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Nestlé India Limited
Financial Analysts’ Meet
May 17 , 2007
Agenda
Opening Remarks Martial Rolland
Key Financials Shobinder Duggal
Questions & Answers All
This presentation may contain statements which reflect
Management’s current views and estimates and could be
construed as forward looking statements. The future
involves certain risks and uncertainties that could cause
actual results to differ materially from the current views
being expressed. Potential risks and uncertainties
include factors such as general economic conditions,
availability and prices of commodities, competitive
products and pricing pressures and regulatory
developments etc.
Responses can only be given to questions, which are not
price sensitive.
Disclaimer
Opening Remarks
Over to SHD
Key Financials
Q1 07
Q1 06
RIG OG EBIT
margin
Gross Sales
INR 9.0 Bio
INR 7.2 Bio
+ 24.7% +150bp
17.9%
16.4%
Strong
on-going
growth
17.9%
22.0%
12.4%
9.3%
EBIT
+ 36.2%
INR 1.6 Bio
INR 1.2 Bio
Snap shot of the quarter
All calculations are based on non-rounded figures
PAT crosses INR 1 Billion milestone
Our Business
We manage a diversified food & beverages business
addressing different need states having a complex
value chain with focus on value drivers to enhance
total shareholders return.
We maintain a high standard of Corporate
Governance and are a responsible corporate citizen.
Our Structure
A Multi-focal Organization with an agile fleet of businesses
The Good Food Good Life Portfolio
Convenience, Pleasure, Nutrition, Health, Wellness
Purc
hasi
ng P
ow
er
Complex Value Chain
Some Examples
Number of Stock Keeping Units 390
Number of Product Recipes 400
Number of Ingredients 330
Number of Packing Materials 800
Number of Quality Tests Performed 190
Driving Total Shareholders Return
1. Sales Growth
2. Profit Margin
3. Working Capital Intensity
4. Fixed Capital Intensity
5. Income Tax Rate
6. Cost Of Capital
7. Value Growth Duration
The Value Drivers
SALES GROWTH (1)
20.6
22.923.9
26.7
29.7
7.3
9.1
17.9
22.0
11.3 10.4
7.9
9.7 9.3
4.4
6.3
11.512.1
11.4
12.412.1
5.0
10.0
15.0
20.0
25.0
30.0
2002 2003 2004 2005 2006 Q1 06 Q1 07
Gross Sales in INR Bio
4
8
12
16
20
24
(%) RIG & OG
Gross Sales INR Bio Real Internal Growth (%) Organic Growth (%)
Sales Evolution
Basis Nestle Internal Reporting Standards
6.2 5.4 6.0 6.1 6.6 6.5 6.7 6.7 7.2 7.0 7.5 7.7 9.0
4.5
6.0
7.5
9.0
Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07
Consistently grown over the quarters
Gross sales including excise duty
Sales
in INR Bio
Volume (000’ Tons) Value@ (INR Bio)
Q1 07 Q1 06 Var% Q1 07 Q1 06 Var%
Domestic 61.9 53.4 16.0 8.1 6.7 21.3 #
Exports 4.7 3.4 36.0 0.9 0.5 69.9
Total 66.6 56.8 17.2 9.0 7.2 24.7
Domestic Contr. %
93.0 93.9 (0.9) 90.4% 93.0% (2.6)
Exports Contr. %
7.0 6.1 0.9 9.6% 7.0% 2.6
Channel-wise Sales
@ Gross Sales including excise duty# Net Domestic Sales up 24.3%
All calculations are based on non-rounded figures
Balancing Export Portfolio
INR Bio
7267
4844
32 3529
2833
5256
68 6571
2002 2003 2004 2005 2006 Q1 06 Q1 07
Exports to Russia Others
2.62.42.6 2.82.4 0.5
Contr.
(%)
0.9
3,801 3,193
1,472
1,798 1,320
1,900
1,2261,495
Q1 07 Q1 06
Milk Products and Nutrition Beverages
Prepared Dishes and Cooking Aids Chocolate and Confectionery
7,2108,994 INR Mio.
