Dear Members,
Your Directors are pleased to present their report and financial statements for the
fifteen months financial year ended 31st March 2024.
Highlights of the Financial Performance and State of Company's Affairs
(Rs in million)
| Particulars |
Fifteen months financial year ended 31st March 2024 |
Financial year (Twelve months) ended 31st December 2022 |
| Sale of products |
242,754.8 |
167,895.3 |
| Add : Other operating |
1,184.1 |
1,074.3 |
| revenues |
|
|
| Add : Other Income |
1,479.6 |
1,010.0 |
| Total Income |
245,418.5 |
169,979.6 |
| Less : Total Expense |
192,573.5 |
137,419.9 |
| Profit before exceptional items and tax |
52,845.0 |
32,559.7 |
| Exceptional items |
(43.7) |
- |
| Profit before tax |
52,888.7 |
32,559.7 |
| Tax expense |
13,560.3 |
8,654.5 |
| Profit after tax |
39,328.4 |
23,905.2 |
| Add : Other Comprehensive Income |
(429.4) |
1,119.4 |
| Total Comprehensive Income |
38,899.0 |
25,024.6 |
| Opening balance in Retained Earnings |
15,144.3 |
10,694.9 |
| Amount available for appropriation |
62,418.0 |
35,391.6 |
| Interim dividends paid during 2023-24: Rs.167.00 per share (Face Value Rs.10.00) and
Rs.7 per share (Face Value Rs.1.00) |
22,850.6 |
- |
| 2022: Rs.145.00 per share (Face Value Rs.10.00) |
|
13,980.3 |
| Final dividend paid during 2023-24: Rs.75.00 per share (Face Value Rs.10.00) |
7,231.2 |
- |
| 2022: Rs.65.00 per share (Face Value Rs.10.00) |
- |
6,267.0 |
| Closing balance in Retained Earnings |
32,336.2 |
15,144.3 |
| Key ratios: Earnings per share (Rs.) |
40.79 |
24.79 |
| Dividend per share (Rs.) |
|
|
| Interim Dividends: |
|
|
| (Face Value Rs.10.00) (Face Value Rs.1.00) |
167.0 7.0 |
145.0 |
| Proposed - Final Dividend (Face Value Rs.1.00) |
8.50 |
|
| (Face Value Rs.10.00) |
|
75.0 |
| Additional Information: |
|
|
| Profit from operations |
53,417.9 |
33,658.6 |
Change in Financial Year
The Board of Directors had at its meeting held on 27th July 2023, approved the change
in Financial Year of your Company from existing "1st January to 31st December"
cycle to "1st April to 31st March" in order to bring the financial year of your
Company in conformity with the financial year as defined under section 2(41) of the
Companies Act, 2013. Consequently, the financial year of your Company under review
extended upto 31st March 2024 comprised of fifteen months period from 1st January 2023 to
31st March 2024 and subsequent financial years of your Company would begin from 1st April
every year to 31st March of the subsequent year.
Accordingly, the Board's Report together with all its Annexures, Audited Financial
Statements and Auditors' Report have been prepared for the fifteen months period from 1st
January 2023 to 31st March 2024. Therefore, the numbers are not comparable to the previous
financial year which comprised of twelve months.
Dividends
The Board of Directors have recommended a final dividend of Rs.8.50 per equity share of
face value of Rs.1.00 each, amounting to Rs.8,195.3 million for the fifteen months
financial year ended 31st March 2024 for approval of the members at the 65th Annual
General Meeting of your Company ("65th AGM"). For the fifteen months financial
year ended 31st March 2024, first and second interim dividends of Rs.27.00 and Rs.140.00
per equity share of face value of Rs.10.00 each and third interim dividend of Rs.7.00 per
equity share of face value of Rs.1.00 each, paid on and from 8th May 2023, 16th November
2023 and 5th March 2024, respectively.
The three interim dividends paid during the period under review and the final dividend
recommended for the fifteen months financial year ended 31st March 2024 is in accordance
with the Dividend Distribution Policy ("Policy") of your Company. The Policy is
available on the website of your Company at https://www.nestle.in/ investors/policies.
Listing of Shares at National Stock Exchange of India Limited
The equity shares of your Company are listed at BSE Limited ('BSE') and allowed to be
traded at National Stock Exchange of India Limited ('NSE') under the 'Permitted to Trade'
category in Cash market and Futures & Options market segment; and was an integral part
of NSE flagship Index - Nifty 50. During the period under review, your Company has, upon
an application made to NSE, listed the said equity shares on the NSE with effect from 1st
August 2023 under the NSE symbol "NESTLEIND". Your Company has paid the listing
fees for the Financial Year 2023-24 to BSE and NSE.
Listing of equity shares on NSE provided an additional platform to the investing
communityand otherstakeholders at large to access all disclosures/ announcements made by
your Company from time to time.
Sub-Division/ Split of Equity Shares
During the period under review, the Board of Directors of your Company approved, the
sub-division/ split of equity shares of your Company, such that 1 (one) equity share
having face value of Rs.10.00 (Rupees Ten only) each, fully paid-up, was sub-divided into
10 (ten) equity shares having face value of Rs.1.00 (Rupee One only) each, fully paid-up.
Further, the members vide resolution passed by way of postal ballot on 8th December
2023 approved the said sub-division/ split of equity shares and consequential alteration
in the existing Capital Clause of the Memorandum of Association (MOA) of your Company.
After the requisite approvals of the Stock Exchanges i.e. BSE and NSE and the
depositories i.e. NSDL and CDSL, new ISIN (INE239A01024) was allotted to your Company. The
effect of change in face value of the share was reflected on the share price at the Stock
Exchanges where your Company is listed (BSE and NSE) effective from 5th January 2024 i.e.
record date for the purpose of sub-division/ split of equity shares of your Company.
As a result of the sub-division/ split of equity shares of your Company, it has become
more affordable and encouraged participation of investors at large.
