Character atheics of nestle

PROJECT
ON
CHARACTER ETHICS OF NESTLE

SUBMITTED TO
MRS. ANSHIKA RAJVANSHI

SUBMITTED BY
PRASHANT KR.ROY
BBA 3RD SEM
00413401711

IDEAL INSTITUTE OF MANAGEMENT AND TECHNOLOGY

INDEX
CERTIFICATE
ACKNOWLEDGEMENT
CHAPTER -1
INTRODUCTION
OVERVIEW
PROFILE
PROBLEMS
CHAPTER -2
RESEARCH METHODOLOGY
SIGNIFICANCE
OBJECTIVE
SCOPE OF STUDY
CHAPTER -3
CONCEPTUAL DISCUSSION OR COMPARSION
CHAPTER -4
DATA ANALYSIS
CHAPATER – 5
FINDINGS & RECCOMENDATIONS
CHAPTER 6

LIMITATIONS
CONCLUSION
BIBOLIOGRAPHY

GUIDE’S CERTIFICATE

I have the pleasure to certify that PRASHANT KR. ROY a
student

of IDEAL INSTITUTE OF MANAGEMENT &

TECHNOLOGY, NEW DELHI has pursued his research work
and prepared the “ CHARACTER ETHICS OF NESTLE”,
under my supervision and guidance . The work is the result of this
own research to the best of my knowledge. This is
submitted

to the Institute

for

Integrated

being

in Learning

Management for the Partial fulfillment of the requirements of the
three year full- time degree in BBA.

Guides Signature
Mrs.ANSHIKA RAJVANSHI

ACKNOWLEDGEMENT
The study was conducted by the assistant of several
individuals. I really appreciate their help and hereby thank
them. I would like to give special thanks to the following
people:
Firstly, I would like to thank MRS. ANSHIKA RAJVANSHI
who had supervised the study and was in charge of the
entire project. Her presence and assistant was remarkable
and so I am grateful to her.
Secondly, I would like to thank the officials who were
interviewed. They took out time from their busy schedules
to help me proceed with my study. Their assistance was
very significant and so I am grateful to them as well.
Thirdly, I would like to thank all other people who provided
me with the resources to conduct my study. Their help and
assistance was very valuable and so I would like to
acknowledge them as well.
Overall all the above mentioned people had a great role in my
study. Their direct and indirect help indeed proved to be help.
PRASHANT KR. ROY
BBA 3RD SEM.
00413401711

SCOPE OF THE STUDY
As learning is a human activity and is as natural, as breathing.
Despite of the fact that learning is all pervasive in our lives,
psychologists do not agree on how learning takes place. How
individuals learn is a matter of interest to marketers. They want
to teach consumers in their roles as their roles as consumers. They want
consumers to learn about their products, product attributes, potential
consumers benefit, how to use, maintain or e v e n d i s p o s e o f t h e
product and new ways of behaving that will satisfy not
o n l y t h e consumer’s needs, but the marketer’s objectives. The scope of
my study restricts itself to the analysis of consumer preferences, perception
and consumption of Cadbury and Nestle Chocolates. There are
many other brands of chocolates available but my study is
limited to two major players of chocolates leaving behind the
others. The scope of my study is also restricts itself to Ambala region only

OBJECTIVES OF THE STUDY

This project is based on the comparative study consumer behavior towards
Nestle and Cadbury chocolates. Objectives of the study are:
The other objective is to know about the customer
s a t i s f a c t i o n l e v e l associated with the product and the customer
preference level.
To increase customer satisfaction and recapture the market share by
fulfilling the customer needs.
To study the factors affecting the consumption patter

LIMITATIONS OF THE STUDY
In attempt to make this project authentic and reliable, every
possible aspect of the topic w a s k e p t i n m i n d . N e v e r t h e l e s s ,

despite of fact constraints were at play during the
formulation of this project. The main limitations are as follows:
Due to limitation of time only few people were selected
f o r t h e s t u d y . S o t h e sample of consumers was not enough to
generalize the findings of the study.
The main source of data for the study was primary data
w i t h t h e h e l p o f s e l f - administered questionnaires. Hence, the
chances of unbiased information are less.
People were hesitant to disclose the true facts.
The chance of biased response can’t be eliminated though all necessary steps
were taken to avoid the same

INTRODUCTION
Nestlé was founded in 1866 by Henri Nestlé and is today the world’s
biggest food and beverage company. Sales at the end of 2005 were CHF 91

bn, with a net profit of CHF 8 bn. Nestlé employ around 250,000 people
from more than 70 countries and have factories or operations in almost every
country in the world. The history of Nestlé began in Switzerland in 1867
when Henri Nestlé, the pharmacist, launched his product Farine Lactée
Nestlé, a nutritious gruel for children. Henri used his surname, which means
’little nest’, in both the company name and the logotype. The nest, which
symbolizes security, family and nourishment, still plays a central role in
Nestlé’s profile. Since it began over 130 years ago, Nestlé’s success with
product innovations and business acquisitions has turned it into the largest
Food Company in the world. As the years have passed, the Nestlé family has
grown to include chocolates, soups, coffee, cereals, frozen products,
yoghurts, mineral water and other food products. Beginning in the 70s,
Nestlé has continued to expand its product portfolio to include pet
foods, pharmaceutical products and cosmetics too. Today, Nestlé markets a
great number of products, all with one thing in common: the high quality for
which Nestlé has become renowned throughout the world The Company's
strategy

is

guided

by

several

fundamental

principles.

Nestlé's

existing products grow through innovation and renovation while maintaining
a balance in geographic activities and product lines. Long-term potential is
never sacrificed for short-term performance. The Company's priority is to
bring the best and most relevant products to people, wherever they
are, whatever their needs, throughout their lives. Taste of Nestlé in each of
the countries where Nestlé sell products. Nestlé is based on the principle of
decentralization, which means each country is responsible for the efficient
running of its business - including the recruitment of its staff.1

That's not to say that every operating company can do as it wishes.
Headquarters involve sets the overall strategy and ensures that it is carried
out. It's an approach that is best summed up as: 'centralize what you must,
decentralize what you can'. Nestlé is a company which is present in all over
the world but It has difference and unique motto to deal in all over the
world. Nestlé believes that they should think about their organizations
globally but they deal with people by interacting with them locally.
“Thinking globally - acting locally” Evolution of Nestlé: 1867 Henri Nestlé founded the company in Vevey, Switzerland.
1898 Nestlé purchases its first factory outside of Switzerland - Viking Milk
factory in Norway.
1905 Nestlé merges with Anglo-Swiss Condensed Milk Company.
1929 Nestlé merges with Peter-Cailler-Kohler Chocolates Suisses S.A.
1938 Nestlé launches Nescafé - the world’s first instant coffee.
1947 Nestlé merges with Alimenting S.A. with the brand Maggi.
1962 Nestlé purchases Findus.
1974 Nestlé becomes a significant shareholder in the Cosmetics Company
L’Oréal.
1977 Nestlé purchases Alcon, manufacturer of eye care products and kits.
1985 Nestlé purchases the Food Company Carnation.
1988 Nestlé purchases the confectionary company Row tree Mackintosh and
the pasta company Buitoni-Perugina.
1992 Nestlé purchases the mineral water Company Perrier.
1998 Nestlé purchases Spillers pet foods business.
2000 Nestlé sells the Findus brand in all countries except for Switzerland.

2001 Nestlé merges with Ralston Purina, the premier pet food company in
North America, and with unique expertise in the dry dog food area.2

VISION OF NESTLE
Nestlé's vision of making good food central to enjoying a good healthy life
for consumers everywhere. This implies gaining a deeper understanding in
many areas of nutrition and food research and transforming the scientific
advances into applications for the company. Having a broad vision the

company is doing its best for their consumers to show the great sense of
responsibility.
Nestlé’s aim is to meet the various needs of the consumer every day by
marketing and selling food of a consistently high quality.
The confidences that consumers have in our brands is a result of
our company’s man-y e ar s o f k n o w l e d g e i n ma r k e t i n g , r e s e a r c h
a n d d e v e l o p me n t , a s w e l l a s c o n t i n u i t y - consumers relate to this
and feel they can trust our products.
High quality and collaboration
Our objectives are to deliver the very best quality in everything we
do, from
primary p r o d u c e , c h o i c e o f s u p p l i e r s a n d t r a n s p or t , t o r e c i p e s
a n d p a c k a g i n g ma t e r i a l s . O u r operations and collaboration in the
Nordic countries gives us greater opportunities to be efficient and strategic
and to function well as an organization, both when it comes to the
distribution chain and to concentrating on joint product launches and
campaigns.

Focus on e-business and websites
Increased investments in the sphere of e-business give us swifter
business and direct contact with trade. Our website is a forum for
consumers, students, future employees and the media. We hope that through
a sincere approach and by conducting dialogues, we will be able to improve,
change and satisfy the demands and wishes of the people of today3

NESTLE COMPANY
As a nutrition, health and wellness company, Nestlé, is committed to the
enhancement of quality of life by helping communities in which it
operates to meet basic and essential human needs.

