Table of Contents

01) Preface

02) About company overview

03) Acknowledgement

04) Executive summary

05) Introduction

06) Departments

07) Company mission

08) Products

09) Financial Analysis

10) Ratio Analysis

11) SWOT Analysis

12) PEST analysis

13) Suggestions & Recommendations

14) Reference

Preface

When it comes to investing, analyzing financial statement information (also known as quantitative analysis), is one of, if not the most important element in the

fundamental analysis process. At the same time, the massive amount of numbers in a company's financial statements can be bewildering and intimidating to many

investors. However, through financial ratio analysis, you will be able to work with these numbers in an organized fashion.

The objective of this tutorial is to provide you with a guide to sources of financial

statement data, to highlight and define the most relevant ratios, to show you how to compute them and to explain their meaning as investment evaluators.

Ratio analysis is used to evaluate relationships among financial statement items.

The ratios are used to identify trends over time for one company or to compare two or more companies at one point in time. Financial statement ratio analysis focuses

on three key aspects of a business: liquidity, profitability, and solvency.

Company overview

Nestle Pakistan Limited is a Pakistan-based company engaged in manufacturing, processing and sale of food products, such as dairy, confectionery, culinary, beverages, infant nutrition and drinking water. The Company operates in two

segments: Milk and nutrition products, which include milk based products and cereals; and Beverages, which comprise juices and water. Nestle Pakistan operates

the biggest milk collection operation in Pakistan. The Company's products are traded under brands, such as NESTLE MILKPAK, NESVITA, NIDO,

EVERYDAY, MILKPAK CREAM, NESTLE RAITA and NESTLE ACTIPLUS. Nestle Pakistan collects milk from an estimated 190,000 farmers spread over

145,000 square kilometers in the province of Punjab and Sindh. Nestle Pakistan is the Food & Beverages Company in Pakistan with key focus on Nutrition, Health

and Wellness and reaching the remotest of locations throughout Pakistan to serve the consumers.

Nestlé is...the world's leading nutrition, health and wellness company. Our 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, from morning to night.

Acknowledgement

I find no words at our command to express our deepest sense of gratitude to the Almighty ALLAH , the most Gracious, the most Merciful and the most

Beneficent, who gives us the talent to complete this task success fully, He is the one who gave us courage to do this.

We much obliged to my loving Parents whose prayers have enabled us to reach

this stage. At this occasion we can’t forget our parents for their guidance at the crucial moments of our life.

We wish to thanks all our Friends and Classmates who really helped us by giving suggestions and critical review of the manuscript. Obviously this achievement was

not possible without all of you.

Executive Summary

The purpose of the term report is to analyze the marketing plans and strategies of

MILKPAK, a brand of Nestle Pakistan Ltd. and to know how they make this brand

popular among their consumers and how they compete with their competitors in

order to survive in the market. The brand has largest market share and target all

social classes. The organization has adopted innovative ways to collect milk and

distribute it with effective distribution channels.

Nestle Milkman Ltd believes in customer based aggressive marketing. It always

looks to the changing demands of peoples and takes initiatives to fulfill those

requirements perfectly.

People of Pakistan are getting more conscious about their health and hygiene

therefore the demand of processed milk is rising gradually and showing great

potential. The industry has been growing at a robust rate of 20% during the last

five years. Therefore, many new companies / organizations are getting into this

sector engaging high investments creating a tough competition in the processed

milk industry.

Introduction

Nestlé S.A is a Swiss multinational food and beverage company headquartered in

Vevey, Switzerland. It is the largest food company in the world measured by revenues .Nestlé's products include baby food, bottled water, breakfast cereals,

coffee, confectionery, dairy products, ice cream, pet foods, and snacks.

Nestle is now the world's largest food company. It is present on all five continents ,

has an annual turnover of 74.7 billion Swiss francs, runs 509 factories in 83

countries and employs about 231,000 people the world over. The Company owes

its current status to the pioneering spirits inherited from its founders which

continues to inspire it, to its concern with quality and to its constant search for new

ways of satisfying man's nutritional needs.

