Nestle India Ltd Directors Report.

Dear Members,

Your Directors are pleased to present their report and financial statements for the year ended 31st December, 2019.

(Rs. in Million)

Particulars 2019 2018
Sale of products 122,952.7 112,162.3
Add : Other operating revenues 736.3 760.4
Add : Other Income 2,468.8 2,589.2
Total Income 126,157.8 115,511.9
Less : Total Expense 99,407.9 91,222.4
Profit before tax 26,749.9 24,289.5
Less: Tax expense 7,054.4 8,220.2
Profit after tax 19,695.5 16,069.3
Add : Other Comprehensive Income (1,547.7) (404.1)
Total Comprehensive Income 18,147.8 15,665.2
Opening balance in Retained Earnings 27,688.1 25,054.5
Amount available for appropriation 45,870.2 40,821.8
Interim dividends
2019: Rs. 101.00 per share 9,738.0
2018: Rs.90.00 per share 8,677.4
Special interim dividend paid out of accumulated profits of previous years (surplus in the profit & loss account)
2019: Rs. 180.00 per share 17,354.8
2018: Nil
Final dividends
2018: Rs. 25.00 per share 2,410.4
2017: Rs. 23.00 per share 2,217.6
Less: Dividend distribution tax 6,059.4 2,238.7
Closing balance in Retained Earnings 10,307.6 27,688.1
Key ratios:
Earnings per share (Rs.) 204.28 166.67
Dividend per share (Rs.)
Interim 281.0* 90.0
Proposed - Final 61.0 25.0
Additional Information:
Profit from operations 25,862.5 23,508.6

* includes special interim dividend of Rs. 180/- per equity share of Rs. 10/- each paid out of accumulated profits of previous years (surplus in the profit & loss account)

Total Sales and Domestic Sales for the year increased by 9.6% and 10.9% respectively. Domestic Sales growth is broad based largely driven by volume and product mix.

Export Sales

Other Income has decreased due to lower average liquidities post payment of special interim dividend on 23rd August, 2019.

Tax Expense (including revaluation of deferred tax assets & liabilities) from 1st April, 2019 to 31st December, 2019 has been computed at the rates introduced by the Taxation Laws (Amendment) Ordinance, 2019 dated 20th September, 2019. Accordingly, Net Profit after Tax and Earnings per share for the year have been positively influenced by the lower tax rates.

Your Company has created a contingency provision of Rs. 1,163.4 million (Previous year Rs. 1,242.5 million) for various contingencies resulting mainly from matters, which are under litigation/related disputes and other uncertainties requiring management judgement. Your Company has also reversed, utilised/settled contingency provision of Rs. 914.6 million (Previous year Rs. 205.6 million) due to the satisfactory settlement of certain litigations and settlement of obligations under free replacement warranty for which provision is no longer required.


The Board of Directors have recommended a final dividend of Rs. 61.00 per equity share amounting to Rs. 5,881.4 million for the year 2019. The total dividend for 2019 aggregates to Rs. 342.00 per equity share which includes first interim dividend of Rs. 23.00 per equity share paid on 15th May, 2019; second interim dividend of Rs. 23.00 per equity share for 2019 out of current year profits and a special interim dividend of Rs. 180/- per equity share out of accumulated profits of previous years (surplus in the profit & loss account) both paid together on 23rd August, 2019; and the third interim dividend Rs. 55.00 per equity share paid on 20th December, 2019.

The dividend recommendation is in accordance with the Dividend Distribution Policy of the Company which is annexed and forms part of the Annual Report and the same is available on the Companys website and can be accessed at

Material changes affecting the Company

There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report. There has been no change in the nature of business of the Company.

Amount Transfer to Reserves

Your Directors do not propose to transfer any amount to the reserves.


In 2019, the exports of your Company to South Asia (Nepal, Bhutan, Bangladesh and Sri Lanka) registered a double-digit growth primarily driven by categories such as, Milk Products, Instant Coffee, Instant Noodles and Infant Nutrition. Your Companys brand continued to have a high level of trust. United Kingdom registered high double-digit growth. Total exports, however, de-grew by 9.9% as a result of lower coffee exports to Turkey in 2019. The balance portfolio continued to grow because of a well-diversified mix of export markets. With the focus on range extension and channel proliferation, brand MAGGI continued to grow amongst the Indian diaspora. United States and Canada remained the biggest destination for culinary exports. Your Company is striving to enhance distribution in key markets and explore new territories. The Instant Tea exports registered another year of credible growth on the back of strong demand for its premium grades in the markets of East Asia. Your Companys endeavor in exploring new markets has delivered good results in the confectionery category with exports to Malaysia and Thailand in 2019.

Contribution to the Exchequer

Your Company over the years has been enabling significant contribution to various taxes. During the year 2019, the Company through its business, enabled tax collections at Central and State level close to Rs. 35.8 billion, in aggregate.

Business Development

In 2019, your Company steadfastly continued its nutrition, health and wellness journey through strong volume and mix-led growth and strengthened its commitment towards a sustainable future, through its brands, its factories, its employees and its partners by taking collective action.

Your Company stayed in its path of growth, by investing in cutting-edge science and innovation and taking decisive steps towards renovation. It has attractive product portfolio and in 2019, your Company launched several new products. By driving greater agility and rapidly adapting to the changing preferences of consumers, your Company brought meaningful differentiation, by improving taste, convenience and nutritional qualities of its products, that saw an increase in consumer trust.

This commitment for innovation was also seen in the way your Company does business. Through the cluster-based approach, that is powered by data and technology, your Company made deeper penetration into newer markets, unleashed growth potential and created a transparent planning process. This has led to an increased engagement with the consumers. In 2019, your Company was leading with strong market shares in 7 out of the 8 categories. Your Company continued to strengthen its business focus through Nestle Business Excellence, by simplifying processes that reduces administrative cost by increasing the penetration of its shared services.

Your Company further leveraged e-commerce, through targeted communication, range selling, consumer base sampling, which led to a growing contribution of e-commerce to domestic sales.

In 2019, your Company has continued to focus on its traditional trade and modern trade, to further strengthen its strategic priorities and build a more agile network of product delivery to its consumers.