Over the years Nestlé has used its resources, skills and technology to
help find solutions to the many socio-economic challenges facing
communities. Many of the communities are confronted by challenges
such as poor sanitation, lack of clean water, poverty, diseases,
malnutrition, food security and many others.
As a responsible corporate citizen, Nestlé is deeply committed to its
corporate social investment programmes which currently support more
than a dozen projects. Nestlé also partners with value-adding non-profit
organizations to ensure that efforts are maximized to help improve the
quality of life. Through its involvement and partnership with these nonprofit organizations over the years, Nestlé has been able to make a
positive contribution to various communities.

BUSINESS PROFILE
The Nestlé Corporate Business Principles are at the basis of our
company’s culture, which has developed over the span of 140 years.
Since Henri Nestlé first developed his successful infant cereal “Farine
Lactée”, we have built our business on the fundamental principle that to

have long-term success for our shareholders,

we not only have to

comply with all applicable legal requirements and ensure that all our
activities are sustainable, but additionally we have to create significant
value for society. At Nestlé we call this Creating Shared Value.
Although our Nestlé Corporate Business Principles were first published
as an integrated document in 1998, most had already been established
in individual form many years before. While the Business Principles
are firmly established, they also continue to evolve and adapt to a
changing world. For instance, Nestlé incorporated all ten principles of
the United Nations Global Compact soon after their creation and
continues to implement them today. This latest revision differs from the
previous two versions in that the ten principles of business operations
are specifically linked to on-line copies of more detailed principles,
policies, standards and guidelines. This has allowed the statement of
each principle to be more succinct, while

providing more detailed

implementing measures related to each one on the World Wide Web.
Also, for the first time, a map of the principles and an overview of
related company measures is included at the start of the document.

We believe in the importance of a strong compliance culture that is fully
embedded in our business. The Corporate Business Principles and the
supporting documents reflect this commitment and thus protect the trust
of our consumers and other stakeholders in the Nestlé brand. Our
internal rules not only require strict compliance with the law, they guide

our actions even if the law is more lenient or where there is no
applicable law at all. For Nestlé, upholding compliance goes beyond
keeping checklists. It requires steadfast principles that apply across the
whole Company, providing clear guidance

to our people As the

Chairman and the Chief Executive Officer of Nestlé, we are committed
to making sure that our entire Company is managed according to these
principles and require

adherence to them from all our employees

around the world. We are also committed to continuous improvement
and are open to external engagement regarding any area of our Co
The foundation for sustainability and Creating Shared Value corporate
Business Principles.
As Nestlé is a principle-based company, the Nestlé Corporate Business
Principles form the foundation of all we do. Compliance with Nestlé
Corporate Business Principles, and with specific policies related to
each principle, is non-negotiable for all employees and their application
is monitored and regularly audited. As shown in the diagram below,
compliance

with Nestlé Corporate Business Principles is

the

foundation for the Company’s commitment to be environmentally

sustainable and to create shared value. Creating Shared Value is the
basic way we do business, which states that in order to create longterm value for shareholders, we have to create value for society. But we
cannot be either environmentally sustainable or create shared value for

shareholders and society if we fail to comply with our Business
Principles. At the same time, Creating Shared Value goes beyond
compliance and sustainability. Any business that thinks long-term and
follows sound business principles creates value for shareholders and
for society through its activities, e.g. in terms of jobs for workers, taxes
to support public

services, and economic activity in general. But

Creating Shared Value goes one step further. A company consciously
identifies areas of focus, where: a) shareholders’ interest and society’s
strongly intersect, and b) where value creation can be optimized for
both. As a result, the company invests resources, both in terms of talent
and capital, in those areas where the potential for joint value creation is
the greatest, and seeks collaborative action with relevant stakeholders
in society. The foundation for sustainability and Creating Shared Value
Creating

Shared Value Nutrition, Water,

Rural Development

Sustainability Protect the Future Compliance with Nestlé Corporate
Business Principles, Laws, Codes of Conduct6 The Nestlé Corporate
Business Principles The ten principles of business. At Nestlé, we have
analyzed our value chain and determined that the areas of greatest
potential for joint value optimization with society are Nutrition, Water
and Rural Development. These activities are core to our business
strategy and vital to the welfare of the people in the countries where
we operate. We actively seek engagement and partnerships with outside
stakeholders that optimize positive impact in these areas of focus.
However, Creating Shared Value is not about philanthropy. It is about
leveraging core activities and partnerships for the joint benefit of the
people in the countries where we operate. In doing so, Nestlé maintains

a very long-term perspective on business development and welcomes
dialogue with external stakeholders who are committed to principled
behavior and constructive engagement. This includes government and
regulatory

authorities, intergovernmental organizations,

governmental organizations, academic and
local communities

Quality assurance and product safety

non-

professional bodies, and

Everywhere in the world, the Nestlé name represents a promise to the
consumer that the product is safe and of high standard. Our commitment is
never to compromise on the safety of any product. Our Quality Policy
summarizes the essentials of our passion for excellence:
 To build trust by offering products and services that match consumer
expectation and preference;
 To comply with all internal and external food safety, regulatory and
quality requirements. Quality is everybody’s commitment. We
continuously challenge ourselves in order to constantly improve and
achieve the highest levels of quality. We maintain the same high food
safety standards in all countries in which we operate. We ensure the
 delivery of high quality products through our Quality Management
System.
Consumer communication

We are committed to responsible, reliable consumer communication that
empowers

consumers to exercise their right to informed choice and

promotes healthier diets. We respect consumer privacy. Our core business
strategy is built around helping consumers to have a balanced, healthier
diet. The Nestlé Consumer Communication Principles contain mandatory
rules on marketing communication to all consumers, including accurate
representation and portrayal of foods in a way that does not encourage
over-consumption. In addition, specific principles
guide our communication to children including no advertising or marketing
activity to children under 6 years of age. Advertising to children from 6 to
12 years is restricted to products

that meet predetermined nutritional

profiling criteria, including clear limits on energy and health-sensitive
ingredients such as sugars, salt, saturated fat and trans fatty acids. Our
children’s communication principles are specifically aimed at protecting
children by ensuring that the advertising is not misleading, does not
undermine parental authority or generate unrealistic expectations of success,

create a sense of urgency or allude to a sense of low price. The Nestlé
Policy on Nutrition and Health Claims steers our actions related to
scientifically supportable health claims. Please see The Nestlé Consumer
Communication Principles.

Marketing of Infant Foods

We are committed to supporting whatever is most suited for achieving the
best start in life for babies. This means that we recommend breast feeding

over all other feeding alternatives. For those who need alternatives to breast
feeding, our objective is to offer formula products that meet international
standards for infant health in place of dangerous and inappropriate breast
milk substitutes, such as whole milk. Our objective is also to offer cereals,
baby foods and milks that contribute to optimal growth and development in
place of complementary foods of low nutritional value often fed to infants.

Leadership and personal responsibility

Our success is based on our people. We treat each other with respect and
dignity and expect everyone to promote a sense of personal responsibility.
We recruit competent and motivated people who respect our values, provide
equal opportunities for their development and advancement, protect
privacy and do not tolerate any form of harassment or discrimination.

Nestlé Management and Leadership Principles

their

Our Management and Leadership Principles describe the culture and basic
values we expect our employees to uphold, as well as the attributes needed
to be successful in management and leadership. Our Code of Business
Conduct specifies certain non-negotiable minimum standards in key areas
of employee behaviour, including compliance

with laws, conflicts of

interests, anti-trust and fair dealing, bribery, corruption discrimination and
harassment, and integrity. We believe in the importance of free competition
and are committed to acting with integrity in all situations. Please see The
Nestlé Code of Business Conduct at www.nestle.com/policies.
Our Human Resources Policy specifies attitudes such as mutual respect,
trust and transparency

in relating to one another and encourages open

communication and cooperation. We also believe that our long-term success
depends on our capacity to attract, develop, protect and retain the right and
best employees. We respect international conventions

concerning

employees’ rights, do not tolerate discrimination for reasons such as origin,
nationality, religion, race, gender, age or sexual orientation or engage in any
kind of verbal or physical harassment based on any of the above or any
other reason.

Safety and health at work

We are committed to preventing accidents, injuries and illness related to
work, and to protect employees, contractors and others involved along the
value chain. Our Policy on Safety and Health at Work establishes safety as a
non-negotiable priority

of our culture. We recognize and require that

everyone play an active role in providing a safe and healthy environment,
and promote awareness and knowledge of safety and health to employees,
contractors and other people

related to or impacted by our business

activities by setting high standards We monitor our performance through
the Nestlé Occupational Safety and Health Management System to assure a
safe and healthy workplace.

