Nestlé India Limited

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Owen Mosley
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1 Nestlé India Limited Nestle India Limited Financial Analysts Meet Financial Analysts Meet -

2 Agenda Introduction & Overview Martial Rolland Financials Shobinder Duggal Chocolates & Confectionery Stewart Dryburgh Business Questions & answers ALL

3 This presentation may contain statements reflecting Management s current views and estimates, that may be construed as forward looking statements. Actual results might differ materially from those either expressed or implied in the statements, depending on the circumstances. Responses can only be given to questions, which are not price sensitive.

4 INTRODUCTION & OVERVIEW

5 Few key and recent environmental changes

6 A period of greater wealth creation.. 50,000 40,000 INR Billion Overview of India s GDP Past Future % , ,000 10,000 22,499 24,773 27,758 31,198 33, GDP at current prices Real GDP growth 6RXUFH(,85%,)RUHFDVW

7 reflected in greater optimism 12,500 10,000 Performance of Sensex 9,398 12,043 7,500 5,000 3,972 3,457 3,262 3,245 3,377 3,607 5,839 4,795 6,603 7,194 2,645 points increase from Dec 05 to Apr 06! 2,500 0 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 A pr-06 Sensex CAGR -7.8 % % %

8 however with its share of issues USD Crude Oil prices Monthly average rates per barrel Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Mar-06 6RXUFH'RZ-RQHV &RPSDQ\

9 and challenges. 40,000 35,000 30,000 Numbers Increasing FMCG clutter 87% 33,878 25,000 20,000 15,000 10,000 5,000-18,083 58% 82% 8,381 2,218 5,320 1,222 FMCG Companies Brands Skus RXUFH$&1LHOVHQ

10 So there are challenges but overall environment seems positive and there are strong opportunities for our Company

11 Directionally we will Maintain our strategic focus towards leadership in Nutrition, Health and Wellness. Leverage our strong brands and drive harder our superior research-based concept/product delivery. Leverage our new organisational structure Leverage our greater consumer and customer intimacy Drive few but big innovations Work towards improving further availability Maintain focus on cost efficiency and effectiveness Move with greater speed.

12 Over to SHD Over to SHD

13 FINANCIALS

14 Continued focus on the 7 value drivers VALUE DRIVERS 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

15 SALES GROWTH

16 Sales Evolution 30. ) 25 io B R20 N (I s15 le a S10 s ro G 5 0 Third Party Sales Affiliated Exports RIG ) (% I G R (RIG in relation to 3 rd Party sales basis international accounting standards)

17 Sales Evolution (contd.) Third Party Sales Affiliated Exports RIG. ) io B R (IN s a le S s ro G ) (% IG R Q1-05 Q1-06 (RIG in relation to 3 rd Party sales basis international accounting standards)

18 Sales Decomposition Sales Growth: +5.8% +12.4% Selling prices = 3.1% Selling prices = 2.1% RIG = 9.3 % RIG = 3.7 % Q1 05 Q1 06 (Basis international accounting standards)

19 Channel-wise Sales Volume (Tons) Q1 (Mio) Q Var% Var% Domestic 53,337 48, ,703 5, Exports 3,440 4, Total 56,777 53, ,210 6,554 Gross Sales including excise duty

20 A Balanced Portfolio INR Mio. 7,210 6,554 Contribution Contribution 3, % 2, % 1, % 1, % 1, % 1, % 1, % 1, % Q1 06 Q1 05 Choc./Conf. Prep. Dishes & Cooking Aids Beverages Milks/Nutrition Gross Sales including excise duty

21 Sales by Product Categories Brand Volume (Tons) Q1 (INR Mio.) Q Var % Var % Milk Products & 26,004 25, ,193 2, Nutrition Beverages 5,525 6, ,472 1, Prepared Dishes & Cooking Aids Chocolate & Confectionary 16,917 14, ,320 1, ,332 6, ,226 1, Total 56,777 53, ,210 6,554 Gross Sales including excise duty

