FOR THE PARTIAL FULLFILLMENT OF MASTER IN

COMMERES
ADMINISTRATION

KUMAUN UNIVERSITY

SUBMITTED BY
: POOJA KUMARI
M.COM

Roll Number:
170300600121

SARDAR BHAGAT SINGH GOVERNMENT POST GRADUATE

COLLEGE
AFFILATED TO KUMAUN UNIVERSITY
 ACKNOWLEDGEMENT

here with take the opportunity to express my profound sense of gratitude

and reverence to all those who have helped and encouraged me towards
the successful completion of the project .It’s been a great experience
working on NESTLE .It give me complete insight about how an
organization not only survives in cutthroat completion but also maintain
a killer instinct in the competitive world.

I would like to thanks all the faculty members of for SARDAR

BHAGAT SINGH GOVERNMENT POST GRADUATE
COLLEGE guiding me and supporting me in the completion of this
project from time to time.

Last but not least my greatest gratitude to the almighty and my parents,
without their support this dream would have remained dream.
 CERTIFICATE

This is to certify that POOJA KUMARI study in our institute SARDAR

BHAGAT SINGH GOVERNMENT POST GRADUATE
COLLEGE w a s a l l o t t e d t h e p r o j e c t o n “NESTLE” by
KUMAUN University has successfully completed it under the guidance
of faculty members.
 DECLARATION

I here be declare that the project work entitled “ NESTLE” is an

authentic work carried out by me under the guidance of faculty
members for a practical fulfillment of the degree of M.Com and this has
not been submitted anywhere else for the award of any degree.

Name of the student

POOJA KUMARI
 INDEX
CHAPTER 1
 OJECTIVE
 RESEARCH METHODOGY
CHAPTER 2
 INTRODUCTION
 COMPANY PROFILE
CHAPTER 3
 ANALYSIS OF DATA
 PRODUCTS
CHAPTER 4
 CONCLUSION
 LIMITATIONS

BIBLOGRAPHY
ANNEXURE
 EXECUTIVE SUMMARY

The current millennium has unfolded new business rules most the
significant of them being that company has to constantly look into
minds of the customer. Customer loyalty plays a significant role
and today securing that loyalty requires quality right price and of
course last but not the least i.e. creating awareness about their
service. As a trainee, I was given knowledge about the way and
style of their working, their routine and their environment. It was
a great experience in getting under such a reputed company,
which has in it the ability to retain customer.
 OBJECTIVE

 To identify the services and products offered by NESTLE.

 To study and analyze the customer perception and preference
about NESTLE.
 Finally to draw the various conclusion and recommendation on
the on the basis of study conducted.
 RESEARCH METHODOLOGY

Managers need information in order to

introduce products and services that create value in the
mind of the customer. But the perception of value is a
subjective one, and what customer’s value this year may
be quite different from what they value next year. As
such, the attributes that create value cannot simply be
deduced from common knowledge. Rather, data
(information) must be collected and analyzed. The goal
of Marketing Research (analysis) is to provide the facts
and direction that managers need to make their more
important marketing decisions .The analysis involves the
following steps:

 Define the problem.

 Determine research design.
 Identify data types and sources.
 Determine sample plan and size.
 Collect the data.
 Analyze and interpret the data.
 Prepare the research report

For the purpose of study, data from the in-house survey

conducted by the marketing department (secondary
data) has been used and also for coming out with the
recommendation. It was also felt that mere secondary
data would not provide in-depth information for the
analysis, hence it was decided that inter active
discussions with the managers and the head of every
department would help in an in-depth and true
understanding of challenges faced by the department .

The methodology adopted was to gather relevant

information from the appropriate department, correlate
the information obtained and to present the information
in a logical and systematic manner.
 INTRODUCTION

Nestle India Ltd. is a part of the Nestle SA group which is

one of the largest manufacturing companies in the
world. Henri Nestle founded the company (with its
headquarters in Vevey, Switzerland) in 1867. Nestle has
two major divisions -Le Societe des Produits Which
looks after the production and marketing and Nestec
Ltd. which provides the technical assistance to the group
companies. Since its inception in 1867, the company has
diversified it product range from the infant weaning
formula (which was its first product) to beverages,
confectionery, ice creams and pet foods among others.
In a span of 130 years the company has ranked 26th
among the world’s largest corporations and boasts of a
turnover of $48932.5 million and employee strength of
221,144 people spread over 75 countries worldwide
(Annexure A).

