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Introduction of food industry
Food industry
The food industry is the complex, global collective of diverse business that together supply
much of the food energy consumed by the world population only subsistence farmers, those
who survive on what they grow, can be considered outside of the scope of the modern food
industry.
The food industry includes:
Regulation
Education
Research and development
Financial services
Manufacturing
Agriculture
Food processing
Marketing
Wholesale
Consumer
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Definitions
It is challenging to find an inclusive way to cover all aspects of food production and sale. The
Food Standards Agency, a government body in the UK, describes it thus:
"...the whole food industry from farming and food production, packaging and
distribution, to retail and catering."
The Economic Research Service of the USDA uses the term food system to describe the same
thing:
"The U.S. food system is a complex network of farmers and the industries that link to
them. Those links include makers of farm equipment and chemicals as well as firmsthat provide services to agribusinesses, such as providers of transportation and financial
services. The system also includes the food marketing industries that link farms to
consumers, and which include food and fiber processors, wholesalers, retailers, and
foodservice establishments."
Industry size
Processed food sales worldwide are approximately US$3.2 trillion(2004).
In the U.S. consumers spend approximately US$1 trillion annually on food, or nearly 10
percent of the Gross Domestic Product(GDP). Over 16.5 million people are employed in the
food industry.
Source of food industry
Agriculture
Agriculture is the process of producing food, feed, fiber and other desired products by the
cultivation of certain plants and the raising of domesticated animals (livestock). The practice of
agriculture is also known as "farming", while scientists, inventors and others devoted to
improving farming methods and implements are also said to be engaged in agriculture. More
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people in the world are involved in agriculture as their primary economic activity than in any
other, yet it only accounts for four percent of the world's GDP.
Food processing
Food processing is the methods and techniques used to transform raw ingredients into food for
human consumption. Food processing takes clean, harvested or slaughtered and butchered
components and uses them to produce marketable food products.
Wholesale and distribution
A vast global transportation network is required by the food industry in order to connect its
numerous parts. These include suppliers, manufacturers, warehousing, retailers and the endconsumers. There are also those companies that, during the food processing process, add
vitamins, minerals, and other necessary requirements usually lost during preparation.
Wholesale markets for fresh food products have tended to decline in importance in OECD
countries as well as in Latin America and some Asian countries as a result of the growth of
supermarkets which procure directly from farmers or through preferred suppliers, rather than
going through markets.
Retail
With populations around the world concentrating in urban areas,food buying is increasingly
removed from all aspects food production. This is a relatively recent development, taking place
mainly over the last 50 years. The supermarket is a defining retail element of the food industry,
where tens of thousands of products are gathered in one location, in continuous, year-round
supply.
Food preparation is another area where change in recent decades has been dramatic. Today,
two food industry sectors are in apparent competition for the retail food dollar.
Prominent Food Companies
Nestlis the world's largest food and beverage company.
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PepsiCo is the largest U.S. based food and beverage company.
Unilever is an Anglo-Dutch company that owns many of the world's consumer product
brands in foods and beverages.
DuPont are the leading producers of pesticide, seeds, and other farming products.
BothArcher Daniels Midlandand Cargillprocess grain into animal feed and a diverse
group of products. ADM also provides agricultural storage and transportation services,
while Cargill operates a finance wing.
Bunge is a global soybean exporter and is also involved in food processing, grain
trading, and fertilizer.
Dole Food Company is the world's largest fruit company
Sysco cooperation mainly catering to North America, is one of the world's largest food
distributors.
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Introduction of Milk industry
Dairy
A dairy is a facility for the extraction and processing of animal milk mostly from cows or
goats, but also from buffalo, sheep, horses or camels for human consumption. Typically it is a
farm (dairy farm) or section of a farm that is concerned with the production of milk, butter and
cheese.
History
Milk producing animals have been domesticated for thousands of years. Initially, they werepart of the subsistence farming that nomads engaged in. As the community moved about the
country, their animals accompanied them. Protecting and feeding the animals were a big part of
the symbiotic relationship between the animals and the herders.
In the more recent past, people in agricultural societies owned dairy animals that they milked
for domestic and local (village) consumption, a typical example of a cottage industry. In this
case the animals were normally milked by hand and the herd size was quite small, so that all of
the animals could be milked in less than an hour about 10 per milker.
Processing of milk
Dairy plants process the raw milk they receive from farmers so as to extend its marketable life.
Two main types of processes are employed: heat treatment to ensure the safety of milk for
human consumption and to lengthen its shelf-life, and dehydrating dairy products such as
butter, hard cheese and milk powders so that they can be stored.
Milk is processed in following ways.
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Nestle
Nestl S.A is the largest nutrition and foods company in the world, founded and
headquartered in Vevey, Switzerland. Nestl originated in a 1905 merger of the Anglo-Swiss
Milk Company, which was established in 1866 by brothers George Page and Charles Page, and
the Farine Lacte Henri Nestl Company, which was founded in 1866 by Henri Nestl. The
company grew significantly during the First World War and following the Second World War,
eventually expanding its offerings beyond its early condensed milk and infant formula
products. Today, the company operates in 86 countries around the world.
History of Nestle
Early History
From 1867 to 1900
The company dates to 1867, when two separate Swiss enterprises were founded that
would later form the core of Nestl. In August of that year, Charles A. and George Page,
brothers from Lee County, in the United States, established the Anglo-Swiss Condensed Milk
Company in Cham. In September, in Vevey, Henri Nestl developed a milk-based baby foodand soon began marketing it. In the succeeding decades both enterprises aggressively expanded
their businesses throughout Europe and the United States. (Henri Nestl retired in 1875, but the
company, under new ownership, retained his name as Farine Lacte Henri Nestl.) In 1877
Anglo-Swiss added milk-based baby foods to its products, and in the following year the Nestl
company added condensed milk, so that the firms became direct and fierce rivals.
In 1905
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However, the companies merged to become the Nestl and Anglo-Swiss Condensed
Milk Company, retaining that name until 1947, when the name Nestl Alimentana SA was
taken as a result of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its
holding company, Alimentana SA of Kempttal, Switzerland. Maggi was a major manufacturer
of soup mixes and related foodstuffs. The companys current name was adopted in 1977. By
the early 1900s, the company was operating factories in the United States, United Kingdom,
Germany and Spain.
During World War I
World War I created new demand for dairy products in the form of government contracts; by
the end of the war, Nestl's production had more than doubled.
After the war, government contracts dried up and consumers switched back to fresh milk.
However, Nestl's management responded quickly, streamlining operations and reducing debt.
The 1920s saw Nestl's first expansion into new products, with chocolate the company's
second most important activity.
During World War II
Nestl felt the effects of World War II immediately. Profits dropped from US$20million in 1938 to US$6 million in 1939. Factories were established in developing countries,
particularly Latin America. Ironically, the war helped with the introduction of the company's
newest product, Nescaf, which was a staple drink of the US military. Nestl's production and
sales rose in the wartime economy.
Dynamic Phase for Nestle
The end of World War II was the beginning of a dynamic phase for Nestl. Growth
accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings
and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and
Stouffer's (1973).
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Diversification came with a shareholding in L'Oral in 1974. In 1977, Nestl made its second
venture outside the food industry by acquiring Alcon Laboratories Inc.
In 1984
Nestl's improved bottom line allowed the company to launch a new round of
acquisitions, notably American food giant Carnation and the British confectionery company
Rowntree Mackintosh in 1988, which brought the Willy Wonka Brand to Nestl.
Most Recent History
From 1990 to 2002
The first half of the 1990s proved to be favorable for Nestl: trade barriers crumbled
and world markets developed into more or less integrated trading areas. Since 1996 there have
been acquisitions including San Pellegrino (1997), Spillers Petfoods (1998), and Ralston
Purina (2002).
There were two major acquisitions in North America, both in 2002: in June, Nestl merged
its U.S. ice cream business into Dreyer's, and in August a US$2.6 billion acquisition was
announced of Chef America, the creator of Hot Pockets. In the same time frame, Nestl came
close to purchasing the iconic American company Hershey's, though the deal fell through.
