Company mission

Nestlé is dedicated to providing the best foods to people throughout their day, throughout their lives,
throughout the world. With our unique experience of anticipating consumers’ needs and creating
solutions, Nestlé contributes to your well-being and enhances your quality of life

VISION STATEMENT
We envision Nestlé Milkpak to grow in the shortestpossible time into the number one food company in
Pakistan with the unique ability to meet the needs of consumers ofevery age group from infancy to old
age,for nutrition and pleasure, through development of a large variety of food categories of the highest
quality.

INTRODUCTION

Nestlé at a Glance

The story begins in 1867, when Henri Nestlé developed a baby formula thatsaved a child's life and
marked the beginning of Nestlé's decades-oldcommitment to nutrition. In the 140 years since then, they
have expanded aroundthe world and developed a range of products designed to suit every
taste, needand cultural preference. Their distinctive seal is recognized everywhere
as aguarantee of quality and healthfulness.

Nestlé Pakistan History
Nestlé Pakistan
Nestlé has been serving Pakistani consumers since 1988, when their parent company, the Switzerland-based Nestlé
SA, first acquired a share in Milkpak Ltd.
Today they are fully integrated in Pakistani life, and are recognized as producersof safe, nutritious and tasty
food, and leaders in developing and uplifting the communities in which they operate. Nestlé Pakistan ensures that
their productsare made available to consumers wherever in the country they might [Link] is at the heart
of the Nestlé philosophy, and their aim is to bringproducts to people's doorsteps.
Headquartered in Lahore, the company operates two production facilities at Sheikhupura and Kabirwala and has
recently acquired three bottle water companies in Karachi and Islamabad. Through its effective marketing and a vast
sales and distribution network throughout the country, it ensures that its products are made available to consumers
whenever, wherever and however.
The company meets its raw milk requirements through its raw milk requirements through direct purchases from the
farmers under its self collection programmed from over 3000 villages, spread over an area of about 8000 Sq. Km. in
Punjab.
Nestlé took a major participation in Milkpak Ltd in 1988. After it assumed the management of the company in 1992,
Milkpak ltd. was renamed Nestlé Milkpak Ltd.
A History of Service
In line with the parent company's global philosophy, Nestlé is proud of theircommitment to excellence in product
safety, quality, and value. Their productscater to human needs, and Nestlé is active in the communities they serve.
From spreading awareness about nutrition and wellness to digging wells in theThar Desert and succoring earthquake
victims, they are committed to serving thecountry and its people.
The consumer's voice is key to Nestlé Pakistan's vision and working. Whetheryou live in the remotest village
or the metropolis of Karachi, their consumerservices team stands ready to listen to your concerns and
provide answers abouttheir products and guidance on matters of health and wellness

Major inputs and outputs

PRODUCTION
Sheikhupura factory
Having originally begun operations in 1979, this factory of Milkpak ltd. was producing UHT milk, butter, cream,
Desi ghee and Frost by 1988. After Nestlé acquired interests in the company. Nestlé Milkpak drew up an ambitious
portfolio of expansion plans.
While reorganizing and reinforcing the existing brands, new production lines were installed. The first to come was a
milk powder plant, which began producing NIDO in 1990m. Infant food products CERELAC, NESTUM and
LACTOGEN followed this.

More product lines and product ranges were added between 1992 and 1997 which included Everyday, MILO,
POLO, ORANGE JUICE, MAGGI NOODLES AND YAKHNI, NESLAC, NESTLÉ RICE AND WHEAT.

In 1998 three new major technologies, added, which produce NESTLÉ PURE LIFE bottled water, Maggi sauces and
high & low boiled confectionery.

5-gallon NPL in polycarbonate refillable bottles was launched in 1999. The year 2000 saw extensive efforts in the
development of new products. Self foaming exotic Frothe in single serve sachets was launched in early 2000
followed by cold coffee under the brand name NESCAFE Frappe, the range of which was subsequently extended
with the introduction of two new flavors” “ French Vanilla”

Several other new products were also introduced during 2000. These included Nestlé Mango juice, Nestlé mango-
Orange juice and Nestlé Plain Yogurt. Certain products namely: Desi Ghee, ButterScotch and cream were re-
launched in improved packing.

