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PROJECT REPORT PROJECT REPORT


ON ON
NESTLE NESTLE
FOR THE PARTIAL FULLFILLMENT OF BACHELOR OF BUISNESS
ADMINISTRATION
GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY
SUBMITTED BY:
VIPUL
BBA (GEN)
SUBMITTED TO:
Mr. AMIT GUPTA
COURSE CORDINATOR OF BBA (GEN)
MAHARAJA AGRASEN INSTITUTE OF MANAGEMENT STUDIES
AFFILATED TO GURU GOBIND SINGH INDRPRASTHA
UNIVERSITY
1
ACKNOWLEDGEMENT
I 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 .Its
been a great experience working on NE!"E .It give me complete
insight about how an organi#ation not only survives in cutthroat
completion but also maintain a killer instinct in the competitive
world.
I would like to thank my project guider $r. AMIT GUPTA for his
immense guidance .% valuable help and provided me the opportunity
to complete the project under his guidance
I would like to thanks all the faculty members of MAHARAJA
AGRASEN INSTITUTE OF MANAGEMENT STUDIES for
guiding me and supporting me in the completion of this project from
time to time
"ast but not least my greatest gratitude to the almighty and my
parents& without their support this dream would have remained
dream
CERTIFICATE CERTIFICATE
'
!his is to certify that (I)*" study in our institute MAHARAJA AGRASEN
INSTITUTE OF MANAGEMENT STUDIES was allotted the project on
NESTLE+ by ,uru ,obind ingh Inderprastha *niversity has successfully
completed it under the guidance of $r. %$I! ,*)!%
DECLARATION DECLARATION
I here by declare that the project work entitled NESTLE is an
authentic work carried out by me under the guidance of $-.
.
%$I! ,*)!% /project coordinator0 for a practical fulfillment of the
degree of 11%/,EN0 and this has not been submitted anywhere
else for the award of any degree
Name of the student
(I)*"
2
INDEX
CHAPTER
OJECTIVE
RESEARCH METHODOGY
CHAPTER !
INTRODUCTION
COMPANY PROFILE
CHAPTER "
ANALYSIS OF DATA
PRODUCTS
CHAPTER #
CONCLUSION
LIMITATIONS
BIBLOGRAPHY
ANNEXURE
3
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.
4
OBJECTIVE
!o identify the services and products offered by
NE!"E.
!o study and analy#e the customer perception and
preference about NE!"E.
5inally to draw the various conclusion and
recommendation on the on the basis of study
conducted.
6
RESEARCH METHODOLOGY
anagers need information in order to introduce products and
services that create value in the mind of the customer. !ut the
perception of value is a sub"ective 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. $ather, data %information& must be
collected and analy'ed. The goal of arketing $esearch
%analysis& is to provide the facts and direction that managers need
to make their more important marketing decisions.
The analysis involves the following steps(
)efine the problem.
)etermine research design.
Identify data types and sources.
)etermine sample plan and si'e.
Collect the data.
Analy'e and interpret the data.
*repare the research report.
7
+or 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 interactive 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.
8
INTRODUCTION
-estle India .td. is a part of the -estle /A group which is one of the largest manufacturing
companies in the world. 0enri -estle founded the company %with its headquarters in 1evey,
/wit'erland& in 2345. -estle has two ma"or divisions , Le Societe des Produits which
looks after the production and marketing and Nestec Ltd. which provides the technical
assistance to the group companies. /ince its inception in 2345, 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 267 years the company
has ranked 84th among the world#s largest corporations and boasts of a turnover of 9
:3;68.< million and employee strength of 882,2:: people spread over 5< countries
worldwide %Annexure A&.
-estle has long been viewed as one of the most multinational
of the multinationals. This is because today only 8= of its
turnover comes from /wit'erland. >ut of the remaining ;3=,
?urope contributes :6.<=, -orth and /outh America
contribute 64.<= and Africa and the Asia *acific $egions
contribute 23=.
19
Comp!" Pro#i$e
Although -estle 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 oga in 2;48. The first product to be
manufactured was Mi$%mid. In the last 6< years the company has
shown rapid progress and has increased its product range to 37
products as of >ctober 2;;5. -estle India .td. now ranks 88nd
amongst India#s most valuable companies %Annexure !& . Its gross
revenue has increased from $s 2772.2 crores to $s. 2826.3 crores in
2;;4. This remarkable growth has been achieved through ,
$apidly 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.
/trengthening 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.
11
The company#s exports also resulted in a very successful year in
this area as exports grew by 85= to $s. 8<7.3 crores in 8776. The
main contributors to this increase were the export of tea and coffee to
@/A, Aapan, $ussia, 0ungary and Taiwan.
-estle India .td. wants to further increase its operations in India
and has started construction of its sixth +actory at !icholim, Boa for
the manufacture of culinary products %a key thrust area& for this
purpose.
1'
T&e Spirit o# Nest$e
Organisational excellence is never achieved through a one time
effort; It is always a process of continuous improvement across a
number of areas of operation.
A key factor for -estle#s success has been its quest for
continuous improvement through ushering in greater productivity and
more efficiency in everyday operations. )espite the infrastructure
impediments in India, -estle has set itself high standards of business
performance. This is reflected through the essence of the company , its
mission statement.
Nest$e's missio!
CTo be in every way the leading company in the Indian food
industry and a good corporate citi'en by providing our consumers with
superior quality products, our shareholders with rapid growth D fair
returns and our employees with a challenging and satisfying work
environment.E
To translate this spirit into a planned and measurable process,
-estle has set up key ob"ectives across all divisions.
1.
Key Objectives
Productio!
To optimise production costs while enhancing product quality so as
to make -estle products even more competitive in the market place.