Improving the nutritional profile of products is at the very heart of your Companys business and is linked to United Nations Sustainable Development Goal, 3. In line with its Purpose, your Company continued to work towards reducing sodium, sugars and saturated fats and adding healthful ingredients like whole grain, vegetables and micro-nutrients to its foods and beverages making them more nutritious. The total micro-nutrient fortified servings sold in 2019 in India is equivalent to 6.7 billion serves, across several product lines.

Your Company launched, a website that provides real-time and personalized advice on nutrition that can be customized for the audience. It aims to make nutrition education more accessible, so that parents can inculcate better food practices and make informed decisions about food choices and nutrition. With AskNestle, parents can access a Growth Tracker that enables them to track how their children are growing. The service also offers Custom Meal Plans personalized for regional preferences and generates a daily nutrition score.

As a recognized leader in sustainability, your Company has taken several steps towards protecting the environment and addressing climate change. By driving new behavior and expanding waste management programs, specifically in the hill states of India, your Company, played an instrumental role in shaping a waste free future. In 2019, MAGGI noodles, NESCAFE and KITKAT became plastic neutral, by managing an equivalent or higher amount of plastic waste, than that generated through the consumption of the brands. Committed to manage resources sustainably; your Company reduced its energy use by 49%, carbon emissions by 58%, water use by 54% and water waste by 59% from 2004 to 2019. Your Company continued to contribute to local communities and build enduring relationships with about 4,600 suppliers, 1,700 distributors, 100,000 dairy farmers, 3,500 coffee farmers and over 1,200 spice farmers.

With traceability, food safety and sustainability at its core and staying true to its Purpose and Values, your Company reinforced its commitment to the consumer, community and the planet, by creating value for all its stakeholders and establishing that business benefits and societal impact are mutually inclusive. Your Company, by incorporating sustainability into every aspect of its business, has reaffirmed its commitment as business as a force for good.

Innovating and Renovating Prepared Dishes and Cooking Aids

The Prepared Dishes and Cooking Aids business continued its strong performances across MAGGI range of products. MAGGI Noodles, in the instant noodles category further strengthened its leadership position in 2019, through a strong double-digit volume growth. A disciplined regional intervention consisting of media, on-ground activation led to penetration growth and distribution ramp-up. MAGGI Noodles continued its focus on innovating and renovating its portfolio with the launch of MAGGI Nutrilicious Atta Noodles made with a blend of 20 spices and herbs.

Your Company also launched MAGGI Fusian Noodles, a range of Asian flavours inspired MAGGI Noodles, available in flavours such as Bangkok Sweet Chilli, Hong Kong Spicy Garlic, Singaporean Tangy Pepper.

MAGGI expanded its offering in the ready-to-eat segment with the launch of MAGGI Upnna and MAGGI Poha, providing convenience and taste to its consumers, especially millennials.

The cooking aids received encouraging consumer response for MAGGI Masala-ae-Magic Seasonings with integrated media campaign, where consumers were encouraged to engage with the brand and experience the product. The simple, natural ingredients inspire the consumers to cook delicious, balanced meals. Reflecting your Companys core purpose, the product, helps provide affordable nutrition for the whole family. Your Companys Sauces business too expanded its portfolio to cater to the increasing level of experimentation in accompaniment through the launch of Chilli Garlic Sauce under MAGGI Fusian range.

MAGGI also launched a website, that positioned the brand as an ally in everyday cooking under the platform MAGGI Consumer Connections, engaging closely with the brand and delivering on variety, convenience and balance to the food.

Building Breakfast Cereals

Your Companys breakfast H9RH cereals business under the NESPLUS brand retailed a range of nutritious options to the Indian consumer. Each of these products are made with four grains: wheat, rice, oats and the traditional Indian millet, jowar.

The variants include - Koko, Choco - Burst Fillows, Strawberry-Burst Fillows and Nutty Honey Granola as well as cereal bars. The products grew in modern trade and e-commerce, saw tremendous on-ground activation, with plans underway for innovation, renovation and new launches.

Strengthening of Milk Products and Nutrition Portfolio

The Milk Products and Nutrition business focuses on nurturing a healthier generation, enabling a healthier future, through scientific and nutritional expertise for individuals and families at all stages of life.

The Milk Product and Nutrition business delivered strong results despite external challenges linked to commodity price inflation. Your Company was able to mitigate some of these challenges, amongst others, by a relentless focus on identifying efficiencies across the value chain, passing on price increases where necessary, as well as innovation in the portfolio.

Your Company expanded its presence in the Health Food Drinks category by bringing to India the worlds number 1 cocoa malt beverage MILO. Launched in powder form in select markets, MILO has gained positive response from consumers and retailers. Your Company also introduced Nestle a+ Banglar Mishti Doi inspired by the regional delicacy of West Bengal.

Your Company continued to inspire enthusiasts to try their hand at baking desserts by offering recipe options with their trusted.

In its Healthcare Nutrition Business, marketed under the umbrella of Nestle Health Science, your Company consolidated its portfolio and delivered growth. This growth was driven by brand RESOURCE High Protein and RESOURCE Diabetic. Specialised nutrition brand PEPTAMEN in the critical care segment also enabled an increase in market share. Your Company also made an entry in Weight Management Category with the launch of OPTIFAST, a first of its kind scientifically designed meal replacement diet for people with weight concerns. This is an example of benefits from the continuous access to, amongst other things, research and development.

Your Company believes breast milk provides the best nutrition for babies, and every child should be exclusively breastfed for six months, followed by introduction of age appropriate complementary feeding and breast milk until two years and beyond.

In the Infant Formula category, your Company re-launched LACTOGEN 1 with L. reuteri (probiotics). In the specialized formula segment, Pre-NAN was relaunched with DHA (Docosahexaenoic Acid) and ARA (Arachidonic Acid) and for the first time manufactured in the Samalkha manufacturing factory of the Company.

In the Baby Foods Category, and in keeping with our line with the consumer trend towards traditional millets becoming the modern super grains, your Company has launched the first ever Ragi variant under the brand CERELAC. In line with the growing Organic food trend your Company launched a range of Organic Cereals under the CERELAC and CEREGROW brands. Since two years, your Company has been providing support to farms where organic practices are in place. The products are made from 100 percent organic ingredients and have the India Organic and Jaivik Bharat certification. The CEREGROW Branded organic cereals launch was supported with communication positioned on CEREGROW ka Poshan, Organic ki Tasalli.

Growing Coffee and Beverages Portfolio

Year 2019 was an exciting year for the Coffee and Beverages business as your Company continued to focus on growing Coffee and Beverages market.