Nestle has long been viewed as one of the most

multinational of the multinationals. This is
because today only 2% of its turnover comes from
Switzerland. Out of the remaining 98%, Europe
contributes 43.5%, North and South America
contribute 36.5% and Africa and the Asia Pacific
Regions contribute 18%.
 Company Profile

Although Nestle has been associated with India

since the beginning of the century through the importing
and trading of infant food and condensed milk,
manufacturing in India only began with these setting up
of the factory in Moga in 1962. The first product to be
manufactured was Milkmaid. In the last 35 years the
company has shown rapid progress and has increased its
product range to 80products as of October 1997. Nestle
India Ltd. now ranks 22ndamongst India’s most valuable
companies (Annexure B) . Its gross revenue has
increased from Rs 1001.1 crores to Rs. 1213.8 crores
in1996. This remarkable growth has been achieved
through -

 Rapidly creating greater manufacturing capacity,

both at factories as well as with co-packers.
 Taking measures to ensure availability and
improved quality of key raw materials - fresh milk
in particular.
 Strengthening of the sales and distribution
network (particularly in smaller towns)
 Ambitious and cohesive manpower training and
development programs for the personnel of the
company across all disciplines
 The company’s exports also resulted in a very
successful year in this area as exports grew by 27% to Rs.
250.8 crores in 2003. The main contributors to this
increase were the export of tea and coffee to USA,
Japan, Russia, Hungary and Taiwan.

Nestle India Ltd. wants to further

increase its operations in India and has started
construction of its sixth Factory at Bicholim, Goa for the
manufacture of culinary products (a key thrust area) for
this purpose
 The Spirit of Nestle

“Organizational excellence is never achieved

through a onetime effort; It is always a process of
continuous improvement across a number of areas of
operation.”

A key factor for Nestle’s success has been its

quest for continuous improvement through ushering in
greater productivity and more efficiency in everyday
operations. Despite the infrastructure impediments in
India, Nestle has set itself high standards of business
performance. This is reflected through the essence of
the company – its mission statement.

Nestle’s mission

“To be in every way the leading company in

the Indian food industry and a good corporate citizen by
providing our consumers with superior quality products,
our shareholders with rapid growth & fair returns and
our employees with a challenging and satisfying work
environment.” To translate this spirit into a planned and
measurable process, Nestle has set up key objectives
across all divisions.

To translate this spirit into a planned and

measurable process, Nestle has set up key objectives
across all divisions.
 Key Objectives

Production

 To optimize production costs while enhancing

product quality so as to make Nestle products
even more competitive in the market place.

Sales and marketing

 To reach a sales turnover of 3000 crores by the

year 2003

 To double the turnover every three years

People

 To help employees to retain a long term

perspective and integrate them fully with the
company’s business goals

 To retain a broad perspective while addressing

individual needs

 To view growth as a continuous process

  To concentrate on attitudinal changes by
developing leader ship skills, an appreciation of
interdependence between units and the
enhancement of a sense of belonging to Nestle.

Finance

 To maintain profit levels above the average for

the food industry in India

The Business Excellence and Common Application

(BECA) initiative essentially translates the spirit of the
Journey towards excellence in to an organize, systematic
and measurable approach. The aim is to aid the
achievements of the company’s key objectives of rapid
growth by ensuring that all operations incorporate the
spirit of meaning full planning, effective cost control and
efficient implementation. BECA is about“planned
improvement in everything we do”
 Factories

Nestle has 6 factories in India These are

1. Moga (punjab) :

The Nestle factory in Moga has the pride of

being the first and most comprehensive factory of
Nestle India. Set up in1962, it represents the core
competence of Nestle India in the manufacture of milk
products (Everyday, Milkmaid), beverages, culinary
products (Maggi sauces, noodles, soups etc.), weaning
cereals (Cerelac) and infant milk formulae.

2. Choladi ( Tamil Nadu):

The factory in Choladi started production in 1967.

Situated about 60 miles from Calicut, the factory today
has 81 employees and produces 1.5% of the total
turnover of Nestle India .It is a 100 percent export
oriented unit which processes freshly picked tealeaves
into soluble instant tea.

3. Nanjagud (Karnataka):

Production in this factory began in 1989with the

manufacture of Nestle instant coffee and Sunrise. Today
in addition to instant coffee the factory also
manufactures health beverages. The plant to
manufacture MILO was also commissioned at this
factory. This factory employs 145 people and is cited as
a model in terms of environment protection for its
installations to purify wastewater as well as for its
provisions for recycling coffee wastes.
 4. Samalakha (Haryana):

This factory was set up in 1993. Located

70kilometres from Delhi, it manufactures weaning
cereals, culinary products ,health beverages and milk
products. Recently the expansion of manufacturing
capacity for Milkmaid Dessert Mixes was under taken at
this factory as this new and unique product category is
viewed to have great potential in the future.

5. Ponda (Goa):

This Kit-Kat factory was set up in Goa in 1995 at a

cost of Rs. 50 crores. It represented a major step by
Nestle towards becoming the Number 1 Chocolates and
Confectionery Company in India.

6. Bioholim (Goa):

The construction work at this new factory is

progressing with speed. This factory will soon
commence the manufacture of culinary products, which
is a key thrust area for the company and will include
latest technological improvements relating to this
category of products.

As a part of Nestles efforts towards continuous

improvement and excellence in Manufacturing
operation, a Moga Improvement team (MIT) was put in
place at the Moga factory. The team comprised of
international experts from Nestle Technical Services
(NESTEC) and the local staff. In 1996, it embarked on a
program with the single minded objective of optimizing
production costs while enhancing the product quality so
as to make Nestle products even more competitive in
the market place. Drawing upon Nestle’s global
experience and manufacturing expertise in 75 countries
the team identified the following areas for detailed
study -

• Process improvement to ensure the optimal usage of

resources.