Another recent purchase includes the Jenny Craig weight loss program for US$600 million.
From 2002 to 2010
In December 2005 Nestl bought the Greek company Delta Ice Cream for 240 million.
In January 2006 it took full ownership of Dreyer's, thus becoming the world's biggest ice cream
maker with a 17.5% market share.
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In November 2006, Nestl purchased the Medical Nutrition division of Novartis
Pharmaceutical for $2.5B, also acquiring in 2006 the milk flavoring product known as
Ovaltine. In April 2006 Nestl bought baby food manufacturer Gerber for $5.5 billion.
.
In December 2006 Nestl entered in a strategic partnership with a Belgian chocolate maker
Pierre Marcolini. Nestl agreed to sell its controlling stake in Alcon to Novartis on 4 January
2010. The sale forms part of a broader US $39.3 billion offer by Novartis to fully acquire the
worlds largest eye-care company.
Nestle in Pakistan
Nestl has been serving Pakistani consumers since 1988, when its parent company, the
Switzerland-based Nestl SA, first acquired a share in Milkpak Ltd.
Today Nestle is fully integrated in Pakistani life, and is recognized as producers of safe,
nutritious and tasty food, and leaders in developing and uplifting the communities in which it
operates.
Nestl in Pakistan ensures that its products are made available to consumers wherever in the
country they might be. Convenience is at the heart of the Nestl philosophy, and its aim is to
bring products to people's doorsteps.
Nestle at a Glance
Ever since Nestl was established, it has been committed to nurturing people worldwide.
Today, as the world's leading Food and Beverages Company, and leaders in health and
wellness, it tries to cater to all your family's nutritional needs, no matter where in the world
you live.
Its story begins in 1867, when Henri Nestl developed a baby formula that saved a child's life
and marked the beginning of Nestl's decades-old commitment to nutrition. In the 140 years
since then, it has expanded around the world and developed a range of products designed to
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suit every taste, need and cultural preference. Its distinctive seal is recognized everywhere as a
guarantee of quality and healthfulness.
Nutrition, quality and convenience remain the keystones of our products and even as it
confronts the new century's challenges, it feels its duty to adapt to the changing needs of ourconsumers.
COMPANY INFORMATION
Ticker: Nestle
Country: Pakistan
Major Industry: Food and Beverages
Sub Industry: Diversified Food
2007 Sales: Rs. 34,183,847,000
Employees: 2345 (Pakistan as of Jan 2007)
Currency: Pakistan Rupees
Market capital: 61,221,938,400
Fiscal year end: December
Shares outstanding: 45349584Share type: Ordinary
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MISSION STATEMENT
At Nestle we believe that research can help us make better food so that people live a
better life. Good food is the
primary source of Good Health through out life. We strive to bring consumer foods that are
safe, of high quality and provide optimal nutrition to meet physiological needs. In addition tonutrition, health and wellness, Nestle products bring consumers the vital ingredient of taste and
pleasure.
As consumer continues to make choices regarding food and beverages they consume,
Nestle helps provide selection for all individual taste and lifestyle preferences.
Research is a key part of our heritage at Nestle and an essential element of our future.
We know there is still much to discover about health, wellness and the roll of food in our lives,
and we continue to search for answers to bring consumers GREAT FOOD FOR GREAT LIFE.
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VISION AND STRATEGY:
The Nestle global vision is to be the leading health, wellness and Nutrition Company
in the world. Nestle Pakistan subscribes fully to this vision, in particular we envision
to.
Lead a dynamic motivated and professional workforce - proud of its heritage and
bullish about the future.
Meet the nutrition needs of consumers all age groups from infancy to old age,
from nutrition to pleasure, through an innovative portfolio of branded food and
beverage products of the highest quality.
Deliver share value through profitable it growth, while continuing to play a significant
and responsible role in the social, economical and environmental sectors of the country. We have profitable and diversified high quality food and beverages product portfolio,
delivering 60:40+ advanced consumer available across all sales channels.
Our brands preferred choice in their categories. Consumer insight drives all aspects of
our marketing and communication efforts.
Our commodities to the consumer are relevant, cutting-edge and adhere to the highest
standards of responsible commodities.
Our company is seen a No 1. Career destination for talented motivated + ambitions
professionals. Our result oriented organizational standard ensures effective commodity and
empowered self management.
our milk collection and agro service will continue to play the primary role in
development of the dairy sector in rural Pakistan.
Our proactive innovation and renovation culture is the key to our success in market
place.
fully integrated systems (Nestl Pakistan, suppliers, customers) ensures efficient
business processes. Nonstrategic activities and products are outsourced or discontinued
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OBJECTIVE
Making our customers winners by constantly exceeding their expectations.
OUR POLICIES
Business policies will continue to evolve and adapt to a changing world, our basicfoundation is unchanged. The time of origin of our company, and reflects the basic ideas offairness, honesty and a general concern for people.
Nestl is committed to the following business policies in all countries, taking intoaccount local legislation, cultural and religious practices.
Nestls business objective is to manufacture and market the companys product insuch a way as to create value that can be sustained over the long term for shareholders,employees, consumers, and business partners.
Nestls does not favor short-term profit at the expense of successful long-termbusiness development.
Nestls recognize that its consumers have a sincere and legitimate interest in thebehavior, beliefs and actions of the company behind brands in which they place their trust, andthat without its consumers of the company would not exist.
Nestls believes that, as a general rule, legislation is the most effective safeguard ofresponsible conduct, although in certain areas, additional guidance to staff in the form ofvoluntary business policies is beneficial in order to ensure that the highest standards are metthroughout the organization.
Nestls is conscious of the fact that the success of a corporation is a reflection of theprofessionalism, conduct and the responsible attitude of its managements and employees.Therefore recruitment of the right people and ongoing training and development are crucial.
Nestls continues to maintain its commitment to follow and respect all applicable locallaws in each of its markets.
The policies formed by the Nestl are for every employee of Nestl around the world.The Nestl brands follow these above mentioned policies and does not make there own
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policies. Members of Nestl are strongly committed to the company, its development, itsculture and its policies.
Apart from professional skills and insight, the capacity and willingness to apply thesepolicies are the main criteria for progressing in the organization, regardless of origin,
nationality, religion, race, gender or age.
CORPORATE SOCIAL RESPONSIBILITY IN PAKISTAN:
In 141 years of experience ,Nestle have learnt that businesses and the societies inwhich they operate are in symbolic relationship .If society flourishes , business isgood .If business does well, it brings wealth and stability to a society.
From this organization interdependence come Nestl conception of CSR .Nestletries to create shared value at every step of the value chain, to ensure that their actions
benefits not only the company but also society at large. Both are after all,interdependent. This consideration affects all of Nestle corporate initiatives.
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Board of Directors(International)
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Company Information (Pakistan):
Company Secretary:
Mohammad Ali Sadozai
Management:
Adil Aali Head of Quality AssuranceArsalan Khan Business Manager BeveragesMohammad Ali Sadozai Head of Legal AffairsFakhar Ahmed Head of Corporate AffairsHaseeb Aslam Country Business Manager-Water Ian Donald Managing Director Jack Moser Head of Milk Collection and Agri-Services
Khurram Zia Business Executive Manager-Ambient DairyKhurram Javed Business Manager-Chilled DairyNauman Khan Country Business Manager-Nestle ProfessionalPeter Wuethrich Head of TechnicalRaymond Franke Head of Finance & ControlSamra Maqbool Business Manager- CulinarySalman Nazir Head of Supply ChainShaheen Sadiq Head of CommunicationsUsman Bhatti Country Business Manager-NutritionUzma Butt Head of Human Resources
Zafar Hussain Shah Head of Sales
Registered & Corporate Office308-Upper Mall, Lahore, PakistanABX: (042) 111 637 853Fax: (042)35789303
Corporate Office Annex304-Upper Mall, Lahore.Park Lane Towers1st & 2nd Floor, Tufail Road,Lahore, PakistanPABX: (042) 36099300
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Factories:
Sheikhupura:29th Kilometer, Lahore- Sheikhupura RoadSheikhupura, Punjab, Pakistan
Phone: (056) 346615 -29 Fax: (042) 36368710
Kabirwala:Khanewal Kabirwala Road, KabirwalaDistrict Khanewal, Punjab, PakistanPhone: (065) 111 637 853 Fax: (065) 2411432
Karachi:Plot No. 823, North Western Industrial Area,Port Qasim, Karachi 74900, PakistanPhone: (021) 34720151-3 Fax (021) 34720154Plot No. 33/7, Sector 15, Korangi Industrial Area,
Karachi 74900, PakistanPhone: (021) 111 123 333 Fax: (021) 35066996
Islamabad:Plot No . 32, Street3, Sector 1-10/3, Industrial Area,Islamabad, PakistanPhone: (051) 4445991 -93 Fax: (051) 4445997
Auditors: KPMG Taseer Hadi & Co. (Chartered Accountants)
Share Register:Gorsi Associates (Pvt.) Limited.
