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

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Lesley Sharp
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1 Nestlé India Limited 14 th Financial Analysts Meet Gurgaon, 5 th August 2008

2 Agenda Opening Remarks Martial Rolland Key Financials Shobinder Duggal Questions & Answers All

3 Disclaimer This presentation may contain statements which reflect Management s current views and estimates and could be construed as forward looking statements. The future involves certain risks and uncertainties that could cause actual results to differ materially from the current views being expressed. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. Responses can only be given to questions, which are not price sensitive.

4 INR 21.3 Bio 1 st Half snap shot 22.6% 18.8% 26.0% INR 4.0 Bio INR 2.3 Bio INR 4.3 Bio Volumes % % & Prices + 60bp % INR 17.0 Bio 17.7% 22.4% INR 3.1 Bio 18.2% INR 1.8 Bio 2007 Net Sales RIG OG EBIT Economic Profit All calculations are based on non-rounded figures Includes Figures from Nestlé Internal Reporting Standards

5 Sustaining inclusive growth INR Bio NET SALES Q1 Q2 Q3 Q4 % QoQ growth EBIT INR Bio Market Cap & EPS Employees & Productivity Market Cap. (INR Bio.) EPS/Share No of Employees 6,000 5,000 4,000 3,000 5,069 4, Sales/Employee INR Mio

6 The BOP Opportunity % <1 08 PCI (USD) 5,504 Global India 11.5 Mio Seeking & Striving India 105 Mio % <4 20 PCI (USD) 7,560 Global India 45 Mio Seeking & Striving India 240 Mio 26 1,101 Aspiring India 314 Mio 42 1,510 Aspiring India 517 Mio Deprived India 701 Mio Deprived India 425 Mio Population 1132 Mio 375 Mio < 1 $/day & 750 Mio < 2 $/day Population 1227 Mio 500 Mio < 2 $/day 6

7 BOP Consumers & PPP Products Price Points & affordability is key!

8 PPP is a growth driver CONSUMERS highly driven by Value for Money. More than 40% of FMCG market at prices upto INR 10 SEGMENT was always important Sharpened FOCUS

9 Growth through PPP PPP 03 PPP 07 Volumes ( 000 MT) / SKUs (Nos.) 24/ / 50 NPS (INR Bio) NPS CAGR % 20 Price Point 16% 100% Product Category 7% 10% % INR % 17% Milk Products & Nutrition 66% 1 Beverages % NPS PPP share % 4% Chocolate & Confectionery Prepared dishes & cooking aids 17% 9

10 Conclusion Managing a PPP business demands a creative mindset which challenges traditional thinking and re-defines paradigms. 10

11 SALES GROWTH (1)

12 Sales Evolution Sales INR Bio Real Internal Growth (%) Organic Growth (%) Sales in INR bio (%) RIG &OG H1 07 H1 08 Basis Nestlé Internal Reporting Standards 0

13 Channel View Net Sales (000 Tons) (INR Bio) H1 08 H1 07 Var% H1 08 H1 07 Var% Domestic Exports (2.1) Total Contribution (%) Domestic Exports (1.2) (1.5) All calculations are based on non-rounded figures

14 Product Portfolio % Share H1 08 H1 07 Milk Products and Nutrition Beverages Prepared Dishes and Cooking Aids Chocolate and Confectionery

15 Product Groups 40 X = 17.8 Prepared Dishes & Cooking Aids Milk Products & Nutrition 4.9 Organic Growth (%) Total Company Chocolate & Confectionery X = Beverages Volume Growth (%) Bubble shows Net Sales (INR Bio)

16 Innovation & Renovation Milk Products & Nutrition Sales Volume (000 tons) Sales (INR Bio) Market Position (Value) % H1 07 H % H1 07 H1 08 No. 1 in Baby Foods & Infant Formula No. 1 in Dairy Whitener. Strong presence in Sweetened Condensed Milk Good presence in Fresh Dairy Contribution 46.3%

