Analysis Report Nestle India Ltd.

About the Company

Nestle
S.A
is
a Swiss transnational food and
beverage
company
headquartered in Vevey, Vaud, Switzerland. It is the largest food company in the
world measured by revenues, and ranked #72 on the Fortune Global 500 in 2014.
NESTL is the world's leading Nutrition, Health and Wellness Company with
mission of "Good Food, Good Life" is to provide consumers with the best tasting, most
nutritious choices in a wide range of food and beverage categories and eating occasions.

It is the largest food company in the world measured by revenues, and ranked #72
on the Fortune Global 500 in 2014.
The Company was founded in 1866 by Henri Nestl in Vevey, Switzerland, where
the headquarters are still located today. It employs around 2,80,000 people and have
factories or operations in almost every country in the world.

Share Holding Pattern of Nestle India

Shareholding Pattern of Nestle India

Cata
gory
Code

Category of Shareholder

Numbe
r of
Shareh
olders

Total
numb
er of
share
s

Number
of
shares
held in
demater
ialized
form

Total
sharehol
ding as a
percenta
ge of
total
number
of shares
AS A
% OF
(A+B)

AS A
% OF
(A+B
+C)

(A) Shareholding of Promoter and Promoter Group

A(1)

Indian

A(2)

Foreign (Bodies Corporate)

Sub Total

Total shareholding of
Promoter and Promoter
Group (A)

60,515,07
9
60,515,07
9

60,51
5,079

62.7

60,515,079

62.76

60,515,079

62.76

60,515,0
79

62.7
6

62.
76

62.7

(B) Public Shareholding

B(1)

B(2)

Institutions
Mutual Funds / UTI

56

801,747

790,657

0.83

0.83

Financial Institutions / Banks

46

109,160

103,534

0.11

0.11

Central Government / State

Government(s)

32,897

32,897

0.03

0.03

Insurance Companies

12

3,764,099

3,763,999

3.9

Foreign Institutional Investors

322

11,735,464

12.17

Sub Total

440

16,426,551

17.05

2,095,451

2,084,391

2.17

2.17

11,735,51
4
16,443,4
17

12.1
17.0

Non-Institutions

Bodies Corporate

1,518

Individuals
Individual shareholders holding nominal
share capital up to Rs. 1 lakh

70,574

9,011,730

7,703,033

9.35

9.35

Individual shareholders holding nominal

share capital in excess of Rs. 1 lakh

122

4,633,230

4,359,826

4.81

4.81

Any Others (Specify)

2,060

3,716,809

3,712,230

3.85

3.85
0.55

Non Resident Indians

1,934

532,882

528,303

0.55

Overseas Corporate Bodies

500

500

Trusts

13

3,566

3,566

Foreign Portfolio Investors

111

3,179,811

3,179,811

3.3

Foreign Individuals

50

50

17,859,480

20.18

Sub Total

74,274

19,457,2
20
35,900,6

20.1
37.2

Business Description
Nestle belongs to a food Processing Industry. Nestle India has a
head office in Gurgaon, Haryana. Nestle with a tag line Good Food,
Good Health in India is growing at the phenomenal growth under the
leadership of Chairman & Managing Director Mr. Suresh Narayanan. The
companys main competitors are AMUL & Britannia. Though its sale was
as high as 94,85.32 crore INR. After more than a century-old association with the country,
today, NESTL India has presence across India with 8 manufacturing facilities and 4
branch offices.

Products/Services
Nestle India provides different products under subcategories i.e
Baby Foods, Chocolate & Confectionery, Coffee, Culinary & Frozen food,
Dairy products, Drinks, Food services, ice creams etc. Here is detailed
information related to the marketing Mix of Nestle India.
Category
Baby Foods
Chocolate & Confectionery
Coffee
Culinary & Frozen food
Dairy products
Drinks
Food services
Ice creams

Products
Cereclec, Gerber
Kitkat, Crunch
Nescafe,
Nescafe
Cappuccino,
Nespresso
Maggi
Coffee-Mate
Milo, Nestea
Chef, Chef-mate, Maggi, Stouffers
Dreyers, Nestle Ice cream

Industry Analysis
Indias food grain production reached 251.12 million tonnes (MT) in FY15. India is
the worlds secondlargest producer of fruits and vegetables. The country produced 91.3
MT of fruits, 163.39 MT of vegetables during 2014-15. India enjoys a similar stature in the
production of marine products, and meat and poultry. India is the single largest producer
of milk in the world, with the production estimated at 137.7 MT.