Transfer:2nd Floor, 202-Sufi Chamber,Link McLeod Road,Lahore.
Agent:Cell: 0346-4479601Fax: 042-37230865
Legal Advisor:Chima & Ibrahim (Advocates)
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Bankers: The Royal Bank of Scotland Limited (Formerly ABN AMRO
Bank (Pakistan) Limited Allied Bank Limited Citibank N.A Deutsche Bank Ltd. MCB Bank Ltd. Standard Chartered Bank (Pakistan) Ltd. United Bank LimitedNational Bank of Pakistan
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DEPARTMENTS
SCIENTIFIC DEPARTMENTS:
Research at the Nestl Research Center encompasses the sensory and nutritional value of
products along with consumer behavior, nutrition needs and social desires for foods and
beverages. At the forefront of all research activities is Nestls commitment to the utmost
safety and quality. A diverse selection of scientific disciplines is necessary for this global
approach to nutrition research. The scientific departments currently at NRC include:
Consumer Confidence
Food Science
Bio Analytical Science
Food/Consumer Interaction
Scientific and Nutrition Support
Innovations and Publications
CONSUMER CONFIDENCE:
The Consumer Confidence department is the scientific heart of the Nestl Quality
System. Consumer confidence and trust has been fundamental to Nestl's success for over 135
years.
Our wide range of expertise is made available to R&D scientists, operational and technical
units and businesses. We cover five main areas:
Consumer Safety that guarantees the delivery of safe products.
Product Compliance that combines all aspects related to the legal compliance of Nestl
products.
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Consistent Quality that involves all measures for the delivery of Nestl products with a
consistent level of quality.
Consumer Preference that ensures our products demonstrate superior organoleptic and
nutritional quality.
Occupational and Environmental Safety that combines all aspects related to the safety of
workers and the environment.
Safety evaluation requires extensive scientific skills in the two areas of food safety: analytical
method development and science-based risk assessment. Ingredients also need to be analyzed
for authenticity and allergens. Leading edge packaging expertise also has a role to play in
ensuring both quality and safety of Nestl food products.
Anticipation of food safety issues is guaranteed through a systematic screening of scientific
and technical literature and evaluation by our network of experts for case-adapted responses.
FOOD SCIENCE
The Food Science Department focuses on the physical, chemical and biotechnological aspects
of food raw materials, ingredients and food products. Our scientists in collaboration wit
nutritionists provide the scientific basis for innovative food concepts which deliver consumer
benefits in the areas of pleasure, health and Wellness, and food quality and safety.
For an innovative approach in the way we make food products, we work on three main aspects
of modern foods.
Food Processes: e.g., molecular basis of unit operations including extraction and refining of
ingredients, or biotransformation of raw materials and ingredients.
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Functionalities of Macronutrients: e.g., structure forming properties of biopolymers, or
ingredient interactions.
Delivery of Functionalities in Food Products: e.g., control of bioavailability of functional
molecules through specific carrier systems.
The Food Science Department assembles state-of-the-art knowledge in food ingredients, food
materials, food colloids and processes. Our research activities are targeted towards innovative
and inventive new ways to combine the classical food ingredients like proteins, carbohydrates
and fats to create new food structure concepts (e.g. foams and mousses) with specific textures
and functionalities.
Our projects are multidisciplinary and are organized in close collaboration with the otherdepartments of NRC including PTCs and R&D Centers as well as the external scientific world
such as universities.
BIO-ANALYTICAL SCIENCE
The Bio-analytical Science Department at NRC is where scientists from a range of disciplines
provide knowledge required for post genomic work. We want to understand how food
molecules affect the complex life processes... and how this knowledge can benefit mankind.
Core disciplines span from analytical chemistry and biochemistry to (bio) mathematics,
bioinformatics and clinical studies. We focus on developing advanced analytical tools and
methodologies to support Nestl research and, in particular, the Nutrition and Health program.
Food is a complex mixture of molecules that play different roles in the body, from maintenance
to defense and protection. Understanding the fundamental biological process is key to
deciphering the contribution of genetic variation among individuals to health and wellness
compared to the effects of the environment and lifestyle.
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The biological process is a complex interplay of relationships between protein sequences,
structure dynamics and molecular recognition. This process can be studied at several levels of
bimolecular organization, which include genetic, and gene expression (genomics and
transcriptomics), protein function and signaling (proteomics) and metabolite control and
regulation (meta-bionomics). Bioinformatics and mathematic modeling are additionally needed
to unify all of the comics science areas.
We aim to be at the forefront of Bio-analytical developments and implement them to further
the science of nutrition and health.
INNOVATIONS AND PUBLICATIONS
Achieving health and wellness through foods is a challenging adventure. It extends the
boundaries of consumer expectations and satisfaction beyond the classical sensory experience.
Todays discoveries provide the knowledge for tomorrows innovations.
Much groundbreaking scientific work has emerged from the Nestl Research Center in theform of significant product innovations and recognizedscientific publications.
FOOD/CONSUMER INTERACTION
In the context of health and wellness, we not only need to understand the physiology of healthbut also to know and understand the consumer's relationship with food. What is it about a food
that makes the consumer like and chooses it?
We study in detail aspects of pleasure derived from food before, during and after consuming it.
These include the pleasure of anticipation, as well as sight, texture, taste and aroma. We also
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investigate the feeling of satisfaction. In one sense, satiety is the reward derived from
consuming a particular food. But it is also strongly linked to signals that tell you to stop eating
and feel happy.
Physicists and chemists help us to understand how to deliver aroma, taste, and texture. Butbeyond biology, psychology or sensory behavior, ethnic culture is also a key to understanding
why a given consumer prefers certain foods over others.
The Department is truly multidisciplinary. With expertise ranging from chemistry and biology
to sensory and social sciences, we are a natural bridge between Food Science and Nutrition and
Health.
SCIENTIFIC AND NUTRITION SUPPORT
The Nutrition and Scientific Support Department (SNS) ensures that research findings and the
latest news on food, nutrition, health and wellness is disseminated across the entire Nestl
R&D community and businesses. In addition, we support R&D innovation by providing the
tools, training and knowledge to assess and communicate the nutritional benefits of Nestl
products.
The department is composed of three interlinked groups: the first group provides Competitiveand Scientific Information and Intelligence to our scientist, technologists, and to the
management. The second group, Nutritional Assessment and Training, provides support, tools
and training to improve the nutritional profile of our products and to increase the nutrition
knowledge of Nestl employees. The group collaborates with a wide network of nutritionists
from around the world in our PTCs, R&D centers and business markets. The third group,
Functional Ingredients, focuses on traditional and functional ingredients. This group
documents the strength of scientific efficacy evidence, supports the compilation of dossiers for
regulatory approval, and proposes new nutrition concepts.
The core of nutrition, health and wellness knowledge within the Nestl R&D community, we
supply information to our colleagues to allow efficient and timely responses to consumer
health and wellness demands.
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CONFECTIONARY DEPARTMENTS:
Nestl has different division. There are four departments in the Nestl confectionary that are asfollows:
CCST Department
Marketing Department
Sales Department
Distributor
CCST DEPARTMENT
The CCST department is a supporting department for both Sales and Marketing departments. It
provides a linkage to both departments by connecting them in case of any demand from other
department.