Nestlé Pakistan today is the leading Food & Beverages Company in Pakistan with

key focus on Nutrition, Health and Wellness and reaching the remotest of locations

throughout Pakistan to serve the consumers. Nestlé Pakistan also prides itself in

being the leaders in Nutrition, Health & Wellness. Ever since 1867, when Henri

Nestlé invented the first infant food, nutrition has been in our DNA. Today more

and more consumers mirror our emphasis on nutrition, as they realize that food

choices affect their health and quality of life.

Our history begins back in 1866, when the first European condensed milk factory

was opened in Cham, Switzerland, by the Anglo-Swiss Condensed Milk Company.

Departments

Human Resource

The Human Resource department is dedicated to our employees, and ensures that

we have all the right people with the right skills, in the right places at the right

time. Understanding that our people are the bedrock of all our business strategies,

it is our mandate to enhance their skills with cutting-edge training and provide

them with world-standard facilities

Our ground-breaking Management Trainee Programmed aims to develop talented

young men and women and help them achieve their potential in a dynamic and

enabling environment. Over a hundred people travel abroad every year to take

advantage of our international training and development events

Finance Department

Accounting and Finance is the heart of a business. Its functioning efficiently

directly affects the rise and fall of a business. It is possible to survive, for a while at

least, without an effective marketing plan, poor human resource management and

indeed a poorly designed business strategy finance is a very essential to smooth

running of the business No finance - no business No business, whether big,

medium or small can be started without an adequate amount of finance. Right from

the very beginning, i.e. conceiving an idea to business, finance is needed to

promote or establish the business, acquire fixed assets, make investigations such as

market surveys, etc., develop product, keep men and machine at work, encourages

management to make progress and create value These departments are crucial to

the financial well-being of a company and ensure that there is money for day-to-

day operations and oversee investments strategies for future growth.

Marketing Department

As marketing is a game to meet the needs and wants of the customers to satisfy

them. Customer satisfaction is the responsibility of marketing department by

developing new product, modifying existing product, placing the product at right

time at right place. The department also helps in setting prices with respect to

competitors and to satisfy customer as well. It functions to promote the product. So

in this way it creates an environment where transactions can take place.

As the function of marketing department is to satisfy the customer and to fulfill

organization objectives. These cannot be performed by a single department. These

can only be achieved when there will be coordination among all departments of the

organization. In the case of Nestle Milkpak Ltd. marketing division with its three

departments coordinates all other divisions and departments.

Sales Department

Sales department is a primary source of getting the information about the market.

They actually visit the market and find out that who are the competitors, and what

strategies they are adopting. They also collect the complaints of the customers and

make sure the availability of the product in the markets. Nestlé cares for its consumers because its success depends on meeting their needs

and expectations. Through listening and understanding, it can make products that

they will want to use all through their lives.

Mission Statement

“Maintaining a global viewpoint, we are dedicated to supplying products of the

highest quality, yet at a reasonable price for worldwide customer satisfaction.”

Product Line

Following are the major products lines which are present in Pakistan as:

01) Nestle Ambient Dairy

02) Breakfast cereals

03) Nestle juices

04) Nestle beverages

05) Nestle chilled dairy

06) Nestle pure life

07) Nestle coffee

Nestle Ambient Dairy

Nestle Nido Fortified

NIDO believes that a mother’s love is unconditional and is always searching

to give her child the very best in life. That is what she is all about,

NURTURING. NIDO strives to provide a strong foundation for growth and

development by giving your children the very best in health and nutrition.

Children grow very quickly and so do their developmental needs. That is

exactly why Nestlé has developed NIDO that understands the nutritional

needs of your children at all stages of growth.

Nestle Nesvita

Did you know that your body loses a certain amount of Calcium every day?

This Calcium needs to be replenished daily since our body cannot produce it

on its own. You must ensure that you get enough of it in your daily diet in

order to have stronger bones.

