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.