| Nestle Milkpak Limited |
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| Annual
Report 1999 |
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| Contents |
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| Directors'
Report to the Shareholders |
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| Performance
at a Glance |
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| Notice
of Annual General Meeting |
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| General
Information |
Management |
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Organisation |
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Company Directory |
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Regional Sales Offices |
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| Group History |
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About Nestle S.A. |
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| Business
Review |
Milk Collection |
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Production |
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Marketing |
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Exports |
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| Auditors'
Report |
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| Balance Sheet |
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| Profit
& Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Share-holding |
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| Directors'
Report to the Shareholders |
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| The
Directors are pleased to submit their Annual |
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| Report
alongwith the audited financial statements of |
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| the
company for the year ended December 31, 1999. |
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| OPERATING
RESULTS |
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| Inspite
of depressing economic activities and |
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| volatile
business environment in the country |
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| impacting
the purchasing power of the consumers, |
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| your
company's performance was excellent and |
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| 1999
turned out to be a year of exceptional |
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| achievements.
Following credible real internal |
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| growth
(RIG) of 18.1% achieved in 1998 your |
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| company
gained further momentum and registered |
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| 21.7%
RIG in 1999. This growth was well balanced |
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| across
our all major products i.e. Milks, Infant |
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| Products,
Confectionery, Water and Culinary. |
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| Total
sales for the year reached Rs. 5.75 bio |
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| showing
growth of 26% over the last year. After |
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| tax
profit for the year was Rs. 280.5 mio inspite of |
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| higher
provision for deferred tax made in the |
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| accounts. |
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| MARKETING |
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| Our
new range of "Maggi Cold Sauces" with three flavours and Fruit
Drops under |
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| confectionery
range were launched during 1999 and well received by consumers. |
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| NESTLE
PURE LIFE launched in December, 1998, has established itself as a
"market |
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| leader"
and is ideally placed to consolidate its position in year - 2000. In
addition, |
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| significant
progress was achieved across the broad range of our business activities |
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| such
as logistics, sales and distribution structure where strong distribution and
impactful |
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| merchandising
made a major contribution in achieving high rate of growth mentioned |
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| above. |
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| MILK
COLLECTION |
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| As
regards fresh milk, an exceptional surge in our sales would not have been
possible |
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| without
a parallel development of raw milk. 1999 proved to be a year of highest ever |
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| milk
collection. We not only exceeded the volume target set for 1999, but also
realized |
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| significant
quality improvement and finished the year below our budget price. |
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| YEAR
2000 COMPLIANCE |
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| The
management is pleased to mention that our efforts spread over two years to
beat |
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| the
millennium bug were very successful. All our information and production
systems |
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| successfully
rolled over into Year 2000 without encountering any problem at any location |
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| of
the company. |
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| DIVIDEND |
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| Since
the financial results for the year were in line with company's expectations,
the |
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| Board
of Directors has recommended to pay final dividend of 30% (Rs 3.00 per share) |
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| in
addition to interim dividend of 35% (Rs. 3.50 per share) paid in August,
1999. |
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| APPROPRIATIONS |
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Rupees Mio. |
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| Net
profit for the year |
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280.48 |
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| Un-appropriated
profit brought forward |
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174.05 |
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454.53 |
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| Appropriations |
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| Interim
dividend Rs. 3.50 per share (35%) |
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158.42 |
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| Final
dividend Rs. 3.00 per share (30%) |
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135.79 |
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294.21 |
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| Un-appropriated
profit carried forward |
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160.32 |
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========== |
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| APPOINTMENT
OF AUDITORS |
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| The
present auditors A.F. Ferguson & Co., Chartered Accountants, retired and,
being |
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| eligible,
offer themselves for re-appointment. |
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| PERSONNEL |
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| Relationship
with the staff - specially the workers, remained cordial. All achievements |
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| made
during the period under report were only possible due to a great deal of
dedicated |
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| efforts
and team work by the company's staff. The directors take this opportunity to |
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| thank
all of them for their hard work and commitment. |
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| FUTURE
OUTLOOK |
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| We
feel that economic slow down faced by the country is un-likely to improve in
the year |
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| 2000
and much of un-certainty will remain. Under this difficult business
environment, we |
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| are
confident to perform satisfactorily in the coming year if we don't loose
sight of quality, |
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| achieve
cost reductions through improved efficiency and maintain growth momentum. |
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FOR AND ON BEHALF OF THE |
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BOARD OF DIRECTORS |
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GRAHAM CAMPBELL |
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| Lahore:
February 21,2000 |
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Chief Executive |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 22nd Annual General Meeting of Nestle Milkpak |
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| Ltd.,
will be held at 10.00 a.m. on Monday, April 17, 2000 at the Company Office at |
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| 304
Upper Mall, Lahore to transact the following business: |
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| ORDINARY
BUSINESS |
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| 1.
