Submitted For The Partial Fulfillment For The Awarded of The Degree Bachelor in Business Administration 2020-2021
Submitted For The Partial Fulfillment For The Awarded of The Degree Bachelor in Business Administration 2020-2021
Submitted For The Partial Fulfillment For The Awarded of The Degree Bachelor in Business Administration 2020-2021
A study on
Submitted for the partial fulfillment for the awarded of the degree
Bachelor in Business Administration 2020-2021
“THANK YOU”!!!! These two words are very less to be measured when it comes to
extend my gratitude towards all those who have made my internship tenure truly a
learning and memorable experience. I would like to extend my gratitude to my company
guide Mr. Vikas Gupta, without whose guidance and help this project would not have
been possible.
Also I am thankful to my faculty guide Mr. Chandan Pal Singh & Miss. Monali Singh of
my college for her continues guidance and invaluable encouragement.
Lastly I would like to thanks all those officers in Association who have taken out time
from their busy schedule to provide with all the information I needed.
(ANSHIKA AGRAWAL)
THANKYOU
2
DECLARATION
I, ANSHIKA AGARWAL hereby declare that the work which is being presented in
dissertation entitled “FINANCIAL ANALYSIS OF NESTLE INDIA LIMITED” in partial fulfillment of
Bachelor of Business Administration, submitted in Mr. Chandan Pal Singh & Miss.
Monali Singh, Manorama Institute of Management Technology College is an authentic
record of my work.
For the further Declaration that this report has been purely and truly Submitted to the
respective college.
Date :- / / 2020
Place:- Agra
PREFACE
Decision making is a fundamental part of research process. Decisions regarding that
what you want to do, how you want to do, what tools and techniques must be used for
the successful completion of the project. In fact it is the researcher’s efficiency as a
decision maker that makes the project fruitful for those who concern to the area of
study. The project presents the financial analysis of the Nestle India Limited. I am
presenting this hard carved effort in black and white. If anywhere something is found
not in tandem to the theme then you are welcome with your valuable suggestions.
I believe that my project report will have been very helpful to the practical knowledge in
the field of financial analysis of any organization.
Table of Contents
1) ACKNOWLEDGEMENT 2
2) DECLERATION 3
3) PREFACE 4
4) EXECUTIVE SUMMARY 6
5) COMPANY PROFILE 7
7) FINANCIAL ANALYSIS 12
8) RESEARCH METHODODLOGY 13
12) FINDINGS 27
14)CONCLUSION 29
15)QUESTIONNAIRE 30
16) BIBLIOGRAPHY 32
Executive Summary
Nestle company is health, nutrition and wellness firm that supplies, manufactures and produces
ready dishes and cooking aids, pharmaceuticals and ophthalmic goods, milk based product cereals
and baby foods. The company operates across six zones that include zone America, zone Oceania,
zone Africa and Asia. Nestle was formed in 1866 by Henry Nestle and its main head quarter is in
Switzerland. With employment of different business strategies and introduction of new products
line, Nestle boosts of employing approximately 339,000 personnel with operations in all regions all
over the globe. The company aims to be the leader in the food industry more specifically health,
wellness and nutrition. Despite its success in the market, Nestle still faces internal and external
challenges that they need to overcome in order to reach their goals. With the dynamism in the
market Nestle tends to embrace change and comes up with products suitable for its customers while
stilly proving on the quality of its original products line. Improvements on the technology,
organizational structure, marketing mix, operations as well as human resource management led to
more profit margins of the company. Nestle has a lot of challenges especially external ones that seem
to grow each day. But with these comes opportunities that need to be explored. Nestle enjoys high
credibility among customer because of its quality products and loyalty and trust among its
customers. It also has the chance to be able to cooperate and forge partnerships with other local
industries to boost their image in whichever region they are based. With dynamism come new
trends that need embracing to beagle to conquer certain markets. Competition is good as it makes
companies think and come up with strategies that enable them stay above competition. Every
organization is established in a society; with goodwill at heart, these companies can easily forge
good relations that will go a long way to market their products. Corporate social responsibility can
be to improve customer relations, saving the environment.
COMPANY PROFILE
Nestle India Limited (Nestle India) is a subsidiary to Nestlé S.A. a global food products
company based in Switzerland. Nestle India principally is engaged in the manufacturing,
marketing, exporting and sales of food & beverage products which include milk
products, nutrition products, beverages, chocolates and confectionery. It markets its
products under international brand names which include Nescafe, Milo, Nestea Maggi,
and Milky bar, Kit Kat, Milkmaid, Nestlé Milk, Nestlé Slim Milk and Nestle Fresh.