To cater for increased production levels; a National Distribution Center (NDC) was constructed in 2000 to serve as a
centralized distribution warehouse. Designed for handling of containerized shipments, NDC has storage Capacity of
8000 pallets of finished products.

Kabirwala Factory 
Kabirwala Dairy Ltd., as it was then called, was established in 1983 as a UHT milk processing plant. Nestlé Milkpak
Ltd acquired it in 1990 as a subsidiary and installed the MAGGI NOODLES plant in 1992.

Nestlé Milkpak Ltd setup its second milk powder plant at Kabirwala in September 1996 which produces NIDO,
GLORIA AND skim milk powders.

A new evaporator was installed and commissioned in 1999, followed by a capacity increase of milk powder
production by 150%. The year 2000 also witnessed the launching of premier quality cultured butter in 100gm. And
200 gm. Packing. In 2001 this butter was made available for institutional sale in 10gm. packing.

This factory is now a fully owned unit of Nestlé Milkpak Ltd since April 1997 and is called Kabirwala Factory.

MILK COLLECTION 

Since 1988 Nestlé Milkpak Ltd has made great strides in establishing its own milk collection system and a mutually
beneficial partnership with farmers, that has focused on increased milk production. A great success story, this
partnership has brought property to the farmers through an assured and growing income from sale of milk. It has
also enabled Nestlé Milkpak Ltd to collect and process the best quality milk, enabling it to produce international
quality UHT milk and other milk products.

Since Nestlé Milkpak Ltd was unable to produce high quality raw milk from the traditional middleman, so essential
to the production of quality processed milk and other products, a self collection program was inevitable. Towards
this end a large network of village milk collection centers (VMCs)
Was created, sub and main centers equipped with chilling facilities were established and a large tanker fleet was
pressed into service. Milk brought by the farmers to the VMCs is tested for quality and fat content before
acceptance. It is then transported to the sub centers for consolidation and chilling before being transferred to the
main centers and finally dispatched to the factories.

After a monumental effort of 12 years, Nestlé Milkpak Ltd can now rightly proud of having pioneered an extensive
and modern milk collection system that works most efficiently.

The corner stone of Nestlé Milkpak LTD’s self collection program is its strategic partnership with the farmers.
During the last 12 months alone the company has infused over billion rupees in the rural economy by the way of
milk purchase.

Soon after the launch of self collection system, Nestlé Milkpak Ltd realized that farmers needed to be made aware of
advancements in the dairy sector, particularly animal husbandry practices, fodder cultivation, veterinary care and
breed improvement.

The company addressed these issues by establishing an Extension Service and staffing it with the qualified
veterinarians. Over the last several years, this department has been rendering extremely valuable services to farmers.
Awareness among farmers has been raised to about milk quality and animal husbandry practices through regular
village meetings. They are provided free consultation in diagnosis and treatment of their livestock and vaccination at
cost.

Realizing that improved feeding means more milk and consequently more milk and consequently more income to
the farmers, Nestlé Milkpak Ltd provides high yield imported seeds and cuttings of nutritional fodder to the farmers
at cost. They are also assisted in the procurement of cotton seed cake and molasses as feed supplements. Farmers are
also educated in converting waste into nutritious and cost effective silage as cattle feed.

Nestlé firmly believes that in the days to come, the initiatives it has launched could provide the breakthrough that
the economically disadvantaged class of small farmers has been looking for.

EXPORTS

Nestlé Milkpak Ltd. entered the export market in 1993 with the export of infant Cereals to Afghanistan. In 1994
export to Afghanistan was expanded to products to urban consumers. It helps in arresting environmental degradation
caused by the influx of cattle into towns.
 The company is also committed to reducing the environmental impact of packaging, without jeopardizing the safety
and quality of the products. Special emphasis is placed on seeking packaging solutions that lead to the lowest
possible weight & volume as well as increasing the recycleablity of its packages. Care is taken to avoid the use of
substances that may adversely impact the environment during packaging, production and disposal. As a result of
these measures Nestlé Milkpak Ltd used 325 tons less packaging material between 1994 and 1999.

Conscious of air pollution hazards due to release of obnoxious gases like carbon dioxide, Nestlé Milkpak Ltd
stringently monitors its gaseous environment and ensures proper maintenance and operation of fuel consuming
equipment at the factories.