To confirm the minutes of the Annual General Meeting held on April 23, |
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| 1999. |
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| 2.
To receive, consider and approve the Audited Accounts of the Company |
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| for
the year ended December 31, 1999 together with the Directors' Report |
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| thereon. |
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| 3.
To appoint Auditors of the Company and fix their remuneration. |
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| 4.
To approve dividend. The Directors have recommended final dividend of |
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| 30%
i.e. Rs. 3.00 per share. |
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| SPECIAL
BUSINESS |
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| 5.
To increase the Authorised Capital of the Company from Rs. 500 million to |
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| Rs. 750 million. |
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| OTHER
BUSINESS |
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| 6.
To transact any other business with the permission of the chair. |
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BY ORDER OF THE BOARD |
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(M.HANIF RAJPUT) |
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| Lahore:
March 20, 2000 |
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Company Secretary |
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| NOTES: |
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| 1.
Share Transfer Books of the Company will remain closed from 10-4-2000 |
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| to
17-4-2000 (both days inclusive) for the purpose of Annual General |
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| Meeting
and to determine entitlement for cash dividend. |
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| 2.
A member entitled to attend and vote at the Annual General Meeting is
entitled |
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| to
appoint another member as proxy to attend and vote instead of him/her. |
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| 3.
The instrument appointing a proxy must be received at the Registered |
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| Office
of the Company at 308 Upper Mall, Lahore, not later than forty eight |
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| (48)
hours before the meeting. |
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| 4.
Shareholders are requested to notify the change of address, if any, |
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| immediately. |
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| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984 |
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| REGARDING
SPECIAL BUSINESS |
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| Item
5 of the Notice: |
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| It
is proposed to increase the Authorised Capital of the Company from Rs. 500
million to |
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| Rs.
750 million divided into 75,000,000 ordinary shares of Rs. 10 each to
facilitate |
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| further
issue of capital from time to time |
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| according
to the requirements of the Company. In this connection, it is intended to |
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| propose
that the following Resolutions be passed as Special Resolutions, with or
with- |
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| out
modification:- |
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| a)
RESOLVED that the Authorised Share Capital of the Company be increased from |
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| Rs.