Supplier and customer relations
We require our suppliers, agents, subcontractors and their employees to
demonstrate honesty,

integrity and fairness, and to adhere to our non-

negotiable standards. In the same way, we are committed to our own
customers. The Nestlé Supplier Code specifies minimum standards that we
ask our suppliers, agents, subcontractors and their employees to respect
and adhere to. The Supplier Code includes requirements such as business
integrity, sustainable operating and agricultural practices, labour standards,
safety, health and environmental practices. To ensure that the Supplier Code
is put in practice, we reserve the right to verify the suppliers’ compliance
with the Code on a regular basis.

Agriculture and rural development

We contribute to improvements in agricultural production, the social and
economic status of farmers, rural communities and in production systems
to make them more environmentally

sustainable. To ensure that our

factories obtain raw materials competitively and at required quality and
safety
specifications
• we engage in developing sustainable agricultural practices and systems
that

contribute to long-term production efficiency,

viable incomes for

farmers and the transfer of agricultural knowledge to suppliers;
•we support the application of new technologies and advances in agricultural
science, including the opportunities offered

by bioscience when their

positive effect on food safety, environment, agricultural practices and
production efficiency are scientifically confirmed and accepted by
consumers. The Sustainable Agriculture Initiative Nestlé (SAIN) guides our
engagement in farming systems to support agricultural practices, rural
development, sourcing processes and practices that are sustainable over the
long term.

Environmental sustainability
We commit ourselves to environmentally sustainable business practices. At
all stages of the product life cycle we strive to use natural resources
efficiently, favor the use of sustainable managed renewable resources, and
target zero waste. We invest continuously to improve our environmental
performance.

The

Nestlé

Policy

on

Environmental

Sustainability

incorporates the United Nations Global Compact’s three guiding
principles on environment

We apply a product life cycle approach

involving our partners from farm to consumer in order to minimize the
environmental impact of our products and activities. Our four priorities
areas are: water, agricultural raw materials, manufacturing and distribution
of our products, and packaging. We implement our policy through the
Nestlé Environmental Management System.
We believe that environmental performance is a shared responsibility and
requires the cooperation of all parts of society. We are determined to
continue providing leadership within our sphere of influence.

Water
We are committed to the sustainable use of water and continuous
improvement in water management. We recognize that the world faces
a growing water challenge and that responsible management of the world’s
resources by all water users is an absolute necessity. Water is a particular
area of focus for Nestlé. The Nestlé Commitments on Water set out our
priorities and objectives on responsible water usage. These are to continue
our efforts to reduce the amount of water used in our operations, ensure
that activities respect local water resources, ensure that the water we

discharge into the environment is clean, engage with suppliers to promote
water conservation, especially among farmers, and reach out to others
on water conservation and access. Nestlé is a founding signatory of the
United Nations Global Compact CEO Water Mandate. We monitor and
improve water efficiency through our water resources management
specialists and in our factories with our environmental specialists in line
with the Nestlé Environmental Management System. We recognize the
right of all people to have access to clean water to meet their
basic needs.

Pros

Nestle's culture is generally a very healthy one. The work environment is
pleasant, supportive, and collaborative. Nestle seems to do a good job of
consistently hiring good people; they are honest, nice people- solid citizens.
There are very few morons or jerks to be found there.
I always felt that I had a built-in network to tap into around the world... even
to the point of knowing that, if I were traveling on vacation abroad, I'd be
able to find someone (a Nestle person) who would help me if something
went wrong.
I always felt that I was part of something larger than myself- and an
organization which adhered to high moral & ethical standards that I could be
proud of.
Cons
It can be very difficult to find advancement opportunities, especially if
you're not naturally skilled at self promotion. Nestle is not particularly good
at recognizing it's employees' talents and providing the developmental
opportunities to fully develop or leverage those talents.
In such a large organization, it is also very easy to become "out of touch"
with the outside business environment. Nestle can sometimes be "insular" in
its thinking. It's also easy to get "too comfortable" there in your job and to
develop a false sense of security.
While some of the attraction for working at Nestle is the possibility for

exposure to international career opportunities, those tend to be made
available only to a small percentage of employees.

TRENDS IN ORGANIZATIONAL CHANGE
Organizations have entered a new era characterized by rapid, dramatic and
turbulent changes. The accelerated pace of change has transformed how
work is performed by employees in diverse organizations. Change has truly
become an inherent and integral part of organizational life.
Several emerging trends are impacting organizational life. Of these
emerging trends, five will be examined: globalization, diversity, flexibility,
flat, and networks. These five emerging trends create tensions for
organizational leaders and employees as they go through waves of changes
in their organizations. These tensions present opportunities as well as
threats, and if these tensions are not managed well, they will result in
dysfunctional and dire organizational outcomes at the end of any change
process.

GLOBALIZATION

Organizations operate in a global economy that is characterized by greater
and more intense competition, and at the same time, greater economic
interdependence and collaboration. More products and services are being
consumed outside of their country of origin than ever before as globalization
brings about greater convergence in terms of consumer tastes and
preferences. Yet at the same time, in the midst of greater convergence, there
is the opposite force of divergence at work where companies have to adapt
corporate and business strategies, marketing plans, and production efforts to
local domestic markets.

To stay competitive, more organizations are embracing offshore
outsourcing. Many functions are being shifted to India, the Philippines,
Malaysia, and

ther countries for their low labor costs, high levels of

workforce education, and technological advantages. According to the 20022003 Society for Human Resource Management (SHRM) Workplace
Forecast, companies such as Ford, General Motors, and Nestle employ more
people outside of their headquarters countries than within those countries.
Almost any company, whether in manufacturing or services, can find some
part of its work that can be done off site. Forrester Research projects that 3.3
million U.S. service- and knowledge-based jobs will be shipped overseas by
the year 2015, 70 percent of which will move to India. Communication and
information sharing are occurring across the globe in multiple languages and
multiple cultures. Global competition and global cooperation coexist in the
new world economy.
One major consequence of globalization is greater mobility in international
capital and labor markets. This creates a global marketplace where there is
more opportunity, because there are more potential customers. However,
there is also more competition, as local companies have to compete with
foreign companies for customers.

According to Dani Rodrik, professor of international political economy at
Harvard's Kennedy School of Government, the processes associated with the
global integration of markets for goods, services, and capital have created
two sources of tensions. First, reduced barriers to trade and investment
accentuate the asymmetries between groups that can cross international
borders, and those that cannot. In the first category are owners of capital,
highly skilled workers, and many professionals. Unskilled and semiskilled
workers and most middle managers belong in the second category.
Second, globalization engenders conflicts within and between nations over
domestic norms and the social institutions that embody them. As the
technology for manufactured goods becomes standardized and diffused
internationally, nations with very different sets of values, norms, institutions,
and collective preferences begin to compete head on in markets for similar
goods. Trade becomes contentious when it unleashes forces that undermine
the norms implicit in local or domestic workplace practices.
Change–Trends and Tensions in Organizations
Trends
Tensions
1. Globalization Global versus Local
2. Diversity

Heterogeneity versus Homogeneity

3. Flexibility

Flexibility versus Stability

4. Flat

Centralization versus Decentralization

5. Networks

Interdependence versus Independence

Professor Rodrik concluded that "the most serious challenge for the world
economy in the years ahead lies in making globalization compatible with
domestic social and political stability" (Rodrik 1997, p. 2). This implies
ensuring that international economic integration does not lead to domestic
social disintegration. Organizations that are confronted with this challenge
will have to manage the tension created by the global integration versus
local disintegration dilemma. The overall picture as a consequence of
globalization is one of turbulence and uncertainty, in which a variety of
contradictory processes present a wide range of both opportunities and
threats that defy established ways of doing business and working in
organizations. Integration and exclusion coexist uneasily side-by-side in
organizations. For example, many apparent dichotomies or paradoxes—
competition versus collaboration, market forces versus state intervention,
global actions versus local solutions—are losing their sharp edges as
contradictory forces appear to converge and reinforce each other in
organizations across the globe. Companies that compete fiercely in some
markets form strategic alliances in others; government guidance and
regulation are required to make markets work effectively; and "think
globally, act locally" has been adopted as business strategy (or as a mantra)
to deal with the challenges of doing business in the globalized economy. As
organizations transform themselves to stay competitive, they will need to
confront and resolve some, if not all, of these dichotomies or paradoxes.