NESCAFE led the journey of bringing in new consumers into coffee category through several initiatives and activations. This resulted in robust brand growth through the year that was reflected in strong gains in category household penetration for NESCAFE and in its market share. NESCAFE Classic continued its journey of building strong connections with consumers. The campaign "Badal Life ki Raftaar" was leveraged to continue building relevance for coffee amongst the youth. On-ground, activations such as sampling and college festivals enabled the brand to connect with youth in a relevant and experiential manner.

NESCAFE SUNRISE moved ahead in its journey of driving a differentiated brand in the core coffee market in the southern part of India.

Ml NESCAFE continued its, premiumisation journey with ESCAFE Gold and NESCAFE E, a smartphone-connected Tj M coffee-making mug, which is compatible with products from the NESCAFE portfolio, by reaching out to consumers seeking premium products across the country through stores as well as e-commerce.

To provide a delightful cafe-like coffee experience, your Company renovated NESCAFE Cappuccino range with an indulgent frothy recipe and a premium look.

NESCAFE also launched several packs to leverage the e-commerce channel. These packs included trendy merchandise like NESCAFE branded portable travel flask, foamer, the iconic red mug, a special cold coffee mason jar to elevate the coffee experience of the consumers and build relevance for coffee. The brand entered new spaces of gifting during the festival of Rakshabandhan with the "NESCAFE Coolest Cold Coffee Kit" and during Diwali with the "NESCAFE Ultimate Coffee Kit" and the "NESCAFE Gold Coffee Connoisseurs Kit".

The strong consumer acceptance and category transformation impact of NESCAFE Ready-to-Drink cold coffee and milk beverage was recognised when it was awarded the Breakthrough Innovations Awards for India in the Emerging Play category by Nielsen, a global retail measurement and data analytics company.

Further building on brand NESTEA, your Company launched NESTEA Ready-to-Drink Iced Tea in tetra-pack format in Peach and Lemon flavours.

More offerings in the Chocolate and Confectionery Portfolio

The Chocolates and Confectionery business delivered double digit growth and market share gains in 2019. This was aided by a combination of rapid acceleration on the premium segment and Hr continued momentum in the core mainstream segment with increase

The focus on innovation continued HEal with multiple category first launches across key brands. KITKAT accelerated its premiumisation journey with the launch of the most indulgent variant KITKAT DESSERT DELIGHT Rich chocolate fudge. This will enable the brand to tap new opportunities in the gifting and sharing space.

By leveraging your Companys access to global research and r development MUNCH set another innovation benchmark in the coated wafer category with the launch of MUNCH CRISP-POP. MUNCH CRISP-POP combines the exciting taste of caramel popcorn with the crunch of MUNCH. MILKYBAR MOOSHA Cocoa Crispies builds on to the familiar creamy taste of MILKYBAR with added crispy cocoa crispies giving a unique combination of creamy and crispy.

Your Company continued its focus on portionability with packs/formats that helped consumers make informed choices. Most of the products per serve provide approximately under 100kcal of energy. The light treat wafer segment witnessed fastest growth in the portfolio.

With continued investments in visi-coolers and distribution infrastructure, your Company increased its distribution reach in both urban and rural markets improving access of its brands to consumers.

Nestle Professional -Out-of-Home business continued to grow steadily in 2019 with a near double digit growth. This growth was driven by improved performance of products across key Out of Home channels such as educational institutes, airlines, offices as well as the food service channels such as hotels and restaurants.

Significant steps were taken by the beverages business to premiumise the portfolio through the launch of advanced and versatile beverage solutions offering widest range of beverage menu in the industry based on NESCAFE GOLD. The launch of new NESCAFE Office corner, with premium hot and cold beverages at affordable prices, was recognized as a unique proposition in the industry.

Your Companys Out of Home business extended its foods portfolio by launching new products in the Ready to eat and Food Solutions segment. With the launch of MAGGI Poha and MAGGI Upma, in an

on the go format, your Company added Indian snacking options for the consumers targeting the transport and education channel.

New products like MAGGI Liquid Seasoning and MAGGI PROFESSIONAL Thai Curry Pastes (100% Vegetarian Red & Green Curry Pastes) were also launched as food solutions to strengthen presence in the Pan-Asian Restaurant segment. Your Company also engaged with 200+ budding chefs from various reputed hotel management institutions through events like Young Culinary Talent, Chef Master Classes and culinary contests. Your Company strengthened engagement with 3000+ key opinion leaders. Your Company under the umbrella of ONE (One Nestle Experience) made a new beginning with the setting up of NESCAFE & MAGGI kiosks in various channels. Your Company, through a franchise business model operates in approximately 476 Kiosks that are visited by over 14.4 million consumers every year.

To address the issue of plastic waste, your Company has introduced wooden forks, kotka paper cups and paper bowls at the kiosks.

Awards and Recognitions

Your Company received awards at various industry platforms in the area of corporate management, marketing, advertising, digital engagement, packaging, human resource development and corporate social responsibility. Some awards are listed below:

• Mr. Suresh Narayanan recognized as the Best CEO in the FMCG category by Business Today.

• Nestle India won "Best Overall Excellence in CSR" at the National CSR Leadership Awards 2019.

• Three awards won at Nielsen Breakthrough Innovation Awards for NESCAFE Ready-to-Drink (Emerging Play), MAGGI Masalas of India and KIT KAT Strawberry Duo (both Short Term Play).

• NESCAFE bagged Effie, silver for its campaign Badal Life Ki Raftar.

• AskNestle/NINA won Gold for Most Innovative Mobile Campaign of the year at MOBEXX Awards 2019.

• RESOURCE High Protein, won The Global Emerald Award, from the Nestle Health Science Global Recognition Program.

• Nestle Health Science won Nutrition and

Wellness Awards 2019 by CIMS Medical

• MAGGI won at the 3rd edition of The Advertising Clubs MARQUEES Awards 2019 in the FMCG (Foods) category.

• Nestle India Supply Chain won Leadership Awards 2019 during 13th ELSC Leadership Conclave in the category of "Customer Intimacy & Service Excellence" Company of the Year.

• NESCAFE E won Gold at The Great Lifestyle Brands Awards.

• Pantnagar Factory, Ponda Factory and NQAC Lab in the Moga Factory of the Company were awarded by Confederation of Indian Industries for Excellence in Food Safety and Food Testing.