If you are all set for an active and healthy lifestyle, then you need to get the

strength your bones need & the smartness you desire with NESTLÉ

NESVITA Calcium Plus a Just two glasses of NESTLÉ NESVITA Calcium

Plus milk helps meet 80% of an adults daily requirement for Calcium

intake* and that too with less than 1% fat. s it is high in Calcium and low in

fat.

Nestle Milkpak

MILKPAK is a trusted brand known throughout the country for its nutritious

wholesome goodness and pure natural taste. To secure a happier and

healthier future for your 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!

NESTLÉ MEETHAY

For Pakistani consumers with a sweet tooth, Nestlé has entered into the

indulgent desserts category. Nestlé MEETHAY is a ready to eat dairy

dessert in two delicious flavors – vanilla and strawberry. The product

can be consumed as it is or be used to make other premium desserts

like tiramisu and fondue. With its unique ready to eat format that

requires no cooking, MEETHAY range of desserts aims to make your

life delicious!

Nestle Everyday

Tea drinking culture is an integral part of daily Pakistani life so when it comes to tea, it’s about NESTLÉ EVERYDAY. Strongly established as a specialized tea creamer, today Nestlé EVERYDAY has not only Become the heart of tea but also the heart of every tea lover across Pakistan. A wide portfolio ranging from mainstream to sachets Perform equally in mixed tea and separate tea.

Breakfast Cereals

Nestle 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 Antigen–E help optimize the

release of energy from Proteins, Fats and Carbohydrates. Loaded with extra

cocoa and rich malt, MILO has the irresistible chocolaty taste that kids love.

So treat your children with MILO and watch them at their active best!

Just one glass of MILO with milk provides children with 50% of their daily

iron, calcium, Vitamin B1 and Vitamin C needs.

Nestle corn flakes

Tear into a box of NESTLÉ CORN FLAKES and discover the simple goodness

Within. There’s nothing quite like a bowl of tasty, crispy flakes made from whole

Grain golden corn with a splash of milk to get the day started.

Not only will NESTLÉ CORN FLAKES serve up a tasty breakfast, it also contains

Ten essential vitamins and minerals, including calcium & iron for a nutritious start

To the day.

Nestlé Juices

Nestle fruita vitals

Oranges are in demand not only for their divine juicy flavor but equally celebrated

For their health benefits. They are naturally low in calories, and an excellent source

Of Fiber and Vitamin C. Squeezed from the finest handpicked oranges, 100% pure

NESTLÉ FRUITA VITALS Orange Juice has no sugar and is a good source of

Vitamin C.

Nestle chilled dairy

Nestle rivayatti mazaa

NESTLÉ Rivayatti Mazaa is the ideal delicious and hygienic kitchen solution for homemakers to provide for all her family’s distinct yogurt needs, whether it be cooking, making lassi, preparing raita or having it with a spoon.

Nestle Raita

NESTLÉ Zeera Raita was launched in 2004, becoming an instant favorite of the

Pakistani cuisine lovers. This was followed by the launch of NESTLÉ Podina Raita

in 2006, which further strengthened NESTLÉ Raita’s position as the fastest

Growing brand within our Chilled Dairy portfolio. With its unique mouth-watering

taste, simple convenience and guaranteed hygiene, NESTLÉ Raita transforms

meals into culinary delights, making meals special and gaining appreciation for

homemakers.

Nestlé Pure Life

Every bottle of NESTLÉ PURE LIFE is produced with the Nestlé 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

well-being of your family.

Nestle Coffee

The world’s most trusted and enjoyed coffee - rich in natural goodness, flavor and

convenience.

With fine roasting, coffee beans release wonderful aromas and flavors. We capture this natural goodness so you can enjoy the rich aroma and delicious taste of

Nescafe - anywhere, any time. More on Enjoying quality moments every day.