42.3%
20.0%
21.1%
16.6%
44.3%
20.4%
18.3%
17.0%
Gross Sales including excise duty
A Balanced Product Portfolio
Product Categories: Jan - Mar 2007
1.5
9.0
3.8
1.8
1.9
15
20
25
30
35
40
6 12 18 24 30 36
Volume Growth (%)
Organic Growth (%)
Total
Chocolate & Confectionery
Milk Products & Nutrition
Beverages
Prepared Dishes & Cooking Aids
Bubble size represents Gross Sales (INR Bio)
21.1
20.0
16.6
42.3
26.0
28.1
20.0
22.0
24.0
26.0
28.0
30.0
Q1 06 Q1 07
3.2
3.8
3.0
3.5
4.0
Q1 06 Q1 07
Milk Products & Nutrition
Sales Volume (000’ tons)
� 8.0%
Sales (INR Bio)
� 19.0%
• Market Leader in Baby Foods and Sweetened Condensed Milk
• Very close to market leader in Infant Formula
• No. 2 in Dairy Whitener
• Growing presence in Fresh Dairy
Contribution to Total Sales
Q1 07
20.0
16.6
21.1
42.3
Contribution to Total Sales
Q1 07
5.5
6.5
5
6
7
Q1 06 Q1 07
Sales (INR Bio)
1.5
1.9
1.0
1.5
2.0
Q1 06 Q1 07
� 29.1%� 16.8%
Beverages
Sales Volume (000’ tons)
• Market Leader in Instant Coffee
42.3
21.1
16.6
20.0
Contribution to Total Sales
Q1 07
1.3
1.8
1.0
1.5
2.0
Q1 06 Q1 07
� 36.3%
16.9
22.5
15.0
17.0
19.0
21.0
23.0
Q1 06 Q1 07
Sales Volume (000’ tons)
Prepared Dishes & Cooking Aids
� 33.1%
Sales (INR Bio)
• Market Leader in instant Noodles
and Ketchups
• No. 2 in Healthy Soups
42.3
21.1
20.0
16.6
Contribution to Total Sales
Q1 07
1.2
1.5
0.8
1.2
1.6
Q1 06 Q1 07
8.3
9.5
7
8
9
10
Q1 06 Q1 07
Chocolate & Confectionery
Sales Volumes (000’ tons)
� 14.3%
Sales (INR Bio)
� 22.0%
• Market Leader in Wafers and
white chocolates
• No. 2 in Chocolates
• Market Leader in Eclairs with
32.4% volume share.
PROFIT MARGINS (2)
4.0 4.5 1.84.7 1.2 1.64.4 5.45.2 1.43.5 4.64.03.9
19.9
18.618.3
19.719.0
19.519.5
17.9
17.117.5
16.917.6
16.416.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2002 2003 2004 2005 2006 Q1 06 Q1 07
3
6
9
12
15
18
21
EBITD-INR.Bio EBIT-INR.Bio EBITD % of Gross Sales EBIT % of Gross Sales
Evolution of Operating Margins
INR Bio.
INR Mio.
Description Q1 07 % Net Sales
Q1 06 % Net Sales
Var.%
Tot. Expenses - of which
6,843 79.3 5,421 80.2 26.2
Materials 4,149 48.1 3,098 45.8 33.9
Staff Cost 646 7.5 543 8.0 19.0
Advt. + sales Promotion
399 4.6 391 5.8 1.9
Distribution 385 4.5 306 4.5 25.6
Power & Fuel 313 3.6 279 4.1 12.1
Total Expenditure
Previous period figures have been regrouped / reclassified to make them comparable.
97
109
116
103
91
95
100
97
88 94
97
106
95
80
90
100
110
120
130
Q 1 Q2 Q3 Q4
Period
Indexed p
rice P
er
Kg
Evolution – Milk Fat Prices
122
Current
Indexed with base Q1-04
2004
2005
2006
2007
100
88
95
116
103
94
9795
97
106
91
97
109
80
90
100
110
120
2004 2005 2006 2007
Q1 Q2 Q3 Q4
Indexed Price per kg
Evolution - Milk Fat Prices
Indexed with base Q1-04
101
121
152 153
238
100100 101
114
187
170174
158
90
110
130
150
170
190
210
230
250
Q 1 Q2 Q3 Q4Period
Indexed p
rice p
er
KG
236 Current
Evolution – Green Coffee Prices
Indexed with base Q1-04
2004
2005
2006
2007
98
88
90
87
108
102100
106
93
9496 101
103
80
90
100
110
Q 1 Q2 Q3 Q4Period
Indexed p
rice p
er
KG
108
Current
Evolution – HVF Prices(329 mio, 12% of RM costs, 5% of Net Sales)
Indexed with base Q1-04
2004
2005
2006
2007
116
128
132
120
111
100
113
134
130
138
145146
141
100
110
120
130
140
150
Q 1 Q2 Q3 Q4Period
Indexed p
rice p
er
KG
117
Current
Evolution – Sugar Prices(329 mio, 12% of RM costs, 5% of Net Sales)
Indexed with base Q1-04
2004
2005
2006
2007
104
96 97
104
139
96
100
95
99
115 116118
135
90
100
110
120
130
140
Q 1 Q2 Q3 Q4Period
Indexed p
rice p
er
KG
127 Current
Evolution – Wheat Flour Prices(329 mio, 12% of RM costs, 5% of Net Sales)
2004
2005
2006
Indexed with base Q1-04
2007
1.12.0 2.6 2.5 3.1 3.2 0.9
9.8
11.5
10.6
11.7
10.7
12.3 12.1
0.5
1
1.5
2
2.5
3
3.5
2002 2003 2004 2005 2006 Q1 06 Q1 07
0
2
4
6
8
10
12
14
Amount % of Gross Sales
Evolution of Net Profit Margins
INR Bio.