On another level, because of globalization, the fates of people living and
working in different parts of the world are becoming intertwined. Global
events may have significant local impact. September 11, 2001 has been
called the "day that changed the world". Heightened security concerns are
changing expectations for people in organizations, and the role of
organizations themselves. The threat of terrorism continues to be an ongoing
concern worldwide. It has created a renewed focus on workplace security as
employees experience a heightened sense of vulnerability in the workplace.
Employee monitoring and screening are occurring more frequently. Concern
over travel for business purposes is resulting in the increased use of alternate
forms of communication such as teleconferencing and videoconferencing.
DIVERSITY
Globalization is impacting how organizations compete with each other. In
combination with changing demographics, globalization is causing a rapid
increase in diversity in organizations. Never before have people been
required to work together with colleagues and customers from so many
different cultures and countries. Diversity is moving American society away
from "mass society" to "mosaic society". Organizations reflect this "mosaic
society" in their more diverse workforce (in terms of not only race, ethnic or
culture but also in terms of age, sexual orientation, and other demographic
variables). More than ever, people have to interact and communicate with
others who come from diverse backgrounds. This in turn has meant that

employees need new relational skills to succeed. An emerging stream of
research in international management has called these new relational skills
"cultural intelligence". Cultural intelligence is defined as the capability to
adapt effectively across different national, organizational and professional
cultures (Earley, Ang and Tan, 2005). More managers take up global work
assignments in industries around the world. They learn how to work with
people who not only think and communicate differently but also do things
differently. Managers will need to develop their cultural intelligence to
manage greater diversity in organizations. Diversity in organizations will
continue to increase. As indicated by the U.S Census Bureau National
Population Projections, the Hispanic population will increase by 11.2
percent between 2000 and 2025 to become the largest minority group in the
United States. All other minority groups will increase by about 9 percent,
while the number of Caucasians will decrease by approximately 19 percent.
The world population is growing at a high rate in developing countries,
while remaining stable or decreasing in the developed world. The result will
be income inequities and economic opportunity leading to increased
immigration and migration within and between nations. More temporary
workers will be used for specific tasks, and there will be a greater demand
for highly skilled workers. The aging American workforce population means
more retirees and potential gaps in availability of experienced workers.
According to American Association of Retired Persons (AARP), by 2015
nearly one in five U.S. workers will be age 55 or older. Retirees often want

to keep a foot in the workplace. AARP's research shows that nearly 8 of 10
baby boomers envision working part time after retirement; 5 percent
anticipate working full time at a new job or career; only 16 percent foresee
not working at all. People of different ethnic and cultural backgrounds
possess different attitudes, values, and norms. Increasing cultural diversity in
both public and private sector organizations focuses attention on the
distinctions between ethnic and cultural groups in their attitudes and
performance at work. This greater focus can result in the tension between
finding similarities and accentuating differences in the face of greater
diversity in organizations. There is an on-going debate between
the heterogenists and the homogenists concerning the impact of greater
diversity in organizations. The heterogenists contend that diverse or
heterogeneous groups in organizations have performance advantages over
homogeneous groups while thehomogenists take the opposing view—that
homogeneous groups are more advantageous than heterogeneous or diverse
groups in organizations. According to the heterogenists, organizations with
greater diversity have an advantage in attracting and retaining the best
available human talent. The exceptional capabilities of women and
minorities offer a rich labor pool for organizations to tap. When
organizations attract, retain, and promote maximum utilization of people
from diverse cultural backgrounds, they gain competitive advantage and
sustain the highest quality of human resources.

Organizations with greater diversity can understand and penetrate wider and
enhanced markets. Not only do these organizations embrace a diverse
workforce internally, they are better suited to serve a diverse external
clientele. Organizations with greater diversity also display higher creativity
and innovation. Especially in research-oriented and high technology
organizations, the array of talents provided by a gender- and ethnic-diverse
organization becomes invaluable. Heterogeneous or diverse groups display
better problem solving ability as they are more capable of avoiding the
consequences of groupthink, compared to highly cohesive and homogeneous
groups that are more susceptible to conformity. On the other hand, greater
organizational diversity has its drawbacks. With the benefits of diversity
come organizational costs. Too much diversity can lead to dysfunctional
outcomes. Diversity increases ambiguity, complexity, and confusion.
Organizations with greater diversity may have difficulty reaching consensus
and implementing solutions. In many organizations, diversity can produce
negative dynamics such as ethnocentrism, stereotyping and cultural
clashes.The homogenists argue that homogeneous groups often outperform
culturally diverse groups, especially where there is a serious communication
problem. Cross-cultural training is necessary to enable culturally diverse
groups to live up to their potential and overcome communication difficulties.
The diversity movement, according to the homogenists, has the potential to
polarize different social groups and harm productivity while breeding
cynicism and resentment, heightening inter group frictions and tensions, and

lowering productivity, just the opposite of what managing diversity is
intended to accomplish. The challenge therefore is for management to
manage the tension produced by heterogeneity versus homogeneity. If
properly managed, organizations can reap the benefits of greater diversity.
Aside from proper management, organizations need to learn to appreciate
and value diversity before the benefits of diversity can be fully realized. To
achieve this, diversity training programs may help people in organizations
understand and value diversity.
FLEXIBILITY
Globalization and diversity trends are forcing organizations to become more
flexible and adaptable. To be able to function globally and to embrace
diversity, leaders and employees in organizations have to become more
flexible and develop a wider repertoire of skills and strategies in working
with diverse groups of people in the workplace as well as in the marketplace.
The response to increased diversity has, in many cases, been increased
organizational flexibility. Some organizations allow workers to have very
different work arrangements (e.g. flex-time) and payment schedules. Some
organizations (and workers) have found it convenient to treat some workers
as independent consultants rather than employees. In certain occupations,
advances

in

communication

and

information

technologies

have

enabled telecommuting —working at home via computer. One consequence
of this is the blurring of boundaries between work and home, and where and

when work occurs. The benefits of greater flexibility may be countered by
the negative consequences of working 24/7 including higher stress and
burnout. The response to increased competition, however, has resulted in a
tension generated by the demands to be flexible and yet maintain some
stability as changes are implemented in organizations. To stay competitive,
organizations are constantly changing and restructuring to increase
flexibility and decrease costs. Business process reengineering, business
process out-sourcing, job redesign, and other approaches to optimize
business processes have been implemented to increase operational and
process efficiency while reducing the costs of doing business. Changes in
business and operational processes need time to stabilize for employees to
learn the new processes, become familiar with them, and be able to operate
effectively

and efficiently.

Yet,

competitive

pressures

can

cause

organizations to go through a series of changes without giving employees
adequate time for learning and training, and for the benefits of the change to
be fully realized in the organization. This tension is well-captured by
Columbia Business School professor Eric Abrahamson in his book, Change
Without Pain (2004) in which he discussed how organizations can go
through change overload and how employees can experience change fatigue
and burnout. Professor Abrahamson proposes "creative recombination" as an
alternative approach to the highly destructive, destabilizing and painful
changes caused by "creative destruction".

FLAT
In a greater competitive marketplace, speed or response time is critical. How
organizations response to customers and other stakeholders or be the first to
market may make a significant difference as time is at a premium.
rganizations that can develop new technologies faster or can adapt to
changes in the market faster are the ones that will survive the competition.
To maximize response time, organizations have been flattening their
hierarchies and structures, in addition to other initiatives such as downsizing
and networking. Flat organizations make decisions more quickly because
each person is closer to the ultimate decision-makers. There are fewer levels
of management, and workers are empowered to make decisions. Decisionmaking becomes decentralized. However, flat organizations create a new
tension between decentralization and centralization. Among the drivers of
decentralization are communications technologies that allow companies to
push decision-making away from the core. Proponents of decentralization
emphasize the idea that less hierarchical organizations mirror the efficiencies
of the networks that enable them: they are faster, more resilient, more
responsive, more flexible and more innovative. Also, they argue, people who
work within decentralized organizations feel empowered and energized.
They do not need to focus on the chain of command and they do not feel
constrained by it.

Organizations are caught between the opposing forces of centralization and
decentralization. They want to leverage the opportunities offered by
decentralization and create more nimble and forceful organizations, but they
cannot always do so because the forces of centralization come into play.
There are obvious benefits to centralization as control is comparatively
tighter and accountability is clearer compared to a flatter, more decentralized
organizational structure. Take the example of IT operations. The key to a
centralized organization's success is its responsiveness. If the centralized
operation can be responsive to the needs of the business, then that approach
can make sense. Several companies, such as DaimlerChrysler and PepsiCo,
have migrated back to centralizing IT operations after attempts at
decentralization. The debate over the centralization versus decentralization
of operations in organizations is an enduring one. It is an age-old battle of
standardization versus autonomy, corporate efficiency versus local
effectiveness and pressure on costs and resources versus accommodation of
specific local needs. Vacillation between centralization and decentralization
is both non-productive and unnecessary. Organizations, as they desire to
become flatter, will need to be clear about how they need to respond to the
tension between centralization and decentralization.