Brands
We believe that food plays a key role in achieving a well-balanced person. And so our philosophy is Good Food for a
Good Life!
At Nestlé, our products are developed keeping our consumers, their preferences and health in mind. Millions of
consumers the world over trust Nestlé products for good reason: when they choose a Nestlé product they have the
satisfaction of choosing quality, taste, variety, convenience and the good nutrition.
With over 140 years of experience and expertise, we take great pride in bringing you a portfolio of health and
wellness because happy, healthy consumers are important to us.

Bottled water

Baby food

Dairy products

Breakfast cereals

Nutrition

Prepared food

Beverages

Chocolate and confectionary

Innovation is one of Nestlé's key competitive advantages. We have more than 140 years of research,
development and scientific know-how. While there is a great deal of pure and applied science research
that takes place in our global R&D centres, Nestlé ensures that the consumer, and the consumer benefit,
remains at the core of all our activities.

Consumer Benefits
Nestlé R&D addresses three areas of benefits for consumers:
 Safety and Quality - this underpins all Nestlé products
 Nutrition and Health
 Taste, Texture and Convenience
Problems and our solution

Micronutrient fortification

While nutritional status has improved worldwide over the past 50 years, new nutrition-related problems
have also emerged. Problems of under-nutrition continue to exist in developing countries, while
increasing rates of obesity in both developing and developed countries contribute to increasing rates of
chronic disease around the world.

Micronutrient deficiencies affect over one-third of the world’s population, mainly in developing
countries, while another 1.6 billion adults are overweight, with 400 million considered obese. Worldwide,
the most common forms of micronutrient malnutrition concern deficiencies in iron (needed for physical
and mental development and physical performance), iodine (cognitive development), vitamin A (sight
and immunity) and zinc (growth and immunity).

Micronutrient malnutrition has many adverse effects on human health, even at moderate deficiency levels.
Ensuring the consumption of a balanced diet is far from achievable on a global scale, and
supplementation through vitamin tablets and injections are a short-term response. Fortification of food
and beverages offers the most cost-effective solution over the medium to long term, for delivering
nutrients to large numbers of people without requiring them to significantly change their food
consumption habits.

We use information from local governments and international health authorities to identify the different
nutritional “gaps” in order to improve the nutrition value across our portfolio by adding the relevant
nutrients and focusing on fortification of foods regularly consumed by the target consumer.

Micronutrient-fortified Nestlé products 2008*

Iron 44 billion servings
Iodine 94 billion servings
Vitamin A 29 billion servings
Zinc 13 billion servings
Popularly Positioned Products

Nestlé’s objective is to provide consumers with nutritious products regardless of where we sell
them and for how much. Our 3950 PPPs [KPI] provide those people at or near the bottom of the
income pyramid with affordable food products.

The key to expanding our PPP portfolio is the application of new food and nutrition technology
to deliver products that provide nutritional value at a reduced cost and appropriate serving size.
A range of locally adapted distribution methods, including street markets, mobile street vendors
and door-to-door distributors, not only creates local jobs but improves our market penetration,
helping to generate worldwide sales of Popularly Positioned Products (PPPs) to the value of CHF
8770 million in 2009.

For example, in Turkey, Maggi has introduced a small dispensing machine in its “mom and pop”
stores, allowing consumers to buy seasoning fortified with iodine and iron at a lower price point.
And in Thailand, the “Nescafé Street Barista” scheme enables prospective entrepreneurs to get a
loan for a coffee cart through the state-owned microcredit system run by the Bank for
Agriculture and Agricultural Cooperatives. Eight business owners have already been provided
with carts and started their own businesses.

Nestlé has also been helping those who want to establish their own businesses in the Philippines.
Through the Nestlé ice-cream street-selling programme, Nestlé invests in freezers, vending carts
and motorbikes, small and medium-sized entrepreneurs – known as micro-distributors – provide
the capital and the sorbeteros (ice-cream street vendors) can purchase the products to sell.

Advertising to children

Nestlé had, by the end of November 2009, joined eight voluntary industry initiativescovering 34
countries on responsible food and beverages advertising at a national and regional level. The aim
of the EU Pledge (across 27 EU Member States) and the initiatives in Canada, United States,
Thailand, Australia, South Africa, Brazil and Russia (additional pledges are in the pipeline) is to
support and promote good nutrition and a healthy lifestyle. All are subject to independent, third-
party compliance monitoring.