S$es !d mr%eti!(
To reach a sales turnover of 6777 crores by the year 8776
To double the turnover every three years
Peop$e
To help employees to retain a long term perspective and integrate
them fully with the company#s business goals
To retain a broad perspective while addressing individual needs
To view growth as a continuous process
To concentrate on attitudinal changes by developing leadership
skills, an appreciation of interdependence between units and the
enhancement of a sense of belonging to -estle.
12
)i!!ce
To maintain profit levels above the average for the food industry in
India.
The !usiness ?xcellence and Common Application %!?CA& initiative
essentially translates the spirit of the Aourney towards excellence into
an organised, systematic and measurable approach. The aim is to aid
the achievements of the company#s key ob"ectives of rapid growth by
ensuring that all operations incorporate the spirit of meaningful
planning, effective cost control and efficient implementation. !?CA is
about * p$!!ed impro+eme!t i! e+er"t&i!( ,e do -
Factories
-estle has 4 factories in India. These are
./ Mo( 0pu!123 4 The -estle factory in oga has the pride of being
the first and most comprehensive factory of -estle India. /et up in
2;48, it represents the core competence of -estle India in the
manufacture of milk products %?veryday, ilkmaid&, beverages, culinary
products %aggi sauces, noodles, soups etc.&, weaning cereals
%Cerelac& and infant milk formulae.
5/ C&o$di 0 Tmi$ Ndu34 The factory in Choladi started production in
2;45. /ituated about 47 miles from Calicut, the factory today has 32
13
employees and produces 2.<= of the total turnover of -estle India. It is
a 277 percent export oriented unit which processes freshly picked tea
leaves into soluble instant tea.
6/ N!1(ud 07r!t%34 *roduction in this factory began in 2;3;
with the manufacture of -estle instant coffee and /unrise. Today in
addition to instant coffee the factory also manufactures health
beverages. The plant to manufacture I.> was also commissioned at
this factory. This factory employs 2:< 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.
8/Sm$%& 0Hr"!34 This factory was set up in 2;;6. .ocated 57
kilometres from )elhi , it manufactures weaning cereals , culinary
products ,health beverages and milk products. $ecently the expansion
of manufacturing capacity for ilkmaid )essert ixes was undertaken
at this factory as this new and unique product category is viewed to
have great potential in the future.
9/Po!d 0Go34 This Fit,Fat factory was set up in Boa in 2;;< at a
cost of $s. <7 crores. It represented a ma"or step by -estle towards
becoming the -umber 2 Chocolates and Confectionery Company in
India.
:/;ic&o$im 0Go3
14
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 -estles efforts towards continuous improvement and
excellence in anufacturing operation, a oga Improvement team
%IT& was put in place at the oga factory. The team comprised of
international experts from -estle Technical /ervices %-?/T?C& and the
local staff. In 2;;4, it embarked on a program with the single minded
ob"ective of optimi'ing production costs while enhancing the product
quality so as to make -estle products even more competitive in the
market place. )rawing upon -estle#s global experience and
manufacturing expertise in 5< countries the team identified the
following areas for detailed study ,
*rocess improvement to ensure the optimal usage of resources
Improvement of operational efficiency
Cost optimi'ation
A series of small but critically important initiatives ranging from
redesigning laboratories to palletisation of raw materials and packaging
material utili'ation, manufacturing and filling loses and labour man
hours resulting in substantial savings and improved productivity and
16
machine utili'ation. In addition, several non tangible 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 reali'ed .
This pro"ect was highly successful and the company is now
implementing its key learning#s of IT in its other factories.
In a country as vast and diverse as India, supp$" c&i!
m!(eme!t is absolutely critical to rapid growth. Through !?CA,
-estle 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.
+or 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. onthly ob"ectives are broken down into weekly and
%wherever necessary& into daily plans and monitored regularly to
ensure smooth implementation and quick corrective action when
needed . a"or 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
17
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. +or this purpose, standard tools such a Total Guality
anagement%TG&, Fai'en, </ and /mall Broup improvement activity
%/BIA& are being extensively used.
The efficacy of this hierarchical structure is seen in -estle#s
performance over past few years of various products.
!y 2;3; the company had achieved a sales figure of
approximately $s. 8<3 crores. 2;3; was the year of launches. /even
new product lines were launched in this year. This was also the year in
which the -an"agud factory was set up. !y the year 2;;8, this sales
figure was touching $s <77 crores. In the 2;;< the pace of launches
quickened and since the construction of the factory at /amalakha, 87
new products have been introduced. !y 8776, -estle had about 54
different products in its portfolio with various new products in the
pipeline as well. The sales figure now touched $s. 282: crores. Thus
sales grew by :<7= over a period of one and a half decades.
18
Mr%eti!( Strte("
-estle has adopted a four pronged growth strategy( ,
2. Bunning the market with new products and brand extensions.
8. ?xpansion of the distribution network to small towns for extensive
availability.
6. $educe prices and introduce smaller packages for products to
make them more affordable %a tool to enter price sensitive markets&.
:. +ocus on employ training and develop a positive attitude through
enhanced manpower development.
<. !y year 8776 it expects chocolate D confectionery to account for
one in every third rupee in sale.
In the late 2;;4 fear of breading complacency by not having a
continuous improvement, gave birth to an international sales D
marketing improvement teams %/IT&.
/IT maps the latest in helping towards the target of year. 8776.
The /IT exercise is a ma"or global initiative of -estle to enhance
sales D marketing productivity. .inked with the already existing !?CA
pro"ect, which in turn emphasises on excellence by improving the
'9
distribution set up , this gave rise to the following growth ob"ectives for
the year 8776
?nsure direct coverage of all urban towns in India.
?xpand distribution to reach 2 million retail outlets on a regular
basis.
Hork in partnership with the distributor for the achievement of these
ob"ectives.
*rovide sustainable solution to optimi'e our secondary sales from
distributor to retailer.