MARKETING DEPARTMENT
The Marketing Department is responsible for all sort of activities including the promotion,
advertising and tools used for generating demand.
The Marketing department is also responsible for arranging stalls and functions for the
promotional and official reasons respectively. These stalls are conducted in different public
places so that more of the people become aware of the importance of products that ensure
quality. These stall activities remain active for around 4-5 days. Thus, in a month 4-5 suchstalls are managed.
After a stall activity finishes, the person who conducted the stall activity has to report to their
seniors about the response they received from the public and the number of new customers
they have been able to attract during their stall activity.
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SALES DEPARTMENT
The Sales Department is responsible for carrying out the sales of Nestl confectionary covering
the whole of Lahore. To conduct the sales efficiently and effectively, there are some territories
that have been assigned some area of Lahore. The area managers administer these territories.
Monthly, the Area Sales Managers are assigned with the targets by the upper management.
This helps in creating competition among the territories
Like some territories covers these areas respectively.
Interior Lahore, upper Mall
Gulberg, Cantt, Cavalary
Defense
Model Town, Township, Garden Town, Johar Town, Rehmanpura and Thokar Niaz baig
These four territories are further covered with a total of 20 routes, each covering a specified
area of Lahore on daily basis.
Everyday, the Nestl delivery van drop confectionary products. There are three people who go
for sales. They are:
Driver
DSR
Loader
For carrying out the transaction easily, the DSR are provided with a handbook. The handbookkeeps records of the data of the retailers. All this data is stored in the system thus, keeping the
system updated.
At the start of the month, the target for the sale of the confectionary is set and all the
distributions have to achieve that target by the end of the month that helps in increasing the
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productivity. The sales target varies with the season. For example, in winters, the sales of
Confectionary products are more as it is in summers. Also, the monsoon season affects the
sales of the candies and chocolates.
When it is the end of the month, all the distributions submit in their report to the Sales andDistribution Manager that contains the percentage of the target achieved including the quantity
sold by each route.
DISTRIBUTOR
For carrying out the daily working, some internally hired or external sources are acting as a
distributor for Nestl in Lahore. The distributor has various responsibilities/duties that are as
follows:
ELEET MANAGEMENT
Procurement of Vehicle.
Installation of Hood on Distribution vehicles.
Paint of Hood & its maintenance.
Maintenance of vehicles in good condition.
DELIVERY TEAM
Short listing of DSRs for hiring.
Supervise DSR orientation & Training.
Daily supervision of DSR performance.
Ensure DSRs working as per company direction.
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CUSTOMER SERVICES
Delivery at customer premises on schedule day & routing time.
Ensuring delivery on special request forwarded by customer services.
Attending all delivery related complaints in time.
WAREHOUSING
Procure a warehouse as per Nestl Standard.
Ensure all Nestl Quality Standard (FIFO, NQS, and QSM etc).
Maintain a clean environment.
Minimize store losses.
ACCOUNTING
Maintain audited accounts of the business.
Provide in time reports to Nestl Management.
Make claims as per company guidelines & verify data.
Ensure efficient operation.
GENERAL
Adhere & act on all policies/decisions by Nestl Management.
Close liaison with Sales Management for Target Achievement.
Corporate Purchase Department
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Corporate purchase department is headed by the corporate purchase manager. It has two
further branches
Local Purchase Department
Imports Departments
Local Purchase Department
Raw Material & Packing Department
Technical Purchase Department
Major Purchases:
Raw material
Commercial ChemicalsLaboratory Chemicals
Packing Material
Office Equipment
Vehicles
Sale of Assets
Technical Department:
Technical Department directly interact with factory for the purchase of machinery and parts of
machinery.
Major Purchases:
Balls
Balls Bearings
Belts
Pipes etc.
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Taxation Department
This department deals with all kinds of taxes which the paid. All the departments send
data about taxes and this department calculates taxes according to the prescribed rate. It has
further three branches:
Sales Tax
Excise Tax
Income Tax
Income Tax:
Income tax calculates Corporate Tax and Employees Income Tax. Corporate Tax is calculated
on the rates fixed by the government. For the calculation of the Employee Income Tax first all
incomes of the employees are added and then the tax is calculated on the basis of the
prescribed rate.Sales Tax
This branch calculates sales tax on all the sales of the period on all the products according to
the rates set by the government from time to time.
Information System Department
Information System is very important in any organization. This department maintains contact
with its establishment in country in which it operating and with headquarter and in other
countries where it carries its operations
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Our Brands
Nestl believes that food plays a key role in achieving a well-balanced person. And so its
philosophy is Good Food for a Good Life!
At Nestl, products are developed keeping consumers, their preferences and health in mind.
Millions of consumers the world over trust Nestl products for good reason: when they choose
a Nestl product they have the satisfaction of choosing quality, taste, variety, convenience and
the good nutrition.
With over 140 years of experience and expertise, Nestl takes great pride in bringing a
portfolio of health and wellness because happy, healthy consumers are important.
Milk Dairy and Chilled Dairy
Beverages
Bottled Water
Baby Food
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Foods
Breakfast Cereals
Chocolate & Confectionary
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OUR PRODUCTS
Milk, Dairy and Chilled Dairy
NESTLE MILKPAK
MILKPAKis a trusted brand known throughout the country for its nutritious wholesome
goodness and pure natural taste. To secure a happier and healthier future for family, you need
the support of a strong partner like MILKPAK, now fortified with extra strength of Iron,
Vitamin C and Vitamin A that keeps you and your family strong. One glassof MILKPAK fulfills 20% Iron, 41% Calcium, 18% Vitamin A and 20% Vitamin C of your
daily requirements as per Nutritional
NESVITAMilk
If you are set for an active and healthy lifestyle then you need to get the strength your bones
need & the smartness you desire with NESVITAMilk & Yogurt as its high in Calcium and low
in fat.
With 50% more Calcium than regular milk & yogurt, NESVITA locks the Calcium in your
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bones making them strong and healthy. This is because it contains CALCI-LOCK, a special
combination of Calcium, Vitamin D and other essential vitamins and minerals.
Just two glasses of NESVITA Milk or four servings of NESVITA Yogurt helps meet an adults
daily requirement for Calcium intake. And it contains less than 1% Fat. NESVITA PRO-
BONES Milk is available in two handy sizes: 1000ml and 200ml. NESVITA Yogurt is
available in 450g tub packaging.
NIDO Nutrition System
The NIDO Nutrition System, comprising of NIDO 1+ and 3+, is a series of Nestl's milk
powders that address the developmental needs of children according to their age and nutritional
requirements
NIDO 1+ is developed for children aged 1-3 years. It contains Prebio 1 that helps maintain a
healthy digestive system and helps prevent upset tummies.
NIDO 3+ with Prebio 3 is designed to support your childs mental and physical development as
well as to aid healthy digestion.
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NIDO FORTIFIED is for children between 4-12 years of age who are growing up in an
increasingly competitive environment and require something extra to ensure success on the
playing field and in the classroom. It is enriched with iron, 24 vitamins and minerals, that are
essential for your childs growth which can be tracked by the 10 signs of good nutrition
.
Nestle Fresh n Natural Dahi
Packed full of delicious nutrition, Nestl Fresh n Natural Dahi is the perfect addition to our richlocal taste and cuisine. Full of pure dairy goodness, it brings you all the benefits of milk along
with active live cultures that aid digestion.
Rich in calcium and protein, Nestl Fresh n Natural Dahi is hygienically packaged for the
health and safety of your family and is available in packs of 125g and 450g.
Let Nestl Fresh n Natural Dahi jazz up your coleslaw, enjoy its unique flavor in chilled lassi
to refresh yourself, or just have it as it is for a delightful healthy snack.
Nestle Fruit Yogurt
Nestl Fruit Yogurt is a mouth-watering treat with real fruits chunks in sweet creamy yogurt. A
healthy option for you to serve your kids, making yogurt fun! Nestl Fruit Yogurt goes great
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with breakfast and dessert, or can be had as it is to satiate cravings for a delicious snack
anytime you like.