500,000,000 to Rs. 750,000,000 by the creation of 25,000,000 new ordi- |
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| nary
shares of Rs. 10 each. |
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| b)
RESOLVED that the Memorandum of Association of the Company be altered by |
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| substituting
for the figures 500,000,000 "and" 50,000,000 appearing in Clause |
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| V,
with the figures 750,000,000 "and" 75,000,000 respectively. |
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| c)
RESOLVED that the Articles of Association of the Company be altered by
substi- |
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| tuting
for the figures 500,000,000 "and" 50,000,000 appearing in Article 3 |
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| with
the figures 750,000,000 and 75,000,000 respectively. |
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| Management |
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| Board
of Directors |
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| Syed Yawar Ali |
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Chairman |
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| Graham
Campbell |
Managing Director |
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| Syed Babar Ali |
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| M.W.O. Garrett |
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| J.D. Luthi |
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(Alternate: M. Hanif
Rajput) |
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| D. Dupont |
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(Alternate: Nimal
Koswanage) |
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| Syed Hyder Ali |
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| Company
Secretary |
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| M. Hanif Rajput |
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| The
Management Team |
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| Hanif Rajput |
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| Finance & |
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| Control
Manager |
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| Martial
Rolland |
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| Marketing
Manager |
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| Graham
Campbell |
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| Managing
Director |
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| Nimal
Koswanage |
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| Factory
Manager |
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| Company
Directory |
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| Registered & |
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308 - Upper Mall, Lahore |
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| Corporate |
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PABX: 5757082-95 |
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| Office |
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Fax: 5711820 |
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| Factories |
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Sheikhupura |
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29th Kilometer, Lahore-
Sheikhupura Road |
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Sheikhupura, Punjab,
Pakistan |
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Phone: (042) 6369321 - 26
8 7228300 |
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Fax: (042) 6368710 |
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Kabirwala |
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Khanewal- Kabirwala Road,
Kabirwala |
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District Khanewal,
Punjab, Pakistan |
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Phone: (0692) 53168 &
(06512) 411433 |
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Fax: (0692) 53169 &
(06512) 411432 |
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| Auditors |
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A.F. Ferguson & Co.
(Chartered Accountants) |
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| Legal Advisors |
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Cheema & Ibrahim
(Advocates) |
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| Bankers |
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ABN Amro Bank |
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ANZ Grindlays Bank Ltd. |
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Bank of America |
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Bank of Tokyo-Mitsubishi,
Ltd. |
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Citibank N .A. |
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Credit Agricole Indosuez |
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Deutsche Bank A.G. |
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Habib Bank Ltd. |
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Muslim Commercial Bank
Ltd. |
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Standard Chartered Bank |
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| Regional
Sales Offices |
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| Karachi |
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F - 77/1, Block 7, |
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Clifton, KDA Scheme 5, |
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Karachi, Sind, Pakistan. |
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Phone: (021) 5833935-6 |
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Fax: (021) 5833937 |
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| Hyderabad |
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178, Block C, Unit 2 |
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Latifabad, Hyderabad,
Sind, Pakistan |
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Phone: (0221) 860403 |
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Fax: (0221) 863202 |
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| Sukkur |
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F - 33/5 - C |
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Workshop Road |
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Sukkur, Sind, Pakistan. |
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Phone: (071) 615946 |
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Fax: (071) 615946 |
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| Lahore |
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29-B, Main Gulberg, |
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Lahore, Punjab, Pakistan |
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Phone: (042) 5754335-6,
5761484 |
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Fax: (042) 5711820 |
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| Multan |
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Surij Miani Road, Chungi
No.1, |
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Multan, Punjab, Pakistan |
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Phone: (061) 515061 |
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Fax: (061) 515061 |
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| Faisalabad |
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House No. 24-Y-103 Madina
Town, |
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Faisalabad, Punjab,
Pakistan |
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Phone: (041)726993 |
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Fax: (041) 47438 |
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| Gujranwala |
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23. D.C. Road. |
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Gujranwala, Punjab,
Pakistan. |
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Phone: (0431) 256320 |