• Improvement of operational efficiency.

• Cost optimization

A series of small but critically important

initiatives ranging from redesigning laboratories to
palletisation of raw materials and packaging material
utilization, manufacturing and filling loses and labour
man hours resulting in substantial savings and improved
productivity and machine utilization. In addition, several
nontangible benefits in the form of systems for
sustainable improvement in areas like factory
maintenance planning tools, down time recording
systems and performance measurement tools were also
realized.

This project was highly successful and the

company is now implementing its key learning’s of MIT
in its other factories.

In a country as vast and diverse as India, supply

chain management is absolutely critical to rapid growth.
Through BECA, Nestle has concentrated heavily on
streamlining and improving their supply chain
management in order to make it more dependable,
more cost effective and most importantly, more
responsive to market needs.

For better supply chain integration the planning

of key operations - purchase, production, distribution
and sales are synchronised to ensure that everybody
works towards a common business plan. Monthly
objectives are broken down into weekly and (wherever
necessary) into daily plans and monitored regularly to
ensure smooth implementation and quick corrective
action when needed .Major benefits accrued thus far
include reduction in working capital through lower
inventories of finished goods and materials, better stock
availability and reduction in obsolescence of materials.

In addition to traditional performance

indicators, quantifiable performance measures have
been identified and implemented in all functional areas
such as sales planning, production output, quality
assurance, material ordering transportation and
warehouse management. These measures are
monitored regularly to gauge the extent of improvement
and identify root problems for taking corrective actions.

Teams have been put in place at all factories

and sales offices to ensure the implementation is
continuous and self-sustaining. Are as of improvement
are regularly identified and time bound action plans
established. For this purpose, standard tools such a Total
Quality Management (TQM), Kaizen, 5S and Small Group
improvement activity (SGIA) are being extensively used.

The efficacy of this hierarchical structure is seen in

Nestle’s performance over past few years of various
products.

By 1989 the company had achieved a sales

figure of approximately Rs. 258 crores. 1989 was the
year of launches. Seven new product lines were
launched in this year. This was also the year in which the
Nanjagud factory was set up. By the year 1992, this sales
figure was touching Rs 500 crores. In the 1995 the pace
of launches quickened and since the construction of the
factory at Samalakha, 20new products have been
introduced. By 2003, Nestle had about 76different
products in its portfolio with various new products in the
pipeline as well. The sales figure now touched Rs. 1214
crores .Thus sales grew by 450% over a period of one
and a half decades.

Marketing Strategy

Nestle has adopted a four pronged growth strategy: -

1. Gunning the market with new products and brand

extensions.
2. Expansion of the distribution network to small
towns for extensive availability.
3. Reduce prices and introduce smaller packages for
products to make them more affordable (a tool to
enter price sensitive markets).
4. Focus on employ training and develop a positive
attitude through enhanced manpower
development.
5. By year 2003 it expects chocolate & confectionery
to account for one in every third rupee in sale.

In the late 1996 fear of breading complacency by

not having a continuous improvement, gave birth to an
international sales &marketing improvement teams
(SMIT).

SMIT maps the latest in helping towards the

target of year.2003. The SMIT exercise is a major global
initiative of Nestle to enhance sales & marketing
productivity. Linked with the already existing BECA
project, which in turn emphasizes on excellence by
improving the distribution set up, this gave rise to the
following growth objectives for the year 2003.

 Ensure direct coverage of all urban towns in

India.
 Expand distribution to reach 1 million retail
outlets on a regular basis.
 Work in partnership with the distributor for
the achievement of these objectives.
 Provide sustainable solution to optimize our
secondary sales from distributor to retailer.
 NEW PRODUCT LAUNCHES

To put all the product launches into perspective,

Nestle now has80 products including various flavours
and variants this awesome list of 80 products for most
companies is an overfull palate. Nestle India Ltd .Still
have a variety of new products in the pipelines. It
believes in slowly colonizing as much territory as fast as
it can, adapting to native conditions and then work at
“holding off the advancing herds”. Nestle products can
be broadly classified into 5 main ranges -

 Milk Products
 Chocolate and Confectionery
 Beverages
 Culinary
 Food service

Milk Products
This category which comprises of condensed
milk, baby milk foods , milk powders , acidified infant
food , and other milk products, showed a slump in 1996
as sale of milk products fell from Rs 31.4crores in 1995
to Rs 31.2 crores in the said year. Consumer off take
remained depressed throughout this year as a
consequence of high price increases necessitated by
substantial increases(+50%) in the cost of basic raw
materials( fresh milk ) , over the past two years .

However Nestle retained its leadership in the

infant food market with Cerelac, Lactogen and Nestum
and even introduced a new flavour of Cerelac - Cerelac
Rice in 1996.

Chocolates and Confectionery

Nestle pursues the objective of accounting for
one in every three rupees in its sales figures through
chocolates and confectionery. This has thus been one of
the thrust areas in Nestle. Nestle this year widened its
range of flavours in POLO, backed by its tremendous
success in the Indian Market by adding POLO Spearmint
to its Portfolio. This new flavour has also received an
encouraging response in the market according to market
analysts.