Available in three delightful flavors; strawberry, mango and peach,Nestl Fruit Yogurt gives
you a variety of scrumptious flavors to treat that sweet tooth with low-fat yogurt, the way you
like it!
Nestle Raita
Sometimes you need something extra with lunch or dinner and ordinary raita just doesnt do
the job. Thats where Nestl Raita comes in. With its unique mouth-watering taste, guaranteed
hygiene and simple convenience, you can indulge your taste buds with just the right flavor that
transforms your meal into a culinary delight.
Hassle-free and ready-to-eat, Nestl Raita is not only packed full of taste, but is also a great
source of calcium and aids digestion too!
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It is available in zeera (cumin) and podina (mint) flavors to suit your individual taste.
MILKPAK Cream
Pour it on, pure n thick for that soft, rich, velvety flavour that is MILKPAK Cream.
Its silky creamy texture is ideal with strawberries or mangoes! Some prefer to give their coffee
a swirl for that creamy finishing touch or put
a generous dollop on their naan (round flatbread).
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BEVERAGES
NECAFE
Jaago! Stimulate your mind. Awaken your soul. Arouse your senses. Come alive
with NESCAF.
Every great tasting cup of NESCAF is rich, aromatic and favourable. It is frothy, intense and
indulging; bold and satisfying. Serve it hot or icy cold; strong black or milky, the NESCAF
experiences are as diverse and unique as its many blends and
varieties. Ranging from the morning wake-me-up, to getting through
the day, quiet reflective moments to unwinding, parties to simply hanging out with your pals,
the NESCAF magic goes beyond just a great tasting cup of coffee; its eye opening, thought
provoking & stimulating. It stimulates one physically, mentally and emotionally touching the
body, mind and soul. NESCAF fits the bill A to Z!
NESCAF CLASSIC
NESCAF Classic kicks start your day and keeps you going and going
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NESCAF GOLD
The premium blend of coffee that gives you rich taste with an aroma to soothe your soul.
NESCAF 3in1
Sugar, Creamer & Coffee; all you need is love and a little hot water. Makes every cup taste
great. Easy to make, convenient to store and hassle free usage
MILO
With the new and improved MILO, children have more reasons to be active as it gives them
the energy they need for an active and healthy lifestyle. A specific balance of Vitamins,
Minerals and Actigen E help optimize the release of energy from Proteins, Fatsand
CarbohydratesLoaded with extra cocoa and rich malt, MILO has the
irresistible chocolaty taste that kids love. So treat your children withMILO and watch them at
their active best!For your convenience MILO is available both in powder and ready to drink
form.
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NESTLE FRUITA VITALS
Rise & Shine to Life with NESTL FRUITA VITALS
NESTL FRUITA VITALS Orange Juice
NESTL FRUITA VITALS Apple Nectar
NESTL FRUITA VITALS Red Grape Nectar
NESTL FRUITA VITALS Pineapple Nectar
NESTL FRUITA VITALS Chaunsa Nectar
NESTL FRUITA VITALS Guava Nectar
NESTL Mango drinkNESTL Orange Mango drink
BOTTLED WATER
NESTLE PURE LIFE
Pakistans Favorite Water, NESTL PURE LIFE, is pure, safe and healthy drinking
water for you and your family. Every bottle of NESTL PURE LIFE is produced with
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the Nestl Safety System and is carefully sealed with a proprietary seal. Purity of the
highest standards is matched by an optimal balance of essential minerals, enhancing the
health and wellbeing of your family.
No wonder its Pakistans favourite water because more people trust it than any other
brand.
For your convenience NESTL PURE LIFE is available in
non-returnable 0.5 liter and 1.5 liter bottles at retail outlets and Bulk bottles for Home
& Office Delivery in 19 & 12 liter (12 liter is
available at retail outlets).
BABY FOODCERELAC
Bharpoor nashvonuma!
Sehatmand mustakbil ka behtrin aghaaz!
Best Start to a Healthier Future!
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Whether its your first-born or even your third bundle of joy each
baby is unique and special. You want the best for your baby in every way and that also means
the best nutrition for your babys healthy
development, giving him or her the solid foundation for a bright and healthy future!
From birth to 3 years of age, your baby goes through a period of rapid growth and
development. Choosing the best nutrition for your baby can be difficult and confusing and you
always wonder if its just right.Each stage of your babys growth is unique and so are the
changing nutritional requirements. CERELAC infant cereals (6 months onwards) are easy to
digest and grouped in stages according to the changing nutritional needs of the growing child,
with
CERELAC providing the right nutrition at each stage.
CERELAC is available in three sizes: 350g & 175g box packaging and a 25g sachet packagingfor your convenience
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FOOD
MAGGI 2 Minutes Noodles
MAGGI realizes that mums feel the need of being more fun around their children; therefore, it
gives them a chance to break out from their mum mould. Now involve your little ones in the
kitchen for a supervised activity full of fun and great learning as they help prepare MAGGI
Noodles for themselves.
New MAGGI 2-Minute Noodles are available in three delicious
flavors: Chicken, Chatkhara and Lemon Chaska.
BREAKFAST CEREALS
NESTL CORNFLAKES, NESTL KOKOCRUNCH
Breakfast has been declared the most important meal of the day and with good reason. Its
the first meal after your body has been resting all night and this is the meal that is going to fuel
the body and prepare it for the day ahead.
All of us: children, teens and even adults benefit from a good breakfast. A bowl of cereal is an
ideal way to start your day!Available in two varieties, NESTL CORNFLAKES (275g and
150g boxes) and kids favourite chocolaty NESTL KOKOKRUNCH (330g and 170g boxes)
are delicious cereals made from wholesome grains and packed with Vitamins, Calcium and
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other minerals.Try them with your choice of milk: MILKPAK or NESVITA to give you and
your family a nutritious burst of energy and a great start to the day, every day.
CHOCOLATE AND CONFECTIONARY
KITKAT AND KITKAT CHUNKY
Have a break, have a KITKAT
Chocolate is one of the most loved indulgences around the world.
It is one of life's little pleasures, which delights the senses of all ages.
KITKAT is by far one of the most popular chocolates all around the world! Its trademark red
and white colors and the distinct KITKAT logo makes it one of the most recognized brandsever. This light hearted treat of wafer fingers coated with delicious smooth chocolate, can be
enjoyed in the signature style of snapping one finger at a time. KITKAT Chunky is a single
solid finger that is perfect for those who want a mouthful!
KITKAT is sold in 11g, 17g and 35g finger bars and
KITKAT Chunky is available in 46g bar.
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POLO
The Mint with the hole!
Just the right sweetness, fresh and minty.
Thats POLO, the all-time favorite mint with the hole. Its popular around the globe
for its just-because moments! POLO mints are products for all occasions, especially when you
need to freshen your mouth and breath with its cool, lingering aftertaste .POLO mints come in
stick-packs of 9, 21 & 30 gms.
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NESTLE PAKISTAN Ltd.BALANCE SHEET
AS ON DEC 31, 2007
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EQUITY AND LIABILITIES 2008 2007
Amount in 000Share Capital and Reserves:
Authorized capital(75000000 in 2007) and (2006: 75000000)
750,000 750,000Issued, subscribe and paid up capital 453,496 453,496
Share premium 249,527 249,527General Reserve 280,000 280,000Accumulated profit 3,405,824 3,128,682
4,388,847 4,111,705
Non Current Liabilities:Long term finances 5139875 4028700Deferred taxation 1319333 1371675Retirement benefits 351968 238370Liabilities against assets subject to finance lease 177582 119602
6988758 5758147
Current liabilities:
Current portion of Liabilities against assets subjectto finance lease 54042 29863Short term borrowings- secured 300000 1035000
Short term running finance under mark-uparrangements -secured 1924287 1637799Customers security deposits-interest free 127884 124572Trade and other payables 2798185 3062027Interest and mark-up accrued 102173 89261
5306571 5978522TOTAL EQUITIES AND LIABILITIES 16,684,176 15,848,574
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NESTLE PAKISTAN Ltd.BALANCE SHEET
AS ON DEC 31, 2008
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ASSETS 2008 2007
Amount in 000
Tangible fixed assets:
Property, plant and equipment 9464373 9074428Capital work-in-progress 1382401 971183
10846774 10045611
Intangible assets: 49744 92382
Long term loans and advances: 98544 80670
Long term security deposits: 5036 6088
Current assets:
Stores and spares 804647 436573Stock in trade 2488573 2393306Trade debts 456813 344053Current portion of long term loans and advances 26615 21279Advances, deposits, prepayments and otherreceivables
1488103 2022387
Cash and bank balances 419327 4062255684078 5623823
TOTAL ASSETS 16684176 15848574
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NESTLE PAKISTAN Ltd.INCOME STATEMENT
FOR THE PERIOD ENDED ON DEC 31, 2008.