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Fax: (0431) 256320 |
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| Peshawar |
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201, 2nd Floor, City
Tower, Jamrud Road, B Block, |
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Peshawar, N.W.F.P.,
Pakistan |
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Phone: (091) 840859,
842415 |
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Fax: (091) 45516 |
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| Quetta |
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63 B - D, Chaman Housing
Scheme, |
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Opposite Askari Park |
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Quetta, Baluchistan,
Pakistan. |
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Phone: (081) 834887 |
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Fax: (081) 822297 |
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| Islamabad |
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74-W, Yaseen Plaza, 1st
Floor, Blue Area, |
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Islamabad, Pakistan |
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Phone: (051)
271874-75,824328, 824384, 274376 |
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| Group
History |
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| The
Nestle Story |
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| Nestle
S.A., the present Switzerland |
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| based
international food group, |
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| originally
consisted of two |
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| companies
and two products: Henri |
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| Nestle
and his baby food in Vevey, |
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| and
the Anglo-Swiss Condensed Milk |
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| Company
and its condensed milk in |
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| Chain,
both in Switzerland. |
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| In
1866 the Page Brothers from the |
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| United
States set up a new |
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| industry
in Chain, making |
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| condensed
milk from a raw |
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| material
that was available in |
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| abundance
in the region. In 1867 |
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| Henri
Nestle, a chemist in Vevey, |
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| created
a milk and cereal based |
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| food
which promptly saved the |
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| life
of a baby which its mother |
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| could
not feed. The companies |
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| competed
vigorously until 1905, |
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| when
they merged and became the |
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| starting
point of the present food group. |
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| Dynamic
Expansion |
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| The
history of Nestle includes the |
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| development
of many different |
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| products
as well as acquisitions, |
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| mergers
and the purchasing of shares |
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| in
companies, mainly abroad. Over |
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| the
course of the years, this enabled |
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| it
to broaden its range of products |
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| and
diversify its operations, while at |
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| the
same time strengthening the |
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| economic
foundations of the |
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| company.
Amongst the most |
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| important
acquisitions were |
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| Carnation
in Los Angeles (milk, |
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| culinary
products and pet foods) and |
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| more
recently Rowntree Mackintosh |
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| in
York (chocolate and confectionery), |
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| Buitoni
in Perugia (pasta)as well as |
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| Perrier
in France (mineral water). |
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| Nestle,
which does 98% of its busi- |
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| ness
outside Switzerland, also has |
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| interests
in non-food sectors, in cos- |
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| metics
(a large share holding in |
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| L'Oreal)
and ophthalmic products (ac- |
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| quisition
of Alcon laboratories Inc.) |
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| while
continuing to give priority to |
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| food products. |
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| Nestle Today |
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| Worldwide
Distribution of Factories |
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| End
1997 (total: 495) |
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| Nestle
is now the world's largest |
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| food
company. It is present on all |
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| five
continents, has an annual turn- |
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| over
of 70 billion Swiss francs, runs |
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| 522
factories in 81 countries, 200 |
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| operating
companies, 1 basic re- |
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| search
center and 20 technological |
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| development
groups and more than |
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| 231,000
employees the world over. |
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| The
Company owes its current sta- |
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| tus
to the pioneering spirit inherited |
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| from
its founders which continues |
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| to
inspire it, to its concern with qual- |
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| ity
and to its constant search for new |
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| ways
of satisfying man's nutritional |
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| needs. |
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| Wherever
possible, it |
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| sets
up factories lo- |
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| cally,
employs person- |
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| nel
from the country |
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| concerned
and relies |
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| on
indigenous raw ma- |
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| terials.
