1995

NESTLE INDIA LIMITED

DIRECTORS' REPORT

Your Directors have pleasure in submitting their report and the

statement
of accounts for the year ended 31st December, 1995.

Financial Results and Operations

Gross Revenue increased by 40% during the year, the highest growth
recorded
in the last ten years. In the process the milestone of Rs. 1000 crores
(Rs.
10000 million) has been achieved. Domestic sales grew by 34% and
Exports by
70%. Net Profit from Operations increased by 31% over 1994.

Sales performance across all major product categories was in line

with
expectations, both on the domestic front, as well as Exports.

The Company achieved a record level of Exports during the year. At Rs

1979
million, Exports now constitute 20% of your Company's sales turnover.

Interest cost has risen very sharply on account of higher funding needs
to
service recently commissioned projects, as well as to meet increased
export
orders, for which materials often had to be purchased in advance.

The Company's overall sales and profit progression during 1995 can thus
be
considered very satisfactory The current year has started well and
your
Directors are hopeful of another very satisfactory year.

Dividends

Two interim dividends of Rs 2.50 each totalling Rs. 5/- per equity
share,
were paid during the year. Your Directors are pleased to recommend a
final
dividend of Rs. 1.50 per equity share (making a total of Rs. 6.50,
subject
to tax). If approved, the final dividend, will be payable to
the
shareholders registered at the close of business hours on 13th May,
1996.

Debentures
The Directors certify that the funds raised by the issue of
Secured
Redeemable Non Convertible Debentures have been utilised for the
purpose
for which the funds were raised and the same have not been diverted for
any
other purpose.

As per the terms of their issue the Series II Secured Redeemable

Debentures
aggregating Rs. 221 million were redeemed during 1995. Further, a part
of
Series PP-I Debentures aggregating Rs. 70 million were also repaid
under
buy back option.

Public Deposits

The Company has not accepted any fresh consequence, expansion

of
manufacturing public deposits during the year. A deposits capacity at
the
Ponda Factory has already have matured in 1993 or earlier, out of
which
deposits totalling Rs. 4,29,000/- are still unclaimed as at 31st
December,
1995. Of these, 2 deposits amounting to Rs. 10,000/-have since
been
claimed as on the date of this Report.

Business Development

The Directors are pleased to state that the concrete steps initiated
last
year in respect of the following key business areas are proving
extremely
fruitful:

- Rapid progress in the creation of enhanced manufacturing capacities

- Measures taken to ensure availability and improved quality of key

raw
materials (fresh milk, green coffee, cocoa beans, tomato paste and
soya).

- Enhanced market presence through launch of appropriate new products.

- Aggressive plans to strengthen Sales & Distribution network,

particularly
in smaller towns.

- Ambitious manpower development and training programmes for the

Company's
personnel across all disciplines.

These and other operational initiatives have resulted in the gross

revenue
of your Company doubling in 3 years, from Rs. 4945 million in 1992 to
Rs.
10011 million in 1995, undoubtedly a very satisfactory rate of growth.

During 1995, the Company launched the internationally famous KIT

KAT,
manufactured at the new factory at Ponda, Goa. KIT KAT launch has met
with
extremely encouraging response, and, as a consequence, expansion
of
manufacturing capacity at the Ponda Factory has already been initiated.

Performance of the major new products launched over the past two
years
continues to be very satisfactory - in particular BONUS Soya-Based
Health
Beverage, POLO Mint, MILKMAID Dessert Mixes, and CONTADINA Snack
Dressing
Encouraged by this success, new variant, for a number of these products
are
in the process of being introduced.

Your Company's continued emphasis on exports has resulted in another

very
successful year for this business area, which, as mentioned earlier,
has
grown by 70% to Rs. 1979 million. Export of Instant Coffee and Instant
Tea
to Russia, Hungary, Taiwan, the United States of America and Japan
being
the major contributors, there was significant improvement in the export
of
Culinary products as well.

The Directors fully support the Company's continued efforts towards

rapid
expansion, as well as the strengthening of the Sales & Distribution
network
and continued increased emphasis on Manpower Development and Training.

