Nestle Accounting Practices

Topics: Balance sheet, Asset, Generally Accepted Accounting Principles Pages: 25 (8544 words) Published: December 12, 2009
Management Accounting -I
Final Project Report
Company – Nestlé India
Submitted By
Rahul –PGP25259
Praveen – PGP25258
Pratyush – PGP25257
Prachal Mehrotra – PGP25255
Prajeesh Jayaram L – PGP25256
Sanjay Dhir – FPM10013
1. About Nestlé
Nestlé is a food and package multinational with its headquarters situated in Vevey, Switzerland. The company came into being in 1905, after a merger between Anglo-Swiss Milk Company and FarineLactée Henri Nestlé Company. The company now has a strong presence worldwide and had an annual turnover of 87 billion Swiss francs in 2008. Nestlé is the world's foremost Nutrition, Health and Wellness company. Nestlé India Limited is the Indian arm of Nestlé SA, which holds a 51% stake in the company. Nestlé products have a wide range and encompass various market segments such as coffee, bottled water, chocolate, ice cream, infant foods, healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food. FMCG Industry

Fast Moving Consumer Goods segment is characterized by quick turnover and relatively low cost inventory. Nestlé is third largest FMCG Company in India after HUL and ITC. The main Competitors of Nestlé in India are Cadbury, Amul and Britannia. FMCG sector has huge growth potential in India. Market Scenario

In 2008, the whole industry was hit by tremendous uncertainties, characterized by high commodity prices and inflation. The market took a further hit with the unprecedented economic crisis which affected all the companies throughout the world. Despite these factors, Nestlé India showed a strong growth potential and delivered good turnover and profits. It also has a distinctive advantage of having access to Nestlé S.A’s extensive Research and Development and latest food technology. This has helped the company to establish itself as one of the leaders in food and package industry in India. SWOT analysis on Nestlé

Sales Distribution:
Total revenue from operations increased by 23.4% over previous year to Rs. 43,351 Million. Profit from operations for the year increased by 24.1% to Rs. 7,822 Million and the Net Profit from operations increased by 29.1% to Rs. 5,341 Million. The sales breakdown is shown below: {draw:frame} {draw:frame} {draw:frame} {draw:frame}

2. Analysis of Auditors report:
The balance sheet of Nestlé India Limited as at December 31, 2008, the profit and loss account and also the cash flow statement for the year ended on that date annexed thereto have been audited byMANJULA BANERJIPartner (Membership number: 86423), forA.F. Fergusson & Co., chartered accounts.AFF is one of the leading firms of Chartered Accountants and Management Consultants in India. It has a provided high quality and specialized services in most areas of management consultancy for over 30 years. The auditor’s have issued an unmodified opinion or “clean opinion”, implying that the financial statements are free of material misstatements and are in accordance with the accounting standards generally accepted in India. it must, however, be understood that the auditors are of the opinion that proper records have been maintained, but have not made any detailed examination of the records to determine if they are accurate or complete. The auditors also report that they had obtained all the information necessary for the purposes of audit and that proper books of account as required by law have been kept by the Company. The auditor’s report that the balance sheet; the profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account and comply with the mandatory accounting standards followed in India. Annexure to the auditor’s report mentions that the management has physically verified most of the fixed assets of the Company using reasonable procedures. The discrepancies noticed on such verification were not material and have been...
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