NESTLE

BUSINESS PRINCIPLES Since Henri Nestl developed the first milk food for infants in 1867, and saved the life of a neighbors child, the Nestl Company has aimed to build a business based on sound human values and principles. While Nestl Corporate Business Principles will continue to evolve and adapt to a changing world, basic foundation is unchanged from the time of the origins of Company, and reflects the basic ideas of fairness, honesty, and a general concern for people. Nestl is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices: Nestl's business objective is to manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners. Nestl does not favor short-term profit at the expense of successful long-term business development. Nestl recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust, and that without its consumers

the Company would not exist. Nestl believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to ensure that the highest standards are met throughout the organization. Nestl is conscious of the fact that the success of a corporation is a reflection of the professionalism, conduct and the responsible attitude of its management and employees. Therefore recruitment of the right people and ongoing training and development are crucial. Nestl continues to maintain its commitment to follow and respect all applicable local laws in each of its markets

HISTORY 1866 -1905 </All_About/History/1866_1905/1866-1905.htm> In the 1860s Henri Nestl, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mother's milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestl's new formula saved the child's life, and soon, Farine Lacte Henri Nestl was being sold in much of Europe.

1905-1918 </All_About/History/1905_1918/1905-1918.htm> In 1905 Nestl merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestl's production had more than doubled.

1918 -1938 </All_About/History/1918_1938/1918-1938.htm> After the war Government contracts dried up and consumers switched back to fresh milk. However, Nestl's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestl's first

expansion into new products, with chocolate the Company's second most important activity

1938 -1944 </All_About/History/1938_1944/1938-1944.htm> Nestl felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the Company's newest product, Nescaf, which was a staple drink of the US military. Nestl's production and sales rose in the wartime economy.

1944 -1975 </All_About/History/1944_1975/1944-1975.htm> The end of World War II was the beginning of a dynamic phase for Nestl. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in 1960, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in L'Oral in 1974.

1975 -1981 </All_About/History/1975_1981/1975-1981.htm> Nestl's growth in the developing world partially offset a slowdown in the Company's traditional markets. Nestl made its second venture outside the food industry by acquiring Alcon Laboratories Inc..

1981 -1996 </All_About/History/1981_1995/1981+-+1995.htm> Nestl divested a number of businesses1980 / 1984. In 1984, Nestl's improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation.

CONSUMER SERVICES Nestl is committed to offer high-quality food products that are safe, tasty and affordable. The Nestl Seal of Guarantee is a symbol of this commitment. Nestl also believe in maintaining regular contact with our consumers. This applies both to how company present their products and to how they address consumers' questions and concerns. When Henri Nestl prepared his first boxes of infant formula for sale, he put his address on the packages so people would know where to go if they had questions. Today, Nestl's Consumer Relationship Panel with the words "Talk to Nestl" expresses the same commitment. This is why Nestl have a worldwide Consumer Services network devoted to caring for their consumers. Nestl people have expertise in a wide range of areas such as nutrition, food science, food safety and culinary expertise. They provide the prompt, efficient and high quality service that consumers expect from Nestl. In addition, company teach them how to talk with consumers and above all, to listen. Listening helps us to understand what people want. Nestl uses the insights gained from relationships with consumers to drive product development. Nestl, care for consumers because success depends on meeting customer needs and expectations. Through listening and understanding, we can make

products that they will want to use all through their lives.

Brands Quality and nutritional value are the essential ingredients in all of brands. Millions of people prefer Nestl products every day, happy with the addition to their wellness that they bring. Baby Foods The production of infant food goes right back to the origins of the Nestl Company. Henri Nestl's 'Farine Lacte' was the first product to bear the Nestl name.In 1867 a physician persuaded Henri Nestl to give his product to an infant who was very ill he had been born prematurely and was refusing his mother's milk and all other types of nourishment. Nestl's new food worked, and the boy survived. From the very beginning, Nestl's product was never intended as a competitor for mother's milk. In 1869, he wrote: "During the first months, the mother's milk will always be the most natural nutrient, and every mother able to do so should herself suckle her children." The factors that made baby foods success in the early days of the Nestl company quality and superior nutritional value are still as valid today for the wide range of infant formula, cereals and baby food made by Nestl. The World Health Organization (WHO) recognizes that there is a legitimate

market for infant formula, when a mother cannot or chooses not to breast feed her child. Nestl markets infant formula according to the principles and aims of the WHO International Code of Marketing Breast Milk Substitutes, and seeks dialogue and cooperation with the international health community and in particular with the WHO and UNICEF, to identify problems and their solution. Nestl's expertise as the world's leading infant food manufacturer, gained over more than 125 years, is put at the disposal of health authorities, the medical profession and mothers and children everywhere.