'1
NE< PRODUCT LAUNCHES
To put all the product launches into perspective, -estle now has
37 products including various flavours and variants this awesome list of
37 products for most companies is an overfull palate. -estle India .td.
/till have a variety of new products in the pipelines. It believes in
slowly coloni'ing as much territory as fast as it can, adapting to native
conditions and then work at Cholding off the advancing herdsE. -estle
products can be broadly classified into < main ranges ,
ilk *roducts
Chocolate and Confectionery
!everages
Culinary
+ood service
Mi$% Products
''
This category which comprises of condensed milk, baby milk
foods , milk powders , acidified infant food , and other milk products,
showed a slump in 2;;4 as sale of milk products fell from $s 62.:
crores in 2;;< to $s 62.8 crores in the said year. Consumer offtake
remained depressed throughout this year as a consequence of high
price increases necessitated by substantial increases%I<7=& in the
cost of basic raw materials% fresh milk & , over the past two years .
0owever -estle retained its leadership in the infant food market
with Cerelac, .actogen and -estum and even introduced a new flavour
of Cerelac , Cerelac $ice in 2;;4.
C&oco$tes !d Co!#ectio!er"
-estle pursues the ob"ective 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 -estle. -estle this year
widened its range of flavours in *>.>, backed by its tremendous
success in the Indian arket by adding *>.> /pearmint to its
*ortfolio. This new flavour has also received an encouraging
response in the market according to market analysts.
ilkybar 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 ma"ority of Indian tastes still do not accept this
flavour.
'.
This year however, was a year of tremendous success for Fit
Fat .This internationally renowned brand gained a large increase in the
arket share in the past year and -estle officials are hopeful that this
will further increase in the coming years. 0owever this !rand along
with it success has brought with it its share of Controversy as the @nion
of India has launched a .itigation against the Fit Fat family pack.
In 2;;5 -estle added to its range of confectionery by
introducing /*.A/0, CA soft hearted, hard boiled sweet E this is being
promoted as a sweet unique to India and is positioned to a target
audience in the age group of : to 28 years and Canyone with a soft
heartE is a potential customer. *riced at $s. 2 for a 5.< gram candy
splash has been introduced selectively in the /outh and has been
speculated to repeat *olo#s performance. -estle#s officials claim that
this candy has the potential to grab a quarter of the 577 crores
confectionery market.
The most recent of -estle affairs with the confectionery market
has been the introduction of ithai agic which is Ca little ithai , a
little magic C .This new product was launched in /eptember 2;;5 ,in
time for the )iwali 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.
'2
;e+er(es
This year has been very successful in the beverages market for
-estle .The sales of beverages has increased from $s 686.6 crores in
8778 to $s 6;3.3 crores in 8776.
-estles +lagship -escafe which was pegged at $upees 27:7
per Filogram before the launch of Tata Cafe, met with stiff competition
from Tata Cafe priced at $upees <<7 per Fg once it was introduced .
Tata cafe claimed to have garnered a market share of 25= by
)ecember 2;;4. This forced -estle to cut prices of -escafe to $upees
3:7 per Fg. 0owever -escafe still retains 36= market share in the $s
255 Crores market for pure instant coffee.
-estle /unrise also showed an increase in sales and captured
87 = of the $s 8<6 crores market in ixed instant coffee.
This year -estle also launched I.>, an internationally renowned
chocolate energy drink, and the response for this has been
encouraging.
-estle has also introduced Tasters Choice tea bag pitched against Ta"
mahal tea bags.
'3
Cu$i!r" 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 0ousewife. ?ncouraged by this success -estle launched aggi
acoroni /nack in three flavors , Chicken , asala and Tomato. -estle
officials# say that this would consolidate aggis position as the number
2 culinary brand in India. The product focuses on convenience and
innovation as its @nique /elling *roposition. This snack has opened a
new 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 5.< lakh outlets that aggi noodles sells in .
In the spirit of catering to Indian tastes aggi introduced maggi
pickles in five variants benchmarked to give the Cghar ka swadE. aggi
)osa ix was also introduced to offer superior quality and added
convenience. Apart from this ilkmaid Falakand ix, a traditional north
Indian sweet of premium quality was added to the milkmaid dessert
mixes. aggi soup also launched three new variants. aggi $assam in
particular was noticeable as yet another attempt to make traditional
Indian cooking a little bit easier.
'4
)ood Ser+ice
+ood service items basically deal with the out of home
segments, which would include vending machines. -estle#s food
service 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 .
-estle wants to sell <77 million cups of tea and coffee through
its vending machines in the year 8776. It currently has 6<77 vending
machines at assorted locations %both public and private&. In 2;;<
-estle food service did well to vend :7 million cups of -escafe and
Tasters Choice tea. Its 8776 sales were placed at <; million cups of
-escafe and 64 million cups of tea, this figure was however way below
the expected sales for the year.
Distri2utio! strte("
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 whooping 8<7 million
consumers ,an unbelievable potential for any +CB . The potential
being spread across more than :777 towns have to be very effectively
and efficiently tapped. -estle till now was retailing in a limited number
of towns with only 877 towns accounting for 57 = of their business. +or
'6
-estle to be a leader in the food industry, expanding the distribution
network for more retail outlets was a must.
To meet this challenge, -estle is working towards an ob"ective
of increasing the retail base to 2,777,777 outlets by the year 8776. This
network is feasible as -estle has a triangular distribution structure thus
the span of control is still retained. The )istribution -etwork is
explained in figure 8.
In order to achieve these distribution ob"ectives -estle has
formulated an international sales and marketing improvement team
%/IT&. /IT focuses on a single ob"ective ,provide sustainable
solutions to optimi'e 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.
Ad+ertisi!( Strte("
'7
-estle, a cash rich company has plenty of marketing prowess.
This can be credited to a strong and sound advertising strategy.