• Moga Factory of the Company was awarded The Golden Peacock National Quality Awards held at Dubai (UAE).

• Moga Factory of the Company received "Golden Peacock Occupational Health & Safety Award" for the year 2019.

• Samalkha Factory of the Company won the first prize in the 6th CII Safety competition 2019 for the Northern region.

• Ponda Factory of the Company won the "Gomant Suraksha Puraskar" Award.

• Tahliwal Factory of the Company won Gold Award in the 6th National Awards for Manufacturing Competitiveness.

Employee Focus

In order to build a sustainable profitable business, your Company invested in programmes equipped to adopt new skills that can adapt to the fast-changing market place.

Your Company also took significant steps in the area of diversity and inclusivity.

Your Company was recognized as one of the top three FMCG Companies in business schools. Your Company also launched SustaiNE, a first of its kind innovation challenge to encourage ideas on sustainable packaging solutions for a better tomorrow.

In 2019, your Company made successful lateral hires and strengthened its position as an Equal Opportunity Employer. Your Company also saw a strong representation of women both as managers and in the field force.

In 2019 Women force constituted 22% of the total field force, 78% of the management trainees, 54% of the technical trainees, 75% of the sales trainees.

In keeping with its commitment to diversity and inclusivity, your Company organized Unconscious Bias programs for employees, created provision of sanitary pad dispenser and disposal units in all factories and sales offices and organised sessions on menstrual health in factories. Your Company enhanced travel benefits for mothers and instituted creche reimbursement policy all of which contributed towards the creation of an inclusive environment that led to an increase in representation of women employees.


Your Company has strengthened its urban distribution and services to channel partners for all its brands and SKUs. To drive visibility and efficiency, your Company focused on high quality channel-level service requirements and ensured market coverage to meet the needs of retailers and partners. In house subject matter experts were trained with global expertise to strengthen the field sales force. Festivals provided business opportunities to engage directly with shoppers and consumers through activation at stores.

The Indian rural market created opportunities for robust route to market model. The project Unlocking rural market helped in building rural footprint by reaching the customers directly, the usage of various point of sale material improved the visibility at retail outlets. Participation in local Haat activities helped in engaging rural consumers, through customized plans. The urban and rural push on direct distribution enabled your Company in its promise of continuous excellence.

E-Commerce channels were leveraged for high impact product launches, category building for premium brands through targeted media and communications.

Your Company promised the customer product freshness on the shelves by ensuring quality in value chain. The entire route to market from distribution center to distributor warehouse to retailer shelf was monitored and quality in service was improved.

Your Company used technology for efficient and effective operations. It helped in building the sales enablers like productivity, SKU per call. The geo tagging of retailer and geo compact salesman market coverage plan, helped reducing the waste in route to market.

Management Analysis

Review of economic scenario and outlook

India has gained substantially in the World Banks Ease of Doing Business rankings by moving up from the 142nd position in 2014 to the 63rd position in 2019, thereby progressing on seven out of the ten parameter. This is despite the fact that in 2019, private consumption, private investments and exports slowed down. Rural wages, tightening of lending conditions and rising unemployment contributed to low demand for goods and services. Exports also remained volatile as a result of global uncertainties around trade and investments and geopolitical issues. Credit to micro, small and medium enterprises was affected. Uncertainty on employment impacted consumer, investor and corporate confidence.

The fall in domestic demand and low international crude oil kept the current account deficit under control and FDI picked up for a few quarters as India remained an attractive investment destination.

In response to the slowdown, the Government made policy announcements to boost supply and demand and the investment climate.

Additionally, the Reserve Bank of India cut its benchmark rates by 0.85% to stimulate private investment. The government reduced corporate tax rates. Steps were taken towards bank consolidation, to add robustness to the banking system and improve flow of credit to private sector.

These included liberalization of FDI norms for select sectors, rollback of surcharge on foreign portfolio investors, incentives to support several industries, bank consolidation to increase capital inflows and reinvigorate private investments and hiring for boosting the economy.

Opportunities and Risks

With multiple product offerings and brands, your Company operates in a dynamic environment, where the food and beverages industry is transforming rapidly.

With the consumer at the core, it is your Companys effort to meet the changing preferences of the diverse consumers. There is greater demand for healthier products that are locally inspired. The emerging millennial consumer is not only technology savvy, but is more discerning, especially with respect to health and wellness. Our endeavor is to spot trends, market products suiting consumer needs and to communicate with them regularly through a media platform of their choice. Your Company has been actively introducing new products, with a focused social media and digital marketing approach. The Companys access to global research and development and expertise is invaluable in these endeavors.

With increasing internet penetration and tech savvy consumer, embedding technology in the organizational processes is important. With sales automation and specialised digital acceleration, your Company has taken significant steps to provide solutions for its diverse consumer base. "AskNestle" is one such app-based initiative for child nutrition needs.

Your Company is impacted by the constant fluctuations in commodity and fuel prices. It is your Companys endeavor to source the right material, that is of high quality and constantly keep track of emerging costs to take corrective action at the right time.

Economic slowdown impacts consumer demand. However, your Company has managed to show steady growth by deploying strategies suited for the times, thus bucking the trend.

Building brand community through innovative marketing strategies are adopted to reach consumers who also have similar social and cultural preferences. Changing consumer behavior poses a constant challenge and proactive steps are being taken to maintain brand loyalty and market share. Your Company has strong focus on consumer safety and health and has robust supply chain management to ensure proper handing, storage and transportation, ensuring traceability along the chain as well as ensuring the freshest stocks reach the consumer in the best conditions.

The technological advancement and IOT (Internet of things) has changed the supply chain process completely in todays world. This is a boon for the FMCG space since it helps to prevent situations wherein stocks at retailer are exhausting or a new product needs to be made available immediately. Your Company ensures process optimization at its core operations improving growth prospects, removing bottlenecks and ultimately enhancing bottom line of the Company.

Your Company takes climate change and environmental protection seriously. As mentioned in other sections of the Boards Report, your Company has undertaken considerable work on conserving resources like energy, water, and ensured minimized impact on the environment. With depleting natural resources due to increased consumption, safeguarding the environment is necessary. Climate change is one of the biggest threats we face as a society and is also one of the greatest risks to the future of business. To address this issue, your Company is transforming its business to reduce Green House Gases emissions, end deforestation, reduce food loss and waste and improve soil health. Your Company is continuously reducing waste and emissions while simultaneously optimizing on the production measures.