India has the largest livestock population across the globe which is equal to 512
million, including 119 million milch (in-milk and dry) animals, 135 million goats and 65

million sheep. The segment contributes about 25 per cent to the countrys farm Gross
Domestic Product (GDP).

Given the above context, it is easy to understand that the food processing
industry is one of the largest industries in India. The countrys food processing industry
ranks fifth in terms of production, consumption and exports.

Strategic geographic location and proximity to food importing nations benefit

India in terms of exporting processed foods. During FY1115, India's exports of processed
food and related products (inclusive of animal products) increased at a CAGR of 23.3 per
cent to US$ 21.5 billion. Main export destinations for food products have been the Middle
East and Southeast Asia.

Government's policies are expected to help turn the Indian food processing
industry into a global outsourcing hub. Between April 2000 and May 2015, FDI in
agriculture and food processing in India stood at US$ 11.51 billion.

Financial Analysis
If you look at the Total Assets, It has increased by around 32% in last four
years despite decrease in the last year. This shows its strong position in the
market. Apart from that if we talk about its liabilities towards business it has
gradually invested in the business by creating long term debt in past few years.
This is great sign for the investors as the business is expanding considering
future demand.

Balance Sheet of Last 4 Years

2014
(` in
millions
)

2013
(` in
million
s)

2012
(` in
millions
)

2011
(` in
million
s)

EQUITY AND
LIABILITIES
SHAREHOLDERS
FUNDS
Share capital
Reserves and
surplus
NON - CURRENT
LIABILITIES

964.2
27,407.9
0

Long-term
borrowings
Deferred tax
liabilities (net)
Long-term
provisions
CURRENT
LIABILITIES

964.2
22,723.
30

16,268.
40

11,894.
80
2,154.7
0
11,933.
90

154.6
2,227.20
13,886.6
0

Short-term
borrowings

41.1

Trade payables

7,287.10

Other current
liabilities

4,095.70

Short-term
provisions

28,372.
10

2,130.60

13,554.
50
58,195.
0

0.1
6,330.4
0
5,002.5
0
2,138.8
0

23,687
.50

964.2
17,019.
90

25,983
.40

10,499.
50
1,620.8
0
10,250.
50

17,984.
10

22,370.
80

502.2
8,851.3
0

16,603
.0

2,459.2
0
4,808.3
0

5,394.0
5,580.3
0
307.6

12,739
.60

7,249.5
0

2.4

13,471
.80
63,142
.70

964.2
11,775.
40

11,284.
30
51,639.
20

5,287.0
2,120.7
0

14,675
.20
44,017
.80

ASSETS
NON - CURRENT
ASSETS
Fixed assets
Tangible assets
Capital work-inprogress

Non-current
investments
Long-term loans
and advances
Other noncurrent assets

31,766.4
0

33,693.
10
2,947.1
0
36,640.
20
2,241.2
0
1,239.4
0

2,447.80
34,214.2
0
3,044.60
1,299.50
-

32,042.
70
3,440.8
0
35,483.
50
1,254.5
0

4.7
38,558.