-estle in the year 8778 had an advertisement spending of $s
:6.6 crores %net& . Tracing -estles advertising responses the ad
campaign by 0TA of J0ot and /weet# was a runway success this ad
was actually meant to fend off a challenge from 0.A 0ein'. The aggi
ranges of sauces were introduced in 2;3< but sales didn#t catch up
until 2;;7 but till 8776 it got considerable market share. At this point
the popular and memorable campaign of Aaved Aaffrey and *anka"
Fapoor was launched by *roducer *ralad Fakkar . This commercial
was an instant success. The volume of sales kept rising from an initial
growth of 26= to 87= in the next year. Today the sales figure for aggi
/auces is growing at a steady 4= per year.
Another noteworthy campaign was that of *>.> %the mint with a
hole&, devised by udra advertising agency. This campaign was
awarded 22 industry ad awards.
In 8778 the advertisement budget has been approximately $s
<4 crores where again innovation was the main focus. The new nation,
wide product launch of aggi acaroni /nack and ithai agic have
been designed by udra . The acaroni ad with its use of C?nglish C
and a catchy beat %which is the latest trend amongst the Indian
Advertisers& appeals well to the target audience and the ithai agic
commercial does keep the secret of the contents in the box , intact.
'8
Training is an integral and indispensable part of Nestle . I regard the
importance of training a highly as research and development .It is a
maor investment in the !uture of the company and imperative because
it is an investment in people
" #r. $elmut #aucher
%hairman and %&O Nestle ' (
)roup
-estle India .td. has an employee base of 67:7 people and
aims to be in the top quartile of the +CB companies .+or this
purpose it follows a very stern and rigorous recruitment policy .
Recruitme!t Po$ic"
$ecruitment of fresh management trainees and sales officers is
done every April,ay. These graduates are generally selected from the
best institutes in the country through a series of interviews. They are
then put through a probation period of 28,23 months. Although -estle
does not offer some of the highest pay packets in the industry, it is
considered a growth oriented company.
Tri!i!( !d De+e$opme!t
Continuous development of skills and attitudes of employees is
critical to the achievement of excellence. At -estle therefore training
.9
and development of human resources is viewed as a long term
investment .
* I# "ou re p$!!i!( #or o!e "er = P$!t ,&et>
I# "ou re p$!!i!( #or te! "ers= p$!t tree>
I# "ou re p$!!i!( #or $i#e= tri! peop$e/-
? O$d C&i!ese pro+er2
This proverb goes with the organi'ations most enduring beliefs
worldwide ,
That long term planning is the key to -estles global success
That -estle#s most valuable assets are its people
-estle#s policy is to rely on a more decentrali'ed form of
management by building in the habit to C Think -estleE.
At -estle India training and development is an integral part of
the business plan and strategy in line with the ob"ectives for the year
8776 and aims to ,
.1
0elp employees to retain long term perspective and integrate them
fully with the company#s business goals
1iew 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 -estle .
In 8776 -estle India benefited greatly from the training program
offered at the $ive $eine International Training Center at 1evey,
/wit'erland. This training program helped facilitate the transfer of
common Fnowledge %technical, marketing, and finance& across the
-estle Broup and ensure interdisciplinary approach to learning and
uniform progress with a tailor,made approach for all.
Company Training needs ,
analysis of training needs of anagers
self development programs for staff at 0>
programs for company orientation and information sharing
.'
programs aimed at computer training and computeri'ation
?stablishment of contact with leading management institutes with a
view to use the same for meeting local training requirements
Nest$e's Corporte Cu$ture
As we had discussed before, -estle is one of the most
multinational of multinationals and is spread over 5< countries
worldwide. This implies that it has employees from diverse cultural
backgrounds. -estle respects the distinctive culture, mentality and
traditions of every employee in every country. Hhat -estle aims at is to
incorporate its own culture into its employees without stifling the
individual employee#s culture and identity. Hhen we went to -estle we
could feel the existence of a distinctive work culture amongst the
management , the staff seemed highly motivated D cheerful and
everybody had pin up boards in front of their tables with reminders ,
motivational messages and even time logs %the -estle people seemed
as if they availed of the benefits of time management& .
..
Apart from this, -estle has a vast distribution network. In order
to support the !?CA process, an integrated computer system has been
put in place across the company to link all functional areas and
locations. This common linked system will improve information
availability, aid quick decision,making and improve supply chain
integration.
-estle has a diverse product range and so it also has diversified risks
Thus anagement on Information systems plays a vital role in -estle
to provide information to the /ales and arketing as well a the
finance department .The ?lectronic )ata *rocessing )epartment
looks after anagement Information /ystems .
.2
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 Veey,
Swit!erland" was founded #y $enri Nestle in %&'(.
Nestle has two ma)or diisions*Le Societe des Produits
which loo+s after the production and mar+eting and
Nesstec Ltd. which proides the technical assistance to
the group companies. Since its inception in %&'(, the
company has diersified it product range from the infant
weaning formula (which was its first product" to
#eerages, confectionery, ice creams and pet foods
among others. In a span of %,- years the company has
ran+ed .'
th
among the world/s largest corporations and
#oasts of a turnoer of 01&2,..3 million and an
employee strength of ..%,%11 people spread oer (3
countries worldwide (Anne4ure A".
Nestle has long #een iewed as one of the most
multinational of the multinationals. This is #ecause
.3
today only .5 of its turnoer comes from Swit!erland.
6ut of the remaining 2&5, 7urope contri#utes 1,.35,
North and South America contri#ute ,'.35 and %&5 is
contri#uted #y Africa and Asia 8acific 9egions.