Milkybar also retained its position as the

number one white chocolate brand in India, however it
did not record a significant increase in sales as a majority
of Indian tastes still do not accept this flavour.

This year however, was a year of tremendous

success for KitKat .This internationally renowned brand
gained a large increase in the Market share in the past
year and Nestle officials are hopeful that this will further
increase in the coming years. However this Brand along
with it success has brought with it its share of
Controversy as the Union of India has launched a
Litigation against the Kit Kat family pack.

In 1997 Nestle added to its range of

confectionery by introducing SPLASH, “A soft hearted,
hard boiled sweet ” this is being promoted as a sweet
unique to India and is positioned to a target audience in
the age group of 4 to 12 years and “anyone with a soft
heart” is a potential customer. Priced at Rs. 1 for a 7.5
gram candy splash has been introduced selectively in the
South and has been speculated to repeat Polo’s
performance. Nestle’s officials claim that this candy has
the potential to grab a quarter of the 700 crores
confectionery market.

The most recent of Nestle affairs with the

confectionery market has been the introduction of
Mithai Magic which is “a little Mithai , a little magic “
.This new product was launched in September 1997 ,in
time for the Diwali purchases of sweets . This brand has
been positioned somewhere between chocolates and
traditional sweets and the company is employing a push
strategy to promote this brand.

Beverages
This year has been very successful in the
beverages market for Nestle .The sales of beverages has
increased from Rs 323.3 crores in2002 to Rs 398.8 crores
in 2003.

Nestles Flagship Nescafe which was pegged at

Rupees 1040per Kilogram before the launch of Tata
Cafe, met with stiff competition from Tata Cafe priced at
Rupees 550 per Kg once it was introduced .Tata cafe
claimed to have garnered a market share of 17% by
December 1996 . This forced Nestle to cut prices of
Nescafe to Rupees840 per Kg. However Nescafe still
retains 83% market share in the Rs177 Crores market for
pure instant coffee.

Nestle Sunrise also showed an increase in sales

and captured20 % of the Rs 253 crores market in Mixed
instant coffee.
 This year Nestle also launched MILO, an
internationally renowned chocolate energy drink, and
the response for this has been encouraging.

Nestle has also introduced Tasters Choice tea bag

pitched against Taj mahal tea bags.

Culinary Products
The market in culinary products had witnessed
a high growth consequent to aggressive pricing decisions
on existing products and the introduction of a variety of
new products to match the needs of the Indian
Housewife. Encouraged by this success Nestle launched
Maggi Macoroni Snack in three flavors - Chicken, Masala
and Tomato. Nestle officials’ say that this would
consolidate Maggi position as the number 1 culinary
brand in India. The product focuses on convenience and
innovation as its Unique Selling Proposition. This snack
has opened anew segment for the Maggi brands. The
brand is positioned as youthful and is represented by
the twists and curls of the macaroni snack. It is
speculated to be introduced in a phase manner nation-
wide to be placed in the 7.5 lakh outlets that Maggi
noodles sells in.

In the spirit of catering to Indian tastes Maggi

introduced Maggi pickles in five variants benchmarked
to give the “ghar ka swad”. Maggi Dosa Mix was also
introduced to offer superior quality and added
convenience. Apart from this Milkmaid Kalakand Mix, a
traditional north Indian sweet of premium quality was
added to the milkmaid dessert mixes. Maggi soup also
launched three new variants. Maggi Rassam in particular
was noticeable as yet another attempt to make
traditional Indian cooking a little bit easier.

Food Service
Food service items basically deal with the out of
home segments, which would include vending machines.
Nestle’s foodservice business is poised for rapid
expansion to meet the growing need for such a reliable,
time saving and cost effective service in this modern
age.

Nestle wants to sell 500 million cups of tea and

coffee through its vending machines in the year 2003. It
currently has 3500 vending machines at assorted
locations (both public and private). In 1995Nestle food
service did well to vend 40 million cups of Nescafe and
Tasters Choice tea. Its 2003 sales were placed at 59
million cups of Nescafe and 36 million cups of tea, this
figure was however way below the expected sales for
the year.

In 2001 and 2002 nestle has come with a number of new

products like it has come with many of the diary
products like milk. The milk is available in the market in
the full cream, toned and double toned milk. The nestle
has also come with the dahi, butter which is available in
the market but at very few shops.

NESTLE has also come with the products which will

target the children like FRUITIPS, MILKYBARCHOO,
NESTLE CHINESE MAGGI NOODLES.
 Distribution strategy

It is an indisputable fact that fundamentally all

consumers marketing must first assure availability of the
product to the consumer .In India, the urban population
alone is of a whooping250 million consumers -an
unbelievable potential for any FMCG .The potential
being spread across more than 4000 towns have to be
very effectively and efficiently tapped. Nestle till now
was retailing in a limited number of towns with only 200
towns accounting for 70 % of their business. For

Nestle to be a leader in the food industry,

expanding the distribution network for more retail
outlets was a must.