Your Company also maintains a BCP (Business Continuity Planning) process to prevent and to recover from any future potential threat or disaster to ensure smooth functioning of the business. Proper drills and advance planning is undertaken with inputs from all the key stakeholders associated with it.

Quality and Safety

Quality and Food Safety are highest priority for your Company. The health of consumers is of paramount importance. To ensure this, your Company has systems and processes in place that ensures all products undergo stringent quality checks. In line with zero defect mindset, during 2019, a special focus was given towards upstream raw material vendors for products such as wheat flour, tomato and chilly paste and sugar, as well as at your Companys factories ensuring right quality and compliant product.

Your Company developed a comprehensive and systematic programme on machinery safety for the benefit of the employees to prevent any untoward incident. All the offices and factories of your Company are certified under Safety and Health Management System that complies with ISO 45001:2018 & Environment Management System that complies with ISO 14001:2015.

Your Company has also taken considerable measures to promote road safety by conducting awareness campaigns for the employees as well as third party transport service drivers. Taking a holistic approach towards employee wellness, your Company introduced several health initiatives for its employees such as early screening and programs that support healthier lifestyle choices and also provide health risk assessment.


The aim of your Company is to develop business while improving its environmental performance in order to create a more sustainable future. In order to achieve this, your Company continues to focus on measures for the conservation and optimal utilization of energy in all the areas of its operations. Factories are encouraged to consistently improve operational efficiencies, minimize consumption of natural resources and reduce water usage, energy usage and carbon emissions while maximizing production volumes. From the period, 2004-2019, for every tonne of production, your Company has reduced the usage of energy by around 49%, reduced water usage by around 54%, reduced greenhouse gases generation by around 58% and the generation of waste water by around 59%.

Waste for Disposal: Your Company is continuously working towards reduction in waste for disposal.In 2019, two more factories converted to zero waste to landfill. Now all eight factories have proudly achieved the coveted status of "zero waste to landfill."

Reduction in Green House Gases emissions:

The Nanjangud Factory in the State of Karnataka has entered into long term power purchase agreements with two solar power developers to supply 24.7 Mio KWH (units) per annum, which is 71% of the total energy requirement. This initiative has reduced Green House Gases emissions by 22,500 tonnes per annum in 2019 and also saved costs.

Packaging and Plastic waste management:

Plastics play a key role in preventing food wastage teifci and ensuring the quality and safety of food products.

However, the leakage of plastic waste into the environment has become a significant environment !* jM challenge. Your Company is tvlmr m strongly committed to minimizing the impact that plastic has on the environment and ensuring right disposal or reuse of packaging. Your Company is determined to look at every option to solve complex packaging challenges by embracing multiple solutions. The vision of your Company is that none of its product packaging, including plastics, should end up in landfill or as litter and that 100% of packaging is reusable or recyclable by 2025.

Collaboration and collective action are key for transforming how packaging is managed today. Recognizing this, your Company is working with various stakeholders and partners to shape a waste-free future. Your Company is one of the founder members of the Industry Consortium WECARE (Waste Efficient Collection and Recycling Efforts) that is represented by environmentally conscious businesses. Your Company has also fulfilled its Extended Producers Responsibility (EPR) towards responsibly managing the post-consumer plastic waste generated by the products. In 2019, your Company extended its EPR projects to 20 states and union territories, such as Goa, Gujarat, Madhya Pradesh, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttarakhand, West Bengal, Maharashtra, Andhra Pradesh, Delhi, Kerala, Orissa, Assam, Bihar, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka and Punjab. It responsibly managed 15,979 MT of post-consumer plastic waste for its end of life.

Your Company launched, Plastic Express a mobile van, that collects dry plastic waste from MAGGI Points in Mussoorie and dry waste for its end of life. The year-long project aims at engaging around 200 MAGGI Points in the hill town for collecting and disposing plastic waste responsibly.

In order to bring about a behavioural change to dispose plastic waste responsibly, your Company introduced an integrated communications campaign titled 2 Minute Safaai Ke Naam (2 minutes for cleanliness) in 2018, that was extended in 2019 to the Kumbh Mela. This campaign brought together multiple stakeholders to address the issue of proper plastic waste disposal and also provided consumers with samplings in an used MAGGI Cup, that were given in exchange for empty MAGGI Cuppa Noodles pack.

Achieving waste segregation at source is key to establish sustainable waste management HiUdaari systems. Your Company has initiated a project titled "HILLDAARI" in Mussoorie, Dalhousie, and Nainital that aims at empowering waste workers and also focuses on working collectively with local stakeholders like urban local bodies, institutions, residents, households, waste generators, and waste workers to raise awareness about anti-littering and segregation at source.

Supply Chain

Your Company in 2019 intensified its commitment towards customer and consumer centrality, operational efficiencies, waste reduction and delivery of fresh products.

By embracing digital transformation in operations, your Company has adopted various forms of digital tools, such as consumer app to drive engagement with partners leading to speed of response to customers and transparency of information in the value chain processes and making product delivery simpler and faster.

In 2019, your Company has introduced web based mobile App that monitors and provides real time data on product availability and freshness from retail outlets that are geo-mapped to the network.

Nestle Business Excellence

Your Company continued to strengthen its business through Nestle Business Excellence to simplify and standardize processes to drive efficiency and provide high quality services in an integrated and seamless manner. In 2019, your Company, by using technology and data further eased processes and added speed to how it does business. Your Company invested in its people to enhance their capabilities. A new Centre of Competence was setup to support end-to-end activities for Order to Cash - from customer order to invoice payment, Source to Pay - from sourcing materials and services to paying vendors, Record to Report - from recording transactions to financial and performance reporting, Hire to Retire - from attracting talent to enabling employees on their Nestle journey.

The initiative of Nestle Continuous Excellence (NCE) enabled successful transitions through people: alignment, leadership development and Lean ways of working. Technology, data and systems were key enablers within each end-to-end activity to deliver speed and quality of execution. Your Company is constantly working towards transforming end-to-end processes and leveraging technology to simplify operations and enhance its capabilities to retain the competitive edge.