OVERVIEW
Although Nestle has #een associated with India since the
#eginning of the century through the importing and
trading of infant food and condensed mil+,
manufacturing in India only #egan with the setting up of
the factory in :oga in %2'.. The first product to #e
manufactured was :il+maid. In the last ,3 years the
company has shown rapid progress and has increased its
product range to &- products as of 6cto#er %22(. Nestle
India Ltd. now ran+ ..
nd
amongst India/s most alua#le
companies (Anne4ure ;". Its gross reenue has
increased from 9s. %--%.% crores to 9s. %.%,.& crores in
%22'. This remar+a#le growth has #een achieed
through<
9apidly creating greater manufacturing capacity, #oth
at factories as well as with copac+ers.
.4
Ta+ing measures to ensure aaila#ility and improed
quality of +ey raw materials*fresh mil+ in particular.
Strengthening of the sales and distri#ution networ+
(particularly in smaller towns".
Am#itious and cohesie manpower training and
deelopment programs for the personnel of the
company across all disciplines.
The company/s e4ports also resulted in a ery
successful year in this area as e4ports grew #y .(5 to
9s. .3-.& crores in %22'. The main contri#utors to this
increase were the e4port of tea and coffee to =SA,
>apan, 9ussia, $ungary and Taiwan.
Nestle India Ltd. wants to further increase its operations
in India and has started construction of its si4th ?actory
at ;icholim, @oa for the manufacture of culinary
products (a +ey thrust area" for this purpose.
.6
The spirit of Nestle
"Organizational excellence is never achieved through a
one time efforts; It is always a process of continuous
improvement across a number of areas of operation."
A +ey factor for Nestle/s success has #een its quest for
continuous improement through ushering in greater
productiity and more efficiency in eeryday operations
Aespite the infrastructure impediments in India, Nestle
has set itself high standards of #usiness performance.
This is reflected through the essence of the company*its
mission statement.
Nestle's mission
BTo #e in eery way the leading company in the Indian
food industry and a good corporate citi!en #y proiding
our consumers with superior quality products, our
shareholders with rapid growth and fair returns and our
employees with a challenging and satisfying wor+
enironment.B
.7
To translate this spirit into a planned and measura#le
process, Nestle has set up +ey o#)ecties across all
diisions.
.8
KEY OBJECTIVES
Production
To optimi!e production costs while enhancing product
quality so as to ma+e Nestle products een more
competitie in the mar+et place.
Sales and ar!etin"
To reach a sales turnoer of ,--- crores #y the year
.---.
To dou#le the turnoer eery years.
Peo#le
To help employees to retain a long*term perspectie
and integrate them fully with the company/s #usiness
goals.
To retain a #road perspectie while addressing
indiidual needs
29
To iew growth as a continuous process.
To concentrate on attitudinal changes #y deeloping
leadership s+ills, an appreciation of interdependence
#etween units and the enhancement of a sense of
#elonging to Nestle.
$inance
To maintain profit leels a#oe the aerage for the
food industry in India.
Cey ?act
This section offers a quic+ and simple oeriew of
N7STL7, ma+ing it an e4cellent place to #egin learning
more a#out the DorldEs Largest ?ood Fompany. $ere
introduction is gien with some +ey facts and figures,
including %&&' $inancial In(ormation) Com#an*
Pro(ile) +istorical ,e-elo#ment and ain Brand.
21
S.LES .N.LYSIS
By Geographic Area
In illion o( C+$ %&&/
012
7urope .3G(-' ,'.(
North and South America ..G.'. ,%.&
Africa, Asia and 6ceania %,G12, %2.,
6ther Actiities &G3,( %...
'2G22&
By Main roduct !roup
In illion o( C+$ %&&'012
2'
Europe
6:/@A
Nort& !d
Sout&
Americ
6./BA
A#ric= Asi
!d Oce!i
.C/6A
Ot&er
Acti+ities
.5/5A
;eerages %2G%1. .(.1
:il+ 8roducts, Nutrition and Ice
Fream
,,1 .(.'
8repared Aishes and Foo+ing Aids %(G''- .3..
Fhocolate and Fonfectionery %-G'', %3..
8harmaceuticals ,G%222 1.'
2.
;e+er(es
5@/8A
Mi$%
Products=
Nutritio! !d
Ice Crem
5@/:A
Prepred
Dis&es !d
Coo%i!( Aids
59/5A
C&oco$te
!d
Co#ectio!r"
.9/5A
P&rmceutic
$s
8/:A
Brea!do3n o( %&&/ Tradin" E4#enses 0in 12
Percenta"e
9aw :aterials .'..
8ac+aging &.&
Salaries and Delfare 74penses %'.'
Aepreciation 1.%
6ther Trading 74penses ,1.3
Total Trading 74penses 2-..
Trading 8rofit 2.&
@o to $inancial 5uide for additional facts and figures.
Com#an* Pro(ile
Fhairman of the ;oard< $elmut 6. :aucher
22
R, Mteri$s
.6/BA
Pc%(i!(
8/:A
S$ries !d
<e$#re
EDpe!ses
B/@A
Ot&er Trdi!(
EDpe!ses
.B/.A
Tot$ Trdi!(
EDpe!ses
8@/8A
Trdi!( Pro#it
9/5A
Deprecitio!
5/5A
Fhief 74ecutie 6fficer< 8eter ;ra#ec+*Letmathe
DorldEs leading food company
Swit!erlandEs largest industrial company
Dorldwide operations
123 factories
@roupEs total wor+ force< ..3, &-& people.
+istorical ,e-elo#ment
%&'' FompanyEs foundation
%2-3 :erger #etween Nestle and Anglo*Swiss Fondensed
:il+ Fompany
%2.2 :erger with 8eter*Failler*Cohler Fhocolates
Suisses. S. A.
%21( :erger with Alimentana S.A. (:aggi"
%2(% :erger with =rsina*?ranc+ (Swit!erland"
%2&3 Acquisition of Farnation (=SA"
23
%22- Acquisition of ;uitoni*8erugina (Italy"
%22. Acquisition of 9owntree (@;"
%221 Acquisition of 8errier (?rance"
%22& Acquisition of Spillers (@;"
.--. Aiestiture of ?indus #rand and parts of NestlH/s
fro!en food #usiness in 7urope.