To meet this challenge, Nestle is working towards

an objective of increasing the retail base to 1,000,000
outlets by the year 2003. This network is feasible as
Nestle has a triangular distribution structure thus the
span of control is still retained. The Distribution Network
is explained in figure 2.

In order to achieve these distribution objectives

Nestle has formulated an international sales and
marketing improvement team (SMIT). SMIT focuses on a
single objective -provide sustainable solutions to
optimize the distributor and retailer sales through a step
by step approach starting with analysis of market
followed by identification of the probable retail outlets
and finally selection of the same .The team also focuses
on proper implementation of resources and timely
follow ups for effective solutions.
 Advertising Strategy

Nestle, a cash rich company has plenty of

marketing prowess .This can be credited to a strong and
sound advertising strategy.

Nestle in the year 2002 had an advertisement

spending of Rs43.3 crores (net) .Tracing Nestles
advertising responses the ad campaign by HTA of ‘Hot
and Sweet’ was a runway success this adwas actually
meant to fend off a challenge from H.J Heinz. The Maggi
ranges of sauces were introduced in 1985 but sales
didn’t catch up until 1990 but till 2003 it got
considerable market share. At this point the popular and
memorable campaign of Javed Jaffrey and Pankaj
Kapoor was launched by Producer Pralad Kakkar .This
commercial was an instant success. The volume of sales
kept rising from an initial growth of 13% to 20% in the
next year. Today the sales figure for Maggi Sauces is
growing at a steady 6% per year.

Another noteworthy campaign was that of POLO

(the mint with a hole), devised by Mudra advertising
agency .This campaign was awarded 11 industry ad
awards.

In 2002 the advertisement budget has been

approximately Rs56 crores where again innovation was
the main focus. The new nation-wide product launch of
Maggi Macaroni Snack and Mithai Magic have been
designed by Mudra . The Macaroni ad with its use of
“English “and a catchy beat (which is the latest trend
amongst the Indian Advertisers) appeals well to the
target audience and the Mithai Magic commercial does
keep the secret of the contents in the box, intact.

“Training is an integral and indispensable part of Nestle .I regard

the importance of training a highly as research and development
.It is a major investment in the Future of the company and
imperative because it is an investment in people”

-Mr. Helmut Maucher

Chairman and CEO Nestle S A Group

Nestle India Ltd. has an employee base of 3040 people

and aims to be in the top quartile of the FMCG
companies. For this purpose it follows a very stern and
rigorous recruitment policy.

Recruitment Policy
Recruitment of fresh management trainees
and sales officers is done every April-May. These
graduates are generally selected from the best institutes
in the country through a series of interviews. They are
then put through a probation period of 12-18 months.
Although Nestle does not offer some of the highest pay
packets in the industry, it is considered a growth
oriented company.

Training and Development

Continuous development of skills and attitudes
of employees is critical to the achievement of
excellence. At Nestle therefore training and
development of human resources is viewed as a long
term investment.
 “If you are planning for one year, Plant wheat;

If you are planning for ten years, plant a tree;

If you are planning for life, train people.”

- Old Chinese proverb

This proverb goes with the organizations most enduring

beliefs worldwide -

 That long term planning is the key to Nestles

global success.

 That Nestle’s most valuable assets are its people.

 Nestle’s policy is to rely on a more decentralized

form of management by building in the habit to
“Think Nestle”.

At Nestle India training and development is an

integral part of the business plan and strategy in line
with the objectives for the year 2003 and aims to –

 Help employees to retain long term perspective

and integrate them fully with the company’s
business goals.

 View the growth of both the personnel and the

company as a continuous process.
  Concentrate on attitudinal changes by developing
leadership skills, an appreciation of
interdependence between units and the
enhancement of a sense of belonging to Nestle.

In 2003 Nestle India benefited greatly from the

training program offered at the Rive Reine
International Training Center at Vevey,
Switzerland. This training program helped
facilitate the transfer of common Knowledge
(technical, marketing, and finance) across the
Nestle Group and ensure interdisciplinary
approach to learning and uniform progress with a
tailor-made approach for all.

Company Training needs –

 Analysis of training needs of Managers.

 Self development programs for staff at HO.

 programs for company orientation and

information sharing.

 programs aimed at computer training and

computerization.

 Establishment of contact with leading

management institutes with a view to use the
same for meeting local training requirements.
 Nestle Corporate Culture

As we had discussed before, Nestle is one of

the most multinational of multinationals and is spread
over 75 countries worldwide. This implies that it has
employees from diverse cultural backgrounds. Nestle
respects the distinctive culture, mentality and traditions
of every employee in every country. What Nestle aims at
is to incorporate its own culture into its employees
without stifling the individual employee’s culture and
identity. When we went to Nestle we could feel the
existence of a distinctive work culture amongst the
management - the staff seemed highly motivated &
cheerful and everybody had pin up boards in front of
their tables with reminders, motivational messages and
even time logs (the Nestle people seemed as if they
availed of the benefits of time management).