NETWORKS
Organizations that flatten tend to encourage horizontal communication
among workers. Rather than working through the organizational hierarchy, it
is often faster for workers who need to coordinate with each other simply to
communicate directly. Such organizations are highly networked. Another
meaning of networked organizations refers to their relations to other
organizations. Organizations that have downsized to just their core
competencies must then outsource all the functions that used to be done inhouse. To avoid losing time and effort managing contracts with suppliers,
organizations have learned to develop close ties to their suppliers so that
social mechanisms of coordination replace legal mechanisms, which are
slow and costly. In many industries, such as the garment industry in Italy,
strong relationships have developed between manufacturers and suppliers
(and other manufacturers), so that considerable work is done without a
contract and without even working out a firm price. For these networked
organizations to work, high trust and social capital between organizations
are key elements. Networked organizations are particularly important in
industries with complex products where technologies and customer needs
change rapidly, such as in high technology industries. Close ties among a set
of companies enables them to work with each other in ways that are faster
than arms-length contracts would permit, and yet retains the flexibility of
being able to drop the relationship if needed (as opposed to performing the
function in-house). The trend towards networked organizations and

structures create a new tension between interdependence and independence.
The forces of aggregation and desegregation throw up new challenges for
organizations, for example, the use of independent contractors, joint
ventures, strategic partnerships and alliances even with competitors.
One advantage of networks is that organizations have greater flexibility and
thus they can become more competitive in the global marketplace. Another
advantage is that organizations do not require that many resources such as
employee benefits, office space, and financing for new business ventures.
On the other hand, networks have distinct disadvantages. Organizations may
find it more difficult to control quality of goods or services as they now have
to depend on their partners in the networks to deliver the quality that is
desired. Legal and contracting expertise as well as negotiation expertise will
also be important for networks. Alternative forms of control may need to be
developed to control quality. Alternative mechanisms for coordination may
also need to be developed to manage the growing constellation and
sometimes tenuous nature of other partner organizations in the network. All
the five trends and the tensions they produce result in greater organizational
or system complexity for both leaders and employees in organizations. The
tensions produced by these trends cannot be solved.

FINANCIAL REPORT OF NESTLE
The Government continued with its strenuous efforts to steer the
economy. With continued focus on reforms and a comb nation of stimulus
packages, rural Income generation schemes and monetary policy amongst
others the government was successful In keeping the GDP growth Largely
on track especially when many parts of the word struggled on this front
This past year highlighted the increasing complexity and volatility of the
economic environment While the Government staking action and new food
regulation is being put In place, faster Implementation could sustain the
growth momentum

Against this background, your company’s success can

be measured on three dimensions - Growth inclusion. Leadership,

Your

Company has always reiterated that good food Is essential for ensuring
productivity and good life. With economic growth, the lifestyles in India
ana evolving and changing People need to eat better and stay healthy to
keep pace with their aspirations but the evolving scenario is complex On the
one hand a very largo population does not

have access to affordable

nutrition, and on the other hand there is an Increasing problem of diabetes,
obesity and heart diseases, The need for better nutrition is a challenge
across the income pyramid. Your Company has access to the Nestle Groups
immense nutritional expertise and food technology for developing products
that provide taste and science-based nutrition With strong consumer centric
innovation and

Renovation supported by the Nestley R&D network, your Company
remained focused on developing Indian concepts and relevant products that
help people manage their need for taste and nutrition and enabled the
Company to grow. Your Directors believe the Company remained sensitive
to the need for
following Its

efficient and sustainable utilization of resources and

basic approach to business to Create Shared Value. It

continued to inspire happiness for Its shareholders and the communities
where It

operates With the own sphere of activities your Company

continued to
utilize its expertise and knowledge and consciously implemented Initiatives
to ensure that while its core business continued to grow, the impact of Its
business on the communities, results In a better quality of life for them and
is in their interest. Your Company continued to Invest resources both in
terms of talent and capital In

the areas of water, nutrition and rural

development because these are also the areas where shareholders interest
and the interests of society strongly intersect and where your Company can
create significant value for both, in an inclusive manner

The factories

Invested in state-of-the-art technology and equipment to process and add
value to agricultural produce, worked closely with the farmers, suppliers
and communities, transferring technology and
upgrade the quality of their raw materials.

knowledge to help them

Your Director* are pleased to inform that during 2010 your Company
delivered a strong performance Net Sate for the year 2010 increased by
21 9% over the previous year Domestic Sales increased by 22.9% on
Increased volumes and realizations, Export Sales increased by 7.6%
Overall, the businesses continued to grow the market while retaining
leadership in most businesses

The consistent performance of your

Company over the years, reflects the strength of the brands, the trust in Its
products and the strong support coming from Nestle Group, Switzerland It
also demonstrates the

continuous engagement and performance of the

people and business partners.

Financial Results and Operations
(Rs In Millions)
2010
Gross Revenue

2009

62,974

51f672

Profit before Interest Impairment.
contingencies and taxation
Interest
Impairment Loans on Fixed Assets (Net)

11,646
11

9,610
14

-

103

Provision for Contingencies (Net)

164

323

Provision for Tax

3,264

2,620

Net Profit

8,187

6,560

Profit Brought Forward

1,425

1,001

Balance Available for Appropriation

9,612

7,551

Interim Dividends

3,471

3,471

Final Dividend Proposed

1,205

1,205

Corporate Dividend Tax

772

795

Transfer to General Reserve

619

655

3,345

1,425

Earnings per Share (Rs.)

84.91

67.94

Dividend per Share (Rs )

48.50

48.50

Surplus carried in Profit and
Lose Account
Key Rates

Total Income
Net Profit for the Year 2010 increased by 25% The operating margins
Improved due to better absorption of fixed cost end Improved product /
channel mix- The Impact of Increase In cost of materials was largely
offset by the one-off Cost In 2009 relating to actuarial losses on
retirement benefits The improvement in
FIXED ASSETS
Net Profit Margin is due to the Increase In operating margin as the effect
of lowering income tax rates has been offset by tower contribution of the
income tax
SHAREHOLDERS FUNDS
holiday at Pantnagar factory Your Company continued to emphasize on
cash generation and delivered strong operating cash flow during the year.
Surplus Funds have been prudently invested after ensuring that such
nvestments satisfy the Company’s criteria of safety. Liquidity end returns.
Cash Flow
The Company supplemented the Provision for Contingencies with further
amount of Rs 184 million (net) for contingencies resulting mainly from
issues, which are under litigation/dispute and other uncertainties requiring
management judgment This was after the reversal/utilization

of Rs 250

million provision, due to settlement of certain disputes for which provision
was no longer required While the current year has also commenced as per
plan, the beginning has been with a number of uncertainties. Including the
Intensity of

cost Increases specially the volatile raw material prices. Your Company
will focus efforts to overcome these challenges and is hopeful that the
Government would continue to support the food processing sector. Your
Directors are confident of the long-term business prospects of the
Company.
Exports
During the year, Export Sales at Rs 3,537 million was higher by 7 6%.
At constant exchange raise the same would be 10.3%.

The Increase in

exports was largely on account of new exports of Coffee to South Africa
and Egypt which wore started during the year There was also a significant
Increase in exports of instant Tee to certain European markets and to the Far
East and a broadened customer base has now been established This was
offset by the discontinuation of exports of Infant nutribon products to Sri
Lanka and Bangladesh due to capacity constraints, and the Lower exports of
cuinary products.

Your Company continued Rs efforts to develop more

products for the Indian athnic community abroad and certain new products
were shipped out during the year. Some new grades of instant Tea have
also been developed and these will add variety and value to the portfolio.

Dividends
The Board of Directors has recommended a final dividend of Rs. 12.50
per equity share of the face value of Rs. 10/- each for the year 2010,
amounting to Rs, 1,205 Million. This is in addition to the two Interim
Dividends for 2010, aggregating to Rs 36.00 per equity share, paid in May
2010 end November 2010 (amounting to Rs 3,471 million) The total
dividend payout for 2010 would be Rs. 4,676 million (excluding the
corporate dividend tax), and maintain the total dividend payout for 2009,
and is in keeping with the financing needs for capital expenditure
Business Development
India is evolving rapidly and people are becoming more health conscious
and eat bettor. Nutrition plays a key role In enhancing Health and Wellness
in our lives and India will be challenged by the need for better nutrition
across the income pyramid Your Company intends to play a definitave role
in providing consumers with Good Food, Good Life Nestle products are
trusted for their high quality and this drives your Company to Innovate and
renovate products to further strengthen its bonds with consumers.

