FINLATICS RESEARCH TASK

Research Insight- 1
NESTLE INDIA LIMITED

Submitted By:
Kumardeep Singha
kumardeep.singha1999@gmail.com
Date of Submission – 11th October, 2020

GENERAL OVERVIEW:
Nestlé S.A. is a multinational packaged food company founded and headquartered in Vevey,
Switzerland, and listed on the SWX Swiss Exchange with a turnover of over 87 billion Swiss
francs. It originated in a 1905 merger of the Anglo-Swiss Milk Company for milk products
established in 1866 by the Page Brothers in Cham, Switzerland, and the Farine Lactée Henri
Nestlé Company set up in 1866 by Henri Nestlé to provide an infant food product. However,
Nestlé India is a subsidiary of Nestlé S.A. Nestlé India manufactures products of truly
international quality under internationally famous brand names such as Nescafe, Maggi, Rice
Mania, Milky bar, Milo, Kit Kat, Munch, Bar-One, Milkmaid and Nestea.
Nestlé India has divided its product portfolio into four different segments, namely
 Milk Products and Nutrition,
 Chocolates and Confectionery,
 Beverages, and
 Maggi (noodles, soups and ketchups).
SHAREHOLDING PATTERN OF NESTLE INDIA LIMITED:
Nestle India Limited is not a family based company as majority of the share capital is owned
by Foreign Promoters i.e. 62.76%, followed by Foreign Institutions (12.1%), Mutual
Funds/UTI (4.53%). The reason for dominance of foreign investment is because of the
Nestle is a Switzerland-based company and it is one of the largest Food and Beverage
Company in the world.
Description Percent of Share (%)

Promoters 62.76

Individuals 15.73

Institutions 7.81

FII 11.03

Govt. 0.00

Others 2.67

MANAGEMENT OF THE COMPANY-

MANAGEMENT TEAM OF NESTLE INDIA Ltd.

Date of
Name Designation Background Work History
Appointment
Board of Directors
30 years experience in
Chairman and the senior management
Mr.Suresh 29th October, Master’s Degree
Managing and top leadership roles
Narayanan 2015 in Economics
Director in leading Global
Companies.
Economics
Executive (Hons.) He has 29 years of work
Mr. Director – Graduate from experience with Nestlé
December,
Shobinder Finance & St. Stephens and also on the Board of
2019
Duggal Control and College and a Nestlé Lanka PLC since
CFO Chartered January 2014
Accountant
He has over 20 years of
rich and exhaustive
experience in Technical
Executive
Mr.Martin 1st April, Bachelor of and Production
Director –
Roemkens 2017 Engineering functions and has held
Technical
senior management
positions during his
career.
 Mr. Kanoria holds
directorship and
membership of the
Committees of the
Board of Directors of
Kanoria Chemicals &
Mr.Rajya Independent MBA (Hons.)
13th May, Industries Limited, JK
Vardhan Non-Executive from IMD,
2014 Papers Limited, Ludlow
Kanoria Director Switzerland
Jute & Specialties
Limited, KPL
International Limited, R
V Investment & Dealers
Limited and Vardhan
Limited.
B.Sc. (Hons)
Ms. Bijapurkar is a
degree in
recognized thought
Physics from
leader on market
Delhi University
Independent strategy and India’s
Ms.Rama 1 st May, and a Post
Non-Executive consumer economy, and
Bijapurkar 2017 Graduate
Director has over 30 years of
Diploma in
experience in market
Management
strategy consulting and
from IIM
market research.
Ahmedabad
Independent M.B.B.S from
Dr.Swati A 2nd August, Director of Piramal
Non-Executive Mumbai
Piramal 2010 Healthcare
Director University
BA in
Economics,
Bachelor of
Independent Science in Former Deputy
Dr.Rakesh 1 st May,
Non-Executive Electrical Governor of the Reserve
Mohan 2016
Director Engineering, Bank of India.
Master’s Degree
and Doctorate
in Economics
Postgraduate
diploma in Ms. Kudva spent 23
management years with CRISIL and
Independent
Ms.Roopa 1 st January from Indian was its Managing
Non-Executive
Kudva 2019 Institute of Director and Chief
Director
Management, Executive Officer from
Ahmedabad 2007 till 2015
(IIM-A)
 Key Executives
Senior Vice-
President and
Mr.B Murli Legal & May, 2007
Company
Secretary

Based on the following information, we can conclude that Nestle India Limited is
professionally managed company as it holds a tremendous group of people who has a special
knowledge for each and every role in the organization.

SWOT Analysis of Nestle India Limited-

Nestlé SWOT analysis

Strengths Weaknesses

 Reputed Brand Name  Price fluctuations by retail giants

 Globally Recognized Brand  Water Controversy
 World’s most valuable Brand  Social Criticisms
 Extensive Product portfolio  Maggi Noodles Controversy
 Environmental sustainability
efforts
 Efficient R&D systems

Opportunities Threats

 Venturing small food start-ups  Illegal rainforest destruction

 Online Shopping controversy
 Market penetration for breakfast  Water Scarcity
cereals  Rising Competition
 Partnerships  Govt. Regulation & prices
 Growing ready-to-drink (RTD)
tea and RTD coffee markets

Nestlé’s Strengths
1. Reputed brand name – Nestle is the most renowned brand in the world. It has
developed a respected reputation in the food and beverages sector offering high-
quality products for everyday use across the globe.
 2. Globally recognized brand – Through its effective advertising and branding
strategies, it has created significant awareness and developed a successful brand image
around the world. According to the Fortune Global 500, Nestle is among the world’s
largest corporations and is ranked at 69th position in 2018 list.

