International Business Report

National Foods

Submitted to: Madam Shamim Zehra

Submission Date: February 7, 2019
Group Members:
 Muhammad Waseem Baig – MKT (Roll no. 18)
 Salwa Sarfaraz – HRM (Roll no. 21)
 Rimsha Kabir – HRM (Roll no. 18)
 Danyal Iftikhar – HRM (Roll no. 4)

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Table of Contents

Company Profile………………………………………………………………………………………………………………………………………………………3

Introduction…………………………………………………………………………………………………………………………………………………………….3

Geographical Presence…………………………………………………………………………………………………………………………………………….3

Mission & Vision………………………………………………………………………………………………………………………………………………………4

CEO Message………………………………………………………………………………………………………………………………………….……………….5

Organizational Chart / Hierarchy……………………………………………………………………………………………………………………………..7

Employees……………………………………………………………………………………………………………………………………………………………….8

Shareholders………………………………………………………………………………………………………………………………………………………….10

Revenue and Production……………………………………………………………………………………………………………………………………….11

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 1. Company Profile

NFL has successfully established itself as a multinational foods company with an independent
subsidiary, National Foods DMCC, in 2013, catering to the Middle Eastern market in Dubai. This
structure was further expanded with 2 more subsidiaries in Canada, (National Epicure Limited)
and United Kingdom, (National Foods Pakistan UK Limited) catering to the North American and
European markets respectively.

2. Introduction

National Foods Limited (NFL), founded in 1970, is Pakistan’s leading multi category foods
company with over 250 different products in 12 categories. NFL holds ISO 9001, ISO 18001, ISO
22000 and HACCP certifications along with SAP Business Technology to drive its strong
commitment to quality and management excellence.

n line with NFL’s Vision 20/20 of becoming a Rs. 50 billion company, we are already on our way
of being recognized as an internationally renowned brand in over 40 countries across 5
continents worldwide.

NFL is dedicated to improving the well-being of our society through continuous development of
innovative food products and a wide range of Corporate Social Responsibility programs.

3. Geographical Presence

NFL continues to expand its horizon across the borders, with Holland, Taiwan, Nigeria and Iraq
being the recent most additions to NFL’s international consumer base.

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 4. Vision & Mission

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

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 5. CEO’s Message
Dear Shareholders,

It is a matter of great pride for National Foods Limited (NFL) to have successfully enhanced its
operational competencies and financial performance over 2017-2018, a year that came with numerous
opportunities and growth. These achievements were shrouded in arduous challenges that could only be
triumphed by strong initiatives with a spirit of managerial excellence. Hence, I am delighted to see that
NFL has once again emerged as an industry leader, by setting new benchmarks of quality, customer care
and success. Moreover, the acquisition of A1 Cash & Carry, with National Foods as the majority-
stakeholder, has added to our profitability and this venture promises faster progress for our business.
This move signifies our pledge for forward-integration, an effective strategy to increase portfolio, while
we continue to diversify. Several new regulatory challenges have emerged due to new legislations by the
food regulatory authorities, that prohibit the addition of monosodium glutamate - MSG in food products.
This abrupt decision by the judiciary caused a loss to the business. However, we have timely eliminated
the use of this ingredient in our recipes. We transformed our business-model to one that does away with
MSG, which in turn helps us comply with this regulatory intervention and enables us to adopt the best
global practices. The Middle-East turmoil had a negative impact on the exports growth, slowing down or
even stagnating the exports of various Pakistani industries, especially the products traded in the Middle-
Eastern region. This trend is expected to continue in the market, over the short-term future. However,
through strong business acumen and innovation, we have prepared strategies to manage our business.

The company ensured major restructuring and enrichments in the Sales Department, elevating its bar
with the expectation of delivering top tier in-store execution, re-aligning product portfolio as per market
potential, optimizing our Route to Market, maximizing our revenue management capabilities and most
importantly building a high performance, KPI focused sales team. NFL has also conducted a
comprehensive research for Brand Platter, after a gap of nearly one decade. This study helped us learn
how the consumers perceive the ‘National Foods’ brand and how we have successfully ‘inspired new
traditions’ in the community. It also helped us evaluate the Brand architecture, consumer dynamics and
brand-categories, enabling the development of newer, more suitable products, while also making other
innovations in our processes and operations.

Corporate Social Responsibility

It was an inspirational moment for everyone at National Foods when we shifted to our new, custom-built
Corporate Office during the last quarter of 2017. This world-class, environment-friendly premises is the
1st Corporate Office in Pakistan to receive the ‘Leadership in Energy and Environmental Design’ (GOLD
LEED) certification by United States Green Building Council (USGBC). The Pakistan Green Building Council
also presented a Green Excellency Award to us for this new building. Constructed with the eco-friendly
materials, this office is just one of our numerous initiatives to attain sustainability for both the

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environment and the business. As a socially-embedded organization, we have always been actively
involved in multiple CSR initiatives. Some of these are based on UN’s Sustainable Development Goals
(SDGs) to ensure good health, quality education and gender equality among all segments of the
population. We continue to make generous contributions for improving healthcare and educational
facilities. In recognition of the women’s contributions in our society, NFL vibrantly celebrates the
International Women’s Day every year, besides granting special privileges like flexible work-timings, an
on-site Day-Care facility and work-from-home under certain circumstances. NFL pursues women-
empowerment within the organization and across the society as a whole. The UN’s SDG of Gender
Equality in the economy is also sought through active participation in the Elevate Program, along with
numerous leading organizations. Within a year, this program has evolved to engage, motivate and train
women at every organizational level, with the objective of minimizing the gender-gap, across the
corporate world.