The business of Prepared Dishes and Coolding Aids grow rapidly MAGGI
continued to strengthen its wide portfolio at an accelerated pace. Being one
of the top Most Trusted Food Brands in the country, MAGGI has gone
beyond offering products, to building emotional relationships with
consumers. MAGGI products provide Taste and Health and bring Happiness
to every home, delivering Taste Bhi Health Bhi Khushiyan Bhi. With the
support of Nestley global network of R&D centres applying knowledge in
science based nutrition. MAGGI products were innovated and renovated In
accordance with the changing needs of all members of the family During
the year, an Innovative range of Me & Meri MAGGI testes were introduced
In Noodles. The Me & Man MAGGI campaign started in 2009. to celebrate
25 years of the emotional relationship of MAGGI wtth Its consumers The
overwhelming response to the campaign brought out some very distinct
experiences and emotions that consumers associate with MAGGI, and the
culinary

experts worked extensively on concepts that capture these

experiences In the taste of the Noodles. Three flavour launched were Me &
Meri THRILLIN CURRY. Me & Meri TRICKY TOMATO and Me & Meri
ROMANTIC

CAPSICA Soon after. MAGGI Vegetable Multigralnz

Noodles was raited out

MAGGI Vegetable Multigralnz Noodles is a

combination of traditional Ingredients, known for their goodness, such as
Ragi, Com, Jowar. And Wheat with real vegetables, and are a source of
Fibre, Calcium and

Protein MAGGI Masala-ac-Magic and MAGGI

NUTRI-LICIOUS PAZZTA launched in Late 2009 established themselves
during the last year MAGGI

NLTRI-LICIOUS PAZZTA is already the market leader and continues to
grow the market for light meals MAGGI Masala-ac-Magic, fortifed with
Iron, Iodine end Vitamin A, is helping housewives In kitchens across the
income pyramid, to provide tasty and nutritious food to their families
everyday. MAGGI continued to connect with consumers. In innovative and
Impactful ways MAGGI Sauces advertising acknowledged the increasing
stress on

consumers and advocated Hasaon, Khushi Phaolao lndia ko

Heatthy Banaol It promoted happiness and spontaneous joy for a healthy
living and encouraged a dialogue with the consumer. The campaign for
MAGGI

Vegetable Multigralnz Noodles revived another dimension In

consumers lives. It brought alive the strong emotional bonds within the
family and rested the multi-benefits of MAGGI Multigralnz to the multibenefits In every motherl Marketing Taste Bhi Health Bhi solutions to
consumers at the bottom of the pyramid has its own challenges These are
Inherent in the lifestyle of these consumers that is driven by traditional
values, lack of education and limited affordabillty. While the solutions have
to be affordable, most people may lack the basic understanding of nutrition
Since MAGGI Masala-ae-Magic is an affordable product that even low
income families can use, the challenge Is to spread nutrition education.
Starting out with the first programme in Dharavi in Mumbai, MAGGI has
been sending out people to Increase nutrition awareness In association with
a social organisation Drishtee it is also organising heath camps in rural
areas. These camps create awareness, amongst others, about micronutrient
deficiencies, while the organisation also develops retail entrepreneurs for
products like MAGGI Masala-ae- Magic With all these Initiatives, MAGGI
continued to be

ranked as the No. 1 Most valuable Food Brand1 and

amongst the Top 10 Buzziest Brands; in the country

The Chocolate and

Confectionery business continued to drive growth in the newer segments
that are more relevant to emerging consumer needs

and wellness

preferences. Driven primarily by better understanding of consumers and
extending the portfolio innovatively your Company’s

chocolate and

confectionery business has grown faster than Industry. White the overal
penetration for the chocolate category is still in single digits and has a long
way to go, the consumption is impulse led and driven largely by convenient
price points. As economic growth creates more disposable income with
more people the consumption is expected to increase. The challenge is to
manage the correct colnage

for these products man Inflationary

enviornment. Your Company has grown this business steadily and it is now
the leader in the chocolaty water segment for lighter eating1 with NESTLE
KIT KAT and NESTLE MUNCH and Whites (goodness of milk) with
NESTLE MILKYBAR, During the year this business continued to Innovate
and renovate brands to increase relevance to the consumers Some of the
more recent and successful launches were NESTLE MILKYBAR Choo
Choko at Rs.5/- NESTLE MILKY BAR
Crispy at Rs.5/- NESTLE MUNCH Guru pack at Rs.10/- and NESTLE KIT
KAT single finger at Rs 5/-.
During the year your Company re-launched NESTLE BARONE Rigorous
work with the R&D Centres has enabled us to develop taste superiority in
NESTLE BARONE, which is supported by consumer research It was
re-launched as the companion for the confident young Indian and the
re-launch campaign goes beyond the product benefit to strengthen the

emotional experience of the consumer NESTLE BARONE is available at
price points of Rs 5/- and Rs 10/-. and this new thrust is further
strengthened by revamped packaging which is fresh, youthful and premium.
Your Company continues to believe that sweet snacking is an Intrinsic
part of peoples lives and with in this category the commitment is to
offer teste as well as balance to consumers. The NESTLE KIT KAT
squirrels communication is an Illustration of this where it Innovatively
brings alive the importance of breaks in routine. In the sugar sub-segment
your company continued to focus on the two need states of indulgence and
refreshment with success While it grew the overall Eclairs portfolio to make
your Company the largest player, volume gains by NESTLE POLO has
now made your Company the biggest NESTLE POLO market In the world.
Your Company is the value leader in Instant Coffee with NESCAFE. During
the year, the Coffee and Beverages business not only strengthened Its
market position but also strengthened its bonding with consumers. The
business continued to focus its efforts on the value chain and leveraged
Nestles world class proprietary aroma recovery technology to
Improve the aroma and taste of NESCAFE CLASSIC.

further

NESCAFE is a

brand with a progressive world view and reflects the thinking that we can
reach our destination when we have a sense of purpose it talks to the youth
of todays progressive India and sees the world as they see it During the year
it engaged with consumers with the

Simple message Switch on your

purpose. Switch on the best In you The

business associated with the

successful and vibrant Deepika Padukone as the brand ambassador and to
further engage with the youth, a digital page Know your neighbours was
created. This page is today the biggest fan page for NESCAFE in the world

with more than three and a half lakh fans, and is continuing to grow These
initiatives along with the ones

already planned are expected to move

NESCAFE to a new growth trajectory. During the year Milk Products and
Nutrition- business performed well and continued to consolidate and grow.
Science based
renovations

nutrition, stringent quality standards end innovation and
are strong pillars for the business which is focused on

enhancing the quality of life During the year your Company launched the
NESTLE START HEALTHY STAY HEALTHY educational initiative in
partnership with doctors, with the aim of making good nutrition a way of
life. It emphasizes the fact that the nutrition that children get in the early
years of life can affect their health forever. And It all starts with mothers
milk. As we progress through different stages of life, we have different
nutritional needs and we need to understand and balance our nutritional
requirements to stay healthy. While your Company actively supports and
promotes breastfeeding as being the best possible source of nutrition for the
developing Infant it recognizes that there are

circumstances where the

mother to unable to feed Your Company continued to build on the heritage
that Nestle has of quality. trust and science based nutrition to meet the
needs of infants, as they grow up, and in later life. NESLAC Nutritious
Milk Drink for children was launched towards the end of the year in select
geographies Your Company has a portfolio of high quality UHT milks that
pass stringent quality checks and are preferred by discerning consumers
who demand the confidence of good taste and putty. The range comprises
NESTLE MILK (Rich and Creamy). NESTLE MILK (Half Fat) and
NESTLE SLIM

[Skimmed Milk], and NESTLE PRO-HEART MILK with Omega 3 Your
Company continued to strengthen the business and also extended the range
of

NESTLE DAHl to include dahi in pouches. In the dairy whitener

category

NESTLE EVERYDAY continued to leed volume and value

growth and introduced affordable price formats to Improve accessibility for
lower income users. The brand was renovated and research shows that 8 out
of every 10 consumers prefer NESTLE EVERYDAY making it Indias most
preferred Dairy Whitener During the year there was greater emphasis on
activations and sampling to bring the brand experience closer to consumers
MILKMAID sweetened condensed milk has in the past

successfully

introduced a new generation of home cooks to easy 3 step recipes. Your
Company continued to strengthen this activity and scale-up business
The Healthcare Nutrition Business that was acquired from Specially Foods
India Private Limited, with products for consumers with special nutritional
requirements performed satisfactorily Work to underway to

develop ft

further. The products In this portfolio are marketed under

brands like

RESOURCE, OPTIFAST and SPERT. RESOURCE is specially formulated
for the management of malnutrition and other medical conditions associated
with increased nutritional needs. It has a range of formulations Including,
amongst others, RESOURCE Diabetic, a ready to use, fibre rich diet for
better nutritional management of diabetics and RESOURCE High Protein
that provides easily digestible whey protein. OPTIFAST is a Nutrition
supplement In overweight condition and SPERT is a Protein supplement to
address the Increased protein needs of the fanny With mom women entering
the workforce and Increasing disposable

Incomes, there la growing

opportunity In the Out or Home segment Your Company is well placed to

tap this During the year as the economic environment Improved and hiring
by corporates Increased the business

was positively benefited Your

Company successfully launched vending machines taking into account the
specific needs of the customers in the large as well as small establishments.
Sales
Your Company is aware that the emerging and the Increasing competitive
Intensity, requires us to be even more efficient, as we go forward. The
process of back- end sales automation that was initiated earlier is now,
fully implemented and provides a robust and integrated distributor
management solution that supports our efficiency In primary and secondary
sales This also facilitates a more transparent record of the transactions from
distributors, to retailers We strive to improve the

availability of our

products with a clear focus on building distributon by going deep & wide
across urban and rural geographies This has resulted In Improving our reach
to more than 400,000 outlets In the last year alone Your Company Is
committed to continuous excellence in the operations. During the year the
focus was on building capacity through the wiling and able distributors who
are long term partners of your Company, and provided the front lino field
force, the support and know-how to improve their capability.