Monitoring is an intrinsic part of the various industry pledges and initiatives. Results from the
first independent monitoring report of the EU Pledge a commitment taken by 11 food
manufacturers (including Nestlé) to voluntarily restrict their advertising to under 12s in print, on
television and online, show a 93% decline in advertising of products that do not meet companies’
nutritional criteria in programmes targeted at children. Compliance across the industry was
consistently high, but in some markets, Nestlé’s own performance was even higher, and in the
case of Germany and Italy, 100% compliant

The global water crisis

In recent years, water has been increasingly recognised as equal to climate change as a pressing
environmental issue. Even though we have enough fresh water at a global level, in many parts of
the world – India, Pakistan, China, southern Europe and the south-western parts of the United
States – more water is withdrawn than is being naturally replenished.

The key challenge is that more than two-thirds of all water is withdrawn by agriculture, so it is
the future of agriculture and food security that is at stake if we are not able to solve the world’s
water crisis.

“Global drying”

 25% of the world’s population already lives under water stress (less than 1700
m3/person/year).
 If present trends continue, 5 billion people will live in water-scarce areas by 2025.
 By 2050, household water needs are predicted to rise by 61%, and agricultural needs by
140%.
 In parts of Gujarat, India, the water table is dropping up to six metres per year.
Everyone – policy makers, industry, agriculture and consumers – can help to improve the
sustainability of our water resource, and Nestlé is a leader in this regard. Nestlé’s long-term
success depends on the water resources that supply our everyday business operations and support
the livelihoods of suppliers and consumers, making effective water resource management one of
the three key focus areas of Creating Shared Value.

We rely on access to clean water to make quality products and we have adopted rigorous
standards to reduce water consumption at our plants and facilities. However, water in the supply
chain remains the greater challenge, so we invest in helping farmers become better stewards of
water, support water resource awareness and education programmes and participate in global
dialogue with leading experts and policymakers

Water and environmental sustainability

 Context
Globally, the combination of population growth, increasing affluence and lifestyle patterns are
outstripping the planet’s ability to bear the effects of human activity. We believe that we are facing
a serious water crisis in the coming years that will have serious consequences for food security.
The food chain, from agriculture to manufacturing and consumption, contributes significantly to
water quality and availability, climate change, energy use, biodiversity and soil quality, and air
quality – at the same time, it is heavily dependent upon all of these environmental resources. As
an example, the availability and accessibility of fresh water already affects our business, and we
also expect to see the consequences of climate change on our operations over the next decades.
 Our goals
Our ambition is to produce tasty and nutritious food and beverages that also have the lowest
environmental footprint, so we strive to continuously improve our operational efficiency and
environmental performance. We apply a life cycle approach to assess the impacts of our own
operations and those associated with the wider value chain, thereby contributing to a better future
and Creating Shared Value to both Nestlé and society.
 Our actions
We invested over CHF 220 million in environmental sustainability programmes and initiatives
during 2009. We continue to identify and implement projects to reduce our use of water, non-
renewable energy and other natural resources, to reduce emissions of greenhouse gases
(GHGs), to eliminate waste and to improve the environmental performance of our packaging. We
also work alongside our suppliers to promote more sustainable practices in our supply chain,
including the promotion of water stewardship.

 Our performance
We continued to make improvements in our water consumption and CO2 emissions performance
through reduced energy consumption following operational energy efficiency measures and a
move towards renewable energy sources. More waste is being diverted from landfill and
 incinerators without energy recovery. A continued focus on packaging weight reduction remains a
priority.
 For more information download the following documents:

Public policy engagement and collective action

Nestlé is a committed leader in the public policy debate on restoring the balance between water
withdrawals and the availability of naturally renewed water. In 2009, we led a joint project, which included
the International Finance Corporation of the World Bank Group and McKinsey, producing Charting Our
Water Future: A new economic framework to decision making in November 2009.