PRODUCT INFORMATION IN BRIEF:CERELAC :-Infant Cereal NAN H.A.2 :-It is a nutritionally complete, hypoallergenic follow on

formula for feeding infants from 6 months onwards as the liquid part of the infants diet during and after weaning, in addition to other foods

NESTARGEL(Thickener for foods and liquids):-Nestargel is a natural thickening agent made of vegetable origin.It is used in the dietary management of infant or adult vomiting, and is also used for the thickening of foods and beverages for culinary purposes, without greatly affecting the nutrient balance or energy intake.Nestargel is made from Carob seed flour, Calcium and also contains poly-saccharides. Dairy Products Nestl has long been a major player in the dairy industry, originally with well known shelf stable brands such as Nido, Nespray, La Lechera and Carnation, then building a strong international presence in Chilled dairy and Ice cream under the Nestl brand. Innovation and renovation play a major role in the development of milk based products as well as of breakfast cereals, managed as a joint venture with General Mills.

The area of Nutrition, with its benefits to health and wellbeing, is having a significant impact on the development of our business. A wide range of proven, science based solutions such as starter and follow-up formulas, growing-up milks, cereals, enteral diets, oral supplements and performance foods are actively developed and successfully brought to market under the Nestl brand.

Breakfast Cereals Although cereals have been with mankind in one form or another for millennia, it was not until the mid 19th century that scientific research, technological innovation, and the influence of a group of American health reformers, gave rise to the crunchy foodstuff we know today as breakfast cereal. Nestl has a joint venture with General Mills outside North America, Cereal Partners Worldwide, which is active in more than 80 countries. The joint venture began in 1990, and its rapid growth has been characterized by strong branding and lately the launching of breakfast cereal brands into the fast-growing cereal bar market. Prepared Foods Convenience foods packaged soups, frozen meals, prepared sauces and flavorings date back more than a century. With the Industrial Revolution

came factory jobs for women and less time to prepare meals. The problem was so widespread that it became the object of intense study in 1882 by the Swiss Public Welfare Society, which offered a series of recommendations, including an increase in the consumption of vegetables. The Society commissioned Julius Maggi, a miller with a reputation as an inventive and capable businessman, to create a vegetable food product that would be quick to prepare and easy to digest. The results two instant pea soups and an instant bean soup helped launch one of the best known brands in the history of the food industry. By the turn of the century, Maggi & Company was producing not only powdered soups, but bouillon cubes, sauces and flavorings. Maggi merged with Nestl in 1947. Buitoni, the authentic Italian brand, which has been producing pasta and sauces in Italy since 1827, became part of the Nestl Group in 1988. nestle india

CERELAC Cerelac is a highly nutritious, easily digested instant cereal. Suitable as a complimentary food for infants from 6 months onwards when breastmilk or formula alone can no longer meet the baby's growing nutritional requirements. Cerelac is NOT TO BE USED AS A BREASTMILK SUBSTITUTE .The Cerelac range is intended for spoon feeding only and only one or two meals should be given a day (unless otherwise advised by a doctor or health care professional). Cerelac is available in seven varieties which include: Cerelac Rice Cerelac Wheat Cerelac Wheat -apple Cerelac Wheat - banana Cerelac Wheat - honey Cerelac Wheat - 3- fruits Cerelac Wheat - 4 - Vegetables

Further information is available below: INFANT FORMULAS Infant formulas are the best alternative to breast milk during the first year of your baby's life. With help from your GP, Midwife or Health Visitor, you will be able to select a formula that will meet your baby's specific nutritional needs.Infant formulas are designed to meet the nutritional needs of growing infants where mothers are unable or choose not to breastfeed. When your baby is 6 months old, you may wish to substitute your breast milk with an infant formula.

Remember: Breastfeed for as long as possible as it has advantages for both

you and your baby. The purpose of alternative feeding is to provide your baby with a safe and satisfactory infant formula in situations where you are unable to or choose not to breastfeed.

Infant formulas are designed to meet the nutritional needs of growing infants, especially in the first year of life. If you have any concerns then speak to your midwife or GP.

