NESTLE INDIA LTD.

GOOD FOOD, GOOD LIFE

COMPANY PROFILE

Name of Company : Nestlé India Limited Head Office: Nestle House, Jacaranda Marg, "M"

Block, DLF City, Phase II Gurgaon - 122002 (Haryana)

Registered office: M-5A,Connaught Circus, New Delhi-110001

CMD: Mr. Martial G. Rolland First factory set up in INDIA in 1961 at Moga,

Punjab.

OVERVIEW

The company’s principal activities are to manufacture & distribute food products. Food products include milk & nutrition, beverages, coffee, blends, tea, cream, chocolate, cereals & cooking aids. The company’s plants are located at Moga, Samalkha, Nanjangud, Choladi, Ponda, Bicholim & Pantnagar. The products of the Company are exported to Russia, Nepal and Bhutan.

PRODUCTS

PRODUCTS

Maggi Tomato Ketchup

MAGGI offers a wide range of specialty Indian Sauces which are relished for their unique taste. Available in the following delightful variants: Tomato Ketchup, Tomato Sauce, Tomato Chilli, Masala Chilli, Chilli Garlic, Tamarina, Tomato Chatpat, Tomato Pudina and the all-time-favourite MAGGI Hot & Sweet Sauce.

Maggi Maggi was the upstad newcorner

who came in with a loud aggressive national burst. It did not come in with one, but with a range of sauces in order to increase market share and axpand the market by offering more usage occasions, bring consumers with different needs into the Maggi Sauces fold and weaning away users of different brands to Maggi. From a market share of 14% in 1985, Maggi Sauces now enjoys a share of about 50% of the market.

The success of Maggi can be most importantly attributed to year-round media activity, and the humorous "it's different" campaign on Maggi Hot and Sweet sauce - this campaign had such an impact that it literally promoted the entire range of Maggi Sauces.

Maggi Market Place

There has always been a presence of good additives in the Indian household. The traditional Indian main meal has chutneys and pickles as additives while the quasimeals, where snacks or ready to eat food is consumed, use sauce as an additive. Prior to Maggi Sauces launch in 1985 the scenario of the branded and unbranded sauces market was such that the Tomato ketchup was most popular in the market with 80% market leaving the remaining 20% for others.

IMAGE : SAUCES

The Brand

The Maggi Sauces brand has reallY been built by creating a new segment in 1989-90 by focusing on Hot and Sweet as a new speciality sauce. The most important aspects of Hot and Sweet were

(i) Brand Image : Young - Teenager, Ever changing, humorous, unpredictable and "whacky"(ii) Brand Positioning : Hot and Sweet was a tomato chilli sauce that was different.

The Consumer Profile of users and non-users Sauce is a product that cuts across all age groups and regions and therefore broadly

the target group was All Adults with Rs. 2500/-+ MHI, in Class I+ towns. Who buys the Product, How and When ? Sauces follow two purchase patterns, In regular sauce households, it is purchased at

the beginning of every purchase cycle when monthly non-durable items are bought. The second group is of those households where sauce has an occasional use, it is usually an impulse puchase, from the local retailers and the main purchaser is the housewife with key influencers being children.

The users can be further subdivided between Tomato Ketchup and specialty sauces such as Hot and Sweet. Tomato Ketchup is for all members of the family (MHI : Rs. 2500+) with the larger part of the consumption coming from children. The purchaser is however the housewife. Hot and Sweet is targeted at the young adult, modern, with MHI : Rs. 2500+. The purchaser could be the housewife or the male/female 'adult'.

Users attitude to category/brand Tomato Ketchup is generally seen as fun to eat, adds flavor to all kinds of food, and

is convenient to use. Users show low involvement, low brand loyalty, are very sensitive to price, appreciate 'premium' quality of Maggi, but are unwilling to pay very large price premium. On the other hand for Hot and Sweet, the frequency of consumption is lower with high band loyalty, greater involvement, less price sensitivity and the user appreciates the unique taste and fun image of Maggi Hot and Sweet.

Cost Accounting

cost accounting is that part of management accounting which establishes budget and actual cost of operations, processes, departments or product and the analysis of variances, profitability or social use of funds.

Cost Sheet

It serves as a means of accumulating the manufacturing costs-direct materials, direct labor, and overhead costs-chargeable to the job or department and as a means of determining unit costs.

Methods Of Costing

Job Costing - This is done, as the name suggests, on job works which may differ from case to case basis. By giving different job numbers and debiting the costs on the jobs, cost of each job work can be ascertained.

Contract or Terminal Costing - This is done for large contracts. Such businesses need not maintain costs separately as financial accounting will indicate the costs and expenses. In such contracting firms, the cost sheets are maintained for individual contracts. In the absence of expense budgets, inefficiencies are often hidden in such cost sheets.

Process Costing - This is useful when a product passes through various processes, yielding different by products of commercial value. This is useful in industries like refineries.

Methods of Costing

Standard Costing: Standard costing means assigning the expected, budgeted costs to the goods manufactured, the goods in inventory, and the goods sold. In other words, the amounts assigned are the costs that should occur when manufacturing products.

Marginal Costing: It is a costing technique where only variable cost or direct cost will be charged to the cost unit produced. Marginal costing also shows the effect on profit of changes in volume/type of output by differentiating between fixed and variable costs.

Activity Based Costing :Activity based costing (ABC) assigns manufacturing overhead costs to products in a more logical manner than the traditional approach of simply allocating costs on the basis of machine hours. Activity based costing first assigns costs to the activities that are the real cause of the overhead. It then assigns the cost of those activities only to the products that are actually demanding the activities.

PARTICULARS Rs (In Thousands)

Rs (In Thousands)

DIRECT COST

Direct Raw materials:

Opening stock 760746

Add: Purchase 14391229

Less: Closing stock (1240513) 13911462

Packing material consumed

2784775

Direct labour 2454121

Direct expense

PRIME COST 19150358

Add: FACTORY OVERHEAD

Power & fuel 1239442

Maintenance & repairs:

Plant & machinery 49264

Building 30507

General 42338

Workers training expenses 173762

Consumption of store & spare parts

112682

Depreciation 27114

Other expenses 968600

2643709

Works cost 21794067

Opening Stock (WIP) 384758

Less: Closing Stock (WIP)

424279 (39521)

21754546

ADMINISTRATIVE EXPENSES

Contribution to PF and other funds

86660

Staff Welfare Expenses 153645

Rent 181615

Rate and Taxes 173762

Insurance 22344

Employees Welfare 348579 966605

COST OF PRODUCTION 22721151

Opening Stock (FG) 1406559

Less: Closing Stock (FG) 1977141 (570582)

COST OF GOODS SOLD 22150569

SELLING AND DISTRIBUTION

Freight Transportation and distribution

1608368

Advertisement 1722059 3330427

TOTAL COSTS 25480996

Profit 10990836

Total Sales 36471832

Saving on Energy

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