Accordingly, the capital structure of your Company post sub-division/ split of equity
shares is as follows:
| Type of Capital |
No. of equity shares |
Face Value (in Rs.) |
Total Share Capital (in Rs.) |
| Authorised Share Capital |
1,000,000,000 |
1 |
1,000,000,000 |
| Issued, Subscribed and Paid-up Share Capital |
964,157,160 |
1 |
964,157,160 |
The details of dematerialization of shares, Demat Suspense Account/ Unclaimed Suspense
Account are provided in the Corporate Governance Report, as annexed to this report.
Slump Sale of Nestle Business Services ('NBS') Division
During the period under review, the Board of Directors of your Company approved the
slump sale of Nestle Business Services ('NBS') Division of your Company to Purina PetCare
India Private Limited (subsequently name changed to Nestle Business Services India Private
Limited and hereafter referred as "NBS Entity"), related party, being a 100%
subsidiary of Nestle S.A., for an aggregate consideration of Rs.798 million. The said
consideration is at an arm's length basis and will be adjusted for net working capital
transferred by your Company as on 30th June 2024. The transaction will be effective from
1st July 2024, subject to customary closing conditions.
NBS Division of your Company was established as Shared Service Centre in India in 2006
to consolidate scalable services and eventually expanded its scope with sharp focus on
efficiencies and automation. As on date, NBS Division predominantly provides captive
services to your Company across four End-to-End Services (Order to Cash, Source to Pay,
Record to Report and Hire to Retire) which helps your Company in driving operational
efficiency, cost optimization, effective decision-making through data analytics, enhancing
customer service, and accelerating automation of various scalable processes across your
Company's value chain (hereinafter "NBS Services"). As per the Business Transfer
Agreement signed between your Company and NBS Entity, after the transfer of NBS Division,
your Company will continue to receive the NBS Services at an arm's length basis.
Proposed Food processing Unit in Odisha
Your Company vide letter dated 13th July 2023 received an in-principle approval from
Industrial Promotion & Investment Corporation of Odisha Limited (IPICOL) for setting
up a food processing unit at Mundaamba, Block - Jankia in the district of Khordha (Odisha)
with an investment of about Rs.894.10 Crore, subject to fulfilment of customary conditions
by your Company. The project implementation is in progress.
Material changes affecting your Company
There have been no material changes and commitments affecting the financial position of
your Company which occurred between the end of the fifteen months financial year ended
31st March 2024 of your Company to which the financial statements related to and date of
this report. There has been no change in the nature of business of your Company.
Amount transferred to Reserves
Your Directors do not propose to transfer any amount to the reserves.
Contribution to the Exchequer
Your Company over the years has been enabling significant contribution to various
taxes.
During the fifteen months financial year ended 31st March 2024, your Company through
its businesses, enabled tax collections at Central and State level close to Rs.64.9
billion, in aggregate.
Exports
During the period under review, your Company's export business delivered good growth.
For further information on exports, kindly refer page no. 15 which forms an integral part
of this Report.
Business Development
The pursuit of new platforms and categories is a key component of your Company's
overall growth strategy and reflects its commitment to anticipate and respond to evolving
market trends and consumer preferences. By leveraging existing competencies and
capabilities and investing in new areas of opportunity, your Company strives to deliver
long-term value to its stakeholders.
During the fifteen months financial year ended 31st March 2024, your Company delivered
double-digit growth with total sales of Rs.242,754.8 million. It witnessed strong growth
momentum across its product groups led by a combination of pricing and mix.
Your Company took several measures to address food inflation, volatile commodity prices
and fluctuating purchasing power by accelerating economies of scale, sharpening
procurement strategies, focusing on cost reduction and enhancing efficiency and speed of
decision-making.
Your Company believes in the power of relevance and focus, as it nurtures its core
brands and thoughtfully introduces select new offerings. Penetration, premiumization and
innovation combined with disciplined resource allocation have been key in driving
business, making your Company one of the fastest growing markets for Nestle globally.
Post the stock split, your Company's shares have become affordable thereby leading to
doubling of the number of shareholders and contributing to the development of strong
retail shareholder base.
The much-awaited NESPRESSO, the pioneer in premium coffee with its range of exclusive
coffees will be launched in India by the end of 2024. The NESPRESSO coffees and machines
will be available in both original and professional systems, for consumers, coffee
aficionados and coffee connoisseurs in India, to unlock new experiences and discover
extraordinary coffees. The first NESPRESSO boutique is intended to be opened in Delhi,
before expanding to other key cities. NESPRESSO will also be sold online through
e-commerce platforms. This launch will bolster Nestle India's premium coffee offerings.
Your Company and Dr. Reddy's Laboratories Ltd. entered into a definitive agreement to
form a joint venture to bring innovative nutraceutical brands to consumers. The
partnership will bring together the well-known global range of nutritional health
solutions as well as vitamins, minerals, herbals and supplements of Nestle Health Science
(NHSc) with the strong and established commercial strengths of Dr. Reddy's in India. The
joint venture company would be formed with Dr. Reddy's holding 51% and your Company
holding 49%. Your Company will have a call option to increase shareholding upto 60% after
six years at a Fair Market Value. Dr. Reddy's shall continue to hold at least 40% of the
shareholding after the Company exercises its call option. The JV Company will be
headquartered in Hyderabad.
Your Company believes that informed consumers are empowered consumers. It has services
such as AskNestle, an online platform that guides people towards balanced consumption.
Through 24X7 consumer service helpline, queries raised by consumers are addressed.
Furthermore, your Company voluntarily includes Guideline Daily Amount (GDA) labelling
on the front of its product packs, that provides consumers with transparent nutrition
information in the context of a reference portion for energy and other key defined
nutrients in relation to their daily needs.
High standard of food safety and quality are non-negotiable. Your Company has a robust
process in place for quality and safety- from procuring raw materials for our products
till its final production. Quality is integral to how we do our business and is a part of
our corporate- business-principles-en.pdf (nestle.com).