3. World’s most valuable brand – According to 2018 Forbes Global, Nestle is among
the top as the world’s most valuable company in regards to highest revenue, profits,
assets, and market value.

4. Extensive product portfolio – Nestle owns more than 2000 brands globally and
renovated over 8000 products for nutrition and health considerations, according to
its Annual Review 2017. It is one of the worlds’ biggest companies with the broadest
product portfolio.

5. Efficient R&D system – Nestle has the world’s largest food and nutrition research
organization with 21 R&D centers Its research and development capability is one of its
key competitive advantages. There are more than 5000 employees involved in R&D
operations. It spent nearly 1.72 billion Swiss Franc on R&D in 2017.

6. Environmental sustainability practices – Nestle puts substantial efforts

in environmental sustainability practices and take innovative initiatives in improving
its quality of products. It optimizes advanced solutions to reduce waste, water usage,
non-renewable energy use, and packaging material usage. In 2017, 253 of Nestle
factories reached zero waste production. To communicate sustainability benefits with
its customers and keeping the environment clean, Nestle launched a free mobile
app that helps people to recycle waste packaging material correctly.

Nestlé’s Weaknesses
1. Price fluctuations by retail giants – Nestlé’s grocery sales are achieved majorly
through huge retail giants like Walmart, Tesco, and Kroger. Any reduction or increase
in prices by these retailers can affect Nestlé’s sales.

2. Water controversy – Recently, Nestle was accused of illegally pumping millions of

liters of water in 6 nations where residents are deprived of drinking water.

3. Social criticisms –Nestle has become a target of media attention many times. The
claim to privatize water, misleading labeling, and a lawsuit for chocolate making
using child and slave labor are some of the examples that have to weaken its market
reputation.

4. Maggi Noodles controversy – In 2017, Nestle failed to clear a laboratory test in

India. This created publicity hype as people boycotted Nestle, leading to the loss
of 80% of market share in the country. Nestle claimed ‘No added MSG’ in the
Noodles packets. However, 1000 times more lead was found in the product after
testing.
Nestlé’s Opportunities
1. Venturing small food start-ups – Nestle has a fantastic opportunity to grow the
number of small food start-ups under its popular brand name. Nestle can also
collaborate with the new start-ups to promote its brand name.

2. Online shopping – Nestle has a remarkable opportunity to boost its e-commerce sites
and online shopping platform. A very few CPGs are offering online services to make
the shopping experience more comfortable and pleasant. Although Nestle has its
online stores in a few countries, expanding its online services to more areas will prove
a rewarding decision for the company.

3. Market penetration for breakfast cereals – Nestlé’s cereals and oats market have
shown fast growth in recent years. Thus, penetrating this market more would be highly
lucrative for the company.

4. Expanding ready-to-drink tea and coffee market – The demand for tea and coffee
is continuously on the rise, rendering a profitable opportunity for Nestle to groom this
market more.

5. Partnerships – Strategic alliances with other food and beverage giants are also a great
opportunity for the company to increase its revenues and profits.

Nestlé’s Threats
1. Illegal rainforest destruction controversy – In 2017, Nestle was alleged of
involvement in the destruction of Sumatra’s last tract of rainforest. It faced severe
criticisms from NGOs and environmentalists in this regard.

2. Water scarcity –Nestlé’s production is highly dependent on water usage. Accessing

the clean water through less costly sources has become difficult for the company due
to many reasons. These include increasing population, climate change, growing
demand for food and water, increasing pollution, water wastage, and overexploitation
of resources.

3. Rising competition – Many CPG companies like Mondelez and Unilever offer similar
food and beverage products. It is hard for Nestle to compete in such a situation where
the substitute products are easily accessible.

4. Government regulations and prices – Government regulations can affect the

business operations of Nestle. Additionally, the increasing prices of commodities force
the company to increase the prices of its products. It will lead to sales reduction as
consumers can switch to other brands which are available at low costs.
Competitive Analysis:-
Competitive Analysis of Nestle India Limited
Sales Total
Market Turnover Net Profit Assets
Last Capitalization (Rs. In (Rs in (Rs. In
Name price (Rs. In crore) Crore) crore) crore)
Nestle 16,034.10 154,593.92 12,368.90 1,969.55 1,985.40
Britannia 3,745.10 90,154.16 10,986.68 1,484.30 5,476.77
Hatsun Agro 822.6 13,299.70 5,308.33 112.27 1,815.25

Competitive Analysis
160,000.00 Nestle
140,000.00
Amount in (Rs.)

120,000.00
100,000.00
80,000.00 Britannia
60,000.00
40,000.00
20,000.00
0.00
Hatsun Agro

Basis of Comparison

Recommendations/Conclusion: -

Nestle is quite successful in the CPG market. However, there are still some areas where it
can improve to strengthen its market standing.

Some recommendations are:

 Bringing innovation in the company’s offerings.
 Growing the number of start-ups in the food and beverage industry.
 Upgrading its online services to create a unique competitive advantage in the CPG
 Improving its production and operational procedures.
 Using authentic raw material to avoid outcry from environmental and social activists.
 Settling the media scandals and controversies to stand by with a positive reputation.
 Participating in CSR activities and upholding its sustainability practices.

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