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 Responsibility Statement

The Directors state that:

a) in the preparation of the annual accounts for the year ended 31st December, 2019, 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 the Company as at 31st December, 2019 and of the profits of the 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 Act for safeguarding the assets of the 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 the 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

Pursuant to the Retirement Policy of the Non-Executive Directors of the Company, Mr. Ashok Kumar Mahindra, Independent Non-Executive Director of the Company had retired with effect from 31st March, 2019. The Directors wish to place on record their appreciation for the contribution made by Mr. Mahindra for over a decade as a distinguished Independent Non-Executive Director of the Company. During the year, Ms. Roopa Kudva was appointed, as an independent director of the Company for five consecutive years with effect from 164 January, 2019 until 31st December, 2023 and Mr. Rajya Vardhan Kanoria was re-appointed as Independent Non-Executive Director for another term of five years with effect from 13th May, 2019 to 12th May, 2024. The members approved the aforesaid appointment of Ms. Roopa Kudva and re-appointment of Mr. Rajya Vardhan Kanoria at the 60th Annual General Meeting held on 25th April, 2019.

The members of the Company re-appointed Mr. Shobinder Duggal as a whole-time Director, designated as Executive Director-Finance & Control and Chief Financial Officer, of the Company from 10th May, 2019 until 31st December, 2019 through postal ballot. Your Board of Directors at its meeting held on 8th November, 2019 noted that the term of Mr. Duggal as a Whole-time Director will come to an end on 31st December, 2019 and on the recommendation of the Nomination and Remuneration Committee, approved Mr. Duggals continuation as the Key Managerial Personnel, designated as Chief Financial Officer, of the Company upto 29th February, 2020. The Directors wish to place on record their appreciation for the contribution made by

Mr. Duggal during his long association of over a decade and a half as distinguished whole-time director on the Board of the Company. The term of Mr. Suresh Narayanan, as Managing Director, which was for a period of five years from 1st August, 2015 is to expire on 31st July, 2020. Mr Suresh Narayanan was also appointed as the Chairman of the Company with effect from 29th October, 2015 in addition to his responsibility as the Managing Director of the Company by the Board of Directors. On the recommendation of Nomination and Remuneration Committee, the Board of Directors has recommended the re-appointment of Mr. Suresh Narayanan as Managing Director of the Company for a period of five years from 1st August, 2020 till 31st July, 2025 for the approval of the shareholders in its forthcoming Annual General Meeting.

In terms of the Articles of Association of the Company, on the recommendation of the Nomination and Remuneration Committee, the Board of Directors, at its Meeting held on 8th November, 2019, appointed Mr. David Steven McDaniel as an Additional Director and whole-time Director, designated as "Executive Director - Finance & Control and Chief Financial Officer" of the Company with effect from 1st March, 2020 for a term of five consecutive years upto 28th February, 2025, subject to approvals.

Mr. David McDaniel holds office from 1st March, 2020 upto the date of the forthcoming Annual General Meeting and is eligible for the appointment. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors has recommended the appointment of Mr. David McDaniel as Whole-time Director designated as "Executive Director - Finance & Control and CFO" for a term of five years from 181 March, 2020 till 28th February, 2025 for the approval of the shareholders in its forthcoming Annual General Meeting. The same shall be subject to approval of the Central Government, as he is non-resident in India. Mr. Martin Roemkens shall retire at the forthcoming Annual General Meeting by rotation and being eligible offers himself for re-appointment. Details of the proposal for appointment/re-appointment of Directors are mentioned in the Explanatory Statement of the Notice of the 61st Annual General Meeting of the Company pursuant to Section 102 of the Companies Act, 2013. Their appointments are appropriate and in the best interest of the Company.

All the Independent 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 are not disqualified from continuing as Independent Directors.The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and they hold highest standards of integrity. The Independent Directors of the Company have confirmed compliance of relevant provisions of Rule 6 of the Companies (Appointments and Qualifications of Directors) Rules, 2014. The Nomination and Remuneration Committee 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". The Appointment and Remuneration Policy of the Company includes criteria for determining qualifications, positive attributes and independence of a director and policy relating to the remuneration of Directors, Key Managerial Personnel and other employees is framed with the object of attracting, retaining and motivating talent which is required to run the Company successfully. The same is available on the website of the Company at the link:

The details of familiarization programmes to Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are available on the website of the Company at the link: familiarisation-programme

The Company has devised a formal process for annual evaluation of performance of the Board, its Committees and Individual Directors ("Performance Evaluation") which include criteria for performance evaluation of non-executive directors and executive directors as laid down by the Nomination and Remuneration Committee and the Board of Directors of the Company. It covers the areas relevant to the functioning as Independent Directors or other directors, member of the Board or Committee of the Board. The Independent Directors carried out annual performance evaluation of the Chairman and Executive Directors. The Board carried out annual performance evaluation of its own performance. The performance of each Committee was evaluated by the Board, based on report on evaluation received from respective Committees. The Company engaged a leading HR Consulting Firm for compilation of the report and feedback received from the Board members, Committee members and directors in the questionnaires circulated and for identifying key inferences and observations with respect to Performance Evaluation. A consolidated report was shared with the Chairman of the Board for his review and giving feedback to each Director.

Corporate Social Responsibility

During the year under review, the Corporate Social Responsibility Committee comprised of Dr. (Mrs.) Swati A. Piramal (Chairperson),

Ms. Rama Bijapurkar, Independent Non-executive Director and Mr. Suresh Narayanan, Chairman and Managing Director of the Company. The terms of reference of the Corporate Social Responsibility Committee is provided in the Corporate Governance Report. Your Company has also formulated a Corporate Social Responsibility Policy (CSR Policy) which is available on the website of the Company at Annual Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure 2 and forms part of this Report.

In terms of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended ("CSR Rules") and in accordance with the CSR Policy, during the year 2019, the Company has spent above two percent of the average net profits of the Company during the three immediately preceding financial years. The details are provided in the Annual Report on CSR activities. In addition to the above, the Company has been implementing societal activities since many decades under umbrella of Creating Shared Value activities which have not been reckoned for arriving at the spends as per CSR Rules.

Some key initiatives that your Company has been engaged in are as follows:

NESTLE HEALTHY KIDS Programme: The Nestle

Healthy Kids Programme has been developed with a focus to raise nutrition, health and wellness awareness among adolescents. The programme contributes towards overall development of adolescents as well as encourages healthier lifestyle, by arming them with knowledge that impacts them in a meaningful way. The programme is being conducted since 2009 and is helping raise awareness regarding good nutritional and cooking practices, good hygiene and promoting physical fitness. The programme is implemented through two modes, one is in partnership with six regional universities and the second is with NGO Magic Bus India Foundation. The programme celebrated its 10th year of implementation and has expanded significantly since its inception, incorporating pertinent elements like plastic waste management etc. in the existing curriculum as well as including parents and teachers as direct beneficiaries in the programme.