Ratio Analysis

A financial ratio (or accounting ratio) is a relative magnitude of two selected

numerical values taken from an enterprise's financial statements. Often used

in accounting, there are many standard ratios used to try to evaluate the overall

financial condition of a corporation or other organization. Financial ratios may be

used by managers within a firm, by current and potential shareholders (owners) of

a firm, and by a firm's creditors. Financial analysts use financial ratios to compare

the strengths and weaknesses in various companies. If shares in a company are

traded in a financial market, the market price of the shares is used in certain

financial ratios. The ratios are shown on the pages ahead.

Current ratio ;( 000)

(2012)

Current Assets/ current liabilities= 16905484/20003413

=0.84 = 84%

Current ratio (000)

(2011)

Current assets/ current liabilities= 13395017/16788455

=0.8 =80%

Interpretation;

The current ratio of 2012 is 0.84 it means that the firm current liabilities are higher

than of current assets .It measures the ability to meet the current debts with current

assets. Nestle Pakistan can meet the debts at 84% in 2012 and 80% in 2011.

Current ratio increases by 4% in 2012 it is a good sign for company.

Change;

The change is + 4% in 2012

Acid test Ratio; (000)

(2012)

0.78

0.8

0.82

0.84

0.86

2011 2012

c/r 2011

c/r 2012

Current Assets- inventories/ current liabilities

= 16905484 - 8025653 / 20003413

= 0.45 = 45%

Acid test ratio

(2011)

= Current Assets-inventories/ current liabilities

= 13395017 - 7064170 / 16788455

= 0.37 = 37%

0

0.1

0.2

0.3

0.4

0.5

2011 2012

atr/2011

atr/2012

Interpretation;

Inventory means that the stock that is in the industry at present. Measures the

ability to meet the current debts with most liquid assets. IN 2012 the acid test ratio

is 45% and in 2011 it was 37 %. 45% means the inventory is high lower the

inventory lower it indicates the acid test ratio.

Change; The change is +0.8%

Debt to equity ratio; (000)

(2012)

= Total debt / stockholder equity

= 39312453 / 11560264

= 3.40

Debt to equity ratio

(2011)

=Total debt / stockholder equity

= 27567443/ 7612416

=3.62

Interpretation;

Indicates the extent to which debt financing is used relatively to equity financing.

It means that the debts are very high. In 2012 the debts the debts are 3.40 0f

stockholder equity but in 2011 the ratio was a bit high 3.64. It shows that the firm

ability to meet the debts relatively to the stockholder equity is very low. The debts

are very high. The change is positive +0.22 times because the debts are low.

Debt to total Assets Ratio (000)

(2012)

=Total debts / Total Assets

3.25

3.3

3.35

3.4

3.45

3.5

3.55

3.6

3.65

2011 2012

d/r 2011

d/r 2012

= 39312453/ 50872717

=0.77=77%

Debt to total Assets

(2011)

= Total debts/ Total assets

= 27567443/35179859

=0.78=78%

0.764

0.766

0.768

0.77

0.772

0.774

0.776

0.778

0.78

2011 2012

dr/2011

dr/2012

Interpretation;

This ratio is showing two things that the assets are increased by 13% in 2012. This

ratio is also showing that the firm’s ability to meet the debts with total assets is

good because the total debts are 78% of total assets in 2011 and 77% in 2011.

Change;

The change is +1% in 2012

Turnover ratio

Receivables turnover (000)

(2012)

= Annual credit sales/ receivables

= 79088000/6208184

= 12.73 times

Receivable turnover in days

(2012)

= 365/RTO

=365/12.73

=28.7 days

Receivable turnover

(2011)

=Annual credit sales / receivables

=64824000/4042634

=16.1 times

Receivable turnover in days

(2011)

=365/RTO

=365/16.1

=22.67 days

Interpretation;

Receivable turnover in 2012 is 12.73 it means that Receivables are turning 12.73

times into cash in a year. If this ratio will high shows the efficiency of the firm

because they are recovering there receivables in time. 12.73 time means that the

firm average collection period is 28.7 approximately a month. In 2011 the RTO is

16.1 which are good than the previous year the firm is able to convert receivables

into cash 16.1 times a year. In 2011 the average collection period is 22.7 which is

relatively good than of 2012. This is based on the credit therefore this ratio is good.