Milk Products and Nutrition portfolio
The Milk Products and Nutrition business registered strong growth, despite fluctuations
in commodity prices, which were addressed through cost optimization and value chain
efficiencies. The portfolio contributed to 40.7% of sales. For more details on this
section, refer to page number 18, which forms an integral part of this Report.
Prepared Dishes and Cooking Aids portfolio
The Prepared Dishes and Cooking Aids business displayed strong growth momentum. This
was aided by a balance of product mix, pricing and volume growth and contributed to 30.4%
of sales. For more details on this section, refer to page number 24, which forms an
integral part of this Report.
Confectionary portfolio
Fueled by the launch of new products, increased media exposure, a more extensive
distribution newtork and innovative brand activations, Confectionery was one of the main
drivers of growth for your Company. It contributed to 16.5% of total sales. For more
details on this section, refer to page number 30, which forms an integral part of this
Report.
Powdered and Liquid Beverages portfolio
The Powdered and Liquid Beverages recorded robust performance by staying focused on
recruitment and creating more occasions for coffee consumption and contributed to 12.4% of
sales. For more details on this section, refer to page number 32, which forms an integral
part of this Report.
Nestle Professional - Out-of-Home business
The Out-of-Home business reported strong growth, propelled by portfolio transformation
and premiumization, channel prioritization and new customer acquisition. For more details
on this section, refer to page number 34, which forms an integral part of this Report.
Sales
Your Company continued to strengthen its distribution network, especially in RUrban
markets. This led to your Company achieving its ambitious goal of reaching 200,000
villages. For more details on this section, refer to page number 14, which forms an
integral part of this Report.
Building Robust Digital, Data and IT Capabilities
Your Company continued to strengthen its comprehensive digital infrastructure. This
helped in achieving excellence across functions and businesses. For more details on this
section, refer to page number 36, which forms an integral part of this Report.
People
People form the heart of your Company's business, where a rich confluence of
multi-generational workforce contributes to the growth of the company. An inclusive
environment leverages diverse skills, cultures, ways of thinking and experiences to fuel
innovation. For more details on this section, refer to page number 46, which forms an
integral part of this Report.
Supply chain
Built on the three fundamental pillars of a forwardlooking workforce, digital maturity
and strong partnerships across the value chain, the Supply Chain of your Company continued
to excel. For more details on this section, refer to page number 50, which forms an
integral part of this Report.
Environment Sustainability
Your Company has been progressing steadily on its commitments towards the planet. Its
Sustainability Task Forces have managed to steer operations in a sustainable way. This has
helped your Company to significantly reduce its emissions, water usage, wastewater
generation and energy usage, per ton of production. For more details on this section,
refer to page number 52, which forms an integral part of this Report.
Management Analysis
Despite a challenging global landscape, India's economy stayed resilient. India
solidified its position as the world's fifth-largest economy, showcasing its significant
economic strength and becoming one of the fastest growing major economies.
The Reserve Bank of India (RBI) in its annual report stated that in the face of
headwinds from protracted geopolitical tensions and volatile global financial markets, the
Indian economy exhibited resilience during 2023-24 with real GDP improving to 7.6% from
7.0% in 2022-23. Manufacturing and services sectors were the main contributors to this
growth, while agriculture slowed down due to unfavorable weather conditions. Food and
beverages inflation averaged 7.0% in 202324, higher than 6.7% a year ago. India's exports
showed positive momentum with a value of USD 119.10 billion during the January-March 2024
quarter.
The International Monetary Fund (IMF) highlighted the strength of domestic demand and a
rising working- age population as key factors contributing to India's economic robustness.
The 54th Annual Meeting of the World Economic Forum in January 2024, highlighted that
India's large and young population, often referred to as a "demographic
dividend," can be a tremendous asset for economic growth, when combined with further
investments in upskilling that can lead to increased productivity and innovation.
However, while the overall economy displayed promising signs of growth, consumer
spending particularly in rural areas remained sluggish. Private consumption was supported
by urban demand while the rural sector faced challenges due to the uneven monsoon and
elevated food inflation, resulting in subdued rural income in 2023.
Increased adoption of mobile wallets and internet banking, has made online transactions
for FMCG purchases smoother and more secure. This surge has further fueled e-commerce
growth in the sector, providing wider access to FMCG products.
India has the second-largest online market globally and has one of the cheapest data
rates in the world, making internet more accessible for consumers. India's digital
payments ecosystem continued to witness remarkable growth. The Unified Payments Interface
(UPI) network processed a record-breaking 13.44 billion transactions in March 2024. The
vast online ecosystem offers access to a wider range of products and brands for both urban
and rural consumers. This digitalization fosters inclusivity by bringing more options to a
wider population and potentially enabling more informed and democratized purchase
decisions.
India boasts the third-largest number of unicorns globally. This signifies a thriving
startup ecosystem with immense potential for innovation and economic growth.
Directors Responsibility Statement
The Directors state that:
a) in the preparation of the annual accounts for the fifteen months financial year
ended 31st March 2024, the applicable accounting standards have been followed and no
material departures have been made from the same;
b) 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 your Company as at 31st March 2024 and of the profits of your
Company for that period;
c) they have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 ("the
Act") for safeguarding the assets of your Company and for preventing and detecting
fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by your Company and
that such internal financial controls are adequate and were operating effectively; and
f) they have devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively.
Directors and Key Managerial Personnel
Mr. David Steven McDaniel (DIN: 08662504), designated as an Executive Director -
Finance & Control and CFO of your Company demitted his office with effect from close
of business hours on 28th February 2023 for taking new assignments with Nestle Affiliate.
Your Directors wish to place on record their appreciation for the contribution made by Mr.
McDaniel during his tenure as an Executive Director - Finance & Control and CFO of
your Company.
