TABLE OF CONTENTS

1. Company Overview
Pg 2

Nestle India Ltd.

2. SWOT Analysis

3. Ratio Analysis
Pg 5

Pg 6-10

4. Vertical Analysis – Common Size Analysis Pg 11-13

5. Horizontal Analysis – Trend Analysis Pg 14-16

6. AnnexureSubmitted By – Group 10 Pg 17-19

7. References Pg 20
Prakhar Garg - 220101184
Swastika Das- 220101129

Prince Raj - 220201085

Vishal Kumar - 220101139
Aatm Prakash Mishra- 220103007
 Company Overview
Nestle India Ltd (Nestle India), a subsidiary of Nestle SA of Switzerland, manufactures, markets
and sells consumer food and beverages. Its product portfolio includes dairy products, nutritional
products, beverages, prepared dishes and cooking aids, chocolates, and confectionery. The company
markets its products under the everyday, NESCAFE, NESTEA, Maggi, KitKat, Munch, Nestle, POLO, Bar-
One, Milkmaid, Milky-bar, Alpino and Eclairs brands, among others.

Nestle India operates manufacturing facilities and branch offices across India. It also exports its
products to various countries across the world, including the US, Canada, the UK, Australia, Singapore,
Turkey, Romania, European Union, New Zealand, and Africa. Nestle India is headquartered in Gurgaon,
Haryana, India.

With eight factories and many co-packers, Nestlé India is a vibrant Company that provides consumers in
India with products of global standards and is committed to long-term sustainable growth and
shareholder satisfaction.

Nestle is India's 2nd largest FMCG Company by Market Capitalization and its leading Consumer
Food Company. Nestle India had around 7910 employees as of the year ended 2021. The company
generated consolidated revenues of 147 billion Indian rupees in the fiscal year that ended December 31,
2021 and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange)
in India.

Market Capitalization – 1,85,000 Crores (Rank 28 in India)

Revenue – 14,709 Crores

Size – 7910 Employees

Product Offerings–

 Beverages

 Breakfast Cereals

 Chocolates and Confectionery

 Dairy

 Foods
Key People

Chairman & Managing Director Finance & Control and CFO

Mr Suresh Narayanan Mr David McDaniel

Executive Director - Technical Company Secretary

Mr Matthias Christoph Lohner Mr Pramod Kumar Rai
Market Capitalisation

Sales

Fixed Assets
Employees
 SWOT Analysis
I. Strengths
1. Unmatched research and development capability - The Company benefits from the extensive
centralized R&D activity and expenditure of the Nestlé Group, at an annual outlay of around 1.6
billion Swiss Francs.

2. As a result of the Company’s ongoing access to the international technology from Nestlé Group,
Switzerland, the Company absorbs and adapts the technologies on a continuous basis to meet
its specific needs from time to time.

3. Environmental sustainability efforts - Nestlé prides itself on company sustainability efforts. The
company’s environmental initiatives have helped to reduce waste, and packaging material usage
and to keep the environment cleaner.

4. Unrivaled product and brand portfolio - Its product portfolio includes dairy products, nutritional
products, beverages, prepared dishes and cooking aids, chocolates and confectionery. The
company markets its products under the EVERYDAY, NESCAFE, NESTEA, Maggi, KITKAT, Munch,
Nestle, POLO, Bar-One, Milkmaid, Milky bar, Alpino and Eclairs brands, among others.

Weaknesses
1. Criticism over high water usage, selling contaminated food, anti-unionism, forced child labor and
using other unethical practices.

2. Contaminated food recalls - Nestlé is a huge food company selling tens of thousands of different
food products daily. Even with strict quality control measures the company often has to recall its
products in various markets due to some form of contamination.

3. Conflict of interest due to brand structure: Nestlé is organized in a matrix structure. This means
that a large number of brands are under the same umbrella group, which makes managing such
a large number of individual brands somewhat challenging and often leads to inconsistencies
and conflicts of interest.

Opportunities
1. Leveraging E-commerce to fuel the growth of products.

2. Growing ready-to-drink (RTD) tea and RTD coffee markets.

3. Investing in Innovation – To meet new demands, reset defining relationships with consumers
and reconsider their product portfolio in the post-COVID era, the company is investing heavily to
make products healthier, and allow consumers to make informed choices.

4. A research-based approach to sustainable development.

 Threats
1. Supply Chain Challenges - The worldwide supply chain continues to be affected by challenges
relating to the COVID-19 pandemic, including delays and disruption.

2. The emergence of competition - many consumer goods companies such as Mondelez, Unilever,
Parle, PepsiCo, Amul, and Britannia offer similar foods and beverages. It is difficult for Nestle to
compete in such a situation where substitute products are readily available.

3. Due to inflation an increase in the cost of raw materials can lead to a decrease in a company’s
share of profits.
Ratio Analysis
Profitability Ratios
 Net profit ratio = Profit after taxes (PAT) / Total revenue For 2021= 21,449/146,337 = 0.146 =
14.6 percentage

For 2020 = 20,824/132,902= 0.156 = 15.6 %

2021-22 2020-21

= 14.6 % = 15.6 %

The profit ratio fell over the year by 1 %.