A part from this, Nestle has a vast distribution

network. In order Nestle has a diverse product range
and so it also has diversified risks Thus Management on
Information systems plays a vital role in Nestle to
provide information to the Sales and Marketing as well a
the finance department .The Electronic Data Processing
Department looks after Management Information
Systems .Availability , aid quick decision-making and
improve supply chain integration.
 Nestle India Ltd. , is a part of the Nestle SA group,
which is one of the largest manufacturing companies in
the world. The company (with its headquarters in Vevey,
Switzerland) was founded by Henri Nestle in 1867.Nestle
has two major divisions-Le Societe des Produits

Which looks after the production and marketing

and Nesstec Ltd .which provides the technical assistance
to the group companies .Since its inception in 1867, the
company has diversified it product range from the infant
weaning formula (which was its first product) to
beverages, confectionery, ice creams and pet foods
among others. In a span of 130 years the company has
ranked 26th among the world's largest corporations and
boasts of a turnover of $48932.5 million and an
employee strength of 221,144 people spread over
75countries worldwide (Annexure A).

Nestle has long been viewed as one of the most

multinational of the multinationals. This is because
today only 2% of its turnover comes from Switzerland
.Out of the remaining 98%, Europe contributes 43.5%,
North and South America contribute 36.5% and 18% is
contributed by Africa and Asia Pacific Regions.
 OVERVIEW

Although Nestle has been associated with India since the

Beginning of the century through the importing and

Trading of infant food and condensed milk,

Manufacturing in India only began with the setting up of

The factory in Moga in 1962 .The first product to be

Manufactured was Milkmaid. In the last 35 years the

Company has shown rapid progress and has increased its

Product range to 80 products as of October 1997 .Nestle

India Ltd. now rank 22nd amongst India's most valuable

Companies (Annexure B) .Its gross revenue has

Increased from Rs. 1001.1 crores to Rs. 1213.8 crores

In 1996 .This remarkable growth has been achieved

Through:

 Rapidly creating greater manufacturing capacity,

bothat factories as well as with copackers.
 Taking measures to ensure availability and
improved quality of key raw materials-fresh milk
in particular.
 Strengthening of the sales and distribution
network (particularly in smaller towns).
 Ambitious and cohesive manpower training and
development programs for the personnel of the
company across all disciplines.
The company's exports also resulted in a very
successful year in this area as exports grew by
27% to Rs. 250.8 crores in 1996. The main
contributors to this increase were the export of
tea and coffee to USA, Japan, Russia, Hungary and
Taiwan.

Nestle India Ltd. wants to further increase its

operations in India and has started construction of
its sixth Factoryat Bicholim, Goa for the
manufacture of culinary products (a key thrust
area) for this purpose.
 The spirit of Nestle

"Organizational excellence is never achieved through a

onetime efforts; It is always a process of continuous
improvement across a number of areas of operation."

A key factor for Nestle's success has been

its quest for continuous improvement through
ushering in greater productivity and more
efficiency in everyday operations Despite the
infrastructure impediments in India, Nestle has set
itself high standards of business performance .This
is reflected through the essence of the company-
its mission statement.

Nestle mission

"To be in every way the leading company

in the Indian food industry and a good corporate
citizen by providing our consumers with superior
quality products, our shareholders with rapid
growth and fair returns and our employees with a
challenging and satisfying work environment."

To translate this spirit into a planned and

measurable process, Nestle has set up key
objectives across all divisions.
 KEY OBJECTIVES

Production

 To optimize production costs while enhancing

product quality so as to make Nestle products
even more competitive in the market place.

Sales and Marketing

 To reach a sales turnover of 3000 crores by the

year 2000.

 To double the turnover every years.

People

 To help employees to retain a long-term

perspective and integrate them fully with the
company's business goals.

 To retain a broad perspective while addressing

individual needs

 To view growth as a continuous process.

 To concentrate on attitudinal changes by

developing leadership skills, an appreciation of
 interdependence between units and the
enhancement of a sense of belonging to Nestle.

Finance

 To maintain profit levels above the average for

the food industry in India.

Key Fact

This section offers a quick and simple

overview of NESTLE, making it an excellent place
to begin learning more about the World’s Largest
Food Company. Here introduction is given with
some key facts and figures, including 2001
Financial Information, Company Profile,
Historical Development and Main Brand.
SALES ANALYSIS

By Geographic Area

2006
In Million of CHF (%)
25/706 36.7
Europe
22/262 31.8
North and South America
13/493 19.3
Africa, Asia and Oceania
8/537 12.2
Other Activities
69/998

Europe
North and South America
Africa, Asia and Oceania
Other Activities
By Main Product Group

2001 (%)
In Million of CHF
19/142 27.4
Beverages
334 27.6
Milk Product,
Nutrition and Ice
Cream
17/660 25.2
Prepared Dishes and
Cooking Aids
10/663 15.2
Chocolate and
Confectionery
3/1999 4.6
Pharmaceuticals

Beverages

Milk Product, Nutrition

and Ice Cream
Prepared Dishes and
Cooking Aids
Chocolate and
Confectionery
Pharmaceuticals
Breakdown of 2006 Trading Expenses (in
%)
Percentage

26.2
Raw Materials
8.8
Packaging
16.6
Salaries and Welfare Expenses
4.1
Depreciation
34.5
Other Trading Expenses
90.2
Total Trading Expenses
9.8
Trading Profit
Go to Financial Guide for additional facts and figures.