The report provides a comprehensive insight into the company, including business
structure and operations, executive biographies and key competitors. The hallmark of
the report is the detailed financial ratios of the company.
SCOPE
The report contains critical company information ' business structure and
operations, major products and services
The report provides detailed financial ratios for the past five years as well as
interim ratios for the last four quarters.
Financial ratios include profitability, margins and returns, liquidity and leverage,
financial position and efficiency ratios.
INDUSTRY SNAPSHOT
India is one of the fastest growing economies in the world. While we are moving
towards a services-led economy but still agriculture contributes 17 per cent of the total
GDP and employs 60 per cent of the population. India is one of the key food producers
in theworld.
The Indian food industry is estimated to be worth over INR 8, 80,000 cores. The
industry employs 1.6 million workers directly.
COMPANY OVERVIEW
Nestle India Limited, a subsidiary of Nestle S.A. of Switzerland, was incorporated in
1959. Nestle S.A. of Switzerland holds around 62 per cent stake in the company. It is a
leading branded processed food companies with a large market share.
ThecompanyfirstunitatMogenstatedin1961formanufacturingmilkproducts
SecondfactoryatCholadi(TamilNadu)in1967toproducebeverage
In 2001, it launched Nestle Pure Life bottled water. To capture the market in coastal
areas, the company launched Maggi cubes in prawn flavor to cater to consumers' tastes.
In the area of chocolate and confectionery, Nestle Munch, a crisp wafer biscuit with
chocolate, was rolled out nationally. In the milk and cereal category, Everyday Dairy
Whitener showed satisfactory growth while Nestle Growing up Milk, launched in 1999,
was launched nationally.
The company ventured into beverage section by launching new blend of coffee powder,
vanilla and mocha. The company also made its foray into the iced tea segment. Nestle
Pure Life bottled water was launched in early 2001.
Nestle Bar- One was re-launched after renovating it to make it smoother, creamier and
better meets consumer need.
Nestle India has been continuously paying dividends to its shareholders for the last 20
years and has a marvelous track record of average dividend payout ratio which has been
over 70 per cent.
BUSINESS SEGMENTS
The company broad product portfolio includes Milk Products & Nutrition, Beverages,
Prepared Dishes & Cooking Aids and Chocolates & Confectionary.
Beverages
Under the beverages segment, the company mainly sells instant coffee. It is the largest
coffee company in India, commanding market share of more than 11 per cent. Besides,
it sells a melted chocolate drink, Nestle Milo. The beverages division contributes around
17 percent to the company's revenues. Beverages contribute a major portion in the
total export market. The company exports instant coffee to various countries such as
Russia and Japan. Besides, it also exports some of its other products.
Export
The total contribution by the export stands at 13 per cent of the company total revenue,
which is mainly through export of coffee to Russia. Nestle India Limited is one of the top
players in the processed food & beverages industry and the largest producer of instant
coffee in India. Under Chocolates & Confectionary, Kitkat and Polo is a successful
international as well as Indian brand. And under Milk Products & nutrition, Cereal is a
market leader.
ABOUT THE PRODUCTS
Nestle is acknowledged for its understanding of consumer needs. The business of
‘prepared dishes and cooking aids’ grew rapidly as it focused on delighting the
Consumers and developing the products that enhance accessibility to nutrition.
The business encompasses the MAGGI which is the pioneer of ‘TASTE BHI HEALTH
BHI’ concept. MAGGI philosophy is that everyday meal should be a celebration of
Nestle provided inputs to the Nestle Group R&D for the development of an innovative
product MAGGI Bhuna Masala.
CompanyistheleaderintheinstantcoffeewithNESCAFE.Though2009wasa
challenging year for the coffee business in India primarily due to adverse climatic and
whether conditions that were experienced, the ‘Coffee and Beverages’ business further
straightened its position as a leader in instant coffees. While NESCAFE Cappuccino had a
successful start, popularly priced products supported growth in the south and limited
edition NESCAFE SUNRISE Rich Mountain blend received very good feedback and
despite the challenging environment NESCAFE performed satisfactorily, achieving
volume and market share growth in India.
During the year based on relevant consumer’s insights, NESTLE KITKAT was
launched with an improved taste delivery making it more chocolaty and crispy. And to
further improve penetration NESTLE KITKAT was launched in a new unique single finger
format at the price point 0f RS.5/-.
