Presented by:

Abrar HasanChief Executive

March 2, 2007

National Foods – A Success Story‘A Pakistan’s Case Study’

Fact Sheet

37 years of innovation Rs. 3 billion in sales 300 product SKUs 6 manufacturing units (Karachi, Bin Qasim,

Lahore) Central Warehousing (Lahore, Gujranwala,

Multan, Islamabad) Rs. 1 million to the economy everyday in

shape of taxes 350 towns covered across Pakistan 1500 employees Annualized Growth Rate of 23% for the last

35 years

National Foods - Facts

30 countries around world 409 distributors

Our Footprint

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Period

Per

cen

tag

e

Return on Capital Employed

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Period

Ru

pee

s

Earnings Per Share

Sales

0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

Rupees

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Years

NFL Sales History

Gross Export Sales

Gross Local Sales

Product Categories

Plain Spices Pickles

RecipesRonaq

Jams

Ketchups Desserts

Salts Basmati Rice

Curry Pastes Sauces

Snacks Vinegars

Our History

Philosophy

Founder’s Philosophy• National Foods must focus on customer’s needs and serve them with quality products at affordable prices at their doorsteps. • Our products must be pure and conform to international standards.• Our research must continuously produce new adventurous products scientifically tested, hygienically produced in safe and attractive packaging. • We must create environment in our offices and factories where talents are groomed and have opportunity to advance in their careers. • We must prove to be recognized as good corporate citizens, support good causes-charity and bear fair share of taxes.• Reserves must be built, new factories created, sound profits made and fair dividend paid to our stock holders through building a reliable brand.• National Foods Ltd. must get itself recognized as leader in Pakistan and abroad. • With the help of almighty God, the company can achieve its targets in years to come.

Purpose“National Foods must focus on

Customer’s needs and serve them

with Quality Products at

affordable prices at their doorsteps.”

Passion– We act with intense positive energy and

are not afraid of taking risks. We challenge ourselves continuously and have pride for what we do and are good at it.

Customer Focus– We see the world through the eyes of our

customers. We do everything possible that makes them happy.

People Centric– We put our people first. Treat them with

respect and actively contribute towards their development.

Teamwork– Our roles are defined, not our

responsibilities. We believe in going the extra mile to accomplish our goals. We coach and support each other ensuring everyone wins. We have a WE versus I mindset.

Leadership– We are a part of the solution…never the

problem. We act like owners and have a positive influence on others.

Ethics– We don’t run our business at the cost of

human or ethical values.

Excellence in Execution– We say…we do … we deliver. We talk

with our actions. We strive for nothing but the best. Execution is the key to winning!

Accountability– We see, we act. We take full responsibility

for our actions and results. We don’t blame others for our mistakes; we analyze them and correct them.

Core Values

Humble Beginnings

This is where it all began…

Dinar Chambers

Present Infrastructure

National Foods as it stands today…

S.I.T.E Port Qasim

Milestones

1970 1978 1982 1985 1986 1988 1989 1990

1993 1997 1998 1999 2002 2005 20062000

Plain Spices

Table Salt

Basic Recipes

IngredientsRecipes& Snacks

PicklesHealth Food

Iodized Salt

Vermicelli KetchupJams & JelliesChinese Range

Raj Masala

Custards& Rivaaj

Squeezy

Ronaq

Evolution

Moving towards House of Brands Strategy

Convenience

Purity Hygiene

Brand Promise

Brand Positioning

– Quality, Hygiene and Purity

Commodity to Value Addition

– Concept of packaged commodities under the National Brand- “The Big Idea”

Trade Resistance

– Biggest Competition

– Lesser Margins as against loose

Convincing consumers for convenience

– Price Gap

– Perceived Quality > Perceived Price

– Free From Impurities

– Commonly available, the distribution challenge

Challenges

1970-80

1980-90

1990-00

2000-07

• The Big Idea• Changing consumer mindset• Competing with the ‘loose’• The fight to survive

•The move towards value addition -’Salt & Recipes’• Public Limited company• International alliances

• UNICEF Alliance• Diversification of product range• ISO Certification• Separate SBU for Export- Raj Masala• Move to professionalism

• JCR VIS• Launch of Ronaq and Squeezy• Automation• Port Qasim

Decades of Performance

Success Through Management Excellence

Financial Planning Product Development Branding Marketing and Selling Operations

Management Excellence

PRODUCT DEVELOPMENT

OPERATIONAL INVESTMENTS

BRAND INVESTMENTS

FINANCIAL OBJECTIVES

FINANCIALS – The Focal Point

The whole business plan is designed around financial parameters:

– Sustainable Growth Model – A practical approach to achieving top-line growth and bottom-line results. It looks at how much growth an entity can generate by maintaining the same financial relationships as the year before.