The Expansion Project at Nanjangud Factory to double Instant

Coffee
manufacturing capacity has also been commissioned. The same factory
will
soon have the distinction of manufacturing MILO - the world's
largest
selling Chocolate Energy Food Drink, the project for which is at
an
advanced stage of completion.

An additional new plant to manufacture Instant Noodles was installed

and
commissioned at Samalkha Factory, to cope with the excellent demand
for
this Product.
Consequent to extremely buoyant sales, the Company has
commenced
construction of a new factory at Bicholim, Goa, for the manufacture
of a
range of Culinary products, which is expected to be commissioned
towards
the latter part of this year. Further capacity expansion for
manufacture of
superior quality Instant Tea has also been completed at Choladi
Factory,
which is a 100% Export Oriented Unit.

Fresh milk being a key raw material, your Company is undertaking

special
efforts to improve the quality of milk being received at its Moga
Factory
and, at the same time, improving its service to the 43,000 farmers
involved
in this activity. Some of the steps being initiated are:

Installation of Chilling Centres at 200 villages throughout the

milk
district.

Provision of Milk Collection Centres with new and improved equipment

to
enable on-the-spot testing of quality.

Implementation of a special Milk Management Computer System to

ensure
maximum accuracy in computation and enhance promptness in payments
to
farmers.

The above steps are likely to be completed by the end of this year,
and
subsequently, similar efforts will also be undertaken for other
key
agricultural raw materials, to the mutual benefit of both the Company
and
the farmers/ planters.

In line with Company's policy to make use of spare capacities

available
with local manufacturers, agreements have been finalised with
existing
copackers for additional requirements and with new copackers for a
variety
of products. This policy has proved to be of considerable mutual
benefit
and has made it possible for your Company to enter the market rapidly,
at
the same time, providing the local manufacturers access to
improved
technology and quality standards.
As you will see the above indicates the considerable commitment of
your
Company towards continued investment and rapid growth, a policy which
is
fully endorsed by your Directors.

Directors

Your Directors would like to place on record their deep appreciation

for
the valuable contributions made by Mr S.A Issenmann who resigned
as
Director with effect from 22nd March, 1996.

Mr. Lim Khing Fong, appointed in the casual vacancy, brings with him
rich
experience and specialised knowledge relevant to the business of
the
Company as a result of his long association with Nestle S.A.,
Switzerland.
He holds office till the Annual General Meeting, and is eligible
for
reappointment. Notice has been received from a member signifying
his
intention to propose him as a Director.

Mr M.W.O. Garrett retires by rotation and being eligible offers himself

for
reappointment.

Auditors

M/s A F. Ferguson & Co., Auditors of the Company, retire in accordance

with
the provisions of the Companies Act, 1956, and being eligible
offer
themselves for reappointment.

In pursuance of Section 233-B of the Companies Act, 1956, your

Directors
have appointed M/s Ramnath Iyer and Co. as the Cost Auditors to conduct
the
cost audit of infant milk foods for 1996. The appointment has
been
confirmed by the Central Government.

Information regarding Conservation of Energy etc. and Employees.

Information required under Section 217(1)(e) of the Companies Act,

1956
read with Rule 2 of the Companies (Disclosure of Particulars in the
Report
of Board of Directors) Rules, 1988 and information as per Section
217(2- A)
of the Companies Act, 1956 read with the Companies (Particulars
of
Employees) Rules 1975, as amended from time to time, form part of
this
Report. However, as per the provisions of Section 19(1)(b)(iv),
the
Report and Accounts are being sent to a shareholders of the
Company
excluding the information relating to conservation of energy
technology
absorption and foreign exchange earnings and outgo, and the statement
of
particulars of employees. Any shareholder interested in obtaining
such
particulars may inspect the same at the Registered Office of the
Company or
write to the Secretary for a copy.

Employees

The Directors wish hereby to place on record their appreciation of

the
efficient and loyal services rendered by all staff and workmen of
the
Company, without whose wholehearted efforts, the overall very
satisfactory
performance would not have been possible.

On behalf of the Board of Directors

NARENDRA SINGH
CHAIRMAN

Place : New Delhi

Dated : 22nd March, 1996.