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MIRA INFORM REPORT
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Report No. : |
509556 |
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Report Date : |
18.05.2018 |
IDENTIFICATION DETAILS
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Name : |
NESTLE LANKA PLC |
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Registered Office : |
# 440, T B Jayah Mawatha, Colombo 10, Sri Lanka |
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Country : |
Sri Lanka |
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Financials (as on) : |
31.03.2018 |
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Date of Incorporation : |
29.01.1981 |
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Com. Reg. No.: |
PQ20 |
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Legal Form : |
Private, Limited Liability Company (In Operation) |
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Line of Business : |
Manufacturers, Importers, Exporters and Distributors of Food & Beverage Items |
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No. of Employees : |
800 |
RATING & COMMENTS
(Mira Inform has adopted New Rating mechanism w.e.f. 23rd
January 2017)
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MIRA’s Rating : |
A+ |
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Credit Rating |
Explanation |
Rating Comments |
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A+ |
Low Risk |
Business dealings permissible with low
risk of default |
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Status : |
Excellent |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List
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Country Name |
Previous Rating (30.09.2017) |
Current Rating (31.12.2017) |
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Sri Lanka |
A2 |
A2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low Risk |
A2 |
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Moderately Low Risk |
B1 |
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Moderate Risk |
B2 |
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Moderately High Risk |
C1 |
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High Risk |
C2 |
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Very High Risk |
D |
SRI LANKA - ECONOMIC OVERVIEW
Sri Lanka is attempting to sustain economic growth while maintaining macroeconomic stability under its IMF program that it began in 2016. The government's high debt payments and bloated civil service cadre, which have contributed to historically high budget deficits and low tax revenues, remain a concern. Government debt is about 75% of GDP and remains among the highest of the emerging markets. Sri Lanka will need to balance its elevated debt repayment schedule with its requirement to maintain adequate foreign exchange reserve levels in the coming years.
In May 2016, Sri Lanka regained its preferential trade preferences under the European Union’s Generalized System of Preferences Plus (GSP+), enabling many of its firms to export products, including it top export garments, tax free to the EU. Also in 2016, the government reformed elements of the country’s tax regime to increase some tax rates and broaden the tax net in response to recommendations made under its IMF program.
Tourism has experienced strong growth during recent years following the resolution of the government's 26-year conflict with the Liberation Tigers of Tamil Eelam. The government has been pursuing large-scale reconstruction and development projects in its efforts to spur growth.
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Source
: CIA |
Company Profile
Basic Information
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a. |
Name of Subject of Inquiry |
NESTLE LANKA PLC |
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b. |
Legal Form & Status |
Private, Limited Liability Company (In
Operation) |
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c. |
Managing Director Chairman |
Mrs Shivani Hegde Mr Suresh Narayanan |
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d. |
Primary Line of Business |
Manufacturers, Importers, Exporters and
Distributors of Food & Beverage Items |
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e. |
Principal Place of Business |
# 440, T. B. Jayah Mawatha, Colombo 10, Sri
Lanka - Head Office Pannala Factory, Makandura, Gonawila,Sri
Lanka Tel: (+94 11) 2696304, 2697821, 2699991 Fax: (+94 11) 2699437 E-mail:
info.srilanka@lk.nestle.com Website: www.nestle.lk |
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f. |
Employees |
800 + Approximately |
Company Details
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a. |
Registration No |
PVS 7225/PBS |
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Date of Registration |
29 January 1981 |
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b. |
Re-registration No |
PQ20 |
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Date of Re-registration |
25 June 2007 |
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c. |
Registered Office |
# 440, T B Jayah Mawatha, Colombo 10, Sri
Lanka |