WORKING CAPITAL INTENSITY (3)
Operating Working Capital
INR Mio
5.8%6.5%As % of Gross Sales
1,6912,356Operating Capital tied up
1,9342,424Less: Payables
3,1634,094Inventories
462686Receivables from Customers
31st Mar
2006
31st Mar
2007
Basis Nestle Internal Reporting Standards
Payables exclude amounts payable on account of taxes, Staff Costs, Capital Expenditure, related
provisions etc.
Rotation of Average Operating Working Capital
Times
25.2
27.7
34.836.2
23.5
21.821.8
16
20
24
28
32
36
40
2002 2003 2004 2005 2006 Q1 06 Q1 07
Adjusted
28.0
Basis Nestle Internal Reporting Standards and average of two period ends
29.5
21.4
681 742 781 1,522 155596 257
3.0 3.1 3.0
5.2
2.9
1.7
3.6
0
200
400
600
800
1000
1200
1400
1600
2002 2003 2004 2005 2006 Q1 06 Q1 07
1.0
3.0
5.0
7.0
Amount % of Gross sales
INR mio. % of Gross sales
Dep. 494 463 491 498 555 131 153
Investment in Fixed Assets
6.26.3
6.56.6
7.0 7.2
5.4
4.4
4.8
5.2
5.6
6.0
6.4
6.8
7.2
2002 2003 2004 2005 2006 Q1 06 Q1 07
Rotation of Average Tangible Fixed Assets
Times
Basis Nestle Internal Reporting Standards
INCOME TAX RATE (5)
36.836.6
34.5
33.7
34.734.4
35.0
33.333.7
35.9
33.7
35.3
33.5
33.6
30
32
34
36
38
2002 2003 2004 2005 2006 Q1 06 Q1 07
Marginal Rate % Effective Rate %
Evolution of Tax Rate
(rates are a % of pre-tax profit excluding FBT)
%
COST OF CAPITAL (6)
9.4 9.7
10.8 10.811.2
7.2
5.3
6.67.2 7.2
7.7
10.5
14.2
9.0
0.0
3.0
6.0
9.0
12.0
15.0
2002 2003 2004 2005 2006 Q1 06 Q1 07
WACC Risk Free Rate
Evolution – Cost of Capital
Basis Nestle Internal Reporting Standards
VALUE GROWTH DURATION (7)
Value Growth Duration
� TSR of 94% over the last 13 quarters.
� Market Capitalization increased by 75% over
last 13 quarters - INR 63 Bio. to INR 110 Bio.
� Top performer on Return on Capital employed
� Amongst top performers on Return on Equity
75
80
85
90
95
100
105
110
Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07
Nestle BSE FMCG Index BSE SENSEX
Performance since last Analyst Meet
14,127
1,124
1,839
18.020.0 20.0
25.0 25.5
20.9 27.3 26.1 32.1 32.7 9.2 11.3
200 200
255
180
250
0
5
10
15
20
25
30
35
2002 2003 2004 2005 2006 Q1 06 Q1 07
100
300
DPS EPS %
Returning cash to Shareholders
INR / Share
2004 - Excludes special dividend of INR 4.5 / Share
1.7 1.9 1.9 2.4 2.5Dividend
(INR Bio)
Dividend as a % of Share Capital
2006 1st interim 60% May 06
2007 1st interim 65% Mar 07
1.8 2.3 2.2 2.7 2.7 0.8 1.0
101.9
69.778.5
87.4
81.0 80.178.9 82.1
54.049.0
60.0 61.1 79.059.4
0.5
1.0
1.5
2.0
2.5
3.0
2002 2003 2004 2005 2006 Q1 06 Q1 07
EP (Economic Profitability) in INR Bio
-
40.0
80.0
120.0
(%) Economic Profit INR Bio Return on Equity (%) Economic Profitability (%)
EP - Basis Nestle Internal Reporting Standards
Creating Shareholder Wealth
QUESTIONS
Thank You