FMCG CO.

- Nestle India

Capital Structure
2012-2013 All Equity
2013-2014 All Equity
2014-2015 All Equity
2015-2016 All Equity
2016-2017 All Equity

The capital structure of the company was the same throughtout the life of the business by
raising funds from the equity.

Debt Equity Ratio

Debt/Equity
2012-2013 - 0.58
2013-2014 - 0.50
2014-2015 - 0.01
2015-2016 - 0.01
2016-2017 - 0.01
2017-2018 - 0.30

Degree of Operating Leverage

Contribution/EBIT
2012-2013 - 2078.78/1585.31 = 1.31 Times
2013-2014 - 2189.89/1678.02 = 1.3 Times
2014-2015 - 2300.74/1782.86 = 1.29 Times
2015-2016 - 1806.77/813.63 = 2.22 Times
2016-2017 - 1975.83/1441.54 = 1.37 Times
2017-2018 - 2130.14/1839.30 = 1.15 Times
Degree of Financial Leverage
EBIT/EBT
2012-2013 - 1585.31/1585.31 = 1 Times
2013-2014 - 1678.02/1678.02 = 1Times
2014-2015 - 1782.86/1782.86 = 1 Times
2015-2016 - 813.63/813.63 = 1 Times
2016-2017 - 1441.54/1441.54 = 1 Times
2017-2018 - 1839.3/1839.3 = 1 Times

Degree of Combined Leverage (DCL)

DFL X DOL
2012-2013 - 1.31 x 1 = 1.31 Times
2013-2014 - 1.3 x 1 = 1.3 Times
2014-2015 - 1.29 x 1 = 1.29 Times
2015-2016 - 2.22 x 1 = 2.22 Times
2016-2017 - 1.37 x 1 = 1.37 Times
2017-2018 - 1.15 x 1 = 1.15 Times

From the above Ratios we can interpret that the Debt Equity Ratio for Nestle IND is lower
then optimal level that is 1 , It indicates more use of Equity Finance as they have only equity
financing throughout their life this is because of the industry it operates in and the needs for
long term credit the highest debt equity ratio is 0.58 .
From the leverage ratio we can say that the capital structure of the EPS of the Firm will be
interrelated Degree of combined Leverage is Low for all the years therefore is relatively less
risky Firm.
Nestle Ind has been performing well in all the years being backed by the financial
strengthening of the company he revenues has grown over years and this became possible
only because of their capital structure.
The link between the Equity and the capital structure is the companies equity financed and
thus no obligations to pay interests affects the investors sentiments positively , a study by
using MM Approach showed a minute difference between a leveraged firm and unleveraged
firm , So there is not much difference
 Dividend Decision
For the year ending December 2017, Nestle India has declared an equity dividend of
710.00% amounting to Rs 71 per share. At the current share price of Rs 10698.70 this results
in a dividend yield of 0.66%.
The company has a good dividend track report and has consistently declared dividends for
the last 5 years.
Date TYPE Dividend %

25-07-18 Interim 200.00

14-02-18 Final 230.00

02-05-18 Interim 200.00

24-11-17 Interim 330.00

18-07-17 Interim 150.00

15-02-17 Final 230.00

15-05-17 Interim 150.00

25-11-16 Interim 160.00

21-07-16 Interim 120.00

12-02-16 Final 185.00

02-05-16 Interim 120.00

27-11-15 Interim 160.00

13-02-15 Final 125.00

04-05-15 Interim 140.00

28-11-14 Interim 80.00

03-09-14 Interim 300.00

14-02-14 Final 125.00

26-04-14 Interim 125.00

18-10-13 Interim 180.00

08-07-13 Interim 180.00

15-02-13 Interim 125.00

07-12-12 Interim 180.00

17-07-12 Interim 180.00

14-02-12 Final 125.00