Its agricultural |
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| services
provide assis- |
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| tance
to improve the |
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| quality
and yield of the |
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| raw
materials it uses. |
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| Much
attention is de- |
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| voted
to professional training and |
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| to
the integration of the company |
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| in
its economic and social environment. |
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| Historical
development |
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Today Nestle is present
in different markets with the following main brands: |
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| 1866
Company's foundation |
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Soluble coffee: Nescafe', Taster's Choice, Ricore', Ricoffy |
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| 1905
Merger between Nestle and |
Roast & ground
coffee: Hills Bros., MJB, Bonda, Zoe'gas, Loumidis |
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| Anglo-Swiss Condensed Milk |
Mineral water: Perrier, Vittel, Contrex, Valvert, Que'zac, San Pellegrino,
Panna, |
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| Company |
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Levissima, Vera, Blaue
Quellen, Santa maria, Arrowhead, Poland Spring, La Vie |
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| 1929
Merger with Peter-Cailler-Kohler |
Other beverages: Nestea, Nesquik, Nescau, Milo, Carnation, Libby's Caro |
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| Chocolats Suisses S.A. |
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Dairy products: Nido, Nespray, Carnation, Milkmaid, Klim, Gloria, Neslac, Bear
Brand |
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| 1947
Merger with Alimentana S.A. |
Breakfast cereals: Nestle |
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| (Maggi) |
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Coffee creamers: Coffee-mate |
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| 1971
Merger with Ursina-Franck |
Infant foods: Nestle', Nan, Lactogen, Cerelac, Nestum, Guigoz |
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| Switzerland) |
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Culinary products: (boullions, soups, seasonings, prepared dishes, canned food, |
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| 1985
Acquisition of Carnation (USA) |
pasta, sauces): Maggi,
Libby's, Buitoni, Crosse & Blackwell, Thomy, Winiary |
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| 1988
Acquisition of Buitoni-Perugina(1) |
Frozen foods: Maggi, Buitoni, Findus, Stouffer's |
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| 1988
Acquisition of Rowntree (GB) |
Ice cream: Nestle, Frisco, Dairy Farm, Magnolia, Motta, Camy, Savory,
Peter's etc. |
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| 1992
Acquisition of Perrier (F) |
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Refrigerated products (Yogurts, desserts, cold meat products, pasta, sauces); |
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Nestle, Buitoni, Herta,
Vismara, LC', Chamyto, La Laitiere |
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|
Chocolate and
confectionery: Nestle, Perugina, Rowntree, Allen's,
Crunch, Cailler, |
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|
Frigor, Chokito,
Galak/Milkybar, Yes, KitKat, Quality Street, Smarties, Baci, After Eight, |
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Baby Ruth, Butterfinger,
Lion, Nuts, Rolo, Aero, Polo, etc. |
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Food Services and
professional products: Chef, Davigel, Santa Rica |
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Petcare: Friskies, Fancy Feast, Alpo, Mighty Dog, Gourmet, Mon Petit,
Matzinger |
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|
Specialized products for
the food industry: Food Ingredients Specialities (FIS) |
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|
Pharmaceutical products: Alcon, Galderma |
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Cosmetics: (L'Oreal (important interest) |
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| Business
Review |
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| Milk
Collection |
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| The
core raw material of Nestle |
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| Milkpak
is milk. Over the last eleven |
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| years,
the company's prime concern |
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| has
been to improve the quality and |
|
|
| volume
of milk for UHT processing |
|
| and
for other milk based products. |
|
| Driven
by its commitment to quality |
|
| and
having realized that only self col- |
|
| lection
could eliminate its depen- |
|
| dence
on poor quality milk available |
|
| from
outside sources, the company |
|
| successfully
established its own col- |
|
| lection
system and expanded its op- |
|
| erations
over a very large milk shed |
|
| area
in Punjab. Owing to this tremen- |
|
| dous
growth in the volume of an ex- |
|
| tremely
high quality raw milk, Nestle |
|
| Milkpak
now produces a superior |
|
| quality
and better tasting UHT milk, |
|
| with
longer shelf life. |
|
|
| Today,
Nestle Milkpak can boast of |
|
| the
largest milk collection network |
|
| in
the country, unmatched in size, |
|
| productivity
and efficiency. Milk is |
|
| collected
through a vast network of |
|
| village
milk centers (VMCs), sub-cen- |
|
| ters
and centers. At these centers, |
|
| chillers
have been installed to lower |
|
| milk
temperature to 4C for prevent- |
|
| ing
bacteria development during long |
|
| hauls
to the factories, which are un- |
|
| dertaken
by a large fleet of specially |
|
| insulated
tankers. |
|
|
| In
terms of quality, the milk collected by |
|
| Nestle
Milkpak is low in sodium, high in |
|