Till year 2019, over 300,000 adolescents across 23 states have been encouraged to live healthier lives through Nestle Healthy Kids Programme.

Project Jagriti: As part of the commitment to inspiring people to lead healthier lives and providing educational programmes, your Company, in partnership with MAMTA Health Institute for Mother and Child, implemented Project Jagriti. The project focuses on developing community support for improved health and nutrition outcomes among adolescents, young couples and caregivers while improving the uptake of public health services. In 2019, your Company moved to a system-led approach with a focus on counseling and development of front- line workers such as Accredited Social Health Activists (ASHA) and Anganwadi Workers etc. This approach is useful in populations that are deficient in knowledge and unaware of their health needs and rights. Till year 2019, the programme has reached out to 5 million beneficiaries - 1.7 million direct and impacting 3.3 million beneficiaries indirectly across 8 States/Union Territories.

Project SERVE SAFE FOOD: Recognizing the potential of street food vending as an important source of livelihood, your Company joined hands with NGO Nidan and National Association of Street Vendors of India (NASVI), to develop programmes to train street food vendors on subjects such as health, hygiene, food handling, food safety, personal hygiene, cart hygiene and garbage disposal. Till 2019, this programme has been implemented across 17 states/Union Territories reaching over to 20,000 street food vendors.

Project Vriddhi: Strengthening your Companys commitment towards building a healthier society and positively impacting the lives of people in marginalised communities, your Company in collaboration with S M Sehgal Foundation, launched Project Vriddhi, an initiative towards village adoption. The three-year project is aimed at improving the livelihoods of 1,500 people in the village of Rohira in Nuh district, Haryana, for bringing a positive change in the lives of the locals.

The project focuses on improving access to clean drinking water for communities, promoting water-saving irrigation practices, increasing awareness on nutrition, enhancing farm productivity and providing healthy learning environment in schools by improving hygiene and sanitation practices.

Business Responsibility Report

Nestles approach to business is Creating Shared Value as used by your Company and it is about the impact of the business and engagement through it. Your Company is mindful of the needs of the communities and works to make a positive difference and create maximum value for the society. It has been conducting business in a way that delivers long-term shareholder value and benefits society.

As stipulated under the Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective is attached in the format prescribed as Annexure 3 and forms integral part of the Annual Report.

Statutory Auditors and Auditors Report

In terms of Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, Members of the Company in 58th Annual General Meeting held on 11th May, 2017 approved the appointment of M/s. B S R and Co. LLP, Chartered Accountants (ICAI Registration No-101248W/W-100022), as the Statutory Auditors of the Company for an initial term of 5 years i.e. from the conclusion of 58th Annual General Meeting till the conclusion of 63rd Annual General Meeting of the Company. The Statutory Auditors have confirmed they are not disqualified from continuing as Auditors of the Company.

The Report given by M/s. B S R and Co. LLP, Chartered Accountants on the financial statement of the Company for the year 2019 is part of the Annual Report. The Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, 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 Accounts and Cost Auditors

The 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, the Company has been making and maintaining the records as required.

In terms of Section 148 of the Act read with Companies (Cost Records and Audits) Rules, 2014, the Audit Committee recommended and the Board of Directors appointed M/s. Ramanath Iyer and Co., Cost Accountants, New Delhi (Registration No. 00019) being eligible, as Cost Auditors of the Company, to carry out the cost audit of milk powder products manufactured by the Company falling under the specified Customs Tariff Act Heading in relation to the financial year ending 31st December, 2020. The 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 the Company for the year ending 31st December, 2020.

The remuneration of Cost Auditors has been approved by the Board of Directors on the recommendation of Audit Committee and in terms of the Companies Act, 2013 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 61st Annual General Meeting of your Company.

Secretarial Auditors and Secretarial Standards

The Secretarial Audit was carried out by M/s. S.N. Ananthasubramanian & Co., Company Secretaries (PCS Registration No. 1774) for the financial year ended on 31st December, 2019.

The Report given by the Secretarial Auditors is annexed as Annexure 4 and forms integral part of this Report. The Secretarial Audit Report is self-explanatory and do not call for any further comments. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, 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 Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Audit Committee recommended and the Board of Directors appointed M/s. S.N. Ananthasubramanian & Co., Company Secretaries (PCS Registration No. 1774) as the Secretarial Auditors of the Company in relation to the financial year ending 31st December, 2020. The 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 they are not disqualified to be appointed as the Secretarial Auditors of the Company for the year ending 31st December, 2020.

During the Financial Year, 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

Eight Meetings of the Board of Directors were held during the year. The particulars of the meetings held and attended by Directors are detailed in the Corporate Governance Report.

Extract of Annual Return

The extract of annual return in Form MGT 9 as required under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 is available on the website of the Company at the link: s/annualreturns

Details of Loans and Investments

Details of the loans given by your Company under Section 186 of the Act during the financial year ended 31st December, 2019 are as follows: Purina PetCare India Private Limited (Fellow Subsidiary): Rs. 150 Million at the interest rate of 6.48 % per annum for general business purpose (Loan outstanding at the end of the year was Nil). For details of investments, please refer note no. 9 forming part of financial statements.

Related Party Transactions

Your Company has formulated a policy on related party transactions which is also available on Companys website at This policy deals with the review and approval of related party transactions. The Board of Directors of the Company has approved the criteria to grant omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arms length. All related party transactions are placed before the Audit Committee for review and approval.

All related party transactions entered during the financial year 2019 were in ordinary course of the business and were on an arms length basis. In terms of the Act, no material related party transactions were entered during the Financial Year by your Company. The disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC 2 is not applicable to your Company. Members may refer to note no. 44 to the financial statement 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, the members of the Company at its 60th Annual General Meeting held on 25th April, 2019 approved the Ordinary Resolution (Ordinary Resolution), inter alia, for continuation of the payment of general licence fees (royalty) by the Company to Societe des Produits Nestle S.A. ("the Licensor"), being a related party, at the rate of 4.5% (four and a half percent), net of taxes, of the net sales of the products sold by the Company as per the terms and conditions of the existing General Licence Agreements ("GLAs"), 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) of the Listing Regulations at any time. In terms of the Listing Regulations, no related party voted on the Ordinary Resolution. The Ordinary Resolution is effective from 1st July, 2019 and approval of members shall be sought every 5 (five) years in compliance with the applicable laws and regulations.