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2008 2007
Amount in 000Sales -- net 34,183,847 28,235,393Less: cost of goods sold (25,231,532) (20,285,142)Gross profit 8,952,315 7,950,251
Less: Distribution and selling expenses (3,890,352) (3,538,284)Less: Administration expenses (956,816) (900,822)Operating profit 4,105,147 3,511,145
Less: Finance cost (557,325) (584,434)Less: Other operating expenses (1,382,138) (442,914)
Add: other operating income 61,800 65,959Profit before taxation 2,227,484 2,549,756
Taxation (674,590) (744,544)Net profit after taxation 1,552,894 1,805,212
Earning per share 34.24 39.81
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NESTLE PAKISTAN Ltd.CASH FLOWS STATEMENT
FOR THE PERIOD ENDED ON DEC 31, 2008
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2008 2007
Amount in 000Cash flows from operating activities:Cash generated from operations 4,224,959 4,534,010Decrease in long term security deposits 1052 --Increase in long term loans and advances (23,210) (27,170)Retirement benefits paid (89,867) (74,690)Finance cost paid (544,413) (593,722)Tax paid (41,697) (234,803)Net cash generated from operating activities 3,526,824 3,603,625
Cash flows from investing activities:
Fixed capital expenditures (1,871,296) (2,909,391)Sale proceeds of property, plant and equipment 74,233 67,321Net cash used in investing activities (1,797,063) (2,842,070)
Cash flows from financing activities:Prepayments of long term finances -- (300,000) Net movement in short term borrowing (735,000) 335,000Payment of finance lease liabilities (66,383) (18,333)Dividend paid (1,201,764) (226,748)Net cash used in financing activities (2,003,147) (210,081)
Net increase/decrease in cash (273,386) 551,474Cash and cash equivalent at beginning of the year (1,231,574) (1,783,048)Cash and cash equivalent at the end of the year (1,504,690) (1,231,574)
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NESTLE PAKISTAN Ltd.STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED ON DEC 31, 2008
CAPITAL
RESERVEREVENUE RESERVE
AMOUNT IN 000Sharecapital
Sharepremium
Generalreserve
Accumulated profit
Total
Balance as at December31, 2007 453,496 249,527 280,000 3,128,682 4,111,705Final dividend for theyear ended December 31,2007 (Rs. 10 per share) -- -- -- (453,496) (453,496)Interim dividend for the
six months period endedJune 30,2008 (Rs. 9 pershare) -- -- -- (408,146) (408,146)Interim dividend for thenine months period endedSeptember 30,2008 (Rs.7.5 per share) -- -- -- (340,122) (340,122)Total recognized incomeand expenses for the year -- -- -- 1,478,906 1,478,906Balance as at December31, 2008 453,496 249,527 280,000 3,405,824 4,388,847
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PEST Analysis SWOT Analysis and BCG Matrix
SWOT ANALYSIS
STRENGTHS ----------------- TO BUILD ON
WEAKNESESS ----------------- TO COVER ON
OPPORTUNITIES ----------------- TO CAPTURE
THREATS ----------------- TO DEFEND ON
Where there is a company in operation it has to work in two kinds of environment i.e.
The external environment
The internal environment of the company.
For a company to avail maximum and avoid maximum, it has to know what it has to avail and
what it has to avoid. The external environment has to be scanned by the management for any
arising opportunities or any critical threats. The resources of a company constitute its strengths
and weaknesses.
External factors are broadly categorized into;
Economic forces
Social, cultural, demographic, and environmental forces
Political, governmental and legal forces
Technological forces
Competitive forces etc
Internal factors are;
Marketing strength of firm
Financial/Accounting resources
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Management
Computer information system
Production/operations etc
BENEFITS OF SWOT ANALYSIS
A SWOT Analysis is conducted by the company so that it is able to position itself to
take advantage of particular opportunities in the environment and to avoid or minimize
environmental threats. In doing so, the organization attempts to emphasize its strengths and
moderate the impact of weaknesses. The analysis is also useful for uncovering strengths that
have not been fully utilized and in identifying weaknesses that can be corrected. Matching
information about the environment with the organization's capabilities enables management toformulate realistic strategies for attaining its goals.
SWOT ANALYSIS OF NESTLE:
STRENGTHS:
Global food producer, located in over 100 countries. Consistently one of the world's largest
producers of food products, with sales in the USA in 2007 of $10 billion; sales and earnings in
2007 were better than expected, even in a down turned economy. Global sales in 2007 topped
$101 billion.
Repeatedly ranked as the world's largest bottled water company and have set up
facilities to operate water resources in a responsible manner. In 2007, Nestl was
named one of "America's Most Admired Food Companies" in Fortune magazine for the
twelfth consecutive year.
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Nestl provides quality brands and products and line extensions that are well-known,
top-selling brands including:
Nestle Milkpak, Nestle Nesvita, Maggie Noodles, NIDO Nutrition System, Nestle Fruit
Yogurt, MILKPAK Cream.
Chocolate and Candy: Kit Kat, KITKAT AND KITKAT CHUNKY, POLO
Drinks: MILO, NESTL FRUITA VITALS, Pineapple Nectar, Red Grape Nectar
.
Gerber: baby formula, prepared baby foods, baby cereals, water, juice, yogurt, foods for
infants.
Professional brands sold to restaurants, colleges, hotels, and food professionals
including Nescafe, Nestle Juice etc.
Successful due in part to their unquestionable ability to keep major brands consistently
in the forefront of consumer's minds (and in their shopping carts) by renovating
existing product lines, keeping major brands from slipping into saturation/decline and
having superior access to distribution channels.
Weaknesses
Their LC-1 division was not as successful as they thought it would be in France. In the
late 1980s, Dannon entered the market with a health-based yogurt, and become the top
selling brand of yogurt; Nestl's 1994 launch was behind the product life cycle curve in
an already mature market and could not compete against a strong, established brand.
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Growth in their organic food sales division was flat in 2007, even though the industry
grew 8.9%.
Since 2004 the breakfast cereal industry has been under fire from the FDA and the
American Medical Association, both of which say that false claims of "heart healthy"
and "lower cholesterol" need to be removed from packaging and advertising. They have
also been forced to reduce the amount of sugar in their products, as parent's advocates
groups claimed they were contributing to the diabetes epidemic among American
children.
General Mills is an experienced, established brand and are the market leader in the
USA, however, they have been lacking in innovation, have not cashed in on the
booming health food craze and have been behind in creating new, niche products,especially in their yogurt division, where Yoplait is the only brand making a profit.
In 2007, although their products did not carry the recalled pistachios, several of their
ice cream brands, Dryer's, Edy's and Haagen-Dazs, were still plagued with bad PR and
loss of sales.
Opportunities
In today's health conscious societies, they can introduce more health-based products,
and because they are a market leader, they would likely be more successful.
Provide allergen free food items, such as gluten free and peanut free.
They launched a new premium line of higher cacao content chocolates dubbed Nestl
Treasures Gold, in order to cash in on the "recession economy" in which consumers cut
back on luxury goods, but regularly indulge in candy and chocolate. Americans want
luxury chocolates, and high-end chocolate is immune to the recession (so far), because
it is an inexpensive indulgence.