The Board of Directors had, based on the recommendation of the Nomination and
Remuneration Committee, at their meeting held on 16th February 2023 appointed Ms. Svetlana
Boldina (DIN: 10044338) as an "Executive Director - Finance & Control and
CFO" ('Key Managerial Personnel') effective from 1st March 2023, to hold office for a
term of five consecutive years, which was subsequently approved by the members at the 64th
Annual General Meeting of your Company held on 12th April 2023.
Ms. Svetlana Boldina fulfils the criteria provided in the Nomination and Remuneration
Policy of your Company including her qualification, experience, background, expertise,
proficiency and integrity. Further, in terms of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing
Regulations"), the Audit Committee has approved her appointment as Chief Financial
Officer after assessment of her qualification, experience and background. Your Company has
also received approval of Central Government for the appointment of Ms. Svetlana Boldina,
being a non-resident in India.
Mr. Matthias Christoph Lohner (DIN: 08934420) designated as an Executive Director -
Technical, demitted his office with effect from from close of business hours on 30th June
2023 for taking new assignments with Nestle Affiliate. Your Directors wish to place on
record their appreciation for the contribution made by Mr. Lohner during his tenure as an
Executive Director - Technical.
The Board of Directors had, based on the recommendation of the Nomination and
Remuneration Committee, at their meeting held on 1st June 2023 appointed Mr. Satish
Srinivasan (DIN: 10173407) as an Executive Director - Technical of your Company with
effect from 1st July 2023 for a term of five consecutive years which was subsequently
approved by the members vide resolution passed through Postal Ballot on 5th July 2023. Mr.
Satish Srinivasan fulfils the criteria provided in the Nomination and Remuneration Policy
of your Company including his qualification, experience, background, expertise,
proficiency and integrity. Your Company has also received approval of Central Government
for the appointment of Mr. Satish Srinivasan, being a nonresident in India.
Dr. Swati Ajay Piramal (DIN: 00067125), retired as an Independent Non-Executive
Director of your Company with effect from from 31st March 2024 upon completion of her
second term of five consecutive years. Your Directors wish to place on record their
appreciation for the contribution made by Dr. Piramal during her tenure as an Independent
Non-Executive Director of your Company.
The Board of Directors had, on the recommendation of the Nomination and Remuneration
Committee, at its meeting held on 5th April 2024 appointed Ms. Suneeta Reddy (DIN:
00001873) as an Independent Non-Executive Director of your Company with effect from 5th
April 2024 for a term of five consecutive years, subject to approval of the Members. Your
Company issued Postal Ballot Notice dated 5th April 2024 for the approval of the members
and the e-Voting on the resolution is under process.A
All the Independent Non-Executive Directors of your Company have submitted the
declaration confirming that they meet the criteria of independence as prescribed under the
Act and the Listing Regulations and are not disqualified from continuing as Independent
Non-Executive Directors. The Board is of the opinion that the Independent Non-Executive
Directors of your Company including those appointed during the period under review,
possess requisite qualifications, expertise and experience and they hold highest standards
of integrity. The Independent Non-Executive Directors of your Company have confirmed
compliance of relevant provisions of Rule 6 of the Companies (Appointment and
Qualification of Directors) Rules, 2014. During the period under review, the non-executive
directors of your Company had no pecuniary relationship or transactions with your Company,
other than sitting fees, commission and reimbursement of expenses, if any.
Brief resume, nature of expertise in specific functional areas, disclosure of
relationships between directors inter-se, details of directorship held in other companies,
membership of committees of the Board along with listed entities from which resigned in
the past three years, shareholding in the Company held by the directors proposed to be
appointed/ re-appointed at the 65th AGM, is provided in the Notice of the 65th AGM.
Ms. Svetlana Boldina (DIN: 10044338) Executive Director of your Company, retires by
rotation at the 65th AGM, and being eligible, has offered herself for re-appointment. A
resolution seeking approval of the members for her re-appointment, forms part of the
Notice of the 65th AGM. As per the terms of her appointment as approved by the members,
her re-appointment at the 65th AGM as a director retiring by rotation would not constitute
break in her appointment as a whole-time director, designated as "Executive Director
- Finance & Control and CFO".
Pursuant to the provisions of Section 203 of the Act, Mr. Suresh Narayanan, Chairman
and Managing Director, Ms. Svetlana Boldina, Executive Director - Finance & Control
and CFO and Mr. Pramod Kumar Rai, Company Secretary are the Key Managerial Personnel of
your Company as on 31st March 2024.
The NRC had adopted principles for identification of key managerial personnel, senior
management including the executive directors which are based on "The Nestle
Management and Leadership Principles" and "Nestle Leadership Framework".
Nomination and Remuneration (NR) Policy of your Company includes criteria for determining
qualifications, positive attributes and independence of a director. The NR Policy relating
to the remuneration of directors, key managerial personnel, senior management and other
employees is framed with the object of attracting, retaining and motivating talent which
is required to run your Company successfully. The same is also available on the website of
your Company at https://www.nestle.in/investors/policies.
An annual evaluation has been made by the Board of Directors of its own performance and
that of its Committees and individual Directors and the details of manner of performance
evaluation of Directors, Board and its Committees are available in the Corporate
Governance Report, which forms an integral part of the Annual Report.
The details of familiarization programmes to the Independent Non-Executive Directors
with your Company, their roles, rights, responsibilities in your Company, nature of the
industry in which your Company operates, business model of your Company and related
matters are available on the website of your Company at
https://www.nestle.in/investors/directorsandofficers/ familiarization-programme.
Corporate Social Responsibility
During the period under review, the Corporate Social Responsibility (CSR) Committee was
re-constituted and Ms. Svetlana Boldina, Executive Director - Finance & Control and
CFO was appointed as member of the CSR Committee with effect from 1st March 2023 in place
of Mr. David Steven McDaniel, Executive Director - Finance & Control and CFO, who
ceased to be member of the CSR Committee with effect from the close of business hours on
28th February 2023, when he demitted his office of Whole-time Director for taking up new
assignment with Nestle Affiliate.