Company Profile

Sales
Raw Materials

Packaging

Salaries and welfear

Depreciation
 Chairman of the Board: Helmut O. Maucher

 Chief Executive Officer: Peter Brabeck-Letmathe

 World’s leading food company

 Switzerland’s largest industrial company

 Worldwide operations

 495 factories

 Group’s total work force: 225, 808 people.

 Historical Development

1866 : Company’s foundation

1905 : Merger between Nestle and Anglo-Swiss

Condensed Milk Company

1929 : Merger with Peter-Cailler-Kohler

Chocolates Suisses. S. A.

1947 : Merger with Alimentana S.A. (Maggi)

1971 : Merger with Ursina-Franck (Switzerland)

1985 : Acquisition of Carnation (USA)

1990 : Acquisition of Buitoni-Perugina (Italy)

1992 : Acquisition of Rowntree (GB)

1994 : Acquisition of Perrier (France)

1998 : Acquisition of Spillers (GB)

2002 : Divestiture of Findus brand and parts of

Nestlé's frozen food business in Europe

Divestiture of Hills Bros, MJB and Chase &

Sanborn roast and ground coffee brands (USA).

2006 Acquisition of Power Bar.

 Factories

Nestle has 6 factories in India. These are

1. Moga (punjab)

The Nestle factory in Moga has the pride of

being the first and most comprehensive factory of
Nestle India .Set up in 1962, it represents the core
competence of Nestle India in the manufacture of
milk products (Everyday, Milkmaid), beverages,
culinary products

2. Choladi ( Tamil Nadu)

The factory in Choladi started production in

1967.Situated about 60 miles from Calicut, the factory
today has 81 employees and produces 1.5% of the total
turnover of Nestle India. It is a 100 percent export
oriented unit which processes freshly picked tea leaves
into soluble instant tea.

3. Nanjagud (Karnataka)

Production in this factory began in 1989 with

them anufacture of Nestle instant coffee and Sunrise.
Today in addition to instant coffee the factory also
manufactures health beverages. The plant to
manufacture MILO was also commissioned at this
factory. This factory employs 145 people and is cited as
a model in terms of environment protection for its
installations to purify waste water as well as for its
provisions for recycling coffee wastes.

4. Samalakha (Haryana)

This factory was set up in 1993. Located 70

kilometres from Delhi , it manufactures weaning cereals
, culinary products ,health beverages and milk products.
Recently the expansion of manufacturing capacity for
Milk maid Dessert Mixes was undertaken at this factory
as this new and unique product category is viewed to
have great potential in the future.

6. Ponda (Goa)
This Kit-Kat factory was set up in Goa in 1995 at a
cost of Rs. 50 crores. It represented a major step by
Nestle towards becoming the Number 1 Chocolates and
Confectionery Company in India.

7. Bicholim (Goa )

The construction work at this new factory is

progressing with speed. This factory will soon
commence them anufacture of culinary products, which
is a key thrust area for the company and will include
latest technological improvements relating to this
category of products .As a part of Nestles efforts
towards continuous improvement and excellence in
Manufacturing operation, a Moga Improvement team
(MIT) was put in place at the Moga factory. The team
comprised of international experts from Nestle
Technical Services (NESTEC) and the local staff. In 1996,
it embarked on a program with the single minded
objective of optimizing production costs while enhancing
the product quality so as to make Nestle products even
more competitive in the marketplace. Drawing upon
Nestle’s global experience and manufacturing expertise
in 75 countries the team identified the following areas
for detailed study -

• Process improvement to ensure the optimal

usage of resources

• Improvement of operational efficiency

• Cost optimization A series of small but critically

important initiatives ranging from redesigning
laboratories to palletsation of raw materials and
packaging material utilization, manufacturing and filling
loses and labour man hours resulting in substantial
savings and improved productivity and machine
utilization. In addition, several nontangible benefits in
the form of systems for sustainable improvement in
areas like factory maintenance planning tools , down
time recording systems and performance measurement
tools were also realized .

This project was highly successful and the

company is now implementing its key learning’s of MIT
in its other factories.

In a country as vast and diverse as India, supply

chain management is absolutely critical to rapid growth.
 Through BECA, Nestle has concentrated heavily on
streamlining and improving their supply chain
management in order to make it more dependable,
more cost effective and most importantly, more
responsive to market needs.

For better supply chain integration the planning of

key operations - purchase, production, distribution and
sales are synchronized to ensure that everybody works
towards a common business plan. Monthly objectives
are broken down into weekly and (wherever necessary)
into daily plans and monitored regularly to ensure
smooth implementation and quick corrective action
when needed. Major benefits accrued thus far include
reduction in working capital through lower inventories
of finished goods and materials, better stock availability
and reduction in obsolescence of materials.

In addition to traditional performance indicators,

quantifiable performance measures have been identified
and implemented in all functional areas such as sales
planning, production output, quality assurance, material
ordering transportation and warehouse management
.These measures are monitored regularly to gauge the
extent of improvement and identify root problems for
taking corrective actions.