Aiestiture of $ills ;ros, :>; and Fhase I San#orn
roast and ground coffee #rands (=SA".
.--' Acquisition of 8ower;ar.
Factories
Nestle has ' factories in India. These are
'6 o"a 0#un7a82
The Nestle factory in :oga has the pride of #eing the
first and most comprehensie factory of Nestle India.
Set up in %2'., it represents the core competence of
Nestle India in the manufacture of mil+ products
(7eryday, :il+maid", #eerages, culinary products
24
(:aggi sauces, noodles, soups etc.", weaning cereals
(Ferelac" and infant mil+ formulae.
%6 C9oladi 0 Tamil Nadu2
The factory in Fholadi started production in %2'(.
Situated a#out '- miles from Falicut, the factory today
has &% employees and produces %.35 of the total
turnoer of Nestle India. It is a %-- percent e4port
oriented unit which processes freshly pic+ed tea leaes
into solu#le instant tea.
:6 Nan7a"ud 0Karnata!a2
8roduction in this factory #egan in %2&2 with the
manufacture of Nestle instant coffee and Sunrise. Today
in addition to instant coffee the factory also
manufactures health #eerages. The plant to
manufacture :IL6 was also commissioned at this
factory. This factory employs %13 people and is cited as
a model in terms of enironment protection for its
26
installations to purify waste water as well as for its
proisions for recycling coffee wastes.
;6Samala!9a 0+ar*ana2
This factory was set up in %22,. Located (- +ilometres
from Aelhi , it manufactures weaning cereals , culinary
products ,health #eerages and mil+ products. 9ecently
the e4pansion of manufacturing capacity for :il+maid
Aessert :i4es was underta+en at this factory as this new
and unique product category is iewed to hae great
potential in the future.
<6Ponda 05oa2
This Cit*Cat factory was set up in @oa in %223 at a cost
of 9s. 3- crores. It represented a ma)or step #y Nestle
towards #ecoming the Num#er % Fhocolates and
Fonfectionery Fompany in India.
/6Bic9olim 05oa 2
27
The construction wor+ at this new factory is progressing
with speed. This factory will soon commence the
manufacture of culinary products, which is a +ey thrust
area for the company and will include latest
technological improements relating to this category of
products.
As a part of Nestles efforts towards continuous
improement and e4cellence in :anufacturing operation,
a :oga Improement team (:IT" was put in place at the
:oga factory. The team comprised of international
e4perts from Nestle Technical Serices (N7ST7F" and the
local staff. In %22', it em#ar+ed on a program with the
single minded o#)ectie of optimi!ing production costs
while enhancing the product quality so as to ma+e
Nestle products een more competitie in the mar+et
place. Arawing upon NestleEs glo#al e4perience and
manufacturing e4pertise in (3 countries the team
identified the following areas for detailed study *
8rocess improement to ensure the optimal usage of
resources
28
Improement of operational efficiency
Fost optimi!ation
A series of small #ut critically important initiaties
ranging from redesigning la#oratories to palletisation of
raw materials and pac+aging material utili!ation,
manufacturing and filling loses and la#our man hours
resulting in su#stantial saings and improed
productiity and machine utili!ation. In addition, seeral
non tangi#le #enefits in the form of systems for
sustaina#le improement in areas li+e factory
maintenance planning tools , down time recording
systems and performance measurement tools were also
reali!ed .
This pro)ect was highly successful and the company is
now implementing its +ey learningEs of :IT in its other
factories.
In a country as ast and dierse as India, su##l* c9ain
mana"ement is a#solutely critical to rapid growth.
39
Through ;7FA, Nestle has concentrated heaily on
streamlining and improing their supply chain
management in order to ma+e it more dependa#le, more
cost effectie and most importantly, more responsie to
mar+et needs.
?or #etter supply chain integration the planning of +ey
operations * purchase, production, distri#ution and sales
are synchronised to ensure that eery#ody wor+s
towards a common #usiness plan. :onthly o#)ecties are
#ro+en down into wee+ly and (whereer necessary" into
daily plans and monitored regularly to ensure smooth
implementation and quic+ correctie action when needed
. :a)or #enefits accrued thus far include reduction in
wor+ing capital through lower inentories of finished
goods and materials, #etter stoc+ aaila#ility and
reduction in o#solescence of materials.
In addition to traditional performance indicators,
quantifia#le performance measures hae #een identified
and implemented in all functional areas such as sales
planning, production output, quality assurance, material
31
ordering transportation and warehouse management.
These measures are monitored regularly to gauge the
e4tent of improement and identify root pro#lems for
ta+ing correctie actions.
Teams hae #een put in place at all factories and sales
offices to ensure the implementation is continuous and
self*sustaining. Areas of improement are regularly
identified and time#ound action plans esta#lished. ?or
this purpose, standard tools such a Total Juality
:anagement(TJ:", Cai!en, 3S and Small @roup
improement actiity (S@IA" are #eing e4tensiely used.
The efficacy of this hierarchical structure is seen in
NestleEs performance oer past few years of arious
products.
;y %2&2 the company had achieed a sales figure of
appro4imately 9s. .3& crores. %2&2 was the year of
launches. Seen new product lines were launched in this
year. This was also the year in which the Nan)agud
factory was set up. ;y the year %22., this sales figure
3'
was touching 9s 3-- crores. In the %22-Es the pace of
launches quic+ened and since the construction of the
factory at Samala+ha, .- new products hae #een
introduced. ;y %22', Nestle had a#out (' different
products in its portfolio with arious new products in the
pipeline as well. The sales figure now touched 9s. %.%1
crores. Thus sales grew #y 13-5 oer a period of one
and a half decades.