17 Innovation & Renovation Prepared Dishes & Cooking Aids Sales Volume (000 tons) Sales (INR Bio) Market Position (Value) % H1 07 H % H1 07 H1 08 No. 1 in instant Noodles and Ketchups No. 2 in Healthy Soups Contribution 23.1%

18 Beverages Innovation & Renovation Sales Volume (000 tons) % Sales (INR Bio) 9.7% 3.5 Market Position (Value) No. 1 in Instant Coffee Very strong presence in Vending Presence in Brown Beverages 11 H1 07 H H1 07 H1 08 Contribution 16.6%

19 Innovation & Renovation Chocolate & Confectionery Sales Volumes (000 tons) % H1 07 H1 08 Sales (INR Bio) % H1 07 H1 08 Contribution 14.0% Market Position (Value) No. 1 in Wafers and White Chocolates. No. 2 overall in Chocolate category No. 2 in Eclairs (No. 1 in volumes)

20 Export Sales Mix H South Asia Russia Europe Asia / Oceania-Others Africa America Beverages Prepared Dishes & Cooking Aids Milk Products & Nutrition Chocolates & Confectionery

21 PROFIT MARGINS (2)

22 Evolution of Operating Margins INR Bio % of Net Sales H1 07 H1 08 EBITD-INR.Bio EBIT-INR.Bio EBITD % EBIT %

23 Managing Costs INR Mio. Description H % of Sales H % of Sales Var. Expenses above EBIT-of which 17, , Materials 10, , Staff Cost 1, , Depreciation Advt + Sales Promotion Distribution Power & Fuel Figures have been regrouped / reclassified to make them comparable.

24 INR Bio. Evolution of Net Profit Margins % of Net sales H1 07 H Amount % of Net Sales

25 WORKING CAPITAL INTENSITY (3)

26 Trade Net Working Capital (TNWC) 30 th Jun 2008 INR Mio 30 th Jun 2007 Receivables from Customers Inventories 5,161 4,409 Less: Trade Payables * 2,594 1,998 TNWC 3,298 3,040 As % of Sales (12 rolling months ) * Excludes payables for taxes, Staff Costs, Capex, provisions for contingencies etc. Basis Nestle Internal Reporting Standards and including affiliated customers and vendors

27 Operating Cash Flows INR Mio H1 08 H1 07 Operating Cash Flows # 1, As % of Sales # excluding exceptional inflows Basis Nestle Internal Reporting Standards

28 FIXED CAPITAL INTENSITY (4)

29 Investment in Fixed Assets INR mio % of Net sales ,522 1, H1 07 H Amount % of Net sales Depreciation Excludes Intangibles

30 Times 7.5 Rotation of Average Tangible Fixed Assets H1 07 H1 08 Basis Nestlé Internal Reporting Standards

31 INCOME TAX RATE (5)

32 Income Tax INR Bio % Tax rate Excludes FBT H1 07 H1 08 Tax Expense Marginal Tax Rate Effective Tax Rate 27.0

33 COST OF CAPITAL (6)

34 Cost of Capital 12.0 Adjusted Cost of Capital (ACC) Risk Free Rate H1 07 H1 08 Basis Nestlé Internal Reporting Standards

35 VALUE GROWTH DURATION (7)

36 Creating Economic Value (%) INR Bio H1 07 H1 08 Economic Profit INR Bio Economic Profitability (%) 50 Basis Nestle Internal Reporting Standards

37 Shareholders Wealth INR / Share 45 % H1 07 H1 08 DPS EPS DPS % ROE % 0 Dividend (INR Bio)

38 THANK YOU

39 Commodity Costs - Ongoing Challenge Oils Indexed cost increase % H Reference point - Jan-Jun 2007 prices -1.6 H Green Coffee Milk Solids Wheat Flour Sugar

Nestlé India Limited 20th Financial Analysts Meet - Gurgaon 30th November 2011

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