The well-being and dedication of our human-capital will always be the driving force behind our ethical
policies and business strategies. Being the leading food brand of Pakistan, NFL continuously endeavors to
give back to the nation by focusing on health, education and women empowerment. We have earned
the trust and confidence of our stakeholders as well as the society through our commitment to elevate
the quality of life through community development, which remains a cornerstone of our corporate
philosophy. NFL leadership takes pride in the gender-diversity achieved by the organization. It is an
equal-opportunity enterprise that employs women not only in its corporate office, but also at its
production site. Thus, encouraging women to bring forth their talents and contribute towards the
success of the organization while our business continues to grow in an increasingly competitive
environment.

Future Outlook & Challenges

Our newly built plant at Nooriabad, outside Karachi, is a state-of-the-art facility that boasts mega
investments to reflect our confidence in Pakistan’s economy. The trial-run of this new factory will start in
August 2018, where the best possible Health and Safety Standards will also be tested. This being an
election-year in Pakistan, the national economy is expected to undergo several changes and the currency
value also tends to remain volatile. Although the current budget recommendations given by the
outgoing government have the potential to create good momentum, however, after the elections, the
degree of change in the political scenario and the competence of the new government leadership will
determine the future course and acceleration of economic growth. Hence, several changes are
imminent, and NFL is geared up to realign our strategy within this evolving scenario. In the end, I would
like to extend my special thanks to the Management Committee (MANCOM) for ensuring the smooth
progress of the company and hope that this robust performance will continue in the future too, where
customer-care and satisfaction will continue to remain our primary focus.

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 6. Hierarchy / Organizational Chart

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 7. Company Information / Employees
Board of Directors

 Mr. Abdul Majeed Chairman

 Mr. Abrar Hasan Chief Executive Officer
 Mr. Waqar Hasan Director
 Mr. Khawaja Munir Mashooqullah Director
 Mr. Zahid Majeed Director
 Mr. Ebrahim Qassim Director
 Mr. Iqbal Alimohamed Director

Audit Committee

 Mr. Khawaja Munir Mashooqullah Chairman

 Mr. Abdul Majeed Member
 Mr. Zahid Majeed Member
 Mr. Ebrahim Qassim Member
 Mr. Iqbal Alimohamed Member

Human Resources and Remuneration Committee

 Mr. Khawaja Munir Mashooqullah Chairman

 Mr. Zahid Majeed Member
 Mr. Abdul Majeed Member
 Mr. Ebrahim Qassim Member
 Mr. Iqbal Alimohamed Member

Company Secretary & Acting Chief Financial Officer

 Mr. Farhan Latif

 Head of Internal Audit and Secretary Audit Committee
 Mr. Shahid Hussain

Internal Auditors

Messrs. Ernst & Young Ford Rhodes Sidat Hyder & Co. Chartered Accountants

Company Management

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  Mr. Abrar Hasan Chief Executive Officer
 Mr. Shakaib Arif Chief Operating Officer
 Mr. Farhan Latif Company Secretary & Acting CFO
 Mr. Kamal Baig Chief Operating Officer-International Division
 Ms. Saira A. Khan General Manager HR, Admin & IR

8. Shareholders
Number of
Shareholdings' Slab Total Shares Held
Share Holders
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 9. Revenue and Cost of Production
National Foods Limited (NATF) has announced a nine month profit of Rs.991.8 million (EPS: Rs.7.62) at
the end of March 2019, marking a 71% hike over the nine month profit recorded in the corresponding
period of last year (Rs.580 million, EPS: Rs.4.48).

While the company’s overall expenses marked noticeable growth during the period, the non-core
income expanded substantially as it recorded a growth of Rs.122.3 million and logging in at Rs.144.6
million.

National Food’s net taxation (Rs.231.7 million) also recorded a decline of 23.3% over the year.

Consolidated Financial Results for the nine months ended March 31, 2019 ('000 Rupees)

Mar-19 Mar-18 % Change

Sales 17,225,380 15,224,657 13.14%

Cost of sales (12,158,567) (10,434,000) 16.53%

Gross profit 5,066,813 4,790,657 5.76%

Distribution cost (2,839,713) (3,073,800) -7.62%

Impairment loss on trade

(5,400) –
debts

Administrative expenses (869,039) (652,800) 33.12%

Other expenses (68,790) (57,808) 19.00%

Other income 144,588 22,318 547.85%

Operating profit 1,428,459 1,028,567 38.88%

Finance costs (204,954) (146,510) 39.89%

Profit before taxation 1,223,505 882,057 38.71%

Taxation – net (231,690) (302,000) -23.28%

Profit after tax 991,815 580,057 70.99%

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 Consolidated Financial Results for the nine months ended March 31, 2019 ('000 Rupees)

Basic and diluted

earnings per share – 7.62 4.48 70.09%
Rupees

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