Financial Analysis
MEANING OF FINANCIAL ANALYSIS
Financial statement refers to such statement which contains financial information about
an enterprise. Their report profitability and the financial position of the business at the
end of the Accounting period. The term financial statement includes at least two
statements which the accountant prepares at the end of accounting period. The two
statements are:
The Balance Sheet
They provide some extremely useful information to the extent that balance Sheet
mirrors the financial position on a particular date in terms structure of assets, liabilities
and owner equity, and so on and the Profit and Loss account shows the result of
operations during a certain period of time in terms of revenues obtained and the cost
incurred during the year. Thus the financial statement provides a summarized view of
financial position and operations of a firm.
The first task of financial analysis is to select the information relevant to the decision
under consideration to total information contained in the financial statement. The
second step is to arrange the information in a way to highlight significant relationship.
The final step is interpretation and drawing of the interface and conclusions. Financial
Statement is the process of selection, relation and evaluation.
RATIO ANALYSIS
Ratio analysis isn’t just comparing different numbers from the balance sheet, income
statement, and cash flow statement. It means comparing the number against previous
year of other companies, the industry, or even the economy in general. Ratios look at
the relationship between individual values and relate them to how a company has
performed in the past, and its performance in the future .
RATIO
For example, Current assets of the firm are 5, 00,000 and Current liabilities are 2,
50,000 then the ratio of current assets to current liabilities will work out to be 2 such
type of ratio are called simple or pure ratios.
FORM OF RATIO
Since a ratio is a mathematical relationship between two or more variables, accounting
figures, such relationship can be expressed in different ways as follows:-
A) As a pure ratio
For example the equity share capital of a company is Rs.20, 00,000 & the preference share
capital is Rs.5, 00,000 the ratio of equity share capital to preference share capital
20,00,000:5,00,000=4:1
Sales
B) As a rate of times
In the above case the equity share capital may also be described as 4 times that
of preference share capital. Similarly, the cash sales of a firm are Rs. 12, 00,000 &
credit sales are Rs. 30, 00,000. So the ratio of credit sales to cash sales can be
described as
2.5[30, 00,000/12, 00,000] = 2.5 times are the credit sales.
Sales
C) As apercentage
In such case, one item may be expressed as a percentage of some other items. For
example, net sale of the firm are Rs.50, 00,000 & the amount of the gross profit is Rs.
10,00,000 then the gross profit may be described as 20% of sales [10, 00,000/50, 00,000]
TYPES OF COMPARISONS
The ratio can be compared in three different ways
c) Combined analysis
If the cross section & time analysis, both are combined together to study the
behavior & pattern of ratio, then meaningful & comprehensive evaluation of the
performance of firm can definitely be made. A trend of ratio of a firm compared
with the trend of ratio of the standard firm can give good results, for example,
the ratio of operating expenses to net sales for firm may be higher than the
industry however, over the years it has been declining for the firm, whereas the
industry average has not shown any significant changes.
The combined analysis shows that the ratio of the firm is above the industry
average, but it is decreasing over the years & approaching the industry average.
Interpretation of theratio
The interpretation of the ratios is an important factor. The limitations of ratio analysis
should also be kept in mind while implementing them. The impact of factors such as
price level changes, change in accounting policies, etc. should also be kept in mind when
attempting to interpret ratios.
Single Absolute Ratio: Generally speaking one cannot draw any meaningful
conclusion when a single ratio is considered in isolation. But single ratios may be
studied in relation to certain rules of thumb which are based upon well proven
convention as for example 2:1 is considered to be a good ratio for current assets to
current liabilities.
Projected ratio: Ratios can also be calculated for further standard based upon the
projected or Performa financial statements. These future ratios may be taken as
standard for comparison and the ratios calculated on actual financial statements
can be compared with the standard ratios to find out variances, if any. Such
variances help in interpreting and taking corrective action for improvement in
future.
Inter-firm comparison: Ratios of one firm can also be compared with the ratios of
some other selected firms in the same industry at the same point of time. This kind
of comparison helps in evaluating relative financial position and performance of
the firm.
LIMITATION OF THE RATIO ANALYSIS
The ratio analysis is one of the most powerful tools of financial management. Though
ratios are simple to calculate and easy to understand, but there are number of
limitations:
Limited use of a Single ratio: A single ratio, usually, does not convey much of a
sense. To make a better interpretation a number of ratios have to be calculated
which is likely to confuse the analyst then help him in making any meaningful
conclusion.
Lack of Adequate Standards: There are no well adopted standards for all ratios
which can be accepted as norms. It renders interpretation of ratios is difficult.