3.

TO,.Y NESTLE IS PRESENT IN ,I$$ERENT
.RKETS WIT+ T+E $OLLOWIN5 .IN BR.N,S
Solu8le co((ee
Nescafe, Taster/s Fhoice, 9icore, 9icoffy.
Roast and 5round Co((ee
$ills ;ros., :>;, ;on+a, Koegas, Loumidis
ineral Water
8errier, Fontre4, Vittel, Valert, Jue!ac, Arrowhead,
8oland Spring, ;u4ton, Vera, ;laue Juellen, Falistoga,
Santa :aria, San 8ellegrino.
Ot9er 8e-era"es
32
Nesqui+, Nescau, Nestea, :ilo, Farnation, Li##y/s Faro.
33
,air* Product
Nido, Nespray, Farnation, :il+maidG La Lechera, @loria,
Neslac, ;arenmar+e.
Brea!(ast Cereals
Nestle
Co((ee Creamers
Foffee*mate
In(ant $oods and ,ietetic Products
Nestle, Nan, Lactogen, Ferelac, Nestum, @uigo!
Culinar* Products 0Bouillons) sou#s) seasonin"s)
#re#ared dis9es) canned (ood) #asta) sauces2
:aggi, Frosse and ;lac+well, Li##y/s, Thomy, ;uiltoni,
Fontadina
34
$ro=en $oods
?indus, Stouffer/s ;uitoni, :aggi
Ice Cream
Nestle, ?risco, Aairy ?arm, :agnolia, :otta, Famy , ect.
Re(ri"erated Products 0*o"urts) desserts) #asta
sauces2
Nestle, Locatelli, Vismara, ;uitoni, Fontadina
C9ocolate and Con(ectioner*
Nestle, Frunch, Failler, ?rigor, Fho+ito, Sarotti,
@ala+G:il+y#ar, Les, Cit Cat, Juality Street, Smarties,
;aci, After 7ight, ;a#y 9uth, ;utterfinger, Lion, Nuts,
9olo, Aero, 8olo, etc.
36
$ood Ser-ices and Pro(essional Products
Fhef, Aaigel, Santa 9ica
Pet Care
?ris+ies, ?ancy ?east, Aplo, :ighty Aog, @ourmet.
S#eciali=ed #roducts (or t9e (ood industr*
?ood Ingredients Specialties (?IS"
O#9t9almolo"ical #roducts
Alcon
Cosmetics
L/6real
37
NEW PRO,>CT L.>NC+ES
To put all the product launches into perspectie, Nestle
now has &- products including arious flaors and
ariants this awesome list of &- products for most
companies is an oerfull palate. Nestle India Ltd. still
has a ariety of new products in the pipelines. It
#eliees in slowly coloni!ing as much territory as fast as
it can, adapting to natie conditions and then wor+ at
/$olding off the adancing herds/. Nestle products can #e
#roadly classified into 3 main ranges<
:il+ 8roduct
Fhocolate and Fonfectionery
;eerages
Fulinary
?ood Serice.
38
:il+ 8roducts
This category which comprises of condensed mil+, #a#y
mil+ foods, mil+ powders, acidified infant food, and
other mil+ products, showed a slump in %22' as sales of
mil+ products fell from 9s. ,%.1 crores in %223 to 9s.
,%.. crores in the said year. Fonsumer off ta+e remained
depressed throughout this year as a consequence of high
price increases necessitated #y su#stantial increases (M
3-5" in the cost of #asic raw materials (fresh mil+",
oer the past two year.
$oweer Nestle retained its leadership in the infant food
mar+et with Ferelac Lactogen and Nestum and een
introduced a new flaor of Ferelac*Ferelac 9ice in %22'.
49
C9ocolates and Con(ectioner*
Nestle pursues the o#)ectie of accounting for one in
eery three rupees in its sales figures through
chocolates and confectionery. This has thus #een one of
the thrust areas in Nestle. Nestle this year widened its
range of flaors in 86L6, #ac+ed #y its tremendous
success in the Indian :ar+et #y adding 86L6 Spearmint
to its 8ortfolio. This new flaor has also receied an
encouraging response in the mar+et according to mar+et
analysts.
:il+y#ar also retained its position as the num#er one
white chocolate #rand in India, howeer it did not record
a significant increase in sales, as a ma)ority of Indian
tastes still do not accept this flaor.
This year howeer, was a year of tremendous success for
Cit Cat. This internationally renowned #rand gained a
large increase in the :ar+et share in the past year and
Nestle officials are hopeful that this will further increase
in the coming years. $oweer this #rand along with its
41
success has #rought with it its share of Fontroersy as
the =nion of India has launched a Litigation against the
Cit Cat family pac+.
In %22( Nestle added to its range of confectionery #y
introducing S8LAS$, BA soft hearted, hard #oiled sweetB
this is #eing promoted as a sweet unique to India and is
positioned to a target audience in the age group of 1 to
%. years and Banyone with a soft heartB is a potential
customer. 8riced at 9s. % for a (.3*gram candy Splash
has #een introduced selectiely in the South and has
#een speculated to repeat 8olo/s performance. Nestle/s
officials claim that this candy has the potential to gra# a
quarter of the (-- crores confectionery mar+et.
The most recent of Nestle affairs with the confectionery
mar+et has #een the introduction of :ithai :agic, which
is Ba little :ithai, a little magic.B This new product was
launched in Septem#er %22(, in time for the Aiwali
purchases of sweets. This #rand has #een positioned
somewhere #etween chocolates and traditional sweets
4'
and the company is employing a push strategy to
promote this #rand.
The latest launch of Nestle in the Fhocolate and
confectionery diision is C9ar"e.