Teams have been put in place at all factories and

sales offices to ensure the implementation is continuous
and self-sustaining. Areas of improvement are regularly
identified and time bound action plans established.
For this purpose, standard tools such a Total Quality
Management(TQM), Kaizen, 5S and Small Group
improvement activity (SGIA) are being extensively used
.The efficacy of this hierarchical structure is seen in
Nestle’s performance over past few years of various
products .By 1989 the company had achieved a sales
figure of approximately Rs. 258 crores. 1989 was the
year of launches. Seven new product lines were
launched in this year. This was also the year in which the
Nanjagud factory was set up. By the year 1992, this sales
figure

Was touching Rs 500 crores. In the 1990’s the

pace of launches quickened and since the construction
of the factory at Samalakha, 20 new products have been
introduced. By 1996, Nestle had about 76 different
products in its portfolio with various new products in the
pipeline as well. The sales figure now touched Rs.
1214crores. Thus sales grew by 450% over a period of
one and a half decades.
TODAY NESTLE IS PRESENT IN DIFFERENT MARKETS
WITH THE FOLLOWING MAIN BRANDS.

Soluble coffee
Nescafe, Taster's Choice, Ricore, Ricoffy.

Roast and Ground Coffee

Hills Bros., MJB, Bonka, Zoegas, Loumidis

Mineral Water
Perrier, Contrex, Vittel, Valvert, Quezac,
Arrowhead, Poland Spring, Buxton, Vera, Blaue Quellen,
Calistoga, Santa Maria, San Pellegrino.

Other beverages
Nesquik, Nescau, Nestea, Milo, Carnation, Libby's
Caro.

Dairy Product
Nido, Nespray, Carnation, Milkmaid/ La Lechera,
Gloria,Neslac, Barenmarke.

Breakfast Cereals
Nestle

Coffee Creamers
Coffee-mate
 Infant Foods and Dietetic Products

Nestle, Nan, Lactogen, Cerelac, Nestum, Guigoz

Culinary Products (Bouillons, soups, seasonings,

prepared dishes, canned food, pasta, sauces)

Maggi, Crosse and Blackwell, Libby's, Thomy,

Builtoni, Contadina.

Frozen Foods
Findus, Stouffer's Buitoni, Maggi

Ice Cream
Nestle, Frisco, Dairy Farm, Magnolia, Motta, Camy
, ect.

Refrigerated Products (yogurts, desserts, pastasauces)

Nestle, Locatelli, Vismara, Buitoni, Contadina

Chocolate and Confectionery

Nestle, Crunch, Cailler, Frigor, Chokito, Sarotti,
Galak/Milkybar, Yes, Kit Kat, Quality Street, Smarties,
Baci, After Eight, Baby Ruth, Butterfinger, Lion, Nuts,
Rolo, Aero, Polo, etc.
Food Services and Professional Products
Chef, Davigel, Santa Rica

Pet Care
Friskies, Fancy Feast, Aplo, Mighty Dog, Gourmet.

Specialized products for the food industry

Food Ingredients Specialties (FIS)

Ophthalmological products
Alcon

Cosmetics
L'Oreal
 Financial Results and Operation

2006(Rs.in millions) 1996(Rs. in millions)

Gross Revenue 12144 10011

Gross Profit (BIT) 1343 1183

Interest 506 315

Depreciation 227 165

Provision for tax 68 171

Profit after taxation 542 532

Extraordinary tax 14 116

Payment

Profit after taxation and 528 416

Extraordinary item

Profit brought forward 215 145

Reserves written back 49 130

Balance available for 792 691

appropriation

Inter dividends paid 353 321

Final dividend proposed - 97

Transfer to debenture redemption 42 2

reserve
Transfer to general reserve 54 56

Surplus carried in profit and loss Account 343 215

 Gross Revenue increased by 21% during the
year, and crossed the 1200 croreS mark . Domestic sales
grew by 19% and exports (including sales to Nepal ) grew
by 27 %. Net profit after tax grew by27% - From Rs 41.6
crores to Rs 52.8 crores .

Throughout 2003, there was a marked lack of

buoyancy in the domestics market caused primarily by
increased inflation and the financial liquidity squeeze
which affected all segments of the industry and trade .

Interest costs rose substantially on account of

higher funding needs to service recently commissioned
projects as well as to meet increased exports for which
materials often had to be purchased in advance.

Considering the recessionary market conditions,

Nestles overall sales and progression during 2003 can be
considered satisfactory.
 Financial Information

In millions of CH 2006

Sale 81 422

EBITDA (a) 12 516

as % of sales 15.4%

EBITA (b) 9600

as % of sales 11.8%

Trading Profit 9 186

As % of sales 11.3%

Net Profit 5 763

As % of sales 7.1%

Capital expenditure 3305

Equity 29 904

Total Assets 65 524

Research and development coat 1 038

Market Capitalization, end December 146 864

(a) Mainly Pharmaceutical products and Water,

managed on a worldwide basis.

(b) Mainly corporate expenses, research and

development costs, amortization of goodwill.
 BIBLIOGRAPHY
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