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Opened Nestl Caf's in major cities to feature Nestl products.
Threats
Any contamination of the food supply, especially e-coli. Their Toll House brand cookie
dough was recalled in March of 2008 because of e-coli. Outbreaks were linked to 28
states and the product had to be recalled globally. Nestl has yet to find out how this
happened, and is still investigating.
They were affected by the pet food recall in 2006, in which 95 different brands of dog
and cat food were recalled due to contamination with rat poison. Also in 2006, FDA
learned that certain pet foods were sickening and killing cats and dogs. FDA foundcontaminants in vegetable proteins imported into the United States from China and
used as ingredients in pet food.
Raw chocolate ingredient prices are soaring; dairy costs alone rose 50% in 2007, this
cuts heavily into their profit margins and often gets passed on to consumers, by
shrinking the packaging in a way that is almost unnoticeable-therefore the consumer is
paying the same prices for less product.
They have major competitors, like Hershey's, Cadbury-Schweppes (owned by Pepsi),
Lindt and Ghirardelli, Kellogg's, Post, Starbucks, Beech-Nut, Quaker, Kraft Foods,
Dannon, Del-Monte, Iams, Earth's Best, Heinz, Frito-Lay (owned by Pepsi).
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BCG Matrix
STARS-Pure life and Confectionaries:
The 2 SBUs i.e. Mineral Waters and Confectionaries fall into this category of the BCG Matrix.These SBUs have high market share and high industry growth rate. These SBUs are requiringlots of investment to compete in growth market. For example, lots of money is spent andaggressive marketing strategies have been implemented for the Mineral Water to build andmaintain market share. Nestle Pure Life has captured 50% of the bottled water market inPakistan since it was introduced. Its approximate sales for 2008 are Rs. 70,401000. This salesfigure is quite impressive as the sales rose quite high in one year. It is predicted that there willbe additional growth in the mineral water category in coming years. The sales of theConfectionaries rose to Rs. 106,559000 from 87,758,000. The huge increase of Rs. 18,801,000puts this SBU in the stars category and shows its increasing market share. There is a growingmarket for products in Confectionaries, For example Kit Kat (even though it is imported), Polo
Smarties etc. This can be proven from the fact that Nestle keeps introducing new products inthis category.
CASH COWS- Milk Products, Coffee and Dietic Infants Food:
Milk products, Coffee and Dietic and Infant food have a high market share and are doingbusiness in mature industries. Since, the customers of this product category are loyal, themarketing costs of these SBUs are quite low and as a result a large amount of cash can be
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generated. Customers loyalty is a must for the Cash Cows to maintain there market share. Thesales of these Milk products have increased to Rs. 108,430,000 from Rs. 87,758,000. This hugeincrease in sales reflects the high market share of this SBU. However, its growth rate is lowbecause in general this category is in the maturity stage- that is- a number of milk productshave been launched by Nestle, most of which are quite old. An innovation has not really been
made in this category. The same conclusion can be made aboutCoffee. There is an already existing market for Coffee which is not increasing further by largeamount. The sales of Coffee were Rs. 46, 89000 in 2008 and Rs. 392, 00000 in 2007. Thishuge difference shows that a great amount of cash is being generated by this SBU. Sales ofDietic and Infant Food rose to Rs. 60, 935000 from Rs. 52, 655000. The infant food units ofNestle are operating in a mature industry. Like the milk products, the infants food have beenaround for a long time barely any new products line being started in this category.
QUESTION MARKS- Culinary Products:
Included in this sector are the culinary products of the organization. The products such
as Maggie 2-minute Noodles and Maggie cold sauces have a low market share were Rs.79,919000 in 2008 and Rs. 60, 818000 in 2007. This figure represents a great potential forgrowth in future. However in contrast, the market share of the products in this category is notvery high currently. The firm needs to focus on differentiating its products in the competitivemarket to gain customers.DOGS- Chocolate Drinks:
Chocolate drinks fall in this category and they possess a low market share and lowgrowth rate. Chocolate drinks had sales of Rs. 19,639000 in 2008 which rose from Rs. 19,541000 in 2007. This is quite a small increase considering the rise in the sales of other SBUs,because, people usually lend to buy light juice like apple and orange juice or Pepsi instead ofChocolate drinks. However, the Chocolate drinks are still profitable so the firm doesnt have toworry about liquidating or getting rid of this SBU. At the moment additional amount of moneyis not invested in this SBU, as it is not very profitable. Nestle is currently trying to maximizeprofits from this category by minimizing expenditure and by differentiating the products tobuild market share.
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PEST Analysis
PEST stands for:
P: Political FactorsE: Economical Factors
S: Social Factors
T: Technological Factors
IMPORTANCE:
Political Factors:
The action of Government can have major effects on business and
markets including creating or reducing demand for particular products and services.
Social Factors:
Social tests are important because they have a direct influence on the demand for
particular types of products.
Economical Factors:
Consumer spending may be controlled by a range of economical factors such as income
level, inflation, taxes, and unemployment.
Technological Factors:
Development in technology give rise to new products and market opportunities.
ADVANTAGES of PEST ANALYSIS:
1) Outline Government laws on business.
2) Can be compared to previous PEST analysis therefore changes in the market may possiblybe anticipated.
3) It indicates whether business has improved or not.
DISADVANTAGES of PEST ANALYSIS:
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1) May be erroneous.
2) Expensive (take time to produce)
3) Problems in the PEST analysis cant be rectified as they all are caused by external issues.
The PEST analysis of NESTLE PAKISTAN makes them understand how
these factors affect the products and services provided by the company.
Political analysis:
This factor indicates what is there in the legal system and political situation of the
country and how it affects the organization. And it includes government regulations
and formal and informal rules of the country.
Huge Taxation of raw material brought from overseas as well as profits.
Employment laws and Trade Unions.
Environmental restrictions and Regulations.
Political stability
Rules regarding product behavior of Parliament acts
Trade restrictions
Risk of terrorist invasion
Pricing regulations and rules of parliament acts
Mandatory employee benefits
Product labeling requirements
Industrial safety regulations
Wage legislations- minimum wage and overtime
Contract enforcement law
Competition regulation
Economic analysis
Economic factors displays the mainly focus on the economic situation of the state, and
in which way the company could produce their own products. Generally we can
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identify the factors under the economic analysis for NESTLE
Using the type of economic system in the country
Inflation rate of the economy
Interest rate of the economy
Economic growth rate
Labor costs for subsidiaries
Unemployment rate of the country
Exchange rate of Dollars in to RS and the other way around
Activities of stock exchange
Infrastructure quality of the country
Skill of workforce Stability in financial market
Comparative advantages of Sri Lanka
Consumers confidence towards this product and the other poducts
Social analysis:
Social factors base on mainly demographic and cultural and traditional aspects of the
external environment of the organization. This fact is directly towards the customers
environment.
Society more aware of healthy life style/ rise in fitness industry.
More focus on leisure time.
Less disposable (cant buy luxury goods) income. Fashion (have temptation towards the adaptation of new trends) Technological
analysis:
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Technological analysis is actually based on the judgment of the technological capabilities and
expertise being used by the company.
Advanced in utilization of technology while establishing products/ packaging/ flavors.Advanced in scientific research.
Advanced in production technology ( more efficient and better quality/ less staff required=cheaper for Nestle= cheaper for customers.)