LACTOGEN Lactogen is manufactured by the Nestle Company, the Swiss firm founded by pharmacist Henri Nestle, inventor of the first fully artificial infant milk formula, "Farine Lactee." Farine Lactee, a malt- and cow milk-based product, was first introduced in the 1860s. It and other commercial pediatric formulas of the time attempted to reproduce the nutritional formula found in breast milk.

Companies continued to try to create synthetics that more closely replicated human milk. Gerstenberger and Ruh introduced SMA (Synthetic Milk Adapted) in 1919; Nestle introduced Lactogen, and Franklin Foods, Similac, soon after. These new products gained the trust of the medical establishment, and the 1950s saw a sharp increase in infant formula use within the United States. Use of infant formula peaked within the 1970s, when approximately 75 percent of American newborns received formula instead of being breastfed. The reasons for this increase include successful marketing campaigns, including the provision of free products; mid-century consumer confidence in "scientific products"; the acceptance of infant formula's nutritional value by nurses and pediatricians; and the increase of women in the workforce.

The use of infant formulas has decreased greatly in recent years; today only three out of ten newborns in the United States are given formula. This change is primarily due to more recent medical studies determining that while babies can thrive on formula, breast milk is superior, especially in that it strengthens the immune system. Nestle and other commercial infant food manufacturers have come under worldwide censure for the aggressive marketing of formulas within third-world countries.

NESTLE INDIA Nestle India With an employee-strength of over 3000 and turnover of US$ 497 million in 2003, Nestle India is one of the leading companies in the FMCG space in India. The company is acknowledged amongst Indias Most Respected Companies and amongst the Top Wealth Creators of India.

SUCCESS STORIES During the first half 2004, the company registered a total income of US$ 257.8 million and net profit of US$ 23.73 million. Nestl India is a 61.85 per cent subsidiary of Nestle S.A. Switzerland and was incorporated as a limited company in 1959. It produces a wide range of products including beverages, prepared dishes and cooking aids, milk

products and nutrition, chocolate and confectionery. Milk products and nutrition account for around 45 per cent of Nestl Indias total revenues. The companys beverage products generate 22 per cent of the companys total revenues, while prepared dishes and cooking aids generate 18 per cent, and chocolate and confectionery 15 per cent. Major player in processed foods Nestl India has over the years built strong brands like MAGGI, NESCAFE, CERELAC, LACTOGEN, KITKAT and POLO. Nestle is major player in many segments of the FMCG sector such as noodles and sauces [MAGGI], instant coffee [NESCAFE] and weaning foods. Nestle products are sold throughout India and are also exported to Russia, Hungary, Japan, USA and several other countries. These include certain international products like Nescafe and Lactogen, as well as select culinary products to meet the demand of the ethnic Indian population living abroad. For three years in succession [from 1999-2000 to 2001]

FORTUNE 500 COMPANIES IN INDIA 2002 Nestle India was recognized with the top Exporter Award for export of Instant Coffee, and for

export of all coffees to Russia and CIS Countries Factors for success The culture of innovation and renovation, continuous improvement and the thrust on value-for-money and affordability have helped the company to focus on adding value for the consumer. The company has continuously focused on operational efficiency; improving product availability and visibility and initiated efforts to make its products more relevant to the consumers. This has been supported by the distribution of smaller stock-keeping units (SKUs). There has been continuous focus on the seven value drivers, namely: Sales growth Profit margin Working capital intensity Fixed capital intensity Income tax rate Cost of capital Value growth duration

Promotion strategy for market expansion The following are some of the strategies used by Nestle for market expansion: Availability of NESCAFE enhanced through an expansion of the vending machine network. New consumption opportunities for chocolates and confectionery were identified and developed in areas like railway platforms, college canteens and major events. Nestle set up Caf Nescafe and Coffee Corners across metros and minimetros. Thrust on supply chain During the past few years, Nestle India has continuously focused on improving the supply chain to reduce wastage, improve efficiencies and provide consumers with fresh stocks all the time. Reduction in the finished goods inventory pipeline to improve freshness of stocks and reduce working capital Control on distribution costs through innovative measures Sustained improvement in customer service levels to improve product availability across all geographies and channels

 Reduction in obsolescence of materials

Future plans Nestl Indias objective is to manufacture and market the companys products in such a way so as to create value that can be sustained over the long term for consumers, shareholders, employees and business partners. Nestle aims to create value for consumers that can be sustained over the long term by offering a wide variety of high quality, safe food products at affordable prices. The company continuously focuses its efforts to better understand the changing lifestyles of modern India and anticipate consumer needs in order to provide convenience, taste, nutrition and wellness through its product offerings.