Be-era"es
This year has #een ery successful in the #eerages
mar+et for Nestle. The sales of #eerage hae increased
from 9s. ,.,., crores in %223 to 9s. ,2&.& crores in
%22'.
Nestles ?lagship Nescafe, which was pegged at 9upees
%-1- per +ilogram #efore the launch of Tata Fafe, met
with stiff competition from Tata Fafe priced at 9upees
33- per Cg., once it was introduced. Tata cafe claimed to
hae garnered a mar+et share of %(5 #y Aecem#er
%22'. This forced Nestle to cut prices of Nescafe to
9upees &1- per Cg. $oweer Nescafe still retains &,5
mar+et share in the 9s. %(( Frores mar+et for pure
instant coffee.
4.
Nestle Sunrise also showed an increase in sales and
captured .-5 of the 9s. .3, crores mar+et in :i4ed
instant coffee.
This year Nestle also launched :IL6, an internationally
renowned chocolate energy drin+, and the response for
this has #een encouraging.
Nestle has introduced Tasters Fhoice tea #ag pitched
against Ta) :ahal Tea #ags.
Culinar* Products
The mar+et in culinary products had witnessed a high
growth consequent to aggressie pricing decisions on
e4isting products and the introduction of a ariety of
new products to match the needs of the Indian
$ousewife. 7ncouraged #y this success Nestle launched
:aggi :acoroni Snac+ in three flaors*Fhic+en, :asala
and Tomato. Nestle officialEs say that this would
consolidate :aggis position as the num#er % culinary
#rand in India. The product focuses on conenience and
42
innoation as its =nique Selling 8roposition. This snac+
has opened a new segment for the maggi #rands. The
#rand is positioned as Louthful and is represented #y the
twists and curls of the macaronic snac+. It is speculated
to #e introduced in a phase manner nationwide to #e
place in the (.3*la+h outlets that :aggi noodles sells in.
In the spirit of catering to Indian tastes :aggi
introduced maggi pic+les in fie ariants #enchmar+ed
to gie the Bghar +a swadB. :aggi Aosa :i4 was also
introduced to offer superior quality and added
conenience. Apart from this :il+maid Cala+and :i4, a
traditional north Indian sweet of premium quality was
added to the mil+maid dessert mi4es. :aggi soup also
launched three new ariants. :aggi 9assam in particular
was noticea#le as yet another attempt to ma+e
traditional Indian coo+ing a little #it easier.
43
$ood Ser-ices
?ood serice items #asically deal with the out of home
segments, which would include ending machines.
Nestle/s food serice #usiness is poised for rapid
e4pansion to meet the growing need for such a relia#le,
time saing and cost effectie serice in this modern
age.
Nestle wants to sell 3-- million cups of tea and coffee
through its ending machines in the year .---. It
currently has ,3-- ending machines at assorted
locations (#oth pu#lic and priate". In %223 Nestle food
serice did well to end 1- million cups of Nescafe and
Tasters Fhoice tea. Its %22' sales were placed at 32
million cups of Nescafe and ,' million cups of teaN this
figure was howeer way #elow the e4pected sales for
the year.
44
In "##$ and "##" nestle has come with a number of
new products li%e it has come with many of the
diary products li%e mil%. &he mil% is avaliable in
the mar%et in the full cream ' toned and double
toned mil%. &he nestle has also come with the
dahi' butter which is available in the mar%et but at
very few shops .
()*&+) has also come with the products which will
target the children li%e FRUITIPS,MILKYBAR
CHOO,!STL! CHI!S! MAGGI OO"L!S#
46
;I;LI6@9A8$L
www.nestle.com
www.google.com
-?H/*A*?$
ABKI-?/
47
%NNE:*-E
)i!!ci$ Resu$ts !d Opertio!
8774%$s. in millions& 2;;4%$s. in millions&
Bross $evenue 282:: 27722
Bross *rofit %!IT& 26:6 2236
Interest <74 62<
)epreciation 885 24<
*rovision for Tax 43 252
*rofit after taxation <:8 <68
?xtraordinary tax
*ayment
2: 224
*rofit after taxation and
extraordinary item
<83 :24
*rofit brought forward 82< 2:<
$eserves written back :; 267
!alance available for
appropriation
5;8 4;2
48
Interim dividends paid 6<6 682
+inal )ividend proposed , ;5
Transfer to debenture
redemption reserve
:8 8
transfer to general
reserve
<: <4
/urplus carried in *rofit
and loss Account
6:6 82<
Bross $evenue increased by 82= during the year, and crossed
the 2877 crores mark . )omestic sales grew by 2;= and exports
%including sales to -epal & grew by 85 =. -et profit after tax grew by
85= , +rom $s :2.4 crores to $s <8.3 crores.
Throughout 8776, there was a marked lack of buoyancy in the
domestics market caused primarily by increased inflation and the
financial liquidity squee'e which affected all segments of the industry
and trade .
Interest costs rose substantially on account of higher funding
needs to service recently commissioned pro"ects as well as to meet
increased exports for which materials often had to be purchased in
advance .
69
Considering the recessionary market conditions, -estles overall
sales and progression during 8776 can be considered satisfactory.
$inancial In(ormation
In millions o( C+$ %&&/
Sales &% 1..
7;ITAA (a" %. 3%'
as 5 of sales %3.15
7;ITA (#" 2'--
as 5 of sales %%.&5
61
Trading 8rofit 2 %&'
as 5 of sales %%.,5
Net 8rofit 3 (',
as 5 of sales (.%5
Fapital e4penditure ,,-3
7quity .2 2-1
Total Assets '3 3.1
9esearch and deelopment costs % -,&
:ar+et Fapitali!ation, end Aecem#er %1' &'1
(a" :ainly 8harmaceutical products and Dater, managed
on a worldwide #asis.
(#" :ainly corporate e4penses, research and
deelopment costs, amortisation of goodwill
6'

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