– Growth Rate = Return on Equity (Base year) X Retention Ratio %

FINANCIALS – The Center Point

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%

Sustainable Growth Rate

Maintaining Financial Discipline Is The Key ..which is achieved through optimizing– Equity Growth

• Minimum target is 30% per annum– Cash flows

• Through sustainable growth model achieve self sufficiency through own cash generation from operations

– Bottom Line• Minimum EBIT KPI’s

….. and through minute analysis of – CBM / CAM (Contribution Before / After Marketing

Investment) for each “Division”; “Region”; “Product Category”; and even “SKU” & “Customer”

FINANCIALS – The Center Point

Balanced approach for all automation and expansion projects maintaining sustainable debt / equity ratio

Controlled utilization of available external financial resources for working capital requirements

Optimum return on investment (ROI) model Efficient financial planning

– Maximum utilization of export credits

– LIBOR based financing – with exchange risk hedging

– Online collection system Above average credit rating of A+ by JCR VIS

FINANCIALS – The Center Point

Better tax planning yet contributing over Rs.350 million / annum

to the government treasury

Cost controlling through “responsibility accounting” …via

….Proper accounting of cost at various “cost centers” and their

timely reporting

FINANCIALS – The Center Point

Product Development

R&D– State-of-the-art facilities (HPLC, FTIR)– All our products conform to US FDA,

CFIA, Canada, EU and AQIS standards– Formal Procedures

Global Sourcing and Alliances– Certified Vendor Program– UNICEF– Oriental Merchants– Cerebos Foods

Product Development

Manufacturer

Effective Supply Chain Management

Branding

• Moving gradually towards House of Brands since 2000

• National• Rivaaj• Ronaq • Raj • Squeezy

Branding

Marketing and Selling– Building the finest Selling and distribution network

• Retail coverage of more than 80,000 outlets• Coverage of 350 towns across Pakistan• Direct Reach up to 50 % of Pakistan

– Clear and focused marketing message• More focus on functional benefits and fitting the

brand into consumer’s lifestyle– Not afraid to experiment

• Rivaaj– Innovation of ideas

• First company to introduce packaged spices• Squeezy• Iodized Salt

Branding

Research Methods:– CLT’s (Central Location Testing) and HUTs (Home Usage Testing)– Culinary Experts and Consumers are on Product Development

Panel– Brand Health Trackers

• Brand awareness• Advertisement Awareness• Top of mind recall

– Consumer Panel• Category Maps• Market and segment penetration• Shares• Volume and tonnage consumption

– Pre & Post Launch Ad Testing• AdWiser (Certified Software of AC Nielsen)

– Post Launch Evaluation• Learn from Mistakes

Marketing Research

Brand building Activities– 360 degree

communication

– TV advertising

– Brand Activation

– In Store Promotions

– Merchandising Drive

Brand Building Activities

Operations

HACCP Certified

ISO 9001 Certified

Microbial TestingCapability

Good Manufacturing

Practices

Operations: Quality Assurance

People Philosophy– Getting the right people– Competitive pay systems– Reward mechanism– Empowerment

Training and Development– Internal Programs– Cross functional exposure– Skill Development

Operations: Human Resources

Performance Management– Goals strategically aligned from

functional to individual level– Regular quarterly reviews of

business KPI’s– Celebrating success

Organizational Development– Benchmarking best practices– Restructuring and realignment of

business processes– Consultants to source know-how

Operations: Human Resources

Operations: IT Infrastructure

Dashboards, KPIs, Benchmark

XMLDATA WAREHOUSE

DataMining

BusinessIntelligence DSS

ERP …CRM SCM SFAOPERATIONAL

BUSINESSPERFORMANCE

& CONTROL

ANALYSIS

STORAGE

Operations: Information System

Adult Literacy Women’s Education Nutrition Awareness

Mission‘The primary objective of our social initiative is to improve the quality of life in Pakistan

by eradicating illiteracy throughout Pakistan’.

Corporate Social Responsibility

R&D– No of New Product Introductions– Product and Process Improvement

Index Procurement

– Out of Stock Index– Material Sourcing Quality Index

Supply Chain– Warehouse Utilization– Freight Monitoring Cost/Ton

Financials– EPS– ROE– GP by Category– Net Profit– Same Category Sales

Growth– Cash flow Generation– Equity Growth

Key Performance Indicators

Production– Tonnage per man-

hour– Wastages– Factory Operating

Expense / Ton– Equipment Efficiency– QA Operational

Compliance

Marketing & Sales– Zonal Profitability– Retail Audit– Brand Image Tracker– U&A Study

Key Performance Indicators

Designing of internal operational and financial polices

Regular external audits by A.F.Fergusons (PWC)

Independent compliance testing through outsourced internal audit function to Ford Rhodes Sidat Hyder (E&Y)

Quarterly reporting to audit committee

Corporate Governance

– Be Brand Oriented

• Think only in branded terms

– Only way to create value

– Invest in know how first then technology

– Technology would naturally become indigenous

– Do things right the first time, you don’t get A second chance

Key to Success

– Emerging Scenario

• Free Trade

• Global Village

• Emphasis on Lifestyle enhancing products

• Convenience the major key

– Opportunities

• South East Asia (SAARC)

– Major Growth Segment

» Pakistan

» India

• Africa and CAS

– Next wave of growth

Futurist Vision

‘To be a Rs. 50 billion food company by the year 2020 in the

convenience food segment by launching products and services in the

domestic and international markets that enhance lifestyle and create value

for our customers through management excellence

at all levels’.

Our Vision