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d. |
Director Board / Ownership As At 30.09.2017 |
Mrs Shivani Hegde |
Director |
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Mr Suresh Narayanan |
Director |
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Mr Jagdish Kumar Singla |
Director |
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Mr Shobinder Duggal |
Director |
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Mr Mahen Dayananda |
Director |
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Mr Ranjan Seevaratnam |
Director |
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Gurcharan Grover |
Director |
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Dian Gomes |
Director |
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e. |
Sated Share Capital |
LKR 537,254,630.00 |
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f. |
No. of Shares |
53,725,463 |
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g. |
Preferential Shares |
NA |
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h. |
Nominal Value of Share |
LKR 10.00 |
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i. |
Auditors |
Messrs. KPMG Chartered Accountants No 32 A,
Sir Mohamed Macan Marker Mawatha P.O.Box 186 Colombo 3. |
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j. |
Company Secretaries |
Mr Keerthi Pathiraja |
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k. |
Main Bank/s |
CITI bank, HSBC, Hatton National Bank PLC,
Commercial Bank of Ceylon PLC, Standard Chartered Bank |
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l. |
Present Value / Share |
LKR 1680.80 |
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m. |
All Time High All Time Low |
LKR 2550.00 LKR 5.50 |
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n. |
Public Quoted Date |
1983.01.01 |
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Shareholders
- Refer Attached Financial Statement
FINANCIAL DETAILS
- Most
recent available Financial Information
Year Summary
CURRENT INVESTIGATION
Good Food, Good Life
Company Logo
• History.
A public quoted Company with limited
liability, incorporated in Sri Lanka on 29 January 1981 under
PVS 7225/PBS and Re-registered on 25th
June 2007 as per the Company Registrations Act No 07,
of 2007 holding registration number PQ 20 and
listed on the Main Board of the Colombo Stock Exchange.
Caption
Nestle Lanka PLC reported disappointing
numbers for the September quarter (3Q17) as the sales slowed and production
cost rose sharply. The company is battling a period of high inflation and
taxes, which negatively impact consumer demand and push up its direct costs.
Accordingly, the local unit of the world's
largest food and Beverage Company, reported a top line growth of 9.0 percent
year-on-year (YoY) to Rs.9.64 billion for the quarter under review, less
impressive considering its past performance.
The cost of sales for the same period rose by
20.5 percent YoY or doubled the rate of sales growth to Rs.6.36 billion,
weighing on the gross profit and pinching the margins hard.
The company, which produces Nespray milk
powder and Maggi coconut milk powder among many other products, reported
earnings of Rs.15.16 a share or Rs.814.4 million for the quarter, down by 24
percent YoY. This is the third consecutive quarter that the company recorded
negative growth in earnings. The Swiss multinational is grappling with how to
cater to the shifting demands for less sugary and healthier products in almost
all markets it operates.
While Nestle is trying to adjust its strategy
towards this growing trend in most mature markets, it has so far done very
little in emerging markets. This was proven when the Sri Lankan president
himself recently singled out Milo— Nestle's most popular chocolate malted
drink— for its high sugar content.
Launching a walk to mark the World Diabetic
Day at Galle Face President Maithripala Sirisena said last Sunday that Milo's
sugar content had increased from 15.0 percent to 16.5
percent within five years and demanded to
reduce it to below 5.0 percent or face legislative controls.
The incident perhaps marks the first in the
history of Nestle where its product was singled out by a president of a
country. The president's remarks are going viral on social media and the
company is yet to respond to the remarks.
Presenting his maiden budget last week
Finance Minister Mangala Samaraweera proposed to impose an excise duty of 50
cents per gram of sugar contained in fizzy drinks and other beverages. This
probably was the first time in Sri Lanka's history where a national budget
contained a tangible measure to make its people healthier.
The new tax was aimed at controlling
non-communicable deceases such as diabetes and obesity, specially among
children. Nestle globally has been struggling for years to maintain growth and
at the beginning of the year it abandoned its 5-6 percent organic growth target
as the sales have been anemic.
The multinational is also being pressured by
an activist investor to maintain a profit margin and improve performance and
the company in September set a trading profit operating margin of 17.5-18.5
percent by 2020 without extraordinary gains.