This cross-sector analysis measured actual abstraction for human use against existing accessible,
reliable and sustainable supply in watersheds, leading to a comprehensive understanding of water
overuse at national and global levels. The effectiveness and cost of various ways to reduce that overuse
were then compared, so that decisions on water management can be integrated into wider economic
decisions.

Nestlé will use these findings in our public policy dialogue, with the aim that they have a major impact,
both on national and regional water policies and on our own efforts.

As a founding signatory of the CEO Water Mandate, an initiative led by the United Nations Global
Compact, we are committed to improving and regularly reporting our efforts in these areas, and played an
active role in the last three World Water Weeks in Stockholm, at which experts, practitioners, decision-
makers and leaders from around the globe exchange ideas, foster new thinking and develop innovative
solutions. Nestlé also works with the Swiss Development Agency and a consortium of Swiss companies
in Colombia to assess their water footprints, has helped to put water high on the agenda of the World
Economic Forum and is a member of the Water Footprint Network.

Closer to home, world-renowned water experts sit on our CSV Advisory Board and starting in 2010,
the Nestlé Prize in Creating Shared Value will honour innovative solutions to improve rural development,
nutrition, access to clean water or water management.

Renewable energy

In addition to operational efficiency improvements and energy-saving equipment, we will

continue to explore the industrial feasibility of switching to more renewable energy sources to
reduce our CO2 emissions and our reliance on fossil fuels; 12.2% of our total on-site energy use
has come from renewable sources.

A number of projects have come on-stream in 2009 which will increase our overall proportion of
energy derived from renewable resources. For example, a landfill gas project at Solon, Ohio,
USA, captures methane from a local landfill site and uses it as an energy source. Meanwhile, at
our Bugalagrande factory in Colombia, the installation of our latest spent coffee grounds fueled
boiler allows the recovery of energy from this biomass. This renewable fuel provides 13% of the
total energy required in the factory and has 95% lower CO2 emissions than the fossil fuel it
replaces. Nestle has been implementing this type of technology for the last 30 years, and of our
27 coffee factories where spent grounds are a by-product, 21are equipped with such technology.

Co-generation of waste coffee grounds, Bugalagrande, Colombia.

We are also planning to replace the boiler at Nestlé France’s facilities in Challerange with a
wood-fired boiler. The project will result in an 85% reduction in the factory’s CO2 footprint, and
save an estimated €9 million over 10 years. The timing will also allow us to benefit from
government subsidies available for renewable energy schemes, which will cover 40% of the cost
of the project. The wood supply plan has been approved by the local authorities and is
considered to be fully compatible with local wood resources management. As Challerange is a
key site for the supply of quality creamer for Nescafé Dolce Gusto, this project will be a further
opportunity for us to communicate about sustainability through our brands.

Optimising packaging

Packaging reduces waste by protecting food products during transportation and storage, in the
retail environment and at home, and contrary to some preconceived ideas, it saves more than it
costs, in both financial and environmental terms. Packaging is also essential for food safety and
freshness, and provides consumers with nutritional information and portion guidance at the point
of purchase.

Packaging represents a small part of the total environmental footprint of food products, but
Nestlé has adopted an integrated approach on packaging in its continuous improvement policy.
This involves what we call a “4R” approach:

 Reducing the weight and volume of packaging materials

 Leading in the development and use of packaging materials made from sustainably
managed renewable resources such as bioplastics
 Aligning with and supporting initiatives to recycle or recover energy from used
packaging, and helping to inform consumers through the use of accepted material
identification and recycling symbols, and by encouraging consumers to recycle where
programmes are available
 Using recycled materials wherever it makes sense.

Nestlé is also a strategic partner of the new Chair in Bioplastics at the École de Mines in Paris,
where research will focus on new and innovative forms of plastics derived from naturally
occurring materials.

Nestlé used 4.17 million tonnes of packaging materials in 2009 [KPI], an increase of 4% largely
due to increased sales and production volumes. Continuing reductions in packaging material
through our source reduction programme saved 58 995 tonnes of packaging material by weight
[KPI], worth CHF 82 million.
Recycling of PET bottles at Whole Foods stores

For example, Nestlé UK became the first major confectionery company in the country to replace
non-recyclable plastic with recyclable cardboard packaging in most of its 20 million Easter eggs.
As one of many recent initiatives to meet its target to reduce packaging by 10% by 2010, against
a 2006 baseline, Nestlé UK used at least 30% less packaging in its small and medium Easter
eggs, saving over 700 tonnes of packaging materials.