40,125

15,757.
50
13,717.
80
29,475.
30
36,738.
0

1,639.1
0

31,114
.40

30

.50

CURRENT
ASSETS
Current
investments

5,073.60

Inventories

8,441.0

Trade
receivables

991.0

Cash and bank

balances

4,458.20

Short-term loans
and advances

520.7

Other current
assets

152.2

19,636.
70
58,195.
0

6,269.6
0
7,359.3
0

3,648.6
0
7,455.8
0

842.7
7,493.6
0
1,013.6
0

875.7
2,369.6
0

38.4

1,343.7
0
7,340.4
0
1,154.2
0
2,272.1
0

541.5
23,017
.20
63,142
.70

10.0

790.0
14,901.
20
51,639.
20

3.0

12,903
.40
44,017
.80

Profit and Loss account for last 4 years

Looking at gross sales it has increased by around 32%. Apart from that PAT also
increased by 25% over the period of time. Gradual profit increase indicates the
steady returns over the period of time.
2014

2013

` in
millions

` in
millions

2012
` in
million
s

2011
` in
millions

REVENUE
Gross Sale of
products
Less: Excise duty
Other operating
revenues
Total revenue from
operations

101,2
95.0
3,232.
30

98,062.7
0

93,79
8.70
3,179
.70

90,619.0

485.7
98,548.4
0

391.5
91,010.5
0

44,825.4
0

39,069.9
0

1,088.50

1,100.40

(674.30)

1,053.20

85,81
8.80
2,796
.20

83,022.
60

633

76,735
.80
1,827.
60

74,908.
20

508.9
83,655.
60

75,417.
10

37,568.
70
1,115.3
0

35,286.
50

(482.80
)
5,464.6
0
1,533.3
0
17,964.
30

EXPENSES
Cost of materials
consumed
Purchases of stockin-trade
Changes in
inventories of
finished goods,
work-in-progress

7,549.10

6,856.90

3,375.40
24,013.4
0

3,299.50
22,176.3
0

(920.2
0)
6,633.8
0
2,771.5
0
20,367.
40

81.1

99.4

68.5

103.9

364.3
80,622.9
0
17,925.5
0

413.1
74,068.7
0
16,941.8
0

258.4
67,802.
50
15,853.
10

469.0
60,965.
0
14,452.
10

and stock-in-trade
Employee benefits
expense
Depreciation
Other expenses
Impairment loss on
fixed assets
Net provision for
contingencies (from
operations)
Total Expenses
PROFIT FROM
OPERATIONS

1,148.0

Other income

873.2

830.9

Finance costs
Employee benefits
expense due to
passage of time
Net provision for
contingencies
(others)

142.3

365.1

648.3

558.1

249.5
17,758.6
0

207.4
16,642.1
0

85.1

70.0
17,743.5
0

138.1
16,780.2
0

PROFIT BEFORE
COPORATE SOCIAL
RESPONSIBILITY
EXPENSE,
EXCEPTIONAL
ITEMS
AND TAXATION
Corporate social
responsibility
expense
Exceptional items
PROFIT BEFORE
TAXATION

266.0

51.1

15,526.
20

13,879.
20

Tax expense
Current tax
Deferred tax

5,824.
10
72.5

PROFIT AFTER
TAXATION
Weighted average
number of equity
shares outstanding
Basic and Diluted
Earnings Per Share
(Face value ` 10)

5,075
.0
5,896.60
11,846.9
0

533.9

5,608.90
11,171.3
0

3,728
.30
1,118
.60

4,161.
40
4,846.9
0
10679.
30

102.3

4,263.7
0
9615.5
0

96,415,7
16

96,415,7
16

96,415,
716

96,415,
716

122.87

115.87

110.76

99.73

Cash flow statement for last 5 years

Cash Flow Statement shows the cash inflow and outflow from the different
activities i.e Cash Flow from Operating Activities, Cash flow from Investing
Activities and Cash flow from Financing Activities. Positive Cash from operating
Activities is a good sign for investors same like investors would also like to see
negative cash flow from both Financing and investing activities.
Looking at Nestle Indias Cash Flow Statement it shows great stability in
case of cash flow. Cash profit is there more than double compare to December
2010. Negative cash flow from investing shoes that company is been investing
throughout the years while Cash Flow from Financing activities also indicates that
company is repaying towards its finance. Despite all the tick mark there it is
generating cash profit. Thus from investing point of view it is very safe company.