22 OPERATING MARGINS

23 Evolution of Operating Margins 6.0 INR Bio ) (% e g ta n e rc e P EBITDA EBITDA as % of Gross Sales EBITA as % of Gross Sales

24 Evolution of Operating Margins (contd.) INR Bio Q1 05 Q1 06 EBITDA EBITDA as % of Gross Sales EBITA as % of Gross Sales ) (% e g ta n e rc e P

25 Total Expenditure INR Mio. Description Q1 06 % Net Sales Q1 05 % Net Sales Var. % Tot. Expenses 5, , of which Materials 3, , Staff Cost Advt + sales Promotion Distribution Power & Fuel

26 Evolution Milk Solid Prices 125 ) 120 d e x e d n115 I ( G K r 110 e P. s R Current Q 1 Q2 Q3 Q4 Period

27 Evolution - Milk Fat Prices Indexed Price per kg Q1 Q2 Q3 Q4

28 Evolution Green Coffee Prices 180 Current ) d e x e d140 n I ( G K r 120 e p s R Q 1 Q2 Q3 Q4 Period

29 Evolution - HVF Prices ) d e x e110 d n I ( 105 G K r e 102 P100. s 100 R Current Q 1 Q2 Q3 Q4 Period

30 Evolution - Sugar Prices ) d e x140 e d n I 130 ( G K120 r e p 110 s R Current Q 1 Q2 Q3 Q4 Period

31 Evolution Wheat Flour Prices Current 126 ) d e120 x e d n115 I ( G K110 r e p s 105 R Q 1 Q2 Q3 Q4 Period

32 NET PROFIT MARGIN

33 Evolution of Net Profit Margins INR Bio. Amount % of Gross Sales Percentage (%)

34 Evolution of Net Profit Margins (contd.) INR Bio. Amount % of Gross Sales Percentage (%) Q1 05 Q1 06 9

35 WORKING CAPITAL INTENSITY

36 Operating Working Capital Trade receivables Inventories Less: Trade Payables # Net capital tied up As % of Gross Sales 31-Mar ,163 1,806 1, % 31-Mar ,589 1,820 1, % INR Mio Basis International Accounting Standards # Excludes any exceptional payable, if any

37 Rotation of Operating Working Capital Times Adjusted Basis International Accounting Standards & average of two period ends

38 Rotation of Operating Working Capital Times Q1 05 Q1 06 Basis International Accounting Standards & average of two period ends

39 FIXED CAPITAL INTENSITY

40 Investment in Tangible Fixed Assets INR mio. % of Gross Sales Q1 06 Dep

41 Rotation of Tangible Fixed Assets Times Basis International Accounting Standards & average of two period ends

42 Rotation of Tangible Fixed Assets Times Q1 05 Q1 06 Basis International Accounting Standards & average of two period ends

43 INCOME TAX RATE

44 Evolution of Tax (as % of pre-tax profit) Marginal Rate Effective Rate

45 Evolution of Tax (as % of pre-tax profit) Q1 05 Q1 06 Marginal Rate Effective Rate

46 COST OF CAPITAL

47 Evolution of WACC - % WACC Risk Free Bond Rate Basis International Accounting Standards

48 Evolution of WACC - % WACC Risk Free Bond Rate Q1 05 Q1 06

49 VALUE GROWTH DURATION

50 Value Growth Duration Nutrition,Health,Wellness for all ages Innovation and Renovation Availability Effective & Efficient Operations Consumer Communications People Structure GLOBE

51 QUESTIONS Thank You

Nestlé India Limited. 14 th Financial Analysts Meet. Gurgaon, 5 th August 2008

Nestlé India Limited. 14 th Financial Analysts Meet. Gurgaon, 5 th August 2008 Nestlé India Limited 14 th Financial Analysts Meet Gurgaon, 5 th August 2008 Agenda Opening Remarks Martial Rolland Key Financials Shobinder Duggal Questions & Answers All Disclaimer This presentation