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Financial Analysis
Vertical Analysis
VERTICAL ANALYSIS OF INCOME STATEMENTS
NESTLEINCOME STATEMENTVERTICAL ANALYSIS
AMOUNT IN ' 000 OF RUPEESFOR THE YEAR ENDED DEC. 31, 2008, 2007 AND 2006
2008 2007 2006Amount %age Amount %age Amount %age
Net Sales 34183847 100.00% 28235396 100.00% 22030958 100%Cost of goods sold (25231532
)
73.811% (20285142
)
71.843% (15778330
)
71.619%
Gross profit 8952315 26.189%
7950251 28.157% 6252628 28.831%
Distribution andselling expenses
(3890352) 11.381% (3538284) 12.531% (2925118) 13.277%
Admin expenses (956816) 2.799% 900822 3.190% (687092) 3.119Total operatingexpenses
(4847168) 14.180%
(4439106) 15.721% (3612210) 16.349%
Operating profit 4105147 12.009%
3511145 12.435% 2640418 11.985%
Finance cost (557325) 1.630% (584434) 2.070% (44774) 0.203%Other operatingexpenses
(1382138) 4.043% (442914) 1.569% (263921) 1.198%
Total other expenses (1939463) 5.673% (1027348) 3.639% (711695) 3.230%Other operatingincome
61800 0.181% 65959 0.234% 76732 0.348%
Profit before taxation 2227484 6.516% 2549756 9.030% 2005455 9.103%Taxation (674590) 1.973% (744544) 2.637% (642165) 2.915Profit after taxation 1552894 4.543% 1805212 6.393% 1363290 6.188%
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VERTIC AL ANALYSIS OF BALANCE SHEET
NESTLE Pakistan Ltd.Balance Sheet
Assets SideVertical Analysis
(Rupees in 000)2008 2007 2006
ASSETS Amount %age Amount %age Amount %age
Tangible and fixed assets:Property plant andequipment
9,464,373
6.726% 9,074,428
57.257% 6986040 54.038%
Capital work in
process
1,382,40
1
8.286% 971,18
3
6.128% 1107052 8.563%
Total tangible fixed
assets
10,846,77
4
65.012% 10,045,61
1
63.385% 8093101 62.594%
Intangible and fixed assets:Intangible assets 49,744 0.298% 92,38
20.583% 135020 1.0455%
Long term loans andadvances
98,544
0.591% 80,670
0.509% 66008 0.511
Long term securitydeposits
5,036
0.030% 6,088
0.038% 6088 0.047
Total intangible
fixed assets
153,32
4
0.919% 179,14
0
1.130% 207116 1.602%
Total fixed assets 11,000,098
65.931%
10,224,751
64.515%
8300217 64.204%
Current assets:Stores and spares 804,64
74.823% 436,57
32.755% 329346 2.548%
Stock in trade 2,488,573
14.916% 2,393,306
15.101% 1907300 14.753%
Trade debts 456,813
2.738% 344,053
2.171% 238291 1.843%
Current portion oflong term loansAnd advances
26,615 0.160% 21,279
0.134% 8771 0.068%
Advances, deposits,prepaymentsAnd receivables
1,488,103 8.919% 2,022,387
12.761% 2109314 16.316%
Cash and bankbalances
419,327
2.513% 406,225
2.563% 34663 0.268%
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Total current assets 5,684,07
8
34.069% 5,623,82
3
35.485% 4627685 35.796%
Total Assets 16,684,176
100.00%
15,848,574
100.00%
12921902
100%
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NESTLE Pakistan Ltd.Balance Sheet
Equity and Liabilities sideVertical Analysis
(Rupees in 000)
2008 2007 2006Amount %age Amount %age Amount %ageEQUITY AND LIABILITIESShare capital and reserves;
Authorized capital750,000 4.495% 750,000 4.732% 750000 5.801%
Issued, subscribed and paidup capital
453,496 2.718% 453,496
2.861% 453496 3.508%
Share premium 249,527 1.495% 249,527
1.575% 249527 1.930%
General reserve 280,000 1.678% 280,000
1.767% 280000 2.166%
Accumulated profit 3,405,824 20.413% 3,128,68
2
19.741% 1548057 11.975%
Total Equity 4,388,847 26.305% 4,111,70
5
25.944% 2531080 19.578%
NON CURRENT LIABILITIESLong term finance 5,139,875 30.806% 4,028,70
025.420% 3963700 30.660%
Deferred taxation 1,319,333 7.908% 1,371,675
8.655% 942858 7.293%
Retirement benefits 351,968 2.110% 238,370
1.504% 234305 1.182%
Liabilities against assetssubject to finance lease
177,582 1.064% 119,602 0.755% 31471 0.243
Total non current liabilities 6,988,758 41.888% 5,758,147
36.322% 5172334 40.009%
Current liabilities:Current portion of liabilitiesagainst assets subject tofinance lease
54,042 0.324% 29,863 0.188% 308392 2.385%
Short term borrowings-secured
300,000
1.798% 1,035,000
6.531% 700000 5.415%
Short term running financeunder mark-upArrangements-secured
1,924,287 11.534% 1,637,799
10.334% 1817711 14.060
Customers security deposits-
interest free
127,88
4
0.766% 124,57
2
0.786% 102307 0.791%
Trade and other payables 2,798,185
16.771% 3,062,027
19.321% 2197529 16.998%
Interest and mark-up accrued 102,173
0.612% 89,261
0.563% 98549 0.762%
Total current liabilities 5,306,57
1
31.806% 5,978,52
2
37.723% 522448 40.412%
Total liabilities 12,295,32 73.694% 1173666 74.056% 1039682 80.422
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9 9 2
Total liabilities and equity 16,684,176
100.00%
15848574
100.00%
12927902
100.00%
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Horizontal Analysis :
HORIZONTAL ANALYSIS OF INCOME STATEMENT
NESTLE
INCOME STATEMENTHORIZONTAL ANALYSIS
AMOUNT IN ' 000 OF RUPEESFOR THE YEAR ENDED DEC. 31, 2008, 2007 AND 2006
Increase(Decrease)in 2006-07
Increase(Decrease) in
2007-08
%ageincrease
(Decrease) in2006-07
%ageincrease
(Decrease)in 2007-08
sales-net 6204435 5948454 28.162 21.067
cost of goods sold 4506812 4946390 28.563 24.384
Gross profit 1697623 1002064 27151 12.604
distribution and selling expenses 613166 352068 20.962 9.95
administration expenses 213730 55994 31.106 6.216
operating profit 870727 594002 32.977 16.918
finance cost 136660 -27109 30.52 -4.639
other operating expenses 178993 939224 67.821 212.056
other operating income -10773 -4159 -14.040 -6.730
profit before taxation 544301 -322272 27.141 -12.639
taxation 102379 -699554 15.943 -9.396
profit after taxation 441922 -252318 32.416 -13.977
earnings per share 9.75 -5.57 32.435 -13.991
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HORIZONTAL ANALYSIS OF BALANCE SHEET
NESTLE Pakistan Ltd.Balance Sheet
Equity and Liability SideHorizontal Analysis
Increase(Decrease)in 2006-07
Increase(Decrease)in 2007-08
%ageincrease(Decreas
e) in2006-07
%ageincrea
se(Decrease) in2007-
08
share capital and reserves
issued subscribed and paid up capital 0 0 0 0share premium 0 0 0 0
general reserve 0 0 0 0
accumulated profit 1580625 277142 102.104 8.858
non current liabilities
ling term finances 65000 1111175 1.640 27.581
deferred taxation 428817 -52342 45.481 -3.816
retirement benefits 4065 113593 1.735 47.654
liabilities against assets subject to finance lease 88131 57980 280.039 48.477
Current Liability
current portion of: long term finance -300000 0 -100.000 0.000current portion of: liabilities against assets subject to
finance lease 21471 24179 255.851 80.966sort term borrowings- secured 335000 -735000 47.857 -71.014short terms running finance under mark-uparrangements- secured -179912 286488 -9.898 17.492
customer security deposits- interest free 22265 3312 21.763 2.659
trade and other payables 864498 -263842 39.340 -8.617
interest and mark-up accrued -9288 12912 -9.425 14.465
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NESTLE Pakistan Ltd.Balance SheetAssets Sides
Horizontal Analysis
Increase(Decrease)in 2006-07
Increase(Decrease)in 2007-08
%ageincrease
(Decrease)in 2006-07
%ageincrease
(Decrease)in 2007-08
tangible fixed assets:
property plant and equipment 2133096 389945 30.730 4.297
capital work in progress 135869 411218 12.273 42.342
assets subject to finance lease -44717 0 -100.000 0.000
intangible assets -42638 -42638 -31.579 46.154
Long t