As on 31st March 2024, the CSR Committee comprised of Dr. Swati Ajay Piramal as
Chairperson and Mr. Suresh Narayanan, Ms. Svetlana Boldina and Ms. Anjali Bansal, as
members.
Further, Dr. Swati Ajay Piramal, ceased to be Member and Chairperson of the CSR
Committee with effect from the close of business hours on 31st March 2024, upon completion
of her second term of five consecutive years as Independent Non-Executive Director. Ms.
Suneeta Reddy, Independent Non-Executive Director was appointed as a Member and
Chairperson of the CSR Committee with effect from 5th April 2024.
The terms of reference of the CSR Committee are provided in the Corporate Governance
Report. Your Company has also formulated a CSR Policy, which is available on the website
of your Company at https://www.nestle.in/investors/policies. Annual Report on CSR
activities as required under the Companies (Corporate Social Responsibility Policy) Rules,
2014, as amended ("CSR Rules") is annexed as Annexure 2 and forms an
integral part of this Report.
In terms of Section 135 of the Act read with CSR Rules, your Company had during the
fifteen months financial year ended 31st March 2024 spent over two percent of the average
net profits of your Company during the three preceding financial years in accordance with
the CSR Policy and the Annual Action Plan approved by the Board of Directors, from time to
time on the recommendation of the CSR Committee.
Since the Financial Year of your Company under review was extended for a period of
fifteen months (January 2023 to March 2024), while the threshold of two percent was in
relation to average net profits during three immediately preceding financial years, your
Company has incurred CSR expenditure in excess of the budget approved by the Board of
Directors and the threshold prescribed under Section 135 of the Act, accordingly, on the
recommendation of the Corporate Social Responsibility Committee, the Board of Directors of
your Company have approved to carry forward excess CSR amount spent during the fifteen
months financial year ended 31st March 2024 and to set it off against the required CSR
expenditure in the immediately succeeding three financial years subject to requisite
compliances of the Act and rules made thereunder.
In addition to the above, your Company has been implementing societal activities since
many decades under the umbrella of "Creating Shared Value" which have not been
reckoned for arriving at the spends as per CSR Rules. Your Company's CSR activity expands
across nutrition awareness, water and sanitation, rural development and environment.
Details of some of the salient features of the CSR Policy and CSR initiatives like
empowering communities, improving lives through Project Jagriti, empowering youth for a
healthier future through Nestle Healthy Kids Programme, igniting young minds with
experiential learning through Project Jigyasa a part of Nestle Healthy Kids Programme,
building a brighter future in rural Haryana through Project Vriddhi, strengthening street
food safety through Project Serve Safe Food, clean environment with emphasis on waste
management through Project Hilldaari, clean water and sanitation facilities through
Project Clean Drinking Water and other projects on disaster management, are given from
page number 40 to 45 which forms an integral part of this Report.
Business Responsibility and Sustainability Report
Your Company does business that delivers long-term shareholder value and benefits to
the society. Your Company continues to focus on its commitments which are aligned with
national priorities and United Nations Sustainability Development Goals.
Your Company aims to make safe, tasty and sustainable food that is nutritous,
accessible and affordable, minimizing its impact on the resources, contributing to a
future in which they are available for generations to come; boosting the well-being of the
communities and enabling a just transition to regenerative practices; and creating a
positive business environment and empowering your Company's employees to make sustainable
business decisions.
In terms of Regulation 34 of the Listing Regulations read with relevant SEBI Circulars,
new reporting requirements on ESG parameters were prescribed under "Business
Responsibility and Sustainability Report" ('BRSR'). The BRSR seeks disclosure on the
performance of your Company against nine principles of the "National Guidelines on
Responsible Business Conduct" ('NGRBCs').
In terms of Regulation 34 of the Listing Regulations read with relevant SEBI Circulars,
new reporting requirements introduced on BRSR Core, which is a sub-set of BRSR, consisting
a set of Key Performance Indicators (KPIs)/ metrics under nine ESG attributes. New KPIs
have been identified for assurance such as job creation in small towns, open-ness of
business, gross wages paid to women etc. Also, for better global comparability intensity
ratios based on revenue adjusted for Purchasing Power Parity (PPP) have been included.
Further, as per the new reporting requirements, your Company had taken reasonable
assurance of the BRSR Core by a third-party Independent Assurance provider i.e. Grant
Thornton Bharat LLP.
For the period under review, your Company has published the BRSR and Assurance Report
on BRSR Core as per the new reporting requirements and annexed as Annexure 3A and Annexure
3B and forms an integral part of the Annual Report.
Statutory Auditors and Auditors' Report
As per Section 139 of the Act, read with the Companies (Audit and Auditors) Rules,
2014, the members of the Company at their 63rd Annual General Meeting ('AGM') of the
Company held on 12th April 2022, approved the appointment of M/s. S.R. Batliboi & Co.
LLP, Chartered Accountants (ICAI Registration No.: 301003E/E300005) ('M/s. SRB'), as the
Statutory Auditors of the Company for a term of five consecutive years i.e. from the
conclusion of 63rd AGM till the conclusion of 68th AGM.
The Report given by M/s. SRB on the Financial Statements of your Company for the
fifteen months financial year ended 31st March 2024 is part of the Annual Report. The
Notes on the Financial Statements referred to in the Auditor's Report are self-explanatory
and do not call for any comments. The Auditor's Report does not contain any qualification,
reservation, adverse remark or disclaimer. During the fifteen months financial year ended
31st March 2024, the Auditors had not reported any matter under Section 143 (12) of the
Act, therefore, no detail is required to be disclosed under Section 134 (3) (ca) of the
Act.
Cost Auditors and Cost Accounts
Your Company is required to make and maintain cost records for milk powder products as
specified by the Central Government under sub-section (1) of section 148 of the Act.
Accordingly, your Company has been making and maintaining such cost records as per the
requirements.