The net profit percentage is the ratio of after-tax profits to net sales. It reveals the remaining profit after
all costs of production, administration, and financing have been deducted from sales, and income taxes
recognized.

 Return on invested capital (ROIC)= Net operating profit after tax (NOPAT) / Invested capital
1. Net operating profit after tax = profit after tax + 0.7*(finance cost – other income) For
2020= 20824 + 0.7(1641.8 -1458.5) = 20952.31

For 2021 = 21449 + 0.7(2011.9 – 1201.1) = 22016.56

1. Invested capital = Equities + borrowings – investments (cur & non-cur) – investment

property

For 2020= 20193 + 348 – (14638.2) – 0 = 5902.8

For 2021 = 20844.8 + 274.7 + 65.9 – (7107 + 632.8) – 0 = 13445.6

3. ROIC for 2020 = 20952.31/5902.8 = 354 %

ROIC for 2021 = 22016.56 / 13445.6 = 163.7 %

2021-22 2020-21

= 163.7 % = 354 %

The ROIC decreased for the year 2021-22 when compared to 2020-21.

Return on invested capital (ROIC) is a calculation used to assess a company's efficiency in

allocating capital to profitable investments.
Operating Profit Ratio = Operating profit before tax / total revenue from operations
1. Operating profit before tax = Profit before tax + finance cost – other income For 2020=
28127. 9 + 1641.8 – 1458.5 = 28311.2

For 2021 = 28837.7 + 2011.9 – 1201.1 = 29648.5

1. Total revenue from operations for 2020 = 133500 Total revenue from operations for
2021 = 147094

2. Operating profit ratio 2020 = 28311.2/133500 = 0.212 = 21.2 %

Operating profit ratio 2021 = 29648.5/ 147094 = 0.201 = 20.1 %

2021-22 2020-21

= 20.1 % = 21.2 %

Operating profit ratio also went down by a couple of percentage points. The operating profit
ratio is the amount of money a company makes from its operations. The higher the operating profit
ratio, the better it is considered.

Solvency Ratios
 Debt Equity Ratio = Long term debt / equity
1. Long term debt = borrowings (cur & non-cur)

For 2020= 348.4

For 2021 = 340.6

2. Equity for 2020= 20193.4

Equity for 2021 = 20844.8

3. Debt-equity ratio for 2020= 0.01725

Debt equity ratio for 2021 = 0.01633

2021-22 2020-21

= 0.01633 = 0.01725

The company’s D/E ratio went down as compared to last FY, which is a good sign.

The debt-to-equity ratio measures your company's total debt relative to the amount originally invested
by the owners and the earnings that have been retained over time.
  Interest coverage ratio = Earnings before tax and interest (EBIT) / Finance cost
1. EBIT = profit before tax + finance cost For 2020 = 28127 + 1641.8 = 29768.8

For 2021 = 28837 + 2011.9 = 30848.9

1. Finance cost for 2020=1641 for 2021=2011

2. Interest coverage ratio

For 2020= 29768.8 / 1641 = 18.14 times

For 2021 = 30848.9 / 2011 = 15.34 times

2021-22 2020-21

= 15.34 = 18.14

Interest coverage ratio tries to measure how many times the company can cover the
interests/finance cost with its current revenue. Here, it decreased significantly ( around 3%).

Liquidity Ratios
 Current Ratio = Current Assets / Current Liabilities
For 2020 = 41850/24925 = 1.67

For 2021 = 27387/26032 = 1.05

2021-22 2020-21

= 1.05 = 1.67

Current Ratio measures the capability of a firm to cover its current liabilities and its capacity to
stay solvent. The current ratio decreased from 1.67 to 1.05.
 Quick Ratio = Liquid Assets/Current Liabilities
1. Liquid Assets = Current Assets – Inventory – Prepaid Expenses

For 2020 = 41850 – 14164 - 386 = 27300

For 2021 = 27387 – 15802 – 500 = 11085

1. Quick Ratio

For 2020 = 27300/24925 = 1.095

For 2021 = 11085/26032 = 0.42

Current Ratio measures the capability of a firm to cover its current liabilities and its capacity to
stay solvent. The current ratio decreased from 1.67 to 1.05.

Quick Ratio helps in understanding whether the company will be able to pay off its current
liabilities with only its Liquid Assets. The Quick Ratio decreased from 1.095 to 0.42.

Activity Ratios
 Inventory Turnover Ratio (ITR) = Cost of Goods Sold (COGS) / Average Inventory COGS =
Opening Stock + Net purchase – Closing Stock

COGS for 2020 = 56739.1

COGS for 2021 = 63189.2

Average Inventory for 2020 =(26966.5)/2 =13497.75

Average Inventory for 2021 =(15802+14164)/2 = 14983

ITR for 2021-22 ITR for 2020-21

= 4.24 = 4.20

Inventory Turnover Ratio shows that what is the efficiency by which the company turnover (sells
off) its inventory and has to replenish it for the given year. There was no such significant change in ITR .
 Inventory Holding Period = 365/ITR
ITR for 2020 = 86.90

ITR for 2021 = 86.08

2021-22 2020-21

= 86.08 = 86.90

Inventory Holding Period signifies the amount of time inventory stays with the company hence,
a low inventory holding period means that the company quickly sells its inventory which is a good sign
for any company. Here, for Nestle the IHP was 86.90 for the year 202021 which reduced to 86.08 in
2021-22.