Technology and Quality
Your Company’s products touch the lives of millions every day and
Nestle is amongst the most trusted companies in India. The commitment
to high integrity Nestle products is supported by stringent quality assurance
norms, state-of-the-art technology and high degree of

automation The

access to Nestles globel R&D and emphasis on science based innovation
and renovation to develop high quality products are significant competitive
advantages Your Company Is also working on a robust and comprehensive
Improvement programme Nestle Continuous

Excellence (NCE) that is

based on LEAN mindset for war on waste and

Total Performance

Management concepts The initial results from prior areas Indicated that
bettor efficiencies have been achieved from the same assets while also
reducing costs
Nestle R&D Centre in India
Your Directors are extremely pleased to inform that at the request of your
Company, Nestle S. A. Switzerland has agreed to the setting up of a R&D
Centre In India as a part of its global network of R&DCentres Nestle R&D
Centre India Pvt Ltd. Is a wholly owned subsidiary of Nestle S A and at the
request of your Company, the RAD facility has been

located In the

proximity of your Company’s Head Office The foundation stone for the
R&D Centre was laid by the Honble Minister for Food

Processing

Industries In September, 2010 and It is expected to be operational in 2012.

Nestles decision to establish an R&D centre In India will be an additional
competitive advantage in the future and well further strengthen the benefits
of technology and know-how received by your

Company from Nestle

Group. The research at this Centre will provide exerting opportunities for
Innovation and will focus on Popularly

Positioned Products (PPPe),

especially for India but also worldwide PPPs meet the specific needs of
consumers with lower income levels by
nutritionally enhanced products at
accelerate your Company’s growth

offering them high-quality,

affordable prices it should help to
and contribute towards reducing

nutritional deficiencies in lndia.
Environment
Your Company is sensitive to the fragility of non- renewable resources and
continues to work towards creating and Increasing awareness for
environmental sustainability Emphasis on conservation of resources is a
priority within the factories and in the manageable areas there is a
continuous effort to minimize consumption of natural resources and reduce
waste and emission. while maximizing production All processes follow the
Nestle Environment Management System and business practices comply
with government policies, environmental laws and regulations using stateof-the-art technology and equipment You writ bo proud to know that as
production volume has been increasing, during the past ten years, there has
been a significant reduction in usage of energy and water and reduction in
emission of green house gases per tonne of production Water consumption

per tonne of production has reduced substantially and water use efficiency
has improved by almost 60% by

employing efficient methods and

technologies Energy consumption per tonne of produce has reduced by
almost 51% through investments in energy efficient systems and processes
and cutting down on energy losses At the same time waste water discharge
per tonne of produce reduced by almost 70% as a result of the reusing of
water and more efficient processes that reduce water DMA The carbon
footprint has been significantly reducing through focus on technologies that
improve combustion and emphasis on utilising renewable fuels such as
coconut shells and process waste to replace non-renewable fuels
Capacity and Funding
Your Company has boon growing at a healthy rate In recent years with
continuing Leadership across its businesses. This market leadership
position and Indias positive economic environment coupled with a
progressive population provides opportunities for growth Your Company
is therefore, accelerating Investment in capacities to provide consumers a
wide product range, from Popularty Positioned Products far low income
consumers to premium offerings In the recent past some

significant

investments have already been initiated Your Directors are hopeful that the
Government continues to support the Food Processing Sector so that your
Company can continue to expand manufacturing and

employment to

provide consumers with affordable products Over the Last three years,
Nestle India has spent over Rs 650 crones In capital Investments, but the
Investments during 2010 atone were In excess of Rs

480 crores and

additional commitments of around Rs 680 crores already existed at the year
end. Current plans foreses a further acceleration in 2011 and beyond This
capital expenditure will go into expanding facilities at Bhichogm, Moga,
Nanjangud, Porda, Samakha and in new Greenfield fecilities while a new
plant for MAGGl products is getting

ready for commissioning at the

Nanjangud Factory, work has been initiated for a green field project at
Tahliwal In Himachal Pradesh In order to finance this accelerated capital
expenditure trajectory

your Company would have a Judicious mix of

Internal Accruals and Debt The Borrowings Free balance sheet of your
Company and the

strong credit ratings of Nestle should facilitate this

strategy Your Directors are pleased that the Reserve Bank of India has
approved availment of External Commercial Borrowing from the foreign
equity holders of upto US$ 450 million for the sourcing of capital goods,
expansion/modernisation of facilities and new projects. The drawdown of
the loan would be based on the funding requirements from time to time
Supply Chain

The current volatile and complex economic environment

requires efficient and cost effective processes. During 2010 your Company
has ensured timely and efficient supply of materials to run the factories,
according the development of local suppliers The distribution of finished
goods to consumers across the country continues to be cost effective and
mora environmental friendly with Increasing share of rail deliveries.
During the year, your Company also delivered sustainable coat
optimisation Initiatives as part of Nestle Continuous Excellence (NCE) to
eliminate waste and manage input coils This year the NCE programme will
be expanded further to cover all supply chain processes and select
distribution centres.

In line with the philosophy of Greeting Shared Value, Nestle India rolled
out Its Responsible Sourcing programme in 2010. All the key vendors were
engaged on this initiative through procurement tod vendor meets at the
Companys Head office and factories Vendors were supported through a preassessment process, consultant visits, dedicated help desk and continuous
engagement and education AH vendors were registered on the SEDEX
platform and Independent Audits by internationally approved agendas were
conducted on the key vendors shortlisted A these

vendors were found

complaint with minor gape for which road maps have been agreed mutually
Human Resources and Trade Relations
Your Company strongly believes that people are its assets and they are key
to drive competitive advantage With the vision given to employees to Seek
the Peak in all endeavors, the emphasis has been on alignment of company
goals with individual objectives and than empowering employees to give
their beat with the mindset of Dream Dare

Deliver, Recognizing the

importance of Human Resources, an efforts

have been put by your

Company to ensure that best talent is recruited, continuously developed and
retained During the year, your Company has

put heavy emphasis on

performance driven culture and appropriate HR tools and processes have
been deployed to ensure clear linkage with rewards. Strong recognition
platforms have been crested to encourage people to deliver stretched goals.
There has been a lot of emphasis on training and development including self
learning, manager inspired
development opportunities.

learning through coaching and censer

All these efforts have ensured that your Company retains Its position as a
preferred employer and an employer of choice. Your Company believes in
fostering trust end mutual respect In employee rotations Your Company
engaged employees with trust and respect by continuously transparently
sharing Information through various forums, dialogues and

other

communication means. These efforts have received excellent redprocation
from employees and in its Industrial Relations.
SWOT Analysis of the Company
Strengths:
* Being NESTLE
* General Licence Agreement which gives access to the Nestle Groups
proprietary technology/ brands, expertise and the extensive centralised
Research and Development facilities
* High quality and safe food products at affordable prices, and trust
in Nestle.
* Understanding of Nutrition, Health and Wellness
* Strong end well differentiated brands with market share leadership.
* Product innovation and renovation, based on consumer insights.
* Well diversified product portfolio across categories and income
Strata
* Efficient supply chain

* Responsive Organisation Structure and strong Management Team
* Distribution structure that allows wide reach and coverage in the
target markets.
* Capable and engaged human resources
* Participation in Global Business Excellence (GLOBE)
* Strong financial position
Weakness:
* Complex supply chain configuration.
* Cascading indirect taxes.
* Price point portfolio
Threat:
* Price volatility of key raw, packaging materials and fuels
* Availability of agro based commodities
* Food Inflation
* While-collar talent
Opportunity*:
* Potential for further expansion In smaller towns and other
geographies
* Growing demand for premium products
* Introduction of GST to simply the taxation and distribution
* Recovery of Our of Home Segment
* Leverage Nestle Technology to cave op more products that provide
Nutrition. Health and Wellness at affordable prices
Working with Communities

Evan as growth and soda! change accelerate the desire to move up the
income pyramid, the issues of rural development, conservation of water and
environmental resources, access to nutrition and food security are potential
challenges Your Company believes that our response to these common
issues will not only have a bearing on our own progress but also the ability
to create sustainable inclusive growth

Nestles approach to business is

Creating Shared Value or Saajhapan as we call it in Nestle India and it la
about the impact of our business and engagement through it In colloquial
thinking Saanjhapan refects joint benefit Your company is focused on the
three ansae of Nutrition, Water and Rural Development where it has the
greatest potential for Joint value with the communities. Understanding of
nutrition, knowledge of balanced diets and access to

good nutrition is

essential for a good life in a survey conducted by your Company around Its
factories in 2009 lack of knowledge and even awareness about balanced
nutrition had emerged as a major concern Your Company has expertise and
understanding of nutrition and Intends to use this to help people Improve
the quality of their lives. It has developed a simple but engaging programme
In partnership with Universities that have knowledge of food habits and
availability in their areas The programme modules are structured in a way
that students absorb the basic knowledge relating to foods In a practical
manner it helps them understand the role of food in our bodies, the manner
in which food is digested and how we can improve the balance of nutrients
in diet The module specifically devotes time to explaining how cooking
practices can improve nutrition, as well as the need for food hygiene,
sanitation, and physical exercise to imp rove health and wellness