INR in Crore
Net Profit Before Tax

Dec '14

Dec '13

Dec '12

Dec '11

Dec '10

12
months

12
months

12
months

12
months

12
months

1774.35

1678.02

1552.62

1387.92

1145.11

Net Cash From Operating

Activities

1644.02

1796.4

1693.38

1158.17

1036.82

Net Cash (used in)/from investing

Activities

-431.7

-440.94

-940.83

-1528.47

-445.89

Net Cash (used in)/from Financing

Activities

-1635.28

-580.12

-513.16

323.19

-543.81

Net (decrease)/increase In
Cash and Cash Equivalents

-422.96

775.34

239.39

-47.11

47.13

Opening Cash & Cash Equivalents

1366.07

590.73

351.34

398.45

358.84

943.11

1366.07

590.73

351.34

405.97

Closing Cash & Cash Equivalents

Key Financial Ratios

Dec '14

Dec '13

Dec '12

Dec '11

Dec '10

10

10

10

Investment Valuation Ratios

Face Value
Dividend Per Share
Operating Profit Per Share (Rs)
Net Operating Profit Per Share
(Rs)

10

10

63

48.5

48.5

48.5

48.5

211.62

202

192.71

163.51

129.3

1,022.12

943.94

864.44

779.39

649.29

Profitability Ratios
Operating Profit Margin(%)

20.7

21.39

22.29

20.97

19.91

Profit Before Interest And Tax

Margin(%)

17.12

17.61

18.89

18.87

17.77

Gross Profit Margin(%)

17.27

17.77

18.96

18.93

17.87

Cash Profit Margin(%)

15.32

15.6

16.46

15.54

15.17

Net Profit Margin(%)

12.02

12.27

12.81

12.79

13

Return On Capital Employed(%)

62.66

47.79

56.58

64.6

135.06

Return On Net Worth(%)

41.75

47.16

59.38

75.47

95.7

294.27

245.68

186.53

132.13

88.72

62.75

47.79

56.59

72.55

135.06

Return on Assets Including

Revaluations
Return on Long Term Funds(%)

Liquidity And Solvency Ratios

Current Ratio

0.53

0.65

0.54

0.55

0.62

Quick Ratio

0.25

0.39

0.22

0.27

0.27

Debt Equity Ratio

0.01

0.5

0.58

0.76

--

0.01

0.5

0.58

0.57

--

Long Term Debt Equity Ratio

Management Efficiency Ratios

Inventory Turnover Ratio
Debtors Turnover Ratio
Asset Turnover Ratio

11.67

12.37

11.55

10.49

12.33

107.49

105.92

82.12

84.1

98.22

3.07

2.84

3.27

4.85

8.71

Profit & Loss Account Ratios

Material Cost Composition
Imported Composition of Raw
Materials Consumed
Expenses as Composition of Total
Sales

47.08

44.6

46.9

48.93

50.6

11.27

11.24

11.12

10.87

10.26

6.5

6.84

5.07

5.19

5.59

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit
Earning Retention Ratio
Cash Earning Retention Ratio

Earning Per Sharte

Book Value

51.27

41.85

43.78

48.63

57.11

48.8

57.62

57.52

54.11

43.52

60.14

67.38

66.06

60.11

51.07

Dec '14

Dec '13

Dec '12

Dec '11

Dec '10

122.87

115.87

110.76

99.73

84.91

294.27

245.68

186.53

132.13

88.72

Price Performance

Closing Price of Nestle India (BSE)

6600

6500

6400

6300
Price
6200

6100

6000

5900
42278

42282

42286

42290

42296

42298

42303

Before Investing Keep these things in mind

Food processing industry is stable industry. Market boom or slump has less
impact on it.

Recent Maggi Row has hit the stock price of the company. Before Investing
internal information as well as information related to Maggi controversy
must be considered

Recent slump is just due to Maggi controversy. Nestle India still one of the
safest stocks to invest in

Empirical study suggest no relation between inflation vis--vis Stock price

of FMCG sector.

42306

Disclaimer: This Report is prepared by Himanshu Patel, Institute of Management Nirma University
for his personal purpose only and not to be used by any other purpose.