NESCAFE enhanced through an expansion of the vending machine network. New consumption opportunities for chocolates and confectionery were identified and developed in areas like railway platforms, college canteens and major events. Nestle set up Caf Nescafe and Coffee Corners across metros and mini-metros

Industrial relations, productivity, and personal

Like other organization contribution and importance of Human Resource capital cannot be ignore. Nestle India employees more than 6100 employee. The labor component is very important to run all the 8 factories spread across India. Company has record of handling all labor matter tactfully in tangible matter. Nestle India Limited has earned its reputation as one of the best company to work with. It also conducts training and development programs for its employees to fare promisingly and maximize their potential.

Principles and Cultures:Nestle India is following Nestl Corporate Business Principles which were issued in 1998 and updated in 2002. Some of the basic Nestl values and principles are: Favoring long-term development over short-term profit; Long-term commitments and relationships; Respect for and integration with diverse cultures; Proper conduct and ethical values as basic requirements for our management and

employees; Recognition that consumers deserve information about the products they buy and the company behind the brand. These Principles have been translated into over forty languages and all Nestl managers are required to know and abide by them. Dedicated team of more than 200 auditors is monitoring the implementation of its corporate business principles worldwide.

Strategy - Nestl Roadmap to Good Food, Good Life

Nestls objectives are to be recognized as the world leader in Nutrition, Health and Wellness, trusted by all its stakeholders, and to be the reference for financial performance in its industry. A. Competitive Advantage: Unmatched product and brand portfolio Unmatched R&D capability Unmatched geographic presence People, culture, values and attitude B. Growth drivers Nutrition, Health and Wellness Emerging markets and PPP Out-of-home leadership Premiumisation C. Operation Pillars Innovation & Renovation Wherever, whenever, however Consumer communication Operational efficiency Nestle India Limited believes in investing for the future to ensure the financial and environmental sustainability of actions and operations: in capacity, in technologies, in capabilities, in people, in brands, in R&D. Their aim is to meet todays needs without compromising the ability of future generations to meet their needs, and to do so in a way which will ensure profitable growth year after year and a high level of returns for our shareholders and society at large over the long-term. Reference: 1. www.nestle.in 2. www.nestle.com 3. Nestle Annual Report 2011 4. Analyst meet presentation presented at Nestl Investors Seminar 2012 Shanghai.