In terms of Section 148 of the Act read with Companies (Cost Records and Audit) Rules,
2014, the Audit Committee recommended and the Board of Directors appointed M/s. Ramanath
Iyer and Co., Cost Accountants, New Delhi (Registration No. 000019) being eligible, as
Cost Auditors of your Company, to carry out the cost audit of milk powder products
manufactured by the Company falling under the specified Customs Tariff Act Heading 0402 in
relation to the financial year ending 31st March 2025. Your Company has received their
written consent that the appointment is in accordance with the applicable provisions of
the Act and Rules framed thereunder. The Cost Auditors have confirmed they are not
disqualified to be appointed as the Cost Auditors of your Company for the financial year
ending 31st March 2025. The remuneration of Cost Auditors has been approved by the Board
of Directors on the recommendation of the Audit Committee. In terms of the Act and Rules
thereunder requisite resolution for ratification of remuneration of the Cost Auditors by
the members has been set out in the Notice of the 65th AGM of your Company. In the opinion
of the Directors, considering the limited scope of audit, the proposed remuneration
payable to the Cost Auditors would be reasonable and fair and commensurate with the scope
of work carried out by them.
Secretarial Auditors and Secretarial Audit Report
The Secretarial Audit was carried out by M/s. S.N. Ananthasubramanian & Co.,
Company Secretaries (PCS Registration No. 1774) for the fifteen months financial year
ended 31st March 2024. The Report given by the Secretarial Auditors is annexed as Annexure
4 and forms an integral part of this Report. The Secretarial Audit Report is
self-explanatory and does not call for any comments. The Secretarial Audit Report does not
contain any qualification, reservation, adverse remark or disclaimer. During the fifteen
months financial year ended 31st March 2024, the Secretarial Auditors had not reported any
matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed
under Section 134 (3) (ca) of the Act.
In terms of Section 204 of the Act read with the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, on the recommendation of the Audit
Committee the Board of Directors appointed M/s. S.N. Ananthasubramanian & Co., Company
Secretaries (Registration No. 1774) as the Secretarial Auditors of your Company for the
financial year ending 31st March 2025.
Your Company has received their written consent that the appointment is in accordance
with the applicable provisions of the Act and rules framed thereunder. The Secretarial
Auditors have confirmed that they are not disqualified to be appointed as the Secretarial
Auditors of your Company for the financial year ending 31st March 2025.
Secretarial Standards
During the period under review, your Company has complied with applicable Secretarial
Standards i.e. SS-1 and SS-2, relating to "Meetings of the Board of Directors"
and "General Meetings", respectively.
Meetings of the Board
Eleven meetings of the Board of Directors of your Company were held during the period
under review. The particulars of the meetings held and attendance of the Directors in the
meetings are detailed in the Corporate Governance Report, which is annexed as Annexure
1 and forms an integral part of this Report. The certificate issued by Company
Secretary-in-Practice is enclosed with the Corporate Governance Report.
Annual Return
In terms of Section 92(3) of the Act and Rule 12 of the Companies (Management and
Administration) Rules, 2014, the Annual Return of your Company is available on the website
of your Company at the web-link https://www.
nestle.in/investors/stockandfinancials/annualreturns.
Details of Loans, Guarantee and Investments
The particulars of loans, guarantee and investments have been disclosed in Note no. 7,
8 and 11 to the Financial Statements.
Related Party Transactions
Your Company has formulated a policy on materiality of related party transactions and
on dealing with related party transactions ('RPT Policy') including clear thresholds
limits as approved by the Board of Directors. The updated Policy is available on the
website of your Company at https://www.nestle.in/investors/policies. The Board of
Directors of your Company has approved the criteria to grant omnibus approval by the Audit
Committee within the overall framework of the RPT Policy on related party transactions.
All members of the Audit Committee are Independent Non-Executive Directors.
All related party transactions are placed before the Audit Committee for review and
approval. Prior omnibus approval is obtained for related party transactions on a quarterly
basis for transactions which are of a repetitive nature and/or entered in the ordinary
course of business and are at arm's length basis.
All related party transactions entered during the period under review were in ordinary
course of the business and at arm's length basis. In terms of the Act and Rules made
thereunder, no material related party transactions, i.e. transaction with a related party
exceeding rupees one thousand crore or 10% of the annual consolidated turnover, as per the
last Audited
Financial Statements of your Company whichever is lower, were entered during the
fifteen months financial year ended 31st March 2024 by your Company. Accordingly, the
disclosure of related party transactions as required under Section 134(3)(h) of the
Companies Act, 2013 ("the Act"), in Form AOC-2 is not applicable. Members may
refer to Note no. 41 to the Financial Statements which sets out related party disclosures
pursuant to IND AS-24.
In terms of Regulation 23(4) and other applicable provisions of the Listing
Regulations, and as per applicable provisions of the Act, the Board of Directors of your
Company has recommended a proposal to the members of the Company by way of an Ordinary
Resolution through postal ballot for the payment of general licence fees (royalty) by your
Company to Societe des Produits Nestle S.A. ('the Licensor'), being a related party, at
the rate not exceeding 5.25%, net of taxes, of the net sales of the products sold by your
Company as per the terms and conditions of the existing General Licence Agreements
("GLAs"), payable in a staggered manner over the period of five years by making
an increase of 0.15% per annum over the current general license fees (royalty) of 4.5% per
annum effective from 1st July 2024, if approved, notwithstanding that the transaction(s)
involving payments to the Licensor with respect to general licence fees (royalty), during
any Financial Year including any part thereof, is considered material related party
transaction(s) being in excess of the limits specified under Regulation 23(1A) and other
applicable provisions of the Listing Regulations at any time.
Your Company issued Postal Ballot Notice dated 5th April 2024 for the approval of the
members and the e-Voting on resolution is under process. In terms of the Listing
Regulations, no related party will vote on the Ordinary Resolution for payment of general
licence fee (royalty) as set out in the Postal Ballot Notice dated 5th April 2024.AA
During the period under review, there was no subsequent material modification in the
terms and conditions of GLAs, as defined by the Audit Committee and specified in the RPT
Policy.