 Receivable Turnover Ratio (RTR) = Revenue from Operations / Average Trade receivables
Rev. from operations for 2020 = 133500 Rev. from operations for 2021 = 147094

Avg Trade Rec. for 2020 = 2820/2 = 1410

Avg Trade Rec for 2021 = 3302/2 = 1651

2021-22 2020-21

= 89.09 = 94.68

Receivable Turnover Ratio shows that how effectively the company is able to get back the
receivables from its debtors. The quicker a company gets its receivables the better it is. In Nestlé's case
we can see that for both the years there is not much significant change in RTR hence, the company is
having a consistent policy regarding its debtors and is able to successfully walk the talk.

 Average Collection Period = 365/RTR RTR for 2020 = 94.68

RTR for 2021 = 89.09

2021-22 2020-21

= 4.096 = 3.85

The Average Collection Period shows the time company takes to get back the money from debtors.
Here, it is around 3.85 days for 2020-21 & it increased marginally to 4.096 in 2021-22. It is good that the
Average Collection Period is constant but a smaller duration would prove even more beneficial for the
company.
Creditor Turnover Ratio (CTR) = Purchases/Average Trade Payables
Purchases for 2020 = 57432

Purchases for 2021 = 63816

Average Trade Payable for 2020 = 31200/2 = 15600 Average Trade Payable for 2021 = 32513/2
= 16256.5

2021-22 2020-21

= 3.92 = 3.68

Creditors Turnover Ratio shows how effectively the company can pay back its creditors. The
smaller it is the better for the company, provided the company is in a position to actually pay the
creditors. Comparedith 3.68 of 2020-21, 2021’s 3.92 is a much better performance by the company.

Average Payment Period = 365/CTR CTR for 2020 = 99.1

CTR for 2021 = 93.11

2021-22 2020-21

= 93.11 = 99.11

The higher the Average Payment Period the better it is for the company, as it can hold on to
that cash for a longer period of time & since the company is in good financial condition longer payment
period is good. In 2020-21, Nestle took around 99 days to pay back to creditors which got reduced to 93
days in 2021-22 , though the change is not significant the higher the duration , the better it is for the
company.
Depreciation and PPE recognition policy of the company:

PPE Recognition
Items of property, plant & equipment are stated at cost less accumulated depreciation and accumulated impairment
losses, if any. Cost is inclusive of freight, duties, taxes or levies (net of recoverable taxes) and any directly
attributable cost of bringing the assets to their working condition for intended use.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as
“Capital work-in-progress”.
Profit or loss on disposal/ scrapping/ write off/ retirement from active use of an item of property, plant and
equipment is recognised in the statement of profit and loss.

Depreciation Accounting Policy

The Company has assessed the useful lives of property, plant and equipment as per Schedule II to the Companies
Act,
2013. Accordingly, depreciation has been computed on useful lives based on technical evaluation of relevant class
of assets
including components thereof. Useful lives and residual values are reviewed annually. Depreciation is provided as
per the
straight line method computed basis useful lives of fixed assets as follows:

Buildings : 25 - 40 years
Plant & Machinery : 5 - 25 years
Office Equipments : 5 years
Furniture and fixtures : 5 years
Vehicles : 5 years
Information Technology (IT) equipment : 3 - 5 years

Key Highlights
Profit falls for the second quarter
Nestle India said its net profit for the March quarter fell 1.25 percent year-on-year (YoY) to Rs 594.71 crore
compared with Rs 602.25 crore in the same quarter last year. The company reported a 20 percent drop in profit in
the December quarter.

Revenue meets street estimates

Sales for the quarter grew 9.74 percent over Rs 3,600.20 crore in the year-ago quarter, according to the data
available.

Domestic sales growth was broad-based and largely driven by volume and mix. Export sales were lower by 1.0
percent largely due to a change in product mix, the FMCG company said.

Inflation plays spoilsport

Nestle India said the cost of key raw and packaging materials hit a 10-year high level. The costs, he said, continued
to surge this quarter which impacted profit from operations.

Commodity prices may firm up

Neste India said cost outlook for key commodities like edible oils, coffee, wheat, fuel remains firm to bullish while
costs of packaging materials continue to increase amid supply constraints, rising fuel and transportation costs. Input
costs are expected to be on bullish trend both globally and locally, it said. Also fresh milk costs are expected to
remain firm with continued increase in demand and rise in feed costs to farmers.

E-commerce now 6.3% of sales

Nestle India said the e-commerce channel showed strong acceleration with growth being largely fuelled by new
emerging formats like ‘quick commerce’ and ‘click & mortar’ for the channel. The channel reported 71 per cent
growth and contributed 6.3 per cent of domestic sales.