Change;

In 2012 the change is - 0.21

0

5

10

15

20

2011 2012

rto/2011

rto/2012

Inventory turnover ratio (000)

(2012)

= cost of goods sold/ inventory

=57564265/8025653

=7.17

Inventory turnover in days

(2012)

=365/ITO

=365/7.17

=50.90=51 days

Inventory turnover

(2011)

=cost of goods sold / inventory

=48099046/7064170

=6.80

Inventory turnover in days

(2011)

=365/ITO

=365/6.8

=53.6=54

6.6

6.7

6.8

6.9

7

7.1

7.2

2011 2012

ito/2011

ito/2012

Interpretation;

Inventory turnover means how much the inventory is in hand and easily

convertible into cash. In 2012 the inventory turnover is 7.17 a year and after 51

days. In 2011 the ITO is 6.80 times a year and after 54 days. The turnover ratio in

2012 is somehow good but not exactly because the inventory sell out after 51 days

it is a beverage company the product life is less.

Change;

The change in 2012 is + 0.37 time

Total asset turnover (000)

(2012)

=Net sales / total assets

=79088000/50872717

=1.6

Total asset turnover

(2011)

=Net sales/ Total Assets

=64824000/35179859

=1.842

Interpretation;

Total asset turnover means the assets are how much efficient to generate the sales.

In 2012 the total asset turnover ratio is 1.6 of the total asset which is a good sign.

In 2011 the turnover is almost double 1.84. The firm is efficient

Change;

The change is -0.24% in 2012

Return on Assets ;( 000)

(2012)

1.4

1.5

1.6

1.7

1.8

1.9

2011 2012

East

West

=net profit after taxes/ total assets

=5865000/50872717

= 11.53% = 0.1153

Return on Assets

(2011)

=net profit after taxes/ total assets

=4668000/35179859

=13.27%= 0.1327

10.50%

11.00%

11.50%

12.00%

12.50%

13.00%

13.50%

2011 2012

roa/2011

roa/2012

Interpretation;

The total return on assets in 2011 was 7.2% and 7.4% in 2012. It means that the

return on assets is good. Measures overall effectiveness in generating profit with

available assets. Earning power of invested capital.

Change;

The change in 2012 -1.74%

Net profit margin (000)

(2012)

= net profit after tax / net sales

=5865000/ 79088000

=0.074=7.4%

Net profit margin

(2011)

=net profit after taxes/ net sales

= 4668000/64824000

= 0.072=7.2%

Interpretation;

Net profit margin measures how much net profit is generated with respect to the

sales. IN 2012 the net profit margin is 7.4% and in 2011 the net profit margin was

7.2% it means that the profit is increased by 0.2 % in 2012.

Change;

The change in 2012 is +0.2 %

7.10%

7.15%

7.20%

7.25%

7.30%

7.35%

7.40%

2011 2012

npm/2011

npm/2012

Gross profit margin ;( 000)

(2012)

=Gross profit/sales

= 21523000/ 79088000

=27.2%=0.272

Gross profit margin;

(2011)

=Gross profit / sales

=16725000/64824000

=25.8%=0.258

Interpretation;

Gross profit margin measures how much gross profit is generated by the sales.

Gross profit is basically the profit which does not include expenses, taxes, interest .

In 2012 the gross profit is 27.2% and in 2011 the gross profit was 25.8%.