Risk Management
Your Company has developed and implemented a Risk Management Policy and in the opinion
of the Board of Directors, during the period under review, there were no elements of risk
identified which may threaten the existence of your Company.
The Board of Directors of your Company evaluates the risk management systems
periodically and takes into account any recommendation(s) of the Risk Management and
Sustainability Initiatives Committee and the Audit Committee.
During the period under review, the Risk Management and Sustainability Initiatives
Committee ("RMSIC") was re-constituted and Ms. Svetlana Boldina, Executive
Director - Finance & Control and CFO was appointed as member of the RMSIC effective
from 1st March 2023 in place of Mr. David Steven McDaniel, Executive Director - Finance
& Control and CFO, who ceased to be member of the RMSIC with effect from the close of
business hours on 28th February 2023, after he demitted his office of Whole-time Director
for taking new assignments with Nestle Affiliate.
As on 31st March 2024, the RMSI Committee comprised of Mr. Suresh Narayanan as Chairman
and Dr. Swati A. Piramal, Mr. Prathivadibhayankara Rajagopalan Ramesh, Ms. Anjali Bansal
and Ms. Svetlana Boldina, as members.
Further, Ms. Suneeta Reddy, Independent Non-Executive Director was appointed as a
member of the RMSI Committee with effect from 5th April 2024 in place of Dr. Swati A.
Piramal, who ceased to be member of the RMSI Committee with effect from the close of
business hours on 31st March 2024, upon completion of her second term of five consecutive
years as Independent Non-Executive Director.
The RMSI Committee on timely basis informed the Board of Directors about risk
assessment and minimization procedures. The RMSI Committee has, formulated a detailed Risk
Management Policy, as prescribed under the Listing Regulations.
Scheme of Arrangement
The Board of Directors, at its meeting held on 28th July 2021, had approved the Scheme
of Arrangement between the Company and its members under Section 230 of the Companies Act,
2013 as amended ("the Act") read with other applicable provisions of the Act and
Rules made thereunder ("the Scheme"), which envisaged transfer of the entire
balance of Rs.8,374.3 million standing to the credit of the General Reserves to Retained
Earnings. Your Company had filed an application with Hon'ble National Company Law
Tribunal, Delhi Bench (Hon'ble NCLT) on 22nd March 2022 for the sanction of Scheme. After
requisite formalities, the Hon'ble NCLT, vide its Order dated 15th September 2023, had
sanctioned the Scheme. Certified copy of the Order sanctioning the Scheme was filed with
the Registrar of Companies, Delhi and the Scheme became effective from 19th October 2023.
Accordingly, the entire amount of Rs.8,374.3 million standing to the credit of the General
Reserves of the Company was reclassified and credited to the 'Retained Earnings' of your
Company and constitute accumulated profits of your Company for the previous financial
years, arrived at after providing for depreciation in accordance with the provisions of
the Act and remaining undistributed in the manner provided in the Act and other applicable
laws. Pursuant to the Scheme, the amount so transferred are available for utilization and
payout in accordance with the terms of the Scheme.
The details of the Scheme and other related documents including the Order passed by
Hon'ble NCLT are available on the website of your Company at
https://www.nestle.in/investors/stockandfinancials/ scheme-arrangement.
Complaint filed in Hon'ble National Consumer Dispute Redressal Commission
The Union of India, Department of Consumer Affairs in 2015 had filed a complaint before
the Hon'ble National Consumer Dispute Redressal Commission ("NCDRC") on the
allegation that by selling MAGGI Noodles in the past, your Company had indulged in unfair
trade practice, sold defective and hazardous goods to the public. Complaint sought
compensation of Rs.2,845.5 million and punitive damages of Rs.3554.1 million. Your Company
had challenged the complaint. The NCDRC vide its Order dated 2nd April 2024 had dismissed
the Complaint in favour of your Company.
Internal Financial Controls and their adequacy
The Directors had laid down internal financial controls to be followed by your Company
and such policies and procedures adopted by your Company for ensuring the orderly and
efficient conduct of its business, including adherence to Company's policies, the
safeguarding of its assets, the prevention and detection of frauds and errors, the
accuracy and completeness of the accounting records and the timely preparation of reliable
financial information. The Audit Committee evaluates the internal financial controls
systems periodically.
Audit Committee
As on 31st March 2024, the Audit Committee comprised of Mr. Prathivadibhayankara
Rajagopalan Ramesh as Chairman, Mr. Rajya Vardhan Kanoria and Ms. Alpana Parida as members
of the Committee, all are Independent Non-Executive Directors.
Subsequently, the Board of Directors of your Company at its meeting held on 5th April
2024 appointed Ms. Anjali Bansal as a member of the Audit Committee with effect from 5th
April 2024, and as on the date of the Report, the Audit Committee comprised of Mr.
Prathivadibhayankara Rajagopalan Ramesh as Chairman, Mr. Rajya Vardhan Kanoria, Ms. Alpana
Parida and Ms. Anjali Bansal, as members of the Audit Committee, all Independent
Non-Executive Directors.
Powers and roles of the Audit Committee are included in Corporate Governance Report,
which forms an integral part of the Annual Report. All the recommendations made by the
Audit Committee were accepted by the Board of Directors.
Vigil Mechanism
The Vigil Mechanism of your Company is governed by significant documents "The
Nestle Corporate Business Principles", "The Nestle Management and Leadership
Principles", "Nestle India Code of Business Conduct" and "Nestle India
Vigil Mechanism/Whistle-blower Policy". The documents are available on the website of
your Company at https://www.nestle.in/investors/policies. The Code/ Policy provides for
adequate safeguards against victimization of director(s)/ employee(s) who avail of the
mechanism and also provides for direct access to the Chairman of the Audit Committee in
exceptional cases. It is affirmed that no person has been denied access to the Audit
Committee.