Meanwhile, the Sri Lankan unit for the nine
months ended September 30, 2017, reported earnings of Rs.45.71 a share or
Rs.2.46 billion, down by a sharp 31 percent YoY. Revenue for the period was
Rs.27.6 billion, slightly down by 0.7 percent YoY. As at September 30, Nestle
SA held a 90.82 percent stake in Nestle Lanka PLC
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Operational Details.
General
The subject company is a large scale business
conglomerate in Sri Lanka in to the FMCG sector with Import and distribution of
many products used in all households in the Island. The company however has
seen a steady decline in the year ending 2017. Many other companies too has
seen the same effect with an economic standstill in the Island and has seen a
collapse in the share markets thus far.
Products & Services
Milo - Drink
Nestomalt - Malted Drink NAN - Children's
Milk (Powder) Nescafe
Instant Noodles - Maggie Brand
Milk - Nespray Brand and Fresh Milk
(Pasteurized)
Sorja - Juice
Milkmaid
Coconut Milk Powder - Maggie Brand
Export Countries
Australia, United Kingdom, Trinidad &
Tobago, Netherlands, France, Middle East
Import Countries
Switzerland
Associate / Subsidiary Companies
Nestle SA
Eastern Food Specialities (Pvt) Ltd
Factory / Warehouse and Sales Outlets
Owned
Factory:
P O Box 1, Makandura, Gonawila (NWP), Sri
Lanka Sales Office:
440,T B Jayah Mawatha,Colombo 10
Nestle Lanka PLC Certifications
FSSC 22000: 2010 (Food Safety System
Certification) Certifications : ISO 14001: 2007 (Environmental Management
Systems) OHSAS 18001: 2007 (Occupational Health and Safety Management Systems)
NQMS (Nestle Quality Management Systems certified by SGS) SLSI Certification
for Cerelac, Milkmaid, Maggi Coconut Milk Powder, Nespray Nutri-Up and Nescafe
Ice Coffee RTD (Ready-To-Drink) SLSI Certification for Good Manufacturing
Practices (GMP) for Nestle Lanka Sampling Operations Environmental Protection
Licence No:
345/2013 R11
INFORMATION
DENIED
Management Non Co-Operative (Tel No.: +94 11 2696304)
FOREIGN EXCHANGE RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
INR 67.72 |
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1 |
INR 91.65 |
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Euro |
1 |
INR 79.89 |
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LKR |
1 |
INR 0.43 |
Note :
Above are approximate rates obtained from sources believed to be correct
INFORMATION DETAILS
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Information
Gathered by : |
KAM |
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Analysis Done by
: |
VAR |
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Report Prepared
by : |
KET |
RATING EXPLANATIONS
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Credit Rating |
Explanation |
Rating Comments |
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A++ |
Minimum Risk |
Business dealings permissible with minimum
risk of default |
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A+ |
Low Risk |
Business dealings permissible with low
risk of default |
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A |
Acceptable Risk |
Business dealings permissible with
moderate risk of default |
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B |
Medium Risk |
Business dealings permissible on a regular
monitoring basis |
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C |
Medium High Risk |
Business dealings permissible preferably
on secured basis |
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D |
High Risk |
Business dealing not recommended or on
secured terms only |
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NB |
New Business |
No recommendation can be done due to
business in infancy stage |
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NT |
No Trace |
No recommendation can be done as the
business is not traceable |
NB is stated where there is insufficient information to facilitate rating. However, it is not to be considered as unfavourable.
This score serves as a reference to assess
SC’s credit risk and to set the amount of credit to be extended. It is
calculated from a composite of weighted scores obtained from each of the major
sections of this report. The assessed factors are as follows:
·
Financial
condition covering various ratios
·
Company
background and operations size
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Promoters
/ Management background
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Payment
record
·
Litigation
against the subject
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Industry
scenario / competitor analysis
·
Supplier
/ Customer / Banker review (wherever available)
This report is issued at
your request without any risk and responsibility on the part of MIRA INFORM
PRIVATE LIMITED (MIPL) or its officials.