Limitation of Accounting: Like financial statements, ratios also suffer from the
inherent weakness of accounting records such as their historical nature. Ratios of
the past are not necessarily true indicator of the future.
Personal Bias: Ratios are only means of financial analysis and not an end in itself.
Ratios have to be interpreted and different people interpret the same ratio in
different ways.
Incomparable: Not only industries differ in their nature but also the firms of a
similar business widely differ in their size and accounting procedures, etc. it makes
comparison of ratios difficult and misleading.
Price Level Change: While making ratio analysis, no consideration is made to the
change in price levels and this makes the interpretation of ratios invalid.
Research Methodology
Research is defined as a systematic, gathering recording and analysis of data about
problem relating to any particular field.
The following sections determine the strength, reliability and accuracy of project:
Research Design
Research Design pertains to the great research approach or strategy adopted for
particular project. A research project has to be conducted significantly making sure that
the data is collector accurately and economically. The study used a descriptive research
design for the purpose of getting insight over the issue. It is to provide an accurate
picture of some aspects of market environment.
Collection of data
Organization of data
Presentation of data
Analysis of data
Interpretation of data
Method of Data Collection
Secondary Data has been gathered through the internet and published data.
Internal audit report of the company
Annual report of the company
Journals and magazines
The time period provide for the project was not sufficient enough to gather data
for a big organization.
High quality and safe food products at affordable prices, endorsed by the NESTLE
Seal of Guarantee.
Responsive organizations structure and strong management team.
Weakness:
Threat:
Food inflation.
Opportunities:
2011 2010
Gross Revenue 51,672 43,581
Profit Before interest and taxation 9,610 8,052
Interest 14 16
Impairment loss and fixed assets(Net) 103 3
Provision for contingences(Net) 323 305
Provision For tax 2620 2387
Key Ratio
Earnings per Share (RS.) 67.9 55.39
4
Dividend per Share (RS.) 48.50 42.5
0
EBIT %
18.5
18
17.5
EBIT %
17
16.5
16
2007 2008 2009 2010 2011
Net Income
60000
50000
40000
10000
0
2007 2008 2009 2010 2011
Dividends
Final dividend of RS 12.50 per equity share of the face value of Rs.10/- year 2011,
amounting to RS. 1,205 Million.
This is in addition to the two Interim Dividends for 2011, aggregating to RS. 36.00 per
equity share, paid in May 2011 and 2011 (amounting to RS. 3,471 Million).
The total payout for 2011 would be RS. 5,470 Million (including the corporate
dividend tax). Further dividends will continue to be based on the need of the
company to deploy internal accruals for business expansion and an appropriate debt
equity ratio.
Dividend Rates
2002200320042005200620072008200920102011
Earning per share
80
70
60
50
20
10
0
2008 2009 2010 2011
Findings
Final dividend of Rs 12.50 per equity share of the face value of Rs.10/- year 2020,
amounting to Rs. 1,205 Million.
The current ratio for the company in the year 2019 was 0.67 and for the year
2020 was 0.60. So the current ratio for the firm has decreased by 0.07 which
indicates that the company’s liquidity position is decreasing.
The quick ratio of the company in 2020 was .251 and 2019 was .306 shows that
the quick ratio of the company has decreased by .55 because the company has
purchased assets by the bank balance as the company has not taken any loan
during the year so the quick ratio of the company decreased.
The Inventory conversion period has shifted from 66 days in 2019 and 59 days in
2020 which shows that the company is efficiently managing their stock and its
inventory turnover has also increased which shows that there is rise insale.
There is no much difference in the net profit ratio of year 2019 and year 2020 as
the net profit and the sale has increased in the same proportion so there is not
much difference in the net profit ratio of the company.
ADDRESS: ___________________________________________________________
Which product first comes to your mind when you think of purchasing?
1. Amul
2. Nestle
3. Britannia
4. Others
5. From which source did you come to know about Nestle Products.
1. T.V Advertisement
2. Hoardings
3. Bus paintings
4. News papers
1. Yes 2. No
7. Please choose below the factor which attracted you most at the Nestle Products.
1. Taste
2. Price
3. Quality
4. Availability of products
1. Offers
2. Quality of products
3. Effective services
4. Effective advertisements
9. Do you think the promotional activity of Nestle gives you clear message?
1. Yes 2. No
10. Will you advise anybody to purchase the Nestle product in your future?
1. Yes 2. No
11. Looking at the promotions of Nestle product does your purchase pattern changes?
1. Yes 2. No
12. Would you like to make your purchase under unexpected offers?
1. Yes 2. No