This

programme was rolled out nationally from April and during the year around

5000 students in village schools have already participated The Universities
also help to ensure that the programme Is being implemented in the beat
interest of the community. The well being of the communities from where
we draw our agricultural raw materials are important for us. Consequently
your Company

continues to do extensive work with fanners and other

suppliers, transferring technology and knowledge to the communities and
helping

them build their capabilities so that they can participate more

effectively in business and build on progress through economic prosperity.
During the year your Company continued to extend its Clean Drinking
Water Projects that Improve access to dean drinking water in village
schools and increase awareness for water conservation in the communities
around our factories During the year, 17 Clean Drinking Water Projects
were constructed to benefit 6300 more students, As a result the number of
these projects around our factories has increased to 156 and 66,000 students
in village school are directly benefiting every year
Your Company has been working extensively to develop dairy fanning and
to make It a sustainable income source even for small and marginal
farmers, This effort continued in the Moga region with your company’s
veterinarians and agronomists providing support, expertise and knowledge
that benefits over 110,000 farmers directly Your Company also continued
with the Village Women Dairy Development Programmes that train them in
good dairy practices as well as spread awareness about personal hearth,
hygiene, water conservation and economic independence.

160 more

programmes helped to reach out to 5300 additional women during the year,
cumulatively benefitting over 45,000 village women During recent years
your Company has also been working with chicory farmers Transfer of

technology, education and better knowledge of roasting and processing has
increased yields and quality During the past 10 years the number of chicory
farmers benefitting from this has increased from 1000 to 7500
Contribution to Exchequer
Your Company has been a leading taxpayer of the country and over the
years has been enabling significant contribute to various taxes During
the year 2010, the Company through Its business, enabled tax collections at
Central and State Law of close to Rs 13.98 billion in the aggregate
Awards and Recognitions
While your Company’s products continued to be trusted for their high
quality, your Company has Increasingly emphasized better consumer
engagement The success is reflecting in the awards and recognitions that
your brands received during the year They are also a strong indication of the
hard work and sustainable initiatives being

implemented to delight

consumers. Soma of the key awards and recognitions:
* Conferred Marketing Company of the Year award at PITCH Indias Top
50 Marketers Awards 2010 to recognise excellence in Marketing

* Pitch

Magazine recognised MAGGI amongst the top 3 Ageless Brands

and

adjudged MAGGI Masala-ae-Magic amongst the top 3 for innovative work
at the Bottom of the Pyramid.
* NESTEA Voted Product of the Year In the powdered beverages category
by Nielsens Consumer Survey of product innovation 2010.
* KIT KAT adjudged Master Brand by the World Brand Congress

* MAGGI Masala-ae-Magic; recognised amongst The Chartbusters of 2010
by The Economic Times
* NESCAFE Know Your Neighbours campaign amongst Top 5 Most
Liked
Digital Campaigns of 2010 listing by AFAQS
* MAGGI again rated the No 1 Food Brand in India by an ICMR consumer
study.
* Me and Med MAGGI campaign recognised by Campaign India Digital
Media Awards - Silver for Best Website (FMCG) and Bronze for Beet
Loyally Campaign.
* MAGGI rated amongst Indias Top 10 Buzziest Brands by AFAQS
Survey 2010
* Me and Mart MAGGI advertising campaign received Silver and Bronze
Awards at 2010 ABBYS,
* Coffee Board Awards for Best Exporter of Coffee to Russia and C S.
and Second Best Exporter of instant Coffee (2009-2010)
* In a survey by Business Today and indicus Analytics to understand
external perceptions Nestle India amongst the section toppers for FMCG
on Best Companies to Work for 2010.
Directors Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act. 1956, the Directors
confirm that
* In the preparation of the annual accounts, the applicable accounting
standards have been followed and no material departures have been made
from the same;
* They have selected such accounting policies and applied them

consistently and made Judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profits for
that period;
* They have taken proper and sufficient care for the maintenance of
adequate accounting records In accordance with the provisions of the
Companies Act 1956 for safeguarding tho assets of the Company and tor
preventing and detecting fraud end other irregularities.
* They have prepared the annual accounts on a going concern basis.
Corporate Governance
In compliance with the requirements of Clause 49 of the Listing
Agreement with the Stock Exchange, a separate report on Corporate
Governance along with Auditors certificate on Its compliance is
attached as Annexure to this Report.
Cautionary Statement
Statements in this Report, particularly those which relate to Management
Discussion and Analysis as explained in the Corporate Governance Report.
describing the Companys objectives, projections, estimates and expectations
may constitute forward looking statements within the meaning of applicable
laws and regulations Actual results might differ materially from those either
expressed or Implied In the statement depending on the circumstances
Directors
Mr Rajendra S Pawar resigned as a Director of the Company with effect
from 22nd April 2010. The Directors wish to place on record their
appreciation for the contributions made by Mr Pawar during his tenure;

Dr. Rakesh Mohan, appointed in the casual vacancy. is currently Professor
in the Practice of international Economics and Finance at the School of
Management and Senior Fellow in the Jeckson Institute for Gobal Affairs at
Yale University He is also Non Resident Senior

Research fellow of

Stanford Centre for international Development, Stanford University He has
been Deputy Governor of the Reserve Bank of India for many years (20052009 and 2002-2004) and held senior positions In the Government of India
Including Secretary, Department of Economic Affairs (2004-2005) as well
as Chief Economic Advisor to the

Government of Ends (2001-2002),

Director General of National Council for Applied Economic Research, and
Chief Executive of Indian Council for Research and international Economic
Rotations Dr Mohan is well known and respected internationally for his
extensive work in the areas

of economic reforms and liberalization.

Industrial economics, urban economics, Infrastructure studies, economic
regulation, monetary policy and the financial sector His experience would
be of Immense benefit to your Company and adds a valuable perspective in
the Board of Director Dr Rakesh Mohan holds office till the Annual General
Meeting and is eligible for re-appointment.
Trade Relations
The Company maintained healthy cordial and harmonious Industrial
relations at all levels Despite severe competition, the enthusiasm and
unstinting efforts of the employees have enabled the Company to remain at
the fore front of the Industry Your Company continued to receive cooperation and unstinted support from the distributors, retailers, stockists,

suppliers and others associated with the Company as Its trading partners
The Directors wish to place on record their appreciation to the same and
your Company will continue in Its endeavor to build end nurture strong
links with trade, based on mutuality. respect and co-operation with each
other and consistent with consumer interest.
Appreciation
Your Company has been able to operate efficiently because of the culture
of professionalism, creativity integrity and continuous improvement in all
functions and areas as well as the efficient utilization of the Company’s
resources for sustainable and profitable growth The Directors wish hereby
to place on record their appreciation of the efficient and loyal services
rendered by each and every employee, without whose whole-hearted efforts,
the overall very satisfactory performance would not have been possible
Your Directors look forward to the future with confidence

CONSUMER PREFERENCE
All marketing starts with the consumer. So consumer is a very
important

person

to

marketer.

Consumer

decides

what

to

purchase, for whom to purchase, why to purchase, from where to
purchase, and how much to purchase. In order to become a
successful marketer, he must know the liking or disliking of the customers.
He must also know the time and the quantity of goods and services,
a consumer may purchase, so that he may store the goods or
provide the services according to the likings of the consumers.
Gone are the days when the concept of market was let the buyer’s
beware or when the market w a s m a i n l y t h e s e l l e r ’ s m a r k e t .
N o w t h e w h o l e c o n c e p t o f c o n s u m e r ’ s s o v e r e i g n t y prevails.
The manufacturers produce and the sellers sell whatever the consumer likes.
In this sense, “consumer is the supreme in the market”. As consumers, we
play a very vital role in the health of the economy local, national
or international.

The

decision

we

make

concerning

our

consumption behavior affect the d e m a n d f o r t h e b a s i c r a w
materials, for the transportation, for the banking, for
t h e production; they effect the employment of workers and
deployment of resources and success of some industries and failures of
others.

Preference
(or "taste") is a concept, used in the social, particularly economics. It
assumes a real or imagined "choice" between alternatives and the
possibility of rank ordering of these alternatives, based unhappiness,
satisfaction, gratification, enjoyment, utility they provide. More generally, it
can be seen as a source of motivation. In cognitive sciences, individual
preferences enable choice of objectives/goals. The study of the consumer
preference not only focuses on how and why consumers make buying
decision,

but

also

focuses

on how

and why

consumers

make choice of the goods they buy and their evaluation of these goods
after use. So for success of any company or product promotion it is
very

necessary

consumer preference.

to

depart

its

concentration

towards

BIBLIOGRAPHY

• NESTLE
• INTERNET
• TEACHER

Character atheics of nestle

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