Change;

The change in 2012 was 1.4%

Earning per share

(2012)

=129.2

Earning per share

(2011)

=102.9

25.00%

25.50%

26.00%

26.50%

27.00%

27.50%

2011 2012

gpm/2011

gpm/2012

SWOT Analysis

1: Strengths:

The biggest strength of nestle is it includes team focused and good policy. Nestle looks on collective and oriented employees to work hard. And second thing is

Nestle has a big brand name because of their high level of market share and the trust of the people from all over the world. Nestle is trying all the time to achieve

bigger volumes by renovating existing products and innovating new products. Because of low cost operators by which Nestle not only compete with others but

also taking ahead. Strengths are internal factors. For example, strength could be your marketing

expertise.

2: Weaknesses:

One of the major weaknesses of Nestle is Nestle Baby Milk because those babies who fed on baby milk are become sick. And so many babies were died because of

nestle baby milk and then people boycott to buy nestle. Weaknesses are internal factors. For example, a weakness could be the lake of new product.

3: Opportunities: Opportunities are external factors, for example developing a distribution channel such as Internet; change in the lifestyle of consumer is possible to increase the

demand for company’s products.

0

20

40

60

80

100

120

140

2011 2012

eps/2011

eps/2012

4: Threats: A threat could be a new competitor in an existing market or a technological change that makes existing products possible out of date.

PEST Analysis

The main theme of PEST analysis is to measure market potential and situation, by indicating growth or decline. PEST analysis can be used for marketing and

business development assessment and decision-making, and the PEST analysis encourages proactive thinking, rather than relying on habitual or instinctive

reactions.

1: Political analysis:

Nestlé’s baby milk can be affected by political change in several different ways i.e. political change can influence public priorities and funding arrangements. Nestle

has to operate within the framework of laws set by Parliament, and that’s why it depends on political considerations. Government plays vital role by imposing the law and regulation on the companies.

Government set standard laws for companies that has to met otherwise they have to pay fines.

Nestle is trying to met all the standard laws which are set by the government. For

example Health and Safety Act, Disability Act but unfortunately Nestle break the law. Government laws and regulation in accounting standards, taxation

requirements, including tax rate changes, new tax laws and revised tax law interpretations are highly influenced on Nestle business.

2: Economical Environment: Nestle needs to have enough information about the country inflation rate,

economic growth rate, and national per person capital income, in which they are willing to start their business. Economic condition varies from country to country. Before starting the baby milk has focus on the above factors. These are the factors

that Nestle has to consider before setting corporate objectives. Global economic turmoil has major influence on Nestle business because customers are spending

less and they have to adopt different strategies in order to run business smoothly.

3: Social analysis: Social or cultural environment had great impact on Nestle. The main focus of

social/ cultural includes the Social change involves changing attitudes and lifestyles. The social and cultural environment is constantly changing. Different

countries had different culture (language, religious beliefs, food, family, clothing and their lifestyle). Nestle has to developed strategies which are according to belief

and culture in multicultural country like UK. Every country has different consumer taste and lifestyle and Nestle has to develop effective strategies in order to met

different lifestyle consumer behavior. Company is totally dependent on the consumer lifestyle and their attitude. Product or services cannot be successful until

company has enough information about the consumer lifestyle. Nestle has to take social and cultural factors under consideration in order to achieve their strategic objectives.

4: Technological:

Technological change has the most rapid, persistent and profound effect. It creates opportunities for new products and product improvements and of course new marketing techniques- the Internet, e-commerce. Technology creates opportunities

for new product or product improvements and new techniques of marketing such as internet and e-commerce.

Suggestions

After the visit of the Nestle Company and check the complete management

functions we suggested to the Nestle Company

They should advertise throughout the year so people should remember them

and will be more brand loyal and new customers will be attracted. They

should use all the medium of advertising to be more successful in attracting

customers.

Company should avail the opportunities. Produce low emission products and

alternative power sources. Also it cans manufacturemid segment economical

products. This will bring the company forward in the race of producing

products. Hence will increase its market share.

Company’s current assets are decreasing each year, it should take effective

measures to try to increase the current assets, especially cash and bank

balances. Cash can be gained if the net income is sufficient.

References

www.nestle.com.pk

www.wikipedia.com

www.google.com.pk

Thanks to all my Friends who helped us...!