Risk Management

The Board of Directors had constituted Risk Management Committee (RMC) to identify elements of risk in different areas of operations and to develop policy for actions associated to mitigate the risks.

The RMC on timely basis informed members of board of directors about risk assessment and minimization procedures. In the opinion of the RMC, there are no such risks, which may threaten the existence of the Company. The details of Risk Management Committee are included in the Corporate Governance Report.

Public Deposits

Your Company has not accepted any Public Deposits under Chapter V of the Companies Act, 2013.

Significant and Material orders passed by the Regulators /Courts/Tribunals

No significant or material orders were passed by the Regulators or Courts or Tribunals which impacts the going concern status and Companys operations in future.

Complaint filed in National Commission

The Union of India, Department of Consumer Affairs in 2015 had filed a complaint before the National Consumer Dispute Redressal Commission on the allegation that by selling MAGGI Noodles in the past, your Company has indulged in unfair trade practice, sold defective goods to the public and sold goods which will be hazardous. Complaint seeks compensation of Rs. 2,845.5 million and punitive damages of Rs. 3554.1 million. Your Company has challenged the complaint. The court proceedings are currently ongoing.

Internal Financial Controls and their adequacy

The Directors had laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companys 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 control system periodically.

Audit Committee

During the year 2019, Mr. Rajya Vardhan Kanoria, Independent Non-Executive Director was appointed as the Chairman of Audit Committee, effective from 1st April, 2019, in place of Mr. Ashok Kumar Mahindra, who ceased to be Chairman of the Audit Committee upon his retirement as a Director of the Company. The Audit Committee was reconstituted and Ms Roopa Kudva, Independent Non-Executive Director, was appointed as member of the Audit Committee with effect from 14th February 2019. Dr. Rakesh Mohan, Independent Non-Executive Director is other member of the Committee. Accordingly, Audit Committee comprises Independent Non-Executive Directors, namely, Mr. Rajya Vardhan Kanoria (Chairman), Dr. Rakesh Mohan and Ms. Roopa Kudva.

Powers and role of the Audit Committee are included in Corporate Governance Report. All the recommendations made by the Audit Committee were accepted by the Board of Directors.

Vigil Mechanism

The Vigil Mechanism of the Company is governed by significant documents "The Nestle Corporate Business Principles", "The Nestle Management and Leadership Principles", "Nestle Code of Business Conduct" and "Nestle India Vigil Mechanism/ Whistle-blower Policy". The documents are available on Companys website at The said mechanism is available to the Director(s)/ Employee(s), who can report to the Company Secretary, on a confidential basis, any practices or actions believed to be inappropriate or illegal under the Nestle India Code of Business Conduct ("the Code"). 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. As an additional facility to all the Directors and Employees of the Company, the Company under the Code provides Integrity Reporting System ("IRS"), an independent third party operated free phone and web based facility for the directors and employees of the Company across all locations.

The details of IRS along with FAQs are available to the Directors and Employees on the Companys intranet portal. Further, the 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. The Company also provides an independent third party operated free phone and web based facility, "Tell us", to all internal and external stakeholders with a dedicated communication channel for reporting potential instances of non-compliance with Nestle Corporate Business Principles. Details of the link to "Tell Us" are available on

The Company sensitizes the availability of the above vigil mechanism from time to time to the directors and employees of the 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 financial year ended 31st December, 2019 in relation to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is given in the Annexure 5 forming integral part of this report.

Information regarding employees and related disclosures

Your Company considers people as its biggest assets and Believing in People is at the heart of its human resource strategy. It has put concerted efforts in talent management and succession planning practices, strong performance management and learning and training initiatives to ensure that your Company consistently develops inspiring, strong and credible leadership. During the year, the focus of your Company was to ensure that young talent is nurtured and mentored consistently, that rewards and recognition are commensurate with performance and that employees have the opportunity to develop and grow.

Your Company has established an organization structure that is agile and focused on delivering business results. With regular communication and sustained efforts it is ensuring that employees are aligned on common objectives and have the right information on business evolution. Your Company strongly believes in fostering a culture of trust and mutual respect in all its employees and seeks to ensure that Nestle values and principles are understood by all and are the reference point in all people matters.

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 appended as Annexure 6 to the Report. The information as per Rule 5 of the Rules, forms part of this Report. However, 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 the Company.

As per the requirement of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH), your Company has a robust mechanism in place to redress complaints reported under it. The Company has complied with provisions relating to the constitution of Internal Complaints Committee under POSH. The Internal Committee (IC) was composed of internal members and an external member who has extensive experience in the field. In 2019, seven cases of sexual harassment were reported, which have been investigated and resolved as per the provisions of the POSH.

During the course of 2019, several initiatives were undertaken to demonstrate the Companys 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, 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 on 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. The Company had, accordingly, transferred Rs. 28,83,288, Rs. 33,43,770 and Rs. 35,97,120 being the unpaid and unclaimed dividend amount pertaining to Final Dividend 2011; First Interim Dividend 2012; and Second Interim Dividend 2012 on 23rd May, 2019, 13th September, 2019 and 17th January, 2020, respectively, to the IEPF. Pursuant to the provisions of IEPF Rules, all shares in respect of which dividend 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, the Company has transferred such equity shares on which the dividend remained unpaid or unclaimed for seven consecutive years to the demat account of IEPF Authority, after following the prescribed procedure.

Credit Rating

The 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 the Company. The rating reflects that the Company has serviced its financial obligations on time. As regards the short term facility provided by the bank, the Company has been awarded the credit rating of A1+. The rated instrument reflects strong degree of safety and lowest credit risk.

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 forefront of the Industry.

Your Company continued to receive co-operation and unstinted support from the distributors, retailers, stockist, suppliers and others associated with the Company as its trading partners. The Directors wish to place on record their appreciation for the same and your Company will continue in its endeavor to build and nurture strong links with trade, based on mutuality, respect and co-operation with each other and consistent with consumer interest.


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 Companys resources for sustainable and profitable growth.

The 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 : 13th February, 2020 Suresh Narayanan
Place : Gurugram Chairman and Managing Director