Your Company as part of establishment of Vigil Mechanism provides an independent third
party operated free phone and web-based Platform, namely, "Speak up", to all
internal and external stakeholders including directors and employees with a dedicated
communication channel for reporting potential instances of non-compliance with Nestle
Corporate Business Principles or for reporting, on a confidential basis, any practices or
actions believed to be inappropriate or illegal under the Nestle India Code of Business
Conduct. Details of the link to "Speak up" is available on the website of your
Company at https://www.nestle.com/aboutus/ businessprinciples/report-your-concerns.
Further, your Company has appointed Ombudsman for Infant Code, under which employees
can report Infant Code violations directly to the Ombudsman, with adequate safeguard to
protect the employee reporting.
Your Company sensitizes the availability of the above Vigil Mechanism from time to time
to the directors and employees of your Company.
Information regarding Conservation of Energy, Technology Absorption and Foreign
Exchange Earnings and Outgo
Information required under Section 134(3)(m) of the Act read with Rule 8 of the
Companies (Accounts) Rules, 2014 for the fifteen months financial year ended 31st March
2024, in relation to the conservation of energy; technology absorption; and foreign
exchange earnings and outgo is annexed as Annexure 5 and forms an integral part of
this Report.
Information regarding employees and related disclosures
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1)
of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
('Rules'), is annexed as Annexure 6 and forms an integral part of this Report. As
per second proviso to Section 136(1) of the Act and second proviso of Rule 5 of the Rules,
the Report and Financial Statements are being sent to the members of the Company excluding
the statement of particulars of employees under Rule 5(2) of the Rules. Any member
interested in obtaining a copy of the said statement may write to the Company Secretary at
the Registered Office of your Company or at the email address investor@in.nestle.com.
As per the requirement of The Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 ("POSH"), as amended, your Company has a
robust mechanism in place to redress complaints reported under it. Your Company has
complied with provisions relating to the constitution of Internal Committee under POSH.
The Internal Committee (IC) comprises of internal members and external member who has an
extensive experience in the field. In the fifteen months financial year ended 31st March
2024, six cases of sexual harassment were reported, which were investigated and resolved
as per the provisions of the POSH. Your Company has in place a policy on prevention,
prohibition and redressal of Sexual Harassment at workplace and the same is available on
the website of your Company at https://www.nestle.in/investors/policies.
During the period under review, initiatives were undertaken to demonstrate your
Company's zero tolerance philosophy against discrimination and sexual harassment, which
included creation of comprehensive and easy to understand training and communication
material which are also made easily accessible. In addition, online workshops were also
run for the employees to enhance awareness and knowledge of other biases that may
influence thinking and actions by running the unconscious bias session.
Statement of Investor Education and Protection Fund
Pursuant to the provisions of Section 124 of the Act, Investor Education and Protection
Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF
Rules") read with the relevant circulars and amendments thereto, the amount of
dividend remaining unpaid or unclaimed for a period of seven years from the due date is
required to be transferred to the Investor Education and Protection Fund
("IEPF"), constituted by the Central Government. In terms of the IEPF Rules,
during the period under review, your Company had transferred Rs.28,17,440.00,
Rs.51,42,452.00, Rs.21,89,148.00 and Rs.29,69,872.00 to the IEPF, being the unpaid and
unclaimed dividend amount pertaining to Second Interim Dividend 2015, Final Dividend 2015
& First Interim Dividend 2016, Second Interim Dividend 2016 and Third Interim Dividend
2016, respectively.
Pursuant to the provisions of IEPF Rules, all shares in respect of which any dividend
which has not been paid or claimed for seven consecutive years shall be transferred by the
Company to the designated Demat Account of the IEPF Authority ('IEPF Account') within a
period of thirty days of such shares becoming due to be transferred to the IEPF Account.
Accordingly, your Company had transferred 23,781 equity shares of face value of Rs.10.00
each and 24,480 equity shares of face value of Rs.1.00 each, on which the dividend(s)
remained unpaid or unclaimed for seven consecutive years, to the demat account of IEPF
Authority, after following the prescribed procedure.
Credit Rating
Your Company has been awarded AAA credit rating for its bank credit facilities by
CRISIL. It is the highest rating and indicates a stable outlook for your Company. The
rating reflects that your Company has serviced its financial obligations on time. As
regards the short-term facility provided by the bank, your Company has been awarded the
credit rating of A1+. The rating reflects strong degree of safety and lowest credit risk.
General
During the period under review, there were no transaction requiring disclosure or
reporting in respect of matters relating to: (a) deposits covered under Chapter V of the
Act; (b) issue of equity shares with differential rights as to dividend, voting or
otherwise; (c) issue of shares (including sweat equity shares) to employees of the Company
under any scheme; (d) raising of funds through preferential allotment or qualified
institutions placement; (e) significant or material order passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company's operations in
future; (f) pendency of any proceeding under the Insolvency and Bankruptcy Code, 2016; and
(g) instance of one-time settlement with any bank or financial institution.
As on the date of this Report, your Company did not have any subsidiary or joint
venture or associate Company.
Trade Relations
Your Company maintained healthy, cordial and harmonious industrial relations at all
levels. Despite severe competition, the enthusiasm and the unstinting efforts of the
employees have enabled your Company to remain at the forefront of the industry.
Your Company continued to receive co-operation and support from the distributors,
retailers, stockist, suppliers and others associated with your Company as its trading and
value chain partners. Your Directors wish to place on record their appreciation for the
same and your Company will continue in its endeavour to build and nurture strong links
with trade, based on mutuality, fairness, 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 of its operations as well as the efficient utilization of your Company's resources
for sustainable and profitable growth.
Your Directors hereby wish 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 satisfactory performance would not have been possible. Your Directors look
forward to the long-term future with confidence.
| On behalf of the Board of Directors |
|
| Date: 25th April 2024 |
Suresh Narayanan |
| Place Gurugram |
Chairman and Managing Director |
|