Similarly, Nestlé Waters reduced the volume of packaging material used per litre of bottled
water. A best-in class example occurs in the United States, where Nestlé Waters North America
introduced the Eco-Shape lightweight bottle in 2007.

By the end of 2009, we estimate that it will have saved more than 195 million pounds of resin
and helped to avoid more than 356 000 tonnes of CO2eq emissions (the equivalent of taking 78
000 cars off the roads for an entire year). Further reductions in the Eco-Shape bottle and cap are
scheduled for 2010.

However, weight is not the only factor; improvements in packaging environmental performance
are also relevant, and our packaging eco-design tool can assist in the selection of the most
appropriate packaging for many products.

Nestlé and sustainable cocoa and coffee

Nestlé is guided by the principle of creating value for shareholders and society in a manner that
is integrally linked to its core business strategies and operations. We call this Creating Shared
Value; value created for shareholders, employees, farmers, consumers and the communities
where we operate.

As one of the world’s biggest buyers of coffee and cocoa, Nestlé has always taken and continues
to take very seriously its responsibility to ensure that these crops are produced in a sustainable
manner and in a way that produces value right through the supply chain – particularly for
farmers.

While Nestlé does not own any commercial farms, a major focus of the company’s work in
improving sustainability of cocoa and coffee supply is in plant science. As a leading private
researcher in the field, Nestlé has pioneered advanced technology in coffee and cocoa. Over the
last 30 years, at its research centre in Tours, France, Nestlé has developed the expertise to
propagate higher quality plantlets on a broad scale. These plantlets can help farmers rejuvenate
their farms and increase productivity by replacing old, low-yield, disease-prone trees.

An additional benefit of Nestlé’s support related to better quality, better-managed trees, is that
farmers can produce higher amounts of cocoa from the same or less land. This reduces the risk of
deforestation and allows farmers to use the extra land for other crops or agricultural activities
which can supplement their family’s food supply or income.

Beyond providing high quality plantlets, Nestlé funds farmer training and agronomists. The
company works with partner organisations on field school programmes which teach farmers
about good farm management and environmental stewardship, helping them increase yields and
operate more sustainably.

Key facts

 Nestlé will invest a minimum of CHF 460 million in its plant science and sustainability
initiatives for cocoa and coffee over the next 10 years - CHF 110 million will be spent on
cocoa sustainability initiatives and CHF 350 million on coffee.  This builds on the CHF
60 million for cocoa and CHF 200 million for coffee invested over the past 15 years.
 Over the past 15 years Nestlé has provided 17 million coffee and cocoa tree plantlets to
producer countries.
 Over the next 10 years Nestlé will provide a minimum of 38 million more plantlets.
These develop into high-yield, disease-tolerant trees providing farmers with a foundation
for increased farm productivity and potential income. In addition, we contribute
important knowledge transfer of our expertise to specific producer countries and projects.
 Although results can vary between plant varieties, farmers and regions, studies show
Nestlé-produced trees can achieve 50% to 200% more productivity than regular, existing
trees.
 Over the last 10 years Nestlé has supported the training of 100,000 cocoa and coffee
farmers. The company aims to support the training of a further 130,000 farmers over the
next 10 years.
 For the past six years we have worked with Rainforest Alliance to develop our Nespresso
AAA Quality™ Coffee Program. We have committed to source 80% of our Nespresso
coffee from Rainforest Alliance certified farms by 2013.
 Today Nestlé purchases 10% of coffee beans used in Nescafé through direct
procurement. We will increase this to a minimum of 20% by 2015.

Sustainable palm oil

We share the concern about the serious environmental threat to rainforests and peat fields
caused by palm oil plantations, and participate in multi-stakeholder solutions to this complex
problem. We only buy processed palm oil and processed oil mixes, we do not use crude palm oil
and we have no direct link with plantations. We have also undertaken an in-depth review of our
supply chain and committed to using only Certified Sustainable Palm Oil (CSPO) by 2015. Nestlé
recently joined the Round table on Sustainable Palm Oil (RSPO) and has repeatedly spoken out
against the production of palm oil for a biofuel.